New research confirms some of our worries: to be more inclusive, strong city economies need to work on becoming more accessible.
One of the key findings from our recent report ‘Opportunity knocks?’ was that a strong city economy is a necessary, but not a sufficient, condition for inclusive growth. Making sure job opportunities not only exist, but are also accessible, is essential.
Yet, we found that, while some of our most successful cities were creating lots of job opportunities for workers with few or no qualifications, these were not always accessible to them due to living costs in those places. Indeed, there is a negative correlation between housing affordability and the number of low-skilled workers moving out and leaving a city.
In Cambridge and Oxford for example, two of the least affordable cities, approximately 40 per cent of low-skilled people who moved house left the city, twice as many as in Middlesbrough and Newcastle, where housing is more affordable. We concluded that people with few or no qualifications are at risk of being priced out our strongest economies.
These findings are complemented by Resolution Foundation’s new research that looks at pay and housing costs in different places. While it is not a complete picture of living costs, the research adds an important missing piece of the puzzle and finds that the high rents in some of our most successful cities are preventing young people from moving there and accessing the job opportunities they offer.
In particular, the research finds that in just over half of local authorities rent prices grew faster than earnings over the past 20 years. Not surprisingly, these are places with strong economies like London, Milton Keynes and Crawley, while in places like Sunderland, where productivity is lower and the economy is weaker, rents grew less than earnings.
This once again sends a clear message that high demand cities need to be building more homes. This is particularly the case when it comes to thinking about inclusive growth. The supply of housing may seem far removed from discussions around inclusive growth, and indeed it has been treated as so. But if we want more inclusive growth, we have to make sure that economic opportunity is accessible where it is most abundant. So for any inclusive growth strategy in strong city economies to be successful, it must have housing at its heart.
And this isn’t to say anything about how rising house prices create wealth for lucky homeowners in certain parts of the country. But more on that from us tomorrow…
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