North/south divide ditched for resurgent/stuck

The economic divide in the UK is no longer along the north/south divide but between towns which are 'resurgent' and 'stuck'.

A report by the Work Foundation out today finds while some cities are 'resurgent' – i.e. growing with increasing momentum – others are 'stuck' in their present malaise.

Cities - including Reading, Bristol, Manchester and Newcastle - have made substantial gains in their economic growth over the last ten years by attracting higher value businesses and highly skilled people.

However, others - such as Hastings, Stoke, Barnsley and Wigan - are falling behind, failing to produce convincing signs of being able to gain momentum.

These differences risk being exacerbated by the credit crunch as too many UK cities have built up a reliance on financial service jobs compared to their European counterparts – warns the How Can Cities Thrive in the Changing Economy report.

"Some big cities of the UK have clearly bounced back from the decline of manufacturing, and have galvanised themselves to be productive, thriving, 21st century places," explained Alexandra Jones, associate director of Work Foundation.

"But look at the next tier and political alarm ought to set in. The stuck cities of Britain have rising proportions of people in low socio-economic groups and very low rates of employment in better paying professional jobs."

Top of the league in terms of Gross Value Added to the economy is the city of Cambridge.

On average each Cambridge citizen adds £30,418 to the value of the economy, a figure which has increased by 54.4 per cent over the last decade.

Oxford comes second, adding an average £30,183 per head to the economy, while Reading has moved up from 11th a decade ago into third.

At the other end of the scale, a resident of Barnsley adds £10,728 on average to the economy, while citizens of Wigan add £10,998.

"Their businesses have low productivity rates," added Ms Jones.

"Many refuse to recognise that their economic future relies on trade links with a neighbouring city that, despite being a historic rival, is now thriving. And they are often blighted by either chaotic or complacent leadership."

The report also makes a number of other findings:

• Cities have become more important to the UK economy over the last decade as growth and jobs have become more dependent on 'knowledge intensive industries'. Every new job in other industries has been matched by 12 new jobs in knowledge intensive industries between 1995 and 2005.



• An over-reliance on financial services in many UK cities could leave places vulnerable to the effects of the credit crunch. Compared to successful European cities such as Oslo, Berlin and Rome, UK cities have specialized far more in financial services and much less in less vulnerable areas such as high tech services.



• Stuck cities need a package of policies to gain economic momentum. The devolution agenda needs to be re-energised and cities given the authority and financial powers to respond to changing economic circumstances in the most appropriate ways in exchange for mayors and stronger accountability; civic pride and leadership will flow from gaining greater power which will in turn attract talented people.

"In time, higher productivity should feed through to rising prosperity, a better quality of life and the ability to attract more highly skilled people," concluded Ms Jones.

"The table points to the places that are becoming the engines of national economic performance – and which need sustained policy attention to help them grow."

Chris O'Toole