North West cities amongst fastest improving cities for third year running - in PwC’s Good Growth for Cities Index

●        Preston highest performing North West city climbing one place to 12th

●        A strong performance from Liverpool which has risen by 3 places, driven by new businesses and jobs

●        Both Liverpool and Manchester maintain top ten position in ‘Top 10’ improvers list, with Liverpool second most improved city.

●        Greater Manchester Combined Authority performs strongly ranking third overall

●        Oxford and Reading remain top of the index for the fourth year in a row,

●        Coventry saw the largest fall in index score this year, driven by poorer health, transport and income distribution

Liverpool came out second behind Bradford a most improved city in this years’ index whilst Manchester also featured in the Top 10 for the second year running. Preston continued its positive momentum from last years ‘most improved city’ status by being the highest performing North West city overall climbing one place to 12th. Liverpool experienced the biggest increase in its score relative to last year, with notable improvements in jobs, work life balance and new businesses.   

As a whole, cities in the North West perform well on the following criteria; work - life balance, where all cities in the region perform above the national average. House price to earnings, where all but one city (Birkenhead) score above the UK average. Jobs, where all cities in the North West score above or around the UK average.

Published today (12 November 2019), the annual Good Growth for Cities Index 2019 sets out to show there’s more to economic well-being than just measuring GDP. The index measures the performance of 42 of the UK’s largest cities, England’s Local Enterprise Partnerships (LEPs) and ten Combined Authorities, against a basket of 10 factors which the public think are most important when it comes to economic well-being. These include jobs, health, income and skills, as well as work-life balance, house-affordability, travel-to-work times, income equality, environment and business start-ups.

For the fourth year running, Oxford and Reading remain the top-performing UK cities on PwC’s Good Growth for Cities 2019 index, followed by Southampton in third place. Although Reading has maintained its position in this year’s index, it has seen a decline in its overall index score, driven by poorer house price to earnings ratios, income inequality and a fall in new business formation.

This year’s index sees almost nine in ten cities in 2016- 2018 having scores higher than the average for all cities in our base year of 2011-2013, highlighting the rate of recovery since the financial crisis. There is strong employment growth, which reflects the continued decline in unemployment, as well as improvements in work-life balance, perhaps as a result of more flexible working patterns becoming more acceptable.

Manchester and Liverpool have seen gradual increases in their scores over the past 11 years. Manchester’s index score has risen by 0.39 and is now exactly in line with the national average. This has primarily been driven by an improvement in new businesses and skills, especially for those over 25.

Liverpool began at a much lower starting point, with a score of -0.42 however it has seen a larger increase in index score over this time period, rising by 0.64, helping it to catch up with the national average. This is due to improvements in almost all variables, but especially in skills, new businesses and jobs

Greater Manchester Combined Authority performed strongly coming third in the index’s Combined Authority rankings. The area saw a particular rise in new businesses variable, but this growth was coupled with a worsening in house price to earnings, making the are less affordable. The Liverpool City region comes 6th of all Combined Authorities, with improvements in jobs, income and new businesses per head.

Of the five LEP’s Cheshire and Warrington is the strongest performing in the region coming 9th out of 38 LEP’s. This is due to strong performances in new businesses and jobs. The rest of the LEP areas within the region perform around the national average, apart from Liverpool City region, which is 31st in the index. However, this area has seen strongest improvement of any LEP, driven by increases in jobs and new businesses.

Since 2015 – 2017 the Northern Powerhouse* has experienced a substantial increase in the jobs component of the index, due to an actual increase in jobs resulting in a fall in unemployment. There have also been strong improvements in work-life balance, new businesses, environment and the skills of 25+ year olds.   

Adam Waller, PwC’s Manchester Office Senior Partner commented;

“It’s pleasing to see cities like Preston, Liverpool and Manchester continuing to make a positive impact within this years’ index which is testament to the vibrant and sustainable economy which is being created across the North West.

Building and creating ongoing working relationships between business, Combined Authorities and LEP’s is vital to ensure that this positive momentum is maintained.

It’s essential that in order for the region to prosper post-Brexit we all need to ensure we play our part.”

The long-term data suggests that performance over time on the index is not driven by a city’s starting position, but rather by a combination of local and national improvements in the economy. Figure 1 below shows the change in average good growth index scores by variable across all cities since 2005-07 and 2016 - 18. Skills amongst the population of 16-64 year old’s, alongside the number of new businesses created have seen the largest improvements in average scores over the period, however housing affordability and owner occupation have deteriorated over the period, alongside rising average commuting times.

Figure 1: Average change in good-growth scores between 2005-07 and 2016-18

GGfC

The short-term data tells a different story, as 11 cities in the index have witnessed a decline in their score relative to the previous index – this is partly driven by the fact that improvement (especially for top performers) has hit a relative ceiling.  However, the price of success has become increasingly evident, with declines in transport and housing highlighting the ongoing infrastructure challenges faced by UK cities. There has also been a decline in skills among young people (16-24) and a decline in overall health

PwC partner and local government leader Jonathan House, commented;

“In an era of political, technological and environmental disruption, cities and regions that want to get ahead, need to do things differently. Even with the uncertainty of Brexit, over the last year, local leaders have had significant success in delivering good growth in their cities and regions. Our research shows the need to take a comprehensive approach to growth, focusing on improving productivity to compete on a global stage, but also on ensuring fairness and inclusive growth so that people and places don’t feel left behind.

“Local leaders need to take a broad view on what economic success means, focusing on the outcomes they want to achieve in terms of inclusive growth, community resilience and improved experience, and crucially, having a plan to translate those ambitions into reality.

“Skills amongst the working age population, alongside the number of new businesses created, have seen the largest improvements; this is a result of leaders focusing on building new opportunities and investing in the talent of their city and region.

“The UK’s cities are known globally for their skills, innovation and entrepreneurial spirit. Our most successful cities don’t compete against other UK cities, they compete against cities across Europe, the Middle East and the US. As the UK’s position on the world stage shifts, cities and regions will need to reposition themselves too, and consider how they can stand out and compete globally, improve productivity and support innovation, while also creating places that are fair and inclusive.”

This year’s index has seen continued improvements in index scores across the UK, driven in particular by falling unemployment rates and increases in new business per head. Whilst there have been strong job improvements, these have reflected a continued decline in house price to earnings ratio. More affluent cities typically have higher overall scores than their less affluent peers, however this also means they typically have lower scores in the areas of housing affordability and ownership, particularly in the case of London.

Previous PwC research found that for those who can afford to buy a house in England, it will cost, on average, around £25,000 to live near the best performing state schools. In addition, PwC’s July edition of the UK Economic Outlook also found that rental affordability ratios in the UK have deteriorated, with some key workers now priced out of the rental market in London and the South East

PwC chief economist John Hawksworth, said;

“Our long-term analysis shows that good growth improvements across the UK since 2005 have been largely driven by skills and new business creation. As the economy and world of work transforms, ensuring people are equipped with the digital and other skills they need for future jobs will remain critical to sustaining these improvements.

“But there are also less positive long-term trends, particularly relating to deteriorating housing affordability and ever longer commuting times. These issues will require sustained investments in affordable housing supply and transport infrastructure in order to address.

“This year’s index results has shown continued broad-based improvements across most UK cities, but there are also signs that progress has plateaued, particularly among top performing cities in the index where unemployment rates were already very low. Increased investment in health, education and skills will be important to drive further improvements in the index now that the post 2008 financial crisis task of reducing unemployment rates has been met in most parts of the country.”

The top-10 highest ranked cities in our latest index, which relates to the period 2016-2018, and the most improved since last year’s index were:

Highest ranking cities

Top 10 improvers

Oxford

Bradford

Reading

Liverpool

Southampton

Norwich

Bristol

Newcastle

Milton Keynes

Cardiff

Aberdeen

Swansea

Edinburgh

Wolverhampton

Swindon

Brighton

Cambridge

Hull

Leicester

Manchester

 
Adam Waller

Adam Waller, PwC's Manchester Office Senior Partner

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