More infrastructure decisions will be taken from outside London after the Department for Transport announced it would be creating major offices in Birmingham and Leeds.
Earlier this month the DfT revealed plans for a ‘second headquarters’ in the West Midlands, which will feature ministerial offices, as well as a ‘northern hub’ in West Yorkshire.
It represents a significant moment for the industry as it shows a government prepared to practice what it preaches on rebalancing the economy. The chancellor’s new £4.8 billion Levelling Up Fund for regional infrastructure, and his Budget promise to ‘spread prosperity across every part of the UK’ appears to be in full effect.
It is not limited to Infrastructure with several public organisations with similar plans, such as the BBC announcing this week it would relocate further departments out of London.
Of course, other infrastructure clients have already made the switch. High Speed 2 has its head office in Birmingham, Network Rail has a huge national centre in Milton Keynes and National Grid has its head office in Warwick.
But all these bodies maintain offices in the capital, with National Grid for example saying it keeps directors, senior managers and ‘departments that benefit from proximity to parliament offices and investment institutions’ at a base in Trafalgar Square.
Now that key roles at the department are moving away from London – with ministers expected to spend a ‘significant amount of time’ in Birmingham focused on the pandemic recovery effort – things could really start to change for the sector.
Over the past decade we have certainly seen an increase in the number of senior vacancies in the transport and infrastructure sector that are based in the North and Midlands as well as in Scotland.
A decade ago, this rarely happened and did necessitate many people in senior roles to work away in London in the week.
I believe this trend will gather pace quite quickly now and this could be great news for experienced leaders and professionals who want to work outside London, closer to home.
Here are the main factors driving the London exodus…
1. Following the leaders
As the quote above from the National Grid website highlights, where the decision makers go, the industry follows.
It is no coincidence that certain areas of central London are chock-a-block with engineering firms. As ministers and key civil servants base themselves in the regions, major suppliers will look to ensure they have senior teams close by. There will then be a knock-on effect further down the supply chain as the industry realises the benefits of having offices close to those of their immediate clients. Just as companies have long based staff in London to ease communications with partner organisations, they will not want to keep them in the capital if they are spending all their time and energy travelling across the country for meetings.
2. Capturing the zeitgeist
It is clear that the government is putting a lot of sway behind its bid to spread growth across the UK. Barely a speech goes by without a reference to the ambition of ‘levelling up’ the economy. We are starting to see the practical manifestation of this policy in state jobs being moved outside the capital. Regional growth appears to be a key factor in decision making now alongside other issues such as decarbonisation, value for money and job creation. Smart companies in the infrastructure sector realise that they are more likely to see projects approved in the north-west for example, than in the south-east over the next few years. It makes more sense than ever before to have senior staff based truly nationally.
3. Keeping costs down
Keeping overheads low is always good business sense and never more so than when the economy is supressed. The UK has borrowed more than £350 billion in the current financial year, the highest amount as a proportion of income since the Second World War.
The industry is looking to put 2020 behind it but 2021 will still be tricky for many. Companies will be keenly assessing any opportunity to trim down the amounts they spend on rent, rates and staff by relocating away from the capital. And the savings can be significant with staff costs in Leeds, Manchester and Birmingham typically 10-15% lower than London and office costs can be halved.
4. Acquiring local knowledge
By moving to the regions, companies put themselves in a better position to attract local people to all levels of their business. As well as tapping into new talent pools away from the ultra-competitive London recruitment market, this can allow organisations to harness local expertise.
From understanding the local challenges and politics, to being potentially more invested in a project that will be visible and meaningful to their own families and communities, local people bring a range of benefits.
In some parts of the UK the clients really like to see people from the area and also living locally in the area delivering the infrastructure and operations, it can be a real PR boost. The small things really can make a difference when delivery is under pressure.
5. Adjusting to the post-Covid world
Many things that we long took for granted have been lost during this pandemic, from visiting family to going to the pub. But there has been a positive side as companies have realised that they do not require all their employees sat at their desks all the time for business to happen. The forced rise of home working and the way so many leaders and their teams have got to grips with technology will have a lasting impact on the way organisations work in the future. Hopefully offices start to reopen this summer, but I do not expect to see everyone returning to their commutes for 40 or 50 hour weeks at their desks. With greater flexibility comes an opportunity to reassess what office space companies truly need, and for some that could mean more small hubs around the country and less reliance on expensive London headquarters.
