Follow Goldman Sachs Beyond London, Tory Mayor Tells City Giants

Sabah Meddings
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(Bloomberg) -- Shortly after we arrive at Andy Street’s office, he insists on bundling into a taxi. Darkening rain clouds aren’t going to stop the mayor of the West Midlands from showing off his proudest new achievement: luring Goldman Sachs to Birmingham.

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Minutes later, Street marches across the city’s new financial district and plants himself in front of Goldman’s offices for our interview. “When they initially came, they committed to 150, they’re already at 400, and they’ve taken space for 1,000!” he says, hailing the bank’s local headcount.

Goldman, which is nestled between offices belonging to HSBC and PwC, is just the beginning, says Street. “What I believe will happen in the UK is we will see places like this grow relatively and actually the financial services sector will therefore be better distributed.” Are there conversations to bring more big banks to Birmingham? “There are but I couldn’t possibly tell you,” he says.

Until seven years ago, Street was the boss of the John Lewis Partnership Plc, where he set the department store chain on a course for rapid expansion, opening shops across the country — including in Birmingham. However in 2016, at 53, he swapped his £800,000 ($994,000) a year retail job for politics, running as Conservative mayor for the West Midlands. He now represents 2.8 million people and regularly opines on issues such as energy bills, “leveling up” and Westminster politics in general.

Today, he wants to talk about investment zones, a Tory initiative to create regional clusters and drive economic growth. But as he fastens a microphone to the lapel of his navy suit, he can’t resist taking a pop at his former employer. The outfit is from a local tailor, not John Lewis, he says. “They don’t sell proper suits anymore.”

‘Genuine Tragedy’

It’s not the first broadside Street has fired in recent weeks, following reports that the beleaguered retailer’s chairman, Sharon White, was on the hunt for outside investment. John Lewis is a mutual, owned by its employees — known as partners.

“They should not be pursuing a demutualization or bringing in private funding,” says Street. “The whole point of the John Lewis Partnership is that it’s owned by its employees for their long-term wellbeing. And I do not believe you can sell off a part of it and still achieve that objective, and I think the objective must be held paramount like the north star.”

As if to underline the point, he says: “It would be a genuine tragedy if part of it was to be sold.”

John Lewis posted an annual loss of £234 million for 2022 and is due to cut jobs. White has reversed much of Street’s store expansion, closing stores — including the one he opened in Birmingham — as she tries to reinvigorate a business that when she took over was “run like the civil service with the same sense of entitlement,” according to Clive Black, analyst at Shore Capital.

She is also searching for new revenues, striking a £500 million partnership with asset manager Abdrn to build 1,000 homes for rent. “I genuinely don’t know why they’ve decided to do that,” says Street.

Street’s gloomy comments on John Lewis stand in contrast to his almost Panglossian approach to the West Midlands and his party’s future. He is relentlessly optimistic, despite having to fight for government funding for the region, and as a senior Conservative, this month’s crushing local election results have left the party bruised.

Street is proud to say that while the Tories lost almost 1,000 seats in the May election across England, they put up a much stronger performance in the West Midlands. It’s a feat he is hoping will secure a third term as Conservative mayor. “I hope I’ve demonstrated that by bringing my business-like approach, we can sort things out and get stuff done,” he says.

Brexit

Street manages to look on the bright side even when it comes to Britain’s struggling car industry. He admits Brexit had an impact on the West Midlands when the terms of trade changed for car parts. “There has been a loss of jobs in the manufacturing sector, no question about it,” he says, before adding hopefully that employment growth in other sectors is “really picking up.”

Given the Tories’ electoral troubles (Labour enjoys a double-digit lead in the polls) amid a generational cost-of-living crisis and rising mortgage rates, is Street being a little too optimistic? “I’ve learned that in this role, there’s no point just sitting here just hurling rocks,” he says. “You’ve got to present a positive picture of why it’s worth investing.”

Street grew up in Northfield and Solihull, where his mother was a pharmacist and his father a salesman. He attended the independent school King Edward’s in Edgbaston, before going to Oxford University, where he led the students’ Conservative Association. He joined John Lewis after university as a trainee in Brent Cross — rising through the ranks to become managing director of its Milton Keynes store in 2003. In 2007, he became managing director of the whole business.

In 2017, he secured a narrow victory to be Tory mayor in a region in which 21 of the 28 local authorities were controlled by the Labour party. Under his leadership, Birmingham was chosen to host the Commonwealth Games, while Coventry won the City of Culture in 2021.

Talent

For Goldman, and other finance companies, the advantage of moving support staff to Birmingham is a 40% saving on property costs — along with cheaper living expenses for employees. Goldman’s office is in the heart of an enterprise zone which offers discounts on business rates. There, it will occupy five floors of a building staffed with engineering workers, human capital management, legal, audit and corporate and workplace solutions.

Street says the battle to attract a new Goldman office “was a race between different places” — with much “wooing” from Street — but ultimately won by Birmingham due its access to talent, with six universities nearby. In a statement last September to announce the move, Goldman said it was diversifying locations to attract and hire talent.

Goldman has its European headquarters in London’s Plumtree Court where it employs 6,000 people, but like rivals, the bank has looked outside the capital for jobs beyond core financial services. Citigroup Inc is seeking 400 more staff for its Belfast office, while Accenture has also set up a hub in the West Midlands. The Financial Reporting Council, the audit regulator, has been told by ministers to move to Birmingham.

“This is modern Birmingham,” Street says, as we stand amid the rows of new office blocks on Centenary Square. “I hope you’d agree that this is a beautiful physical space. It’s well connected. It’s a place that people want to come and work.”

--With assistance from Deirdre Hipwell.

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