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 the 63 largest 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: www.centreforcities.org/data-tool

Population

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

• In 2017, 53.8 per cent of the UK population (35.5 million) lived in cities.
• The four biggest cities (London, Birmingham, Manchester and Glasgow) accounted for almost a quarter of the total UK population (24.3 per cent) and 45.2 per cent of the total population living in cities.
• London alone was home to 15.2 per cent of the UK population and accounted for 28.3 per cent of the population living in cities.
• 24 out of 63 cities experienced higher population growth than the national average between 2016 and 2017.
• Four cities saw a decline in their population. While in the previous year only Aberdeen recorded a decline, between 2016 and 2017 Aldershot, Oxford and Luton all joined this group, shrinking by 0.1 per cent, 0.5 per cent, and 0.6 per cent respectively.
• Younger population groups tend to concentrate in cities: 58.8 per cent of those aged 16 to 24 were living in cities in 2017, while only 47.6 per cent aged 50 or over were living in cities in the same year.

Business dynamics

City economies are predominantly driven by their businesses. The overall number of businesses in a city, as well as the number of new business start-ups and closures, are all good indicators of the strength of a city’s economy.

Business starts and closures

• Three out of five businesses (61 per cent) that started up in 2017 were located in cities. This has increased in recent years: in 2011, 58 per cent of business starts were in cities.
• London had the highest number of start-ups per 10,000 population (101.1), followed by Manchester (90.3) and Aberdeen (85.0). At the other end of the spectrum Plymouth (30.6), Dundee (30.9), and Sunderland (31.0) were the lowest-ranked cities.
• Meanwhile, 60 per cent of UK business closures occurred in cities in 2017.
• London, Northampton and Aberdeen were the three cities with the highest number of closures (94.9, 72.7 and 71.7 per 10,000 population).
• Between 2016 and 2017, the number of business closures increased by 24 per cent nationally, with Nottingham experiencing the highest increases in closures (47.8 per cent), followed by Doncaster (47.0 per cent) and Leeds (43.0 per cent). Moreover, Exeter was the only city where the number of closures fell (-2.0 per cent).
• Newport, Liverpool and Manchester had the highest churn rate (15.8, 8.0 and 7.3 respectively) – these cities saw the greatest difference between new businesses setting up and current businesses closing.
• Six of the bottom 10 cities with the lowest start-up rates were coastal cities.

Business stock

• Cities were home to 54.9 per cent of all UK businesses in 2017. Between 2016 and 2017 the total number of businesses increased by 0.9 per cent in the UK, and by 1.5 per cent in cities as a whole. Looking at the past 10 years, the business stock increased by almost a quarter nationally and by more than a third in cities.
• Warrington was the city with the fastest year on year growth in business stock per 10,000 population (26.5 per cent) between 2016 and 2017, followed by Newport (16.7 per cent).
• London alone accounted for 23 per cent of the total UK business stock and 42 per cent of total cities’ business stock, far larger than Manchester and Birmingham (each accounting for less than 4 per cent of the total UK business stock).
• London also ranked first for business stock per capita, with 583 businesses per 10,000 population, followed by Reading (478), Milton Keynes (476) and Warrington (468).
• Sunderland (205), Plymouth (217), and Dundee (222) on the other hand had the lowest levels of business stock per 10,000 population.

Productivity and innovation

Productivity and innovation are drivers of long-run economic growth. Finding new and better ways of making goods and delivering services improves the performance of businesses which in turn increases wages and the capacity of city economies.

Productivity

• Only 14 cities out of 62 had levels of productivity above the British average in 2017.
• Slough, London and Milton Keynes were the three cities with the highest levels of productivity, with GVA per worker at least 26 percent above Great Britain’s average of £57,600.
• As Figure 16 shows, there is a very clear geography to productivity, with cities in the Greater South East tending to perform better on this measure than cities elsewhere. This is reflective of the make-up of jobs across cities, with jobs in cities in the Greater South East tending to be in higher-skilled occupations than elsewhere.
• Five of the top 10 cities with the highest GVA per worker also rank in the top 10 in their industrial share in private knowledge service jobs (London, Milton Keynes, Edinburgh, Reading, and Swindon, Figure 15).

Innovation

• In total, about 11,800 patent applications from the UK were published in 2017. Of this, 56 per cent of all patent applications published were registered in cities.
• Cambridge had the highest number of patents published per resident in 2017. This was more than twice the number in Coventry, the city with the second highest number (113 applications per 100,000 residents).
• London had the highest absolute number of patent applications published in 2017, with 2,199 publications. Relative to its resident base the capital ranked 16th nationwide, with 22 applications published per 100,000 residents.
• Six of the top 10 cities with the highest number of published patent applications are located in the south of England, with the exceptions being Coventry, Derby, Aberdeen, and Edinburgh.

Employment

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

Employment rate

• 37 out of 63 cities across the UK saw their employment rate improve in 2018, and 13 did so by two or more percentage points.
• Overall, UK employment increased by 0.7 percentage points between 2017 and 2018, from 74.2 per cent to 74.9. The city average remains slightly lower than the national average at 73.4 per cent.
• 36 cities had employment rates below the national average. To bring these cities up to the current UK average a further 508,294 residents in these places would need to find employment.
• Blackburn, the UK city with the lowest employment rate in 2018 (64.1 per cent), would need almost 9,700 of its residents to find employment to reach the UK average. Birmingham (the city with highest deficit in absolute terms) would need 124,521 of its residents to find jobs to match the UK average.
• Southern cities tend to perform better than cities elsewhere. Preston is the only city outside the south of England to feature in the top 10. Moreover, no southern city is listed in the bottom 10.
• Big cities tend to fare worse than the average, with only two (Bristol and Leeds) of the ten biggest having employment rates above the national average. Meanwhile Birmingham, Liverpool, and Nottingham are all in the bottom 10.

Jobseeker’s Allowance Claimant Count

Jobseeker’s Allowance (JSA) is currently being rolled into Universal Credit which has led to inconsistencies in the definition of a claimant looking for work across the country. While this has a big impact when looking at change in claimant rates, a static picture still provides a good indication of the relative strength of different labour markets.

• Almost two thirds (62 per cent) of those claiming Jobseeker’s Allowance lived in cities in November 2018.
• With the exceptions of Edinburgh and York, all top 10 cities with the lowest claimant count rates were located in the south of England.
• On the other hand, eight of the bottom 10 cities with highest claimant count rate were located in the north of England and Scotland.

Private sector jobs growth

• 39 of 62 cities increased their number of private sector jobs between 2016 and 2017, and 33 did so by more than the British average (1.1 per cent).
• 19 cities saw reductions in their number of private sector positions and in 8 cities the number of jobs dropped by more than 2 per cent.
• Northampton saw the greatest increase in private sector jobs from 2016 to 2017 (6.7 per cent), while Worthing experienced the lowest growth in this sector (-4.9 per cent).
• Overall, cities led the private sector jobs growth in 2017 with 171,000 net jobs created, 71.1 per cent of the total 240,500 net jobs gain in Great Britain.

Public and private sector jobs

• In 2017 the private to public sector employment ratio in Great Britain was equal to 2.9.
• In general, the job market in cities tends to be more dominated by publicly-funded activities than the national average. Out of 62 cities, only 18 had private to public employment ratios above the British average. Crawley had the smallest public sector of any city, where there were 7.7 private sector jobs for every publicly-funded one. It was followed by Slough and Swindon.
• In the bottom 10 cities, Oxford had almost the same number of private and public sector employees, mainly the result of its universities. This highlights that higher levels of publicly-funded jobs do not necessarily mean a less successful economy.

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 56 per cent of the UK working-age population in 2017 they were home to 58 per cent of those with a degree or equivalent qualification.
• But the UK’s highly-skilled population is concentrated in a few cities. The top 10 cities combined accounted for around 28 per cent of the total UK highly-skilled population (compared to 21 per cent of the working age population), whereas the bottom 10 only accounted for less than 3 per cent of the population with high-level qualifications (but 4.3 per cent of the working age population).
• Northern cities fare poorly on this measure. Eight of the top ten cities are located in the South; however, not all southern cities do well – four southern cities (Gloucester, Southend, Peterborough, and Ipswich) are in the bottom 10.
• Scottish cities perform relatively well when compared with the rest of the UK, with Edinburgh and Aberdeen ranking in the top 10 and Glasgow and Dundee in the top 20.

No formal qualifications

• Cities were also over-represented for people with no qualifications, being home to 59 per cent of the population with no formal qualifications.
• Most of the best performing UK cities were small or medium-sized, while two of the UK’s biggest cities – Liverpool and Birmingham – were in the bottom 10.
• Moreover, southern cities tend to perform better than cities elsewhere. York and Edinburgh are the only cities outside the south of England to feature in the top 10.
• Some cities have very polarised skills profiles: Glasgow had the 13th highest share of working age population with high-level qualifications (47.4 per cent), but also a very high share of population with no formal qualifications (10.4 per cent). Similarly, Belfast was 21st in the UK for highly skilled population (36.8 per cent), but had the highest share of population with no formal qualifications (16.1 per cent).

Wages

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

• In 2018, the average weekly workplace wage in cities was £595, compared to the UK average of £555.
• However, workers earned more than the UK average in only 14 cities. The average London weekly wage was £751, 71 per cent higher than in neighbouring Southend (£439).
• Overall the UK saw a £4 change to its real weekly earnings between 2017 to 2018, from £551 to £555.
• 32 cities saw their weekly salaries decrease in real terms between 2017 and 2018. York recorded the largest fall (-£65 per week), followed by Southampton (-£47 per week) and Swindon (-£37 per week). These three cities are all below the national average (of £555) in real weekly earnings. Those cities which experienced a decrease in wages from 2017 to 2018 are, however, spread throughout high and low earning cities.
• On the other hand, Slough experienced the largest increase in wages, with a real increase of £70 per week between 2017 and 2018, followed by Barnsley (£59), Cambridge (£47), Hull (£45) and Aldershot (£42).

Housing

The stock of housing and house prices together provide useful insights into cities’ housing markets, highlighting both supply and demand and their impact on house affordability.

Housing stock growth

• Cities accounted for 52 per cent of the UK’s housing stock.
• The UK’s dwelling stock increased by 0.9 per cent between 2016 and 2017, consistent with previous years (0.8 per cent between 2015 and 2016).
• In 23 cities housing stock growth exceeded the UK average, with Cambridge experiencing the highest growth (2.3 per cent), followed by Swindon (1.8 per cent) and Telford (1.6 per cent).
• The strong growth in housing in Cambridge in the last year continues its fast-paced expansion of housing over the last 5 years. In 2017, the city had 10 per cent more homes then it did 5 years earlier.
• Around 43,700 new houses were built in London between 2016 and 2017. This represented a housing stock growth of 1.1 per cent, ranking London 15th nationally.

House prices

• In 39 out of 62 cities, house prices grew by more than the British average of 2.7 per cent.
• Not all cities saw increases though – 10 cities saw their average house price fall (up from five in the preceding year). Aldershot saw the largest fall (-2.4 per cent), followed by Birkenhead, Aberdeen, Oxford and Brighton.
• Aberdeen has seen its house prices steadily decline over the past three years, falling by 7.4 per cent between 2015 and 2016, by 1.7 per cent between 2016 and 2017, and by 1.4 per cent from 2017 to 2018.
• Barnsley experienced the highest house price growth, with average prices increasing by 8.1 per cent, followed by Leicester (7.5 per cent) and Cardiff (6.7 per cent).
• House prices in London (£607,500) were more than twice the national average (£283,300)
• At the other end of the spectrum, Burnley had the lowest average house price at £107,900, although it increased by 4.6 per cent compared to last year. The prices in London were 5.6 times higher than in Burnley. An average house in Burnley cost less than half the average British home.

Housing affordability

• In 2018, on average house prices in Britain were 9.8 times the annual salary of residents.
• Oxford was the least affordable city, with house prices being 17.3 times higher than annual earnings. In total, only 17 out of 62 cities were less affordable than the British average.
• On the other hand Burnley was the most affordable city, with an affordability ratio of 4.3.
• All the top 10 least affordable cities were located in the south of England. Meanwhile with the exception of Dundee and Stoke the 10 most affordable cities were in the North of England.

Environment

Accounting for over 76 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 2016, cities accounted for 53.8 per cent of the UK population but only 46.1 per cent of the UK’s total CO2 emissions, reflecting the lower carbon emissions per capita in cities than elsewhere.
• Average UK emissions per capita in 2016 totalled 5.4 tonnes (down from 5.9 tonnes in 2015), but the city average was low at 4.6 tonnes.
• Swansea and Middlesbrough are significant outliers, emitting far more than the national average (5.4 tonnes). Despite their relatively higher emissions, both Swansea and Middlesbrough reduced their CO2 emissions per capita by 11.1 per cent and 45.1 per cent, respectively. This reduction was driven by the downscaling of large industrial installations, most likely linked to both cities’ steel plants, which had accounted for more than three quarters of total emissions in each city.
• The cities with the lowest emissions per capita were Ipswich (3.1), Chatham (3.3) and Luton (3.3) respectively.
• All cities reduced their emissions per capita in the year between 2015 and 2016, except for Sheffield, which experienced no change in its emissions.
• In four cities (Belfast, Exeter, Middlesbrough and Swansea) emissions per capita reduced by more than 10 per cent.
• Big cities are significant emitters, but they are very efficient when emissions are considered on a per capita basis. London for example accounted for 10.7 per cent of total UK emissions in 2016, but was eleventh lowest out of 63 for per capita emissions with only 3.8 tonnes emitted for every resident (down from 4.1 tonnes in the previous year).

Digital connectivity

Broadband connectivity is a key component of the infrastructure offer that a city can make to business, entrepreneurs and residents. The development of optical fibre has considerably increased broadband speed across the country, now enabling access to ‘ultrafast’ (>100 Mbps) speeds.

• In 2018, more than half of UK premises (56.1 per cent) had access to ultrafast broadband.
  In 55 out of 63 cities the proportion of properties with access to ultrafast speeds exceeded the UK average.
• Six of the top 10 cities were located in the south of England, whereas only two cities in the bottom 10 were in the south of England (Southend and Milton Keynes).
• While there is variation in the coverage of ultrafast broadband (>100 Mbps), the next level down in speed, ‘superfast’ broadband (>30 Mbps), is more consistently available, with all cities except Hull having at least 90 per cent of their properties covered by ‘superfast’ broadband.