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HSBC and HS2 reinforce ‘booming Birmingham’, but also highlight tale of two cities

HSBC and HS2 reinforce ‘booming Birmingham’, but also highlight tale of two cities

🕔26.Mar 2015

High speed trains will bring London and Birmingham much closer together, but there’s no need to wait until 2026 to see that happening, writes Paul Dale.

The announcement this week that HSBC is to move its head office to Arena Central, bringing 1,000 jobs, is the latest sign that the Capital no longer has a strangle hold on blue chip companies.

Birmingham’s professional services and financial sector has been growing steadily for a while, chiefly off the back of cheaper commercial rents against London’s sky-high property market and a realisation  among global clients that  our firms offer high quality professional services, but also because of the promise of massively improved connectivity as a result of HS2.

In 2026, assuming Ed Balls hasn’t scrapped the planned high speed rail route between Euston and Curzon, a journey from London to Birmingham or indeed from Birmingham to London will take no longer than a commute from Wimbledon to Cannon Street – and will be achieved in far more comfort and style.

Neanderthals in the House of Lords have packaged together every half-backed snake oil claim about HS2 that it is possible to find in a report that accuses the Government of failing to make a convincing case for the £50 billion project. As usual, the Economic Affairs Committee does not address the question of if not HS2, then what else?

Is anyone seriously contemplating carrying out improvement work on the West Coast Main Line that would be necessary to solve capacity problems if HS2 is not built? How long would this take? At what cost and disruption to services would the WCML project be undertaken?

HSBC’s decision to come to Birmingham is based on long term thinking and the benefits of HS2, with a 39 minute journey from Curzon to Heathrow, will have informed that thinking.

Underpinning the growth of the financial services sector has been an astonishing change in the way people now view Birmingham as a desirable place to live. Twenty years ago anyone predicting that young professionals would vote with their feet in a mass transit from London and the south east to work and live in Birmingham would have been at risk of being carried off by men in white coats.

And yet, the Mercer Quality of Life survey for 2015 places Birmingham as the second best place to live in the UK outside of London. A hat-tip here to former Tory city council leader Mike Whitby, who put much faith in the ability of such surveys to address Birmingham’s image problem.

Whenever he spoke of the Mercer study or the Cushman and Wakefield business study, Whitby was greeted with howls of derision by Labour councillors. Now of course the Labour leader of Birmingham city council praises Mercer whenever he gets the chance.

Whitby also worked hard to bring Deutsche Bank to Birmingham, the first of the big wins against London, in a move that has seen the bank expand and provide far more jobs than envisaged.

Some 5,500 Londoners in their thirties moved to Birmingham last year, the highest figure for any regional city. The Greater Birmingham and Solihull LEP area attracted a record 77 foreign direct investment projects in 2013-14, the highest on record and more than any other area. Birmingham welcomed more business start-ups than any other city in 2014 – a total of 18,000 new companies.

This year’s MIPIM property fair in Cannes saw Birmingham in the most unusual position of having so many office and retail-based developments on its books that it must have been a challenge to showcase everything in the time allotted.

The Snow Hill  scheme – described as Birmingham’s Canary Wharf by the city council – the Paradise redevelopment scheme with more Grade A offices, the Grand Central shopping centre and the Smithfield redevelopment of the Wholesale Markets site add up to a critical mass of financial investment boosted by business rates uplift from the enterprise zone.

The growing success of what might be termed the City of Birmingham serves only to underline the problems facing Birmingham city council and the wider Birmingham outside of the inner ring road where unemployment remains depressingly high and social deprivation in inner city wards has been among the worst in England for many years. As Mark Rogers told us in his anniversary interview this week, “deprevation in this city hasn’t changed in 25 years.”

While global investors queue up to grab a slice of the city centre action, the council is fighting on all fronts just to stay in business.

Two Government commissioners have been drafted in to run schools and children’s social services, a damning report by Lord Kerslake, the former Permanent Secretary at the Department for Communities and Local Government, exposed the council’s failure of leadership over many years and led to the appointment of an improvement panel – and to top it all the council’s chief executive openly questions whether the money to run statutory services will have run out by 2020.

There’s no doubt that the past three weeks, from the glories of MIPIM to the entirely unexpected announcement about HSBC, have been good for city council leader Sir Albert Bore. The man who has built his reputation on huge economic redevelopment projects has had plenty to shout about, and with a challenge to his leadership on the horizon he will play the big city developer card for all it is worth. Credit must also go to Business Birmingham, notably Neil Rami and Wouter Schuitemaker, for MIPIM, HSBC and HS2 successes.

This week Sir Albert told the Financial Times that a combination of HS2 and London’s over-heated commercial property market was driving demand. Developers could earn as high yields here in Birmingham as in the Capital but also benefit from cheaper property prices.

“There will be other companies who want to come to Birmingham because of the development of the financial services sector. The future is bright,” he added.

The prospects for Birmingham city centre certainly are bright, perhaps brighter than they have been for decades. As for much of the rest of Birmingham, the quality of brightness is not immediately obvious to many of the people living there. It’s a point that is likely to feature large in Councillor Clancy’s bid for leadership as soon as the polls close on 7 May.

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