When talking economic growth, it’s all too easy to focus on shiny start-ups and massive employers – but it’s Britain’s mid-sized companies that could really drive growth, NatWest’s CEO has told the Labour Party conference in Liverpool.
One of the key themes of this year’s conference has been the need to drive growth, with Steve Reed’s "Build Baby Build” hats being among the event’s most sought-after souvenirs.
As Sir Keir Starmer said on Tuesday in his keynote speech: “The defining mission of this Government is to grow the economy, improve living standards and change the way we create wealth.”
Also at conference, NatWest teamed up with think tank Labour Together for a debate called “Unlocking the Mid-Market Economy as the Growth Engine for the Ƶ”.
The term “mid- market” might sound a little dry. But according to NatWest CEO Paul Thwaite – returning to his home city of Liverpool – that market has a key role to play in driving the Ƶ economy forward.
He told the meeting: “It’s crucial we care about it. We have to think of the critical middle as the crown jewel of the Ƶ economy. It’s less than 0.5 per cent of businesses but employs more than seven million people. It drives about £1.3 trillion in turnover. It provides the potential to unlock a lot of growth.”
Last year, NatWest , on those vital mid-market companies (MMCs) - which it defined as firms with an annual turnover of between £25 million and £500 million. It said there were more than 13,000 such firms across the Ƶ, contributing some £420 billion in gross value added (GVA) to the economy.
And it said that “one per cent growth in this segment could add £35 billion GVA to the Ƶ economy and £115 billion in business turnover by 2030”.
MMCs are also vital to the Ƶ’s regional and national economies - making up 27 per cent of employment in Scotland and in the Humber, 24 per cent of employment in the West Midlands, 23 per cent in the North East and 22 per cent in Yorkshire.
Irene Graham, CEO of the ScaleUp Institute, said those mid-market businesses were among other things critical to Ƶ export success.
She said that for Government the critical middle was an area that “really needs to be leant into more if they’re going to achieve the ambitions they have”.
Steve Rigby is co-CEO of the West Midlands-based Rigby Group, one of the Ƶ’s biggest family firms. He said his group had grown and developed several mid-market companies.
And he said: “The reality is that (when your business reaches mid-size) you start to become reasonably self-sufficient. When you get to that situation you have critical mass. You start to have heads of department, boards, think about how to grow a business.”
Mr Rigby said the Ƶ had a traditional focus on SMEs and on foreign direct investment.
And he added: “The bit in the middle, often we don’t focus on. Those businesses don’t need a lot of money from Government. They just need some help.”
On , as the bonus clue is slowly revealed, catchphrase host Stephen Mulhern likes to ask guests: “Will the middle solve the riddle”?
Debate host James Howat, chief economist at Labour Together, didn’t quite say that - but he did ask the panellists what support mid-market firms would specifically need from Government.
Mr Thwaite said ministers could make sure they focused on those mid-sized firms as well as on SMEs.
He said they needed to make sure that when making policies they had a “lens” dedicated to mid-sized firms and said they should “look through the lens at the impact of those policies on mid-market companies”.
Ms Graham agreed that it was about that lens and about access to opportunities, rather than about more money. She added that areas including Coventry and Warwickshire and Liverpool City Region had seen successful when regional government worked with local mid-sized firms.
Mr Rigby agreed that devolved authorities - like those in the West Midlands - would play a vital role in supporting the “critical middle”.
He said: “We need national policies on how to grow that cohort but it’s a regional delivery mechanism.”
Mr Thwaite again stressed businesses needed support and that this was “not an ask for a big cheque”.
That came as Lucy Rigby joined the panel, with host Mr Howat joking this was one of the few occasions when a minister wasn’t being asked for money.
Ms Rigby was appointed Economic Secretary to the Treasury earlier this month and said she had spent much of the time since speaking to industry, particularly in financial services.
She said the three subjects that came up most often were skills, AI adoption and regulatory challenges. And she said the Government was working to address those issues, with measures such as the Leeds reforms to financial regulations and a revamped Office for Investment.
Steve Rigby said that most mid-market businesses were “bootstrapped” and self-financing rather than relying on private equity. He said they tended to have developed "cautiously", remaining EBITDA-positive and with a “level of caution” regarding debt.
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He said the West Midlands was strong in logistics and in advanced manufacturing - and said that some manufacturing companies were being “perhaps too cautious” when it came to investing in robotics.
He warned “if they don’t modernise, they suddenly start falling by the wayside”.
And he said the job of industry and government leaders was to encourage those firms to make those key investments.
Mr Thwaite added: “As Steve knows better than anyone, when you run a business you spend 99 per cent of your time running that business. You don't spend time waiting for industry missives from local or national government.”
Liverpool city region metro mayor Steve Rotheram later joined the panel and was asked what he was hearing from business.
He said that, while businesses did talk about the need for fiscal discipline, and he said the city region also needed more housing, “the thing that would help would be getting the workforce round more easily. Public transport is really important”.
The mayor ended by saying that “the economic growth that Rachel (Reeves) was just talking about on the platform” cannot happen in isolation - it needs the support of mid-market businesses and of government national and regional.
