This first blog in our 'Blast from the Past' series looks back at how 2010 report 'Private Sector Cities' helped rebalance the debate about jobs growth across UK cities
On the 28th May 2010, David Cameron used his first major speech as Prime Minister to ask “Can we rebalance economic power across our regions, across different industries, so that more people have a stake in our success?”
Shortly after he gave this address, Centre for Cities published a report entitled Private Sector Cities, one of the first major outputs from a UK think tank to set out why re-balancing the economy in this way would be extremely difficult, and why it would ultimately demand a new approach to fostering urban economic growth at a time of dramatic public spending reductions.
Rich in analysis, the report provided three key messages about the nature of the UK economy that have shaped much of the Centre’s subsequent research, and many elements of Government policy.
First, globalisation and technological change have reshaped the geography of private sector growth in our economy, so that some cities are now much better placed than others to generate private sector jobs. This is illustrated most clearly by the fact that in the decade leading up to the financial crash of 2008, for every one new private sector job created in the North and Midlands, 10 were created in London and the South. London alone saw the creation of 320k new private sector jobs during this period, around 290k more than any other UK city, highlighting its critical role in the national economy.
Source: NOMIS 2010, Annual Business Inquiry, workplace analysis. Estimates based on jobs added between 1998-2005 and 2006-2008 to take into account changes in ABI methodology.
However, focusing just on the North-South divide can be misleading. The North and Midlands still accounted for 44.5 percent of England’s private sector jobs reminding us that there is still a significant amount of private sector activity in these areas. And while London did generate by far the biggest amount of new private sector jobs of any city in the UK, performance within cities across the rest of the country was mixed. For example, the next best performers were Bristol (37k), Manchester (33k), Leeds (25k) and Newcastle (24k), demonstrating that success in generating private sector jobs was by no means limited to the South of England.
Third, bigger is not always better. Although many of our Core Cities recorded impressive rises in private sector employment during this period, others fared less well, with Birmingham and Nottingham each losing significant numbers of jobs. By contrast, when looking at the greatest changes in private sector employment during this period, the best performers were often mid-sized cities, like Brighton (+25%), Milton Keynes (+24%) and Preston (+16%) illustrating their growth potential in the years ahead.
Source: NOMIS 2010, Annual Business Inquiry, workplace analysis. Estimates based on jobs added between 1998-2005 and 2006-2008 to take into account changes in ABI methodology.
The report also set out a new direction for urban economic development in the UK, and it is clear to see the impact that our recommendations have had on Government policy in the three years since publication.
For example, the report called for the introduction of new incentives to encourage buoyant cities to expand, by ensuring that local areas benefit from building more homes and attracting new businesses. By introducing a New Homes Bonus, together with the local retention of business rates, the Government has begun to provide such incentives.
We also argued for planning rules to be made more supportive of growth in those cities, and only last month a new National Planning Policy Framework designed to boost sustainable development was finally introduced in full.
And we called for more strategic capital investment in those places that have the most chance of generating jobs, something that has been reflected in successive Autumn Statements and Budgets.
While the Government’s response in each of these instances may not be exactly as we would like, there is no doubt that Private Sector Cities lay the foundation stones for a new approach to fostering economic growth in our urban areas. Nevertheless, much more remains to be done, particularly in relation to cities who are struggling economically, and for whom new incentives mean little in the face of low levels of private sector demand and weak skills profiles.
In his recent Budget, the Chancellor stated that over the past twelve months, for every one public sector job lost as a result of spending reductions, two private sector jobs have been created. Re-reading Private Sector Cities reminds us that the key question to ask here is ‘where are those jobs being lost and created?’ The evidence from the previous decade indicates the picture will be deeply uneven, further reinforcing the need to ensure that the specific economic development challenges faced by buoyant and struggling cities across the country are prioritised in policymaking.
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