Moving public sector jobs won’t address the North/South divide alone

The priority for the Government should be tackling the skills-gaps and transport issues hampering economic growth in Northern cities

The question of how to tackle the UK’s North/South economic divide has plagued policy makers for decades. In recent years, attempts to do so have mainly focused on the Northern Powerhouse initiative, which initially aimed to boost Manchester’s economy to create a counterbalance to London, but subsequently broadened out to focusing on strengthening economic performance across the North through improving rail links. However, to improve the North’s economy, we need to make some hard choices about where to make policy interventions – and this means reverting to a particular focus on Manchester and other big cities.

Our recent briefing sets out the role that cities, and city centres in particular, play in the national economy. The big problem for the North is that its cities are punching well below their weight – if the North’s cities were as productive as those in the Greater South East, the North’s economic output would be £154 billon larger. That’s three extra economies the size of Manchester.

Clearly then, focusing on boosting growth in cities outside the Greater South East will be critical in improving the economic performance of the North and other regions. The question, therefore is how best to do this. One of the most direct tools that policy makers can use is to move public sector jobs around the country – as we have seen, for example, with the BBC’s relocation to Salford and the ONS’s move to Newport. This issue is again high on the political agenda, with the Government considering moving 800 Channel 4 jobs out of London. But how effective are such relocations – and if the Government wants to move Channel 4, where should it go to?

Today we’ve published a new briefing looking at the economic impact of public sector relocations, which offers two key findings in response to these questions. Firstly, a note of caution: our analysis shows that while the BBC’s relocation to Salford has been positive for Greater Manchester in bringing jobs to MediaCityUK, its impact on employment across the wider city region was small – equivalent to a maximum of 0.3 per cent of all the jobs in Greater Manchester in 2016. By extension, the jobs impact of the potential Channel 4 relocation shouldn’t be expected to be very large either.

The analysis also suggests that if the BBC had moved to a smaller city than Manchester – with fewer high-skilled workers and a less diverse economy – it’s likely that the limited employment boost it brought would have been less significant. This leads us on to our second key point: if the Government does move Channel 4, it should move the jobs to a major city which is already home to a large-share of high-skilled workers and firms in related industries – in another words, a city like Manchester.

Of course, this raises the issue of fairness. Given that Manchester has already received a great deal of policy focus in recent years – from the BBC’s relocation, to the four rounds of devolution it has enjoyed and the introduction of the new mayor – is it right for Manchester to get Channel 4 too?

The answer, in our view, is probably yes – despite the political difficulties it may bring in terms of Manchester being seen to be prioritised over other cities. Moving Channel 4 to MediaCity would build on a project that was started back in 2011, and would allow it to benefit and expand the existing specialist pool of workers and suppliers that has been created since the BBC’s move – and working with the scale of the city in the way that the ONS’ move to the much smaller city of Newport could not.

Sure, an extra 800 jobs from Channel 4 would be a positive thing for the other cities bidding to be the new station’s new home, such as Birmingham, Liverpool and Sheffield. But the bigger issues for these places is the barriers that for decades have deterred high-skilled businesses from investing in them in sufficient numbers – and which moving Channel 4 would do little to help break down.

To boost growth and prosperity, these cities need many thousands of knowledge-based businesses in many different sectors deciding to set up shop in their economies, creating tens of thousands of new jobs in an emergent way that successful cities foster, rather than through ‘big ticket’ policies. For that to happen, these places need to address the skills and transport issues that hamstring their economies, which should be a higher priority than headline grabbing initiatives such as securing Channel 4. Birmingham, for example has the highest share of people with no formal qualifications of any city in the UK, and Liverpool doesn’t fare much better. Meanwhile no other city in the UK has a body with Transport for London style powers, despite this being very much in the gift of politicians to change – this too should be a priority for Northern cities.

Policy is right to focus on specific places. But it has to be clear on how it is tackling the challenges that each place faces. Looking to give everyone a prize, and being unclear on what an intervention is aiming to do, ultimately doesn’t help very many people.

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Comments

Robin Spragg
25 August 2017 10:50

The lower productivity of the Northern cities is due mainly to lower investment by the Government in infrastructure, and lower private investment also in the North. The solution is to equalise investment in the Northern cities with investment London, which will require the Government to direct investment to them.

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