The industrial profile of the UK has changed over 100 years, but trends suggests investment in skills and transport will drive growth
In the year the Queen celebrates her Diamond Jubilee, Centre for Cities looked back at the shape of urban Britain in the final year of her grandmother Queen Victoria’s reign. What we found was that while the geography of our economy looked very different in 1901, the patterns of city performance that we still see today were already emerging.
The industrial revolution was built on northern powerhouses such as Manchester and Liverpool. By 1901 the industrialised parts of the north and Midlands accounted for nearly 35% of England’s population, compared to around 25% today.
Many of our cities in these areas were reliant on heavy industry such as ship building, textiles and dock working. But much of this employment was cyclical and more susceptible to wider changes in the economic climate than other industries. The casual nature of employment in these sectors meant the typical response of employers to downturns was to either cut wages or lay off workers.
With the exception of Blackpool, heavy industry accounted for at least 45% of total employment in every city north of Mansfield. In Bradford it hit 59%, in Middlesbrough 64% and in Burnley it hit a high of 68%. So while heavy industry was a big source of jobs, it did not usually provide stable employment for its workers. Instead, it created periods in and out of employment for many people working in the north.
The reverse was observed in towns and cities in the south of England. These cities were much less reliant on cyclical employers; in Reading just 33% of workers were employed in these industries. Southern cities also had a greater proportion of service jobs and had a higher share of workers in professional occupations. In Bournemouth, for example, there were 10 times the proportion of men employed in professional occupations than in Nottingham.
The industrial profile of the towns and cities in the south meant that they were in a better starting position to adapt to changes in the structure of the national economy throughout the 20th century. Services overtook manufacturing as the largest employment sector as early as the 1920s, and today it accounts for 84% of all jobs in England and Wales. Manufacturing accounts for just 9% of all employment, down from more than 40% in 1901.
The pace of this change varied hugely across cities. In 1901, services were already a bigger employer than manufacturing in Bournemouth. But it wasn’t until the 1970s that services employment overtook manufacturing in Rochdale.
Despite these employment trends, UK manufacturing is and will remain important to our economy. It is a big investor in research and development, and some of our manufacturers are world leaders. Nevertheless, looking at urban development over the last century tells us two things about future patterns of economic growth.
First, manufacturing is highly unlikely to be a net contributor to the jobs growth that the country needs. In order to remain competitive in the global marketplace, manufacturing is continually improving in productivity, producing more goods with fewer workers. The UK is not alone here; even Germany has seen manufacturing’s share of total employment halve in recent decades in response to global competition.
Second, cities need to continue adapting to changes in the national economy. Many cities have grappled with the impact of structural change in the second half of the 20th century and some of this industrial legacy continues to manifest itself to this day.
The answer is not to attempt to turn back the clock. The assets that helped cities thrive in the 1900s are no longer the economic strengths they were. Instead cities need to focus on the distinctive assets that will help them thrive in a 21st-century economy, and to invest more generally in skills and transport, which our work shows to be important for growth and prosperity in the 21st century.
Looking back at the last 110 years of urban development shows that history matters for a city’s economic performance. The challenge for current and future policy makers is to ensure that cities are not beholden to their past, but instead make the most of their assets as they look to the future.
Paul Swinney is an economist who leads on data analysis for Centre for Cities
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The local government finance bill returns to the Lords, but we must stimulate links between councils and small businesses
Today sees the local government finance bill receive its second reading in the House of Lords. It is fair to say that this will not seem of huge significance to most businesses, many of whom will understandably see more pressing concerns during these tough economic times.
However, the bill is important as it seeks to introduce a completely new system of business rates retention, whereby local authorities will be able to keep a proportion of business rates growth in their area.
The coalition government argues that this reform will provide councils with a “strong financial incentive to promote local economic growth”. Implicit in that statement is that councils could be doing more.
Although there are many excellent examples of councils and businesses working together to stimulate growth, London Chamber of Commerce and Industry (LCCI) believes that an even better and more productive relationship could be achieved if the right conditions are put in place.
The key question is whether the bill will create these conditions. In our report released today, Driving local growth: the business case (pdf), we conclude that the bill does not go far enough to create the right financial incentives for councils to fully engage with their local business base.
The government’s decision to exclude rateable value increases from the business rates retention scheme means that councils only stand to benefit under the new system if they permit new forms of physical growth in their area.
This is a missed opportunity, because it means that the majority of businesses, who do not have the ability to grow physically, will not see a change in relationship with their local council.
In order to incentivise councils to engage with, and deliver for their entire business base, the government should reconsider its decision to exclude all rateable value increases from the business rates retention scheme.
We surveyed firms on what they would like to see their council prioritise and the top three answers were investing in local infrastructure, improving community safety and maintaining the built environment. All three of these have the potential to raise rateable values in an area.
Where councils can prove that such investment has led to an increase in rateable values, they should be allowed to keep a proportion of the resulting increase in business rates.
We know that businesses support the principle of business rates retention and are willing to pay more in rates in return for investment in their local area, as the success of business improvement districts show.
What the business community is looking for is a financial link between local councils and firms that is so strong, it will force a relentless focus from the former on local economic development. As things currently stand, that financial link does not exist, a point we will be making as the local government finance bill completes its passage through the House of Lords.
Colin Stanbridge who is chief executive of the London Chamber of Commerce and Industry
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The Youth Contract is a good start on tackling worklessness, but local authorities need to be at the heart of policy
The government’s £1bn flagship Youth Contract, which has promised to create at least 410,000 jobs for young people, was launched last week.
Set amid a backdrop of rising unemployment figures, it makes sense for central government to tackle youth unemployment as a top priority. Young people aged 18 to 24 are now part of the fastest growing age group without work and the country is at serious risk of creating a lost generation. Figures released last month by the Office for National Statistics revealed that up to 1 million young people across the UK are now jobless.
However, plugging large quantities of cash into high profile schemes is not necessarily the answer to unlocking growth and creating jobs – this comes from confident and creative engagement with employers, and it is at a local level where this can happen.
The Youth Contract marks an important start for raising awareness of the seriousness of the problem, but fails to factor in how local government can help to deliver results.
Councils sit at the very heart of their local community and as a result they have an unparalleled overview of local business and the needs of their area. This enables them to play a central role in helping to foster local growth by targeting resources to meet local needs.
The recent investment into local high streets pledged by the government in response to the Mary Portas review is an excellent example of local and central government working in partnership to stimulate growth and regeneration. A similar approach should be applied to tackling youth unemployment if things are to change.
The onus must be on local authorities to become more creative about how they engage with local employers to foster opportunities for work. Councils need to play a bigger part in both supporting and galvanising local employers to create more jobs.
Westminster currently generates 2% of countrywide GDP, so our businesses are well placed to help stimulate job growth, particularly for young people looking for work.
Last month, Westminster council launched a programme to create 2,012 apprenticeship and employment opportunities for local young people before the end of the year. It brought together 170 employers from different sectors, including catering, performing arts, technology and the charity sector. We have also committed £1m to a work and skills board to train young people for work.
Councils must seek to create an environment in which young people can thrive, and we are constantly looking for new ways to achieve this; for example, we are currently looking at bringing in travel concessions for 18- to 24-year-olds to improve transport access to job interviews across London.
Getting councils to engage with local employers is the key to making the Youth Contract and other similar schemes work – it is our collective responsibility to prevent a lost generation of young people spending a life on benefits.
Councillor Daniel Astaire, Westminster council’s cabinet member for business
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