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North-south divide widens as job creation in London and south outstrips rest of the UK

North-south divide widens as job creation in London and south outstrips rest of the UK

🕔19.Jan 2015

The dangerously unbalanced nature of the UK economy is reinforced today by research showing that the gap between Britain’s best and worst performing cities has widened dramatically since 2004 with job creation overwhelmingly based in London and the south.

Centre for Cities’ 2015 Cities Outlook report highlights a two-tier economy of “dynamism and decline” and finds that for every net 12 new jobs between 2004 and 2013 in cities in the south of England, only one was created in cities throughout the rest of the UK.

The report states: “Despite a consistent political commitment from all parties to improve the relative economic performance of places outside of the south, the gap between cities in the south and cities in the rest of the UK has increased, not diminished.

“Looking over a ten-year period from 2004 to 2014 – which allows an analysis of longer term trends rather than year-to year fluctuations – shows that the differences in population growth, the number of businesses, the number of jobs and house price affordability have continued to widen between cities in the south and cities elsewhere in the UK.”

With the General Election around the corner, the report calls on all parties to ensure their visions for growing cities are based on significant devolution of both fiscal and structural power, providing incentives to support economic growth, and giving greater flexibility to ensure money can be spent where it is most needed.

Cities Outlook is the annual health-check of the economic performance of the UK’s 64 largest cities. This year’s report maps the fortunes of cities over a decade of economic boom and bust, during which three major parties have held power.

National growth between 2004 and 2013 was largely driven by a handful of cities – mainly located in the south – which have seen a population boom, rapid growth in new businesses and thousands of jobs created.

At the same time in other cities, migration of young and skilled workers, a lack of business growth, and falling employment opportunities have led their economies to contract.

  • London’s number of jobs increased by 17.1 per cent, while falls of over 10 per cent were seen in Blackpool, Rochdale and Gloucester
  • Milton Keynes’ population grew by 16.5 per cent, while Sunderland’s population contracted by 1.4 per cent.
  • Swindon’s number of net additional businesses climbed 29 per cent, while Grimsby lost 5.5 per cent of its business base.

And while Birmingham has been the recipient of good economic news lately, leading the way outside of London as the UK’s most entrepreneurial city last year, Centre for Cities’ ten-year study paints a different picture.

Birmingham fails to make it into the top ten performing UK cities for any economic indicator.

Coventry is the West Midlands’ sole representative in the top ten with a 22 per cent jump in business growth and an 11 per cent increase in private sector jobs.

Birmingham has the 63rd worst levels of inequality out of the 64 cities, is 59th out of 64 for Jobseeker Allowance claimants and 58th out of 64 for the lowest employment rate. Birmingham sits at the bottom of the table for population with the highest percentage of no formal qualifications, in 64th place.

The report suggests that even the best-performing cities in the south are now facing threats to their further progress from the unprecedented growth in housing prices.

Despite being the most centralised nation in the advanced world, Cities Outlook 2015 shows how successive Governments’ have failed to rebalance the national economy, with policy interventions and funding consistently too small, ad hoc, complicated and costly for cities to implement.

The global financial crisis, the move to knowledge-intensive businesses, and the increasing integration of technologies in workplaces, have left some cities with a weaker business base from which to create jobs and drive growth, and have seen others – such as London, Brighton and Cambridge – reach new heights of prosperity.

Andrew Carter, Acting Chief Executive, Centre for Cities, said: “Five months out from the election, this report makes the strongest economic case yet for the next government to step up to the challenge of investing in the long-term success of our cities, and build a brighter future in which more people and places can contribute to, and share in, prosperity and growth.

“The stark picture the report paints of the enormous gap in the fortunes of UK cities over 10 years and underlines why a ‘steady as she goes’ approach must be scrapped. We must move from thinking that bundling up new funding streams with bureaucratic delays, or simply tinkering around the edges with well-intentioned announcements, will be enough to reverse trends that are becoming increasingly entrenched.”

“Cities need long-term funding and strategic planning, and policies that go to the heart of addressing the key drivers of economic growth – including transport, planning, skills and housing. This report throws down the gauntlet for all parties to turn their recent interest and pledges around cities and devolution into a clear plan to grow jobs and businesses, and improve quality of life throughout the United Kingdom.”

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