Tyne and Wear City Region
Economic Review
Economic Geography, Linkages and the Low
Carbon Economy
Executive Report
November 2010
ii
Contents
Executive Summary
1
1. Introduction
17
2. Recent Economic Performance
19
3. Benchmarking the Changes
26
4. High Level Changes in Employment and Economic Geography
30
5. Functional Economic Geographies
48
6. Sectors for Future Growth
60
7. Conclusions
75
iii
List of Tables, Charts and Figures
Executive Summary
Table: Key Employment and GVA Sectors
Table: Sub sectors with a net employment increase
Chart: City Region Employment Growth
Chart: City Region Location Quotient
Map: Tyne and Wear City Region Total Employment
Table: Long Term Growth Potential
2. Recent Economic Performance
Chart: Tyne and Wear City Region – Employment Change
Chart: Tyne and Wear City Region Employment
Chart: FTE Employment Growth and Specialisation
Table: Key sub-sectors in the City Region
Chart: Net Increases in GVA – over £1 billion
Chart: Net increases in GVA – over £100m
Chart: Tyne and Wear City Region GVA
Chart: Tyne and Wear City Region GVA per FTE
Table: City Region Strengths
3. Benchmarking the Changes
Table: Employment in City Regions
Chart: City Region Employment Growth
Chart: City Region Location Quotient
Table: Relative Sectoral Performance
Table: The Employment Gap
4. High Level Changes in Employment and Economic Geography
Chart and Table: Public Services Employment Growth and Specialisation
Map: Public Administration Employment
Map: Higher Education Employment
Map: Compulsory Social Security Employment
Chart and Table: FPB Services Employment Growth and Specialisation
Map: FPB Services Employment
Chart and Table: Manufacturing Employment Growth and Specialisation
Table: Advanced Manufacturing Assets and International Centres of Excellence
Map: Manufacturing Employment
Map: Automotive Employment
Map: Total Employment
Map: Total Employment Change
5. Functional Economic Geographies
Map: Functional Labour Market Geographies
Map: Newcastle and the North Commuter Flows
Map: Central Sunderland Commuter Flows
Map: Washington Commuter Flows
Map: Durham City Commuter Flows
Table: Key Employment Locations
Table: Medium/Long Term Growth: Sub Sectors
Chart and Table: Creative and Digital Growth and Specialisation
Map: Creative and Digital Employment
Map: Tourism Employment
Chart and Table: Process Industries Growth and Specialisation
7. Conclusions
Table: Employment Gap with other City Regions
Table: Key Employment and GVA Sectors
Table: Sub sectors with a net employment increase
Table: Key Employment Locations
Table: Long Term Growth Potential
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Executive Summary
Adroit Economics Ltd, in association with ekosgen and St. Chad’s College, University
of Durham, were commissioned to undertake a Tyne and Wear City Region (TWCR)
Economic Geography, Linkages and Low Carbon Study. The Study forms part of an
Economic Review of the Tyne and Wear City Region, which aims to develop a greater
understanding of how the places, communities, businesses and markets of the City
Region operate and interact economically and spatially. The Review comprises a
number of different research elements including: Labour Market, Skills and Talent
project (Regeneris Consulting); a ‘Housing and Economy’ Study (Nevin Leather
Associates); and a final over-arching Review Report that is to be prepared by Professor
Alan Harding, Director of the Institute for Political and Economic Governance (IPEG),
University of Manchester.
This executive report provides a consideration of:
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Tyne and Wear City Region’s economic performance;
Benchmarking the changes;
High level changes in employment and economic geography;
Functional economic and labour market geographies;
Economic and growth opportunities; and the
Low carbon economy.
The economic performance, benchmarking and employment change and location
sections provide an integral part of the over-arching analysis of the different economic
geographies in the City Region. Thereafter, the functional economic geographies
section provides a more detailed consideration of labour market flows and linkages.
Tyne and Wear City Region Economic Performance
The Tyne and Wear City Region has around 706,000 full time equivalent (FTE) jobs,
accounting for two thirds of the total employment in the North East. Official Annual
Business Inquiry statistics (which count full and part time jobs separately) show that the
City Region experienced exceptional growth between 2000 and 2008, with an increase
of some 57,600 jobs (+ 9%), well ahead of the national growth of 6%. The exceptional
growth of the City Region’s economy is all the more remarkable given the scale of the
manufacturing job losses over the same period. Overall growth has been driven by:
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A rapid increase in private sector services, notably Financial, Professional and
Business Services.
Strong employment growth in the Public Sector.
In terms of scale, the greatest contribution to Gross Value Added (GVA) and
employment growth was the Financial, Professional and Business services sector,
where employment increased by some 32,600 FTE jobs and GVA by £3.8 billion. This
sector has a relatively high GVA/FTE, although the City Region lags behind the
national average. Automotive is an important sub sector in the City Region and
employment numbers have held up well in sharp contrast to other manufacturing sub
1
sectors, while in Creative and Digital, a total GVA of £1.7 billion makes this one of the
most important smaller sectors in the City Region.
Key Employment and GVA Sectors
Employment (FTE)
2000
2007
Change
Public Sector
187,101 207,191
20,090
Finance/Prof/ Business
86,197 118,856
32,659
Construction
53,082
60,018
6,936
Tourism
33,233
34,903
1,669
Transport
24,736
32,026
7,290
Automotive
28,197
28,522
325
Creative and Digital
22,537
26,189
3,652
Total
435,083 507,705
72,621
Source: NEEM, 2007
2000
4,246
3,384
980
541
721
958
835
11,665
GVA (£m)
2007
Change
6,612
2,366
7,189
3,805
2,120
1,140
885
344
1,063
342
1,286
328
1,639
804
20,794
9,129
The City Region has benefited from strong employment growth across the sub sectors
of Financial, Professional and Business services (shaded in the table below).
Sub Sectors with a net employment increase of over 2,000 FTEs
Employment (FTE)
2000
2007
Change
Other Business Services
36,978
51,294
14,316
Public Administration & Defence
53,887
65,038
11,151
Construction
53,082
60,018
6,936
Financial Services
14,526
21,227
6,701
Education
52,902
57,638
4,736
Property
7,052
11,387
4,336
Accountancy, Legal & Consultancy
17,532
21,861
4,329
Health
80,311
84,515
4,203
Computer Services
8,821
12,821
4,000
Other Land Transport
15,742
19,565
3,823
Architectural and Technical
10,109
13,087
2,978
Ancillary Transport Services
7,152
9,914
2,762
Total
358,095
428,364
70,269
Source: NEEM, 2007
Benchmarking the Change
Tyne and Wear City Region is a substantial economy, on a par in terms of size and
scale with the Sheffield City Region and significantly larger than Bristol, Nottingham
and Liverpool City Regions. It is, however, much smaller than the Leeds and
Manchester City Regions. Connections to the nearest City Region (Tees Valley) could
be improved, and transport links to the two largest northern conurbations, Leeds and
Manchester are relatively poor.
Tyne and Wear City Region reduced the gap with other City Regions through strong
employment and GVA growth between 2000 and 2008. Overall employment growth
was twice as high as the Leeds and Manchester City Regions, and the City Region
performed well across all of the main and specialist employment sectors.
2
City Region Employment Growth (%) 2000-2008
FPB Services
Pub. Services
Manufacturing
Tourism
Autom otive
CDI
-45
-35
Bristol City Region
-25
-15
-5
5
Glasgow City Region
15
Liverpool City Region
Manchester City Region
Sheffield City Region
Tyne and Wear City Region
25
35
45
Leeds City Region
55
Nottingham City Region
The key features of Tyne and Wear City Region relative to others are:
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A higher than average representation in terms of Public Sector employment
(similar to Liverpool), Manufacturing (similar to Sheffield and Nottingham), and in
specialist sectors including Automotive (similar to Sheffield); and
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Much lower representation, even after recent employment growth, in private
sector services, notably Financial, Professional and Business services (similar to
Sheffield and Liverpool) and Creative and Digital Industries (similar to Liverpool
and Sheffield).
City Region Location Quotient 2008
FPB Services
Pub. Services
Manufacturing
Tourism
Autom otive
CDI
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
Bristol City Region
Glasgow City Region
Leeds City Region
Liverpool City Region
Manchester City Region
Nottingham City Region
Sheffield City Region
Tyne and Wear City Region
1.5
Tyne and Wear City Region has closed the gap with high performing City Regions
through the strong employment growth of a number of sectors between 2000 and 2008.
In the next growth cycle, the City Region needs to make another step forward by:
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Out-performing other City Regions with regard to private sector services; and
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Developing new knowledge intensive, high value added jobs and sectors to
close the productivity gap.
Key High Level Changes in Employment and Economic Geography
Analysis of the distribution of employment highlights clusters of employment across the
City Region with large concentrations of employment in ‘out of town’ business and
industrial parks as well as city / urban centres. The city centres of Newcastle (including
the shared ‘Waterfront’ with Gateshead), Sunderland and Durham, are powerful
locations, albeit it at different scales. Between them they combine higher education,
cultural and tourism assets, retail and an evening economy with significant Public
Administration and Financial, Professional and Business services employment.
Newcastle city centre and northern Gateshead is a major regional as well as City
Region asset, due to the collective scale of all of these activities, coupled with its ability
to draw on a very strong north facing labour market.
The key out of town sites now play an important role as locations for significant
concentrations of sector specific employment. Such locations are spread across the
City Region and include: Cobalt; Team Valley; Washington; Doxford International Park;
Gosforth; Cramlington; Northumberland Business Park; and Riverside locations. In
addition to these key sites, there are a series of locations which play a valuable role,
particularly in their local economy. These include: Morpeth; Blyth; Hexham; Corbridge;
Consett; and Chester-le-Street.
The analysis highlights that key city/urban centres can be grouped with the adjacent
‘out of town’ sites to determine four employment cores across the City Region. These
are:
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Newcastle and the North: comprising key employment locations in Newcastle,
Gateshead and North Tyneside including Newcastle City Centre, Gateshead
Town Centre, Quayside, Regent Centre, Gosforth, Longbenton and Cobalt. This
area shows particularly high employment of financial, business and professional
services.
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Central Sunderland: comprises of Sunderland City Centre and key employment
locations in the eastern area of the Local Authority including Doxford
International Park and the Enterprise Park. This area has seen significant
increases in public sector services and lower-order professional services
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Washington: key employment centres in North West Sunderland Local
Authority including Nissan Motor Manufacturing (UK) Ltd. Washington lies at the
heart of the City Region’s manufacturing base.
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Durham City: comprising Durham City Centre and out of town estates. Durham
City has developed a strong public sector employment base as both an
administrative and educational centre.
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The adaptation of locations in Washington and the Team Valley, alongside the rapid
development of locations such as Cobalt, reflect a number of factors, including the
willingness of some office based businesses (including the public sector) to locate to
out of town centres; the importance of lower costs to some investors; and a preference
for sites with car parking and/or access to the strategic road network. This offer has
been an important factor in driving the remarkable growth in private sector service
employment in the City Region.
Functional Economic Geographies
A number of studies contributed to the analysis of the economic geographies existing
within the City Region. These include: The Economic Geography of the North East, Jon
Carling and Dr John Mooney (North East Regional Information Partnership), Draft –
version May 2010; Access to Tyne and Wear City Region Study: Output 1: Evidence
Review, AECOM, Draft – version June 2010; County Durham Functional Economic
Market Areas Report, GHK Consulting in association with the Centre for Urban and
Regional Development Studies, University of Newcastle, Draft – version 2010; City
Relationships: Economic Linkages in Northern City Regions: Tyne and Wear City
Region, One North East on behalf of Northern Way, Nov 2009.
Building upon the findings of previous studies and the consultations, further analysis
has been carried out to investigate the flows of commuters to key employment
locations across the City Region – Newcastle and the North, Central Sunderland,
Washington and Durham City. This resulted in the identification of four functional labour
market sub-geographies.
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Newcastle and the North: made up of Newcastle, Gateshead and North Tyneside. A
very powerful economic geography with a strong Newcastle/Gateshead urban core in
terms of Universities, Creative and Digital, Tourism and Leisure and the largest
concentration of Financial, Professional and Business Services and Public
Administration employment in the City Region. This is complemented by a number of
strong locations at Cobalt, Morpeth, Killingworth and Blyth (manufacturing), a strong
suburban housing market, and good transport connections to the core, but variable
public transport links between southern Northumberland and those employment
centres found in the Newcastle/Gateshead urban core and North Tyneside. The
geography also includes a number of attractive rural locations.
Of the labour market geographies in the City Region, Newcastle and the North has the
largest catchment area. There are substantial flows from all of the residential wards in
Newcastle, Gateshead and North Tyneside, which in many cases reflect localised
commuter patterns as well as those to key employment locations. There are also
significant flows of commuters to the Newcastle and North area from Blyth, Washington
and Consett. The catchment area is then further expanded with considerable flows of
commuters from Morpeth (to the north), Hexham (to the West), Derwentside, Chesterle-Street and Sunderland, especially Washington (to the south).
Central Sunderland: This geography is based around the Sunderland city centre,
which was highlighted as Tyne and Wear City Region’s second economic centre in the
Northern Way City Relationships study. The geography has a growing service sector
economy based on fast growing business services and public sector employment.
While the area recorded substantial employment growth in the 2000-2008 period,
considerable challenges remain in further developing Sunderland City Centre as a
private sector service location and maintaining employment levels in Manufacturing and
the Public Sector. This geography (and the Southern areas in the City Region more
generally) has a much weaker housing market than the northern part of the City
Region, and it includes areas of housing market failure as well as employability
challenges in a number of the urban areas.
Commuter flows highlight that, to a certain extent, Sunderland City Centre is self
contained with the most significant flows coming from the wards surrounding the
employment sites in the geography. Commuters travel from Boldon, Cleadon and
Whitburn (in South Tyneside), and patterns stretch further south to areas in the former
Easington district, such as Seaham. There is little cross-over between the concentrated
travel patterns of Central Sunderland and Washington, with the only exception being
Shiney Row, which sits between the two geographies and has significant flows of
commuters to each geography.
Washington: This geography is based around Washington, home to Nissan Motor
Manufacturing (UK) Ltd. The geography has a strong manufacturing base and while
Nissan and its nearby supply chain are of vital importance and of national significance,
there is also a strong industrial presence in other manufacturing sub-sectors. However,
the area continues to face considerable challenges in maintaining manufacturing
employment levels whilst further developing Washington as a private sector service
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location. Similar to most places in the southern parts of the City Region, Washington
has areas of housing market failure.
Commuter flows illustrate that the Washington area is relatively self contained and as
expected, due to its smaller scale, has less significant inflows of commuters than
Central Sunderland. The site attract commuters from Boldon, Cleadon and Whitburn (in
South Tyneside), and while the geography does not extend as far south as that for the
Central Sunderland, Washington attracts commuters from slightly further west, in
particular, from outlying parts of the former district of Chester-le-Street.
Durham City: Durham City is a key asset with a renowned visitor attraction in the form
of the Cathedral, a leading University, and a strong administrative base. A growing
Tourism, Culture and Creative sector is transforming the City into a dynamic economic
hub.
Commuter flows to Durham City highlight that the area is relatively self contained, with
the strongest employment flows all within the former Durham City district local authority
boundary. This reinforces findings from the NERIP study on economic geographies in
the North East, which suggested that the City should be seen as a centre in its own
right. There are also flows into the City from wards across Durham County. In the
northern parts of the County (such as Consett, Leadgate, Catchgate, Stanley, Urpeth
and surrounding areas) there are also significant flows into Newcastle and the North.
Beyond the County, Durham City also attracts commuters from Houghton-le-Spring and
the surrounding area in south west Sunderland.
The four substantive labour market sub-geographies in the Tyne and Wear City Region
have each made a contribution to economic growth, although Newcastle and the North
is by far the largest. In terms of similarity, Newcastle and the North and Durham City
face related challenges and opportunities, albeit on different scales, while Central
Sunderland and Washington could be defined as ‘economies in transition’, with a
continuing imperative to generate new employment to off-set the projected continued
employment decline in the industrial base.
The 2000 to 2008 economic performance of Tyne and Wear City Region demonstrates
that it is possible to have strong employment growth across the economic geographies.
While there is likely to be some inevitable competition for new investment/jobs,
employment growth in one area should not have to be at the expense of other
neighbouring places. Given the need to close the gap with other comparable city
regions in the country there is a strong argument to suggest that employment growth
within all of the different economic geographies in the Tyne and Wear City Region will
be required in order to improve performance and enhance competitiveness and
prosperity across the wider inter-connected economic geography of the City Region.
Strengths and Weaknesses of Tyne and Wear City Region as a Business
Location
As part of this study, a detailed survey was conducted with a large number of small and
medium-sized enterprises (SMEs) in order to gain further insight into the reasons why
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businesses were located in the Tyne and Wear City Region. The survey, which elicited
466 responses, adopted a blended approach targeting businesses through telephone
interviews and an online questionnaire.
The importance of businesses being located near to their workforce is reinforced by the
majority of the surveyed business’ workforce travelling less than 10 miles to work. On
average, the majority of employees travel less than five miles (54%) or between 5 and
10 miles (23%) to their place of work. This was particularly evident for micro
businesses, where two thirds of the workforce travelled less than 5 miles.
Evidence gathered through the business survey re-confirms that there are significant
flows of employees across the City Region. More specifically, it suggests that
Newcastle1 and Durham attract employees from the widest geographical area as well
as serving the labour market of their local residents. By contrast, other areas tend to
recruit from a smaller geographical area, e.g. Sunderland, South Shields, Peterlee and
Jarrow.
Connectivity and accessibility is viewed as a key strength of the business locations in
Tyne and Wear City Region. In particular, businesses made reference to their location
being central, easily accessible and supported by good road infrastructure.
The majority of businesses surveyed appear to be well embedded within the North
East. Almost three quarters of respondents reported that if they were not situated at
their current location, they would be at another site in the region. Encouragingly, the
large majority of these businesses stated that their alternative location would be in
Tyne and Wear (51%), County Durham (23%) or Northumberland (4%). While this may
include locations outside the City Region defined economic geography, it nevertheless
suggests a reasonable level of embeddeness in the City Region amongst those small
businesses that were surveyed.
Economic and Growth Opportunities
The economic recession has adversely affected many businesses in Tyne and Wear
City Region, and the housing and commercial development markets have slowed
considerably. This is likely to be compounded by the actions taken in the Coalition
Government’s Emergency Budget, which have seen major reductions made in public
sector expenditure in a number of areas. The further significant reductions in public
spending, which are expected to be announced by the Chancellor of the Exchequer in
the forthcoming Comprehensive Spending Review, are also expected to impact upon
the nature and structure of the City Region’s economy.
Local Authorities, the wider public sector, private sector and other stakeholders face
major challenges over the next few years in dealing with the legacy of the recession
and the consequences of reduced public sector expenditure. As the Labour Markets,
Skills and Talent (Regeneris) and Housing and Economy (Nevin Leather Associates)
Reports make clear these include likely reductions in employment opportunities for
graduates and the need for jobs skills and re-training actions, as well as a number of
fundamental challenges relating to employability, skills, access to employment centres,
1
Of note, the majority of businesses that responded to the survey are located in the Newcastle and the North catchment area.
8
housing in urban areas and new housing development in attractive locations. These
issues will influence the priorities for the leading public sector agencies over the next
five years.
Nevertheless, the economy will (eventually) enter a period of sustained economic
recovery, and it is important that the Tyne and Wear City Region is able to take
advantage of more favourable conditions and accelerate economic growth. In strategic
terms, the City Region should focus its efforts on strengthening its knowledge-based
intensive (KBI) private sector service employment. The important priority will be to
identify and support those key sectors and sub-sectors that possess the means and
ability to earn income from outside of the North East, i.e. that are not dependent upon
local demand.
In identifying the sectors and sub sectors for growth, the key criteria which have
influenced the selection are a combination of:
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Strong presence and/or unrealised potential;
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Strong recent economic performance;
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Recognised assets in terms of skills, leading companies, research capability,
business infrastructure; and
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Medium and long term market opportunities.
The priorities are based around three groups:
1) Private sector services, particularly in higher value added activities and those
where the City Region lags behind or has acknowledged strengths.
In the long term, there is a need to explore the factors, which play a part in attracting
and supporting the expansion of higher value added service employment, including
leisure, culture and heritage, universities and housing. In other City Regions, the
attractiveness of a major centre is an important element in securing new investment.
2) Public sector employment regional/national headquarters/service centres and
Universities.
While public sector employment will fall over the next three years, there are likely to be
opportunities to secure new employment as public sector services re-organise.
Universities are also facing a short term challenge with regard to funding, although in
the medium to long term are likely to grow as overseas students continue to choose the
UK and the North East as a place to study.
3) Industrial employment based on sub sectors where the City Region has
acknowledged strengths and market opportunities (including local carbon
opportunities).
Although the UK’s manufacturing employment has been in decline for many decades,
low carbon offers a new opportunity for investment and employment growth. It offers
the potential for a range of sub sectors and technologies, and the emphasis on new
products and processes plays to the strengths of leading companies and University
expertise in Tyne and Wear City Region.
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Long Term Growth Potential
Long Term Growth Potential
Sub Sector
Other Business Services
Financial services
Creative and Digital
Tourism
Regional/national
headquarters/service centres
Universities
Employment Locational
Base (FTEs) Focus
Private Sector Services
51,294
16 key locations including City Centres and out of town
business parks
21,861
Newcastle City Centre and Waterfront, Sunderland
Enterprise Park, Doxford International Park, Gateshead
Centre, Gateshead Quays and Baltic Business Quarter,
Cobalt, Gosforth, Bracken Hill Business Park (Peterlee)
26,189
Newcastle City Centre and Quayside, Gateshead Quays
and Baltic Business Quarter, Cobalt, Team Valley, Great
North Park, Doxford International Park, Metro Centre
Area, area adjacent to Killingworth, Durham City and
Bracken Hill Business Park (Peterlee)
34,903
Durham City, Newcastle City Centre
Public Sector
10,0001
Newcastle and Gateshead Urban Core, Durham City,
18,5682
Automotive
(manufacture 11,252
only)
Process Industries
11,989
Low Carbon
n/a
Electric Vehicle/Renewable
Energy
1
Estimate
2
No of jobs – based on ABI data
Source: NEEM, 2007 (with above exceptions)
Newcastle City Centre, Durham City, Central Sunderland
Centre
Industrial
Washington supported by 9 other automotive locations
Durham, Gateshead, Northumberland, North Tyneside
North and South Tyneside Waterfront, Blyth,
Washington,
Easington, Team Valley, Port of
Sunderland
The sectors listed above account for circa 20% of the economy and are heavily
weighted towards private sector services. The industrial sectors are important in their
potential to replace lost jobs and effectively help stabilise manufacturing employment.
Significant growth in these sub sectors would close the gap with peers as illustrated in
the ‘City Region average’ comparator analysis undertaken in this study. There are likely
to be new and emerging markets, which present new opportunities for businesses in
the North East. These are likely to be sub sets of existing sectors, and in most cases it
will be the development of new products and markets that will lead to opportunities
opening up to increase the performance and size of the business base.
In the short term, opportunities for employment growth are likely to be limited to private
sector services, including the re-organisation of businesses into fewer, larger centres. It
is crucial that partners in the Tyne and Wear City Region are able to support reinvestment and attract new investment in key sectors, such as Business Services and
Creative and Digital.
Economic Geography Implications
The four economic and labour market geographies identified in the Tyne and Wear City
Region during the course of this research are closely linked, and the 2011 Census is
likely to show increased commuter flows (and over longer distances). Each of the
labour market geographies is distinctive and the scale of opportunity that will be
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presented to each of the geographies by the growth sectors identified in the previous
section will vary considerably:
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Sunderland and Washington (with parts of South Tyneside and County Durham)
will reinforce their roles as the industrial heartland with renewable energy and
low carbon vehicles offering the best opportunities for a manufacturing revival.
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Newcastle and the North will continue to re-position the North East as a high
value, private sector service economy, with the urban core offer
(Newcastle/Gateshead) complemented by the Cobalt and rural town offer. The
Newcastle/Gateshead urban core will be the location, which competes with the
city centre offices in Manchester, Leeds, Sheffield and Liverpool in knowledgebased sectors such as Financial, Professional and Business Services and
Creative and Digital.
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Durham City and wider County Durham will strengthen the economy of the
County through a contribution towards the industrial base and low carbon
opportunities, and, at the same time, develop a unique offer in the City of
Durham that is based on a tourism/university/employment centre. In terms of
comparisons and linkages with the Newcastle/Gateshead urban core, it is
possible to identify potential similarities here to the relationship that exists
between York and Leeds.
These are not prescriptive scenarios and all the labour market geographies within the
City Region will seek to develop some form of service based and low carbon economy
e.g. Sunderland will continue to develop its offer for Financial, Professional and
Business services, and North Tyneside/Newcastle and Blyth, which already have a
number of substantial assets, are providing, and will continue to provide new
opportunities in renewable energy. An analysis of the economic growth period between
2000 and 2008 highlighted that there were a range of locations that investors in the City
Region were attracted, which allowed ‘non-traditional destinations’ to increase their
base in knowledge intensive forms of employment.
Low Carbon Economy
The study was asked to examine the opportunities presented to Tyne and Wear City
Region from the market-led and policy-driven move towards a low carbon economy.
The analysis undertaken in the research suggests that the City Region should be in a
position to benefit from its distinct locational advantages, and by building upon its
strong industrial base, existing engineering skills and the strengths of its key
companies. The City Region’s main opportunities, which are being realised to some
extent, relate to the development of electric vehicles and associated equipment and
infrastructure, and specific opportunities in the offshore wind turbine markets, such as
turbine blades, bearing and maintenance. The main industrial opportunities for electric
vehicles are concentrated in and around the south of the City Region (i.e. South
Tyneside, Sunderland, and the former Easington district), while Blyth, Cramlington and
the North Bank of the River Tyne are generating new potential around offshore wind
turbine blades. There are likely to be low carbon supply chain activities and
infrastructure requirements that will involve other places in the City Region as well.
There are a set of substantive and immediate priorities for the Tyne and Wear City
Region to consider:
11
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Electric vehicles and further development of the battery plant: Initially the
focus of the opportunity is on electric vehicles, including the production of the
Nissan Leaf. This opportunity will expand to other low carbon vehicle
technology, such as hydrogen, and related technology including electrical
networks and informatics.
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Offshore wind turbines: The opportunities for the City Region are multi-faceted
and include the manufacture of components and the assembly and maintenance
of full wind turbines, as well as working as part of the associated supply chain.
Key locations include Blyth, Newcastle/North Tyneside (i.e. North Bank of the
Tyne), South Tyneside and potentially the Port of Sunderland.
ƒ
Micro-generation: This technology is likely to become increasingly viable and
will create local economic opportunities in the City Region – in both
manufacturing and project management. There is a need for a public sector
lead to be taken in removing regulatory barriers, promoting opportunities and in
supporting market creation.
Adapting existing engineering skills: the City Region has a strong
engineering base and these skills could be adapted to act on opportunities
presented by a low carbon economy and to support the development of the two
markets above.
ƒ
While other opportunities will gain momentum as new regulations are agreed, e.g.
biomass and carbon capture and storage, there are two substantive areas where the
City Region can realise its potential in the shorter term. These are the development of
low carbon consultancy skills, building on the City Region’s very strong intellectual
knowledge-base and technical expertise, and the retro fitting of housing, currently being
prioritised by the Government, with significant employment creation potential. The latter
is likely to be carried out over a five to ten year programme.
It is clear that the development of the low carbon economy offers the City Region a
significant opportunity in helping to maintain and diversify its existing industrial base,
and to develop accompanying services, including technical expertise. The low carbon
economy is now a fiercely competitive global phenomenon, and the successful City
Regions will have in place well developed local and sub regional plans to work with the
private sector to capture and realise new opportunities.
Role of the Public Sector
The role of the public sector as an employer and service provider is now being affected
by reduced public sector budgets and the uncertainty over external funding from
regeneration bodies such as the Homes and Communities Agency. It is evident that
Tyne and Wear City Region would not have enjoyed such strong growth in employment
between 2000 and 2008 without public sector interventions, and there is a compelling
rationale for the public sector to continue to address market failures and put in place
the conditions to support further sustainable (and re-balanced) economic growth.
12
There are three new approaches, which will influence how the public sector supports
economic growth and maintains it role in economic development going forward. These
are:
ƒ
ƒ
ƒ
Reducing delivery costs, introducing efficiency gains, merging services and
working cross-boundary and sub regionally.
Using assets, particularly land assets, to realise monies and/or make things
happen (including joint ventures).
Working in partnership with the private sector, with a premium on investor
developer led activity which requires limited public sector financial support.
The reductions in public expenditure will limit the extent to which the ‘state’ can
intervene with financial support and additional initiatives. There is also an inevitable risk
that the public sector’s role as a major recruiter of graduates in the City Region will
reduce, and there are likely to be fewer resources available for supporting higher level
skills and innovation.
There are a number of mechanisms being promoted to provide new ways of financing
local economic development – e.g. Tax Incremental Financing, Accelerated
Development Zones, Local Asset/Incentive Backed Vehicles – although these
mechanisms are somewhat novel in the UK, and there is potentially a higher degree of
risk in operating such models in the North East. It is therefore important that partners
continue with their efforts to explore and develop a range of new initiatives, which could
support investment in infrastructure and provide Tyne and Wear with similar capacity to
other City Regions.
Both the Regeneris Report on Labour Market, Skills and Talent, and the Nevin Leather
Associates Report on City Region Housing and Economy cover the economic inclusion
and housing challenges resulting from the recession and the reduction in public sector
employment (and activities). Many of the challenges require immediate responses to
reduce the impact on individuals and communities, while others require new and
innovative solutions.
The Labour Market, Skill and Talent Report sets out a number of priorities including the
need for work related training for redundant workers from the public sector, the
continued prioritisation of job search support, and support for key labour market
groups, including young people. The Report concludes that “there is a need for Local
Authorities and other partners in the public and private sector to work closely together
at the City Region level to address many of the issues”.
The analysis in this economic geography report suggests that there are two critical
roles for the public sector in terms of supporting economic growth:
ƒ
ƒ
Planning policy, employment land and commercial/industrial property to
ensure the City Region can meet the needs of existing businesses and attract
new investment; and there will be a premium on commercial and housing
development, which does not require public sector support.
Place making and housing, supporting both a growing economy and
addressing housing market failure in a number of urban areas. This will include
13
accelerating new housing development while trying to persuade developers to
invest in disadvantaged neighbourhoods.
Implications and Priorities
Skills: The move to a higher value added, knowledge-led and service based economy
will require a more highly skilled workforce. The Regeneris labour markets study
suggests that there will be a need to create additional higher skilled jobs (reflected in
the priority sectors in this report), and that the City Region appears to have an
adequate supply of skilled labour to meet existing demand. This suggests that the
emphasis in Tyne and Wear City Region will need to be on stimulating greater demand
(from employers and individuals) for higher level skills, particularly through targeting
new investment and sector expansion.
Locations: Employment growth of some 50,000 jobs was absorbed in a number of key
locations, some of which benefited from fiscal incentives. The City Region needs to
build on these assets, and is now well positioned to capture inward investment looking
for both prestigious locations and lower cost business parks. The key locations in terms
of accelerating economic and employment growth have been / are:
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Newcastle City Centre & Waterfront /Gateshead Quays and Baltic Business
Quarter
Durham City
Sunderland City Centre
Cobalt/Doxford Business Park/Gosforth-Newburn – Out of town business
parks
Washington/Team Valley
South Tyneside/North Tyneside/Blyth Waterfronts, Port of Sunderland Low Carbon
Each of these locations is different, either by function, size, scale and/or mix. These
locations include the major centres, which support a wider economic geography across
the City Region. They provide the range of locations which support economic growth
across the City Region, including: a city/urban offer that is able to capture blue chip
companies and Whitehall relocations (where sustainable transport is a key
determinant); lower costs and value for money locations for office based employment,
notably in business services; and high quality/competitive locations for manufacturing
for new and re-investment.
Transport Services and Infrastructure: Some of the main road corridors in Tyne and
Wear City Region are congested, and congestion is forecast to increase. Given that the
City Region has seen significant development take place adjacent to the highway
network, any further congestion has the potential to render the City Region less
attractive to investors and impact on local business. As well as considering a different
approach to land-use policy, there is also a requirement on the part of the public and
private sectors to improve the public transport network in order to better serve the
major employment locations that are situated within and across the City Region.
Housing Growth: The City Region needs to grow its executive housing market in order
to provide the range of housing needed to attract greater numbers of higher skilled
14
people to the North East. The suburban and market town offer in the north of the City
Region provides a range of attractive places to live. Housing supply has become a
general problem most acute in urban areas south of the Tyne. Taking forward
developer-led housing (without subsidy) will be important in maintaining momentum in
the housing market.
Housing Market Failure: There are significant areas of housing market failure in the
major urban centres. There is a need to develop new ideas and products to take
forward urban and low cost housing in Newcastle/Gateshead and Sunderland and in
some of the smaller settlements.
Within the context of new economic development policy, the City Region and its
partners will need to give due consideration to what new delivery mechanisms are
required to address a broad range of challenges. These include:
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
New Infrastructure and Business Support Funding Mechanisms: with
limited public sector funding, new mechanisms to support infrastructure
investment, including housing, and business support, will be essential, which
could be based on new models including Accelerated Development Zones, Tax
Increment Financing, JESSICA and JEREMIE.
New Approaches to Funding Affordable Housing: population and economic
growth will be undermined without a supply of quality social and private rented
accommodation. Developing new ways of funding affordable housing,
particularly in inner city areas, is a major priority for local partners.
Financial Freedoms and Flexibilities: in order to manage the challenges of
restoring and accelerating economic growth at a time of reduced public
spending, there is a need to re-consider some of the rules, processes and
restrictions which inhibit local government and public sector from pursuing
greater joint working and more effective local delivery, across all external funding
streams.
Innovation: in some sub sectors and markets, such as Creative and Digital and
low carbon, innovation will play a key role in developing new ideas, transferring
knowledge and securing investment and employment. The public sector, working
with stakeholders such as the Universities, has a continued critical role to play is
supporting business to grow.
Welfare to Work, Skills and Employment Services: there is a risk that a
significant percentage of residents in the City Region will be unable to take
advantage of the knowledge-based intensive jobs, which will accompany
economic growth. There will be a continuing role for the public sector in directing
and delivering welfare to work, adult skills and employability programmes.
Low Carbon Economy: The opportunities with regard to the low carbon
economy will develop further as new regulations and policies are introduced.
The public sector has a major role to play in ‘making the market’, de-risking
investment and helping businesses take advantage of these and in realising
particular initiatives and interventions.
In addition, the public sector faces the major challenge of managing the implications of
four years of sharp reductions in funding. This will require new strategies to be
15
implemented (by local government, private sector and new sub-national economic
development arrangements), and will involve introducing new approaches to
developing and commissioning local services and supporting initiatives such as
business start up programmes. The extent to which the employment impact of reduced
public expenditure can be minimised will have a major influence on the City Region’s
ability to demonstrate resilience and return again to a period of sustained economic
growth.
The economic agenda during the next five years calls for new areas of expertise and a
high level of creativity and innovation from all partners. The need to advance plans for
housing and business/economic infrastructure will require new vehicles and a better
use of assets, while new approaches (including more flexible national policies) are
needed to address local housing and employability issues. More radical thinking will be
required to reduce the impact of the recession on communities and businesses, and to
create the conditions to capture new investment as the national economy comes out of
recession and enters a new period of growth.
It is recommended that local authorities and partners in the Tyne and Wear City Region
examine in detail the evidence set out in this executive report and the associated
technical reports prepared as part of the study. Local authorities and partners will need
to consider carefully the potential policy implications it is suggested emerge from the
analysis in order to determine how they wish to identify and prioritise specific policy
issues and options going forward.
16
1.
Introduction
1.1
Adroit Economics Ltd, in association with ekosgen and St. Chad’s College,
University of Durham, were commissioned to undertake a Tyne and Wear City Region
(TWCR) economic geography, linkages and low carbon Study.
1.2
The Study forms part of an Economic Review of Tyne and Wear City Region,
which aims to develop a greater understanding of how the places, communities,
businesses and markets operate and interact economically and spatially. The research
will act as the core evidence base to underpin future policy and strategy development
of partners in the City Region. The Review comprises a number of different research
elements, including: a Labour Market, Skills and Talent project (Regeneris Consulting);
a Housing Markets Study (Nevin Leather Associates); and a final over-arching Review
Report that will be prepared by Professor Alan Harding, Director of the Institute for
Political and Economic Governance (IPEG), University of Manchester.
1.3
The study brief states that the project focusing on economic geography, linkages
and low carbon economy should seek to provide the City Region Economic Review
with a narrative on agglomeration effects, and the relationships and interactions of
place with key economic sectors and sub sectors, businesses, labour and housing
markets.
1.4
This executive report condenses a substantial evidence base, which includes
drawing upon a number of studies carried out by expert advisors, an economic and
spatial analysis of the City Region economy, a large employer survey (over 460
companies across the City Region) and a face to face interview programme with key
stakeholders.
1.5
The Report is structured in the following sections:
ƒ
ƒ
ƒ
ƒ
ƒ
ƒ
Tyne and Wear City Region Economic Performance
Benchmarking the Changes
High Level Changes in Employment and Economic Geography
Functional Economic Geographies
Economic and Growth Opportunities
Low Carbon Economy
1.6
The economic performance, benchmarking and employment change and
location sections of the report provide an integral part of the over-arching analysis on
the different economic geographies within the City Region. Thereafter, the functional
economic geography section provides a more detailed consideration of labour market
flows and linkages. The final section seeks to answer the key research questions set
out in the study brief. These include:
1) Which key economic sectors and sub sectors have played the most important roles
in driving employment and GVA growth in Tyne and Wear City Region over the last
decade? How does the City Region compare with other, similar City Regions in terms
of its key economic specialisms?
2) Where are the main concentrations of employment in these sectors and sub sectors
to be found? Has their distribution of employment within the City Region changed over
time? In particular, have firms in certain sub-sectors tended to decentralise to, or start
up in, more peripheral areas of the City Region or is there evidence to suggest that
17
agglomeration effects are increasingly powerful and tend to draw new economic activity
to the main employment centres?
3) How deeply embedded within the City Region are firms within key subsectors? What
keeps them in Tyne and Wear City Region and what might cause them to reconsider
whether this is the right place to do business?
4) Are the high employment and GVA growth sectors of the recent past necessarily the
ones that will drive economic change in the future? Which other sub-sectors might
feasibly play a more powerful driving role in the future and what advantages does Tyne
and Wear City Region offer for firms in these subsectors?
5) How, in particular, have industries and firms that are likely to be critical to the
development of low carbon, non-polluting energy sources, and climate change
mitigation fared, in Tyne and Wear City Region and how might they develop in the
future?
6) What is the continuing and future role of the public sector as an employer and
service provider in sustaining and developing economic opportunities, jobs, higher level
skills, knowledge and innovation?
What are the implications of market change in relation to:
a) The City Region’s skills base
b) The City Region’s places, locations, and infrastructure
c) The role of the public sector in supporting opportunities, independently or jointly with
the private sector
18
2.
Recent Economic Performance
2.1
Tyne and Wear City Region has around 706,000 Full Time Equivalent jobs,
accounting for two thirds of the total employment in the North East. Official Annual
Business Inquiry (ABI) statistics, which count full time and part time jobs separately,
show that the City Region experienced exceptional growth between 2000 and 2008
with an increase of some 57,600 jobs (+9%), well ahead of the national growth of 6%.
There has been considerable change in the employment base over the 8 year period,
the most important being the rapid increase in private sector services, notably
Financial, Professional and Business services.
2.2
The majority of this analysis is based on data generated through the North East
Economic Model (NEEM), which has been developed and operated for One North East
by St Chad’s College, Durham University. The model provides a number of useful
datasets, which are not widely available including FTE employment and a more
detailed breakdown of sectoral Gross Value Added (GVA) and productivity.2 Each of
the relevant datasets is available for Tyne and Wear City Region, North East England
and Great Britain. However, given that the model is unique, it is not possible to use
NEEM in order to make comparisons with other City Regions. In such cases, ABI data
has been used.
Dynamics of Change
The exceptional growth of
the City Region’s economy
is all the more remarkable
given the scale of the
manufacturing losses over
the
same
period.
Employment in the sector
contracted by 22% resulting
in the loss of some 24,600
FTE positions.
Tyne and Wear City Region - Employment Change
250000
F u ll T im e E q u ivalen ts
The employment increase
has
been
driven
by
significant growth in the
Financial, Professional and
Business Services sector,
where
employment
increased by 38% creating
over 32,500 additional FTE
positions. The Public Sector
also experienced strong
employment growth of 10%
creating
over
20,000
additional FTE positions.
200000
150000
100000
50000
0
2000
2001
Public Sector
Wholesale and Retail
2002
2003
2004
2005
2006
2007
Manufacturing
Financial & Prof. Business Services
2
The latest NEEM data is based on individual records in the Annual Business Inquiry 2007. NEEM is used in the
report as an analytical framework and supplement with Annual Business Inquiry 2008 data. NEEM will be updated
on a regular basis by the University of Durham.
19
Current Structure
Following significant growth,
Financial, Professional and
Business Services is now
the second largest sector
employing almost 120,000
FTEs (around 17% of total
employment).
Tyne and Wear City Region Employment
140000
F u ll T ime Eq u ivalen ts
Public
Services,
which
comprise
Public
Administration; Education;
and Defence, is the largest
employment sector with
122,500 FTEs (17% of total
employment). This rises to
207,000 (29% of total
employment) when health is
included,
reflecting
the
continued importance of the
public sector to the Tyne
and Wear City Region
economy.
120000
100000
80000
60000
40000
20000
0
Public
services
Financial &
Prof.
Business
Services
Health and
wellbeing
Wholesale
and retail
Construction
Source (both tables from recently completed work): NEEM, 2007
Sector Representation
2.3
There are two substantive employment specialisms in the Tyne and Wear City
Region: Public Services and Automotives, with the proportion of employment in these
sectors much higher than the national average (1.5 times and 1.3 times respectively).
The very high level of public sector employment reflects the significant labour pool in
Universities and the success of the City Region in attracting regional/national business
and service centres for public sector agencies.
2.4
In addition to strong growth in Financial, Professional and Business services,
other private service sectors, which have experienced employment growth include:
Transport; Creative and Digital; and Tourism. Collectively, these three sectors
generated around 12,600 additional FTE positions. Despite this growth, each of the
private service sectors, and in particular Financial, Professional and Business Services
and Creative and Digital, remain under-represented in the City Region economy.
20
Source: NEEM, 2007
Sub Sectors
2.5
Further analysis of the key employment sectors in the City Region has enabled
important sub-sectors in terms of both size and recent employment growth to be
identified. Health is the largest of the City Region’s sub sectors followed by Public
Administration, which was responsible for driving public sector employment growth
between 2000 and 2007. While the level of employment in Health is largely in line with
the national average, sub sectors that are not dependant on and/or geared to local
demand, i.e. elements of Public Administration, Higher Education and Compulsory
Social Security Activities, are all highly represented, reflecting the presence of key
assets, such as the Universities, and success in securing large public sector functions.
Key sub-sectors in the City Region
Largest SubSector
Health
Public Sector
Other
Business
Services
Financial
Services
Basic Metals
Manufacturing
Computer
Computer
Creative and Digital
Services
Services
Source: ekosgen, 2010 based on NEEM, 2007
Financial,
Professional and
Business Services
Other
Business
Services
Driver of
Growth
Public Admin
Other important sub-sectors
Higher Education;
Compulsory Social Security
Accounting; Legal &
Consultancy; Architectural and
Technical Services; Property
Services
Machinery and Motor Vehicles
-
2.6
‘Other Business Services’ is the largest Financial, Professional and Business
Services sub sector and, along with Financial Services, led the sector’s strong growth.
While all of the five sub sectors have experienced employment growth, they are all, with
the exception of the smallest sub sector - Property Services, under-represented in the
City Region. Despite Creative and Digital being a smaller employment sector,
21
Computer Services is the City Region’s twelfth largest sub-sector in employment terms.
The sub-sector has experienced significant employment growth in recent years which
has driven the sector’s overall growth and helped to compensate for decline in
Telecommunications and Printing and Publishing.
GVA
2.7
As with employment, the City Region’s GVA growth (50%) outpaced regional
(47%) and national (40%) growth, with a significant increase of over £9 billion between
2000 and 2006. By 2007, Tyne and Wear City Region was estimated to have
generated around £29billion GVA per annum. The overall increase was driven by
significant employment growth, and to a lesser extent productivity gains, in Financial,
Professional and Business services. This sector has the third highest GVA per FTE in
the City Region, and it generated an additional £3.7 billion GVA over a seven year
period.
Net Increases in GVA - over £100m
Net Increases in GVA - over £1 billion
k
in
s
dr
et
od
&
m
Fo
M
le
W
ho
in
sa
in
g
le
&
&
om
ot
re
iv
ta
al
il
es
t
or
sp
ot
e
&
Di
gi
Construction
t iv
Public services
ea
Health &
wellbeing
Cr
Financial,
Professional &
Business
services
ta
l
-
Au
500
m
1,000
an
1,500
Tr
2,000
ur
is
2,500
To
3,000
En
3,500
er
gy
900
800
700
600
500
400
300
200
100
-
4,000
Source: NEEM, 2007
2.8
Six other private sector service sectors increased their GVA contribution.
Collectively, Creative and Digital; Tourism; Transport; Wholesale and Retail; Research
and Development; and Other Services generated an additional £1.9 billion between
2000 and 2007. Creative and Digital accounted for 43% (£804 million) of this increase.
In three of the six sectors (Wholesale and Retail, Research and Development and
Other Services), the GVA growth has been jobless, with employment declining over the
same period.
2.9
In terms of total contributions, 9 sectors (shown in the chart below) generated
over £1billion GVA accounting for 84% of the total GVA in 2007. Financial, Professional
and Business services generated the highest level with a contribution of around £7.2
billion (25% of total GVA), followed by the public sector (when including health), which
generated around £6.6 billion (23% of total GVA).
22
Tyne and Wear City Region GVA
Tyne and Wear City Region GVA
8,000
7,000
6,000
£m
£m
5,000
4,000
3,000
2,000
1,000
1,000
900
800
700
600
500
400
300
200
100
In
s
du
s
o d tri e
& s
Ot
h e d ri
nk
rs
e
W
Ae
o o rvi c
d
es
ro
&
sp
Pa
ac
pe
e
&
r
de
fe
Ot
n
he
c
Cl e
rM
ot
an
he
uf
s
ac
tu
ri n
g
Gl
R&
as
s
D
pr
od
El
u
ec
c
tri
M ts
ca
ar
in
lE
e
qu
ip
m
en
t
s
Fo
et
m
&
s
es
Pr
oc
ng
in
i
hi
al
m
ol
is
to
ur
M
ne
ry
&
To
ac
M
Transport
E n erg y
A u o to m o tiv e s
C r e a tiv e &
D ig ita l
C o n s tr u c tio n
W h o le s a le &
r e ta il
H e a lth &
w e llb e in g
F in a n c ia l,
P r o f.&
b u s in e s s
P u b lic
s e r v ic e s
-
Source: NEEM, 2007
2.10 Despite strong growth, the City Region is faced with the challenge of below
average productivity (GVA/FTE). In 2006, the average GVA per FTE was £38,441,
slightly below the regional average (£38,495) and significantly below the national
average (£47,260) even when taking the London effect into consideration (£43,384).
Based on the 2006 variance and GVA levels of £29bn (2007), if Tyne and Wear City
Region was to meet national productivity levels, it would generate £35.7billion GVA per
annum, and would therefore close the prosperity gap with the national level by an
additional circa £6.7billion.
2.11 Average productivity levels hide disparities across the sectors in terms of both
the absolute level of GVA per FTE and the relative performance when compared with
Great Britain. Six of the 23 NEEM sectors outperform the national average and a
further seven are at least at 90%. The majority of these sectors, however, tend to be
smaller employment sectors. The GVA per FTE of the sector which has driven national
economic growth - Professional and Financial Business Services - only reached 86% of
the national figure.
Tyne and Wear City Region GVA Per FTE
100
90
80
70
60
50
Process
Industries
Electrical
Equipment
Transport
Machinery &
tools
Aerospace &
defence
Wholesale &
retail
Marine
Financial,
professional,
business
Glass
products
40
Public
services
GB=100
115
110
105
100
95
90
85
80
C
lo
A
th
uo
es
to
m
ot
iv
H
es
ea
l th
R
&
&
w
D
el
lb
ei
ng
O
En
th
er
er
gy
se
rv
Fo
ic
es
od
M
&
in
dr
O
in
th
in
g
er
k
&
M
m
an
et
al
uf
s
ac
tu
rin
g
To
ur
C
is
on
m
st
ru
W
ct
oo
io
d
C
n
re
&
at
Pa
iv
pe
e
r
&
D
ig
i ta
l
GB=100
Tyne and Wear City Region GVA Per FTE
Source: NEEM, 2007
23
Key Sectors
2.12 Combining the analysis of employment growth, GVA growth and productivity
begins to highlight the relative strengths of the Tyne and Wear City Region economy. It
also highlights issues that help to explain some areas of under-performance, which
need to be addressed going forward.
2.13 Several sectors have experienced above average employment and GVA growth
(see Groups 1 and 2), although productivity levels vary and the GVA per FTE
generated by the majority of these sectors is below 90% of the GB average. This is a
particular issue for the larger sectors, including Financial, Professional and Business
Services and Public Services, which together account for 40% of the City Region’s
prosperity gap. The Public sector GVA/FTE variation with GB is not a sign of poor
productivity; the variations are a consequence of wage and other operating costs
differentials.
City Region Strengths
Group 1: High Productivity, High Growth
Above average employment and GVA
growth, productivity at least 90% of GB
average
Group 2: High Growth
Above average employment and GVA
growth, productivity below 90% of GB
average
Group 3: High Employment Growth
Others with employment growth of over 4.5%
Group 4
Others with productivity at least 90% of GB
average
Source: NEEM ,2007
Construction; Creative and Digital; Mining
and Metals; Research and Development
Financial, Professional and Business
Services; Public Services; Process
Industries; Aerospace and Defence; Glass
Products
Transport; Tourism
Health and Wellbeing; Automotive; Energy;
Food and Drink; Timber and Wood; Other
Services; Clothes; Other Manufacturing
Conclusions
2.14 There are a number of features of the analysis, which have major implications
for economic priorities in the City Region. These are:
ƒ
The group of high productivity sectors (relative to the national average) and high
growth (GVA or employment) is very small in terms of employment, and only one
has significant employment potential – Creative and Digital.
ƒ
The high growth category is made up of a number of smaller manufacturing sub
sectors (where employment has been in decline, although GVA is increasing)
and two major components of service sector growth – Public Sector services,
where employment is now under threat; and Financial, Professional and
Business services, where productivity is significantly below the national average.
ƒ
Private services’ sector employment has dominated employment growth, and
played a major role in off-setting the continued decline in manufacturing
employment.
ƒ
It is likely that the major contributors to GVA and employment growth during
2000-2008 will also be the major contributors in future, albeit with some
24
important caveats3, when the economy enters another cycle of sustained
economic growth – Financial, Professional and Business Services and Creative
and Digital.
ƒ
Given the current public sector expenditure forecasts it is likely that for the next
four years, the public sector contribution to economic and employment growth
will be limited.
2.15 While the performance of the Financial, Professional and Business Services has
been exceptional, the evidence suggests that the Tyne and Wear City Region is not
capturing the high value added/high skilled employment that is needed to close the gap
with other City Regions and the national economy. The major challenge is to generate
and secure higher value added, knowledge-intensive employment in key private sector
service sub sectors.
3
While there is uncertainty over the scale of future employment growth in financial, professional and business services, and the
extent to which the scale of employment growth in the 2000-2008 period can be repeated, TWCR is a competitive location for new
investment in some sub-sectors and activities.
25
3.
Benchmarking the Changes
3.1
Tyne and Wear City Region is of a similar size and scale as the Sheffield City
Region. When examined against seven other City Regions that were identified in the
study for the purposes of comparative analysis, Tyne and Wear City Region recorded
the third highest level of employment growth between 2000 and 2008 (+9.1%). This
outpaced the selected City Regions’ average of 6.4% and resulted in the creation of
over 57,600 jobs. In both relative and absolute terms, the Tyne and Wear City Region
created more employment than the Manchester City Region between 2000 and 2008.
Employment In City Regions
Employment
2000
2008
1,214,662
1,283,769
1,128,926
1,170,476
769,698
848,776
649,783
710,452
636,340
693,978
553,886
584,357
484,131
522,342
354,509
375,026
Leeds CR
Manchester CR
Glasgow CR
Sheffield CR
Tyne and Wear CR
Liverpool CR
Bristol CR
Nottingham CR
Source: ABI, 2008
(ranked by size)
Change
No.
%
69,107
5.7
41,550
3.7
79,078
10.3
60,669
9.3
57,638
9.1
30,471
5.5
38,211
7.9
20,517
5.8
Comparative Employment Growth
3.2
The exceptional employment growth is apparent when comparing growth
across key sectors. As shown in the diagram below, employment growth in Tyne and
Wear City Region outperformed the City Region average across all sectors reviewed. In
particular, Tyne and Wear City Region had:
ƒ
ƒ
ƒ
The strongest employment growth in three sectors: Financial, Professional and
Business Services; Automotive; and Creative and Digital.
The second highest level of employment growth in the case of Public Services
and Tourism, with the highest levels being in Sheffield City Region and Liverpool
City Region respectively.
The lowest level of decline in the Manufacturing sector.
City Region Employment Growth (%) 2000-2008
FPB Services
Pub. Services
Manufacturing
Tourism
Autom otive
CDI
-45
-35
Bristol City Region
-25
-15
-5
5
Glasgow City Region
15
Liverpool City Region
Manchester City Region
Sheffield City Region
Tyne and Wear City Region
25
35
45
Leeds City Region
55
Nottingham City Region
26
Comparative Employment Representation
3.3
Tyne and Wear City Region has higher employment representation in Public
Services and Automotives than in any of the other seven City Regions. Manufacturing
and Tourism employment is also well represented. Critically, employment in Tyne and
Wear City region is under-represented in private sector services in spite of strong
growth in a number of sectors. In two of the most important knowledge intensive
sectors – Creative and Digital and Financial, and Professional and Business Services –
the intensity of employment is very low and significantly lags behind the three leading
City Regions of Manchester, Leeds and Bristol.
City Region Location Quotient 2008
FPB Services
Pub. Services
Manufacturing
Tourism
Autom otive
CDI
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
Bristol City Region
Glasgow City Region
Leeds City Region
Liverpool City Region
Manchester City Region
Nottingham City Region
Sheffield City Region
Tyne and Wear City Region
1.5
Source: both charts ABI, 2008
Overall Similarities
3.4
Tyne and Wear City Region is similar to Sheffield City Region and Liverpool City
Region (both of which are former Objective One Regions) in terms of economic
structure. All three City Regions (still) have significant industrial bases and have heavy
concentrations of public sector employment. In all three cases this is partly as a
consequence of a relatively small and under-performing private sector service
economy.
3.5
The three City Regions are similar in size and scale, and each face locational
challenges in strengthening their economies going forward. Tyne and Wear City Region
is distant from the main UK markets and is located in the smallest region in England. It
has limited access to other regional markets and is part of a contained economic
hinterland. Liverpool City Region is relatively isolated and is limited to some extent by
the influence of the nearby and much larger Manchester City Region; while Sheffield
City Region is constrained by the influence of the adjacent Leeds City Region. In the
Tyne and Wear City Region, Liverpool City Region and Sheffield City Region,
agglomeration benefits will be more limited than those in the two largest northern City
Regions – Leeds and Manchester.
27
3.6
In terms of economic geography, the Tyne and Wear City Region is more
cohesive than many other City Regions – Doncaster is semi detached from Sheffield,
while Barnsley is in both Leeds and Sheffield City Regions; parts of Liverpool City
Region face towards Manchester City Region. At the same time, the core city
administrative areas of Glasgow, Bristol, Nottingham and Manchester dominate their
City Regions in a manner which does not apply in Tyne and Wear City Region.
3.7
In some ways, there are similarities between Tyne and Wear City Region and
Leeds City Region, where the City of York is linked to the City of Leeds but is also
independent (similar to Durham City vis-à-vis Newcastle/Gateshead) and Bradford is a
nearly powerful centre, similar to Sunderland (although Sunderland has a more
successful employment growth record). Both Tyne and Wear City Region and Leeds
City Region have large semi-rural and rural hinterlands, which strengthen the housing
offer. Tyne and Wear City Region has the benefit of being more effectively linked than
Leeds City Region, with significant employment and supply chain connections, partly
due to its isolation.
Closing the Employment Gap
3.8
Combining the City Region’s relative performance in terms of both employment
growth and representation creates two clear groups as shown in the table below. This
highlights the importance for Tyne and Wear City Region of continuing to grow key
private service sectors, despite the significant progress that took place between 2000
and 2008.
Relative Sectoral Performance
Group 1
Above City Region average representation
and employment growth
Group 2
Below City Region average representation
but above average growth
Source: ekosgen 2010, Based on ABI, 2008
Public Services
Tourism
Automotives
Manufacturing (lower level of decline)
Financial, Professional and Business
Services
Creative and Digital
3.9
The assumption made about the need to increase the size of the private service
sectors is further reinforced by looking at the number of additional jobs that are
required to increase the level of employment across the private service sectors in Tyne
and Wear City Region in order to match both city region and national averages. In total,
Tyne and Wear City Region needs to create an additional 33,600 net jobs if it is to
close the employment gap with the city region average. The target increases to
approximately 43,000 jobs when compared against the national average. Going
forward, significant levels of growth are required to narrow the gap. For example, it
requires an increase in employment of around 40% in Transport and 20% in Creative
and Digital, and Financial, Professional and Business Services. This presents Tyne and
Wear City Region with an acute challenge especially if, as suggested in the Regeneris
Labour Market, Skills and Talent study, the overall employment base in the City Region
declines or stagnates in the short term as public sector job losses offset any growth in
other sectors.
28
The Employment Gap
Sector
Financial & Professional Business Services
Wholesale and Retail
Creative and Digital
Transport
Research and Development
Other Services
Total
Source: ekosgen 2010, based on ABI, 2008
With CR Av.
21,320
8,323
477
2,904
655
0
33,649
With GB Av.
21,339
9,352
4,988
4,805
1,733
526
42,744
Summary
3.10 The period between 2000 and 2008 saw very strong economic growth take
place in the Tyne and Wear City Region. The Tyne and Wear City Region closed the
gap with most other City Regions, and it out-performed both the Leeds City Region and
the Manchester City Region. In part, this performance reflects a catching up in terms of
the volume of jobs generated in private sector services. However, despite the
impressive performance in the last decade there remain a number of challenges to
efforts to further close the gap with other city regions and the national level, and these
are:
ƒ
The size of the Tyne and Wear City Region, coupled with its distance from other
major markets, is likely to constrain the scale of agglomeration benefits, which
are expected to contribute towards the growth of the Leeds City Region and
Manchester City Region (although the scale of agglomeration benefits in these
two economies is still unclear).
ƒ
Significant further employment growth in private service employment services is
required, and, in some cases, the level of growth that is required is substantive.
ƒ
The other city regions that have been examined for the purposes of comparative
analysis in this study have increased their competiveness and they will continue
to compete with Tyne and Wear City Region for many of the future mobile
investments.
ƒ
Tyne and Wear City Region needs to strengthen its ability to secure investment,
which will deliver higher value added employment. This is likely to bring it into
direct competition with the two major city regions in the north – Leeds and
Manchester.
ƒ
The Regeneris Report on Labour Market, Skills and Talent suggests that the
size and scale of Tyne and Wear City Region results in a relatively thin labour
market compared to some other city regions. This has implications for any efforts
that are progressed to encourage new growth in knowledge intensive sub sector
and niches.
29
4.
High Level Changes in Employment and
Economic Geography
4.1
There are three broad sectors which have had the most significant influence on
the economic geography of Tyne and Wear City Region – Public Services, Financial,
Professional and Business services and Manufacturing. Over the past ten years,
employment in the first two sectors has become more mobile, with office based
accommodation moving to a number of new locations, while the manufacturing
employment base has decreased considerably over the past twenty years.
Public Services
4.2
The ‘Public Services’ sector, as defined by NEEM, includes Education, Public
Administration and Defence. Under this definition, ‘Public Services’ is the largest
employment sector in the Tyne and Wear City Region, employing 122,500 FTEs (17%
of total employment). Between 2000 and 2007, the sector experienced the second
largest net increase in employment of all city regions, creating over 15,500 additional
FTE positions. This growth was driven by:
ƒ
A significant increase in employment in the Sunderland local authority area,
where over 6,500 additional FTE positions (an increase of 48%) led to the City
increasing its share of Public Services sector employment in the City Region
(from 13% to 16%).
ƒ
A 45% increase in employment in Gateshead, which resulted in over 3,500
additional FTE positions.
4.3
Taking a more traditional view of the Public Sector, and including Health
Services,4 employment in the sector increases to over 207,000 FTEs (29% of total
employment), thus highlighting the importance of the sector to the overall Tyne and
Wear City Region economy. On the basis of standard definitions, the total contribution
of the Public Sector to GVA in the City Region stands at £6.6bn (23% of total GVA).
The sub-sector analysis is based on
the traditional definition of the
sector5 and includes:
Sector
Human Health
Public
Administration
Primary Education
Higher Education
Secondary
Education
Community
Services
Adult and other
education
Compulsory
Social Security
Activities
4
Employment
2007
56,871
43,835
26,926
18,568
15,980
13,145
8,846
7,026
Health Services are included as Health and Wellbeing in the NEEM 23 sector definitions.
30
Source: NEEM, 2007
4.4
While Health is the largest sub-sector, Public Administration has been
responsible for driving employment growth in the wider Public Sector. Employment
levels in the sub-sector are now almost double the national average. There is also an
exceptionally high representation of Compulsory Social Security activities employment
(four times what would have been expected) and a relatively high representation of
Higher Education employment, reflecting the important role of the four Universities in
the City Region. The high representation of these sub-sectors highlights the City
Region’s success in attracting public service functions that are not geared specifically
to / dependent upon local demand.
Key Locations
4.5
Employment in Public Administration (almost 44,000) is concentrated at nine key
sites, which are spread across the four labour market geographies of the City Region
and account for two thirds of the total sub-sector employment. These are predominantly
based at City / Urban centre locations, although there are also significant
concentrations in some ‘out of town’ locations. The three largest sites located in
Newcastle and the North, and Durham City – Benton View Park;6 Durham City Centre;
and Newcastle City Centre – together account for almost 60% of total employment.
5
Based on Annual Business Inquiry (ABI) data.
Benton View Park is located at Longbenton and includes the DWP and HMRC offices. ABI data captures the site within the
Newcastle local authority boundary. However, other data sets identify the site within the North Tyneside local authority district.
6
31
City/Urban Locations: Durham City; Newcastle City centre; Sunderland City Centre; Morpeth;
Gateshead Centre
Out of Town Locations: Benton View Park; Adjacent to Washington; Team Valley; Ponteland
4.6
There have been mixed growth trends across the Public Administration sites
between 2003 and 2008, with six of the sites experiencing employment growth while
the remaining three contracted. The most significant increases were at the Washington,
Morpeth and Durham City locations. In addition to these key sites, there has also been
a notable increase in Public Administration employment at Cobalt in North Tyneside,
where the Council has relocated its civic centre to the Business Park and Job Centre
Plus has chosen it as the location for their main regional office. At two of the three
locations which have experienced employment decline – Gateshead Centre, and
Ponteland in Castle Morpeth – the contraction was slight. There was, however, a more
significant decline in employment at Team Valley in Gateshead.
Higher Education and Compulsory Social Security
4.7
In comparison, employment in Higher Education and Compulsory Social Security
is much more concentrated. The Higher Education employment map highlights the
importance of the four Universities in the Tyne and Wear City Region, which are spread
across the functional geographies, with concentrations of employment at the
Newcastle, Northumbria, Durham and Sunderland University sites. The Compulsory
Social Security employment is concentrated in the Newcastle and the North and
Washington areas with Team Valley as a key location, along with Benton Park View
and Durham House in Washington.
32
33
Financial, Professional and Business Services
4.8
Financial, Professional and Business Services is the second largest sector in the
Tyne and Wear City Region in employment terms, accounting for nearly 120,000 FTE
jobs in 2007. This equates to almost 17% of the Tyne and Wear City Region total,
second only to Public Services. The sector has undergone exceptional growth and has
been the fastest growing sector in the City Region since 2000, with the number of FTEs
increasing from around 86,100 in 2000 to 118,800 in 2007 - an increase of over 32,500
FTE (38%). The fastest rate of growth has been in the Sunderland Local Authority area,
where the number of jobs has more than doubled since 2000, an increase of over
11,000. This has increased Sunderland’s share of this sector’s employment in the City
Region from 12% to 18%.
4.9
The strong employment growth also led to the sector’s total output growing by
110% between 2000 and 2007. The sector generates nearly one quarter of Tyne and
Wear City Region’s total GVA, over £7.1bn in 2007. GVA per FTE employee in the
sector is over £60,000, well above the city region average, although it is only 85% of
the national average.7
Sub Sectors
4.10 Other Business Services is the largest sub-sector employing around 51,000
(43% of the total in the sector) and, along with Financial Services, has driven the
sector’s recent employment growth. The second largest sub sector is Accountancy,
Legal and Consultancy employing around 22,000, closely followed by Financial
Services employing just over 21,000. The smallest sub sector, Property Services, which
employs just over 11,000, has had the fastest growth rate, leading to the creation of
over 4,000 additional FTE jobs since 2000.
4.11 While all of the sub-sectors have experienced employment growth, they are all,
with the exception of Property Services under-represented in the Tyne and Wear City
Region.
The sector comprises five main subsectors:
Sector
Employment
2007 (FTE)
Other Business
Services
Accountancy,
Legal and
Consultancy
Financial
Services
Architecture
and Technical
Consultancy
Property
Services
51,294
21,861
21,227
13,087
11,387
Source: NEEM, 2007
7
Given the dominance of London and the South East in this sector, and London’s role as a global centre of banking and finance,
the TWCR figure of 85% of GVA/FTE can be viewed as a positive achievement.
34
Employees and Workplaces
4.12 Newcastle, and particularly the City Centre and Riverside, is the dominant
location in the Tyne and Wear City Region for Financial, Professional and Business
Services employment - 35% of the sector’s total employment in the City Region is
located in Newcastle8 in comparison to a quarter of total City Region employment.
4.13 In 2007, there were over 10,700 Financial, Professional and Business Services
workplaces in the Tyne and Wear City Region. The large companies are concentrated
in the major city/urban areas, with over half of the largest workplaces (employing more
than 200 employees) based in Newcastle and Sunderland. Newcastle also dominates
in terms of medium sized workplaces (50-199 employees) in the City Region. Smaller
companies are more evenly distributed, suggesting they are serving a local
market/function.
4.14 The findings from the business survey carried out as part of this study
(predominantly SMEs) suggest that it is more important for businesses in the Financial,
Professional and Business sector to be close to their workforce and customers than to
their competitors and suppliers. Businesses appear to be reasonably well embedded in
the City Region, with the majority reporting that if they were not at their current location,
they would be elsewhere in Tyne and Wear (57%), County Durham (17%) or
Northumberland (3%). The findings also show that over the past three years
businesses in the sector had accessed public sector support for either a grant or
bursary; general advice and guidance; financial advice; and start up support.
Key Locations and Change over Time
4.15 Across the City Region there are 16 key locations spread across the four labour
market geographies, which together account for 65% of the total sector employment.
These include a balance of city/urban centres and out of town locations, including some
of the largest business parks. Newcastle and the North is by far the largest location,
which is largely due to Newcastle City Centre and the adjoining Waterfront locations,
which include the Quayside, accounting for 23% of total employment.
4.16 All 16 sites are key locations for the largest sub-sector – ‘Other Business
Services’. As expected, there are fewer key Financial Services locations, with
concentrations of employment in Newcastle and the North and Central Sunderland.
Key locations are Sunderland Enterprise Park; Doxford International Park; Gosforth;
Bracken Hill Business Park (Peterlee); Gateshead Quays and Cobalt. Doxford
International Park (part of the Central Sunderland area) is also highlighted as the only
key Property Services location.
8
Newcastle city centre and district i.e. the local authority area.
35
City/Urban Locations: Newcastle City Centre & adjoining Waterfront; Sunderland Enterprise Park;
Gilesgate (Durham); Corbridge/Hexham; Gateshead Quays;
Out of Town Locations: Team Valley; Doxford International Park; Washington; Gosforth, Bracken Hill
Business Park (Peterlee); Cobalt; Adjacent to Killingworth; Newcastle Business Park/Newburn Riverside;
Monkton Business Park; Viking Industrial Estate; Tedco Business Works; Quorum; Balliol
4.17 While the majority of sites have continued to grow in employment terms,
between 2003 and 2008, parts of Newcastle and the North (e.g. Newcastle City Centre)
has experienced employment decline, which may be linked to businesses relocating to
other sites (within or outside Tyne and Wear City Region). Some of the businesses may
also have moved to the newer Waterfront locations, which have experienced
employment growth.
4.18 The majority of the most significant employment increases at specific locations
were linked to the opening/expansion of Financial Services operations. These include
the Lloyds TSB and RBS telebanking operations in Sunderland’s business parks; and
Newcastle Building Society in Cobalt, North Tyneside.
36
Manufacturing
4.19 Manufacturing is one of Tyne and Wear City Region’s largest employment
sectors, employing over 89,500 FTEs in 2007. This accounted for 13% of total
employment as compared to 10% nationally. Between 2000 and 2007, manufacturing
employment in the City Region declined by over a fifth (21%) with the loss of over
24,000 FTE positions. Whilst this was significant, it was less severe than the
employment decline in the sector nationally, which fell by over a quarter (26%).
4.20 The above average representation of the manufacturing sector in the City
Region is highlighted by employment in the majority of sub-sectors also being above
the national average:
ƒ The manufacture of transport equipment and the manufacture of machinery and
equipment have the highest representation. These are important sub-sectors,
employing 13,000 and 11,600 FTEs respectively, and have experienced a
relatively low rate of decline between 2000 and 2007.
ƒ The manufacture of basic metals and fabricated metals is the largest sub-sector
employing over 15,000. It has experienced the lowest level of employment
decline between 2000 and 2007.
ƒ In contrast, the manufacture of electrical and optical equipment – the fifth largest
sub-sector employing over 9,000 – has experienced the second greatest
average annual decline in employment since 2000.
The sector comprises 12 subsectors:
Sector
Basic Metals
Transport
Equipment
Machinery &
Equipment
Food & Drink
Electrical &
Optical
Rubber &
Plastic
Chemicals &
Fuel
Other
Manufacturing
Non-Metallic
Minerals
Textiles
Wood
Paper
Employment
2007 (FTE)
15,357
12,914
11,640
9,372
9,016
7,676
6,456
5,963
3,157
2,783
2,587
2,563
Source: NEEM, 2007
37
Advanced Manufacturing
4.21 There are elements of the sub-sectors – classed as Advanced Manufacturing –
which are typically higher value added activities. A recent report for the RDA network
prepared by GHK Consulting – “Identification of the National Spatial Distribution of
Expertise and Excellence for Key ‘New Industry, New jobs’ Industrial Technologies”9 –
examined the presence of expertise in six broad technologies, including Advanced
Manufacturing, which comprised Industrial Biotechnology, Micro/Nanotechnology and
Additive Manufacturing. In the assessment, which considers the relative strengths of
the English regions, the North East was highlighted as an area of Significant and
Combined Presence (the highest assessment) for Industrial Biotechnology, and of
Significant Presence (the second highest assessment) for Micro/Nanotechnology.
4.22 Industrial Biotechnology and Micro/Nanotechnology are defined as ‘enabling
industrial technologies’ that apply across a wide range of manufacturing sub-sectors.
The former includes the production of chemicals, materials and fuels from biomass
feedstock using biotechnology-based processes. The latter is defined as a new
approach to manufacturing drawing upon a series of scientific-based technologies,
techniques and processes. The GHK report indicated that the following advanced
manufacturing competitive assets and international centres of expertise are located in
Tyne and Wear City Region:
Technology
Industrial Biotechnology
Micro/Nanotechnology
Regional Competiveness Assets and International Centres of Expertise
- Cluster of chemicals and petro-chemicals activity including AzkoNobel
(Gateshead)
- Research into Biocatalysts at the Institute for Cell and Molecular
Biosciences at University of Newcastle
- Development of Biocatalysts for manufacturing process at the Centre
for Bioactive Chemistry at Durham University
- Engineering of biotechnology processes at the Centre of Bioactivity,
Durham University and the School of Chemical Engineering and
Advanced Materials at University of Newcastle
- Proctor and Gamble R&D Centre in Newcastle, which includes
nanotechnology under work on colloids and surface science and
under product formulation and processes
- The Institute of Nanoscale Science and technology and its commercial
arm INEX (Innovation in Nanotechnology Exploitation) at University of
Newcastle
- The Centre for Molecular and Nanoscale Electronics at the University
of Durham
- University of Newcastle and Durham University both conduct
mico/nanotechnology research
Source: Identification of the National Spatial Distribution of Expertise and Excellence for Key ‘New Industry, New jobs’ Industrial
Technologies (GHK, Technopolis, CURDS, Newcastle University)
4.23 Both Industrial Biotechnology and Micro/Nanotechnology are classified as
emergent technologies. Industrial Biotechnology is seen as a technology of substantial
future global market size, within which the UK remains a strong competitive location
throughout the value chain. Similarly, Micro/Nanotechnology is forecast for substantial
market growth, although with some volatility in the growth pattern possible.
9
GHK, Technopolis, CURDS, University of Newcastle.
38
Employees and Workplaces
4.24 In 2007, over a fifth of Tyne and Wear City Region’s manufacturing employment
was located in the Sunderland local authority area (and in particular Washington)
where over 16,000 are employed in the sector. Durham County (especially Peterlee)
and Gateshead local authority area (especially East Gateshead and Team Valley) are
also key employment ‘centres’, each employing around a fifth of manufacturing
employees (over 15,600 and 13,700 respectively). Increasingly, the manufacturing
base is concentrating in the south of the City Region.
4.25 There were almost 2,800 manufacturing workplaces across the City Region in
2007, a fall of 8% since 2000. The percentage decline in workplaces was much smaller
than the fall in manufacturing employment, reflecting employment losses in the City
Region’s larger workplaces. Even so, 77 large workplaces account for almost 45% of
total Manufacturing employment.
4.26 The business survey findings (of predominantly SMEs) suggest that it is most
important for businesses in the sector to be close to their workforce as opposed to
suppliers, competitors, and in contrast to the other key sectors, to their customers. The
businesses surveyed appear to be less embedded in the City Region than the
businesses in other sectors, with only half of the sample (52%) reporting that if they
were not based at their current location they would be located in Tyne and Wear (33%),
County Durham (15%) or Northumberland (2%) (the proportion ranged between 7085% for most other sectors). Instead, over a third of businesses (35%) reported that
they would be elsewhere in Great Britain, with smaller proportions suggesting that they
would be based elsewhere in Europe (6%) or beyond (6%). The findings also show that
over the past three years businesses in the sector had mainly received public sector
support for financial support through access to finance (grant or bursary); general
advice and guidance; financial advice; and business planning.
Key Locations and Change over Time
4.27 Across the Tyne and Wear City Region there are 10 key Manufacturing
locations, which are largely based in ‘out of town’ industrial parks across the four City
Region labour market geographies and together account for 32% of total sector
employment. The key sites represent a much lower proportion of the total sector’s
employment when compared to the respective shares of key service sector locations.
This highlights the fact that employment in the Manufacturing sector continues to be
relatively dispersed across the Tyne and Wear City Region. Nevertheless, with over
24,600 employees the 10 sites play an important role.
39
City/Urban Locations
South Shields, Jarrow & Hebburn; Walker; East Gateshead (including Saltmeadows Industrial Estate,
East Gateshead Industrial Estate; Stadium Industrial Estate, Felling Industrial Estate)
Out of Town Locations
Washington, Bracken Hill, North East and North West Industrial Estate (Peterlee); Team Valley;
Cramlington and Northumberland Business Park; Portobello Trading Estate (and surrounding area);
Blaydon; Boldon Business Park
4.28 Washington is a key manufacturing location in the City Region. It is by far the
largest site and, as home to Nissan Motor Manufacturing (UK) Ltd, is the key
automotive location in the North East. There are five other sites across the City Region
employment geographies, which employ over 3,000; these are Bracken Hill and North
East and North West Industrial Estates (Peterlee); Team Valley; South Shields, Jarrow,
Hebburn and East Gateshead industrial estates and Cramlington and Northumberland
Business Park.
4.29 In addition to Washington, there are also concentrations of automotive
employment in the South of the City Region at Boldon Business Park in South
Tyneside and Bracken Hill, North East and North West Industrial Estates in Peterlee.
Similarly, there are several key basic metals and machinery sites, located
predominantly in Newcastle and the North. The former includes Walker; Felling
Industrial Park; and Team Valley and the latter Cramlington and Northumberland
Business Park; Portobello Trading Estate; and Team Valley.
40
Key Automotive Locations (Manufacture only*): Washington; Bracken Hill and North East and North
West Industrial Estates (Peterlee); Boldon Business Park
*The Map is based on the NEEM definition of the sub-sector, which includes the sale and repair of automotives
4.30 There have been mixed trends across the key manufacturing locations between
2003 and 2008, with employment increasing at four sites in the Newcastle and the
North and Washington geographies, despite the overall sector trend of employment
decline. The largest increase was at Cramlington and the Northumberland Business
Park, closely followed by the sites in East Gateshead and Washington. There was also
a significant increase at Boldon Business Park in South Tyneside, which has strong
links with sites at Washington. These increases link to the continued strong
performance of specialist manufacturing companies and growth in advanced
manufacturing. Sites are based along the main road infrastructure corridors (e.g. A1
western bypass, A19 and A69).
Key Locations – Total Employment
4.31 An analysis of the distribution of total employment highlights that there are
clusters of employment across the Tyne and Wear City Region. Large concentrations of
employment can be found in city/urban centres and also out of town business and
industrial parks.
4.32 The City Centre areas in Newcastle/Gateshead (with the Waterfront) and, to a
lesser extent, Durham and Sunderland, are powerful locations. Between them they
combine higher education, cultural and tourism assets, retail and an evening economy
with significant Public Administration and Financial, Professional and Business
Services employment. The Newcastle/Gateshead urban centre, due to its scale on all
41
of these activities, and its ability to draw on a very strong north-facing labour market, is
a major regional as well as City Region asset.
4.33 The key ‘out of town’ sites play an important role as locations for significant
concentrations of sector specific employment. Such locations are spread across the
City Region and include: Cobalt; Team Valley; Washington; Doxford International Park;
Gosforth; Cramlington and Northumberland Business Park and Riverside locations. In
addition, there are a series of locations, which play a valuable role, particularly in their
local urban area. These include: Morpeth, Blyth, Hexham, Corbridge, Consett and
Chester-le-Street.
4.34 The analysis highlights that key city/urban centres can be grouped with the
adjacent ‘out of town’ sites to determine four labour market geographies across the City
Region. These are:
ƒ
Newcastle and the North: comprising key employment locations in Newcastle,
Gateshead and North Tyneside, including Newcastle City Centre, Gateshead
Town Centre, Quayside, Regent Centre, Gosforth, Longbenton and Cobalt.
ƒ
Central Sunderland: comprising Sunderland City Centre and key employment
locations in the southern area of the local authority, including Doxford
International Park and Sunderland Enterprise Park.
ƒ
Washington: key employment centres in North West Sunderland, including
Nissan.
ƒ
Durham City: comprising Durham City Centre and also out of town estates.
42
4.35 The adaptation of locations in Washington and the Team Valley, coupled with
the rapid development of locations, such as Cobalt and Doxford International Park, are
a consequence of number of factors. These include, the willingness of some office
based businesses (including the Public Sector) to locate to out of town sites; the
importance attached to lower cost premises and other costs (some stimulated by fiscal
incentives) to some investors; and a preference for sites that have car parking and/or
access to the strategic road network. A combination of these factors contributed
towards the remarkable growth in private sector service employment in the City Region
during the last decade.
4.36 The distribution of total employment also highlights clear links between the
location of key employment sites and the major transport corridors. The map of recent
employment change confirms the fact that employment increases have tended to follow
development of infrastructure corridors.
4.37
The key transport infrastructure corridors include:
ƒ
Tyne Corridor: Despite the continued decline of traditional industry,
employment sites have continued to grow along both sides of the River Tyne
from the mouth of the River up to Blaydon in Gateshead and Newburn in
Newcastle.
ƒ
‘Old A1’ Route: Similarly, employment sites continue to develop along the route
North of the Newcastle Central Business District and along the Metro lines north
of the Tyne.
43
ƒ
A19 Corridor: Employment sites have increased in the Southern parts of the
City Region, from Boldon Business Park in South Tyneside to Doxford
International Park, Sunderland, south to Bracken Hill Business Park and the
North East and North West Industrial Estates in Peterlee. To the north of the
River Tyne, the A19 provides access to Cobalt Business Park and
Northumberland Business Park. The opening of the second Tyne Tunnel in 2011
should help to strengthen links along the A19 between areas North and South of
the Tyne.
ƒ
A1 Corridor: Moving south to north, this corridor runs through established
centres of employment in North Durham, Washington and Tyneside.
4.38 The recent changes in employment location reflect a longer term trend, as
highlighted in research conducted by NLA for Tyne and Wear City Region. The NLA
analysis showed that, over the past 25 years, there has been a clear shift in the locus
of employment from its concentration along the River Tyne and the River Wear. Within
a general pattern of greater dispersal, associated in part with more space-intensive
uses, employment in the City Region has moved westwards to align along major
transport corridors running north-south through the conurbation and into Durham.
44
Strengths and Weaknesses of Tyne and Wear City Region as a Business
Location
4.39 As part of this study, a detailed survey was conducted with SMEs across the
Tyne and Wear City Region to gain further insight into the reasons why businesses
were located in the City Region. A separate technical report detailing, in full, the
findings from the business survey supplements this executive report. The business
survey, which elicited 466 responses, adopted a blended approach, and targeted
businesses through telephone interviews and an online questionnaire.10
4.40 Strengths: connectivity and accessibility were viewed as key strengths of the
business location ‘offer’ in Tyne and Wear City Region. In particular, those businesses
that took part in the survey made reference to their location being central, easily
accessible and supported by good road infrastructure. Very few respondents
specifically referred to the benefits of broadband access, public transport or rail
infrastructure.
4.41 Proximity to markets; access to workforce and skills; and the low costs of
premises were also noted as primary location strengths. Workforce and skills were
highlighted as a particular strength by businesses. Positive attributes that were seen as
attractions for businesses in the City Region included the attitude of the workforce, the
ability to attract suitable staff and a relatively low cost base.
4.42 There is evidence to suggest that the strengths of Tyne and Wear City Region
as a business location vary depending on whether the business is located in the urban
core/centre or in some of the more outlying areas of the City Region:
ƒ Businesses who took part in the survey and who were located in
Newcastle/Gateshead reported that being in a central, easily accessible location
was a key strength.
ƒ Low costs were highlighted as a key strength by those businesses that were
located outside the urban core/centres.
ƒ More generally, travel and connectivity was seen as a strength across the City
Region, which supports the evidence that employment growth has occurred in
both city/urban areas and in ‘out of town’ business parks.
4.43 Weaknesses: While connectivity and accessibility is viewed as a key strength of
the City Region as a business location, it is also viewed as a weakness by some
businesses, albeit to a much lesser extent. The isolation of the business location was
the most significant weakness reported (by around 1 in 10 businesses). This was then
followed by issues relating to general travel and connectivity and road infrastructure,
highlighting the fact that the main location concerns amongst the business base may
relate to existing transport issues.
4.44 Importance of Linkages: The findings of the survey highlighted the fact that
businesses attached significant importance to being located close to their workforce.
Over three quarters of businesses felt that it was important to be proximate to their
workforce, while half felt that it was important to be based near their main customers.
10
A total of 356 interviews were completed by telephone (against a target of 300) and 110 responded to the on-line survey.
45
Fewer businesses (across all sectors) reported that it was important to be located close
to key suppliers (29%) and main competitors (13%).
4.45 There is evidence that the importance of these factors varies by sector, with the
main differences relating to proximity to customers. Being close to customers was seen
as important by a high proportion of Financial, Professional and Business Services
businesses (62%) and Tourism (74%) businesses, and in contrast, by a lower
proportion of Manufacturing (16%) firms.
4.46 Location of Supply Chains and Markets: The majority of businesses did not
see being located close to their suppliers as being of particular importance. On
average, over 50% of their suppliers are located in the North East (34% in Tyne and
Wear, 13% in County Durham and 4% in Northumberland). When asked about the
specific reasons why firms did not source more supplies locally, more than half of the
respondents suggested that they were happy with their current level of local supplies
and did not plan to increase orders. One of the main barriers to increasing the
procurement of local supplies was the unavailability of the product ‘locally’.
4.47 On average, just over half of those businesses who took part in the survey said
that their immediate business market was based in Tyne and Wear (31%), County
Durham (15%) or Northumberland (6%) When asked about the reasons for not selling
more products/services locally, approximately 50% of respondents said that they were
happy with their current level of trade in local markets.
4.48 Alternative Locations: The majority of businesses surveyed appeared to be
sufficiently embedded within the North East. Almost three quarters of respondents
reported that if they were not located at their current location, they would be at another
site in the region. A large majority of businesses stated that their alternative location
would be in the Tyne and Wear sub-region (51%), County Durham (23%) or
Northumberland (4%). While this may include locations outside the functional economic
area of the Tyne and Wear City Region, it suggests a reasonable level of
embeddedness in the City Region amongst those businesses that were surveyed.
Conclusions
4.49 The geography of employment in Tyne and Wear City Region has changed
considerably over recent years; partly as a result of the contraction of the
manufacturing employment base, but also as a consequence of the locational
preferences of certain types of office based employment. This has meant that the Tyne
and Wear City Region has been well placed to capture the full range of potential
investment. However, looking forward, the key challenges for the City Region are:
ƒ
Building on the potential of the City Centre locations and their unique offer,
based on higher value Financial, Professional and Business Services and
Administrative employment, Creative and Digital, Higher Education, Culture
and Leisure. However, there are a number of immediate challenges in this
area. The major asset of Newcastle City Centre Centre/Gateshead Riverside
remains an expensive location for many types of investment; Sunderland City
Centre needs significant investment; and Durham City is constrained by its
size.
46
ƒ
Critical mass is required to improve the long-term sustainability of a number
of out of town office based employment locations.
ƒ
Further investment (in terms of infrastructure assets) is required at those
manufacturing locations where employment has been increasing.
ƒ
Capitalising on river front locations in Blyth, North and South Tyneside and
Port of Sunderland for the development of renewable energy investment (see
low carbon section).
4.50 In order to match its competitors, it is estimated that Tyne and Wear City Region
needs to create and accommodate an additional 30,000 to 40,000 net jobs. One of the
most critical constraints to further economic expansion could be the challenge of
managing increased road-based congestion. Without appropriate mitigating measures,
there is a risk that new development in the City Region could be limited in the future
due to concerns about traffic congestion and its associated environmental
consequences, which might result in subsequent highways constraints.
47
5.
Functional Economic Geographies
Introduction
5.1
Tyne and Wear has been a long-standing administrative area, and the broader
City Region geography has more fully captured the functional economic market area in
line with the recent practice of moving beyond local administrative boundaries. A
number of recent studies have examined the economic geography of North East
England and Tyne and Wear City Region in an attempt to understand better the
functioning of local economies within these geographies and their various linkages and
dependencies.
5.2
The concept of functional economic geographies has tended to be defined
traditionally on the basis of Travel to Work Areas, where a level of 75% self
containment was regarded as evidence of a single functioning economy, taking account
of flows of labour.11 More recently, there has been a growing recognition of the need to
move towards a broader definition of Functional Economic Market Areas (FEMAs)
based on an analysis of geographic building blocks across a range of different
domains, including labour markets; housing markets; producer markets; consumer
markets; communications; and public services.
5.3
Some of the important factors that have shaped the pattern of contemporary
employment geography in the Tyne and Wear City Region have been the demand for
office premises alongside the major retail/commercial centres in other locations offering
lower commercial rental costs and (often) substantial car parking, thus leading to a
more dispersed pattern of employment. While providing a less sustainable offer in the
early years of their existence, many of the ‘out of town’ locations, such as Cobalt, are
now gaining sufficient critical mass in order to attract support for better public transport
provision. The emergence of these locations has not only helped to expand the City
Region’s offer and enhance its competitiveness as a business location, it has also
helped to shape the spatial pattern of economic geography in the Tyne and Wear City
Region.
5.4
Analysis of the longer-term structural employment changes by NLA shows a
clear shift in the location of employment between 1984 and 2008. During this period
concentrations of employment have moved westward from the traditional heavy
industry sites along the Tyne and Wear to major north-south transport corridors. Major
employment sites have also become much more dispersed across the geography. The
pattern of movement was particularly strong between 1991 and 2001 when demand for
sites with good access to employees and service-users was prominent. Since then,
there have been moves to re-use former industrial sites. Over the course of this period,
housing has also moved to a more decentralised and suburban/out of town pattern.
Economic Geography of the North East: NERIP
5.5
One of the most in-depth studies to date that has examined the economic
geography of Tyne and Wear City Region is the Economic Geography of the North
East (EGoTNE) research project undertaken by Jon Carling and Dr John Mooney of the
North East Research and Information Partnership (NERIP). EGoTNE examined a
range of evidence including employment, skills, commuting, and retail/leisure linkages.
11
Functional Economic Market Areas, An economic note, Communities and Local Government, 2010.
48
The EGotNE Study provides a useful baseline from which this analysis can further
develop understanding of the functional economic geographies in Tyne and Wear City
Region. The findings related to commuting and retail patterns are summarised below.
Commuting Patterns
5.6
The EGoTNE report suggests that Tyne and Wear City Region is ‘poly-centric’ in
nature and that it is possible to make a distinction between a northern and a southern
geography in the City Region:
ƒ The northern geography encompasses Newcastle, Gateshead and North
Tyneside and has close economic ties with South Northumberland, both in terms
of people movements and the geography of businesses. It also confirms that
there are links between the northern geography and Chester-le-Street and
Derwentside (in County Durham).
ƒ The southern geography encompasses Sunderland and South Tyneside, and
has some links with Easington and Peterlee. In particular, the automotive sector,
which has a strong presence in this area, has linkages with smaller manufacturing
companies across Tyne and Wear.
5.7
The EGoTNE study suggests that throughout the North East there are a number
of places, which are economic centres in their own right rather than being solely linked
to larger economic centres. This applies to Durham and Hexham within the Tyne and
Wear City Region. The study outlines a number of key commuting patterns across the
City Region (based on the 2001 Census), which highlight significant employment flows
and key employment centres. These include:
Northumberland: the town of Morpeth is a significant employment centre (defined as
more residents work in the town than travel elsewhere), attracting commuters from the
east and north in significant numbers, and some from Newcastle. There are also flows
from South East Northumberland (Blyth and Wansbeck) to Morpeth district and
Tyneside (and vice versa). Hexham is a significant employment centre, although
significant numbers commute to Tyneside.
Newcastle, Gateshead and the area north of the Tyne: As expected, there are
significant commuter flows between the areas in this part of the conurbation. There are
substantial commuting in-flows from Blyth Valley, Morpeth, Tynedale, Derwentside,
Chester-le-Street, Sunderland and South Tyneside.
Sunderland and South Tyneside: there are noticeable commuting flows out to
Newcastle and Gateshead, but relatively low numbers of people commuting into the
Sunderland and South Tyneside geography. EGoTNE suggests that the area is quite
self contained, with 72% of Sunderland people who are in work, working within the
Sunderland local authority district.
Durham County: Durham City is seen as a key economic centre in its own right, with
more residents working in the City than commuting out, and it receives notable
numbers of commuters from its surrounding areas. Chester-le-Street and the eastern
parts of Derwentside have very strong economic links with Gateshead and Newcastle.
Easington and Peterlee are quite self-contained, although there are noticeable flows to
Sunderland, Durham and Hartlepool (which lies outside the Tyne and Wear City
Region).
49
5.8
In terms of longer distance commuting patterns (i.e. journeys over 25 miles each
way), which in some cases stretch beyond the City Region, there are key links between
Alnwick and Tyneside, southern Northumberland and Durham City, Sunderland and
Middlesbrough or Stockton (and the opposite), and Darlington and Newcastle or
Sunderland.
5.9
In terms of commuting patterns, research undertaken by Regeneris for the Tyne
and Wear City Region illustrated that there are strong net flows from North Tyneside,
South East Northumberland and County Durham into Newcastle and Gateshead
(including the major employment site of Team Valley). The analysis for Sunderland
reflected a very different pattern, with very strong flows in from County Durham, and
important flows into Sunderland from South Tyneside and Gateshead. The Regeneris
study also highlighted that the number of in-commuters into Newcastle are of a different
magnitude to any of other local authority area in the Tyne and Wear City Region.
Retail Patterns
5.10 The retail patterns analysed in the EGoTNE study highlighted much more
significant flows into the Newcastle/Gateshead core with residents from across the
Tyne and Wear City Region travelling to shop at Newcastle City Centre and/or the
Metro Centre. This includes flows from Morpeth, Blyth, Wansbeck, South Tyneside,
Washington, Chester-le-Street, Consett and Stanley. While many of these areas have
their own high streets, their markets are limited to residents in the immediate catchment
area.
5.11 Sunderland, Durham, and to a lesser extent Hexham, are exceptions to this
trend with more residents who shop in the immediate area than travel elsewhere.
Easington and Peterlee also partially link towards Hartlepool for some shopping needs.
County Durham Functional Economic Market Areas
5.12 The bespoke County Durham Review – Durham Functional Economic Market
Areas Report prepared by GHK Consulting in association with the Centre for Urban and
Regional Development Studies (CURDS), University of Newcastle upon Tyne. The
GHK study identified four distinct geographies within County Durham:
ƒ Consett, Stanley and Chester-le-Street show strong linkages with each other and
with areas to the north of the County up to Prudhoe and Rowlands Gill, but more
significantly to Gateshead and Newcastle and staying west of the A1 – but not
linking specifically across to Wearside;
ƒ Peterlee, Seaham and Easington are strongly linked with each other and with
Sunderland and Washington to the North;
ƒ Durham City forms a single strong FEMA, operating as a fairly self contained
market area, with some linkages to areas north of the City; and
ƒ The rural west of the County, comprising the old district authorities of Wear Valley
and Teesdale show strong linkages with each other and across the South of Co.
Durham to join with Spennymoor and Sedgefield.
50
Consultations
5.13 A series of individual consultations undertaken with senior local authority and
public sector economic development officers, as part of this economic geography study
for Tyne and Wear City Region, supported the analysis of a Newcastle/northern
Gateshead/North Tyneside centred northern geography; a Sunderland centred
southern geography; and a semi independent Durham City. A number of other points
were raised during the consultations in relation to economic geography:
ƒ Commuting flows have increased since the 2001 Census was conducted as new
employment locations have developed.
ƒ Although Sunderland was perceived as being relatively self contained in labour
market terms, there was a perception that the economic linkages between
Newcastle and Sunderland and their hinterlands were increasing.
ƒ Greater connectivity between north and south was seen as a priority and likely to
generate additional benefits. However, concerns were raised about the capacity of
the road network to accommodate further development in certain places.
ƒ Links between North Tyneside and South Tyneside were regarded as important
going forward, with North Tyneside viewed as an important source of employment
for the residents of South Tyneside, albeit the ‘barrier effect’ of the River Tyne is a
factor to be mindful of.
5.14 The consultations suggest that the NERIP analysis represents a useful baseline
of the representation of the Tyne and Wear City Region’s economic geographies, and
the flows within, between and across each area. However, it is very important to avoid
seeing the economic geographies as self contained or isolated units, as each
contributes towards the Tyne and Wear City Region functioning as a coherent
economic geography.
51
Economic Geographies in Tyne and Wear City Region
5.15 This study has built upon the findings of previous research and the consultations
to further investigate functional economic geographies based on flows of commuters to
key employment locations across the City Region. The analysis began with the
definition of four employment cores, which were based on total employment patterns,
as outlined in the previous section of the report, these are:
ƒ
Newcastle and the North
ƒ
Central Sunderland
ƒ
Washington
ƒ
Durham City
5.16 Commuter patterns to these locations from all wards in the City Region were
then analysed,12 which resulted in the identification of four functional labour market
geographies. The four geographies are outlined in the map below which is followed by
individual descriptions.
12
Further detail on the methodology used to determine the labour market geographies is set out in the Economic Geography
technical report produced as part of this study.
52
Newcastle and the North
5.17 A very powerful economic geography, with a strong urban core in terms of
Universities, Creative and Digital, Tourism and Leisure and the largest concentration of
Financial, Professional and Business Services in the North East. This is complemented
by a number of strong locations at Cobalt, Morpeth, Longbenton (Quorum and Balliol)
and sites in Blyth-Cramlington, a strong suburban housing market and good transport
links to the core. It includes a number of attractive rural locations.
5.18 While employment growth outside of the urban core has significantly increased
employment in Financial, Professional and Business Services, Newcastle City
Centre/Gateshead riverside is a unique location in the City Region and is the base for a
large Financial, Professional and Business Services sector. The strong concentrations
of economic activity in Newcastle, and its role as the key economic centre in the City
Region, were noted in the 2006 OECD Territorial Review and the 2009 Northern Way
City Relationships research. This business strength draws on highly qualified workers
who are attracted to the strong housing market offer in the broader Newcastle and the
North sub-geography. Despite this strength there remains an issue of polarisation
within the northern area with high levels of deprivation close to the more prosperous
areas.
Newcastle and the North has the largest catchment area. There are substantial flows of over 800
employees from all of the residential wards in Newcastle, Gateshead and North Tyneside, which in many
cases reflect localised commuter patterns. There are also significant flows of commuters to the
Newcastle and North area from Blyth, Washington and Consett. The catchment area is then further
expanded with considerable flows of commuters from Morpeth (to the north), Hexham (to the West),
Derwentside, Chester-le-Street and Sunderland, especially Washington (to the south).
53
Central Sunderland
5.19 This geography is based around the Central Sunderland, which was highlighted
by the Northern Way City Relationships’ research study as the City Region’s second
economic centre of activity. The geography has a growing service sector economy
driven by what has been fast growing Business Services and Public Sector
employment. While the Central Sunderland recorded substantial employment growth in
the 2000-2008 period, considerable challenges remain in further developing this
geography as a private sector service location and maintaining employment levels in
Manufacturing and the Public Sector. This geography (and the Southern area of the
City Region more generally) has a much weaker housing market than the northern part
of the City Region, and includes areas of housing market failure as well as
employability challenges in a number of the urban areas.
The commuter flows highlight the relatively self contained nature of the Central Sunderland with the most
significant flows coming from the wards surrounding the employment sites.
The City sites attract commuters from Boldon, Cleadon and Whitburn (in South Tyneside), as well as
commuter patterns stretching further south to areas in Easington such as Seaham.
There is little cross over between the concentrated travel patterns of the Central Sunderland and
Washington, with the only exception being Shiney Row, which sits in between the two geographies and
has significant flows of commuters to each.
54
Washington
5.20 This geography is based around Washington, home to Nissan Motor
Manufacturing (UK) Ltd. The geography has a strong manufacturing base and while
Nissan and its nearby supply chain are of vital importance and of national significance,
there is also a strong industrial presence in other manufacturing sectors. The area
continues to face considerable challenges in maintaining manufacturing employment
levels whilst further developing Washington as a private sector service location. Similar
to most of the areas in the Southern parts of the City Region, Washington has areas of
housing market failure.
The commuter flows highlight that the Washington site is relatively self contained and as expected, due
to its smaller scale, has less significant inflows of commuters than the Central Sunderland.
The site attracts commuters from Boldon, Cleadon and Whitburn (in South Tyneside). While the
geography does not extend as far south as that for the Central Sunderland, Washington attracts
commuters from slightly further West, in particular, from the outlying parts of the former Chester-le-Street
local authority.
55
Durham City
5.21 Durham City is a key asset with a renowned visitor attraction in the Cathedral, a
leading University and a strong administrative base. A growing Tourism, Culture and
Creative industry sector is transforming the City into dynamic economic hub.
The commuter flows to Durham City highlight that the area is relatively self contained, with the strongest
employment flows all within the former Durham City Local authority boundary. This reinforces the NERIP
findings that the City is a centre in its own right.
There are also flows from wards across the County.
Beyond the County, Durham City also attracts commuters from Houghton and the surrounding area in
south west Sunderland.
5.22 Taken together, the four economic and labour market sub-geographies in Tyne
and Wear City Region should not be viewed in isolation, but as inter-dependent and
over-lapping geographies. It is important to note a number of other issues, which were
highlighted in the consultations undertaken as part of this study:
ƒ The likelihood of linkages strengthening between North Tyneside and South
Tyneside.
ƒ Anecdotal evidence which suggests that linkages between Newcastle and
Sunderland (and their economic hinterlands) are increasing.
ƒ Durham City’s role as the major centre for County Durham.
56
ƒ The flows of people from the north of the City Region into Sunderland, including
some longer distance commuters.
5.23 There is a strong argument for strengthening the economic linkages between the
two major city-based geographies (north and south) in the Tyne and Wear City Region.
This would increase the supplier base for local companies, encourage businesses to
move from local to City Region level markets, and help reduce the leakage from the
City Region economy. It would also increase the potential for, and scale of,
agglomeration benefits.
Labour Market and Travel to Work: Business Survey Results
5.24 The findings of the business survey highlight and reinforce the fact that local
recruitment is a key feature and that, while there are long distance commuting patterns,
there are also significant localised commuter flows. Businesses in the survey
suggested that they drew upon a relatively small catchment area in terms of labour,
with the majority of the surveyed business’ workforce travelling less than 10 miles to
work. On average, the majority of employees travel less than five miles (54%) or
between 5 and 10 miles (23%) to their place of work. This was particularly the case for
micro businesses, where two thirds of the workforce travelled less than five miles.
5.25 Anecdotal evidence gathered through the survey suggests that Newcastle and
Durham attract employees from the widest geographical area as well as serving the
labour market of their local residents. Other areas tend to recruit from a smaller
geographical area, e.g. Sunderland, South Shields, Peterlee and Jarrow. The table
below summarises frequently mentioned locations of employees by business location.
Key Employment Locations
Businesses
located in...
Newcastle
Centre
Frequently mentioned that employees were drawn from...
Sunderland
Centre
Jarrow,
Hebburn,
South Shields
Durham City
Peterlee
Easington
Consett
/
Businesses frequently mentioned suburbs of the Newcastle / Gateshead
conurbation (e.g. Heaton, Fenham and Gosforth). However, a wide range of other
responses highlighted businesses employing people from across the entire TWCR
– including Hexham, Durham, Sunderland, Chester-le-Street and Whitley Bay.
Businesses generally stated ‘Sunderland’ as the main base from which employees
were recruited, however, other areas mentioned included Newcastle, Hexham and
Durham.
The majority of employers from Jarrow, Hebburn and South Shields tend to recruit
people from within these locations. Few examples of key labour markets were
highlighted outside of the immediate area.
Businesses frequently mentioned Durham City and its outskirts, but also draw in
workers from across County Durham (e.g. Spennymoor, Consett, Bishop Auckland)
as well as further afield (e.g. Newcastle, Gateshead and North Yorkshire)
Businesses reported a wide range of locations, with Peterlee mentioned frequently.
Other geographical areas noted by respondents included: Sunderland,
Middlesbrough, Durham, Consett, Hartlepool and Newcastle.
Consett based businesses frequently mentioned the town as the main source of
labour, along with Durham, Stanley, Gateshead and Newcastle.
Source: Adroit Telephone and On-line Survey, 2010
Conclusions
5.26 The four substantive economic and labour market geographies in Tyne and
Wear City Region have each made a contribution to economic growth, although
57
Newcastle and the North is by far the largest in size. In terms of similarity, Newcastle
and the North and Durham City face similar challenges and opportunities, albeit at
different scales, while the Central Sunderland and Washington could be seen as
economies in transition, with a continuing imperative to generate new employment to
off-set the inevitable decline in the industrial base.
5.27 The degree of linkages between the four labour market geographies is relatively
strong. There are significant flows between Gateshead and Newcastle and Sunderland,
although the latter is relatively self contained. Economic linkages within the Tyne and
Wear City Region are much stronger than in, for example, Sheffield City Region, where
Doncaster is a self contained economic unit, and Barnsley looks to both the Leeds City
Region and Sheffield City Region. Weaker internal linkages also apply in the Liverpool
City Region, where the links between outlying areas and the Liverpool City Centre are
less intense. Parts of the Liverpool City Region, such as Warrington and St Helens,
also face towards the Manchester City Region.
5.28 There are a number of issues arising from the analysis on economic
geographies in the Tyne and Wear City Region:
ƒ Agglomeration: A number of city regions have been considering the potential for
realising potential agglomeration benefits. There is a body of opinion that the
medium sized city regions and cities in England are too small in population and
economic terms in order to generate agglomeration benefits of any significance.
There is an alternative view, which believes that agglomeration spin-offs can be
generated from activity focused on urban core/city centres and that this will yield
added benefits for the wider city region economy.
ƒ Newcastle City Centre/Gateshead is the major location in the Tyne and Wear City
Region for higher paid and higher skilled workers in both the public and private
sector. While numbers have been increasing, as they have been across the
geography, there is insufficient evidence to date to attribute this to agglomeration
as distinct from a ‘city centre effect’. Nevertheless, the city centre of Newcastle
presents the major opportunity for the Tyne and Wear City Region to capture
additional high value added and knowledge-based employment.
ƒ Polarisation: The very strong employment performance of Sunderland has
helped to ensure that the Tyne and Wear City Region does not polarise into a
prosperous north and a more disadvantaged south. This was also noted in the
Northern Way City Relationships work, which concluded that Tyne and Wear City
Region is bi-polar (or duo-centric). It is important that this momentum is
maintained as the southern geography of the City Region is at an earlier stage in
its transition to a knowledge service based economy.
ƒ The NLA study on Housing and the Economy in Tyne and Wear City Region
highlighted the potential for Sunderland, with its highly contained labour market, to
internalise the economic shock of the recession and public sector job losses,
potentially leading to a greater impact on both the labour and housing markets.
Although Newcastle and the North is a relatively strong economy, there are still
issues of economic exclusion and polarisation affecting communities in Newcastle
and Gateshead, in the urban core, within North Tyneside, and along the River
Tyne and parts of Blyth along the coast.
58
ƒ Housing: The attraction and retention of skilled workers requires both
employment opportunities and also places and communities, which are attractive
to live in. The northern part of the City Region, which includes an urban living offer
and suburban and executive housing, has the broadest residential offer, while the
housing market in the south is much weaker. Addressing this issue will be
important in improving the skills pool available to employers and new investors in
the south of the City Region. Dealing with this matter is inextricably linked to
tackling the matters identified above relating to polarisation.
ƒ Congestion: A substantial part of Tyne and Wear City Region’s recent
employment growth has been outside of the two major city centres (Newcastle
and Sunderland) and focussed on the main road routes through and within the
City Region. The messages from Government are that major capital road
schemes across the country will reduce in volume and scale due to the reductions
in transport investment in the short and medium term. The risk is that increasing
congestion on the road network could have a major impact on economic growth in
the City Region unless new sustainable transport measures are introduced or
there is a fundamental shift in land use and development policy. However, in what
is now a market-led period for planning and development, any alteration could
prove difficult to achieve.
59
6.
Sectors for Future Growth
6.1
Following a period of sustained economic growth nationally, during which Tyne
and Wear City Region made substantial employment gains and delivered exceptional
performance, the economic recession has created a climate of uncertainty about future
prospects. The situation has been compounded by the steps set out in the Coalition
Government’s Emergency Budget, which will see major reductions in public sector
expenditure and employment.13
6.2
The Regeneris Report on Labour Market, Skills and Talent has suggested that
the City Region will enter a period where the employment base will decline or stagnate
as public sector employment losses off-set any growth in other sectors. It is not
possible to forecast when employment levels will return to and then surpass the peak
employment numbers of 2008.
6.3
Tyne and Wear City Region faces the twin challenges over the next few years of
dealing with the employment and economic consequences of reduced public sector
expenditure and preparing to take advantage of the next period of sustained economic
recovery.
6.4
As highlighted in previous sections of this report, while the Tyne and Wear City
Region has made considerable progress in its transition to what is now a predominantly
service based economy, the further expansion of private sector services is a key priority
(stimulated, in part, by new knowledge-based manufacturing and innovation activity) to
bridge (and potentially exceed) the gap with city region and national averages.
6.5
While economic growth since 2000 has been driven by Financial, Professional
and Business Services, there has also been substantial growth in Public Sector
employment. The Tyne and Wear City Region continues to have a large manufacturing
and industrial base (accounting for over 10% of employment), with some key sites and
employers experiencing employment growth in recent years. Both of the latter are
presented with new opportunities and challenges; the public sector through the
potential creation of new regional/national headquarters/service centres (as a result of
civil service relocation); and the manufacturing base through the development of a low
carbon economy.
6.6
The priorities for growth should focus on wealth creation sectors, and not (solely)
those sectors that are dependent on local demand. The potential growth sectors can be
summarised as:
ƒ
Private Sector Services: Continuing to grow Financial, Professional and
Business Services and in particular continuing the strong momentum which has
been seen in the recent rapid growth of Other Business Services and Financial
Services. There will also be important opportunities linked to growing the
Tourism and Creative and Digital sectors.
13
The exact nature of the reductions will become clearer following the Comprehensive Spending Review in October.
Reports suggest that Cabinet Ministers have been asked by the Treasury to plan for cuts of up to 40% in their
departmental budgets.
60
ƒ
ƒ
Public Sector (not dependent on local demand): Building on the four
Universities role as key City Region Assets and developing Regional/National
headquarters/service centres.
Industrial Base: Focusing on the automotive sub-sector; the development of
advanced Manufacturing and Process Industries; and capitalising on
opportunities presented through the development of the low carbon Economy.
This includes diversifying some aspects of Manufacturing operations and the
Manufacturing skills base.
Medium/Long Term Growth: Sub Sectors
Private Sector Services
Other Business Services
Financial Services
Creative and Digital
Tourism
Public Sector
Regional/national headquarters/service centres
Universities
Industrial
Automotive
Process Industries
Low Carbon
Electric Vehicle/Renewable Energy
6.7
The majority of these ‘growth sectors’ sectors have been discussed in detail in
earlier sections of this report. The following sections provide details on those sectors,
which have not yet been presented with an individual profile.
61
Creative and Digital
6.8
Creative and Digital is the ninth largest employment sector in the Tyne and Wear
City Region, employing over 26,000 FTEs (4% of total employment). Between 2000
and 2007, Creative and Digital was one of nine sectors in the Tyne and Wear City
Region which experienced a net increase in employment. This was in contrast to a
decline at the national level. Over 3,600 additional FTE jobs were created with the
sector growing by 16%. This growth was driven by:
ƒ
ƒ
Rapid growth in North Tyneside (largely at Cobalt) where employment in the
sector increased by 141%, creating some 3,000 additional jobs.
Strong growth in Newcastle (particularly at Great North Park, the City Centre and
Quayside), the relevant parts of Durham (dispersed across the former
authorities) and Northumberland (again dispersed across the former authorities).
6.9
The sector is the fifth largest in terms of GVA having generated over £1.6bn in
2007 (6% of total GVA). The sector’s higher share of GVA reflects the high productivity
levels in comparison to other sectors in the City Region, with the average GVA per FTE
being over £62,600 in 2007. While this is the second highest level of the 23 sectors in
the City Region, it lags behind the national average for the sector.
6.10 Computer Services is the largest sub-sector employing around 12,800 – almost
half of the total Creative and Digital employment in the City Region. The sub-sector has
experienced the greatest level of growth between 2000 and 2007, which has resulted in
over 4,000 additional jobs. In contrast, employment in both Telecommunications and
Printing and Publishing (the second and third largest sub-sectors) has been declining.
The sector comprises four main subsectors:
Sector
Computer Services
Telecommunications
Printing &
Publishing
Advertising
Employment
2007 (FTE)
12,821
5,866
5,633
1,869
Source: NEEM, 2007
6.11 In spite of very strong employment growth, Computer Services is significantly
under-represented in Tyne and Wear City Region compared to national levels, as is
Printing and Publishing.
62
Employees and Workplaces
6.12 In 2007, almost a third of Tyne and Wear City Region’s Creative and Digital
employment was based in Newcastle (particularly Great North Park and the Quayside)
where over 8,000 people are employed in the sector. A further fifth of the sector’s
employment (5,000 jobs) was based in North Tyneside (largely at Cobalt). Both areas,
and especially North Tyneside, have a higher share of Creative and Digital employment
when compared to their respective shares of total employment.
6.13 There are over 2,300 Creative and Digital workplaces across the City Region.
Generally, workplaces are distributed across the geography of the City Region, with
representation in both urban and rural areas. However, this masks some trends relating
to the size of workplaces with micro-workplaces (1-9 employees) much more evenly
distributed than small (10-49 employees), medium (50-199 employees) and large
(200+) workplaces. In 2007, over 80% of medium and large workplaces were located in
Newcastle, Sunderland, Gateshead and Durham.
6.14 The business survey findings suggest that it is more important for Creative and
Digital Businesses to be located close to their workforce, and to a certain extent
customers (although lesser than other sectors), rather than suppliers and competitors.
The businesses appear to be reasonably well embedded in the City Region with the
majority reporting that if they were not at their current location, they would be in Tyne
and Wear (63%); County Durham (12%) or Northumberland (2%). The findings also
show that over the past three years businesses in the sector have mainly received
public sector support through access to finance (grants or bursary); financial advice
and general advice and guidance.
Key Locations and Change over Time
6.15 Across Tyne and Wear City Region there are nine key sites across the four
labour market geographies, which account for 53% of the total sector employment.
These include a balance of both city centre locations and out of town business parks,
and due to the smaller nature of the sector, highlight specific areas rather than broader
clusters of employment. Newcastle and the North has the largest concentration of the
sector’s employment, with Newcastle City Centre and Quayside being the largest
Creative and Digital location, closely followed by Cobalt – both sites employ over 2,000
employees. Three other sites – Team Valley; Great North Park (both in Newcastle and
the North); and Doxford International Park (Central Sunderland) – all employ just below
2,000. Other key sites are: Gateshead Creative Quarter, the Metro Centre Area
(including Gateshead Watermark); the area adjacent to Killingworth; Durham City; and
Bracken Hill Business Park (Peterlee).
6.16 The scale of the Computer Services sub-sector in comparison to the others
means that it is inevitable that the majority of these sites (six of nine) are key Computer
Services locations.
63
City/Urban Locations: Newcastle City Centre and Quayside; Gateshead Creative Quarter and Metro
Centre Area including Gateshead Watermark; Durham City
Out of Town Location: Cobalt; Team Valley; Doxford International park; area adjacent to Killingworth;
Bracken Hill Business Park (Peterlee)
Key Computer Services Locations: Newcastle Quayside; Great North Park; Doxford International
Park; Metro Centre Area (including Gateshead Watermark); Durham City, Bracken Hill Business Park
(Peterlee)
6.17 There have been mixed employment trends across the key Creative and Digital
employment sites between 2003 and 2008, with only five of the nine experiencing an
increase in employment. The large majority of this growth has been in Newcastle and
the North, with a smaller increase captured in the Central Sunderland.
6.18 The greatest actual increase was at the Great North Park, which includes the
SAGE headquarters and has become a Creative and Digital location in the five year
period. There has also been a significant increase in Creative and Digital employment
at the Metro Centre Area and the Gateshead Creative Quarter which stretches into the
Gateshead Waterfront. Gateshead Creative Quarter is an important part of the Town
Centre Development Strategy and continues to develop in line with plans to develop a
vibrant mixed used quarter. The three other sites which experienced an increase in the
sector’s employment are: Cobalt; Doxford International Business Park and the area
adjacent to Killingworth. All of the sites which experienced an employment increase
also increased their share of the sector’s total employment.
64
Tourism
6.19 The Tourism sector is the sixth largest sector in the Tyne and Wear City Region
in employment terms, with just under 35,000 FTE jobs (4.1% of total employment). It is
one of nine sectors in the City Region where employment has risen since 2000, with
the number of FTE posts increasing by 1,670 or 5%. The Tourism sector accounts for
virtually the same proportion of employment in the City Region as it does nationally.
However, employment nationally is growing more rapidly and has increased by 10%
since 2000.
6.20
ƒ
ƒ
ƒ
The growth in the City Region has been driven by:
Newcastle/Gateshead’s role as short break destination, supported by four of the
region’s most popular attractions (Great North Museum, Baltic, Sage and
Discovery Museum), with Newcastle City Centre the largest employment centre,
reflecting the scale of visitor accommodation and business tourism;
Rapid employment growth in Durham, which has seen the largest increase with
the number of FTEs increasing by almost 2,000 (35%) since 2000; and
Strong growth in Northumberland where the number of FTEs increased by 600
(15%).
6.21 The sector contributed £885m to the City Region’s GVA in 2007, 3% of total
output. The sector has very low levels of GVA per FTE. In 2007, output per FTE
worker stood at £25,355 per annum, less than two-thirds of the City Region average
across all sectors and slightly lower than the average for the Tourism sector across
Great Britain. However, the sector has experienced the seventh largest increase in
GVA in the City Region and GVA growth has outpaced the national average for the
sector.
6.22 Both the level of Tourism employment and GVA are likely to be underestimated
by the NEEM definition, which covers hotels, catering, pubs and restaurants. This only
partially reflects the facilities and services which comprise the Tourism sector and in
particular does not capture employment (and the associated GVA) at key attractions
such as museums, galleries, gardens and leisure centres/facilities.
Key Locations
6.23 The economic geography of the Tourism sector is different to that of other
sectors of the economy, with the five key Tourism locations, which highlight significant
clusters of employment, in each of the largest centres (Newcastle, Durham, Sunderland
and Gateshead). There is at least one centre in each of functional labour market
geographies, with the exception of Washington, which has lower levels of tourism
employment.
6.24 This links to the critical mass of attractions, services and facilities offered in the
centres. The City of Durham has an exceptionally strong visitor market. As noted
earlier, Newcastle, and to a lesser degree Gateshead, have been successful in
developing a business visitor market and a city break market. They also act as a base
for exploring the assets of Northumberland and County Durham.
65
City/Urban Location: Newcastle City Centre; Gateshead Centre; Gateshead Metro Centre area;
Sunderland City Centre; Durham City Centre
6.25 Overall, the five key locations account for only 23% of total tourism employment,
with a substantial proportion of employment distributed more evenly across the City
Region. This reflects the smaller concentrations outside the five key locations for
example, Castle Morpeth in Northumberland. Many of the smaller and more rural
centres have successfully developed day visitor attractions and these have played a
part of strengthening the rural tourism market.
66
Process Industries
6.26 The Process Industries sector, which covers the oil, gas, chemicals, plastics and
rubber industries, is in the mid-range of the NEEM sector baseline in employment
terms, with just under 12,000 FTEs in 2007. This equates to 1.7% of the total
employment in the City Region. It is one of fourteen sectors in which employment has
fallen since 2000 and the FTEs reduced by nearly 3,500, a decline of 22.6%. However,
employment in Tyne and Wear City Region has fallen at a slower pace than in Great
Britain as a whole, and as a result the sector continues to be highly represented in the
City Region.
6.27 The sector generated £569m of GVA in 2007, which was 2.0% of total output.
GVA increased by 24.2% between 2000 and 2006, faster than the national increase in
the sector (9.2%), although output levels fell significantly in 2007. GVA per FTE
employee is £47,433, the sixth highest of the 23 sectors in the City Region. This is
above the City Region average but only 43% of the national average for the sector.
6.28 The manufacture of plastic and other plastic products is the largest sub sector,
employing over 6,700 FTEs - more than half of the total process industries FTEs. This
sub sector also experienced the lowest rate of employment decline between 2000 and
2007 and continues to be an employment specialism for the City Region with
employment levels above the national average. Chemicals and chemicals products are
the second largest sub-sector employing just over 2,400. However, it is underrepresented when compared to national levels. While Paint, Varnishes and Ink employs
fewer than 2,000 FTEs following considerable employment decline, it continues to be
highly represented in the City Region, with employment 3.5 times as high as national
levels.
The sector comprises five main
sub-sectors:
Sector
Plastic
Chemicals
Paints,
Varnishes
and Inks
Rubber
Oil and Gas14
Extraction
Employment
2007 (FTE)
6,761
2,435
1,685
916
191
Source: NEEM, 2007
14
The Oil and Gas extraction sub-sector only employed 191 FTEs in 2007 following significant decline from 707 in 2000 and is
therefore not included in the diagram.
67
6.29 Employees are relatively evenly distributed across the City Region with four local
authority areas having at least 15% of the total. There are concentrations of
employment in Durham City and Newcastle and the North, as Durham, Gateshead,
Northumberland and North Tyneside all have a considerably higher share of Process
Industries employment than they have of total employment overall. In 2007, there were
294 Process Industries workplaces in the City Region with the overall number of
workplaces remaining virtually static between 2000 and 2007, despite employment
decline. The workplaces are distributed across the City Region, although there are
variances in the distribution by size. Durham has a particularly high number of mediumsized workplaces, accounting for nearly 36% of all those with 50-199 employees, while
half of the large workplaces are in Newcastle and the North (Northumberland and North
Tyneside).
6.30 The business survey findings suggest that Process Industries businesses
consider it more important to be close to their workforce as opposed to supplier,
competitors, and customers in contrast to the other key sectors. Process Industries
businesses also appear to be reasonably well embedded in the City Region, especially
when compared with other manufacturing businesses, with the majority reporting that if
the were not based at their current location they would be elsewhere within Tyne and
Wear (57%) or Durham (15%). The findings also show that over the past three years
businesses in the sector have mainly received public sector support to access general
advice and guidance; innovation and financial advice.
68
Low Carbon Economy
6.31 The implications of the low carbon economy have been an important element of
the research on economic geography and linkages in the Tyne and Wear City Region.15
This reflected the potential for low carbon activities to offer new opportunities for a
rebalanced economy through developing the existing industrial base and increasing the
volume and performance of knowledge intensive service industries.
6.32 Lord Stern’s Review in 2006 set out the economic case for action on climate
change and for investment in a low carbon economy. The former Government’s vision
for a Low Carbon Industrial Strategy sets out the case for the transition to a low carbon
economy transforming the whole economy:
‘It will change our industrial landscape, our supply chain, and the way in which
we work and consume. For as well as being an environmental and economic
imperative, the shift to a low carbon economy is also an economic opportunity’.16
6.33 The opportunities are linked to significant savings through energy and resource
efficiency measures, and supplying the demands of a low carbon economy, which will
support economic growth and job creation. This study focuses on the opportunities
presented by the latter in Tyne and Wear City Region.
6.34 The vision sets out drivers of fundamental change in four key areas, two of
which are directly relevant to the City Region:
ƒ
ƒ
Putting in place the renewable energy infrastructure for the UK’s low carbon
future; and
Making the UK a global leader in the development and production of low carbon
vehicles.
6.35 Both of these include opportunities for the City Region to develop and diversify
its strengths of existing industrial and, particularly, engineering, operations and skills.
The opportunities within the two key low carbon markets are discussed in turn below.
A Fast Developing Market
6.36 The economic and employment potential of low carbon has been the subject of a
number of studies and policy papers. While a number of these use different definitions,
the numbers involved are substantial. In 2008, BERR and DIUS forecast that one
million additional jobs would be created by 2030, while Innovas in a number of studies
has suggested an annual growth rate of circa 5% per annum for low carbon
environmental goods and services. Forecasts for the development of renewable energy
are also very positive, with employment growth of 50,000 additional jobs by 2020, with
some estimates much higher.
6.37 A recent Work Foundation report on the low carbon economy17 highlighted three
scenarios for the development of low carbon activities:
ƒ
15
16
17
A low carbon implementation sector (reducing emissions through existing
technologies).
A detailed technical report focusing on the Low Carbon Economy has been produced as part of this study.
UK Low Carbon Industrial Strategy, 2009.
A 2020 Low Carbon Economy - A Knowledge Economy Programme Report, Work Foundation, 2010.
69
ƒ
Manufacturing led growth in low carbon activities (world class, export oriented
low carbon activity based on manufacturing).
ƒ
Low carbon service led activities (world class, export oriented low carbon
activities based on business, financial and technical services).
6.38 The Work Foundation report suggests that while low carbon technologies will be
associated with the creation of a large number of jobs, many will be focused on
relatively low skilled employment, delivering largely local services. New manufacturing
and services activities have, however, the potential to create knowledge intensive
employment requiring high level skills. The report notes that highly knowledge intensive
activities will be very competitive and that “we can expect only a discrete number of
global value creation locations to develop for each”. Other research suggests that the
Tyne and Wear City Region is well-positioned to become a leading centre for high
value added low carbon activities in renewable energy and Low Carbon Vehicles.18
6.39 A recent report prepared by GHK Consulting and published by the RDA network
“The Identification of the National Spatial Distribution of Expertise and Excellence for
Key New Industry, New Jobs Industrial Technologies,19” examined expertise in six
broad technologies including Low Carbon, which comprised Low Carbon Buildings,
Low Carbon Vehicles, Carbon Capture and Storage, Civil Nuclear, Offshore Wind and
Marine Energy. In an assessment, which considers the relative strengths of the English
regions, the North East was highlighted as an area of Significant and Combined
Presence (the highest assessment) for Low Carbon Vehicles and Offshore Wind, and
of Significant Presence (the second highest assessment) for Carbon Capture and
Storage and Marine Energy. In particular, the North East achieved the highest
assessment in Low Carbon Vehicles, whereas only two other regions met the threshold
(East of England and West Midlands).
6.40 Both Low Carbon Vehicles and Offshore Wind were classified in the GHK report
as emergent technologies with the former forecast to experience rapid market growth in
a sizeable world market. Similarly, Offshore Wind is “forecast to experience one of the
highest global market growth rates of all the technologies”. Carbon Capture and
Storage and Marine Energy were both identified as nascent with more uncertain
markets. Carbon Capture and Storage is seen to be a market of considerable
uncertainly, but with significant growth potential, while Marine Energy is predicted to
remain small in the foreseeable future.
Renewable Energy – Market Development in Offshore Wind Turbines
6.41 The market development of offshore wind turbines is a key low carbon economy
opportunity for the Tyne and Wear City Region within the Renewable Energy sector.
Locations in and around the eastern parts of the City Region – e.g. Blyth, North
Tyneside (stretching into Newcastle along the North Bank of the Tyne) and South
Tyneside and Sunderland – are able to supply the large industrial and waterfront areas
required by the sector, as well as access to a skilled workforce, and port facilities to act
as a service centre and proximity to Dogger Bank (which will generate demand for port
capacity to manufacture, assemble and maintain the proposed wind farms). The City
Region’s opportunities in this market are strengthened considerably by the presence of
the recognised centre of excellence – the National Renewable Energy Centre (NAREC)
18
19
Economic Implications of Climate Change, Arup and Cambridge Econometrics, 2010.
GHK, Technopolis and CURDS, University of Newcastle upon Tyne.
70
in Blyth – which is playing a key role in developing the market by conducting research
and knowledge transfer activity, such as the testing of new offshore wind turbine
blades.
6.42 The opportunities for the City Region are multi-faceted and include the
manufacture and assembly of wind turbines alongside associated supply chain
requirements. For example, companies in South Tyneside are already manufacturing
offshore wind platforms. Additional key developments to date include announcements
by Clipper Windpower of their intention to manufacture wind turbines blades on the
Neptune Estate on the North Bank of the River Tyne, and the preparation of land for
further investment by Shepherd Offshore. There is also a strong sub-sea cluster based
on the River Tyne, where specialist firms manufacture some of the specialist equipment
required to rig and support offshore and energy industries.
Low Carbon Vehicles
6.43 The development of electric vehicles is a niche low carbon opportunity for Tyne
and Wear City Region. An in-depth report looking at the economic impact of climate
change mitigation action on the North East20 estimated that the differential in production
values for low carbon and standard vehicles could result in a 12% rise in GVA for the
automotive sector within Tyne and West City Region.
6.44 There is national recognition of the area’s existing strengths in the market
through its designation as a Low Carbon Economic Area for Ultra Low Carbon Vehicles
(under the former government). The core area comprises Sunderland, South Tyneside
and the former district of Easington in County Durham, and is the location where major
companies including Nissan and Smith Electric vehicles are based. Key developments
so far include securing investment in the Nissan battery plant and the production of the
Leaf, which will be the first mass-market electric vehicle. Both of these developments
have already helped to safeguard jobs in the City Region.
6.45 In the south of the City Region, a number of particular companies are likely to
take a leading role in the development of low carbon forms of transport. There are also
opportunities in Northumberland with Avid, which is based in Cramlington and is
continuing to develop its electronic vehicles market.
6.46 At first glance, the initial opportunity for Tyne and Wear City Region seems to
reside on electric vehicles. However, this could be expanded subsequently to embrace
other low carbon vehicle technology, such as hydrogen, and related technology,
including electrical network and informatics (all of the different elements required to
transform the automotive industry). The North East has begun to roll out electric vehicle
charging points, after being one of three UK locations to be given Plugged in Places
funding. Local authorities in Newcastle and Gateshead have also been taking steps to
introduce electric vehicles into the authorities’ car pools. Combined, the various
aspects of the electric vehicle opportunity will create a wide range of new jobs,
including jobs in Manufacturing and Research and Development. There will also be
jobs generated to install the charging points as part of the initial phase of activity.
These will be replaced later by training-related jobs as a diverse range of organisations,
including the fire service, AA, police and car dealers are introduced to such vehicles.
20
Economic Implications of Climate Change, Arup and Cambridge Econometrics, 2010.
71
Other Low Carbon Activities
6.47 In general terms, micro-generation technology is likely to become increasingly
viable and will create local economic opportunities in the City Region – in both
Manufacturing and project management. There have been a number of community-led
pilots in the City Region, and micro-generation is expected to be a potential source of
activity for social enterprises. While technology will develop to take advantage of the
regulatory and pricing mechanisms, there is a need for this growing area of economy
activity to be championed within the Tyne and Wear City Region.
6.48 To support the development of a low carbon economy in the City Region, there
will be a requirement for the public and private sectors to bring together different
strands of policy to ensure low carbon companies based in the UK have access to the
infrastructure, skilled workers, research and development and investment opportunities
they will demand to invest in the City Region.
6.49 This links with the City Region’s opportunity to develop low carbon consultancy
skills, building on the very strong base of consultancy and technical experts. This is
recognised in the ‘Impact of Climate Change Mitigation Action on the North East
Economy’ Report which suggests that while the benefits of Carbon Reduction
Consultancy will be relatively small in the North East (due to the dominance of London
and the South East in this area), such future activity in the North East will be focused
overwhelmingly within Tyne and Wear City Region.
6.50 There is considerable potential in this area for innovation, knowledge transfer
and research and development activities drawing upon assets such as the National
Renewable Energy Centre, the National Centre for Low Carbon Vehicles and the
University of Newcastle upon Tyne’s Institute for Research on Sustainability.
6.51 Other potential developments are at the forefront of new technology. Alcan
Lynemouth Power Station is a coal and biomass fired power station, which provides
electricity for the Alcan Lynemouth Aluminium Smelter. The company is developing
plans to construct a 13 turbine wind farm near to the station and to develop carbon
capture and storage (CCS) technology. By way of support, the Coalition Government
has announced that a market sounding exercise will take place to help the Department
of Energy and Climate Change to explore options for the selection of future CCS
demonstration projects as well as opportunities to access funding through the EU
funding mechanism NER300.
6.52 New opportunities will gain momentum as markets grow stronger, and new
regulations are agreed and are introduced e.g. biomass. The most recent example is
the effort to stimulate the construction sector through the retro-fitting of housing, which
is currently being prioritised by the Government and has significant employment
creation potential. Reports have suggested that such benefits in the North East region
may be more concentrated in Tyne and Wear City Region due to the larger business
and resident population, which is estimated to generate £59m of the anticipated £89m
GVA increase within the North East.21
21
Economic Implications of Climate Change, Arup and Cambridge Econometrics, 2010
72
Links with Higher Education Institutions
6.53 The four Universities in the City Region can support the development of a low
carbon economy through innovation, knowledge transfer and research and
development activities. This is already taking place, and there are various examples of
activities relating to different technologies, which are being undertaken by the
University of Newcastle, Durham University and the University of Sunderland. As
highlighted in the regional annex of “The Identification of the National Spatial
Distribution of Expertise and Excellence for Key New Industry, New Jobs Industrial
Technologies” report, these include:
ƒ
Low Carbon Vehicles: The University of Newcastle has a Centre for Advanced
Electric Drives and the Transport Operations Groups; the University of
Sunderland has the Institute for Automotive and Manufacturing Advanced
practice; Durham University has the Centre for Automotive Practice.
ƒ
Low Carbon Capture and Storage: Durham University’s Energy Institute has
various specialists, including CSS – It is a research partner on two of the three
shortlisted UK CSS demonstrator projects. It also has the Centre for Research
into Earth Energy Systems.
ƒ
Offshore Wind: Durham University focuses on indirect and direct drive
technology, offshore conditioning monitoring and reliability. It is one of the
leading partners in the Supergreen Wind Consortium (nine groups with expertise
in wind turbine technology, aerodynamics, hydrodynamics, materials, electrical
machinery and control and reliability and condition monitoring). The University of
Newcastle focuses on mechanical drive trains.
ƒ
Marine Energy: The University of Newcastle is the UK’s largest Marine
Engineering undergraduate school. The school of Marine Science and
Technology, and the Power Electronics, Drives and Marine Group, both focus on
marine biology and technology, with the electrical department possessing some
renewable experience.
6.54 It will be important to ensure that the activities of such centres across the
Universities (and those of NAREC) are joined up, and that knowledge is being
transferred to those companies involved in the development of the relevant low carbon
markets to maximise the benefits for the local area, the City Region and the North East.
Business Views: Low Carbon
6.55 There were mixed views from the companies surveyed as part of this study
about the potential impact that the development of a low carbon economy could have
on the business. While there was an even split between those that felt that the impact
would be positive or that there would be no impact at all, only one in ten businesses felt
that the impact would be negative. Where businesses expected the impact to be
positive, the main benefits were expected to be an increase in demand for their
products/services and the opportunity to develop new products. Manufacturing
businesses were more likely to expect the low carbon agenda to impact (positively or
negatively) on their industry. The analysis of the low carbon opportunities within the
City Region suggests that manufacturing businesses are particularly well placed to
73
experience the benefits, albeit with continued support and commitment from the public
sector.
Summary
6.56 Tyne and Wear City Region is well placed to capture the benefits from the
development of a low carbon economy by capitalising on its locational advantages and
building upon its strong industrial base, existing engineering skills and the strengths of
its key companies. The City Region’s main opportunities relate to the development of
the electric vehicles and offshore wind turbine markets, where progress is already
being made. The main geographical opportunities are concentrated in the south of the
City Region (South Tyneside, Sunderland, and Easington) in terms of electric vehicles;
Newcastle/North Tyneside (North Bank of Tyne) and Blyth for offshore wind; and other
areas in the City Region are likely to be involved in supply chain and service sector
spin-offs.
6.57 The Work Foundation makes the case for prioritising the development of low
carbon activities to generate new employment activities, and it argues that jobs that are
not created in the UK will instead be created elsewhere. Many of the knowledge
intensive activities are likely to become spatially concentrated in a limited number of
locations, and will build capacity from some of the existing world-class facilities located
in the City Region. All the evidence suggests that the Tyne and Wear City Region has
the potential to establish itself as a leading European centre for renewable energy and
low carbon vehicles.
6.58 Other opportunities will emerge for the City Region as new regulations are
agreed, as has recently been seen by the Government’s recent prioritisation of retrofitting housing. Further opportunities are likely to be linked to Carbon Reduction
consultancy and research suggests that the regional benefits of such activities will be
concentrated in the City Region.
6.59 The scale of these benefits in employment terms are currently unclear and will
ultimately depend on the success of early opportunities. Nevertheless, it is clear that
the development of the Low Carbon economy offers the Tyne and Wear City Region a
significant opportunity in helping to maintain and diversify the existing industrial base.
74
7.
Conclusions
Introduction
7.1
The Tyne and Wear City Region enjoyed a sustained period of economic growth
between 2000 and 2008. The City Region benefited from strong growth in the national
economy, and was also supported by the work of a number of local authorities and
agencies involved in land remediation and physical regeneration. The key features of
the ‘growth period’ were:
ƒ
Private sector service employment surged, helping to re-balance the economy,
with growth in key sub sectors, such as business services outperforming both
national growth and the majority of other City Regions; and
ƒ
Employment growth was distributed across the geography with North Tyneside
and Sunderland recording very high rates of employment growth.
7.2
Employment growth in the last decade has contributed towards further altering
the balance of the economy towards an emerging knowledge based and service sector
driven economy in the City Region. Public sector and manufacturing employment
numbers remain higher in Tyne and Wear City Region than the national average.
7.3
As the Labour market, Skills and Talent Report (Regeneris) makes clear, the
impact of the recession along with the reduction in public sector employment presents
a series of new challenges for the City Region. These include the likely reduction in
opportunities for graduates and the need for jobs, skills and re-training actions. This
Report, as well as the NLA Report on Housing and the Economy, highlights a number
of fundamental issues regarding employability, higher skills, access to employment
centres, the quality of the residential offer in urban areas, and new housing
development in attractive locations. These will influence the priorities for the leading
public sector agencies over the next five years.
Benchmarking the TWCR economy against comparator city regions
7.4
The brief for this study asked the question: How does the City Region
compare with other, similar city-regions in terms of its key economic
specialisms?
7.5
Tyne and Wear City Region is a substantive economy, with almost 700,000 jobs
and a GVA of £29billion, which means that it is on a par in terms of size with the
Sheffield City Region. It is, however, significantly smaller than the Leeds City Region
and the Manchester City Region, and has relatively few linkages with the other major
northern conurbations, unlike Sheffield, Leeds, Manchester and Liverpool.
7.6
Between 2000 and 2008, the Tyne and Wear City Region reduced the
‘prosperity’ gap with other city regions through strong employment and GVA growth.
Overall employment growth was twice as high as the Leeds City Region and the
Manchester City Region. Furthermore, in a number of sectors Tyne and Wear City
Region recorded the highest level of growth when compared to seven other city regions
that were examined as part of this study.
7.7
The key features of the Tyne and Wear City Region relative to other places are:
75
ƒ
A higher than average representation in terms of public sector employment
(similar to Liverpool) and manufacturing (similar to Sheffield and Nottingham);
and in specialist sectors including automotive (similar to Sheffield); and
ƒ
Much lower representation, even after recent employment growth, in private
sector services, notably financial and professional services (similar to Sheffield
and Liverpool), and Creative and Digital Industries (similar to Sheffield and
Liverpool).
ƒ
In terms of the macro-economic geography of Tyne and Wear City Region, there
are similarities in structure and composition with Leeds City Region (e.g.
Durham City/York and Sunderland/Bradford), and Tyne and Wear City Region
more cohesive as a functional economic geography than either Leeds or
Liverpool City Regions.
7.8
Further growth is required to increase the level of employment across all private
service sectors in the Tyne and Wear City Region to match the city region and national
averages. In total, over 33,600 jobs are required to close the employment gap with the
city region average, and 43,000 to meet the national average.
Employment Gap With Other City Regions
Sector
Gap with CR
Average
Financial & Professional Business
21,320
Wholesale and Retail
8,323
Creative and Digital
477
Transport
2,904
Research and Development
655
Other Services
0
Total
33,649
Gap with GB
Average
21,339
9,352
4,988
4,805
1,733
526
42,744
7.9
Looking forward, further higher levels of employment growth are required for
Tyne and Wear City Region to match its peers, with, for example, an increase of
around 40% in Transport and 20% in both Creative and Digital and Financial,
Professional and Business Services. This presents the City Region with a particular
challenge given the forecasts that the employment base in the City Region will decline
or stagnate in the short term as public sector employment losses off-set any growth in
other sectors.
7.10 When the eventual upturn arrives, the Tyne and Wear City Region needs to be
prepared for the next growth cycle to make another step forward by:
ƒ
Outperforming other city regions with regard to private service sectors; and
ƒ
Developing knowledge intensive, high value added jobs and sectors to close the
productivity gap.
Economic sectors, sub sectors and locations
7.11 The Study Brief asked the question: which key economic sectors and subsectors have played the most important roles in driving employment and GVA
growth in Tyne and Wear City Region over the last decade?
7.12 In terms of scale, the greatest contribution to GVA and employment growth has
been generated by the Financial, Professional and Business Services sector, where
employment increased by some 32,659 FTE jobs and £3.8 billion GVA. This sector has
a relatively high GVA/FTE, although Tyne and Wear City Region lags behind the
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national average. Nevertheless the growth has been remarkable in a relatively short
space of time.
Key Employment and GVA Sectors
Employment (FTE)
2000
2007
Change
Public Sector
187,101 207,191
20,090
Finance/Prof/ Business
86,197 118,856
32,659
Construction
53,082
60,018
6,936
Tourism
33,233
34,903
1,669
Transport
24,736
32,026
7,290
Automotive
28,197
28,522
325
Creative and Digital
22,537
26,189
3,652
Total
435,083 507,705
72,621
Source: NEEM, 2007
2000
4,246
3,384
980
541
721
958
835
11,665
GVA (£m)
2007
Change
6,612
2,366
7,189
3,805
2,120
1,140
885
344
1,063
342
1,286
328
1,639
804
20,794
9,129
7.13 Automotive is an important sub sector, and employment numbers have held up
well in sharp contrast to other manufacturing sub sectors, while in Creative and Digital,
a total GVA of £1.69 billion makes this one of the most important sub sectors in the City
Region. As with other sub sectors in private sector services, Tyne and Wear City
Region is under-represented, suggesting potential for further growth.
7.14 The table below sets out the sub sectors where employment increased by over
2,000 FTE during the period 2000-2007, and demonstrates again the crucial role
played by private sector services in supporting recent economic and employment
growth. The City Region has benefited from strong growth across the sub sectors of
Financial, Professional and Business services (shaded in the table below).
Sub Sectors with a net employment increase of over 2,000 FTEs (20002007)
Employment (FTE)
2000
2007
Change
Other Business Services
36,978
51,294
14,316
Public Administration & Defence
53,887
65,038
11,151
Construction
53,082
60,018
6,936
Financial Service
14,526
21,227
6,701
Education
52,902
57,638
4,736
Property
7,052
11,387
4,336
Accountancy, Legal & Consultancy
17,532
21,861
4,329
Health
80,311
84,515
4,203
Computer Services
8,821
12,821
4,000
Other Land Transport
15,742
19,565
3,823
Architectural and Technical
10,109
13,087
2,978
Ancillary Transport Services
7,152
9,914
2,762
358,095
428,364
70,269
Source: NEEM, 2007
7.15 Manufacturing continues to be a crucial element of the City Region economy,
although employment numbers have been declining for some time. Employment in the
sector tends to be full time, skills levels are high, as are average wages. In addition,
77
many manufacturing companies are successfully competing in national and
international markets.
7.16 There are a number of areas, such as Automotive and low carbon, where there
are opportunities to secure new investment and generate employment. Manufacturing
is a major part of the wealth generating element of the economic base, and it is a major
driver of export performance. When account is taken of those sectors that are based on
local services – Health, much of Public Administration, school age Education, much of
Retail and Leisure, and Public Transport – Manufacturing and Financial, Professional
and Business services comprise the majority of the export earning, wealth creating
opportunities which underpin the City Region economy.
Changes in employment geography: decentralisation and/or agglomeration?
7.17 The Study Brief asked the question: where are the main concentrations of
employment in these sectors and subsectors to be found? Has their distribution
of employment within the City Region changed over time? Is there evidence to
suggest that agglomeration effects are increasingly powerful and tend to draw
new economic activity to the main employment centres?
7.18 In recent years, Tyne and Wear City Region has managed successfully to grow
its private sector employment base, notably in Financial, Professional and Business
services, by offering a broader range of locations to capture new investment. Newer
locations have complemented the traditional commercial centres in the City Region.
There is evidence that a significant proportion of new investment has favoured lower
cost and out of town locations, reflecting the type of services being provided i.e. ones
that do not require a prestigious location. This reflects the diversity of investment which
has been attracted, although the City Region still needs to attract and retain greater
numbers of higher value and higher skilled employment in Financial, Professional and
Business services.
7.19 The City Region offers locations which are both complementary and competitive.
The range of locations means that investors can have corporate and headquarters
functions in one location, and less expensive accommodation elsewhere in the City
Region. This allows the City Region to take advantage of its success in attracting high
level functions, by offering other locations where costs are lower for back office
services. This process can also work in reverse.
7.20 A number of locations compete with each other. This is inevitable and it could be
to the advantage of the City Region – it acts to lower costs (to the benefit of the
company), and increases choice. The company survey undertaken as part of the
research for this report indicated that companies’ second choice location was
elsewhere in the City Region. This suggests that there will be movement within the City
Region as companies expand, contract and look for appropriate accommodation.
However, it is important that where company movement is predominantly displacing
employment, with few additional jobs involved, the public sector should not provide any
subsidy.
7.21
ƒ
In terms of the location of private sector services:
The local authority area of Newcastle has increased its employment, although its
proportionate share vis-à-vis total employment in the City Region has reduced;
and
78
ƒ
North Tyneside (through Cobalt) and Sunderland (through Sunderland
Enterprise Park and Doxford International Park) have both increased their share
of total City Region employment.
7.22 Although the Newcastle City Centre/Gateshead urban core has the highest
concentration of highly skilled and highly paid employees, and is home to a significant
number of large employers, there is only limited evidence to date of agglomeration.
There is potentially more evidence of agglomeration across the economic geography
covering the Newcastle and the North labour market geography in the City Region,
where there is a broader offer in terms of location, the potential of locating near to the
City Centre (and its cultural and leisure facilities) without paying city centre rents, and a
very strong housing market and wider labour force.
7.23 The Regeneris Labour Market, Skills and Talent study suggests that
agglomeration is dampened by the City Region’s scale, location and accessibility,
dispersal of economic activity and sectoral mix. It notes that the labour market is “thin”
for private sector knowledge based industries. The report does conclude, however, that
there is a case for “drawing more on the strengths and assets of Tyne and Wear City
Region economic core in order to drive economic growth across the City Region as a
whole”
7.24 Although evidence of agglomeration is thus far limited, Newcastle City
Centre/Gateshead Quayside is a unique asset for the City Region combining
Universities, Public Administration, Creative and Digital, Tourism and Leisure, and a
very large Financial, Professional and Business services base. As such, it presents a
distinctive offer and competes with other major cities in the north of England.
7.25 The other concentrations of essentially office based employment in sectors that
have grown, are based in out of town locations, such as Cobalt, which has become an
important inward investment location. The mobility of employment in the private sector
services is also reflected in the success that all districts in the City Region have had in
capturing new investment, although a proportion of employment growth is in services
which require a local presence.
7.26 There are a number of centres that now include both service and industrial
employment, although the premier locations are based on city centre and new high
quality business parks. In Manufacturing, employment is concentrating in fewer
locations, with the greatest focus in the south of the City Region, notably Washington.
While low carbon offers new opportunities for the existing manufacturing centres, those
areas with large riverside sites are likely to be at an advantage in terms of capturing
some of the emerging offshore wind turbine investments.
7.27 In effect there are two processes taking place – employment is concentrating in
a limited number of locations, and this varies by sector; and these locations are
dispersed, although the largest concentration is at the economic core of the City
Region.
7.28 Overall, the 2000-2008 economic performance shows that it is possible to have
strong employment growth across different economic geographies. In simple terms,
while there is some inevitable competition for new investment/jobs, employment growth
does not have to be at the expense of neighbouring authorities. Given the need to
close the gap with other City Regions there is a strong argument to suggest that
employment growth across all of the economic geographies is needed to enhance
competitiveness and prosperity.
79
Key Employment Locations
Office Based Services
Manufacturing
Newcastle City/Gateshead Washington
Central Sunderland
Team Valley
Durham City
Boldon Business Park
Cobalt
East Gateshead Industrial Estates
(including Saltmeadows Industrial
Estate, East Gateshead Industrial
Estate; Stadium Industrial Estate,
Felling Industrial Estate)
Doxford International Park, Bracken Hill, N and NW Industrial
Estates (Peterlee)
Gosforth Park
South Shields, Jarrow and Hebburn
Washington
Portobello; Blaydon
Team Valley
Cramlington
Bracken Hill Business
Park (Peterlee)
Killingworth
Newburn Riverside
Low Carbon
South Tyneside
North Tyneside
Blyth
Washington
Easington
Port of Sunderland
Sub-sector roots in the City Region
The Study Brief asked the question: How deeply embedded within the city-region
are firms within key subsectors? What keeps them in Tyne and Wear City Region
and what might cause them to reconsider whether this is the right place to do
business?
Strengths and Weaknesses of Tyne and Wear City Region as a Business
Location
7.29 Strengths: Connectivity and accessibility is viewed as a key strength and asset
of business locations in Tyne and Wear City Region. In particular, the businesses
surveyed as part of this study placed significant emphasis on their location being
central, easily accessible and supported by good road infrastructure. Proximity to
markets; access to workforce and skills; and the low costs of premises are also seen as
primary location strengths. Positive attributes included the attitude of the local
workforce, the ability to attract suitable staff as well as a relatively low cost base.
7.30 There is some evidence to suggest that perceptions on the strengths of Tyne
and Wear City Region as a business location vary according to whether the business is
located in the urban core or in more outlying areas of the City Region:
ƒ
ƒ
ƒ
Businesses in Newcastle/Gateshead saw being in a central, easily accessible
location as a key strength,
Low costs tended to be highlighted as a key strength by businesses located
outside the urban core.
More generally, travel and connectivity was seen as a ‘commercial strength’
across the City Region, which supports the evidence that recent employment
growth has occurred in both city/urban areas and out of town business parks.
7.31
Weaknesses: In comparison to locational strengths, less of a consensus exists
on the main weaknesses of the City Region as a business location, and there is
evidence to suggest that a reasonable proportion of businesses are happy with their
80
current location and that it meets their business needs. While connectivity and
accessibility is viewed as a key strength of Tyne and Wear City Region as a business
location, it is also viewed as a weakness by some businesses, albeit to a much lesser
extent. Other weaknesses included general travel and connectivity issues, and road
infrastructure, thus highlighting the fact that the main locational concerns raised by
businesses tends to centre on transport issues.
7.32 Importance of Linkages: Businesses placed significant importance on being
located close to their workforce, which may reflect some of the concerns raised about
transport infrastructure. Over half of those surveyed felt that it was important to be near
their main customers, while fewer firms saw it as important to be close to key suppliers
(29%) and main competitors (13%).
7.33 There is evidence that the importance of these factors varies according to
sector. Being close to customers is seen as being important by a higher proportion of
Financial, Professional and Business services (62%) and Tourism (74%) businesses,
and in contrast, a lower proportion of Manufacturing (16%) businesses. Further,
proximity to workforce, key suppliers and main competitors are most important for
businesses in the Tourism sector, which may suggest that the sector could have the
strongest local supply and market linkages in the City Region economy.
7.34 Labour Market and Travel to Work: The importance of businesses being
located near to their workforce is reinforced by the majority of those businesses
surveyed who said that their workforce travelled less than 10 miles to work. On
average, the majority of employees working in SMEs in the City Region travelled less
than five miles or between 5 and 10 miles to their place of work. This was acute for
micro businesses, where two thirds of the workforce travelled less than 5 miles.
Newcastle and Durham attract employees from the widest geographical area (although
size of labour market catchment area should not be confused with absolute numbers of
flows), as well as serving the labour market of their local residents. Businesses in other
areas tend to recruit from a smaller geographical area, e.g. Sunderland, South Shields,
Peterlee and Jarrow.
7.35 Alternative Locations: The majority of businesses surveyed appear to be well
embedded within the North East. Almost three quarters of respondents reported that if
they were not located at their current location, they would be at another site in the
North East. Encouragingly, a large majority of businesses stated that their alternative
location would be in Tyne and Wear (51%), County Durham (23%) or Northumberland
(4%). While this may include locations outside the City Region geography it
nevertheless suggests a reasonable level of embeddedness amongst those businesses
that were surveyed.
Sectors that offer the most opportunity
7.36 The Study Brief asked the question: are the high employment and GVA
growth sectors of the recent past necessarily the ones that will drive economic
change in the future?
7.37 The economic recession has adversely affected many businesses, and the
housing and commercial development market has slowed considerably. The challenges
facing the City Region have been compounded by the Emergency Budget, and the
immediate reductions in public sector expenditure in a number of areas.
7.38 Stakeholders in Tyne and Wear City Region face major challenges over the next
few years in dealing with the employment and economic consequences of further
81
significant reduced public sector expenditure. These challenges are outlined in detail in
the Regeneris Labour Market, Skills and Talent Report, and include the need to deal
with the likely significant redundancies in the public sector and increasing
unemployment and worklessness.
7.39 Nevertheless, the economy will (eventually) enter a period of sustained
economic recovery, and it is important that the City Region is able to take advantage of
the more favourable conditions when they return and accelerate economic growth.
7.40 In strategic terms, partners in the City Region should focus their priorities and
resources on supporting knowledge intensive private sector service employment. This
remains the key weakness of the economy at the present time. The important factor is
identifying key sectors with the ability to earn income from outside of the North East i.e.
those that are not dependent upon local demand. In identifying the sub sectors for
growth the key criteria which have influenced the selection are a combination of:
ƒ
Strong presence and/or unrealised potential;
ƒ
Strong recent economic performance;
ƒ
Recognised assets in terms of skills, leading companies, research capability,
business infrastructure; and
ƒ
Medium and long term market opportunities.
7.41
The priorities are based around three groups:
ƒ
Private sector services, particularly in higher value added activities and those
where the City Region lags behind or has acknowledged strengths.
ƒ
Retaining public sector employment in regional/national headquarters/service
centres and Universities.
ƒ
Industrial employment based on sub sectors where the City Region has
acknowledged strengths and market opportunities (including low carbon
economy opportunities).
7.42 While public sector employment will fall over the next three years, there are likely
to be opportunities to secure new employment as public sector services re-organise.
Universities are also facing short term challenges with regard to funding, although in
the medium to long term they are likely to grow as overseas students continue to
choose the UK and the North East as a place to study.
7.43 Although the UK’s manufacturing employment has been in decline for many
decades, low carbon offers a new opportunity for investment and employment growth.
It offers potential for a range of sub sectors and technologies, and the emphasis on
new products and processes plays to the strengths of leading companies and
University expertise in the Tyne and Wear City Region.
Long Term Growth Potential
7.44 There is a need to explore the factors, which play a part in attracting and
supporting the expansion of high value added service employment including leisure,
culture and heritage, universities and housing. In other city regions, the attractiveness
of the major city centre is an important element in securing new investment.
7.45 The table below sets out the sub sectors with long term growth potential
(assuming a sustained period of economic growth is established). Some of the
82
locations identified in the table have a leading role to play in attracting the high value
added investments needed to accelerate economic growth.
Long Term Growth Potential
Sub Sector
Other Business Services
Financial services
Creative and Digital
Tourism
Regional/national
headquarters/service centres
Universities
Automotive (manufacture only)
Process Industries
Employment
Locational
Base (FTEs)
Focus
Private Sector Services
51,294
16 Key locations including City Centres and out of
town business parks
21,861
Newcastle City Centre and Waterfront, Central
Sunderland , Doxford International Park,
Gateshead centre, Gateshead Quays and Baltic
Business Quarter, Cobalt, Gosforth, Bracken Hill
Business Park (Peterlee)
26,189
Newcastle City Centre and Quayside, Gateshead
Quays and Baltic Business Quarter, Cobalt,
Team Valley, Great North Park, Doxford
International Park, Metro Centre Area, are
adjacent to Killingworth, Durham City and
Bracken Hill Business Park (Peterlee)
34,903
Durham City, Newcastle City Centre
Public Sector
1
10,000
Newcastle and Gateshead Urban Core, Durham
City,
18,5682
Newcastle City Centre, Durham City, Sunderland
City Centre
Industrial
11,252
Washington supported by 9 other automotive
locations
11,989
Durham, Gateshead, Northumberland, North
Tyneside
N/A
North and South Tyneside waterfront, Blyth,
Washington,
Easington,
Team
Valley,
Sunderland
Low Carbon
Electric
Vehicle/Renewable
Energy
1
Estimate
2
No of jobs – based on ABI data
Source: NEEM, 2007 (with above exceptions)
7.46 The long term growth potential sectors account for circa 20% of the economy
and are very heavily weighted towards private sector services. The industrial sectors
are important in their potential to replace lost jobs and effectively help stabilise
manufacturing employment. Significant growth in these sub sectors would help to
close the gap with the city region average. There are likely to be new and emerging
markets, which present new opportunities for businesses in the North East. These are
likely to be sub sets of existing sectors, and in most cases it will be the development of
new products and markets that will generate opportunities for the business base.
7.47 In the short term, opportunities for employment growth are likely to be limited to
private sector services, including the re-organisation of the some businesses into
fewer, larger centres. It is crucial that Tyne and Wear City Region is able to support reinvestment and attract new investment in key sectors, such as Business Services and
Creative and Digital.
83
Economic Geography
7.48 The four labour market geographies identified in this study are closely linked and
the 2011 Census is likely to show increased commuter flows (and over longer
distances) between the geographies. Each geography is distinctive, and the scale of
opportunity of the growth sectors identified in the previous section will vary
considerably within and between the geographies:
ƒ
Central Sunderland and Washington (with parts of South Tyneside and County
Durham) will reinforce their roles as the industrial heartland with renewable
energy and low carbon vehicles offering the best opportunities for a
manufacturing revival.
ƒ
Newcastle and the North will continue to re-position the North East as a high
value, private sector service economy, with the urban core offer
(Newcastle/Gateshead) complemented by the Cobalt and semi-rural and rural
town offer. The urban core will be the location which competes with the city
centre offices in Manchester, Leeds, Sheffield and Liverpool in sectors such as
Financial, Professional and Business Services and Creative and Digital.
ƒ
Durham City and wider County Durham will strengthen the economy of the
County through a contribution towards the industrial base and low carbon
opportunities and, at the same time, by developing a unique offer based on a
tourism/university/employment centre.
7.49 These are not prescriptive scenarios and all the labour market geographies
within the City Region will seek to develop some form of service based and low carbon
economy e.g. Sunderland will continue to develop is offer for Financial, Professional
and Business services, and North Tyneside/Newcastle and Blyth, which already have a
number of substantial assets, are providing, and will continue to provide new
opportunities in renewable energy. An analysis of the economic growth period between
2000 and 2008 highlighted that there were a range of locations that investors in the City
Region were attracted, which allowed ‘non-traditional destinations’ to increase their
base in knowledge intensive forms of employment.
Low Carbon Economy
7.50 The Study Brief asked the question: How, in particular, have industries and
firms that are likely to be critical to the development of low carbon, non-polluting
energy sources, and climate change mitigation fared, in Tyne and Wear City
Region and how might they develop in the future?
7.51 Tyne and Wear City Region is well placed to capture the benefits from the
development of a low carbon economy by capitalising on its locational advantages, and
building upon its strong industrial base, existing engineering skills and the strengths of
key companies. The City Region’s main opportunities relate to the development of the
electric vehicles and offshore wind turbine markets, where real progress has already
been made. The main opportunities are concentrated in the south of the City Region
(South Tyneside, Sunderland, and Easington), North Bank of the Tyne, Blyth and
Cramlington; although the wider supply chain activities are likely to involve other areas.
7.52
There are a set of substantive and immediate priorities for the City Region:
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Electric vehicles and further development of the battery plant: Initially the
focus of the opportunity is on electric vehicles, including the production of the
Nissan Leaf. However, this subsequently expands to other low carbon vehicle
technology, such as hydrogen, and related technology including electrical
network and informatics (all of the different elements required to transform the
automotive industry). The North East has begun to roll out electric vehicle
charging points, after being one of three UK locations to be given Plugged in
Places funding. Combined, the various aspects of the electric vehicle opportunity
will lead to a wide range of jobs, including jobs in manufacturing and research
and development.
ƒ
Offshore wind turbines: The opportunities for the City Region are multi-faceted
and include the manufacture and assembly of offshore wind turbines as well as
working as part of the associated supply chain. Key developments to date
include announcements by Clipper Wind power of their intention to manufacture
wind turbines on the North Bank of the Tyne, and the preparation of land for
further investment by Shepherd Offshore. Key locations include Blyth, North
Tyneside, South Tyneside and the Port of Sunderland.
ƒ
Micro-generation: This technology is likely to become increasingly viable and
will create local economic opportunities in the City Region – in both
manufacturing and project management. There is a need for a public sector
lead to be taken in removing barriers, promoting opportunities and market
creation.
ƒ
Adapting existing engineering skills – the City Region has a strong
engineering base and these skills could be adapted to act on opportunities
presented by a low carbon economy and to support the development of the two
markets above.
7.53 While other opportunities will gain momentum as new regulations are agreed
e.g. biomass and carbon capture and storage, there are two substantive areas where
the City Region has significant opportunities. These are the development of low carbon
consultancy skills, building on the City Region’s very strong consultancy and technical
experts, and the retro fitting of housing, currently being prioritised by the Government,
with significant employment creation potential. The latter is likely to be carried out over
a five to ten year programme.
7.54 The scale of these benefits in employment terms is currently unclear and will
ultimately depend on the success of earlier opportunities. Nevertheless, it is clear that
the development of the low carbon economy offers the Tyne and Wear City Region a
significant opportunity in helping to maintain and diversify the existing industrial base
and to develop accompanying services, including technical expertise. The low carbon
economy is now a fiercely competitive global phenomenon, and successful city regions
will be those that have in place well developed local and sub-regional plans to work
with the private sector to capture new opportunities.
7.55 The business survey, undertaken as part of this study, revealed mixed views
about the potential impact that the development of a low carbon economy could have
on the business base in the City Region. While there was an even split between those
that felt that the impact would be positive or that there would be no impact at all, only
one in ten businesses felt that the impact would be negative. Where businesses
expected the impact to be positive, the main benefits were expected to be an increase
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in demand for products/services and the opportunity to develop new products.
Manufacturing businesses were most likely to expect the low carbon agenda to have a
more profound impact upon their industry and sector. This reflects the analysis of the
low carbon economy opportunities within the City Region, which suggest that
manufacturing businesses are particularly well placed to experience the benefits, but
are also mindful of the short-term challenges to overcome.
Role of the public sector
7.56 The Study Brief asked the question what is the continuing and future role of
the public sector as an employer and service provider in sustaining and
developing economic opportunities, jobs, higher level skills, knowledge and
innovation?
7.57 The role of the public sector is likely to change over the next two years as the
ideas and policies of the Coalition Government re-shape how economic development is
managed and delivered in England. These changes will be set within a broader
framework of a reduction in the role of formal regional institutions, and a major new
emphasis on localism, including the delegation of some decision making to
neighbourhoods and communities.
7.58 Local Enterprise Partnerships (LEPs) are expected to take forward the economic
development role in place of Regional Development Agencies (RDAs), and the full
range of responsibilities of LEPs will become clearer over the next six months. At the
same time, the Regional Growth Fund will be a source of investment for economic
development, although the scale of funding through this competitive mechanism will be
significantly less than the comparable RDA budgets and other sources. The Regional
Growth Fund is not being reserved exclusively for LEPs. Private sector companies can
also seek support directly. At the time of writing, there is no guidance available on the
scale of support likely to be available for partners in the Tyne and Wear City Region.
7.59 There is now a much greater emphasis on market led projects and interventions,
aimed at supporting private sector employment growth and a rebalancing of the
economy. In the future, there will be a focus on joint public/private investments, and on
ensuring that other assets, such as land and premises, are utilised to deliver
interventions. The renewed emphasis on private sector employment growth fits with
many of the priorities already identified by partners in the City Region.
7.60 In addition to these structural changes, with regard to economic development,
the public sector’s role as an employer and service provider will alter as a consequence
of reduced public sector budgets over the next four years. There is also uncertainty
over the continuation of external funding, such as that provided by the Homes and
Communities Agency. It is clear that a reduction in public sector employment is
inevitable and this will have an impact of the City Region’s employment rate, and shortterm economic growth potential.
7.61 The analysis of employment growth suggests that Tyne and Wear City Region
would not have enjoyed such strong growth in employment without public sector
interventions, and there is a compelling rationale to continue to address market failures
and put in place the conditions to support future and further economic growth.
7.62 There are three new ways of working for partners in the City Region, which will
influence how the public sector supports economic growth and maintains its role in
economic development. These are:
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Reducing delivery costs, introducing efficiency gains, merging services and
working cross boundary and according to functional economic geographies.
ƒ
Using assets, particularly land assets, to realise monies and/or make things
happen (including joint ventures).
ƒ
Working in partnership with the private sector, with a premium on investor/
developer led activity which requires limited public sector financial support.
7.63 The reduction in public expenditure will limit the extent to which the public sector
can intervene with financial support and additional initiatives. There is also a risk that
the public sector’s role as a major recruiter of graduates will reduce, and there will be
potentially fewer resources from Government made available for supporting higher
level skills and innovation.
7.64 Both the Regeneris Report on Labour Market, Skills and Talent and the NLA
Report on Housing and the Economy cover the economic inclusion and housing
challenges resulting from the combination of the economic recession and the reduction
in public sector employment (and activities). Many of the challenges require immediate
responses to reduce the impact on individuals and communities, while others require
new and innovative solutions.
7.65 The Labour Market, Skills and Talent Report sets out a number of priorities for
action, including the need for work related training for redundant workers from the
public sector, the continued prioritisation of job search support, and support for key
labour market groups, including young people. The Report concludes that “there is a
need for local authorities and other partners in the public and private sector to work
closely together at the city region level to address many of the issues”
7.66 There are two critical roles for the public sector in terms of supporting economic
growth:
ƒ
Planning policy, employment land and commercial/industrial property to
ensure that the City Region can meet the needs of existing business and attract
new investment; and there will be a premium on commercial and housing
development which does not require public sector support.
ƒ
Place making and housing, supporting both a growing economy and
addressing housing market failure in a number of urban areas in the City
Region. This will include accelerating new housing development while trying to
persuade developers to invest in disadvantaged neighbourhoods.
7.67 The NLA Report on Housing and the Economy highlights the potential for
increased polarisation, particularly for many communities in the urban areas. A
combination of increasing unemployment and changes to the benefit system are likely
to impact on the most vulnerable members of society. The Report highlights the
challenges of securing new build in inner cities and the need to prioritise worklessness
programmes. In a similar vein, the Regeneris Report highlights the danger of some new
employment locations being more difficult to access from areas of high unemployment.
Implications and Priorities
7.68 The Study Brief asked the question what are the implications of market
change in relation to:
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a) The City Region’s skills base?
b) The City Region’s places, locations, and infrastructure?
c) The role of the public sector in supporting opportunities, independently or
jointly with the private sector?
7.69 Skills: It is evident that the move towards a higher value added and service
based economy requires a more highly skilled workforce. The accompanying skills
study undertaken by Regeneris suggests that there is a need to create additional
higher skilled jobs (reflected in the priority sectors identified in this report). At present,
Tyne and Wear City Region is said to have an adequate supply to meet current
demand. This analysis emphasises the need for greater demand for higher level skills
to be generated by employers and individuals, particularly by targeting new investment
and sector expansion where higher level skills are required.
7.70
A combination of the economic recession and reduced public sector
employment is likely to reduce the demand for new graduates. At the same time, many
former public sector workers will be highly skilled and qualified. The transferability of
individuals’ skills will be important in matching supply and demand as the economy
begins to emerge out of recession and into growth.
7.71
Locations: Employment growth of some 50,000 jobs was absorbed in an eight
year period (between 2000 and 2008) in a number of key locations in the Tyne and
Wear City Region, some of which benefited from fiscal incentives. The City Region
needs to build on its assets, and look to capture inward investment in both its
prestigious city locations and lower cost business parks. The key locations in
accelerating economic and employment growth are:
Newcastle Centre & Riverside/Gateshead Quays and Baltic Business
Quarter
ƒ Durham City
ƒ Sunderland City Centre
ƒ Cobalt/Doxford Business Park/Gosforth-Newburn – Out of town business
parks
ƒ Washington/Team Valley
ƒ South Tyneside/North Tyneside/Blyth Waterfronts, Port of Sunderland Low Carbon
7.72 Each of the locations is different, either by function, scale and/or mix. These
locations include the major city centres which support a wider geography across the
City Region. They provide the range of locations which support economic growth
across the City Region, including a city/urban offer able to capture blue chip companies
and Whitehall relocations (where sustainable transport is a key determinant); lower
costs and value for money locations for office based employment, notably in business
services, and high quality/competitive locations for manufacturing for new and reinvestment.
ƒ
7.73 Transport Services and Infrastructure: Development along the road corridors
has increased employment, but has also posed challenges about future congestion.
Increased congestion has the potential to make the City Region less attractive to
investors and to impact upon local business. At the same time, providing adequate car
parking is seen as a requirement for employers. There is a need to strengthen the
public transport network in order to serve more effectively the major employment
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locations in the City Region. Other research, undertaken as part of the Tyne and Wear
City Region Economic Review, illustrates a disconnect between certain employment
locations and areas of high unemployment, thus resulting in a need to strengthen public
transport services between disadvantaged communities and employment centres.
7.74 Housing Growth: Despite the fragility of the housing market, and the limited
prospects in the short-term for a return to optimum performance, the City Region will
need to grow its executive housing market offer in order to provide the range of housing
needed to attract greater numbers of higher skilled people to the North East. The
suburban and market town offer in the north provides a wider range of attractive places
to live. However housing supply has become a general problem most acute in urban
areas south of the Tyne. Taking forward developer led housing (with no public subsidy)
will be important in maintaining momentum in the City Region housing market.
7.75 Housing Market Failure: There are significant areas of housing market failure
in the major urban centres. These are set out in some detail in the NLA Report on
Housing and the Economy. There is a need to develop new ideas to take forward urban
and low cost housing in Newcastle/Gateshead and Sunderland and some of the
smaller industrial settlements.
7.76 Within the context of new governance and delivery arrangements for economic
development, partners in the City Region will need to give consideration to developing
new delivery mechanisms to deal with a broad range of policy challenges. These
include:
ƒ
New Infrastructure and Business Support Funding Mechanisms: with
limited public sector funding, new mechanisms to support infrastructure
investment, including housing, are required, and which will be based on models
such as Accelerated Development Zones, Tax Increment Financing and
JEREMIE.
ƒ
New Approaches to Funding Affordable Housing: population and economic
growth will be undermined without a supply of quality social and private rented
accommodation. Developing new ways of funding affordable housing,
particularly in inner city areas, is a major priority for local partners. Consideration
will need to be given to the proposals put forward by the Coalition Government
when details are clarified.
ƒ
Financial Freedoms and Flexibilities: in order to manage the challenges of
restoring and accelerating economic growth at a time of reduced public
spending, there is a need to re-consider some of the rules, processes and
restrictions which inhibit local government and public sector joint working and
more effective local delivery, across all of the external funding streams.
ƒ
Innovation: in some sub sectors and markets, such as Creative and Digital and
low carbon, innovation will play a key role in developing new ideas and securing
investment and employment. The public sector, working with stakeholders such
as the Universities, will have a continuing role to play in supporting business to
grow.
ƒ
Welfare to Work, Skills and Employment Services: there is a risk that a large
percentage of residents in the City Region will be unable to take advantage of
the knowledge intensive jobs which will accompany economic growth. There is a
crucial role for the public sector (and increasingly it seems private and third
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sectors) in directing and delivering welfare to work, adult skills and employability
programmes.
ƒ
Low Carbon Economy: The opportunities with regard to the low carbon
economy will develop as new regulation and policies are agreed and introduced,
and markets start to expand. The public sector has a role to play in helping
business take advantage of these and in taking forward particular initiatives and
interventions, such as the retro fitting of housing. Given limited funding and the
need to avoid duplication, it is important that a strategic, high-level grouping is in
place to bring partners in the City Region together to co-ordinate efforts.
7.77 Finally, the public sector has a major challenge in managing the consequences
of the four year reduction in funding. Local government and the wider public sector will
include developing new approaches to delivering local services, and to work with those
individuals affected by unemployment. The extent to which the employment and wider
economic consequences of reduced expenditure can be mitigated will have a major
impact on the ability of Tyne and Wear City Region to demonstrate resilience and
return quickly to a period of sustained economic growth.
7.78 The economic agenda for the next five years calls for new areas of expertise to
be identified and a high level of creativity and innovation from partners in the City
Region. The need to advance strategic plans for housing and business/economic
infrastructure is likely to require new vehicles and the better use of existing assets,
while new approaches (including more flexible national policies) are needed for housing
and employability. Radical thinking is required to reduce the impact of the recession on
communities and businesses, and to create the conditions to capture new investment in
the Tyne and Wear City Region as the national economy emerges out of recession.
7.79 It is recommended that partners in the Tyne and Wear City Region examine in
detail the evidence set out in this executive report and the associated technical reports
prepared as part of the study. Partners will need to consider carefully the potential
policy implications it is suggested emerge from the analysis in order to determine how
they wish to identify and prioritise specific policy issues and options going forward.
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