Centre for Cities

To own or to rent: housing is a spatial issue

Another data nugget from the Census which was released last week reveals patterns of residence by tenure. With much talk on needing to boost the construction sector and a renewed focus on housing, our analysis clearly shows that tenure patterns have a spatial element to them.

Oxford and Cambridge have the lowest rates of home ownership (47 per cent of households) and high rates of private rental (28 and 27 per cent, respectively). Hull, London and Liverpool make up the next lowest rates of home ownership (50, 51 and 54 per cent, respectively) with Hull showing the highest rate of social tenancy (28 per cent). Hastings has the highest proportion of people privately renting (29 per cent), while Warrington, Wakefield and Wigan have the lowest (11, 11 and 12 per cent, respectively).

Contains Ordnance Survey data © Crown copyright and database right 2012

Clearly, the factors influencing the housing tenure patterns in different cities are varied. For example, cities with high levels of deprivation where individuals and households have limited access to decent jobs and income are likely to have higher shares of social housing. 

In other cities high house prices mean people can’t afford to buy and have to rent. Whilst in other cities with high levels of renting this will be down the size of the student population.

Regardless, one thing is for sure – different cities need to identify and respond to their different issues.

Follow Joe on Twitter: @joesarling

Cities and youth unemployment

The continued fall in youth unemployment is good news, as is the extension of the Youth Contract. Yet the picture across the UK shows that the youth claimant rate remains high in many cities and young people continue to be stuck on benefits.

Top 5 cities with highest youth claimant rate: Hull (10.4%), Middlesbrough (10.1%), Barnsley (9.5%), Doncaster (9.4%), Birmingham (9.1%)

Top 5 cities with highest % of 16-24 year old claimants on JSA for 1 year or more: Hull (29.4%), Ipswich (27.8%), Dundee (25.8%), Middlesbrough (25.2%), Sunderland (24.2%)

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

Part-time nation

This morning’s headline labour market statistics will be welcome news for the Government:

• Employment now stands at 71.%; an increase of 0.1 on the last quarter and 0.9 on last year;
• Unemployment has fallen to 2.51 million or 7.8%; a decrease of 0.2 on the last quarter and 0.5 on last year;
• The claimant count is also down 3,000 from last quarter and 20,900 on last year to 1.58 million;
• And while public sector employment is contracting (- 24,000 over last quarter), private sector employment is rising (+ 65,000 over last quarter).

The quarterly figures are being heralded as the best in a decade. For many this is an overstatement though; the employment rate is still well below the 2008 peak. Figures on underemployment don’t look so impressive either. The latest statistics tell us:

• Part-time work has risen by 3.7% over the last year (and was static over the last quarter);
• Full-time work has risen by just 1% the last year (and by 0.2% over the last quarter).
• Real wages are 6.2% lower than they were in 2009;
• The number of people in employment wanting to work more hours has risen by 1 million since the start of the economic downturn in 2008 to 3.05 million.

The Census provides us with a longer term view of what’s been happening with full-time and part-time work. It allows us to look at change in hours worked at a relatively detailed geographic level over the last decade.

At national level there has been a 4.4% point rise in people working part-time (less than 31 hours) between 2001 and 2011. Part-time work increased in all cities by at least 2.3% points. In Leicester 6.9% more people were working part-time hours in 2011 than in 2001.

What’s behind this increase? Is it simply that more women (who have a much higher propensity to work part-time) have entered the labour market?

The figures suggest otherwise. The proportion of males working part-time has risen by 6% points, while the proportion of females working part-time has risen by less than 2% points (and a small minority of cities have seen a fall).

As the map shows, part-time working amongst the male workforce has increased substantially in some cities: the proportion of men working part-time has risen by more than 10% points in Bradford and Luton.

In the absence of more detailed time-series data, it is difficult to assess the extent to which these changes are driven by the recession. It does serve as an important reminder though that unemployment is only part of the story.   

Change in part-time working amongst the male workforce by city, 2001 to 2011

Follow Naomi on Twitter: @Naomi_Cities

Which of the UK’s cities are most devout?

Data from the Census released today reveals England and Wales’ most devout cities. 

Blackburn was the most religious city (see Figure 1). 86 per cent of people stated that they were religious according to the Census; 53 per cent were Christian while an additional 27 per cent were Muslim.

Northern cities on the whole tend to be more devout than those in the South. In Wigan, Liverpool Bolton Preston and Rochdale at least four out of five people were religious.

Cities in the south tend to be less devout. In Brighton, the least devout city in England and Wales, two out of five people held no religious beliefs. Similarly, in Cambridge, Hastings and Norwich relatively few people were religious. Exceptions to this include London and Luton. 

Figure 1: Proportion of residents that are not religious, 2011

Source: Contains Ordnance Survey data © Crown copyright and database right 2012, Census 2011 

Leicester was England and Wales’ most religiously diverse city. As Figure 2 below shows, although 39 per cent of people were Christian, 14 per cent were Muslim, 12 per cent Hindu and four per cent Sikh. 

Figure 2: Religious beliefs in Leicester, 2011

 

Source: Census 2011

Note: Centre for Cities defines cities according to their Primary Urban Areas, a definition of which can be found here.

Autumn Statement: what's in it for cities?

As the economy continues to falter, the Autumn Statement – or mini-Budget – was an opportunity to set out a clear strategy for economic growth. Overall, despite various positive individual announcements, the Government did not present a clear route out of our economic woes. The speech was strong on a range of supply-side measures, but weaker on how to kick-start the economic demand we need to get the economy moving. More support is likely to be required, from national Government and from cities, if we are to see a step change in private sector growth over the years ahead.

So what are the most significant measures for cities in the Autumn Statement? Three measures stand out as particularly significant for cities.

First, infrastructure investment, which featured strongly in the speech – but more still needs to be done. The announcement of a £5bn investment in infrastructure over the next two years, funded by cuts in Whitehall department budgets, will be a boost for various local economies. £1bn investment in roads, the extension of the Northern Line in London, improvements to flood defences and rolling out ultra-fast broadband in 12 smaller cities* are all measures that will deliver jobs and training in the short term and help to boost growth in the longer term.

Announcements designed to encourage investment in infrastructure over the longer term were also welcome. These included: funding and reforms to assist construction of up to 120,000 new homes; an independent infrastructure investment platform for pension funds; increasing the annual investment allowances in plant and machinery to £250k; plans to take High Speed 2 to the North West and West Yorkshire; and offering empty property rates relief to speculative new developments.

But these are small measures in the scheme of things and are unlikely to give the economy the kick-start it needs. More still needs to be done, particularly on: supporting house-building – we need 232,000 homes a year just to keep up with demand according to CLG; developing new investment models for infrastructure that cities around the country can use to share risks and rewards with the private sector and get developments moving (PF2, the updated version of PFI could be significant in this regard); and ensuring that infrastructure delivery is brought forward quickly rather than taking decades to deliver.

Second, spending cuts matter to cities because of the likely impact on economic demand. Alongside various measures designed to help those on low incomes, such as increasing the basic tax threshold and cancelling the 3p rise in fuel duty, were measures designed to reduce public spending, most significantly including below-inflation increases in working-age benefits. All of these measures are likely to affect local economic demand as they affect how much money is in people’s pockets. Cities will be particularly affected by these reforms because they contain the highest concentrations of people on various forms of benefit, and certain cities will be hit harder than others (HM Treasury’s charts show that those on the lowest three income deciles will suffer the biggest proportional impact (although the wealthy will lose the most in cash terms).

Third, reallocation of spending along place-lines is a positive measure – not least the endorsement of Lord Heseltine’s recommendation for a single capital pot.

The Autumn Statement spared neither national nor local government from cuts. Whitehall departments will continue to feel a squeeze and be encouraged to follow the Department for Education model of reducing spending on administration, while local government are being given a reprieve from next year’s 1% cut but expected to deliver a 2% cut in spending the year after.

However, there was more of a place-focus with the announcement that the 2015-2016 Spending Review (due in the first half of next year) will include a single pot pulling together “more of the funding that currently goes to transport, housing, skills and getting people back to work” that Local Enterprise Partnerships can bid for.

Over the next year, the Centre for Cities will be investigating how more funding in areas that affect local economies can be allocated to ‘city regions’, many of which approximate to LEP areas. The devil is bound to be in the detail of this announcement, and it will be particularly important to understand the implications of having a competition between LEPs for the money. But it is good that the Government will be using the one year Spending Review to pilot this kind of place-focused approach, allowing areas to allocate money that supports a better functioning labour market to the priorities of that local area, whether that’s transport, childcare, skills, housing or a mix of all of the above.

This Autumn Statement was never going to be easy in this economy and with the Coalition’s commitment to reduce the deficit and therefore only introduce fiscally neutral policies. But more action is still likely to be needed, from national Government and cities, if the UK and its cities are to realise their economic potential.

* These cities are: Brighton and Hove, Cambridge, Coventry, Derby, Oxford, Portsmouth, Salford, York, Newport, Aberdeen, Perth and Derry-Londonderry



Reaction to the Autumn Statement

Over the next hour or so i'll be sharing some thoughts on what the Statement means for cities.

 

12.43  The first obvious point is that when hear national figures around growth, jobs, exports, and unemployment - there is huge variation between cities up and down the UK.  

The second obvious point is that if 1.2m private sector jobs have been created in the UK then the vast majority (approx. 75%) will have been created in cities. 

12.55 city budgets will not be reduced by a further 1% next year but will be reduced by 2% the following year.  Services and activities focused on supporting the economy and jobs are likely to under further pressure as a result    

 

12.57 Annoucements on rail - extension of HS2 to North West and Yorkshire.  £1bn loans to extend underground to Battersea and Olympic Park in London.  

Broadband investment for 12 cities including Brighton & Aberdeen.  Making sure this is used not only for installing the physical infrastructure but is also used to ensure that entrepreneurs and small firms are able to access the appropriate wrap-around services will be important.  

13.09  Cities Outlook 2011 showed welfare is a significant source of income for many cities - in Glasgow the annual welfare bill was £3.2bn in 2009, in London it was £22bn. 

13.14 RGF is getting more funding - the challenge is to increase the rate at which it is dispersed to businesses and cities.  

Aeropace and Advanced manufacturing signalled out as sectors to get 'more support'.  

UKTI's budget is to be expanded by 25%.  This should make it easier for them to work more closely with cities to ensure that the assets and strengths of different places  are communicated to potential overseas investors and businesses.  

In response to the Hesletine review LEPs will be able to bid into a single capital pot which will combine funding from housing, transport and skills budgets.

 

Introducing Private Finance 2: Son of PFI

As part of his Autumn Statement, Chancellor George Osborne is tomorrow expected to unveil a wave of infrastructure projects including new schools, hospitals and roads, to go forward under a revamped version of the Private Finance Initiative, to be known as Private Finance 2 (PF2).

When in opposition, both Coalition parties were often critical of the last Labour Government’s use of PFI to fund long term infrastructure investment across the country, insisting that the details underpinning PFI contracts left the taxpayer exposed to higher costs over the long-term.

More recently, a 2011 Treasury Select Committee report deemed the benefits of PFI “illusory” and noted that, despite often incurring a higher cost of borrowing than traditional routes, Government departments had become “addicted” to PFI as a means of reducing up-front cost and moving expenditure off the public balance sheet. This prompted the Government to scale back new PFI investments and announce a review of existing PFI contracts in an attempt to renegotiate the terms upon which they were based.

However, since this announcement and against a backdrop of a faltering economy, the Government has been under mounting pressure to set out how it intends to reform PFI to support major public sector building works in the years ahead.

Details emerging today suggest we will soon know the answer. So, what do we expect to be new about PF2?

• Profit sharing – Under the revamped PFI, the Government will become a minority stakeholder in project companies, giving it a seat on the board and a share of profits. Reports suggest that this will typically equate to a stake of around 20%, but it could be as high as 49%.
• Transparency – It is thought that project companies will be made to publish details of profits and also make future taxpayer liabilities transparent.
• Tighter timelines – In order to speed up the assembly of a project pipeline and avoid a re-run of the PFI process where projects could take up to five years to reach financial close, it appears there will now be an 18-month limit on project negotiations.
• Room to re-negotiate – The Government is also expected to introduce new contract clauses to allow hospitals and local authorities room to renegotiate service agreements with other providers, if they are more cost effective.

The Government will hope that PF2 is capable of kick-starting major investment programmes across the country, but that reforms ensure the taxpayer is able to share in any returns made on projects, as well as underpinning delivery risk. However, until we know more about how these measures will work in practice as part of a broad programme of investment, it is impossible to know whether the flaws of the previous regime will re-surface.

As always, the devil remains in the detail.

Follow Ben on twitter: @BenCities

The return of city centre living?

ONS has released today Census population data at geographies below a local authority level. And as it is increasingly doing, it has provided the data in a very user friendly way to compare it to 2001. I strongly suggest you use a couple of minutes of your Friday afternoon to look at it.

A very quick play with it shows how city centres have become increasingly attractive as residential areas in some cities in recent years. As the screenshot below shows, this is very clear in Manchester – its city centre has transformed from a place to leave to a place to live.

A similar trend is seen in other cities too, such as Leeds and Sheffield. We’ll look to do a more detailed analysis on these figures soon.

The new Mayor of Bristol - top economic priorities

While voting for Police and Crime Commissioners has taken most of the attention today, the people of Bristol are also currently taking to the polls to vote for their new mayor.

The referenda on mayors held back in May were a bit of a damp squib – Bristol was the only city of those polled on the issue of introducing a mayor to vote yes. But despite going against the crowd, the significant improvement in strategic leadership that the mayoralty is likely to provide will be a very good thing.

So how should the winner of today’s vote put these freedoms to good use? Here are three suggestions:

1. Make sure Bristol’s City Deal is a success. The recent negotiation that the city entered into with Whitehall has given it an excellent opportunity to tailor economic policy for its area. In the short term delivering on this Deal should be the number one economic priority for the new mayor.
2. Play a co-ordinating role between policy areas and act as a figurehead. The Mayor of London is a good example of what can be achieved here.  He chairs multiple London-wide boards that are responsible for economic development, such as Transport for London and the Local Enterprise Partnership. He sets the London Plan, which sets out a city wide strategy to support economic growth. And most clearly of all, he acts as a figurehead for the capital, not just for the rest of the UK but around the world. Investors know who to speak to; citizens know who to hold accountable. When asked to name the leader of London, surely few would struggle to answer.
3. Self-define the role. Lack of clarity around what extra a mayoralty would do is likely to have been one of the main reasons for the resounding 'no to mayors' vote in most cities back in May. But this presents a real opportunity for the Bristol mayor. The appetite shown by Government to devolve power through City Deals gives scope for further requests from the mayor’s office. Again, London acts as the case in point – the remit of the Mayor of London is much wider now than when the position was created in 2000, a remit that has been expanded incrementally over the last 12 years.

Of course, the Mayor of London covers 33 local authorities, rather than the one that the Mayor of Bristol will represent. This is a key problem of the type of mayoralty that was offered to our cities outside of London.

So over the longer term, as the mayor demonstrates the impact that they can have on the city economy, he or she should also seek to work with neighbours to augment the mayor's political coverage to one that matches the economy of the city, not an artificial boundary on a map. For those outer areas worried that this will mean too much focus on the city at the expense of more rural areas, it may be worth remembering that the first time Boris Johnson was elected mayor of London, it was on the basis of votes in the suburbs rather than the city centre.

Bristol is a vital cog in UK plc. With the strong stewardship of its new mayor it could cement its position as England's strongest performing big city outside of London. Today marks an important juncture in the city's history. Whoever is elected, the mayoralty is likely to provide significant scope to support the city and its residents to prosper in the future.

Follow Paul on twitter @Paul_Swinney

No stone unturned – Heseltine’s economic plan for the UK

With 89 recommendations, comprehensive is certainly one word you might use to describe Lord Heseltine’s Review launched today in Birmingham. Others may view it as an attack on Government. But Heseltine claims to be a “glass half full” man who sees his Review as an opportunity to rise to the challenge.

Heseltine points to the UK’s world class businesses and internationally renowned universities but urges “these are standards to achieve not grounds for complacency”. Jerry Blackett from the Birmingham Chamber of Commerce was clear in his introduction that “no one thinks the status quo is an option for the UK economy”.

Heseltine’s view is there is a better way. That way centres on reinvigorating local leadership across England – something Centre for Cities has long been calling for.

What’s included in the Review?

It’s difficult to summarise all of the Review’s recommendations in a short blog. Heseltine himself is reluctant to prioritise out of the 89 recommendations for fear of people losing sight of the others. His view is that every single one is a “contributor to growth”. If he did have one priority though, it would be to build a “universal understanding that the responsibility for growth lies with every individual”.

There are several key themes running through the report, along with some stand out recommendations:

• PM-led National Growth Council – An overarching long term strategy should be underpinned by a strong governance structure. The Growth Council should drive the implementation of the Growth Strategy across all departments.

• A Single Funding Pot – A single funding pot for local areas to include significant parts of budgets held by central government that would be ‘more effectively managed by local leaders’ (including skills, housing, infrastructure and employment support). This goes with the grain of developments around City Deals and Community Budgets but would give city leaders much more discretion over how funds are spent locally.

• Putting local partners at the heart of economic policy – Local Enterprise Partnerships should be given resources (with the allocation of £250,000 new public funding) to develop local economic plans. LEPs should then bid for funding from the single pot. Where LEPs lack capacity they should be given support.

• Functional economic areas – Emphasis is also placed on LEPs ensuring their boundaries match functional economic areas – the most effective level for urban economic decision making and implementation. Heseltine also believes a more simple structure for local government should be created: all two-tier authorities outside London are encouraged to move towards unitary status.

• Public-private partnerships – Central to the Review is partnership between the public and private sectors. Recommendations around broadening the role of the private sector include the Chambers of Commerce receiving enhanced legal status to provide access to business support and local authorities building stronger relationships with private sector partners.

So where next?

There is a lot of support for Heseltine’s recommendations. As always there is also some scepticism, some surrounding the ability of Chambers of Commerce to provide effective business support and mechanisms for fair allocation from a single funding pot. A real shift of power to LEPs will bring with it more experimentation too. With experimentation comes the need for proper evaluation of what works.

What really matters now is the reaction from Government, and what we see in terms of action and implementation.

Heseltine acknowledges that many of his recommendations are not new. There are lots of references back to past initiatives and reviews. In some ways this is reflective of the lack of implementation and consistency. For Heseltine “inertia forms a substantial part of the blockage” when it comes to policy implementation. For those who think there’s merit in his plans, Heseltine urges people to “stand up and be counted” in order to drive change.

Follow Naomi on Twitter @Naomi_Cities