Interpretation of LMI by promotional agencies;their need to maintain business confidence

Alan Townsend Durham University

(also previously DTI, Manchester & Glasgow; Wear Valley District Councillor; Planning consultancy for Teesside)

Enterprise Zones as example

24 announced across England, 2012Target of jobs for 2015 54,000Achieved, December 2013 4,649Achieved, December, 2014 15,500 Achieved, August, 2015 19,000

In 540 businesses with £2.2bn. investment, including £450mn. from government New round being decided, funded 2015-2020 My previous research suggested jobs peak after 25 years

Types of interpretationby Economic Development Agencies, Chambers of Commerce, LEPs, politicians,

consultants and press

• Interpretation of past data trends• Interpretation of current data• Jobs to be gained and lost from openings and closures• Business bias to new projects and training (replacement jobs?)• Projections of demand (often in consulting reports)• Labour force projections, with/out migration• Broader sweeps of the future regional economy CONCLUSION; M. Hodge; “thorough scrutiny of forecasts” Personal view; need for a new “code of conduct”

Some sources of exaggeration

Firms seeking grant-funding and/or Planning permission have an interest in claiming their higher figures of job creation/preservation (Planners downplay due to malleability for most projects)Local politicians and newspapers also have an interest in boosting the job numbers, notably the multiplier effect (competitive practice).It is part of the marketing operation to sow optimism, but it doesn’t help good planning for an area to be a victim of its own propaganda.There is a reasonable case to be made for providing a surplus of employment land, to allow for underestimation and choice.Aspirational targets do have a place in the work of LEPs, but they do cause confusion when they cannot be compared with housing and training numbers

“Bigger cities have not grown faster”R. Martin, Cambridge University

Annual average % change, 1981-2011, 63 Primary Urban Areas, GB, ranked

All in employment decline, GB Leading “northern” Cities in growthBurnley (-0.7% p.a) Telford (NT)(+2.1% p.a.)Hull Warrington (NT)LIVERPOOL CardiffStoke Preston (NT)Dundee LEEDSBirkenhead DoncasterSunderland YorkBIRMINGHAM NewportBlackpool EdinburghGrimsby Aberdeen (+0.5% p.a.)BlackburnMiddlesbroughWigan (-0.1% p.a.)Source; ONS ; “NT” = New Town

Travel-to-work of 8 Core Cities of England, 1981-2011, thousands

Source: Censuses of Population

Workplace population

Daily travel IN

Daily travel OUT

%Commuting IN

1981 Males 1276.0 499.4 195.4 39.12011 Males 1182.5 466.0 280.2 39.4

1981 Females 905.4 264.3 60.0 29.22011 Females 1031.1 415.7 191.8 40.3

The 9 Core City Local Authorities versus rest of City Regions

Employment as full-time equivalents, 1984=100 (Champion & Townsend)

80

90

100

110

120

130

1984

1987

1989

1991

1993

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

19

84

= I

nd

ex

10

0

Inner London

Rest of LCR

9 City LAs

Rest of 9CRs

Change in FTEs for 10 City Regions, 2008-14, % for period (Townsend & Champion)

London CR

Sheffie

ld C

R

Nottingham

CR

Man

ches

ter C

R

Bristo

l CR

Newca

stle

CR

Leeds

CR

Birmin

gham C

R

Liver

pool CR

Glasg

ow CR

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0 .

2008-2010 2010-2012 2012-2014

% f

or

per

iod

The truth about the Core Cities group

• The advantage of Core Cities is volume, richness and variety of jobs; not the RATE of increase (unless you count the last 2 years?); the Core City people admit its not about rates, its about Volume of jobs, as they have 40% of the City Regions' jobs

• IF they're not the "Drivers of change" on that front, the evidence is that its through increased net inward commuting to some extent, with little dispersal of new growth out to surrounding LAs

• There may be everything to say for concentrating transport and other public investment across areas with a lot of people, but that doesn't rule out that there might be more value for money in say Northampton or Hull for a particular kind of spend.

• Big cities have not grown faster since 1981 (see slide evidence including Cambridge)

Need for an Inter-Departmental Code of Conduct; BIS, DfT,CLG,DfE at al.Forward Estimates of Employment Gains

My recommendation is that statements of future employment should be treated as seriously as population projections, but that if they can’t match specified standards, they should be barred under a government code. Thus• A circular around relevant ministers and government bodies requiring

caution.• A statement that bodies must be clear as to which objective they are seeking;

unless there is a particular reason these should be cautious median forecasts.• Otherwise one as a ”confidence booster” and another as a “fail-safe” working

figure for Planning docs.• In particular, there needs to be a clear distinction between

“basic” employment, in factories and offices bringing income to the area (both can be identified in surveys) and the “multiplier” in the general run of local services with a fixed total of demand at any one time (CLG circulars faulty).