Centre for Cities

Young Jobseekers

Here's one of the odd things about this recession - unemployment is high, but not as high as we all expected.

So far, output levels have fallen by a massive 6% - but the recent rise in unemployment has been less steep than many feared. Everyone thought unemployment would have reached 3 million by now - but the official ILO measure is showing 2.46 million right now. That's 7.8% of the adult workforce - still high, but lower than the 13% in Ireland and 10% in the US.

Another puzzle is the big difference between the wider ILO measure of unemployment, and the claimant count. Roughly 1.6 million are now claiming Jobseeker's Allowance - almost 1m fewer than the total unemployed number.

Here's another. A few months ago, everyone was predicting 1m unemployed young people. So far, the official number is still some way below that (943k).

How come we're managing to keep a lid on unemployment rising? And why aren't more people signing on for JSA?

Official explanations include the big increase in part-time work. Employers are shifting more workers than ever before, from full-time to part-time. This is helping to limit the number of job losses, and keeping total unemployment below the 3 million mark.

The Government is taking some of the credit, pointing to the Future Jobs Fund - set up earlier this year, to combat youth unemployment. I got an update on how the Fund is performing, when I chaired a conference in Birmingham yesterday on youth unemployment.

The Fund aims to create 150k temporary jobs over the next year or two. It's part of the wider Young Person's Guarantee, which will be fully up and running from Jan 2010. The Fund has now provided enough money to create 95k jobs for young people and those in unemployment hotspots.

But the Fund has only just started. Only a few hundred real people have been placed in real jobs so far. Swindon - where youth unemployment has risen very sharply - has successfully bid for over 200 jobs through the Fund, but now has to match those jobs to its young unemployed. DWP is aiming to fill 30k of those 95k jobs up to March 2010.

So if the Future Jobs Fund has only just started to kick in, why is the claimant count so much lower than expected?

Here's one answer - lots of young unemployed people simply aren't signing on.

I chaired a panel of six young men at yesterday's conference - and only one of them was claiming Jobseeker's Allowance. The rest of them had decided not to sign on - either because they didn't want to get into the JSA habit, or because they wanted to do more than 16 hours of training a week, or they were picking up casual labour. Most of them had GCSEs, and wanted to work in construction - but Birmingham has been hit worst than most other cities, and there aren't many construction jobs around. Shockingly, none of them had a good word to say about JobCentre Plus or Connexions. And because they weren't signing on, they weren't eligible for the advice and support that JCP offers - and hadn't heard of the Future Jobs Fund.

This got me thinking - there are probably loads of other young people that are unemployed, but not claiming JSA. And youth unemployment could already be above 1 million.

Lots of the conference delegates - all dedicated and committed to helping young people - kept referring to JobCentre Plus programmes as a "customer journey" for young unemployed people. The problem is that too many young people aren't even on the journey.

Business support for RDAs

Business leaders today had a bash at local councils, and appeared to endorse the continuation of Regional Development Agencies.

The Confederation of British Industry, British Chambers of Commerce and Engineering Employers Federation all lined up to warn about the risks of excessive localism. The EEF say they are "scared witless" of local authorities: "They lack the critical mass, the funds and the ability to step outside local politics to identify the priorities for their region, to set out how best to meet them and to make it happen." Ouch.

Here's Adam Marshall (our former colleague, now director of policy at the BCC): "There's a need for something to exist between Whitehall and the level of the local authority. Localism is something many people believe in but there's a danger in going so local that you can't take care of the strategic infrastructure which business thinks is so important."

John Cridland, the CBI deputy, is also worried: "There's a danger the Conservatives' policies don't give business sufficient involvement in key regional decisions which affect them (like transport and planning)."

The Financial Times is calling this a "business backlash" against Tory plans to dismantle "the entire regional tier of government". Sounds to me more like a backlash against excessive localism.

My latest soundings suggest the Tories' plans are rather less seismic, and our business leaders may be worrying unduly. Here's why...

First, the Conservatives have been sending out mixed messages on RDAs. Yes, they have definitely said they would scrap RDAs and devolve everything to councils: Caroline Spelman told the Tory conference in October she would get rid of regionalism "lock, stock and barrel". But other Tory shadows like Stewart Jackson and Justine Greening have also said there may be a role for individual RDAs, and each would be judged on a case-by-case basis.That's quite a different message.

It's clear that the Tories will strip RDAs of their housing and planning powers. But that doesn't mean all RDAs disappear overnight. The Tories need to clarify the rest of their position on RDAs, and soon.  My guess is that the they will want to "refocus" RDAs, take them back to their original remit around business and enterprise. They might get rid of a few, but not all. So, contrary to business concerns, there may still be a role for RDAs under a Tory government.

Second, while the Tories are definitely big fans of localism, they do acknowledge there should be a growing role for clusters of councils at the sub-regional level, like Greater Manchester. It won't just be every local authority for itself. If elected, the Tories will probably convert the current basket of Multi Area Agreements etc into Local Enterprise Partnerships, and give them control over things like regeneration spending.

Business leaders' concerns are understandable - individual local councils can't do everything. We're worried about excessive localism, too. We don't want all economic development decisions taken by individual local authorities. That would be bonkers.

But the choice isn't a black and white one, between RDAs and local authorities. RDAs might survive in some form, under the Tories. And business shouldn't forget about the city-region level for things like housing, transport and skills. We want more decisions to be taken by groups of local authorities that share the same economic area, i.e. Greater Manchester and Greater Birmingham.

My message to business is "don't panic, wait for the detail" - the Tory plans may not be as scary as you think.

PS I understand the Tories are planning to issue a statement some time before the election, clarifying their proposals on RDAs and mayors.

Bremner, Core Cities & Me

Liverpool did a great job staging the Core Cities Summit this week. I've done a lot of conferences, and this was one of the best.

Speakers included the amazing Kjell Nordstrom (+ crazy powerpoint), a turbo-charged Will Hutton (Summit chair Jon Sopel couldn't shut him up), and the multi-faced Rory Bremner (more on him in a minute...).

In my speech at the Summit gala dinner, I said there was a lot of consensus between the Core Cities - but a lot of unanswered questions, too.

We all agree on this:

• Cities are vital to our national economy - together, the 8 Core City regions are 25% of England's economy.
• Our cities need more financial powers, so they can do more to support their different economies.
• Public spending cuts are coming, and cities need to generate more private sector jobs.
• Cities should collaborate more, and city-regions are a good thing.
• A change of government is quite likely next year.

But here are the tricky questions:

• What about under-performing cities, and the places and people in cities that have been left behind?
• What financial powers do cities want? Exactly which tax and spending powers?
• Can devolution deliver real savings, and how can cities grow their private sector?
• Should all city-regions be statutory and binding, or is it OK for some to be voluntary and informal?
• Are cities ready for a Tory Government? Which might mean no RDAs and more elected mayors.

Rory was the star turn, and did his stuff after my speech. But instead of kicking off with Gordon Brown or David Cameron, he did me. V funny.

Adonis wants big city mayors

Here's a surprise. Transport Secretary Andrew Adonis has today called for elected mayors in Britain's major cities. See his interview with Progress Magazine.

His vision for high-speed rail is compelling. Not just a transport policy, but a social and economic policy too:

"I believe passionately that high-speed rail could be one of our principal policies for creating a fairer and more united society. It could do as much as any other policy in bridging the north-south divide, in linking together prosperous and less prosperous regions..."

His support for elected mayors is quite a surprise. Here's the best bit:

"I think we should be looking seriously at introducing elected mayors across Britain...Ken Livingstone did as much as any other figure in the last 10 years to bring about public service reform...We created the mayoralty, gave him the opportunity to mobilise Londoners and the democratic legitimacy necessary to introduce big reforms like the congestion charge. I believe that if we had elected mayors in other major cities of Britain, they could bring about similar change."

If Adonis likes mayors, which other Labour Ministers agree? David Miliband was clearly a fan, when he was a CLG Minister a few years back. But the other vocal supporters - Hazel Blears, James Purnell, etc - are no longer in government. Will be interesting to see if any other Ministers step up and endorse AA...

PS Here's my case to Labour for elected mayors - and to the Tories

Public sector graduates

Over the last decade, the public sector has taken on loads of graduates - and has driven overall jobs growth in UK cities. 69% of the 1.2 million net new jobs added to city economies between 1998/2007 were public sector jobs.

But with spending cuts looming, new graduates will soon find it a lot harder to get a job in e.g. local and central government - according to numbers we published last Friday. See this coverage in the Guardian, Times and FT.

Our highest-skilled young adults are nearly twice as likely to work in the public sector, than the average worker. Six months after completing their studies, just over half (52%) of all 2007 higher education leavers were working in public sector jobs. Nationally, one in four (27%) of the overall workforce is employed in the public sector.

Graduate unemployment is already on the increase. For example, 8% of graduates from Tyne & Wear universities were out of work in 2007/08 - up from 4% a year earlier.

Over the next 5-10 years, the public sector will be less able to absorb new graduates. Applications for public sector jobs have increased sharply in the last year - but many graduates are likely to be disappointed.

• In 2009, over 22k applied for the Civil Service Fast Stream - 6k more than in 2008.
• By Sep this year, 60k had applied for teacher training courses - 10k more than in 2008.

About 250k people graduate from higher education each year. Given that the public sector will be squeezed for the next 5-10 years, cities will need to generate more private sector job opportunities for their graduates.

That was one of the findings of our latest report, for Liverpool. The share of graduates in Liverpool's working-age population increased from 14% in 1995 to 23% in 2008. That's a great result. More than 17k students now graduate from the city's three universities each year. Liverpool now needs to match that by increasing the demand for higher level skills, and generating more private sector graduate jobs.

Economic Prosperity Boards

City-regional and regional government in England are at a crossroads right now. And the traffic lights aren't working. One road is totally congested with too many different regional bodies. Meanwhile, there are some new, emerging city-regional vehicles on the other road - 15 Multi Area Agreements and 2 city-region pilots. But so far, progress has been too slow - mainly because all those regional bodies are clogging things up.

We like city-regions, because they match real economic areas like Greater Manchester. They are the right-sized area for funding transport, skills and housing. Regions are too big for that stuff, and individual local councils too small. We want city-regions to be put on a firmer footing - formal legal bodies, with real powers.

That's why we welcomed the Government's proposals for Economic Prosperity Boards, earlier this year. EPBs are part of the Local Democracy Bill, which is currently going through Parliament - see previous post.

EPBs would be permanent, statutory, binding sub-regional authorities for economic development. Unlike MAAs, which are 3-year voluntary groupings of local councils. EPBs would be much broader than MAAs - they would allow existing councils to pool responsibilities for things like transport, planning, skills and employment. And because they are formal legal bodies, central government could devolve real powers to them.

Greater Manchester and Leeds city-region pilots are the closest thing to EPB status. As I said back in February, city-regions like Greater Manchester will only get hold of big devolved budgets if they go for formal, statutory models like EPBs. Or Metro Mayors.

But EPBs are not definite yet. Government Ministers haven't exactly been pushing them hard. Concerns have been raised in Parliament. And the Tories seem to be against them.

The Business and Enterprise Committee considered the Local Democracy Bill earlier this year. It was "surprised and disappointed" by the lack of detail in the Government's proposals for sub-regional governance. And concluded that EPBs "might be an unnecessary addition to the plethora of organisations and strategies which operate at local, sub-regional and regional level".

Caroline Spelman didn't like EPBs, when she spoke in the Local Democracy Bill debate in June.

I asked a CLG Minister and officials about EPBs a couple of weeks ago. They were "hopeful" that EPBs would get the green light, but weren't entirely clear what they would do - and said it was "up to local councils" to decide.

I hope that Economic Prosperity Boards do end up in the final Local Democracy Act. If they are in there, CLG Ministers will have to sell them - and explain why Greater Manchester etc should become one. Councils that form a statutory sub-regional authority should get more devolved budgets and powers, than those that don't.

But there is a risk that EPBs will never materialise. Either because they get chopped out of the Bill. Or because, post-election, a Tory Govt drops them and introduces Local Enterprise Partnerships instead. Things should become a bit less muddy once the Bill gets Royal Assent next month.

3 Bills

Parliament is near the end of its current 2008-09 session.

Three Bills of crucial importance to cities are still being considered by both Houses. All 3 need to be wrapped up by early Nov - before the Queen's Speech kicks of the final pre-election session on 18 Nov.

• The Apprenticeships, Skills, Children and Learning Bill is massive - it will scrap the Learning & Skills Council, transfer 16-18 education funding to local councils, and create the new Young Person's Learning Agency and Skills Funding Agency. It completed Committee Stage in the House of Lords last week. Report Stage is scheduled for 2 Nov.

• The Welfare Reform Bill will abolish Income Support, and move claimants onto either Jobseeker's Allowance or Employment & Support Allowance. Third Reading in the Lords - their last chance to amend the Bill - takes place on 3 Nov.

• The Local Democracy, Economic Development and Construction Bill will establish the new Local Economic Assessment Duty for local councils (from April 2010) and the Single Regional Strategy for RDAs and councils. It will also give different councils the power to co-operate on economic development, e.g. through Economic Prosperity Boards - more on those in a bit. This Bill completed its Report and Third Reading Stages in the Commons on 13 October. The Lords will consider it on 9 Nov.

Too many regional bodies

Last week, CLG Minister Barbara Follett helpfully clarified the full range of regional bodies that currently preside over the English economy. Speaking at the launch of The Smith Institute's collection of essays on The Future of Regional Policy, Barbara set out the current regional government structure.

It's quite complicated - so here's a slideshow setting it all out.

I'm sure there must be a reason for each of these regional bodies. But taken together, there are just too many of them. Surely some will have to go after the next election, whoever wins.

You've probably heard of Regional Development Agencies, and maybe Government Offices. But I bet you didn't know about all the other stuff.

The new-ish Regional Economic Council (REC) reports to the National Economic Council, which was set up a year ago to co-ordinate economic policies across Government. The REC is co-chaired by Alastair Darling and Peter Mandelson. It meets quarterly - most recently, in Gateshead last Friday. And it includes the 9 Regional Ministers and 9 RDA chairs.

Then there's the Council of Regional Ministers (CRM), which also includes those 9 Regional Ministers. It meets every fortnight, and is co-chaired by Liam Byrne and Tessa Jowell.

Here's how the NEC, REC and CRM work. (This isn't a joke.)

• The NEC will "influence the communications work of the CRM".
• The REC is the "outward facing Council", and a "sounding board" for Government. It "considers actions relating to the economy" discussed at the CRM. It discusses actions from the NEC and CRM, and feeds back its members' views to the NEC.
• The CRM is a forum that "feeds into the NEC and supports the REC". Its focus is to "oversee delivery of national economic priorities in the regions". Its purpose is also to "share best practice between regions" and "disseminate messages from the REC and NEC".

There's more.

Regions like the East of England each have a Regional Economic Forum, to "provide the CRM and REC with a regional perspective". Not to be confused with a Regional Partnership Group - "a forum for key regional and sub-regional bodies to take a collective, strategic perspective on regional issues".

Following the decision in 2007 to scrap Regional Assemblies, regions now have Local Authority Leaders' Boards. LALBs are working with their RDA to produce a new Single Regional Strategy.

We also have 8 Regional Select Committees - each with a built-in Labour majority (for now), to reflect the national political balance of power. The North West Committee has been quite busy. But in the East of England, 39 out of the 55 MPs are Conservative. Given that the Tories don't much like regional government, the East of England Committee hasn't been that active.

Mustn't forget the 8 Regional Grand Committees - they each include all the MPs of any given region. I can't work out what they do, or if they've ever actually met...

...See what I mean about too many regional bodies? I wouldn't mind if they had real devolved powers over real budgets. But most of them sound like talking shops, with no real powers at all. 

PS The South West RDA got a bit of a bashing on 5Live's Donal MacIntyre show last night - I was on, too

Cities still in recession

The recession was meant to be over today. I woke up this morning to forecasts of +0.2% GDP growth for the third quarter (Jul-Sep).

But the ONS put us straight. The recession is in fact still going strong (or weak). Growth contracted for the sixth successive quarter in Jul-Sep, by -0.4%. Since the first quarter of 2008, growth has shrunk by 5.9%. That's a lot.

While the UK is still stuck in recession, our eurozone neighbours seem to have bounced back to recovery already.

Two points on that. First, that's good news for our economy - France, Germany, etc should be able to take more of our exports from now on. Second, we might have started to grow after all - according to Ben Broadbent from Goldman Sachs. See the BBC's Stephanie Flanders to find out why.

Whatever the fine detail, today's numbers present a big problem for both Labour and Tories.

The Government is desperate for the economy to start growing, ahead of the General Election on 6 May. Former Ministers I spoke to in Brighton said that was their only hope. Today's numbers are bad news for their re-election plans. Strong growth is unlikely to return in time for the Election.

The Tories are more keen than Labour to cut spending, and would start as soon as they get into power. That's one of the differences between them and Labour. But the length and depth of the recession makes spending cuts just that bit less palatable today. Talk of another stimulus may start to gather pace. What then?

Next milestone = next month's job numbers (on 11 Nov).

Cities and the spending squeeze

UK cities have been boosted over the last decade by loads of public investment and jobs. In many cases (like Newcastle), they've been a bit too dependent on the public sector. With spending cuts looming, cities won't be able to rely as much on the public sector from now on. 

We had a Question Time debate on this last night - with Charles Clarke, Justine Greening and Jeremy Browne.

The fiscal deficit is now huge - most likely £175 billion in this 09-10 fiscal year. Even adjusting for the recession, the structural deficit currently stands at a whopping £90 billion. Have a look at this presentation by my colleague Chris Webber, for all the gory details.

Here are the facts on capital spending and public sector jobs.

Capital spending saw a real increase of 13% between 97-98 and 07-08. That massive injection of cash paid for new housing, transport, schools, hospitals, etc. But capital spend will be cut dramatically in the next Spending Review period (2011-14). That means less cash for housing, transport and regeneration across all cities.

UK cities added 1.2 million net new jobs between 1998-2007. Over two-thirds of these were public sector jobs. In Birmingham, the number of public sector jobs increased by 80k - but the number of private sector jobs fell by 55k. Cities like Birmingham will need to reverse that trend over the next decade.

The three main parties have started talking about spending cuts - but they all need to set out more detail between now and the General Election.

• Labour says it will halve the deficit by 2013-14, but Gordon Brown set out a lot of new spending commitments in his conference speech in Brighton.
• George Osborne told the Tory conference in Manchester that he will cut spending by £7bn a year, but that's only one-sixth of what's needed to halve the deficit by 2014.
• Vince Cable set out his slightly longer list of cuts in Bournemouth - including a public sector pay freeze, scrapping RDAs, and halving Train to Gain budgets. But that's still not enough.

Once all these cuts start, what will happen to all that talk about financial devolution? Last night, Clarke and Greening agreed that cities should still get more financial powers:

• Clarke said cities need 3-5 year spending settlements from the Treasury, and more income streams - like local authority bonds for new infrastructure. He said Labour has been too timid on financial devolution, over the past 12 years.
• Greening set out the Tories' Control Shift proposals - which would reduce ring-fencing and allow cities to retain some business rate revenue. But she conceded that a George Osborne Treasury would keep a tight grip from the centre.

So, here's the big question. If there's a Tory Govt next year, will "Control Shift" result in "fiscal shift" from central govt to cities? Unlikely, I reckon, in the near term. Small steps will be the approach.

But the case for giving cities more tax and spend powers is still strong. De-layering all those tiers of governance, accelerating Total Place, pooling budgets with city-regions, giving the business rate back to cities. All these things would devolve and deliver smarter spending.