UK’s top cities growing fast, but some regions catching up faster - PwC’s Good Growth for Cities index 2017

  • Oxford and Reading top index for second year running, but Birmingham most improved

  • Cities in the Midlands and North of England are amongst fastest improving cities this year

  • Strongly improving performance from new Metro mayor cities such as Birmingham, Middlesbrough and Liverpool

  • But the price of success is reduced housing affordability and increased average commuting times

  • Critical need for local industrial strategies that address housing, transport and skills gaps

Cities across the UK are seeing strong jobs growth and are catching up on the historic top performers in the South of England, according to the latest Demos-PwC Good Growth for Cities index.  

While the highest ranked cities still tend to be mostly in the South of England, except for Edinburgh, the top 10 improvers in the 2017 index include Birmingham, Leeds, Newcastle, Liverpool and Derby, suggesting that the Midlands and North of England are steadily narrowing the gap. Only London and Southampton from the South are among the top 10 improvers relative to last year’s index.

John Hawksworth, chief economist at PwC, commented that:

“The UK has been a great job-creating machine in recent years and this has driven improvement in our good growth index this year across all major UK cities. On average across the UK, the index is now at its highest level since it began in 2005 and all regions have benefited from this upturn.

“But there has also been a price to pay for this in terms of worsening housing affordability, increased average commuting times and more people having to work long hours. The cities that are highest ranked on our index also tend to suffer the highest price of success.”

Published today [8 November 2017], the sixth annual Good Growth for Cities 2017 index sets out to show that there’s more to life, work and general well-being than GDP. The index measures the performance of 42 of the UK’s largest cities, England’s Local Enterprise Partnerships (LEPs) and the nine Combined Authorities against a basket of ten indicators based on the views of the public as to what is key to economic success and wellbeing.

These include employment, health, income and skills - the most important factors, as judged by the public - while housing affordability, commuting times, environmental factors and income inequality are also included, as is the number of new business starts.

Oxford and Reading top the good growth index for second year running

Oxford and Reading were again the two highest performing large UK cities in the index, with the most recent results showing that the historic gap between these two cities and the rest of the index remains significant. This reflects continued improvement across a range of measures in each of these cities, particularly jobs, income and skills.

The top 10 highest ranked cities, and the most improved since last year were:

 

Highest ranking cities (2017 index)

Top 10 improvers since last year

1

Oxford

Birmingham

2

Reading

Leeds

3

Southampton

Leicester

4

Edinburgh

Newcastle

5

Bristol

Southampton

6

Milton Keynes

London

7

Cambridge

Middlesbrough & Stockton

8

Coventry

Wolverhampton & Walsall

9

Leicester

Liverpool

10

Swindon

Derby

Source: PwC analysis

The index shows that all 42 UK cities improved their score relative to our 2016 index, driven primarily by increasing employment. In general, those cities that have seen the biggest improvements in their overall score have also experienced particularly large falls in unemployment in recent years.

Growth comes at a price

However, while all 42 cities have improved their year-on-year scores in the overall 2017 index, success comes at a price. We have seen a reduction since last year’s report in housing affordability, falling owner occupation rates, rising average commuter times, and minor declines in both the health and work-life balance indicators.

Jonathan House, Government and Public Services partner at PwC, commented:

“If cities are to sustain the strong performance of recent years, this puts a priority on delivering place-based growth which is inclusive and addresses key supply side constraints particularly infrastructure.

“Delivering good growth cannot be achieved by any one person working alone but goes hand-in-hand with place based transformation, where local government, central government and the private sector act together and work collaboratively to deliver outcomes and where place based leaders facilitate local economic growth, prosperity and well-being.”

Opportunity Areas lack skills and entrepreneurship

Our analysis shows that most of the Government’s 12  Opportunity Areas do not score well against the measures of ‘skills’ and ‘new business starts’ in our index. 10 of the 12 Opportunity Areas performed below the average of all cities in the index against both of these measures (see chart below), though Doncaster has performed better recently on new business starts and Norwich is slightly above the UK city average for skills.

The scale of the challenge has also been getting greater - over the past five years 10 of the 12 areas have seen a worsening of performance with regards to new business starts relative to the UK average. This highlights the need for action, and the relevance of the support to the opportunity areas proposed by the government.

Strong performance by Metro Mayor Cities

Our analysis of English Combined Authorities shows a strong performance in metro mayor cities. Three of the six newly elected mayors were elected into regions containing cities in the top 10 improvers in our index:  Birmingham, Middlesbrough and Liverpool (while Bristol and Cambridge are also in the index top 10).

While the election of mayors per se had no direct bearing on the index scores, the devolution process has been a work-in-progress for a number of years and this has already had a positive effect on local performance and so on the good growth index scores for these cities.

Other core cities in the top 10 improvers were Leeds and Newcastle - highlighting the increased pace of recovery in major urban centres in the UK outside the South of England.

Overall assessment

Commenting on the overall theme of this year’s index results, Paul Terrington, PwC head of regions, said:

“We’ve seen broad-based improvements in our good growth index across the UK, driven in particularly by falling unemployment rates.

“Some areas in the North and Midlands that had lagged behind in the recovery from the financial crisis are now showing clear improvements in their index scores. The economic recovery is now spreading across the country rather than being focused on London and the South East.

“However, we are also seeing the price of prosperity in terms of  growing pressures on scarce resources of housing, transport and skills. If UK cities are to sustain the relatively strong performance of recent years as we move through Brexit and beyond, it will be critical to address these challenges as part of cities’ growth strategies, rather than trying to fix the problems later when they become serious constraints on growth.”

Ends.

Notes to editors:

For more information or to speak to a quoted spokesperson, please contact Pippa Vaux  on 07753460118 or pippa.vaux@pwc.com

About the Good Growth for Cities report:

  1. A copy of the Demos-PwC Good Growth for Cities index 2017 can be downloaded from www.pwc.co.uk/goodgrowth from 00:01 hrs GMT, 8 November.
  2. The Demos-PwC Good Growth for Cities index 2017 measures the current performance of 42 of the largest UK cities against a basket of 10 indicators that - based on the views of the public – are seen as critical to economic success and wellbeing. Employment, health, income and skills are the most important of these factors, as judged by the public, but housing affordability, commuting times, environmental factors, business start ups, work-life balance and income inequality are also included in the index.
  3. The latest index is based on data that was averaged over the period 2014-2016. We use rolling three year averages in order to minimize the impact of the volatility from year to year that is often a feature of local area data.
  4. We have included cities with a travel-to-work area (TTWA) of at least 250,000 people.
  5. Further methodological details, including definitions of all of the variables in the index and data sources, can be found in Appendix 1 of the report.

About Demos:

Demos is Britain’s leading ideas-led, cross-party think-tank. We produce original research, publish innovative thinkers and host thought-provoking events. We have spent over 20 years at the centre of the policy debate, with an overarching mission to bring politics closer to people. Demos has always been interested in power: how it works, and how to distribute it more equally throughout society. We believe in trusting people with decisions about their own lives and solving problems from the bottom-up. We pride ourselves on working together with the people who are the focus of our research. Alongside quantitative research, Demos pioneers new forms of deliberative work, from citizens’ juries and ethnography to ground breaking social media analysis. Demos is an independent, educational charity, registered in England and Wales (Charity Registration no. 1042046).

Find out more at www.demos.co.uk

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with more than 236,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

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© 2017 PwC. All rights reserved.

 

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