Can the Midlands Engine match up to the Northern Powerhouse?

The Midlands Engine for Growth, lesser-known cousin of the much-heralded Northern Powerhouse, was launched by Business Secretary Sajid Javid in December last year. Devolution deals, coupled with large public investment, are designed to give areas such as the East and West Midlands the potential to be catalysts for major development. And such plans could help smaller contractors take a bigger slice of the potential work this improving region has to offer.

According to the government, productivity in the East Midlands region, for instance, is around 10% lower than the national average. When announcing the launch, the Minister suggested that there were around 25,000 job vacancies in the Midlands that were hard to fill due to a lack of suitably skilled local applicants. However, it is thought that, if the Midlands matches the predicted growth rate for the UK over the next 15 years, it could create 300,000 jobs and boost the national economy by £34 billion.

In the East Midlands, Derby and Nottingham, the region’s two largest cities, have promised a minimum of £900 million in public investment over three decades – pledges set out in their own devolution plans. With devolution providing the opportunity to drive development into projects that have been stalled because of the lack of funding or central government backing, this upfront public infrastructure investment should unlock the potential for lucrative private sector partnerships.

However, as planning and demand increases in these areas, so will the squeeze on skills and contractors. Research by Gleeds suggests that Nottingham, for example, has faced difficulty in the past attracting tenders for projects between £5 million and £10 million, and some larger contractors often don’t consider tenders under £10 million. There also is a strong need to retain university-leavers from the region’s key institutions rather than face a ‘brain-drain’ to the London construction market.

This all leaves an important gap in the market for small regional contractors, or those with an ability to begin offering skills or services in the region. Combining funds from a devolution deal with strong public-private cross-sector partnerships and the retention of highly-trained individuals from the region’s leading education establishments should mean the building blocks are in place for another regional powerhouse.