Monday, 26 October 2020
What does the future of the East Midlands look like? Business leaders have their say
In August, the Government launched a consultation on its Planning for the Future white paper, which proposes major changes to the UK’s planning system in response to the economic trends that have been accelerated during the pandemic. While many of these trends may be national, there is a distinct East Midlands flavour to how they are playing out. To help shape the Chamber’s response to Westminster, it held a roundtable session for business leaders to offer their views on the future of how we live, work and move, as Dan Robinson reports.
East Midlands must harness logistics sector as it drives post-Covid job creation
For many people in the region, East Midlands Airport represents a family holiday in the Balearics, a couple’s city trip to Rome or a friends’ ski break in the Swiss Alps.
In normal times, about 4.2 million passengers would pass through its terminals to fly to more than 90 destinations each year, but as the pandemic rips through the aviation sector, it looks set for a huge drop in 2020 – with July’s 79,235 passengers down 86.1% on 2019.
Daytime flights to sunnier spots are just one half of the airport’s business, though, and the overnight cargo operation – which typically handles 370,000 tonnes a year, second only to Heathrow – has prospered during lockdown, with year-on-year volumes up by 21.2% and 18.5% for July and August respectively.
“The airport plays a vital role for this region and the country in terms of moving goods,” says Ioan Reed-Aspley, head of external communications at the airport.
Some of the growth has obvious drivers, not least the “turbo-charged” shift to online shopping – with Office for National Statistics figures suggesting its 19% year-on-year proportion of all retail reported pre-lockdown in February had risen to almost 33% in April.
But Ioan also highlights how it has benefited from the industry’s collapse of long-haul flights to locations like North America. As companies have been unable to deliver goods in the belly hold of passenger aircraft, they have instead turned to end-to-end freight services like DHL and UPS, which have their UK hubs at Castle Donington.
Directly to the north of the airport is the SEGRO East Midlands Gateway site, a 700-acre logistics park that is already home to flagship sites for Amazon, Very, Nestle, Kuehne+Nagel, Games Workshop, ShopDirect and XPO Logistics – with DHL granted planning permission for another major hub in August.
The site is expected to employ up to 8,000 people eventually, in addition to the 9,500 jobs associated with the airport across its passenger, logistics and surrounding hospitality elements.
Ioan adds: “There’s a cluster of logistics operators that have emerged around the airport, many of which are recruiting, so this corner of North-West Leicestershire is probably the fastest-growing area in the East Midlands.”
Alex Reynolds, development director at Tritax Symmetry – which has two major logistics schemes in the East Midlands, including the proposed Hinckley National Rail Freight Interchange cargo terminal – says logistics has shown great resilience during the pandemic and many e-commerce firms have boomed.
He points to national research from Savills, which reported record levels in the first half of 2020 for take-up of industrial and logistics space, as well as a British Property Foundation 2020 study saying the median salary in logistics is £31,600, compared to £24,900 across all sectors.
“Going forward, the East Midlands has a real opportunity to capitalise on that growth but we need the right well-located sites to be available,” adds Alex, who also highlights a Network Rail study claiming each freight train removes 76 HGVs when promoting the industry’s green credentials.
“Geographically, we have a strong motorway connectivity with the logistics golden triangle, as well as being the epicentre for rail freight, which allows inland multi-modal opportunities to flourish.
“We also have a skilled labour force and wages in logistics are higher than the national average.”
Public transport will be key to connecting people with newly-created logistics jobs in East Midlands
The job benefits are fairly clear, but many agree the challenge for the region is to connect its towns and cities with these new employment hubs.
Warehouses have been responsible for the biggest recovery in passenger levels for bus operator trentbarton, which dropped to a tenth of pre-Covid numbers in April. The company has recorded patronage exceeding 100% on two services to logistics sites near the airport.
Perhaps the first hurdle will be convincing passengers it’s safe to use public transport again, with Galliford Try's East Midlands business development manager Neus Garriock admitting she’s afraid “we could wipe out all those sustainability benefits we’ve been trying to achieve if we don’t pay attention to safely bringing people back on to trains, buses and trams”.
Alongside the fear factor, people may no longer wish to travel so far to work.
Go Travel Solutions managing director Robin Pointon highlights examples like Saltaire, a model village built in Bradford to accommodate workers at the Victorian era Salts Mill.
“If we can get residents and businesses nearer together, that would be ideal,” he says. “Places like Saltaire, near my roots, made a lot of sense and it was actually sustainability before we branded it sustainability. For that to happen, it’s about policies and individuals accepting their role in change.”
Jon Parker, managing director of the Integrated Transport Planning consultancy, adds another spanner in the works of sustainable transport as he observes how local politicians have struggled to implement cycling and walking infrastructure due to concerns over upsetting car users.
He adds: “At some point, we need to face this head-on and ask the community what it wants from infrastructure in a world in which we have limited space.”
Future of office sector in East Midlands
While many are excited about the opportunities presented by a burgeoning logistics sector – and Alex Reynolds is keen to emphasise how many warehouses feature significant office space – it doesn’t mean we’ll all be getting trams, trains and buses to a big shed just off the M1 in a decade’s time.
Air IT chief executive John Whitty believes the East Midlands also has the right type of skillset for a thriving technology industry – with the costs of running a business in the region up to 17% lower than average in the IT sector.
And like many other office-based businesses, he doesn’t anticipate a permanent return to the days of travelling to fixed workplaces from Monday to Friday.
RSM’s Leicester office managing partner Kevin Harris and Freeths’ Leicester managing partner Mukesh Patel, whose companies employ 5,000 and 1,000 people respectively, say many of their staff want to continue remote working to some degree and expect a hybrid future between the home and office.
This could present opportunities for the East Midlands.
A House of Commons briefing paper published in July found more than a third of UK businesses are in London (1.1 million) or the South East (940,000).
But Galliford Try’s Neus Garriock identifies an increasing appetite for a hub and spokes model in the UK – “with smaller headquarters that aren’t so much about concentrating bums on seats but projecting an image about the company, and then having the hubs across the regions”.
She adds: “With its location and infrastructure, the East Midlands is in a good position to capitalise on something like this.”
Trend of people leaving London presents opportunity for East Midlands
The exodus from London into the regions has been a trend many estate agents had noticed pre-pandemic – and like many movements, this looks set to accelerate in the future.
ONS data showed 103,000 more people left the capital in 2018 than moved in, and Narinder Singh Nijjar believes the East Midlands stands to benefit.
The founder of Leicester-based The Lettings & Sales Business says: “We noticed this trend about three years ago where people were moving slowly away because they can go into the office on a needs-must basis, which coincided with a really good property boom in the East Midlands over that time.
“This brings a different type of clientele into the Leicestershire market. They have more financial power behind them and can put a bit of a premium on a property so house prices rise.”
Narinder and his wife Jaz Kaur also run Fraser Stretton, which provides a full-service marketing suite for small and medium-sized housing developers, and they are keen to see how the Government intends to streamline the planning process in its proposed reforms.
“A recent development we’re working on in Fleckney took nearly three years from initial planning application to approval,” he says. “This has proved to be a very lengthy and costly exercise, which can prove very challenging to smaller developers.
“We need to be careful the Government is creating a fair playing field when it comes to planning decisions coming through and that the big developers are not monopolising this particular sector.”
This article features in the November issue of Business Network magazine. To read an online version of the magazine, click here.
East Midlands Chamber has produced a discussion paper based on this roundtable, which can be viewed here.Back