Executive summary

Cities are places of opportunity. They are the engines of the UK economy, driving growth and creating jobs in different businesses – from engineering and financial services to manufacturing, logistics, hospitality and retail. They offer something for every skill level.

But ’success’ does not always simply mean economic growth, and policymakers are increasingly concerned with ‘inclusive’ growth too. In recent years, politicians from both ends of the spectrum have been determined to tackle issues around poverty and inequality and cities up and down the country are developing strategies to ensure people at both ends of the labour market can access the many economic opportunities they generate.

Yet, while there is widespread consensus on the challenges to be addressed, too often the mechanisms proposed to deliver inclusive growth overlook that prosperity requires productivity. Little is known about the ways in which places provide more positive economic outcomes for those at the bottom end of the labour market and the role cities play in understanding the causes of — and solutions to — poverty and inequality.

To support national and local policy-makers in the creation of a more inclusive economy, this report looks at the geography of low-skilled jobs and people, analysing how and why economic outcomes vary between places and unpacking the mechanisms through which low-skilled jobs are created.

It finds that:

  1. Policies that support the growth of cities do not just benefit high-skilled people, they support low-skilled people too. Low-skilled people and low-skilled jobs tend to cluster in cities, but within cities, it is mainly in the Greater South East, where the economy is stronger, that low- skilled people tend to benefit from better economic opportunities than elsewhere. Low-skilled people living in the Greater South East are less likely to be unemployed than elsewhere and have access to many more job opportunities, both in low-skilled and higher-skilled occupations.
  2. There cannot be inclusive growth without economic growth. The ability of cities to attract high-skilled exporting jobs has an impact on the overall level of economic growth in these places. But growth in these jobs and businesses has indirectly benefited low-skilled people too. Growth in high-skilled exporting jobs brings money into the local economy creating demand for jobs in local services occupations such as leisure and retail, generating opportunities for low-skilled people. The variety of jobs stronger economies can offer means that low-skilled people not only have access to more job opportunities but better opportunities too. This is because they are more likely to go on to access higher-skilled, better-paid occupations.
  3. Creating growth is a necessary, but not sufficient, condition for inclusive growth. One of the challenges associated with strong city economies is that success comes with increased pressures on the housing market. As a result, low-skilled people risk being priced out of strong economies, making it more difficult for them to access the many job opportunities these cities generate.

Different places are at different stages when it comes to inclusive growth. This is something both national and local policy-makers need to be mindful of when designing successful inclusive growth strategies.

This report recommends that:

  • Cities with weaker economies need to focus on creating economic growth by attracting high-skilled exporting businesses. Short-term solutions to improving the economic outcomes of low-skilled people, such as attracting in low-skilled businesses, will not in the long-term, support the levels of economic growth required to sustain inclusive growth. Rather, weaker economies should focus on attracting investment from high-skilled exporting businesses. This means cities need to increase the benefits they offer to such businesses by focusing on attracting and retaining talent, improving within-city transport, such as buses, and offering high-quality office space to businesses.
  • Cities with strong economies need to make sure their economic growth is accessible to everyone in their labour market. To support their ongoing success, these cities need to focus on measures that make their job opportunities accessible, such as building more homes, ensuring better public transport connections between suburbs and city centres and continuing to improve the skills of all their residents.
  • Central Government should follow similar principles in the design of the UK Shared Prosperity Fund. That means ensuring that in places with weak economies funding is not only directed at helping people to participate in the labour market but is also aimed at supporting places in the creation of high-skilled economic growth in the longer term.
  • More widely, there should be a much greater focus on adult education both at the national and local level, to ensure those with few or no qualifications can train and upskill. Much of today’s low-skilled workforce is the legacy of an education system that failed to prepare everyone to be successful in the labour market. While much has been done in recent years to tackle this issue, a lot still remains to be done for those that have already left compulsory education. For this reason, national and local policy-makers should work together to improve access and take-up of adult education.