Repeat Casualty Cities Hit Hardest by Latest Recession and Risk Long Term Cycle of Decline

LONDON -

As Corby, Walsall, Swindon, Blaenau Gwent and the Wear Valley emerge with the UK’s fastest rising rates of unemployment over the past year, new research from The Work Foundation argues it is cities with the highest numbers of people with low or no skills that are faring the worst during the recession.

With a focus on 12 UK cities, the research explains why some cities are suffering more than others and highlights what could change their future prospects. In many cases, areas that had yet to recover fully from recessions of the 1980s and 1990s are once more suffering disproportionately during the current downturn.

Maps in the report, Recession and Recovery: How UK cities can respond and drive the recovery, show that workforce skills largely determine how well cities are performing in the recession and that most of the worst hotspots are repeat casualties from previous recessions. High skills cities, places with highly qualified populations such as Cambridge, York and Oxford, have fared better compared to areas with a high proportion of residents with no or low qualifications, such as Stoke or Rochdale which have been much harder hit. The exception is Swindon, which has experienced large increases in unemployment despite a reasonably strong skills profile.

Manufacturing saw a 6.7% contraction in employment between March 2008 and March 2009, with consumers and businesses holding off buying ‘big ticket’ items like new cars. Areas such as Corby and Swindon, with histories of high levels of employment in manufacturing, have been hard hit with significant increases in the number of residents claiming Job Seekers Allowance.

Local Government Minister Rosie Winterton said: “Local leadership is vital in the challenging economic times we now face. The Government has committed to investment in growth, jobs, infrastructure and public services. It is vital to keep investing to speed recovery, build the industries of the future and lead the way out of the economic downturn more quickly. As part of that we are helping local areas tackle long term worklessness through skills training, apprenticeships and a GBP1bn fund to create 150,000 new jobs. Local leaders who know their local area bests can tailor these services accordingly and play a critical role in helping places to respond to the recession.”

Cities dependent on jobs in the finance and business services sector (which has declined nationally by 2.8% over the past year) have tended to see higher rises in unemployment compared to other sectors - but jobs in London and the South East have bucked this trend. This is because job losses in financial services have been concentrated in retail banking and support services which tend to be located outside the capital. Lloyds Banking Group, for instance, recently announced that two call centres in Chester and Speak are to close with the loss of 84 jobs.

The research from The Work Foundation - and its partner report from the OECD LEED programme (looking at 40 international cities) - both capture many examples of creative and innovative responses to the recession. Interventions to support local businesses have been particularly strong, for example, Cardiff Council is exploring the novel approach of taking equity stakes in local businesses in order to support firms within the area without increasing their debt burden, while under the Manchester ‘Timebank’ business mentoring scheme, professional consultancies and support agencies are offering free business advice to small and medium sized local businesses. Cities such as Newcastle are also acting promptly to support people who have just been made redundant, with Newcastle City Council working with partners to set up three new resource centres to provide early interventions on employability, skills, mental health and debt advice.

Alexandra Jones, Associate Director of The Work Foundation said, “Skills - or the knowledge, qualifications and competencies of the workforce - drive the success of individuals and cities. People with higher skills levels are more resilient to economic shocks and more able to take advantage of opportunities that arise while those with fewer or non-transferable skills are much more vulnerable and have access to far fewer opportunities. This effect is magnified in cities as low skilled cities find it harder to attract the knowledge based industries on which the recovery depends.”

Will Hutton, Executive Vice Chair of The Work Foundation added, “Cities are the power engines that will help the UK prepare for an upturn and many of the measures captured by this research could be strategically introduced at little cost and no change in legislation. Unless the government acts to give cities the powers they need, areas with low or no skills face a struggling cycle of decline long beyond the recession, making it much harder to bounce back in the future.”

Notes to editors

1. Recession and Recovery: How UK cities can respond and drive the recovery by Neil Lee, Katy Morris and Alexandra Jones is published by The Work Foundation and is available at www.theworkfoundation.com. The 12 Cities studied in the report are Belfast, Birmingham, Bristol, Cardiff, Chelmsford, Derby, Glasgow, Liverpool, Manchester, Newcastle, Oxford and Swindon.

2. Recession, Recovery and Reinvestment: the role of local economic leadership in a global crisis by Greg Clark is published by OECD and is available from www.OECD.org.

3. An executive summary gathering data from both reports is attached and includes a table of the most affected UK authorities.

4. The Work Foundation is the leading authority on work and its future. It aims to improve the quality of working life and the effectiveness of organisations by equipping leaders, policymakers and opinion-formers with evidence, advice, new thinking and networks.

Source: The Work Foundation

Media enquiries: Nasreen Memon, +44-207-976-3507/+44-7825-527-036, nmemon at theworkfoundation.com