Centre for Cities

Social mobility – the city facts

The Deputy Prime Minister launched the Coalition’s annual progress check on social mobility this week.

The document tracks the UK’s progress against a set of indicators mapping social mobility from birth into adulthood. The findings reveal stark gaps at all life stages between the poorest and richest in society.

Centre for Cities research reveals how these inequalities play out across the country:   

Foundation Years  

• 54% of children in Rochdale achieve a ‘good level of development’ in Early Years Foundation Stage compared to 69% in Richmond-upon-Thames in London (Source: Neighbourhood Statistics)

School Years

• 74% of children in Middlesbrough achieve a level 4 in Maths at the end of Key Stage 2 compared to 89% in Trafford in Manchester
• A 7% point gap remains between buoyant and struggling cities in GCSE Maths and English attainment (Source: Learning Curve, Centre for Cities)
• 44% of children in Barnsley achieve five good GCSEs including Maths and English compared to 66% in Gloucester
• Pupils eligible for free school meals are 3 times more likely to get five good GCSEs in Tower Hamlets in London compared to Milton Keynes

 Transition Years

• There is a 16% point gap between buoyant and struggling cities in the number of pupils going on to study A-levels (Source: Learning Curve, Centre for Cities)
• A young person living in Warrington is twice as likely to go to university compared to Grimsby and nearly four times more likely to go to a Russell Group university or Oxbridge (Source: HESA)

Adulthood

• Job-related training improves individuals’ chances of progressing in work. People in Derby are three times more likely to access job-related training than people in Bradford (Source: Learning Curve, Centre for Cities) 

*Unless otherwise stated data is sourced from the Department for Education

The emphasis in the government’s strategy for social mobility is on ‘joined-up’ government with departments working together across policy areas. This makes a lot of sense given that individuals’ social mobility is influenced by multiple factors. Yet departmental silos have historically been difficult to break down. Cities can lead the way here, bringing together partners at the local level to tailor interventions around individuals, to maximise the impact of national initiatives and to minimise duplication.

The Centre for Cities will be exploring some of these issues at a roundtable with key Whitehall officials with leading voices from cities and business next month. If you are interested in attending or want to find out more, please contact Niamh Sands.

Unemployment in UK cities - an international comparison

Unemployment has fallen for the second consecutive month to March. Yet the outlook remains fragile as part-time work and self employment increase in the absence of full-time job creation.

The picture across UK cities continues to look very different. To highlight just how different we’ve compared ILO unemployment rates by city to countries around the world. Unemployment rates in Crawley are comparable to unemployment in Norway; Bristol to Sweden; Stoke to Bulgaria; Hastings to Iceland; Middlesbrough to Portugal. 230 miles from Chatham to Swansea takes you through Cyprus, US, the Netherlands, Czech Republic, Sweden, Turkey and Hungary.

ILO unemployment rates – UK cities and international economies compared (click to view full size version)

Source: LFS, Eurostat and Annual Population Survey, ONS, 2012

In most countries the average unemployment rates do not give a clear picture of how much unemployment varies from city to city. For example, Brookings’ latest Metro Monitor reports that less than 6% are unemployed in Boston and Washington while more than 16% are unemployed in Fresno, California. We’re not trying to suggest that individual cities are comparable to whole countries. But the map does highlight the extent to which the scale of the challenge varies across cities – and the need for policy to respond accordingly. 

Unlike many other countries labour market policy in the UK is highly centralised limiting the ability of cities to respond to their particular circumstances. The Youth Contract and other employment support programmes need to go further in places like Barnsley where unemployment is still high and rising. One of the first City Deals saw the creation of the City Apprenticeship and Skills Hub in Manchester which promises to increase the number of apprenticeships available locally to 6,000 by focusing on SMEs – what might this look like elsewhere? How can cities work with employers to help maximize the impact of national initiatives?  And how can policy be better joined up at city level to support individuals to overcome the multiple barriers they often face?

Cities and long-term youth unemployment

Following on from yesterday's blog highlighting the upward trend in long-term youth unemployment, we've mapped the data across UK cities. 

Top 5 cities with highest youth claimant rate: Hull (10.7%), Doncaster (10.4%), Grimsby (10.4%), Middlesbrough (10.2%), Barnsley (10%)

Top 5 cities with highest % of 16-24 year old claimants on JSA for 1 year or more: Hull (17.8%), Middlesbrough (16.4%), Birmingham (16%), Sunderland (15.7%), Medway (15.2%)

 

Youth claimant rate and % of 16-24 year old claimants on JSA for 1 year or more by city, March 2012

Source: Claimant Count, NOMIS

 

Young people spending longer on the dole queue

This month’s labour market statistics suggest the economy has picked up since the start of the year. But the claimant count data also indicates a sharp rise in long term unemployment over the last year: people are now staying on unemployment benefits for longer.

The increase is particularly striking amongst 16 to 24 year olds. Historically young people have tended to move off benefits more quickly than others and they still do: 11% of 16 to 24 year olds have been on benefit for more than a year compared to 22% across all ages.

Yet over the last year the proportion of claimants unemployed for more than a year has almost doubled and is now four times higher than at the start of the recession. Over 55,000 16 to 24 year olds have now been on JSA for more than a year.

Claimants by duration (all ages and 16-24 year olds) (March 2008=100), March 2008 to March 2012

 

Source: Claimant Count, NOMIS

Claimant counts vary by city. From March 2011 to 2012, Sunderland and Middlesbrough have seen the sharpest rises in unemployed 16-24 year olds claiming benefits for more than a year. A year ago less than 2% of young unemployed people in Sunderland had been on benefits for more than a year; today this figure has risen to nearly 16%.

A small number of cities, such as Worthing, have seen relatively low increases and just over 5% of young claimants have been unemployed for more than a year. Belfast is notable exception having seen no significant shift towards long-term unemployment over the last year, although the city saw shifts towards long-term unemployment earlier in the recession.

Proportion of 16-24 year old claimants on Jobseeker’s Allowance for 1 year or more

Source: Claimant Count, NOMIS

But elsewhere in the UK, figures are now rising even in cities that had low rates at the height of the recession. Prior to 2011 the proportion of young people on benefits in Sunderland at no point exceeded 2%. In Blackburn no more than 1% of young people had been out of work for more than a year.

Broad trends show (as expected) that young people are more likely to get stuck on benefits in cities with the highest youth unemployment rates. In Hull, for example, the youth claimant rate stands at 11%; nearly a fifth of these young people have been unemployed for more than a year (an increase from less than 2% at the start of the recession).

Employment providers may be becoming overwhelmed by the scale of the challenge in these areas. Longer term trends also point to the issue of low labour market demand in some places; a problem current welfare-to-work schemes are unlikely to be able to do much about in isolation.

But the latest figures on the shift towards long-term youth unemployment raises further questions about the impact of recent policy decisions – from the cancellation of the Future Jobs Fund and JobCentre Plus reforms to the new Youth Contract. There is clearly an urgent need to understand why these figures have rocketed over the last year – and why the same is not true in Belfast, a city exempt from many of the recent reforms.

Early analysis published by the DWP shows that young people who have taken part in the government-backed work experience programme are more likely to find work – by around 16%. Clearly more needs to be done.

Individuals often face multiple barriers to work; from lack of skills and work experience to lack of childcare or transport to low demand from employers. As we have highlighted in our past research, tackling any one of these barriers in isolation is likely to be insufficient in reducing unemployment. Further enhancement of the Youth Contract, for example, may increase the likelihood of young people finding sustainable employment.

Learning more about what works – and what works where – is crucial if the UK is to reverse the shift towards the young unemployed staying unemployed for longer.

Cities and the Youth Contract

Nick Clegg launched the Youth Contract today, a £1billon fund to tackle youth unemployment. It offers wage incentives to employers, and money to create work experience places and apprenticeships. I blogged about the Youth Contract when it got its first airing back in November, but it’s worth restating two of the key points again.

Firstly, the Youth Contract should have a much stronger spatial aspect to it if it is to be effective in the places that face the largest youth unemployment problem. Around one in ten young people claim Jobseeker’s Allowance in Grimsby. This compares to less than one in 40 in York. While the impact of unemployment on a young person in York is likely to be no better than it is on a similar person in Grimsby, it is clear that there is a much larger demand problem in the latter than the former. Given that the Youth Contract is trying to tackle a demand problem, it should be focussed where this demand problem is most acute.

Secondly, the causes of youth unemployment may be more fundamental than a short term lack of demand – even if jobs were available, poor skills may be holding young people back. Our report Learning Curve showed a strong negative correlation between GCSE attainment including Maths and English and youth unemployment across England’s cities. This supports previous research that Maths and English attainment are a key factor for future employment prospects. So as a policy response to youth unemployment the Government should also be trying to improve Maths and English skills of young people too.

Correlation between GCSE attainment and youth unemployment in cities, average 2007 to 2010

Source: NOMIS 2011, claimant count 2007 to 2010 data; Neighbourhood Statistics 2011, GCSE and Equivalent Results for Young People by Gender, Referenced by Location of Educational Institution, 2006/07 to 2009/10 data. Cities in England only.

The Youth Contract is short-term in its outlook and appears to be largely spatially blind. So while the sentiment of the policy is to be applauded, it is likely to require greater focus and complimentary action on skills if it is to be successful in cities that have the largest youth unemployment problem.

Four years on and the road to recovery looks set to be a long one for many cities

Unemployment at the national level is showing tentative signs of stabilising; helping to allay fears about a double dip recession. Yet both the wider measure of unemployment (ILO unemployment) and the claimant rate are still up on last year, and there has been a large increase in part-time work.

The pattern of "recovery" contrasts with the recovery from the last recession in the early 1990s. Four years on from the start of the 1990s recession and unemployment had been steadily falling for more than a year. Four years on from the start of the most recent downturn and unemployment has returned to 2009 levels. 

Recession and recovery – changes in unemployment

So what’s different this time around? Unemployment figures have undoubtedly been driven up by the 270,000 jobs lost from the public sector over the last year, but the 1990s recovery also saw large scale public sector redundancies. The main difference between now and then is that the 1990s recovery was accompanied by much stronger economic growth and, as a consequence, private sector job creation. 

Recession and recovery – changes in GDP

No city is close to seeing unemployment return to pre-recession levels; in the majority of cities claimant rates remain twice as high as rates at the start of the recession. But recessions and recoveries are always uneven. For example, some cities are much more vulnerable to public sector job losses because of their greater dependence on public services for employment, and as a result unemployment is likely to remain much higher.

Take Hull and Reading for example, as highlighted in this month’s labour market update. Four years on from the start of the downturn in the 1990s, unemployment had been falling in both cities for over a year and it continued to do so at a steady rate until it fell back to pre-recession levels. Today, neither city has seen a significant fall in unemployment since the start of the downturn four years ago. But while rates have been relatively stable in Reading, unemployment in Hull is back on an upward trend, suggesting it is less resilient in the face of public sector cuts and global economic uncertainty. 

Claimant rates in Hull and Reading, 2008-2012

Next week’s Budget statement is an important opportunity to bolster the UK economy and get it more firmly on the road to recovery. But many national policies continue to be ‘spatially blind’, despite the fact that that cities face some very different challenges. There is a real opportunity for the Chancellor to use next week’s budget to give cities the financial resources and powers they need, not just to stem local unemployment rises but to drive the recovery for the UK as a whole. 

Overcoming the skills divide is key to reducing economic disparities

This morning’s headlines reporting that “Poor numeracy blights the economy" chime closely with recent research we’ve published at the Centre for Cities.  As avid readers of this blog will remember, in November we published a report - Learning Curve - which explored the strong correlation at city level between GCSE attainment in Maths and English and unemployment. Last week we had the opportunity to discuss this further with colleagues from the worlds of business, education and the third sector at a roundtable debate with Gordon Marsden, Shadow Minister for Further Education, Skills and Regional Growth.  

Learning Curve highlighted that there remains substantial difference in levels of educational attainment between cities. For example, in 2009/10 74 percent of pupils in cities with "buoyant" economies received 5 GCSE A*-C grades including English and Maths compared to only 67 percent in cities with "struggling" economies.

The effect is two fold. Firstly, individuals without these qualifications will find it more difficult to find employment in a "struggling" city due to an oversupply of low skilled labour. Secondly, those cities already facing economic difficulties will be restricted in their ability to rebound from the economic downturn because they suffer from a shortage of skilled labour.

With these challenges in mind, discussion at the event moved on to the implications for policy – and how to improve educational attainment and employment outcomes against a backdrop of tight fiscal budgets. I noted three key recommendations:

1. Aligning skills and employment strategies  

   Panelists emphasised the importance of the relationship between the private and public sector in providing career advice, training and employment opportunities. In a post-roundtable interview with Economia Gordon Marsden said that, “to have a highly-skilled workforce, we need government to foster an environment that encourages business growth and the development of people’s skills, which go hand-in-hand”. 

2. Qualifications vs. interpersonal skills 

   While there was agreement that core qualifications remain essential, the issue of interpersonal skills was also a key point of discussion. It was argued that too often young people leave the education system without the required understanding of how to conduct themselves in a professional manner. It was stressed that tacking this is central to improving the employability of school leaves and that it should be a priority in educational policy.

3. Apprenticeships and SMEs 

   There was general agreement about the importance of apprenticeships. To this end, Gordon called for more small and medium sized businesses to increase their intake of apprentices – something cities are seeking to support through the new City Deals. Here the group was reminded that, although important, a focus on apprenticeships should not undermine support for other skills groups such as graduates

With UK unemployment hovering at 2.7 million and economic growth stagnating, there is a need for decisive action. In response, the Centre’s view is that improvements in English and Maths GCSE attainment should be at the core of the Government’s educational strategy, especially for  "struggling" cities. Alongside this, Local Enterprise Partnerships should work with skills providers and employers to provide more effective links between education and employment.

Unless improvements are made, UK cities are likely to see growing skills divides and economic inequalities.  

Austerity and the labour market

Today’s labour market statistics show that the Government’s austerity measures are having two impacts on the labour market beyond the impact on headline unemployment. The first is that public sector pay growth has slowed rapidly in recent months. And the second is that there has been a large fall in number of people not in the labour market due to long term sickness. 

On point one, the growth in public sector pay has declined steadily since 2008, and grew by just 1.1 percent in the year to December 2011. Given the Chancellor’s commitment to cap public sector pay increases to one percent until 2015 pay growth in the public sector is likely to remain sluggish and below the rate of inflation throughout 2012. 

Turning to point two, the Government’s reforms to welfare are feeding through to reductions in labour market inactivity. Overall the number of people classed as ‘inactive’ (either not in employment or searching for a job) fell by 72,000 people in the three months to December. Of this total, 70 percent had been inactive because of long term illness. There are now 2.1 million people out of the labour market due to long term sickness, the lowest number since the three months to May 1995.

The long term nature of the Government’s public sector spending cuts means that these figures are likely to only show the start of longer running trends. For more information, look at Cities Outlook 2011 for our analysis of how the spending cuts are likely to play out across our cities, Cities Outlook 2012 for more detail on unemployment across cities and this month’s Labour Market Update for more analysis on today’s labour market figures.

UCAS applications – a city by city breakdown

Yesterday’s release of the UCAS university applications data showed that there was a 5 percent fall in the number of degree applications for the academic year starting next September.

We’ve broken down the data to look at what this looks like across cities. Here are the headline findings: 

• Of the 41 cities that have higher education institutions, only 12 saw an increase in degree applications
• Reading saw the largest increase – there were 10 percent more applications for the year 2012/13 than 2011/12, amounting to a 1,900 increase
• Derby saw the largest decrease – there were 3,300 degree level applications to the University of Derby, a 19 percent fall on the previous year

The top 10 and bottom 10 cities can be seen in the table below. Source: UCAS, http://www.ucas.com/about_us/media_enquiries/media_releases/2012/20120130appdig 

Note: This data is for degree applications to higher education institutions

Although the variation in these numbers is very interesting, they should be viewed with a little caution. Firstly, the introduction of higher tuition fees is likely to have caused a spike in applications last year as students opted for a cheaper degree over a gap year. This is most striking for Derby – its university had a 23 percent increase in applications last year. And a similar pattern is seen in Sunderland. Secondly, these figures are for those students who applied before the 15 January deadline – more students are likely to apply before the academic year begins. For these reasons it is better to look at several years data before passing judgement on the impact of higher tuition fees. 

There could be significant implications for the business base in cities such as Derby and Hull if the decrease in demand for places at their universities is persistent. Our report Starter for Ten showed that the biggest economic impact that universities have on their local economies is through the staff they employ and the students they attract. Although these numbers reflect applications, rather than entrants, a continuation of these patterns would mean that student spend in these cities would see a large reduction. The Centre will keep a watching brief on these figures and their implications for cities.

 

The Youth Contract – right problem, wrong tool?

The increase of youth unemployment beyond the one million barrier has prompted Nick Clegg to unveil the announcement of the ‘Youth Contract’. The contract is a £1 billion fund that the Government hopes to create 400,000 jobs for young people. But is it tackling the root of the problem? 

Comparisons of this initiative to the Future Jobs Fund have already been drawn. While there are differences between the two – the subsidy paid to employers will be much lower this time round for example – at their most basic the two policies are essentially the same; they both equate to subsidising the employer for employing a young person. 

Setting aside the apparent u-turn by the Government, their intentions are well placed. Academics such as Paul Gregg at Bristol have researched the ‘scarring effects’ of youth unemployment. They find that unemployment at the start of young people’s working lives can have significant impacts on their future job prospects. So an attempt to address this is a good thing. 

The question is whether what has been proposed will make any difference. Firstly, offering a subsidy to employ a young person increases the relative attractiveness of employing that person over an older worker. So if the employer decides to fill a current vacancy with a young worker instead of an older one, as opposed to creating an extra new job specifically for a young worker, then this policy is likely to simply shift the problem rather than addressing it. 

Secondly, the Youth Contract is likely to have an impact on only a small part of the total number of young unemployed people. Previous Centre for Cities' work on the Future Jobs Fund labelled the policy as a ‘sticking plaster’ that needed to be carefully targeted in order to be effective. If youth unemployment is cyclical i.e. is short term, then efforts to boost demand for young people may have an impact. This may be the case in places such as Warrington and Swindon that have seen large increases in youth unemployment from a small base since the beginning of the downturn. It is these places where the Youth Contact is likely to have its largest impact. 

But in many other cities youth unemployment may be more of a structural problem i.e. not a temporary issue caused by the short term reluctance of employers to recruit. This means that places such as Hastings and Birkenhead (see map below), which entered the downturn with large numbers of young unemployed people, are less likely to see the benefit of such an intervention. They will require a longer term solution to deal with fundamental problems in their youth labour markets. 

What are these fundamental problems? Our report Learning Curve, launched yesterday, identifies the lack of Maths and English qualifications as a contributor to the problem of youth unemployment. The report shows that there is a strong negative correlation between GCSE attainment including Maths and English and youth unemployment across England’s cities. This supports previous research that Maths and English attainment are a key factor for future employment prospects. 

So the Youth Contract may well help some young people into jobs that are work-ready. But it is likely to have little impact on the large stock of young people that lack the skills that businesses require. These problems take a much longer time to address. And as such a much longer term policy response is required.