We get to the bottom of the mystery surrounding the competing statistics that are being used to describe the economic recovery in our cities.
By Paul Swinney
As the saying goes, 'There are three kinds of lies: lies, damned lies and statistics', and it's an unsurprising reaction when contradictory statistics are used to discuss the same issue. Most recently this has come up in relation to private sector job creation. The Centre's Cities Outlook 2014 report showed that 80 per cent of all net private sector jobs created between 2010 and 2012 were created in London.
Yet this doesn't chime with figures the Government has used, from a different source, which argue that over the last year 80 per cent of net jobs were created outside London. This blog aims to set out why the numbers are different.
So what's the difference between the Government figures and the figures used in Cities Outlook?
Cities Outlook uses the Business Register and Employment Survey, which looks at jobs by workplace. The Government uses the Annual Population Survey (APS), which measures employment of residents.
No dataset is perfect but the reason we use BRES data is that it gives a more accurate picture of where the jobs are, rather than where employed people live. So using the APS data the Government relies on, a working person who lives in St Albans would be classed as employed in their home town of St Albans, even if their job was actually in London. And around three quarters of a million people commute in to London each day.
What's more, if that person had two jobs, this wouldn't show up in the data. The APS shows only whether you're employed or not, irrespective of how many jobs you have or how many hours you work.
That's also the reason we only go up to 2012, because the BRES data hasn't been collected for 2013 yet.
So does this account for the differences between the datasets?
It partly accounts for the difference, but it doesn't account for the whole difference. Another big difference is based on definitions of the 'public' and 'private' sector.
In 2012 the ONS changed the definition of the public sector, moving sixth form colleges from public to private. But they did not back date their figures. This means that calculations of private sector 'growth' would be boosted because sixth form college jobs have 'moved' from the public to the private sector. Our calculations suggest this accounts for 23 per cent of overall private sector employment growth outside Greater London, compared to just 7 per cent in it.
That's why Cities Outlook uses the sectors public administration, education and health to define the public sector throughout the time period, rather than the ONS's definition. It's not perfect, but it is consistent.
OK, but it still is a big difference. Have you got any other datasets to back one or the other up?
Well, actually, yes. The ONS publishes a third dataset, Workforce Jobs. It says that between September 2011 and September 2013 (a slightly different time period to the one we used in Outlook), Greater London accounted for 50 per cent of all new private sector jobs created.
If we expand this to the greater South East (so as to include the whole of the London PUA area that we look at) this figure increases to 81 per cent, a similar figure to the one in Outlook.
Wow, the APS has really got it wrong then.
In fact, even the APS says that the Greater South East accounted for over 60 per cent of employment growth in the last year (2013).
Right, so all the datasets suggest that the recovery is very much south east led?
That's right. And that means in cities such as Glasgow and Bradford, it is likely to still feel very much like recession despite the national recovery. Making the most of cities throughout the UK, and helping the cities that are still not feeling the benefits of economic recovery, are where the focus of the debate should be.
Addendum: The blog was amended on 2nd July 2014 to reflect the accidental omission of the word ‘net’ when discussing net private sector jobs growth. The sentence now aligns with the commentary and analysis in Cities Outlook 2014.