02City Monitor: the latest data

There is considerable variation in the economic performance of cities across the UK. The purpose of this chapter is to show the scale and nature of this variation by highlighting the performance of cities on 17 indicators covering:

• Population
• Business dynamics
• Productivity
• Innovation
• Employment
• Skills
• Wages
• Housing
• Environment
• Digital connectivity

For most indicators the 10 strongest and 10 weakest performing cities are presented. Tables of the full list of cities can be found on our data tool.

Population

Growing populations can give an indication of the economic opportunity that is available in cities. Cities that provide more job and career opportunities are likely to retain and attract more people than cities that do not.

• In 2014, 54 per cent of the UK population (approximately 34.7 million out of 64.6 million) lived in cities.
• The four biggest cities (London, Birmingham, Manchester and Glasgow) accounted for almost a quarter of the total UK population (24 per cent) and 45 per cent of the total population in cities.
• London alone is home to 15 per cent of the UK population and accounted for 28 per cent of the population living in cities.
• 23 out of 63 cities experienced double digit growth in population over the ten years between 2004 and 2014. The UK population grew by 8 per cent over the same period.
• The fastest growing cities (Slough, Milton Keynes, Peterborough and Swindon) had growth rates more than twice the national average in the decade between 2004 and 2014.
• Only one city – Sunderland – experienced negative growth, while the population remained the same in Blackpool and Burnley.

Business Dynamics

Strong city economies depend on the dynamism of businesses and entrepreneurs. The overall number of businesses in a city and the rates at which businesses are starting up and closing down are key indicators of the health of a city’s economy.

Business starts and closures

• 61 per cent of UK business start-ups in 2014 were in cities, up from 60 per cent in 2013 and 57 per cent in 2009. Meanwhile, 58 per cent of overall UK business closures were in cities.
• The number of new businesses in the UK has increased by almost 50 per cent since 2009 (from 236,000 in 2009 to over 350,000 in 2014). There were more businesses in 2014 than at any time since the data was first collected in 2000.
• For the second year in a row since the recession, the number of start-ups exceeded the number of closures in all UK cities in 2014. However, there was considerable variation in the churn rate between the bottom ranked and top ranked cities; the lowest, Belfast, was 1.2 and the highest, Northampton, was 11.7.
• London was the number one city for start-ups per 10,000 population (100.1), followed by Northampton (80.6) and Milton Keynes (75.4), whereas Hull (31.4), Sunderland (30.2) and Belfast (28.8) were the lowest ranked cities.
• London was also the city with the highest number of closures (61.1 per 10,000 population), considerably above the second ranked city Reading (48).

Business stock

• Cities were home to 54 per cent of all UK businesses in 2014, up from 53 per cent in 2013 and 51 per cent in 2009.
• Northampton was the city with the fastest year on year growth in business stock (11 per cent between 2013 and 2014) followed by Doncaster (9 per cent). Over the last five years Slough has been the strongest performer, seeing growth of 29 per cent.
• London alone accounted for 22 per cent of total UK business stock, up from 19 per cent in 2009.
• The four biggest UK cities (London, Manchester, Birmingham and Glasgow) accounted for almost 30 per cent of the overall business stock in 2014. However the top 10 is dominated by medium-sized cities such as Reading and Brighton.
• Dundee (217), Plymouth (216) and Sunderland (192) had the lowest levels of business stock per 10,000 population in 2014.
• The geography of the top 10 and bottom 10 cities is stark. Seven of the top 10 cities were located in the Greater South East. Meanwhile no southern cities feature in the bottom 10.

Productivity and innovation

The creation and absorption of new ideas and innovations increase productivity, and productivity is the driver of long-run economic growth. Those economies that are better able to create and commercialise new ideas are better placed to grow in the future.

Productivity

• Only 17 out of 62 cities in 2014 had levels of productivity above the British average, with Reading, Slough and London having GVA per worker over 32 per cent above the national average of £53,700.
• Productivity increased between 2013 and 2014 in 48 out of 62 cities, with Leicester and Portsmouth recording GVA per worker growth of around 4 per cent.
• In the lowest ranked cities, York’s productivity decreased by 2.3 per cent, and Swindon’s GVA per worker was 3.3 per cent lower in 2014 than it was in 2013.

Innovation

• 61 per cent of all patents granted in the UK in 2014 were registered in cities.
• London was the city with the highest absolute number of patents in 2014 – its total of 370 represented 16 per cent of the UK total.
• Cambridge had by far the highest number of patents per 100,000 population, with almost 102. Aberdeen, the second ranked city, recorded 19.7 patents per 100,000 population in the same year.
• Small cities were the most innovative on this measure, with seven of the top 10 cities having fewer than 250,000 residents.

Employment

High employment rates, employment growth and low unemployment point to well-functioning labour markets, with high demand for workers amongst employers. Low employment rates and high unemployment are suggestive of a combination of poor skills and weaker employer demand.

Employment rate

• 43 out of 63 cities across the UK improved their employment rate in 2015, and 20 did so by two or more percentage points.
• Overall, the UK employment rate grew by 1.2 percentage points between 2014 and 2015, from 71.7 per cent to 72.9 per cent. The city average remained slightly lower than the national average, at 71 per cent.
• 32 cities had employment rates below the national average. To bring these cities up to the current UK average, 551,000 residents would need to find employment.
• Liverpool, the UK city with the lowest employment rate in 2015 (61.2 per cent), would need almost 48,600 of its residents to find employment to reach the UK average. Birmingham (the city with the highest deficit in absolute terms) would need 132,300 of its residents to find jobs to match the UK average.
• Southern cities tend to perform better than cities elsewhere. Only one of the top 10 cities was located in the North of England (Warrington, with 76.9 per cent in employment) and one in Scotland (Aberdeen, 77.3 per cent).
• Big cities tend to fare worse than the average, with Bristol being the only one of the 10 largest cities to have an employment rate above the national average.

Unemployment

• Almost two thirds (64 per cent) of out of work claimants lived in cities in 2015.
• 54 out of 63 UK cities experienced a reduction in the share of its claimants between 2014 and 2015.
• Interestingly, while cities such as Belfast, Bradford and Hull still had some of the highest claimant count rates, they were also the cities that experienced the largest reduction of claimants in the year from 2014 to 2015.

Private sector jobs growth

• 57 of 62 cities increased their number of private sector jobs between 2013 and 2014, and 32 did so by more than the British average (3.4 per cent).
• Five cities saw reductions in the number of private sector jobs, and in two cities this number dropped by more than 2 per cent (Portsmouth, 2.2 per cent and Slough, 3.5 per cent).

Public and private sector jobs ratios

• Out of 62 cities, only 16 had private to public sector jobs ratios above the British average of 2.8 in 2014.
• Crawley, Slough and Milton Keynes were the top ranked cities, recording respectively 7.5, 5 and 4.1 private sector jobs for every public sector position.
• In the bottom 10 cities, Oxford had almost the same number of private and public sector employees.

Skills

Skills levels are a key component of the success of a city economy. Those cities that have a high proportion of graduates tend to have stronger economies than those that have a large number of people with no formal qualifications.

High level qualifications

• While cities were home to 55 per cent of the UK working age population in 2014, they were home to 57 per cent of those with a degree or equivalent qualification.
• Only 16 cities out of 63 had shares of working age population with high level qualifications above the national average.
• The UK’s highly skilled population is concentrated in a few cities. The top 10 cities combined accounted for almost 30 per cent of the total UK highly skilled population (and 22 per cent of the working age population), whereas the bottom 10 only accounted for 2.4 per cent of the population with high level qualifications (and 3.8 per cent of the working age population).
• North-South disparities in the distribution of the high skilled population are stark. Six of the top 10 cities are located in the South, while only one southern city (Southend) is in the bottom 10.
• Scottish cities perform relatively well when compared with the rest of the UK. Edinburgh, Aberdeen and Glasgow rank in the top 10 and Dundee in 14th position.

No formal qualifications

• Cities are home to 55 per cent of the UK working age population, but almost 59 per cent of the population with no formal qualifications.
• 27 of the 63 cities had shares of population with no formal qualification below the national average in 2014.
• Most of the best performing UK cities were small or medium sized, while three of the UK’s biggest cities, Glasgow, Birmingham and Liverpool, had some of the highest shares of residents with no formal qualifications.
• Some cities have very polarised skills profiles: Glasgow had the 9th highest share of working age population with high level qualifications (43.6 per cent), but also had one of the highest shares of population with no formal qualifications (12.6 per cent). Similarly, Belfast was 15th in UK for highly skilled population (36.6 per cent), but had the second highest share of population with no formal qualifications (16.7 per cent).

Wages

Wages reflect the types of jobs available in cities. Those cities that have higher wages typically have a greater number of high skilled jobs than those that have lower wages.

Wage growth

• In 2015, the average weekly workplace wage in cities was equal to £545, compared to the UK average of £508.
• Workers in only 17 of 63 cities earned more than the UK average in 2015. Most of these cities were located in the Greater South East (10 of 17).
• Real weekly workplace earnings were higher in 43 out of 63 cities in 2015 than they were in the previous year. For 14 of these growth exceeded £20 per week in real terms.
• Nine of the 10 cities with the fastest real earnings growth were located in the South of England, with Basildon experiencing the largest increase of £40.
• 20 cities saw their weekly salaries decrease in real terms between 2014 and 2015, with Stoke recording the worst performance (-£56 per week), considerably worse than the second worst city Northampton (-£16).
• In absolute terms, London retained first position for highest weekly earnings, averaging £675 (£2 less than the previous year), followed by Crawley (£641) and Slough (£636). Huddersfield had the lowest weekly wage, £399 per week (up by £2 from the previous year).

Housing

Housing stocks and prices together provide useful insights into cities’ housing markets, highlighting both supply and demand measures and their impact on house affordability.

Housing stock growth

• Cities accounted for 52.5 per cent of the total UK dwelling stock in 2014.
• The UK’s dwelling stock increased by 0.6 per cent between 2013 and 2014.
• In 24 cities housing stock growth exceeded the UK average, with Cambridge topping the list and recording more than 2.6 per cent growth (more than twice the second placed city, Telford, with 1.2 per cent).
• Only one city (Dundee) did not increase its dwelling stock between 2013 and 2014.

House prices

• 16 out of 63 cities saw average house prices decrease between 2014 and 2015.
• 27 cities experienced housing price growth above the British average of 3.4 per cent, with Luton (10.8 per cent), Slough (11.2 per cent) and Cambridge (12.5 per cent) seeing the largest increases.
• Apart from Swindon, all of the top 10 cities with the largest house price increases were located in the Greater South East.
• House prices in London in 2015 were more than twice the British average (£530,000 compared to £260,400). Cambridge and Oxford were second and third with £469,600 and £453,500, far above the next city, Reading, with £343,500.
• At the opposite end of the ranking, Burnley had the lowest average house prices in 2015, with £99,600 (down by £6,000 from the previous year).
• 21 of the 27 cities that experienced house price growth above the British average were in South East, South West and East of England regions. All of the cities that saw a fall in house prices, with the exception of Peterborough, were in the Midlands or North of England.

Housing affordability

• In 2015, the average house price in Britain was 9.8 times the average annual salary.
• Nine out of 62 cities were less affordable than the British average, with Oxford, London and Cambridge being the least affordable cities.
• In Oxford, the least affordable city, house prices were 16.2 times annual salaries. In Burnley, the most affordable city, this figure was 4.3.
• Annual earnings show much less variation across the UK than house prices do. In 2015, an average house in London (the most expensive) was 5.3 times more expensive than the average house in Burnley (the least expensive), while residents’ annual salaries in Reading (the highest) were only 1.6 times annual salaries in Hull (the lowest).
• All the top 10 least affordable cities are located in the South of England, whereas many of the most affordable locations are in the North of England.

Environment

Accounting for over 80 per cent of total greenhouse gas emissions, CO2 emissions are one way to gauge how ‘green’ a city is and the size of its carbon footprint.

• In 2013, cities accounted for 54 per cent of the UK population but only 47 per cent of the UK’s total CO2 emissions.
• Average UK emissions per capita in 2013 totalled 7 tonnes (slightly down from 7.1 tonnes in 2012), but the city average was lower at 6.1 tonnes. All but five cities reduced their emission level in the year between 2012 and 2013.
• Swansea and Middlesbrough are significant outliers. They were two of only seven cities to emit more CO2 than the national average.
• Big cities are significant emitters, but they are very efficient when emissions are considered on a per capita basis. London for example accounted for 11 per cent of total UK emissions in 2013, but was 16th out of 63 cities for per capita emissions with only 5.1 tonnes emitted for every resident (down from 5.3 tonnes in the previous year).

Digital Connectivity

Broadband connection is now a key component of the infrastructure offer that a city can make to businesses and entrepreneurs.

• In 2015 the percentage of fixed line connections reaching super-fast speeds across UK cities was 76 per cent, higher than the UK average of 63 per cent.
• In 58 out of 62 cities the proportion of postcodes achieving super-fast speed exceeded the UK average.
• Six of the top 10 cities were located in the Greater South East region, whereas eight of the bottom 10 cities were in the North West of England (Warrington, Burnley and Blackburn) and Yorkshire (Bradford, Sheffield, Doncaster, Huddersfield and Barnsley).