Recession: Urban renewal rules
Author: Malcolm CooperDate: 29/01/2009
Publication: Local Government Chronicle
With daily job losses making it increasingly clear that the UK is in a very unpleasant recession, the time is ripe to assess how British cities are placed to face the challenge.
This is exactly what Cities Outlook 2009, a research report written by the Centre for Cities and supported by the Local Government Association, sets out to do.
The report covers 64 UK cities, measuring their economic strength, social fabric and physical infrastructure. It provides an assessment of how vulnerable each city is to job and business losses, and estimates of their resilience and potential for recovery.
The headlines are clear. UK cities led the national economy through a decade of growth until 2007. They will now bear the brunt of the downturn. They remain, however, the economic engine room of UK plc. As was the case in the previous decade, it will be cities that take the lead again when the recessionary storm blows itself out.
In recent months, other reports have attempted to analyse the impact of the recession on a region-by-region basis. But the recession must be understood - and fought - at the individual city level, where the powers of both national and local government can be best deployed to meet specific city challenges.
This recession began with the credit crunch, and it is still paralysis in the credit markets which is the biggest contributor to economic woe.
In this sense, all cities are affected. Companies are going out of business because the absence of credit is smothering demand and crippling debt-dependent balance sheets. The strongest proof of this is on the high street. The weak are going under, while the strong are, at worst, holding their own.
But what of our cities? Let us first look at their exposure to three highly cyclical industries: retail, financial services and construction. All cities will suffer from job losses on the high street, but levels of exposure vary.
To take just two examples, retail and leisure accounts for almost a quarter (24.5%) of all jobs in Brighton, but only 20.1% in Sunderland. Financial services have already taken a beating, and it is clear that there are many more job losses to come.
Three of Britain's most dynamic cities, London, Edinburgh and Bristol, have respectively the 1st, 3rd and 4th largest concentrations of financial services jobs (the 2nd is the Aldershot Primary Urban Area, a combination of several prosperous Hampshire towns).
London has already been hit by job losses in the City and Canary Wharf. Edinburgh and Bristol will face similar issues, as will Leeds, effectively the financial services capital of the north of England.
The construction sector, particularly in house-building, has been in trouble for a year. This winter is seeing smaller supply chain businesses entering receivership. Job losses here can be highly localised.
Persimmon, for example, has its headquarters in York. While most of the 2,000 job cuts it announced in 2008 will be spread across the country, the biggest concentration is likely to be at HQ.
It was City redundancies that hit London hard last year. But more than two-thirds of the cities with the largest increases in Jobseeker's Allowance (JSA) claimants were in the north of England - including Hull, Liverpool and Wigan.
Wigan has made significant progress in reducing deprivation, but the city, with its high concentration of financial and business services jobs and a dominant construction sector had already seen an extra 2,200 people claiming JSA in the 12 months up to November 2008.
It is important to balance a city's exposure to the recession with an assessment of its ability to absorb job losses and stimulate new sources of growth. One of the best measures of this is its skills profile.
Higher-skilled people are just as likely to lose their jobs - indeed in the case of places like the City, they are actually the most vulnerable. They are, however, much better placed to find new employment because of their range of transferable skills, and their relative mobility.
They also give a city economy the firepower to respond to improving business conditions, to strengthen existing specialisms, and to diversify into new areas.
The skills geography of UK cities is very uneven. Edinburgh and Cambridge are the two highest-skilled British cities. In both places, 44% of the working age population has degree-level qualifications or higher.
At the other end of the scale, the worst equipped are Grimsby and Hull, each with only 15%. The most vulnerable large city is Liverpool, where the figure is 20%. The picture becomes darker when we look at the percentage of people with no qualifications at all: 24% in Belfast and Stoke; 22% in Liverpool; and 21% in Hull and Birmingham.
While every city is a complex individual economic entity, there are exceptions to any generalisation. There are stronger cities such as Warrington and York in the north of England, and weaker ones like Hastings and Luton in the south.
Oxford has the highest percentage of employees working in 'knowledge-intensive' industries, but the city ranks 56th out of 64 on its overall employment rate, which is 69.3%.
Major cities tend to have their own large-scale problems - London is a study in contradictions. Borough wage rates range from more than £1,000 a week in Kensington & Chelsea to less than half that in Enfield and Brent, Barking & Dagenham and Tower Hamlets.
The employment rate also varies significantly - in Bromley it is 81.2%, while in Tower Hamlets (which includes Canary Wharf) it is only 58.4%.
Regardless of their cities' economic make-up, all local authorities have a leading role to play in fighting the recession. They are the frontline service providers who must deal with the impact of job losses.
They have a crucial task ahead to prevent skills wastage, so that recovery will not be held back by labour shortages. They also have a vital role in ensuring their residents and businesses have access to the wide existing range of advice and financial support packages.
Finally, councils are always one of their city's largest employers, and they will need to fight hard to protect their own workforces in the face of falling revenues. Overall, strong cities require strong leadership - particularly at a time when strategic vision is of such vital importance.
Cities Outlook 2009, Centre for Cities' annual index on UK urban economic performance, can be downloaded at www.centreforcities.org/outlook09
A version of this article first appeared in Local Government Chronicle
