Cities, employment and skills: what works? Max Nathan Senior Researcher, Centre for Cities 31 October 2005

The Centre for Cities What? An independent urban research unit based at ippr. Sponsored by Lord Sainsbury Why? Taking a fresh look at how UK cities function, focusing on economic drivers When? Launched March 2005 Where? We’re working in Liverpool, Manchester, Birmingham, Sunderland, Derby, Barnsley, Doncaster and Dundee

What we’re doing Key projects City People: city centre living (January 2006) City Leadership: financial devolution (February 2006) City Markets: enterprise in deprived areas (April 2006) Discussion Paper series Creative Class model, Lyons Inquiry, city centre housing markets, enterprise in deprived areas Seminars and events Working Cities series, UK – Bilbao, Brookings Institute

About this presentation Cities agenda: cities are important, are doing better Our urban areas are once again the locomotives of economic and social progress in this country. David Miliband, October 2005 Employment and skills agenda: cities are where the problems are The Core Cities and London need almost 500,000 jobs to bring their employment rates up to the national average. DWP / HMT, 2003

Why cities matter Economic activity is concentrated in and around cities. Britain’s 20 biggest cities contain around half the population, half the jobs (Moore & Begg, 2004) Economic, social problems are also concentrated around cities. 40% of concentrated worklessness is in cities and urban areas (SEU, 2004) Better performing cities will help the UK do better. Big cities, city-regions are the hotspots of regional growth (SURF, 2004)

What’s going on? Big cities are in recovery mode. Output, employment growth Some Northern towns are in trouble. Low performance, high deprivation, industrial legacy Cities tend to under-perform on employment, skills, inactivity: -In Core Cities, more people with lo/no skills, shortfall of graduates -Employment rates are lower than UK average, inactivity higher (Westwood, 2004) Jobs required to take employment rate to UK average (LFS, 2003) Inner London207,000 Birmingham61,000 Glasgow56,000 Liverpool42,000 Manchester41,000 Outer London19,000 Nottingham18,000 Newcastle16,000 Sheffield13,000 Cardiff12,000

What explains this? Legacy of long term industrial, occupational changes , Britain’s 20 biggest cities lost 2.8m manufacturing jobs, gained 1.9m business service jobs and 0.8m public sector jobs (Moore & Begg, 2004) Increasing returns to skills, especially for graduates. Future polarisation of city economies (Machin & Vignoles, 2001; IER, 2001) Macro stability and growth. National conditions have helped cities recover

What are the challenges? Jobs are being created that the workless can’t easily fill. Cities face worklessness and overly tight labour markets Drivers of economic growth may change: -Big rise in public sector employment now starting to slow -What if the macro economy starts to turn down? Three big challenges for cities: -Improve low and intermediate skills, attract and retain graduates -Reduce inactivity, connect people to the labour market -Long term, build and diversify cities’ economic base

What works? Strategy: two key points: -Cross-Whitehall consensus on importance of cities, city-regions. -Better understanding of the future sources of growth in cities. Players: simplify overlapping roles, geographies of JobCentre Plus, LSCs, local authorities Scale: less emphasis on the neighbourhood level, more focus on the city-region system Powers: we should aim to move control of budgets, delivery to emergent city-regions

What works? (2) Strategy: better national co-ordination, thro Departmental floor targets Players: Strong case for GLA to get strategic control of employment and skills. Outrunner for other city-regions Scale: need to focus on fiscal incentives to encourage cross- boundary working within city-regions Powers: emerging ideas from City Leadership work: -Metro contracts to align economic development in city-regions -Stronger LAA 4 th block for smaller cities, large towns