The Centre for Cities have recently published its latest report analysing how individual cities across the UK were affected during the last recession; this coming as the UK economy slumped 0.5% in the last quarter of 2010 and government cuts are taking hold.
The report reveals that Barnsley, Doncaster and Hull all saw some of the biggest rises in people claiming for benefits (behind Swindon) between February 2008 and June 2009, the close geographic nature of these settlements is worrying; highlighting localised issues, that could affect more people than those within the city boundaries.
Despite this some cities have managed to bounce back more strongly than others and it is the demand for low skilled workers which has made the strongest recovery and places with a strong low skill sector have seen the strongest growth, with Doncaster and Hull both seeing the claimant count drop between March and November 2010. This is not to pretend Manufacturing is the answer to our cities woes; the sector accounting for around 10% of all GDP in 2006, steadying out after 30 years of continuous decline. Thus any significant % rises in the sector will be small in comparison to the entire jobs market.
A major concern will be how our cities cope, with significant reduction in welfare spending; only today Liverpool city council announced significant job cuts, this a city with the 2nd highest welfare bill per capita, only behind its cross river neighbour Birkenhead. Which leads to the question, is it cheaper to the government to have an increasing number of people on welfare than doing government or council jobs? The cuts in Liverpool will remove around £192 per resident, this equates to less money in the economy and more importantly less localised spending, which can only lead to struggling businesses and further job losses. The cycle can be fatal.
The North / South divide is also very prevalent with 6 of the 10 least affected areas of welfare cuts located in this region. There is opportunity for growth in these tough times with Aberdeen, Bristol and Leeds, 3 places which the Centre for Cities report sees as having the potential to grow, a result of strong private sectors built up during the boom years.
Despite 1 in 3 private sector jobs (37%) currently located within the 11 major Cities, it was the smaller cities located in the south which saw the fastest population growth between 1999 and 2009. It is important these places can retain and attract jobs. The Yorkshire cities of York (2) and Leeds (6) were the only Northern Cities in the top 10 fastest growing cities by population. York also has the 7th lowest claimant count (Nov 2010) while Leeds is only one of two places which saw its employment rate increase between June 2008/9 and June 2009/10.
Unfortunately employment rates can be deceptive, for example City A may have 80% of people in employment but all earning around minimum wage while City B may only have 60% employment but all within the countries top earners, this means that it is City B which has the most money swirling within its local economy. 7 of the UKs highest earning cities are in the South of the country, the exceptions are Warrington, Edinburgh and Aberdeen. Of cities with the lowest average wage 9 are in the North, the exception is Hastings, the bottom 2; Grimsby and Hull both located within close proximity to each other and are both highly isolated from significant areas of population, a factor which makes it harder than ever to keep money flowing within the local area and any prospect of recovery even more difficult. To compound its problems between 2006 and 2010 Grimsby saw a -1.8% decrease in earnings (at 2006 prices).
The next economic quarter will be crucial in determining whether the country slips back into recession, the key is to keep money flowing within our cities, I fear this will prove harder than ever as public sector workers see there jobs disappear something which could potentially lead to localised problems within cities with an over reliance of public sector jobs.
The report can be read in Full here
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