Introduction

The relocation of public sector jobs is one of the most direct tools that policy makers can use to move jobs around the country. There is precedent for doing this already in the UK – for example through the opening of HM Revenue and Customs offices in Liverpool, Department for Work and Pensions in Newcastle and the Driver and Vehicle Licensing Agency in Swansea. And political interest continues on this front. As part of its industrial strategy and rebalancing agenda, the 2017 Conservative Party manifesto pledged to move significant numbers of civil servants out of London and the South East to other cities in the UK.

Governments often use relocation of public sector workers to try and stimulate economic growth in different parts of the country. Public sector relocation can stimulate the local economy in two main ways. The first, direct impact is the move of the jobs themselves and the wages they pay. The second is the ‘multiplier effect’ that these jobs can have, boosting demand for local goods and services and attracting jobs in related industries by improving the attractiveness of the area to businesses.

The size of the multiplier effect on the local area is affected by the skills levels and nature of the jobs as well as the number. For example, the movement of low-skilled jobs has a clear direct impact in that it creates employment. But its wider impact is likely to be limited, in that the wages they pay will be lower, the career progression they offer is likely to be limited and their interaction with other bodies, be they public or private (e.g. public affairs companies), infrequent.

Looking at the seniority of position in the civil service across England suggests that many of the moves to date have been of lower-skilled jobs.1 London accounted for 23 per cent of all of England’s civil service jobs in 2016, but for 53 per cent of top grades.2 In comparison only 12 per cent of all administrative officers and assistants were located in the capital.

There have been two notable cases of high-skilled publicly-funded jobs that have been moved out of London in recent years – the consolidation of the Office for National Statistics (ONS) in Newport and the move of part of the BBC’s national activities to Salford in Greater Manchester.

This briefing looks at the impact of these moves. Box 1 gives an overview of the ONS relocation, while the main body of the report looks at the BBC’s move to Greater Manchester. Using these two case studies it then draws some broad conclusions about the implications for public sector relocation.

It’s important to note that whilst this briefing looks at the economic impact of the BBC’s move, there may be non-economic reasons behind a decision to move jobs out of London, such as enhancing devolution or making public bodies more representative of the whole UK. This report looks only at the economic impact on the areas where the bodies have been relocated.

Box 1: The consolidation of the ONS in Newport

The decision to move the majority of jobs at the ONS’ office in London to Newport was a result of the 2004 Lyons Review looking at the location of public sector jobs, with a stated aim to ‘boost regional economic growth.’ But subsequent analysis suggests that this move has not been especially successful at having a wider economic impact on Newport.

In 2005-06, 1,000 jobs were relocated from London to an already established site in Newport with 1,400 existing jobs located there. As many as nine in 10 staff members chose not to follow their job, with just seven civil servants in senior positions opting to do so.3

While we don’t know the reasons as to why so many people chose not to move, looking at the depth of the labour market in Newport certainly shows that this did not provide any great incentive. In 2006, 12 per cent of jobs in Newport were knowledge-based, placing it 47 out of 62 cities. And the number of jobs in statistics is likely to have been much smaller still. This means that job opportunities and career progression outside of the ONS in Newport would have been very few and research suggests that these are key factors in attracting highly skilled people.4

These 900 jobs have of course been filled. But for the same reasons as above doing this in Newport is much more difficult than in a deeper labour market such as London. Evidence given in the Bean Review of the ONS suggests that this has impacted on the quality of work done in the ONS in recent years.

The nature of the ONS’ work and its location also mean that its wider multiplier on the Newport economy is likely to have been small. Because of the sensitive nature of what it does, the ONS rightly does not interact with external bodies as much as, say, a Whitehall department does. But the implication is that the relocation does not bring with it other jobs in related activities.

The location of the campus is likely to have been important too for any multiplier effect – the positioning of the ONS campus on an out of town site has limited the demand for local services such as shops and restaurants (although we would still expect to see some positive effects on local services within the travel to work areas for ONS employees). A visit to the site suggests that no immediate local services are sustained by its presence. This means that, unlike the BBC relocation analysis that follows, a more thorough look at employment and business location around the ONS site has not been done.5

This suggests that the move of these jobs has done little for Newport beyond the actual jobs themselves, while it may have had a negative impact on the quality of the ONS output. In terms of the former, the nature of the ONS may mean that it wasn’t the best body to choose to relocate if bringing a wider economic benefit to Newport was the goal. In terms of the latter, this may have been mitigated if the ONS had been moved to a deeper, more highly-skilled labour market where recruitment is easier.

 

Footnotes

  • 1 England is used here to take out the impact of devolved government.
  • 2 Grade 6 and above.
  • 3 Bean, C (2016), Independent Review of UK Economic Statistics, London: Cabinet Office.
  • 4 Swinney P and Williams M (2016), The Great British Brain Drain: where graduates move and why, London: Centre for Cities.
  • 5 If this analysis was undertaken the lack of other businesses around the site would mean that getting clearance of the data would be highly unlikely.