As we come to terms with this week’s terrorist attack, our thoughts are with the families of those affected by this senseless act; not just in Manchester, but across the North-West. Like many regions across the country, the North-West is dependent upon the skills and talents of its young people, particularly those coming out of universities, to contribute to the region’s success.

Our own Midlands region is home to more than 10 million people and its economy is worth £217.7 billion, about 13 per cent of the UK’s annual output. The Midlands Engine strategy sets out ambitious targets to grow the region’s economy by £34 billion by 2030, creating a substantial number of new jobs, improving productivity and GVA (gross value-added) per person.

Tackling these major challenges requires private and public sector involvement and support from the region’s universities. Long-standing civic universities, such as Birmingham, are ‘anchor institutions’; employing significant numbers of people and embedded in the region as strong and consistent contributors to both economy and communities.

If we focus on regional economic growth, universities contribute in the following important and related ways:
• Directly, via their economic impact as a major employer, investor and procurer
• By attracting students – particularly foreign postgraduate students – from outside the region who spend locally
• As a source of graduates, enhancing the skill-base of a region
• Through regional multiplier effects created by employees and students spending their income locally and, supporting all kinds of firms in the region
• Firms that fund research or collaborate with universities benefit from access to science and technology-related expertise by, for example improving innovation and productivity
• By attracting other firms and organisations to the region, drawn by the availability of skilled employees and access to university expertise

Major regional challenges

The Midlands suffers from a historical lack of investment, higher unemployment and lower levels of skills and productivity relative to the UK average. In the past, this has made the region unattractive for both skilled graduates and firms looking to invest, trapping the region in a cycle of under-performance.

City-Region Economic Development Institute (CityREDI) research shows that skills shortages are a critical part of this cycle. For the Birmingham city-region in particular, only 28 per cent of the workforce are highly skilled (NVQ4+) compared to 37 per cent nationally.

Skills improvements have directly accounted for about a fifth of the growth in average labour productivity in the UK over recent decades. They underpin higher GVA per worker, improve firms’ capacity to innovate and export and correlate with higher salaries, enhancing regional multiplier effects and driving other kinds of investment.

Local change is underway

There are encouraging signs that the region is starting to emerge from this low-growth cycle. Inward foreign direct investment (FDI) is strong; new firms, such as HSBC, are moving here and current firms, such as JLR, are investing. Levels of productivity and exports are also improving, while infrastructure developments are making the region more attractive to new investors.

The skills agenda shows positive indicators of change. Some 24 per cent of undergraduates at the University of Birmingham come from the region, but 48 per cent of our graduates now stay here after graduating and this number has increased significantly in recent years.

Universities are a growing source of local talent, helping drive this positive growth cycle. More graduates are staying because universities are connecting more with local organisations, providing internships and work experience to enhance student employability. But the city-region is also becoming more attractive relative to London and elsewhere.

Universities can play an even stronger role in the region, by:

• Building on their role as a source of skills and expertise for the region by increasing links between teaching programmes and local organisations
• Growing the number of joint research investments with corporate partners in areas aligned with regional economic growth plans (such as advanced automotive engineering or low-carbon energy), developing regional specialisation and a more competitive, high-wage local economy
• Combining STEM capabilities with business and management expertise to help translate science and technology into new products and services
• Changing procurement practices to support small, local firms and using their buying power to support disadvantaged socio-economic groups in the region
• Increasing contributions to local arts and creative sectors, which play an important role in keeping graduates here and attracting inward investment

Professor Simon Collinson
Deputy Pro-Vice-Chancellor for Regional Economic Engagement and Director of CityREDI in Birmingham Business School, University of Birmingham