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MKSM Research ProjectEconomic Development Evidence Base

Final ReportAugust 2009

MKSM Research Project Economic Development Evidence Base Final Report

Contents

1: Context for study .................................................................................................................1

2: Milton Keynes South Midlands Growth Area....................................................................3

3: Economic baseline forecasts .............................................................................................8

4: Enhanced Growth Scenario to 2021 ................................................................................26

5: Priority Sectors ..................................................................................................................35

6: Scale of jobs challenge .....................................................................................................44

7: Conclusions .......................................................................................................................47

Annex A: Business Services Sector Analysis .................................................................. A-1

Annex B: Sustainable Construction Sector Analysis ...................................................... B-1

Annex C: Creative Industries Sector Analysis.................................................................. C-1

Annex D: High Performance Engineering and Motorsport Sector Analysis.................. D-1

Annex E: Logistics Sector Analysis................................................................................... E-1

Annex F: Analysis of priority sectors performance, 2003-2007...................................... F-1

Annex G: Priority Sectors Employment Projections by local area.................................G-1

Contact: Matt Sales Tel: 020 7307 7170 email: [email protected]

Chris Green Date: Approved by:

Chief Executive

18 August 2009

www.sqw.co.uk


1: Context for study

Introduction 1.1 SQW Consulting (SQW), in partnerships with Cambridge Econometrics (CE), was

commissioned by SEEDA on behalf of the Milton Keynes South Midlands (MKSM) Economic Development Group (EDG) to undertake research to assess the likely employment trajectory of the MKSM sub-region to 2021. This is the Final Report of the study.

Context for study 1.2 MKSM is the largest and most successful growth area in the UK. The sub-region was

designated as a Growth Area by government in the 2003 Sustainable Communities Plan. It includes parts of three of the best performing regions (the South East, the East and the East Midlands) in the UK. As reported in the MKSM Business Plan, it is in a prime position to deliver housing and economic growth which will bring major benefits to the UK economy. The area has demonstrated over the last 30 years its ability to attract private sector investment, and it has the capacity to attract a great deal more, from UK and international sources.

1.3 At one level, the context for – and purpose of – this study can be simply stated. For the MKSM as a whole, the intention – set out in the MKSM Business Plan 2008 and consistent with the earlier MKSM Sub-Regional Strategy (2005) – is to “provide for” 192,000 net additional jobs over the period 2001-2021. This figure is not a “target” (in the same way that there is a clear target for the provision of 224,000 net additional dwellings over the same period). Instead, it is a “reference value” against which progress will be monitored.

1.4 The view of the MKSM EDG is that this level of jobs growth will prove challenging. There is concern that based on past trends, the sub-region may not achieve the reference target. The current recession puts the jobs ambitions into sharp focus, with most commentators expecting the UK to remain in recession into 2010.

Study objectives 1.5 Against this backdrop, the purpose of the assignment has been to:

• verify whether there is likely to be a jobs gap over the period to 2021, taking into account the implications of the current recession

• assess the extent to which currently planned interventions of local and sub-regional partners are likely to close this gap

• examine the scope for further action in relation to five already-identified key sectors (and/or, potentially, different/additional sectors).

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Study process 1.6 The study has involved:

• the preparation of bespoke baseline economic forecasts for MSKM to 2021 from CE’s Local Employment Forecasting Model

• the review of interventions planned by local partners in MKSM including consultations with the respective Local Delivery Vehicles (LDVs)

• the assessment of the past performance and growth prospects for five priority sectors in MKSM, including consultations with MKSM sector leads

• the preparation of bespoke alternative economic forecasts for MKSM to 2021 (‘Growth Scenario’)

• presentation of key findings to inform MKSM EDG meeting in July 2009

• final reporting.

Structure of report 1.7 The remainder of the report is structured into six Chapters:

• Chapter two introduces the MKSM sub-region, the vision and objectives of the MKSM Business Plan and the MKSM Economic Development Implementation Plan (EDIP)

• Chapter three presents baseline forecasts for MKSM to 2021. The analysis is by MKSM and local area, by broad sectors and by the five priority sectors

• Chapter four presents the results of the enhanced Growth Scenario, which has been undertaken in two stages: the population enhanced scenario, and the employment enhanced scenario

• Chapter five summarises analysis undertaken of the priority sectors in MKSM

• Chapter six examines the scale and nature of the jobs challenge in MKSM

• Chapter seven presents the conclusions of the study.

1.8 The main report is supported by appendices containing the detailed findings of the research:

• papers for each priority sector are presented in Annexes A to E

• Annex F presents recent employment and business trends in the priority sectors and MKSM’s comparative advantage as measured by location quotients

• Annex G presents employment forecasts by area for the MKSM priority sectors (baseline forecasts and population enhanced scenario).

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2: Milton Keynes South Midlands Growth Area

MKSM geography 2.1 MKSM comprises six local areas made up of districts or groups of districts. Each area has a

Local Delivery Vehicle (LDV) to drive forward the growth agenda in partnership with local authorities, other public sector partners and the private sector. At a sub-regional level, MKSM is overseen by the MKSM Executive team and Board.

2.2 In April 2009, Bedfordshire County Council and the lower-tier local authorities of Bedford Borough, Mid Bedfordshire District and South Bedfordshire District changed their status to a unitary authority structure. Bedford Unitary Authority has replaced Bedford Borough and Central Bedfordshire Unitary Authority has been formed from the former Central and South Bedfordshire Districts. The County Council has been dissolved. The report uses the old administrative names unless otherwise stated.

2.3 The local growth areas in MKSM are:

• Aylesbury Vale where the main focus for growth is the town of Aylesbury

• Bedford & Mid Bedfordshire where the focus for growth is the town of Bedford and the adjoining areas of Kempston and Northern Marston Vale

• Luton & South Bedfordshire where the focus for growth is Luton and the adjoining areas of Dunstable and Houghton Regis along with the towns of Leighton Buzzard and Linslade

• Milton Keynes where the focus for growth is Milton Keynes

• North Northamptonshire (comprising Corby, Kettering, Wellingborough and East Northamptonshire) where the focus for growth is the towns of Corby, Kettering and Wellingborough

• West Northamptonshire (comprising Northampton, Daventry and South Northamptonshire) where the main focus for growth is the town of Northampton.

2.4 Each area in MKSM has a part to play in delivering growth and it is the collective impact of complementary interventions across the whole area that will be fundamental to achieving the scale and quality of change required.

2.5 A map of the MKSM sub-region is shown overleaf.

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Figure 2-1: MKSM sub-region

Source: MKSM

Business Plan vision and objectives 2.6 The MKSM Executive and Board published a Business Plan for MKSM in 2008. The

Business Plan has the following vision.

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MKSM Vision

MKSM offers the best opportunities for growth in UK. It has been creating new homes and jobs at 10 times the national rate for years. Over the 20 years from 2001-21 the area will provide 224,000 new homes and 192,000 additional jobs – growth equivalent to the size of major UK city, absorbed in a sustainable manner into an existing polycentric settlement pattern which ranges in character from ultra modern garden city to traditional market towns and villages set in ‘heart of England’ countryside.

MKSM is already a great place to live and work benefiting from a strategic location within an hour of central London and close to the world-class universities of Oxford and Cambridge. It is an international gateway and a national gateway to the Midlands and the North from the greater South East.

Further growth will add quality, variety and opportunity, not just scale so new development contributes to transforming MKSM to a high value low carbon economy. Fundamentally, it will support the development of sustainable communities which are attractive to international and local investors, and to people with the full range of skills and qualifications. Town centres will be expanded and revitalized; knowledge based businesses will offer well paid jobs; environmentally friendly housing will be provided for all sections of the population; the quality of education, healthcare, cultural and leisure opportunities will be improved; new green spaces will be created; major new visitor attractions will be provided; all forms of transport will be developed to support growth; distinctiveness and diversity between places will be enhanced.

Source: MKSM Business Plan

2.7 The Business Plan states that achieving this vision will require the combined efforts of a large number of public and private partners. The work of the public and private partners will be rooted in the particular circumstances of the local area, building on local assets and addressing existing deficits.

2.8 To meet the MKSM vision, the following objectives have been defined:

Business Plan Objectives

Despite MKSM’s existing track record in delivering growth, a step change is required to achieve the targets for 2021. The MKSM business plan will support delivery of the MKSM vision by focusing on priorities for investment and intervention in relation to key themes identified in the vision, and at the sub-regional scale. There are various public and private sector partners who have a role in ensuring the MKSM vision is realised, each with their own plans and programmes of activity that address the challenges and build on the assets of their local area.

The MKSM business plan highlights those interventions that are critical to the success of MKSM as a whole because of their scale or significance. The business plan is intended to complement local plans and programmes by adding weight to local efforts to secure the resources needed to deliver high quality growth successfully and sustainably. It will do this by:

• serving as a prospectus for the sub region which raises the profile of MKSM in order to attract more investment from government and the private sector

• identifying the priority interventions and gaps in capacity to deliver sustainable growth throughout MKSM, thereby providing a clear statement on investment requirements

• acting as an operational tool for the IRB to assess how the sub-region as a whole is delivering against the vision and where it is appropriate to act at MKSM level to support local delivery

• suggesting mechanisms for delivery via performance or contractual frameworks that are binding on the key stakeholders and provide shared ownership and joint responsibility for implementing the priorities.

Source: MKSM Business Plan

MKSM growth aspirations 2.9 Housing targets have been established for each local area of MKSM. The jobs reference

target to 2021 has also been allocated locally.

2.10 Since the production of the Business Plan, the Regional Spatial Strategy (RSS) for the South East region has been published (The South East Plan, May 2009). This strategy includes new targets for Milton Keynes and Aylesbury Vale (the MKSM authorities in the South East region) and over a different time period, 2006-26.

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6

2.11 The table below updates the growth targets in the Business Plan to reflect the South East Plan. This is for the purposes of this study only and does not have any wider authority. The changes increase the jobs reference target from 192,000 to 202,400 between 2001-21 (+10,000) and the housing target from 224,400 to 227,370 (+3,000).

Table 2-1: MKSM jobs and housing targets, 2001-21

Growth Policy Area

LDV Local Authority District Areas Jobs target1 Housing target

Aylesbury Vale Aylesbury Vale Advantage

Aylesbury Vale District 19,3002 25,0253

Milton Keynes Milton Keynes Partnership

Milton Keynes (unitary) 48,7004 42,2455

Luton and South Beds

Luton Gateway Luton Borough (unitary)

part of Central Bedfordshire Council (unitary)6

23,000 27,300

Bedford and Mid Beds

Renaissance Bedford

Bedford Borough (unitary)

part of Central Bedfordshire Council (unitary)7

27,000 31,800

North Northants North Northamptonshire Development Company

Corby (District)

Kettering (District)

Wellingborough (District)

East Northamptonshire (District)

47,400 52,100

West Northants West Northamptonshire Development Company

Northampton (District)

Daventry (District)

South Northamptonshire (District)

37,000 48,900

MKSM 202,400 227,370

Source: SQW Consulting drawing on MKSM Business Plan and South East Plan, May 2009

Economic Development Implementation Plan 2.12 To co-ordinate economic development activity across the sub-region, the EDG has prepared a

draft Economic Development Implementation Plan (EDIP)8. The EDIP is intended to be an outcomes based framework to provide partners with a focal point to enable collaboration across MKSM. The EDIP will cover the period 2009 to 2012.

1 Based on the mksm Business Plan 2008, p26 2 Target in MKSM Business Plan is 12,690 net additional jobs. Revised figure calculated from: five-year annualised target 2001-06 from MKSM Sub-Regional Strategy; and 15-year annualised target 2007-21 from South East Plan May 2009 3 Target in MKSM Business Plan is 19,400 new homes. Revised figure calculated in same way as jobs figure. 4 Target in MKSM Business Plan is 44,900 net additional jobs. Revised figure calculated from: five-year annualised target 2001-06 from MKSM Sub-Regional Strategy; and 15-year annualised target 2007-21 from South East Plan May 2009 5 Target in MKSM Business Plan is 44,900 new homes. Revised figure calculated in same way as jobs figure. 6 Formerly South Bedfordshire District 7 Formerly Mid Bedfordshire District 8 MKSM Economic Development Group, May 2009, Draft MKSM Implementation Plan for Economic Development.


2.13 The draft EDIP states that achieving the MKSM reference target will require two sets of actions:

• actions to take advantage of jobs resulting from population increase, for example in construction, hospitality, logistics, retail, health care and the service sector (what is often termed non-tradeable goods and services)

• actions that impact on the quality of jobs being created across MKSM, focusing on priority sectors that reflect the strengths of the sub-region.

2.14 The strategy of the draft EDIP is to build on the strengths and opportunities of the sub-region. The key strengths identified in the plan are:

• the international reputation of MKSM as a business location – including Silverstone and companies such as Johnson and Johnson

• the international connectivity of MKSM – the sub-region has excellent road and rail connections and access to international gateways such as Luton Airport and other airports in the Greater South East

• a track record in innovation and new product development – MKSM lies within the Oxford to Cambridge high-technology arc and contains companies and institutions with research excellence including Cranfield University and the motorsport cluster.

Priority sectors and themes

2.15 The priority sectors were selected by the EDG in Autumn 2008 following a mapping exercise. The sectors were agreed to represent particular strengths of the MKSM or where there was a potential economic opportunity, which could deliver jobs. Individual EDG Members are acting as leads for each sector.

2.16 The priority sectors are

• Construction and the built environment (led by Luton Borough Council) (referred to in this report as sustainable construction)

• Logistics for the future (Northampton Borough Council)

• High value engineering (HPE) and motorsport (Northamptonshire Enterprise Limited)

• Creative industries (Central Beds)

• Business services (Milton Keynes Council).

2.17 The draft EDIP includes a set of priority actions and objectives for each priority sector.

2.18 In addition to the priority sectors, a skills theme has been identified as particularly important to support MKSM’s ambitions to stimulate the creation of more high quality jobs.

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8

3: Economic baseline forecasts

Introduction 3.1 This section presents the findings of the baseline economic forecasts for MKSM to 2021. The

forecasts were commissioned specifically for the MKSM area9 as part of this study, and take into account current perspectives on the likely depth and duration of the recession. The base year for the forecasts is 2007.

3.2 It is important to note that throughout this report, all employment figures taken from the econometric forecasts include both full-time and part-time positions, they are not Full Time Equivalents (FTEs). The employment forecasts do however include estimates of self-employment.

Employment 3.3 Table 3-1 overleaf shows the baseline forecasts for employment between 2001 and 2021. The

table also includes the jobs reference targets and the main message by area. This shows that:

• over the twenty years, past trends would indicate a growth in employment across MKSM of 84,000 jobs, with 900,000 jobs by 2021

• fifty-six thousand of these jobs were created between 2001 and 2007, reflecting the strong performance of MKSM over this period

• the impacts of the current recession are forecast to be severe, with a fall in employment between 2007 and 2011 (the last year of negative growth) of nearly 30,000 jobs across MKSM

• between 2012 and 2021 the economy is expected to recover, but at a slower growth rate than between 2001-2007, creating 54,000 jobs.

3.4 Past trends, which do not reflect the current level of economic development activity in the sub-region, would indicate that MKSM will not achieve the jobs reference target. The ‘gap’ under these forecasts is around 120,000 jobs. The only local area forecast to meet its jobs reference target by 2021 is East Northamptonshire.

3.5 The baseline forecasts show that employment in MKSM increased more in percentage terms between 2001 and 2007 than UK employment (7% and 5% respectively). Although encouraging, this shows that MKSM did not perform significantly better than the UK in this period of continual economic growth. MKSM is forecast to contract less than the UK in the current recession, and also increase more in percentage terms between 2012 and 2021 (10% compared with 7% across the UK).

9 Previous employment forecasts for MKSM have been produced by amalgamating separate forecasts for the relevant parts of the East, East Midlands and South East regions. However, these separate forecasts were produced by different firms at different times, and therefore are not fully comparable.


9

Table 3-1: Baseline forecasts employment change (000s), MKSM and local areas, 2001-21

Total employment (‘000s) Employment change (‘000s)

Ref. job target 200710 & 2021 (‘000s) Employment change (%)

2001 2007 2011 2021 2001-2007

2007-2011

2012-2021

2001-2021

% 2001-2007

% 2007-2011

% 2012-2021

% 2001-2021

Main messages

UK 29,820 31,432 30,324 31,946 1,612 -1,108 1,550 2,126 n/a 5% -4% 5% 7% Employment increased by 5% 01-07 but is forecast to contract by -4% 07-11

Employment expected to expand by further 5% 12-21, by a smaller amount than in 07-11 period

MKSM 814 870 841 898 56 -28 54 84 71/

202

7% -3% 6% 10% 84,000 additional jobs, 01-21 (+10%)

-30,000 jobs in recession, recovery 12-21

Significantly under ref job target at 2021

79% of 2007 job ref target achieved (01-07)

Baseline forecasts show MKSM expanding at faster rate than UK in positive periods

Aylesbury Vale 74 77 75 79 2 -2 4 4 7/

19

3% -3% 5% 6% Slow growth of +4,000 jobs (6%), 01-21

Recession hits gains in 01-07

15,000 below 2021 jobs ref target

Secured only 30% of 07 jobs ref target (01-07)

Milton Keynes 147 159 154 169 13 -5 13 22 17/

49

9% -3% 8% 15% Strongest absolute growth (22,000) 01-21

Relatively even distribution by period

But <50% of 2021 ref job target

Achieved 76% of 07 pro-rata jobs ref target

10 Equal to seven years of annualised twenty-year target


10



2001 2007 2011 2021 2001-2007

2007-2011

2012-2021

2001-2021

% 2001-2007

% 2007-2011

% 2012-2021

% 2001-2021

Main messages

Luton 91 99 96 104 8 -3 7 13 9% -3% 8% 14% Reasonable forecast jobs growth 01-21

One of areas hardest hit by recession

Below ref target at 2007 (75% of target) and 2021 (with S Beds)

South Bedfordshire

51 49 48 50 -2 -2 2 -1

8/

2311

-4% -3% 5% -2% Stagnant jobs growth, with small gains 12-21

Below ref target at 2007 (75% of target) and 2021 (with Luton)

Corby 32 34 33 34 2 -1 1 2 5/14 6% -4% 3% 5% Small growth of 2,000 jobs, 01-21

Significantly below jobs ref target of 14,000, 01-21

Secured 42% of pro-rata 2007 jobs ref target

Kettering 37 40 39 41 3 -2 2 4 6/

16

8% -4% 6% 10% 10% increase in jobs 01-21

Recession hits gains in 01-07

Only 25% of ref jobs target at 2021

Secured 53% of pro-rata jobs ref target at 2007

Wellingborough 38 36 35 36 -2 -1 1 -2 4/

12

-6% -4% 4% -6% Negative growth, with loss of 2,000 jobs 01-21

Trend since 01, though small recovery 12-21

Misses jobs ref target at 07 (pro-rata) and 21

East Northamptonshire

26 30 29 30 4 -1 2 5 2/

5

16% -4% 6% 18% Only area forecast to hit jobs ref target at 2021 Secured >200% of pro-rata jobs ref target at 2007 Gain of 5,000 jobs 01-21, majority 01-07

11 Joint reference target for Luton and South Bedfordshire


11



2001 2007 2011 2021 2001-2007

2007-2011

2012-2021

2001-2021

% 2001-2007

% 2007-2011

% 2012-2021

% 2001-2021

Main messages

North Bedfordshire

77 83 81 87 6 -2 5 10 8% -2% 6% 13% Reasonable growth 01-21 of 10,000 jobs

Achieved 127% of pro-rata 2007 jobs target

But below jobs ref target at 2021 (with Mid Beds)

Mid Bedfordshire 46 52 51 53 6 -1 3 7

9/

2712

13% -3% 5% 16% Reasonable jobs growth of 16% 01-21

Achieved 127% of pro-rata 2007 jobs target

But below jobs ref target at 2021 (with N Beds)

Northampton 133 138 133 141 6 -5 7 8 4% -4% 5% 6% Area hardest hit by recession (-5,000 jobs)

Recovery 12-21 of 7,000 jobs

Sub-area achieved 125% of 07 jobs ref target

But below joint jobs ref target for 2021

Daventry 34 39 38 40 6 -1 3 7 16% -4% 7% 20% 2nd highest % jobs increase 01-21 of 20%

Sub-area achieved 125% of 07 jobs ref target

But below joint jobs ref target for 2021

South Northamptonshire

28 32 31 34 4 -1 3 6

13/

3713

16% -4% 10% 22% Highest % increase, with +6,000 jobs 01-21 Sub-area achieved 125% of 07 jobs ref target But misses joint jobs ref target for 2021

Source: CE Baseline projections, Regional Economic Prospects, February 2009

12 Joint reference target for North Bedfordshire and Mid Bedfordshire 13 Joint reference target for Northampton, South Northamptonshire and Daventry


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3.6 The changes in total employment are illustrated in Figure 3-1 below for selected years.

Figure 3-1: Baseline forecasts total employment by year, MKSM (000s)

898868

841839849871870

814

-50

50

150

250

350

450

550

650

750

850

950

2001 2007 2008 2009 2010 2011 2016 2021

Year

Tota

l em

ploy

men

t in

000s

Milton Keynes

Aylesbury Vale

Luton

South Bedfordshire

Mid Bedfordshire

North Bedfordshire

Northampton

South Northampton

Daventry

Wellingborough

Kettering

Corby


Source: SQW Consulting

3.7 By local area, Table 3.1 shows:

• Milton Keynes is forecast to have the highest absolute growth of 22,000 jobs, an increase of 15% on 2001. Luton has the second highest absolute growth of 13,000 jobs (14%). Of the largest economies, Northampton is predicted to experience more modest growth

• total employment is expected to decline in Wellingborough and South Bedfordshire (by -6% and -2% respectively)

• varying prospects for West and North Northamptonshire, with North Northamptonshire growing at a slower rate.

Gross Value Added

3.8 Table 3.2 presents the baseline forecasts for Gross Value Added (GVA). GVA is measured in 2003 prices14.

14 This is consistent with the Office of National Statistics, who use 2003 as the constant price measure of value added.


Table 3-2: Gross Value Added absolute and percentage change, MKSM, 2001-21 (£2003m)

Total GVA % change

2001 2007 2011 2021 Change 2001-21 2001-07 2007-11 2012-21 2001-21

UK 948,881 1,113,010 1,100,840 1,425,576 476,695 17% -1% 26% 50%

MKSM 28,287 34,405 34,207 45,345 17,058 22% -1% 29% 60%

Aylesbury Vale 2,695 3,157 3,127 4,132 1,437 17% -1% 29% 53%

Milton Keynes 5,676 7,219 7,109 9,853 4,177 27% -2% 35% 74%

Luton 3,603 4,655 4,657 6,295 2,692 29% 0% 31% 75%

South Beds 1,800 1,978 1,958 2,544 744 10% -1% 27% 41%

Corby 1,083 1,269 1,239 1,566 483 17% -2% 24% 45%

Kettering 1,070 1,283 1,275 1,622 552 20% -1% 24% 52%

Wellingborough 1,187 1,288 1,267 1,615 428 8% -2% 25% 36%

East Northamptonshire 759 986 979 1,273 514 30% -1% 27% 68%

North Beds 2,814 3,259 3,265 4,200 1,386 16% 0% 26% 49%

Mid Beds 1,682 2,119 2,114 2,762 1,080 26% 0% 28% 64%

Northampton 4,070 4,755 4,804 6,269 2,199 17% 1% 27% 54%

Daventry 1,004 1,351 1,334 1,759 755 35% -1% 29% 75%

South Northamptonshire 844 1,086 1,079 1,457 613 29% -1% 32% 73%

Source: CE Baseline projections, Regional Economic Prospects, February 2009.

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3.9 GVA in MKSM is expected to grow from £28.3 billion (bn) in 2001 to £45.3 bn in 2021, an increase over the entire period of 60%. The percentage changes in GVA by period shows the slower rate of growth expected in the second half of the twenty-year period, following the recession years.

3.10 The table shows MKSM outperforming the UK in all periods. While GVA grew by 22% between 2001 and 2007 in MKSM; it increased by 17% in the same period in the UK. And from 2012, GVA is forecast to increase more in percentage terms in MKSM than in the UK, by 29% compared with 26%.

3.11 All local areas of MKSM are expected to see an increase in value added. The economies of Milton Keynes, Luton and Northampton are expected to account for more than 50% of the absolute increase across MKSM as a whole.

3.12 Comparing employment and GVA change by area serves to show that the baseline forecasts expect an increase in GVA per job across almost all sectors and in all local areas of MKSM. The only sectors where GVA per job is forecast to decline is in education and some limited manufacturing activities, and only in particular areas of MKSM.

Broad sector analysis

3.13 The baseline forecasts include projections of employment change and GVA by forty-one broad sectors. Figure 3.2 overleaf shows absolute change in employment by these broad sectors between 2001 and 2021.

3.14 The graph shows positive growth in 11 broad sectors, mainly in service based industries but also including land transport, construction and public administration. Professional services and health and social work are expected to expand by around 35,000 employee jobs and land transport and other business services by close to 25,000 employee jobs.

3.15 Manufacturing industries dominate the lower half of the figure, with the motor vehicles sector declining by around 10,000 employee jobs, and the textiles, clothing and leather products, mechanical engineering and distribution sectors declining by 6,000-7,000 jobs.

3.16 The figure serves to show that future employment growth in MKSM will not be evenly distributed by sector. Some sectors will grow, some will contract, and the nature of employment is also likely to change within some sectors, with a faster pace of change than the headline figures would suggest.

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Figure 3-2: Employment change by broad sectors, MKSM, 2001-2021 (000s)

-15.0 -5.0 5.0 15.0 25.0 35.019 Motor Vehicles 6 Text., Cloth. & Leath

16 Mech. Engineering 26 Distribution

18 Elec. Eng. & Instrum.28 Hotels & Catering 12 Rubber & Plastics 32 Communications

15 Metal Goods 11 Chemicals nes

1 Agriculture etc 8 Printing & Publishing21 Manuf. nes

7 Wood & Paper 34 Insurance 17 Electronics

5 Food, Drink & Tob. 13 Non-Met. Min. Prods.

24 Water Supply 20 Oth. Transp. Equip.

31 Air Transport 33 Banking & Finance

9 Manuf. Fuels 22 Electricity

10 Pharmaceuticals 14 Basic Metals 4 Other Mining

30 Water Transport 3 Oil & Gas etc

2 Coal 23 Gas Supply

38 Public Admin. & Def. 25 Construction

27 Retailing 35 Computing Services

41 Misc. Services 39 Education

37 Other Bus. Services 29 Land Transport etc 40 Health & Social Work

36 Prof. Services

Absolute change in employment in 000s

Source: Cambridge Econometrics baseline forecasts

3.17 Tables 3-3 and 3-4 overleaf present the top fifteen broad sectors in MKSM by total employment and GVA in 2007 and 2021, and employment and GVA change 2012-21 (absolute and percent). The tables excludes sectors which are forecast to have less than 1,000 jobs in 2021.

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Table 3-3: Baseline forecasts top sectors by employment change, MKSM, 2001-21

Top 15 sectors by total employment, 2007 (‘000s)

Top 15 sectors by total employment, 2021 (‘000s)

Top 15 sectors by absolute employment change, 2012-21 (‘000s)

Top 15 sectors by % employment change, 2012-21 (%)

MKSM 870.0 MKSM 897.8 MKSM Total 54 MKSM Total 6%

27 Retailing 85.0 40 Health & Social Work 100.6 36 Prof. Services 15.2 35 Computing Services 25%

40 Health & Social Work 83.3 27 Retailing 89.1 40 Health & Social Work 12.4 36 Prof. Services 22%

37 Other Bus. Services 78.0 37 Other Bus. Services 84.5 29 Land Transport etc 8.1 29 Land Transport etc 14%

26 Distribution 75.7 36 Prof. Services 82.9 37 Other Bus. Services 7.2 40 Health & Social Work 14%

36 Prof. Services 69.4 26 Distribution 73.7 27 Retailing 5.5 34 Insurance 14%

39 Education 66.6 39 Education 68.9 35 Computing Services 5.4 33 Banking & Finance 11%

25 Construction 56.1 29 Land Transport etc 65.1 25 Construction 4.8 37 Other Bus. Services 9%

29 Land Transport etc 54.7 25 Construction 58.5 41 Misc. Services 4.2 25 Construction 9%

41 Misc. Services 52.5 41 Misc. Services 54.2 39 Education 2.9 41 Misc. Services 8%

28 Hotels & Catering 40.5 28 Hotels & Catering 41.1 28 Hotels & Catering 2.3 27 Retailing 7%

38 Public Admin. & Def. 37.5 38 Public Admin. & Def. 34.3 33 Banking & Finance 2.1 28 Hotels & Catering 6%

35 Computing Services 21.8 35 Computing Services 26.7 26 Distribution 0.5 8 Printing & Publishing 6%

33 Banking & Finance 21.1 33 Banking & Finance 21.7 8 Printing & Publishing 0.5 39 Education 4%

5 Food, Drink & Tob. 17.6 5 Food, Drink & Tob. 15.0 34 Insurance 0.2 26 Distribution 1%

32 Communications 13.3 32 Communications 12.1 21 Manuf. nes -0.1 32 Communications -2%


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Table 3-4: Baseline forecasts top sectors by GVA change, MKSM, 2001-21

Top 15 sectors by total GVA, 2007 (£2003m) Top 15 sectors by total GVA, 2021 (£2003m)

Top 15 sectors by absolute GVA change, 2012-21 (£2003m)

Top 15 sectors by % GVA change, 2012-21 (%)

MKSM 34,405 MKSM 45,345 MKSM 10,244 MKSM 29%

36 Prof. Services 3,312 36 Prof. Services 5,018 36 Prof. Services 1,555 35 Computing Services 73%

26 Distribution 3,096 26 Distribution 3,721 35 Computing Services 1,331 32 Communications 70%

29 Land Transport etc 2,247 35 Computing Services 3,160 32 Communications 767 36 Prof. Services 45%

27 Retailing 2,108 29 Land Transport etc 2,936 26 Distribution 745 17 Electronics 42%

33 Banking & Finance 1,894 40 Health & Social Work 2,881 40 Health & Social Work 715 37 Other Bus. Services 41%

40 Health & Social Work 1,886 27 Retailing 2,795 37 Other Bus. Services 686 34 Insurance 34%

25 Construction 1,797 33 Banking & Finance 2,644 33 Banking & Finance 655 31 Air Transport 33%

35 Computing Services 1,585 37 Other Bus. Services 2,381 27 Retailing 600 40 Health & Social Work 33%

37 Other Bus. Services 1,577 25 Construction 2,069 25 Construction 330 33 Banking & Finance 33%

41 Misc. Services 1,508 39 Education 1,897 39 Education 328 27 Retailing 27%

39 Education 1,478 32 Communications 1,870 41 Misc. Services 297 26 Distribution 25%

38 Public Admin. & Def. 1,353 41 Misc. Services 1,821 38 Public Admin. & Def. 238 14 Basic Metals 23%

32 Communications 989 38 Public Admin. & Def. 1,634 31 Air Transport 236 39 Education 21%

5 Food, Drink & Tob. 977 5 Food, Drink & Tob. 1,013 34 Insurance 60 41 Misc. Services 20%

28 Hotels & Catering 772 31 Air Transport 944 17 Electronics 52 25 Construction 19%


17


18

3.18 The tables highlight that:

• retailing was the largest sector in 2007 with 85,000 employee jobs, followed by health and social work15 (83,000), other business services16 (78,000), distribution17 (76,000), professional services18 (69,000) and education19 (67,000). Other forms of service based industries dominate the remaining top sectors, though land transport (logistics) and construction also feature

• by 2021, the same sectors are forecast to be the largest employers, with health and social care replacing retail as the largest employment sector (101,000 jobs, reflecting the population increase and ageing population). Other sectors expected to expand most are professional services, land transport and other business services

• in GVA, professional services had the highest value added in 2007 of £3.3bn, followed by distribution, land transport and retailing. As would be expected, there is a close correlation between changes in employment and GVA

• the same sectors are expected to have the most value added in 2021, with professional services expanding by £2.7bn between 2001 and 2021. Nine sectors expand by around £1bn in value added, including computing services20 (+£2bn).

3.19 The broad sector analysis shows the likely continuing decline of traditional manufacturing and increasing dominance of service based industries in MKSM in the future.

3.20 The table shows that those sectors that make up the MKSM priority sectors (discussed in the following section) are forecast to be some of the best performing sectors. Outside of the sectors that make-up the priority sectors, the main sectors expected to expand between 2012 and 2021 are (in order of importance): health and social work, retailing, education and hotels and catering. These sectors potentially offer some scope for MKSM to prioritise in addition to the priority sectors. However, all have a close relationship with the forecast increase in population across MKSM e.g. healthcare to support a growing and ageing population; hotels and catering and retailing from leisure activities. The question therefore for MKSM partners is the extent to which ‘regional’ or ‘national’ economic functions can be attracted to MKSM in these sectors. Education perhaps has the closest links to the aspirations of partners in MKSM, given the need to raise education attainment and higher skilled labour.

Priority sector forecasts 3.21 This section presents the results of the baseline forecasts for the five priority sectors in

MKSM. To inform the economic forecasts and sector analysis undertaken for this study,

15 Human health activities (public and private hospitals, nursing homes, dentists), veterinary activities and social work activities (accommodation and non-accommodation based) 16 Labour recruitment, security, cleaning activities and miscellaneous services such as call centres and photography 17 Sale/ repair of motor vehicles/ motorcycles and other wholesale trade and commission 18 Real estate, renting of machinery and equipment, research & development (natural and social sciences), business activities (e.g. legal, accountancy, market research, public relations, financial management and management of holding companies) 19 All forms – primary, secondary, further and higher education 20 Hardware, software, data processing and maintenance/ repair


definitions of each sector based on Standard Industrial Classifications (SIC) was agreed with the client group. The definitions are provided at the end of Annex F.

Past performance

3.22 This section provides analysis of recent trends in employment (not including self-employment) and workplace units in the five priority sectors between 2003 and 2007. This draws on the detailed analysis contained in Annex F.

3.23 It is important to note that care should be taken in interpreting the findings. The data are estimates only from the Annual Business Inquiry (ABI), subject to sampling errors. There have also been changes to the ABI methodology over the period of analysis, leading to so-called discontinuities. This means that ideally time-series data should not be compared beyond 2004. However, policy-makers require more up to date information to assist them in making informed decisions, and there is no alternative to the ABI. The important point is that changes between years can result from changes in the methodology and/ or sampling errors as well as real changes in the economy. There is likely to be more certainty with the accuracy of the data for larger spatial areas such as the MKSM sub-region than for smaller areas such as local authorities.

Employment and workplace units change

3.24 Table 3-5 provides an overview of changes in employee jobs and the number of workplace ‘units’ in the priority sectors in MKSM as a whole, 2003 to 2007.

Table 3-5: Employee jobs and workplace units in key industry sectors, MKSM, 2003 to 2007

Employee jobs Workplace units

Key industry sector 2003 2007 2003/07 2003 2007 2003/07

Creative industries 50,840 56,700 + 5,860 11,000 12,600 + 1,600

Motor sport & HPE 27,540 25,160 - 2,370 1,620 1,530 - 90

Sustainable construction 27,830 33,120 + 5,290 7,040 8,070 + 1,030

Logistics 84,670 94,450 + 9,780 6,590 6,450 - 140

Financial & other business services

64,840 77,350 + 12,510 10,920 12,430 + 1,510

Sub total key sectors 255,700 286,780 + 31,070 37,170 41,080 + 3,910

Total employee jobs 717,150 763,180# + 46,020 65,510 70,860 + 5,350

Source: Annual Business Inquiry – ONS; SQW Consulting; Note: # total adjusted for change in survey date from December to September

3.25 This shows that the five key industry sectors together accounted for almost 287,000 employee jobs and 41,000 business units in the sub-region in 2007, suggesting growth of over 31,000 jobs and 5,500 units as compared with 2003. Logistics was the biggest sector in employment terms, followed by financial and business services, in 2007. Creative industries and financial and business services accounted for the largest number of business units.

19


20

3.26 Most of the key sectors had experienced strong growth. Employment growth in the five key industry sectors was almost twice as high as the rate of growth in all employee jobs in MKSM over the same period and the number of business units in the priority sectors also grew at a faster rate than across MKSM as a whole. However, this masks differences by sector. Between 2003 and 2007 the motor sport & HPE sector contracted in number of jobs and business units and logistics in business units. This is partly a definition problem, as it is impossible to distinguish in published statistics between real high performance engineering and some more traditional manufacturing, particularly in the motor vehicles sector.

3.27 Figure 3.3 presents annual employment levels in each sector between 2003 and 200721.

Figure 3-3: Employee jobs in key industry sectors, MKSM, 2003 to 2007

Employee Jobs in Key Industry Sectors, 2003 to 2007, MKSM, (source: ABI)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2003 2004 2005 2006 2007

Creative industries total Motor sport & high performance engineering Construction total

Logistics total Business services (n.e.s.) total

Source: Annual Business Inquiry ONS

Local concentrations

3.28 Milton Keynes and Northampton accounted for the highest proportion of jobs in 2007 across MKSM (18.3% and 16.6% respectively). Luton and Central Bedfordshire (former Mid and South Bedfordshire districts) were also relatively important, with more than 10% of jobs. These same areas accounted for the highest proportions of employment in the priority sectors, 59% of MKSM’s total.

3.29 Central Bedfordshire, Milton Keynes, Aylesbury Vale and Northampton had the highest concentrations of business units across MKSM in 2007 (55% of total). The same areas accounted for 56% of business units in the five sectors.

21 It should be noted that the employee estimates are derived from a sample survey and year-on-year differences reflect sampling error as well as actual changes in numbers employed.


3.30 By priority sector:

• for creative industries, Milton Keynes accounted for over one-fifth of all employee jobs, (22.1%). Northampton, (13.5% of the total), Central Bedfordshire, (12.8%) and Aylesbury Vale, (10.5%) were also relatively important

• the motor sport & HPE sector is particularly reliant on employment in three districts: Luton, (24.1%), Milton Keynes, (14.9%) and Daventry, (12.2%)

• the sustainable construction sector is more widely spread with five areas contributing 10% or more of the sub-region’s employee jobs. The largest share is contributed by Central Bedfordshire (16.3%)

• the large logistics industry is particularly dependent on the employment provided in Milton Keynes (17.9%), Northampton (15.8%), Luton (13.6%) and Central Bedfordshire (9.8%). These four areas account for over 57% of the total jobs

• two local authority areas dominate the provision of financial & business service jobs, Milton Keynes (with 25.8%) and Northampton (20.6%). Central Bedfordshire and Luton are also both relatively important, each accounting for between 10% and 11% of total MKSM employment in this sector.

Baseline forecasts

3.31 Table 3.6 overleaf presents the findings of the baseline forecasts for the five priority sectors. The table includes key messages by sector, including the expected distribution of growth (and contraction) by local area in MKSM. For comparison, the table shows the forecast change in employment and GVA in each priority sector by period across the UK.

3.32 Employment is expected to grow by a combined total of 71,000 jobs across the five sectors between 2001 and 2021. This represents 85% of the forecast employment growth across all sectors in MKSM over the same period. This suggests that MKSM has prioritised the right sectors, with the growth outstripping other parts of the economy.

3.33 The baseline forecasts predict that four of the priority sectors will grow in employment terms, and all in respect of value added:

• the highest employment growth is expected in the creative industries sector (+40,000), with GVA increasing by 135%. All areas of MKSM are expected to benefit, but particularly Milton Keynes, Aylesbury Vale and Northampton

• the business services sector is forecast to expand by 29,000 employee jobs and by 111% in GVA, with the population centres of Milton Keynes, Luton and Northampton securing most growth locally

• employment is expected to grow more modestly in logistics (+12,000) and sustainable construction (+6,000), although the value added from logistics activities is expected to increase by 75%, indicating a movement to higher value activities

21


22

• the HPE and motorsport sector is expected to decline in employment sharply by 16,000 jobs (-43%). A good proportion of this decline has already happened (i.e. between 2001-07), and the majority of the losses are forecast for Luton and Northampton.

3.34 Compared to forecast UK performance in the priority sectors between 2012 and 2021, MKSM is expected to perform better in business services, with employment growing by 20% compared with 14% in the UK. The expected expansion in the creative industries sector in MKSM is in line with the UK forecast, although with value added growing more in percentage terms in MKSM. The forecasts for the logistics and HPE and motorsport sectors are in line with the UK. Sustainable construction, however, is expected to grow at a slower rate in MKSM than across the UK.


Table 3-6: Sector forecasts, employment and GVA, MKSM, 2001-2021

Total by year Absolute change by period MKSM % change by period

UK % change by period

Main messages

2001 2007 2011 2021 2001-2007

2007-2011

20012-21

2001-21

% change 01-21

% change 12-21

% change 01-21

% change 12-21

Creative industries – employment (000s)

30 66 63 70 36 -3 7 40 135% 11% 121% 10%

Creative industries – GVA (£2003m)

888 2,569 2,662 4,061 1,680 93 1,298 3,173 357% 47% 239% 41%

+40,000 jobs 01-21, most secured by 07

Growth of 7,000 jobs 12-21

Increase in GVA of 360% 01-21 (£3.2bn). +£1.3bn between 12-21

All areas except East Northamptonshire expected to increase employment

Strongest growth locally in Milton Keynes (+12,000 jobs) and Aylesbury Vale/ Northampton (both +5,000 jobs)

MKSM forecasts in line with UK 2012-21

Sustainable construction – employment (000s)

53 56 53 59 3 -3 5 6 11% 9% 22% 15%

Sustainable construction – GVA (£2003m)

1,511 1,797 1,706 2,069 286 -90 330 558 37% 19% 40% 26%

+6,000 jobs 01-21 reaching 59,000 jobs

Loss of 3,000 jobs in recession followed by +5,000 jobs 12-21

Growth in GVA of £558m (37%) 01-21

Most local areas experience modest employment growth (North Bedfordshire c.50% of total growth with 3,000 jobs)

MKSM forecasts weaker than UK 2012-21

Business Services – employment (000s)

69 85 80 98 16 -5 16 29 42% 20% 22% 14% +29,000 jobs 01-21, +16,500 jobs 12-21

GVA +£4.2bn over twenty years (+111%). £2.5bn additional GVA 12-21

23


24

Total by year Absolute change by period MKSM % change by period

UK % change by period

Main messages

2001 2007 2011 2021 2001-2007

2007-2011

20012-21

2001-21

% change 01-21

% change 12-21

% change 01-21

% change 12-21

Business Services – GVA (£2003m)

3,793 5,236 5,333 7,992 1,444 96 2,456 4,200 111% 44% 89% 38% Strongest growth in Milton Keynes and Luton (jobs and GVA) and Northampton (GVA)

MKSM forecasts stronger than across UK between 12-21

Logistics – employment (000s)

98 103 102 109 5 -1 7 12 12% 6% -2% 2%

Logistics – GVA (£2003m)

3,926 5,043 5,012 6,863 1,117 -31 1,703 2,937 75% 33% 57% 30%

+11,500 jobs (12%) 01-21

GVA +£2,900m (75%) 01-21

Suggests attraction of higher value activities

Fall in employment in a number of local areas, with job growth concentrated in Daventry, Northampton, Corby and South Northamptonshire

GVA expected to increase across all local areas

MKSM forecasts slightly above UK 12-21

HPE & motorsport – employment (000s)

37 28 25 21 -9 -3 -3 -16 -43% -13% -33% -11%

HPE & motorsport – GVA (£2003m)

1,372 1,408 1,261 1,444 35 -147 164 72 5% 13% 16% 15%

Sharp fall of 16,000 jobs between 01-21 (-43%)

A significant proportion of this decline took pace in the 2001-07 period

Small increase in GVA of £72m (5%)

Majority of job losses forecast in Luton (-7,500 jobs) and Northampton (-3,500 jobs)

MKSM forecasts below UK for 2012-21

Source: Baseline projections consistent with Regional Economic Prospects, February 2009


Key findings 3.35 This Chapter has presented the results of the bespoke baseline forecasts for MKSM between

2001 and 2021. The forecasts are based on past trends and do not reflect the current level of economic development activity in the sub-region.

3.36 The forecasts predict that an additional 84,000 jobs will be created across MKSM over the twenty-year period, with 900,000 jobs by 2021. Past trends would indicate that MKSM will struggle to meet its jobs reference target of an additional 200,000 jobs between 2001 and 2021.

3.37 The headline change tells only part of the story. MKSM achieved a historically good level of growth between 2001 and 2007, although the sub-region’s performance was not significantly better than that of the UK’s over the same period. The expected loss of 30,000 jobs in the current recession takes out a significant chuck of the growth between 2001 and 2007. Fifty-four thousand additional jobs are expected to be created from 2012 onwards but at a slower rate of growth than between 2001 and 2007. Overall, the service based economy of MKSM is expected to continue to become increasingly important to wealth creation.

3.38 The baseline forecasts suggest that the Milton Keynes and Luton economies will grow strongest over 2001-21 although East Northamptonshire is the only local area under the modelling results to meet its jobs reference target. GVA is expected to out-strip employment growth across all areas.

3.39 The evidence is that MKSM is prioritising the right sectors. Growth in employment in the five sectors between 2003 and 2007 was double the rate of the rest of the economy and 85% of the employment growth in the baseline forecasts is concentrated in the five sectors. Logistics is the biggest priority sector in employment terms, followed by business services. Creative industries and business services are forecast to expand the most between 2001 and 2021, although the HPE and motorsport sector is expected to contract, fuelled by the decline of the mass production component of the sector.

3.40 Other sectors expected to perform well over 2012-21 are health and social care, retailing, hotels and catering and education. Growth in these sectors is closely tied to the forecast population increase over the period.

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26

4: Enhanced Growth Scenario to 2021

Introduction 4.1 Chapter four presents the findings of the enhanced Growth Scenario to 2021.

4.2 The enhanced Growth Scenario adjusts the baseline forecasts in two ways: first, to take account of the revised housing targets for MKSM, resulting from changes to the relevant Regional Spatial Strategies; and secondly, to take account of the higher than previous levels of intervention to stimulate economic and employment growth.

4.3 The section below covers the first stage, with the results of the second stage presented later in the Chapter.

Enhanced population scenario

Approach

4.4 The first stage – the Enhanced Population Scenario - has involved running the econometric model with revised population assumptions reflecting the current housing targets for the local areas in MKSM. The baseline forecasts used trend-based population projections for MKSM based on ONS estimates. These population projections are not consistent with current policy aspirations for MKSM (though they would reflect past policy decisions).

4.5 The revised population assumptions, together with the housing targets from which they were derived, are presented in Table 4.1. While the housing targets are included in the relevant Regional Spatial Strategies, the population figures have no wider authority – they were prepared solely for the purposes of this study, based on assumptions about the relationship between housing and population figures.

Table 4-1: Revised MKSM population projections, 2001-21

Revised MKSM Research Project housing target, 2001-21

Assumed MKSM Research Project population for housing target22

2001 baseline population

New 2021 population projection

Bedford 19,500 27,000 148,100 175,100

Mid Bedfordshire 12,300 22,600 121,300 143,900

Bedford & Mid Bedfordshire 31,800 49,600 269,400 319,000

South Bedfordshire - 18,19023 112,700 130,890

22 Revised housing target multiplied by average household size 23 In the absence of a housing target 2001-21 for South Bedfordshire in the MKSM Business Plan (there is a target for the combined South Bedfordshire and Luton area), this figure has been calculated by apportioning the South Bedfordshire/ Luton assumed population target to the individual South Bedfordshire and Luton districts in line with the proportion each district made up of the projected 2021 population for South Bedfordshire/ Luton in the MKSM Business Plan. The MKSM Business Plan assumed the population of South Bedfordshire/ Luton in 2021 to be 341,200, of which South Bedfordshire made up 42.7% and Luton 57.3%. Consequently we have allocated


27

Revised MKSM Research Project housing target, 2001-21

Assumed MKSM Research Project population for housing target22

2001 baseline population

New 2021 population projection

Luton - 24,410 185,900 210,310

Luton & South Bedfordshire 27,300 42,600 298,600 341,200

Milton Keynes 42,245 79,409 212,700 292,109

Aylesbury Vale 25,025 34,313 165,700 200,013

Daventry 10,800 26,100 72,000 98,100

Northampton 31,500 48,200 194,400 242,600

South Northamptonshire 6,600 16,200 79,500 95,700

West Northamptonshire 48,900 90,500 345,900 436,400

Corby 16,800 33,000 53,400 86,400

East Northamptonshire 9,400 16,400 76,800 93,200

Kettering 13,100 25,600 82,300 107,900

Wellingborough 12,800 24,400 72,500 96,900

North Northamptonshire 52,100 99,400 285,100 384,500

MKSM 227,370 398,303 1,577,400 1,975,703

Source: SQW Consulting based on MKSM Business Plan and South East Plan

4.6 The table has a target to deliver an additional 227,000 new homes across MKSM between 2001 and 2021. We estimate that this will increase the total population of MKSM from 1.58m in 2001 to 1.98m by 2021.

4.7 In absolute terms, the Enhanced Population Scenario assumes an additional 50,000 people than the baseline forecasts. Of greater significance are the changes in the distribution of the population locally between the models. This is shown in Table 4.2.

Table 4-2: Difference in population between enhanced population scenario and baseline forecasts, (000s)

2007 2011 2021

Aylesbury Vale 0.0 0.7 2.6

Milton Keynes 0.0 6.0 21.9

Luton 0.0 1.9 7.9

South Bedfordshire 0.0 -0.2 -1.0

Corby 0.0 5.9 27.1

Kettering 0.0 0.7 2.7

42.7% of the assumed population for the South Bedfordshire/ Luton housing target (42,600) to South Bedfordshire, and 57.3% to Luton.


28

2007 2011 2021

Wellingborough 0.0 2.9 12.7

East Northamptonshire 0.0 -2.3 -8.1

North Bedfordshire (Bedford) 0.0 -0.6 -2.1

Mid Bedfordshire 0.0 -5.9 -20.0

Northampton 0.0 4.9 18.7

Daventry 0.0 1.3 4.5

South Northamptonshire 0.0 -5.1 -16.8

MKSM 0.0 10.4 50.2

Source: Cambridge Econometrics forecasts

4.8 In this scenario, the population changes were the only revision made to the econometric model - all other assumptions were held constant.

Findings

4.9 The output of the ‘enhanced population’ scenario is a revised set of employment and GVA forecasts to 2021. These are presented in Tables 4.3 and 4.4 overleaf.

4.10 By comparing the results against the baseline forecasts, it is possible to show the employment and GVA growth that the model forecasts will result from the additional population generated by the new housing targets. The results are presented in Table 4.5 overleaf.

4.11 The differences between the baseline forecasts and enhanced population scenario for MKSM as a whole are not significant, with an additional 9,200 jobs and £430m of GVA by 2021.

4.12 The additional jobs and GVA are concentrated in Milton Keynes, Northampton and Corby. Five local areas see a reduction in employment and GVA due to having fewer people than under the baseline forecasts. They include the three former districts in Bedfordshire and South and East Northamptonshire.

4.13 The additional employment is concentrated in service based industries that support population (i.e. non-tradeable services) and in construction. There is little change by priority sector, with 2,200 more jobs across the five sectors compared with the baseline forecasts (growth of 73,000 employee jobs overall, 2001-21).


29

Table 4-3: Population enhanced scenario employment change (000s), MKSM and local areas, 2001-21 Total employment by year (‘000s) Employment change by period (‘000s) Employment change by period (%) 2001 2007 2011 2021 2001-2007 2007-2011 2012-21 2001-21 % 2001-07 % 2007-11 % 2012-21 % 2001-21

UK24 29,820 31,432 30,324 31,946 1,612 -1,108 1,550 2,126 5% -4% 5% 7%

MKSM 813.7 870.0 843.1 907.0 56 -27 61 93 7% -3% 7% 11%

Aylesbury Vale 74.5 76.8 74.7 79.1 2 -2 4 5 3% -3% 6% 6%

Milton Keynes 146.7 159.4 155.7 173.8 13 -4 17 27 9% -2% 11% 18%

Luton 90.6 99.0 95.9 105.0 8 -3 8 14 9% -3% 9% 16%

South Beds 51.5 49.5 47.7 49.9 -2 -2 2 -2 -4% -3% 4% -3%

Corby 32.4 34.3 33.7 37.8 2 -1 4 5 6% -2% 11% 17%

Kettering 37.3 40.4 38.7 41.2 3 -2 2 4 8% -4% 6% 10%

Wellingborough 38.4 36.2 35.1 38.0 -2 -1 3 0 -6% -3% 8% -1%

East Northamptonshire 25.6 29.7 28.3 29.2 4 -1 1 4 16% -5% 4% 14%

North Bedfordshire 76.7 83.0 81.2 85.6 6 -2 4 9 8% -2% 5% 12%

Mid Bedfordshire 46.2 52.1 49.7 50.1 6 -2 1 4 13% -5% 1% 9%

Northampton 132.7 138.3 134.4 145.0 6 -4 10 12 4% -3% 7% 9%

Daventry 33.5 39.1 37.8 40.9 6 -1 3 7 16% -3% 8% 22%

South Northamptonshire 27.7 32.1 30.0 31.6 4 -2 2 4 16% -6% 6% 14%

Source: Cambridge Econometrics Population enhanced scenario, consistent with Regional Economic Prospects, February 2009

24 UK employment and GVA forecasts under the population enhanced scenario are the same as under the baseline forecasts.


Table 4-4: Population enhanced scenario GVA change (000s), MKSM and local areas, 2001-21 Total employment by year (‘000s) Employment change by period (‘000s) Employment change by period (%) 2001 2007 2011 2021 2001-2007 2007-2011 2012-21 2001-21 % 2001-07 % 2007-11 % 2012-21 % 2001-21

UK 948,881 1,113,010 1,100,840 1,425,576 1,628.4 406.9 167.4 2,161.2 17% -1% 26% 50%

MKSM 28,286.6 34,405.1 34,271.3 45,773.8 6,118.5 -133.8 10,583.4 17,487.3 22% 0% 30% 62%

Aylesbury Vale 2,694.9 3,157.3 3,127.5 4,140.3 462.4 -29.7 931.5 1,445.4 17% -1% 29% 54%

Milton Keynes 5,675.6 7,218.7 7,169.4 10,133.2 1,543.1 -49.3 2,730.6 4,457.7 27% -1% 37% 79%

Luton 3,603.3 4,654.6 4,668.9 6,368.0 1,051.3 14.2 1,558.3 2,764.6 29% 0% 32% 77%

South Beds 1,799.5 1,977.8 1,951.0 2,513.7 178.3 -26.8 517.1 714.1 10% -1% 26% 40%

Corby 1,083.0 1,269.2 1,270.0 1,743.1 186.3 0.8 434.5 660.1 17% 0% 33% 61%

Kettering 1,070.2 1,283.5 1,276.6 1,632.1 213.3 -6.9 325.8 561.9 20% -1% 25% 53%

Wellingborough 1,187.1 1,287.8 1,282.6 1,697.5 100.7 -5.2 379.8 510.4 8% 0% 29% 43%

East Northamptonshire 759.5 986.3 968.0 1,225.8 226.8 -18.3 239.9 466.4 30% -2% 24% 61%

North Bedfordshire 2,814.0 3,258.6 3,252.0 4,144.3 444.7 -6.6 818.4 1,330.4 16% 0% 25% 47%

Mid Bedfordshire 1,681.6 2,119.2 2,070.1 2,585.1 437.6 -49.2 475.1 903.5 26% -2% 23% 54%

Northampton 4,070.3 4,754.6 4,842.7 6,449.6 684.4 88.1 1,475.5 2,379.3 17% 2% 30% 58%

Daventry 1,004.3 1,351.4 1,338.4 1,777.5 347.1 -13.0 407.5 773.2 35% -1% 30% 77%

South Northamptonshire 843.5 1,086.0 1,054.2 1,363.7 242.5 -31.8 289.2 520.2 29% -3% 27% 62%

Source: Cambridge Econometrics Population enhanced scenario, consistent with Regional Economic Prospects, February 2009

30


Table 4-5: Enhanced Population Scenario, difference in employment and GVA to baseline forecasts, MKSM and local areas, 2001-21

Baseline forecast, Employment (000s)

Enhanced Population Scenario – difference to baseline forecast

Commentary

2001 2007 2011 2021

2011 employment difference (000s)

2021 employment difference (000s)

2011 GVA difference (£2003m)

2021 GVA difference (£2003m)

MKSM Total 813.7 870.0 841.5 897.8 1.6 9.2 64.8 428.8

Aylesbury Vale Total 74.5 76.8 74.7 78.9 0.0 0.2 0.8 8.0

Milton Keynes Total 146.7 159.4 154.4 168.8 1.3 5.0 60.3 280.5

Luton Total 90.6 99.0 95.7 103.6 0.2 1.3 11.4 72.9

South Beds Total 51.5 49.5 47.9 50.4 -0.2 -0.5 -7.1 -29.9

Corby Total 32.4 34.3 32.9 33.9 0.8 3.9 31.1 177.4

Kettering Total 37.3 40.4 38.7 40.9 0.1 0.3 2.0 10.3

Wellingborough Total 38.4 36.2 34.7 36.1 0.4 1.9 15.7 82.9

East Northamptonshire Total 25.6 29.7 28.6 30.2 -0.3 -1.1 -11.4 -46.7

North Beds Total 76.7 83.0 81.5 86.6 -0.3 -1.0 -13.2 -55.6

Mid Beds Total 46.2 52.1 50.8 53.5 -1.0 -3.4 -43.5 -176.9

Northampton Total 132.7 138.3 133.3 140.7 1.1 4.2 38.7 180.4

Daventry Total 33.5 39.1 37.7 40.4 0.1 0.5 4.6 18.7

Jobs

Population enhanced growth scenario forecasts an additional 9,200 jobs to 2021 across MKSM against baseline forecast

Equivalent to growth overall of 93,000 jobs 2001-21 in enhanced population Scenario

Additional jobs concentrated in service based sectors

GVA

Additional £429m of GVA expected by 2021 from enhanced population Scenario against baseline forecasts

MKSM distribution

Additional jobs and GVA in enhanced population Scenario concentrated in Milton Keynes, Northampton and Corby

Some local areas lose out in enhanced population Scenario – particularly Mid Bedfordshire and South Northamptonshire

Comparison against jobs ref target

Enhanced population Scenario still in order of 100,000 below MKSM jobs target

Only East Northamptonshire forecast to hit target at 2021

South Northamptonshire Total 27.7 32.1 30.7 33.7 -0.7 -2.1 -24.5 -93.2

Source: Cambridge Econometrics Baseline Forecast and Enhanced Population Scenario

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Enhanced employment scenario

Approach

4.14 This section deals with the second adjustment to the baseline forecasts - the enhanced employment scenario.

4.15 The enhanced population scenario shows the effect on jobs and GVA from a higher MKSM population and changes in its distribution. The enhanced employment scenario builds on the results of the enhanced population scenario but also adjusts the input assumptions in the model to take account of the higher than previous levels of intervention that is happening and planned across MKSM to stimulate economic and employment growth.

4.16 This adjustment has been made to MKSM as a whole not by local areas/ sub-areas of MKSM or by priority sector.

4.17 The enhanced employment scenario has involved the following steps:

Step 1: Exogenous verse endogenous growth

• the first step was to calculate the proportion of the jobs growth in the baseline forecasts that is population dependent (i.e. local jobs or endogenous) and the proportion that is non-population dependent (i.e. exogenous) based on the findings of the enhanced population scenario

• in adjusting the baseline forecasts for employment interventions we have applied scaling factors only to the exogenous proportion of jobs growth in the enhanced population scenario forecasts between 2008 (given that 2007 is the base year) and 2021

Step 2: Scaling factors

• scaling factors have been applied to the exogenous growth by the forty-one broad sectors in the econometric modelling. All broad sectors that wholly or partly make up the five priority sectors have been adjusted by 25% (21 of the 41 sectors); all other broad sectors have been adjusted by 15%. Where employment was forecast to decline in the modelling, the scaling factor slows down the rate of decline

• the scaling factors are based on an assessment of the scale of growth local interventions in MKSM could reasonably achieve above past trends25

25 The scaling factors are one of the assumptions selected for testing through the scenario process. They were chosen based on two judgements. Firstly, drawing on analysis undertaken by Bedford local authority on the strategic business sites required to meet the local areas jobs reference ‘target’ for 2001-2021. This analysis estimated that the portfolio of sites in the borough (including hard to deliver sites) could accommodate in the order of 14,000 jobs by 2021. This represents an increase on the 2001 jobs total for North Bedfordshire of 18%. And secondly, based on the judgement of the SQW team on the level of growth that heightened economic development activity in MKSM could deliver above past trends. Comparable empirical research was not available within the study timetable to draw on in making this assessment.


Step 3: Output

• the output of the adjustment is revised estimates of employment and GVA by broad sector for MKSM as a whole, at 2021.

4.18 Originally we anticipated adjusting the enhanced employment scenario by sub-area of MKSM based on actual planned interventions in each area. Although there is information on key proposals– for example in Programmes of Development, the MKSM Business Plan and economic development strategies – firm estimates of likely employment generation is not available on a consistent basis across the sub-areas.

Findings

4.19 Table 4.6 presents the employment projections under the enhanced employment scenario alongside the results of the baseline forecasts and population enhanced scenario.

Table 4-6: Total employment by scenario, MKSM (000s)

2001 (000s) 2021 (000s) 2001-21 change (000s)

2001-21 change (%)

Baseline forecasts 814 898 84 10%

Enhanced population scenario 814 907 93 11%

Enhanced employment scenario 814 947 134 16%

Enhanced employment scenario +10% 814 961 147 18%

Enhanced employment scenario -10% 814 934 120 15%

MKSM jobs reference target 814 1,016 202 25%


4.20 This shows an increase in jobs under the enhanced employment scenario of 134,000 between 2001 and 2021 (16%). This compares against jobs growth of 84,000 (10%) in the baseline forecasts and 93,000 (11%) in the enhanced population scenario.

4.21 Given the uncertainty in the absolute level of growth above past trends that should be assumed for MKSM, the table presents two sub-scenarios of the enhanced employment scenario: namely plus/ minus 10% of the jobs growth in the enhanced employment scenario. The former delivers a total of 147,000 additional jobs 2001-21; the latter growth of 120,000 jobs overall.

4.22 Table 4-7 presents the results for GVA.

Table 4-7: Total GVA by scenario, MKSM (£2003m)

2001 (£2003m)

2021 (£2003m)

2001-21 change (£2003m)

2001-21 change (%)

Baseline forecasts 28,287 45,345 17,059 60%

Enhanced population scenario 28,287 45,774 17,487 62%

Enhanced employment scenario 28,287 48,067 19,781 70%

Enhanced employment scenario +10% 28,287 50,045 21,759 77%

Enhanced employment scenario -10% 28,287 46,089 17,802 63% Source: SQW Consulting

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4.23 The enhanced employment scenario projects an increase in GVA of £19.8bn between 2001 and 2021, an increase of 70%. This compares to an increase of £17bn under the baseline forecasts and £17.5bn under the enhanced population scenario.

Key findings 4.24 This Chapter has presented the findings of the enhanced Growth Scenario in two parts: firstly

adjusting the baseline forecasts to reflect the housing targets for MKSM (enhanced population scenario); and secondly adjusting the non-population driven jobs growth in the enhanced population scenario to take account of the above-trend levels of intervention planned in MKSM to stimulate economic and employment growth (enhanced employment scenario). The second stage was undertaken for MKSM as a whole only.

Population enhanced scenario

4.25 There is little difference at the level of MKSM as a whole in the results between the baseline forecasts and enhanced population scenario. The modelling suggests that the additional 50,000 population assumed in the enhanced population scenario will create an additional 9,200 jobs and £430m of GVA by 2021. All other assumptions in the model were held constant.

4.26 The findings, and those for the baseline forecasts (which assumed a strong growth in population across MKSM) suggest that the local jobs that will be created in MKSM to support the additional population will only go some way towards meeting the sub-region’s jobs reference value.

4.27 There are more significant differences by local area between the results of the baseline forecasts and enhanced population scenario because of changes made to the distribution of population (resulting from local housing targets). Milton Keynes, Northampton and Corby are expected to benefit most, while some local areas lose out, particularly Mid Bedfordshire and South Northamptonshire.

Employment enhanced scenario

4.28 The findings of the employment enhanced scenario show the impact that economic development and employment interventions in MKSM could have, making a real step-change in employment creation in MKSM. Under this scenario, an additional 134,000 jobs and £19.8bn of value added is created between 2001 and 2021. The employment growth rate of 16% compares favourably against the baseline forecast increase of 10% and the population enhanced scenario of 11%.

4.29 If achieved, this would make a significant dent in the jobs gap under the baseline forecast, closing it by around 50,000. Nevertheless, a jobs gap remains, in the order of 65,000 jobs under this scenario. To meet the jobs reference target of an additional 202,000 jobs between 2001 and 2021, MKSM would need to increase the number of jobs by 25% on the 2001 position. This compares with growth of 16% under the employment enhanced scenario.

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5: Priority Sectors

Introduction 5.1 This Chapter presents the findings of analysis undertaken of the growth prospects of the five

priority sectors in MKSM.

5.2 Limited resources have been available for this part of the study. The work has involved: researching the characteristics of the sectors in MKSM based on employment and business statistics and the findings of the baseline forecasts; the identification of comparative sector advantages in MKSM from location quotient analysis; consultations with the local sector leads and the review of background papers prepared for some sectors as part of drafting the EDIP; and the preparation of sector reports.

5.3 This section begins by presenting the results of the location quotient analysis. It then summarises the key findings from the other elements of the work in a summary table for each sector. The detailed analysis of employment and business statistics can be found at Annex F and complete sector reports are enclosed as Annexes A – E.

Location quotient analysis 5.4 This section compares the ‘Location Quotients’ (LQ) of employment in the priority sectors in

the local areas of MKSM against Great Britain. It draws on the analysis contained in Annex F, where further detail is provided. The same health warning applies in the interpretation of the results as with the analysis of employment and business unit time-series data in Chapter 3, as the source for the location quotient analysis is the ABI.

5.5 LQs are a measure of relative employment strength. If the share of employment in a given sector and area is the same as the comparator area (i.e. Great Britain), then the ‘LQ’ is 1.00; if the share is lower then the LQ will be <1.00 and if it is higher then the LQ will be >1.00.

5.6 LQs are one measure of strength: they are not a measure of the quality of employment in a given sector or of long-term growth prospects. However, they are useful in identifying where there are comparative advantages on which to build.

5.7 Our analysis shows that MKSM has the strongest concentration of employment in the logistics sector, when compared with Great Britain. This is evident in Figure 5.1 below. All areas have LQs above one, with Corby and Daventry standing out with LQs of between four and five.

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Figure 5-1: Relative strength of logistics sector by local area against Great Britain, 2007

Location quotients of MKSM employees in logistics industries 2007 compared with Great Britain

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5.8 LQs also reveal the relative strength of Daventry and Luton in the HPE and motorsport sector, compared to Great Britain. East Northamptonshire also has a higher concentration of employment in this sector relative to Great Britain. This is shown in Figure 5.2 below.

Figure 5-2: Relative strength of HPE and motorsport sector by local area against Great Britain, 2007

Location quotients of MKSM employees in motor sport and high performance engineering industries, 2007, compared with Great Britain

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5.9 For the creative industries sector, the LQ analysis identifies that five local areas are relatively strong compared with Great Britain – South Northamptonshire, Aylesbury Vale, Milton Keynes, Central Bedfordshire and Kettering.


5.10 For the business service sector, only Milton Keynes and Northampton are relatively strong in employment terms compared with Great Britain.

5.11 Our analysis shows that MKSM does not have relative strength in employment in the sustainable construction sector. No local area has a LQ above one (the average for Great Britain).

Sector reports summary 5.12 This section presents key findings of the sector reports in Annexes A – E. A summary table is

presented for each sector (Tables 5.1 – 5.5). The tables describe the character of each sector in employment and business units; the employment and GVA prospects in the baseline forecasts; present a SWOT analysis for each sector; and conclude with ideas to help support the growth of the sectors in MKSM.

5.13 The purpose of the sector reports is to help partners in MKSM develop appropriate strategies for sector growth as part of the EDIP.

Summary tables

Table 5-1: Creative industries sector analysis

Character of sector

Diverse sector including a wide range of craft, manufacturing, design and technology based activities and products

Large and growing part of the MKSM economy – 7.4% of MKSM jobs in 2007

Employment – increase of 11.5% 2003-07

Business units – increase of 14.5% 2003-07

Baseline forecasts

• Employment – forecast growth of 40,000 jobs 2001-21, the majority already secured with 7,000 additional jobs 2012-21

• GVA – forecast growth of 350% 2001-21. MKSM is expected to attract high-value activities over the period

• Strongest growth locally forecast for South Northamptonshire, but solid growth also expected in Mid Bedfordshire, Milton Keynes and Aylesbury Vale.

Strengths

• Good central location and good connectivity including road, rail and air transport

• Strong base of small creative businesses in parts of the MKSM area in design, architecture and publishing

• Some major brands such as Doc Martens and Church’s Shoes

• Lower land and rental costs than London and suburban locations

• Supporting infrastructure of educational and artistic bodies

• Range of attractions for younger people including the National Bowl at Milton Keynes, Xscape Centre

Opportunities

• Forecast growth in sector, particularly in Milton Keynes, with 40,000 additional jobs 2001-21

• Local strengths e.g. graphic and other design, architecture, film studios and locations (e.g. Cardington), publishing, brand identities

• Link to other major sectors e.g. logistics and ecommerce sites (Amazon etc), high value engineering (Nissan R&D at Cranfield and others)

• Develop local creative identity through major development projects e.g. town centre re-development, rebrand city / town quarters

• Growing population with demand for leisure opportunities

• Build on the attractions for young people in the area e.g. MK Bowl, Universities, events

• Capitalise on the university presence

Weaknesses

• Lack of obvious creative identity (and perhaps centre) – many dispersed activities

• The print industry has been strongly affected both by the recession and by the decline in

Threats

• Concentration of forecast growth in sector is limited to a small number of locations

• Pressure on some existing business models (largely advertising funded models)

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traditional regional newspaper advertising

• Architecture has been particularly strongly impacted by the decline in requirements for new buildings due to the current recession

• Possible lack of articulation between publicly funded support programmes and the commercial creative sector

• Lack of liquidity in some businesses – inability to obtain loans / overdrafts

• Competition from other media hubs in the UK – particularly London, Manchester (Media City)

• The pull of major events elsewhere e.g. Olympics in London

Options to support sector growth

Strong prospects for long-term growth. No current single theme that might provide a driver for opportunities in the creative industries sector in MKSM

National drivers include digital convergence – both in the means of production e.g. editing and post production or sound recording, and in the final product e.g. computer games

Strategies to assist the sector in MKSM will need to build on local assets e.g. strengths in graphic and other design, architecture, film studios and locations, publishing as well as some strong brand identities

Seek linkages between the creative sector and other major sectors in MKSM e.g. logistics and ecommerce sites (Amazon etc) and other important sectors e.g. High value engineering (Nissan R&D at Cranfield and others)

Develop local creative identity through major development projects e.g. town centre re-development, rebrand city / town quarters as cultural / arts/ creative quarters

Build on the attractions for young people in the area e.g. MK Bowl, Universities, events and live performances

Capitalise on the university presence and growing reputation and facilities of Universities


Table 5-2: Sustainable construction sector analysis

Character of sector

The sector definition includes the wide range of activities within the SIC 45 construction sector

Medium sized sector in MKSM – 4.3% of jobs in 2007

Employment – increase of 19% 2003-07

Business units – 14% growth, 2003-07

Major companies based in MKSM, but also micro and SMEs

Baseline forecasts

Employment – forecast growth of 6,000 jobs 2001-21, with losses of 3,000 in recession followed by growth of 5,000 jobs 2012-21

Sector forecast to be hit hard by recession nationally

GVA – increase of £558m or 37% 2001-21 a faster rate of growth than forecast for employment (11%)

North Bedfordshire forecast to secure 50% of overall jobs growth (3,000 jobs). More modest growth elsewhere

Strengths

• Strong representation of major company head quarters – Kier, Kingspan, Travis Perkins

• Strong support among public sector partners for sustainability

• Excellent location for construction sector head office and sales, demonstration, logistics operations

• Strong sustainability activities in the area and demonstration projects e.g. Oxley Woods

• Infrastructure of colleges and universities with expertise relevant to sustainable construction

• Excellent location for supply of construction activities to wider markets e.g. in London and South east as well as Midlands

Opportunities

• Major house-building opportunities in the area – 224,000 new homes by 2021

• Forecast increase in jobs and GVA across most local areas of MKSM, strongest in North Bedfordshire

• Major opportunities to supply to road and rail developments e.g. £400m London to Oxford rail corridor scheme, widening of M25

• Demand for off site construction with opportunity to link to sub-region’s strengths in logistics

• Develop MKSM as the prime hub for knowledge and practical expertise in sustainable construction and related activities

• Maximise advantage of the expertise available in universities and colleges and in major companies

• Exemplar and demonstration projects e.g. housing

Weaknesses

• Uncertain prospects for recovery in the wider economy

• Pressure on public finances

Threats

• Continued recession affecting demand for construction (3,000 job losses forecast locally 2007-2011)

• Cost pressures on delivering higher sustainability

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• Lack of understanding of the sector locally

• Ageing workforce and need for career progression

• High degree of dependence of future demand on public sector investment programmes e.g. in transport

standards

• Sustainable construction prioritised in other construction markets and UK growth locations and corridors e.g. Thames Gateway and London


Reasonable long-term prospects but instability in short-term

Growing market in sustainability of construction process, with general trends towards:

higher levels of sustainability, energy efficiency, passive heating and cooling in all types of construction leading in general to higher value added in the construction process

greater off-site construction both for residential and commercial / industrial construction products.

Opportunities in both new build but also retro-fitting of existing stock

May be opportunities for sites in MKSM to become a hub for offsite construction activities, thereby linking the twin drivers of sustainability and cost effectiveness of automation and logistics management

Future strategy needs to build on expertise in FE and HE sectors

Public sector can play leading role in setting appropriate planning policy and through procurement policy


Table 5-3: Logistics sector analysis

Character of sector

Logistics covers the traditional logistics activities of wholesaling, warehousing and road and air transportation but has been transformed in recent years through the use of management systems that control and optimise these systems to maximise efficiency and market responsiveness.

Large employer in MKSM - 94,450 jobs in 2007 (12% of total jobs)

Employment - increase of nearly 10,000 jobs 2003-07

Business units – small fall to 6,450 units in 2007

Baseline forecasts

Employment – steady growth forecast, of 11,500 jobs 2001-21 (12%) (small contraction in recession)

GVA – strong growth of 75% forecast 2001-21 (£2,900m)

Employment growth forecast to be concentrated in local areas in the north of the sub-region - Daventry, Northampton and South Northamptonshire. Falls in some local areas

GVA is expected to increase across all local areas

Strengths

• Relative strengths locally (especially in Corby and Daventry)

• Location in the centre of UK with excellent road and rail connections

• Access to large consumer markets (e.g. 8 million people within one hour’s drive of Milton Keynes)

• Two major inter-modal logistics centres at DIRFT (Daventry) and Eurohub (Corby)

• Good access to East Coast ports and international airports (Luton in MKSM)

• Situation within the Oxford – Cambridge Arc – Europe’s premier high tech region

• Supporting infrastructure locally e.g. ‘Skills for Logistics’ at Milton Keynes, Chartered Institute of Logistics and Transport’ at Corby

• In parts of the MKSM area prime industrial rents are between 30 -45% less than in London and South East region

Opportunities

• Sector forecast to grow to 2021, particularly in its GVA contribution to the sub-regional economy

• Encourage higher value added activities

• Encourage ‘reverse logistics’ linked into the need for sustainable recycling requiring high tech processes e.g. of white goods, computers

• Low carbon options in logistics – favouring activities such as inter-modal hubs

• Global trend towards outsourcing of much of UK production leading to increasing requirements for efficient logistics of imported goods

Weaknesses

• Little dedicated air freight capacity in MKSM

• Few Knowledge Transfer Partnerships linking Universities with expertise in logistics

Threats

• Perception in planning system impinging on prospects for growth

• Closure of some logistics centres e.g. some

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• Few known examples of collaborative research between Cranfield and local logistics companies

• Current economic recession impacting on demand from retail, construction etc

• Loss of skilled staff e.g. Eastern Europe

• Perceptions in planning system that logistics has low employment density, is low value added and small multipliers, results in lack of enthusiasm for proposed new developments

• The quality and earnings of logistics jobs is often perceived to be low

• Lack of detailed knowledge about logistics within parts of the public sector and the scope for higher value, more knowledge intensive activities

• Some parts of the logistics sector are poorly skilled with need for career progression

automotive parts distribution facilities as a consequence of the current recession

• Development of major logistics hubs in other parts of the UK e.g. further along the M1 corridor

• Development of air freight activities at other locations encouraging companies to locate there

• Increased congestion inhibiting demand for logistics locations in the area.


Good prospects for growth in the medium term after the end of the current recession

There are concerns that the sector has a negative image of low value added ‘trucks and sheds’ operations

Fostering added value activities within the sector is a key opportunity for MKSM, for example by linking the logistics industry to other higher value activities and building on local expertise e.g. logistics support organisations and Universities


Table 5-4: Business services sector analysis

Character of sector

The definition of the sector relates principally to those professional services provided to commercial businesses e.g. finance, legal, consultancy

Large employer in MKSM - 77,350 jobs in 2007 (10% of MKSM total)

Employment – increase of 12,500 jobs 2003-07

Business units – increase of 1,500 units 2003-07

Baseline forecasts

Employment - increase of 29,000 jobs (42%) 2001-21, with predicted loss of 4,500 jobs between 2007-11

GVA – forecast to increase by £4.2bn (111%) between 01-21, of which £2.5bn over 2012-21

Jobs growth concentrated in Milton Keynes (+9,000 jobs) and Luton (+6,000).

Sector expected to grow in most areas of MKSM

Strengths

• Growing base of business services sector, which has many elements of a cluster in terms of the inter-relationship of businesses, supply-chain and labour market

• Growing reputation of some local areas in MKSM as locations for business services e.g. Milton Keynes in banking and insurance

• Excellent links from several MKSM towns to London, where most of the sector’s HQs are based, with opportunities for further expansion

• Some key linkages through institutions such as Cranfield University, University of Northampton and the Open University (MK) to major businesses in the sector through management development specialisms.

Opportunities

• Strong growth anticipated in economic forecasts (employment growth of 42% 2001-21)

• Recent company relocations to MKSM on which to build e.g. National Rail re-location to Milton Keynes

• Opportunity to plan in quality business services accommodation in commercial developments

• Planned town centre regeneration in most MKSM towns

• With the second largest global share of the business process outsourcing market, the UK is set to experience further growth in the short-medium term

• The UK is the leading Shared Service Centre location in Europe with one third of all Pan-European SSCs set up here

• Management consultancy is one of the fastest growing sectors in the UK and is the largest outside of the US, estimated at nearly £10 billion (2008).

• There is an opportunity to instigate ‘commuter claw-back’ of the skilled workforce that leaves MKSM to work in London/ SE

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Weaknesses

• Potential skill shortages to attract higher value activities (e.g. degree level or higher)

• Mixed property offer across MKSM. Milton Keynes is generally well-placed, but plans for similar supply in most other towns are still at the formative stage

• Mixed engagement of public sector agencies with sector to date

• With a value of £1.8bn, although the UK is the world’s second largest market for market research, it exhibits relatively slow growth compared with much smaller but more recently established markets

Threats

• Strong competition, globally and within Europe and the UK, to secure new investment

• Recent trends within the sector towards increased out-sourcing and off-shoring of back-office functions is both an opportunity and a threat

• The recession is currently dampening demand for staff with professional qualifications, but there is an underlying shortfall in some parts of the sector

• Impacts of recession on supply of high-quality commercial development

• There remains, amongst employers, an on-going issue in relation to the generic skills and attitudes of new entrants to the labour market


The medium term prospects for growth appear to be good though the impacts of the recession will need to be monitored (both on employment and GVA numbers and impacts on provision of supporting infrastructure needed to attract business services)

Business services is a target sector for many local areas of MKSM, although the strongest concentrations are in Milton Keynes, Northampton, Aylesbury Vale and Luton.

For the future, recent trends within the sector towards increased out-sourcing and off-shoring of back-office functions is expected to continue – both an opportunity and a threat for MKSM

There may be skills challenges to realising objectives for MKSM to attract higher value business services activities

This study has revealed concerns that there is not a robust understanding of the sector at the sub-regional level, although there has been engagement in local areas.


Table 5-5: HPE and motorsport sector analysis

Character of sector

Sector definition based upon a range of value-added engineering activities (e.g. specialist parts research, design and manufacture of materials, tools and instruments) and manufacture of a more mainstream nature (e.g. motor vehicles, marine)

Small/ medium sector in MKSM, accounting for 3.3% of jobs (25,160) and 2.2% of business units

Employment – decline of 9% 2003-07

Business units – decline of 6% 2003-07

Baseline forecasts

Employment - sharp fall of 16,000 jobs forecast 01-21 (-43%) (losses of 9,000 jobs 01-07)

GVA – small increase of £72m (5%) expected 01-21

Jobs losses concentrated in Luton (-7,500 jobs) and Northampton (-3,500 jobs). Growth in two areas – East Northamptonshire and Daventry

Strengths

• Location close to London and base of research and development expertise

• Excellent road connections to other parts of Motorsport Valley including Oxfordshire, Warwickshire, Cambridgeshire and Norfolk

• Good access to international airports

• Presence of high profile academic and technical institutions e.g. Cranfield University produces more than 10% of the UK’s post-graduate engineers

• Sites and premises: e.g. Silverstone Innovation Centre, Brixworth and Rockingham

• World-class facilities for motorsport testing

• Strong skills base in parts of HPE and in motorsport

Opportunities

• Extend and externalise the core traits and values of the sector into other sectors – rapid problem solving and product development

• Harness the expertise and capacity of serial entrepreneurs in the sector to increase business formation and survival rates

• Changes to motorsport regulations could prove advantageous e.g. Cosworth engine supplies to three new F1 teams in 2010.

• Harness brand value and international reputation of motorsport industry as a competitive advantage to investors, visitors, potential labour recruits to sector

• Take a lead in new low carbon technologies e.g. materials technology, fuel technology

• The global trend towards integration of developments in materials technologies with advanced engineering

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• A strong base on which to build engagement with the motorsport sector e.g. through the work of Northamptonshire Enterprise

design and manufacturing processes provides opportunities for the sector.26

Weaknesses

• Sharp fall in employment forecast in MKSM over 2001-21, with expected loss of 16,000 jobs. Mass production part of sector expected to be especially hard hit

• Uncertain Government support for the motorsport sector, despite it being identified as a key cluster

• Engineering sector struggles to attract sufficient labour from universities and schools

• Lack of formalised structure for the sector, with elements of industrial and intellectual secrecy

Threats

• Global economic recession has hit demand for vans, engines and yachts/marine equipment in the short and potentially medium-term

• The loss of skilled engineers to the industry in the recession could hamper the ability to source these skills for the sector when the industry recovers.27

• Ongoing changes to motorsport regulations and budgets will hamper R&D (e.g. cap on track testing and wind tunnel testing) and threaten jobs and technological applications

• Lack of adequate current intelligence on businesses in the sector, limiting ability to develop sound strategies and actions

• Strong global competition, especially from US and BRIC nations

• Anticipated cuts in public expenditure will affect defence budgets and may have trickle-down effect on aerospace supply chain locally

• Loss of British Grand Prix at Silverstone will diminish the value of MKSM’s motorsport brand and USP


Small/ medium sized industry in MKSM, although an important sector in Daventry, East Northamptonshire and Luton

Growth prospects are not as strong as for other priority sectors, with further losses anticipated in mass production

May be value in harnessing the brand value and international reputation of the motorsport industry, but some uncertainty about long-term prospects if GB losses Grand Prix

The environmental technologies sector is seen as a major opportunity for MKSM but thinking has not developed into specific areas to target

Future funding for military research and procurement of products in the aerospace sector may have a trickle-down effect to some firms in MKSM. However, the electronics industry is expected to contract and businesses in automotive and marine sectors in MKSM are at risk.


Key findings 5.14 This Chapter has presented key findings for the sector analysis undertaken as part of the

study.

Location quotients

5.15 Location Quotient analysis suggests that of the five priority sectors, MKSM has the strongest concentration of employment in the logistics sector, when compared with Great Britain. All local areas have a higher concentration of employment in the sector than Great Britain, particularly Corby and Daventry which are home to major logistics hubs.

5.16 Daventry is also strong in employment in the HPE and motorsport sector, alongside Luton. Five local areas have a higher concentration of employment in the creative industries sector than Great Britain - South Northamptonshire, Aylesbury Vale, Milton Keynes, Central Bedfordshire and Kettering. Milton Keynes and Northampton are the only local areas that 26 Office of Science & Innovation (2006), Science & Technology Cluster: overview of key trends up to 2015-2020 27 SEEDA (June 2009), Regional Intelligence Snapshot for the South East


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compare favourably in employment in the business services sector. No local area is comparatively strong in employment in the sustainable construction sector.

5.17 The location quotient results could partly be explained by the definitions used for each sector (e.g. sustainable construction is quite narrow whereas the creative industries sector definition is broad) and do not say anything about the quality of the jobs in each area.


5.18 The long-term prospects for the creative industries sector look good. The sector is expected to grow the most of the five priority sectors. There are opportunities to grow the sector in MKSM, building on strengths in film and architecture, an expanding number and quality of leisure-based attractions, capitalising culturally on re-development proposals and digital convergence. There is no current unifying theme for the development of the sector in MKSM, but perhaps there does not need to be one given its broadness.

5.19 The prospects for the business services sector also appear to be good, though this study has revealed concerns that there is not a robust understanding of the sector at the sub-regional level. There has been engagement with the sector in local areas, and business services is being prioritised locally in terms of the types of economic development interventions planned. There may be skills challenges to attracting some higher value business services activities.

5.20 The evidence suggests that there are also reasonable prospects for the logistics sector. Consultees reported that the sector suffers from a negative ‘trucks and sheds’ image, particularly in the planning system. Fostering added value activities within the sector is a key opportunity for MKSM, for example by linking the logistics industry to other higher value activities and building on local expertise.

5.21 The prospects for the sustainable construction and HPE and motorsport sectors appear to be more mixed. Key to the future of the sustainable construction sector will be MKSM developing strengths in the sustainability of the construction process: in the expanding environmental technology goods and services markets, through demonstration projects (both new-build and retro-fitting) and off-site modular based construction (linking to strengths in logistics). In the HPE and motorsport sector, the sub-region will need to plan for and manage the expected decline in car mass production (though new opportunities may emerge as new technologies come to market). The motorsport part of the sector remains one of MKSM’s key selling points, with strong brand value and a world-class international reputation.

.

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6: Scale of jobs challenge

6.1 The growth scenario forecasts suggest that MKSM faces considerable challenges in achieving the jobs growth reference target for an additional 202,400 net jobs between 2001 and 2021. The gap is in the order of 65,000 jobs, after accounting for enhanced growth resulting from both achievement of the housing targets (and the consequent effects on endogenous jobs growth related specifically to an increased population) and the additional effects of the current interventions to support exogenous economic and employment growth. Even if we have seriously underestimated these additional effects on exogenous growth, there is still a big gap between the reference figure and the forecast number of jobs by 2021.

6.2 Responding to this challenge will require a mix of supply side and demand side interventions, and this mix will vary across MKSM depending on the particular characteristics of each area and the issues that need to be addressed.

Nature of jobs challenge

Supply side interventions

6.3 Supply side interventions include those relating to the availability of employment land and premises, the quality and capacity of infrastructure, and the availability of appropriate skills and funding for business growth.

6.4 In all of these aspects except possibly funding, there are variations across MKSM. For example, those areas in which Core Spatial Strategies have been adopted (Bedford and North Northants) tend to have the best supply of land, whereas those which still have some way to go on Core Strategy preparation tend to have more limited supply relative to requirements.

6.5 The problem is exacerbated in some areas by infrastructure constraints which are restricting the availability and development of sites: for example, in Luton improvements to the M1 junctions and to the station gateway will enable redevelopment of substantial areas of land for employment purposes, and in Aylesbury overcoming constraints on electricity supply is a crucial step in enabling some employment sites to be brought forward for development. In contrast, Milton Keynes is relatively well placed in terms of infrastructure because of its New Towns heritage, and improvements to the A421 and J13 will further enhance its accessibility.

6.6 The capacity of the sub-regional transport network to support the growth ambitions of MKSM was recently explored in the MKSM Transport Strategy28. This found that that the planned growth to 2021 is located appropriately and sustainably related to planned transport infrastructure. Committed road and rail schemes in the sub-region were found to be able to cater for much of the anticipated growth, and will also deliver accessibility improvements. The strategy does identify potential ‘problem’ areas in the transport network that could hinder growth in particular parts of the sub-region. The strategy draws attention to the pressure on the ‘Northampton Arc’ – the A43/ A45 corridor linking Daventry and Towcester with 28 Colin Buchanan, June 2009, MKSM Transport Strategy.

45


Northampton/ Wellingborough/ Kettering/ Corby – on the longer term prospects for growth in this area; and the low accessibility score for Aylesbury, and the difficulties in significantly improving it. Other key transport challenges include significant local congestion and the long-term management strategy of the M1. Luton was identified as an area of MKSM which could accommodate a higher level of employment than is currently planned because of its good accessibility (this would require other supporting factors to also be in place such as available land). Bedford’s accessibility will also be enhanced by the upgrade to the Thameslink network. K

6.7 Skill levels also vary across MKSM, but are generally weak for a growth area which is seeking to create a very large number of high value jobs over the next 12 years. In only three areas – Aylesbury Vale, West Northants and Milton Keynes - is the proportion of the working age population with qualifications at or above NVQ3 greater than the national average, but none of these areas exceeds the SE regional average. At the other end of the scale, Luton, North Northants and Bedford are well below both the England and SE regional averages.

6.8 The skills challenges facing MKSM was explored in the skills action plan prepared for the local Learning and Skills Councils in March 200729. Although we understand partners are not now working to this action plan, it highlights the key challenges the sub-region faces across a range of skills areas. They included:

• Construction sector - Concerns that the sub-region will not have sufficient supply of skilled workers who will be able to progress to higher level occupations such as building logistics, project management, technical engineering and positions emerging in the sustainability field. A potential imbalance was identified between the demand and supply of skilled workers in MKSM

• Logistics sector – Lack of apprenticeships and limited provision in Further Education (something MKSM through a secondee from the LSC has been working to address). The action plan identifies the increasing demand for higher technical skills in logistics (e.g. robotics, IT, supply-chain management) and the problems of an aging workforce. Overall, the report states that there needs to be a substantial delivery in logistics skills delivery across MKSM

• High value engineering – Concern that there may be shortages in the supply of workers with higher level skills (Levels 3 and 4) and general need to re-skill the existing labour force with new skills. Future demand was identified for managerial occupations, technical engineers and soft skills such as communication, problem solving and team working

• Business services – Skill gaps in customer services, management and leadership.

Demand side interventions

6.9 Demand side interventions at the local scale include those concerned with stimulating business activity, such as support for entrepreurship, promotion of inward investment, and

29 MKSM Action Plan, March 2007, Prepared for LSCs Bedfordshire and Luton, Northamptonshire and Thames Valley.


initiatives to support increased innovation, and improvements to the wider business environment which stimulate investment.

6.10 Variations in VAT registrations illustrate differences between areas in relation to entrepreneurship and the propensity to start a business. Most parts of MKSM are above the national average, though rates vary from 70 per 10,000 working age population in Aylesbury Vale to under 40 in Luton (national average 52).

6.11 One area in which all areas within MKSM are making improvements is in the attractiveness of the general business (and living) environment. For example, major town centre improvements area underway or planned for most towns in MKSM, which should stimulate expansion by existing businesses and some inward investment. The largest scale changes are in the two largest urban centres, Milton Keynes and Northampton, but significant improvements and expansions of the central areas of Aylesbury, Bedford, Corby and Luton are underway, and improvement schemes are planned in most other town centres.

Key findings 6.12 This analysis suggests that, if the reference employment growth figures are to be achieved,

there will have to be a transformation in the scale and effectiveness of interventions to support jobs growth, over and above current initiatives. This will be easier to achieve in some areas than others, due to differences in the opportunities and constraints currently facing each area.

6.13 Locational and accessibility advantages favour some parts of MKSM more than others. Plans are in place to remove or reduce many of the physical constraints, but doubts about the availability of funding have increased as a result of economic recession and threatened public sector spending cuts (not helped in MKSM by the recent Government announcement to switch a major part of the 2010/11 growth funding allocations to funding for Private Finance Initiative (PFI) housing under the so called ‘Housing Pledge’. The problems of limited high level skills in MKSM may also be difficult to reduce substantially.

6.14 In addition, more will need to be done to increase inward investment, business expansion and entrepreneurship. More and bigger scale demand side initiatives will be essential to complement and make the most of supply side improvements.

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7: Conclusions

7.1 This study has explored the likely employment trajectory of MKSM to 2021 in the context of the jobs reference target for an additional 202,400 jobs to be created in the sub-region between 2001 and 2021.

7.2 The employment trajectory has been assessed through the commissioning of baseline forecasts for MKSM to 2021 and the development of an alternative Growth Scenario which reflects the housing targets for local areas of MKSM and an uplift in employment growth to reflect the heightened level of economic development and employment interventions planned across the sub-region.

7.3 The key conclusion from this work is that MKSM is likely to face serious challenges in meeting the jobs reference target. This is highlighted in the table below which compares employment growth assumed in the baseline forecasts and Growth Scenario.

Table 7-1: Total employment by scenario, MKSM (000s)

2001 (000s) 2021 (000s) 2001-21 change (000s)

2001-21 change (%)

Baseline forecasts 814 898 84 10%

Enhanced population scenario 814 907 93 11%

Enhanced employment scenario 814 947 134 16%

MKSM jobs reference target 814 1,016 202 25%


7.4 Past trends might suggest that MKSM will create an additional 84,000 jobs by 2021 (baseline forecasts). If the additional population being planned for locally is factored in (enhanced population scenario), this increases the number of jobs to 93,000. Adding in a further uplift to reflect local economic development activity may suggest a total net additional growth in employment of 134,000 jobs (enhanced employment scenario).

7.5 An increase in employment of this scale would be a significant achievement for MKSM, far exceeding past trends. However, it is still 65,000 short of the jobs reference target. To meet the jobs reference target, MKSM will need to secure an employment growth rate of 25% on the 2001 position. This compares with growth of 16% under the employment enhanced scenario.

7.6 This analysis suggests that, if the reference employment growth figures are to be achieved, there will have to be a transformation in the scale and effectiveness of interventions to support jobs growth in MKSM, over and above current initiatives. This will be easier to achieve in some areas than others, due to differences in the opportunities and constraints currently facing each area.

7.7 These opportunities include the sector mix of local areas. The evidence suggests that the priority sectors offer opportunities for growth in the future. Creative industries, business

47


48

services and logistics have the best prospects, but MKSM should also look to continue to support parts of the sustainable construction and HPE and motorsport sectors. Developing strategies that build links between the priority sectors should form part of future sector work, where strengths in each sector can reinforce one another.

A-1


Annex A: Business Services Sector Analysis

Introduction A.1 For the purposes of this assessment, the business services sector relates principally to those

professional services provided to commercial businesses, and include finance, legal, management consultancy, property, IT, data and database management, machinery rental and maintenance and certain types of research. Excluded from this definition are advertising and architecture, as they are included under the definition of the ‘creative industries’ sector.

A.2 Whilst many businesses in this sector are micro-enterprises30, over the last decade there has been a significant growth of businesses in this sector, and re-positioning of existing companies to provide a range of business services under what is often termed ‘business process outsourcing’.

A.3 Like most sectors, it is difficult to define the precise scope of the business services sector. Other terms in common use, which at least overlap with this sector definition include ‘financial services’ and ‘professional services’, and their functions can include business functions such as contact centres and shared service centres.

A.4 Broadly speaking, there is recognition that the business services sector, in MKSM and elsewhere, is one that is key to generating value to local economies: a high proportion of employees in the sector have above-average skills, qualifications and earnings, and there are expected to be major improvements in Gross Value Added (GVA) over the forecast period.

Description of the sector

Employment and business units

A.5 Our analysis shows that there were 77,350 employee jobs in the sector in MKSM in 200731 and this increased by 19.3% over the previous four years. The sector accounted for around 10% of jobs in MKSM in 2007.

A.6 There were 12,430 businesses active in this sector in MSKM in 2007 (excluding the self-employed), accounting for 17.5% of all businesses. This represented an increase of nearly 14% over the previous four-year period.

Locations/concentration in MKSM

A.7 Two locations dominate the business services sector in the MKSM region: Milton Keynes (26% of all business services sector jobs in MKSM) and Northampton (21%). Eighteen percent of all MKSM’s Business Services businesses (excluding self-employed) are located in Milton Keynes, with 15% in Central Bedfordshire and 14% in Aylesbury Vale.

30 A microenterprise is defined as an enterprise which employs fewer than 10 persons and whose annual turnover and/or

annual balance sheet total does not exceed €2 million 31 Annual Business Inquiry – ONS; SQW Consulting; Note: # total adjusted for change in survey date from December to

September


A.8 Figure A-1 below compares the relative strength of employment in the sector by area against Great Britain (as measured by Location Quotients (LQ)). This shows that Milton Keynes and Northampton are relatively strong (where LQs are above one, the average for the comparator area).

Figure A-1 : Relative strength of business services sector against Great Britain, 2007

Location quotients of MKSM employees in financial & business services 2007 compared with Great Britain

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Important concentrations of business activity - firms

Table A-1 : Important concentrations of business activity - firms

Bedford

• Dataforce / Sabio: Contact Centre services

• Exel: Head Office Services

• Institute of Legal Executives

Central Bedfordshire

• Stortext: Document Management & Processing

Luton

• Mazers: Accountants/Auditors

• Experian: Marketing databases

• Ernst & Young: Accountants

Milton Keynes

• Accenture: HR Services

• Dataforce Group: Marketing Services

• Merchants: CRM Contact Centre

• Mouchel: Business Service Outsourcing

• PriceWaterhouseCoopers: Accountants and Management Consultancy

A-2


• Abbey/Santander: Financial Services

• KPMG: Accountants & Auditors

Northampton

• Barclaycard

• Nationwide Building Society

• Phoenix: IT Support

• Shoosmiths: Solicitors

• Dataforce Group: Marketing Services

• IPSL: Business process outsourcing


DLC: Debt Collection


Locational advantages A.9 MKSM has a number of locational advantages in developing and attracting the business

services sector. Not least is its proximity to strong business services markets in London and the Greater South East, with opportunities for firms in MKSM to provide services to companies and organisations in these areas. There is also evidence of companies locating some business functions in MKSM to take advantage of the lower cost base and access to a large pool of labour e.g. in banking and finance in Milton Keynes.

A.10 The assessment suggests that the concentration of business services activities in parts of MKSM (particularly Milton Keynes and Northampton) is a result of:

• The areas are generally the largest settlements in MKSM and the business services sector thrives in those locations where there is a strong and diverse local business base and demand for services from the population

• The towns have some of the best connections on the rail and road network, both to London and each other

• The clustering of business services activity over time, whereby businesses utilise the skilled labour market in the area as a result of the presence of other businesses in the sector. Clustering of activity also facilitates the exchange of knowledge and greater competition between firms and organisations

• The premises available in these towns, both in town-centre and edge-of-town locations, are generally better – in terms of quantity, quality and range

• Successful inward investment promotion campaigns which have targeted and successfully secured new investment and relocations in this sector.

A-3


Sector forecasts A.11 Tables A.2 and A.3 present long-term economic and GVA forecasts for the sector (taken from

the baseline forecasts undertaken for this study, which include self-employment not included in ABI data).

Table A-2 : Employment forecasts for Business Services, 2001-21 (‘000s)

Total employment Change in employment

% growth 01-21 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

MKSM 69 85 80 98 16 -5 16 29 42%

Aylesbury Vale 7 8 7 9 1 -1 2 2 33%

Milton Keynes 18 23 21 27 5 -2 5 9 51%

Luton 7 10 10 13 3 0 3 6 91%

South Bedfordshire 4 5 5 6 1 0 1 2 56%

Corby 1 1 1 1 0 0 0 0 0%

Kettering 2 3 3 3 1 0 0 1 67%

Wellingborough 2 2 2 2 0 0 0 0 15%

East Northamptonshire 1 2 2 2 1 0 1 1 71%

North Bedfordshire 7 6 6 7 -1 0 1 0 -4%

Mid Bedfordshire 3 5 5 6 2 0 1 2 72%

Northampton 14 16 15 17 1 -1 2 2 15%

Daventry 2 2 2 3 1 0 1 1 65%

South Northamptonshire 2 3 3 4 1 0 1 2 106%

Source: Baseline projections consistent with Cambridge Econometrics Regional Economic Prospects, February 2009

Table A-3 : GVA forecasts, 2001-21 (£2003m)

2001 2007 2011 2021 2001-2007

2007-2011

20012-21

2001-21

% growth 01-21

MKSM 3,793 5,236 5,333 7,992 1,444 96 2,456 4,200 111%

Aylesbury Vale 396 509 503 755 113 -6 231 359 91%

Milton Keynes 971 1,416 1,385 2,182 445 -31 735 1,211 125%

Luton 441 623 632 1,001 182 9 342 560 127%


Corby 56 59 63 105 3 4 39 48 85%

Kettering 79 133 138 199 54 5 56 120 151%

Wellingborough 92 130 134 192 38 4 53 100 109%

A-4

A-5


2001 2007 2011 2021 2001-2007

2007-2011

20012-21

2001-21

% growth 01-21


North Bedfordshire 423 391 405 549 -33 15 132 125 30%


Northampton 711 1,028 1,085 1,519 317 57 398 808 114%

Daventry 68 105 112 179 37 7 63 111 162%



A.12 The tables forecast:

• An increase in the number of employee jobs in the business services sector in MKSM of 29,000 jobs between 2001 and 2021, with the loss of 4,500 jobs between 2007 and 2011 followed by an increase of 16,500 jobs between 2012 and 2021

• One half of the jobs growth is expected to take place in Milton Keynes (+9,000 jobs) and Luton (+6,000). Other local areas are expected to secure additional business services employment in the order of 0-3,000 jobs.

• An increase in GVA over the twenty years of £4.2bn (growth of 111%). During the recession, GVA is forecast to continue to grow by £96m, with £2.5bn additional GVA over 2012-21.

• The GVA growth is distributed across the MKSM area, but particularly in Milton Keynes, Northampton and Luton.

SWOT analysis Table A-4 : SWOT analysis

Strengths

• Growing base of business services sector, which has many elements of a cluster in terms of the inter-relationship of businesses, supply-chain and labour market

• Growing reputation of some local areas in MKSM as locations for business services e.g. Milton Keynes in banking and insurance

• Excellent links from several MKSM towns to London, where most of the sector’s HQs are based, with opportunities for further expansion

• Some key linkages through institutions such as Cranfield University, University of Northampton and the Open University (MK) to major businesses in the sector through management development specialisms.

Weaknesses

• Potential skill shortages to attract higher value activities (e.g. workers qualified to degree level or higher)

• Mixed property offer across MKSM. Milton Keynes is generally well-placed, but plans for similar supply in most other towns are still at the formative stage

• Mixed engagement of public sector agencies with sector to date e.g. training and development activities are often undertaken in-house or through self-funded programmes. Whilst this is not inherently a weakness, it is a constraint to fuller engagement with the sector through publicly-funded skills programmes e.g. apprenticeships and work placement opportunities

A-6


• With a value of £1.8bn, although the UK is the world’s second largest market for market research, it exhibits relatively slow growth compared with much smaller but more recently established markets

Opportunities

• Strong growth anticipated in economic forecasts (employment growth of 42% 2001-21)

• Recent company relocations to MKSM on which to build e.g. National Rail re-location to Milton Keynes

• Opportunity to plan in quality business services accommodation in commercial developments

• Town centre regeneration in most MKSM towns should make them more attractive to business services firms and create more or better accommodation

• With the second largest global share of the business process outsourcing market, the UK is set to experience further growth in the short-medium term

• The UK is the leading Shared Service Centre location in Europe with one third of all Pan-European SSCs set up here. Whilst there has been a slow-down in this market as a result of the recession, long-term growth is projected

• Management consultancy is one of the fastest growing sectors in the UK and is the largest outside of the US, estimated at nearly £10 billion (2008).

• There is an opportunity to instigate ‘commuter claw-back’ of the skilled workforce within MKSM to London, if the local Business Services sector was developed further (e.g. Research for Renaissance Bedford32 indicates that 67% of out-commuters from Bedford would find having a similar job available locally attractive).

Threats

• There is exceedingly strong competition, globally and within Europe and the UK, to secure new and footloose business service investment

• Recent trends within the sector towards increased out-sourcing and off-shoring of back-office functions is expected to continue and this has implications for the sector in MKSM – as both an opportunity and a threat

• The recession is currently dampening demand for staff with professional qualifications, but there is an underlying shortfall in some parts of the sector which will become more visible as the economy picks up

• Impacts of recession of supply of high-quality commercial development to attract business services occupiers

• There remains, amongst employers, an on-going issue in relation to the generic skills and attitudes of new entrants to the labour market and their suitability for more entry-level and back-office jobs in the sector. These are common across the UK, but leaves it exposed compared to some competitor locations in Europe


Contribution to overcoming jobs challenge A.13 The medium term prospects for growth in the business services sector in MKSM appear

strong. The baseline forecasts undertaken for this study show that fifteen and a half thousand additional jobs in the sector were attracted to the sub-region between 2001 and 2007 and a similar level of growth is envisaged post-recession from 2012 onwards.

A.14 Business services is a target sector for many local areas of MKSM, although the strongest concentrations are in Milton Keynes and Northampton. Milton Keynes has identified the sector as one of those “offering the best prospects for sustained economic growth in the future” 33.

A.15 As with other sectors, it is very difficult to disentangle the impact of the recession from the longer-term projections for growth in this sector. However, according to recent SEEDA analysis34, sentiment within the UK and global financial markets has been improving over the past couple of months and with it the outlook for the financial services sector in the region. Although the financial sector has contracted faster than any other in the service sector, and 32 Engaldn Marketing (2006) for Renaissance Bedford, Out Commuting Study 33 Milton Keynes Partnership (2005) The New Plan for Milton Keynes: Draft Economic Development and Property Market Directions Paper

34 SEEDA (June 2009), Regional Intelligence Snapshot for the South East

A-7


there has been an increase in the number of redundancy notifications in business services, the recession has not hit the sector as badly as had been anticipated35. Clearly the impacts of the recession on the financial and other parts of the business services sector in MKSM will need to be carefully monitored.

A.16 For the future, recent trends within the sector towards increased out-sourcing and off-shoring of back-office functions is expected to continue and this has implications for the sector in MKSM – as both an opportunity and a threat. PWC36 identify two key trends in the business services sector which may impact on MKSM:

• Increased service bundling from fewer suppliers

• Increase in professional advisory services to meet increased levels of regulation at national and international level.

A.17 This study has found that whilst there is recognition of the importance of the business service sector in different parts of the MKSM economy – in particular in Milton Keynes and Northampton – there is little evidence of a robust understanding of the sector at a sub-regional level, with structured engagement generally taking place at local level.

A.18 An example of current local activity, Northamptonshire, through Northamptonshire Enterprise, has targeted the financial services and contact centre industries as part of its investment promotion strategy for the past five years37. Its proposition is based upon competitive operating costs (compared principally to London), its internal and external accessibility, labour pool and the presence of key financial services businesses, such as Barclaycard and Nationwide. Its ‘investor development’ approach engages with strategic and foreign-owned employers across a range of sectors, but it currently lacks a dedicated resource for Business Services, unlike other sectors in the county, such as HPE and environmental technologies. Northamptonshire also operates an Ambassadors programme, and is developing an Intermediaries programme, which specifically aims to develop relationships with, and between, parts of the business services sector.

A.19 Possible actions to support the continuing growth of the sector are included in the box below.

35 SEEDA (June 2009), South East Economy Review 36 PriceWaterhouseCoopers (2008), M&A insights: Analysis and opinions on UK M&A: Business Services Sector 37 Invest Northamptonshire (2009), The central location for the financial services sector


A-8

Box A-1: Potential business services sector actions

Taking a more pro-active approach to formalised engagement with the key businesses in the sector at the sub-regional level. These should be undertaken by/with a senior manager within the relevant local authority and be presented as a means of helping to support the business’s development and identify operational issues (e.g. workforce development, recruitment/retention). Even 2-3 meetings a year with 10-15 business will help to build a relationship with this key sector.

Where the key Business Service sector business have Head Offices elsewhere in the UK or overseas, partners should attempt, through an appropriate strategic intermediary such as UKTI, to engage with the Head Office CEO/COOs to understand their drivers, strategic plans and opportunities for further investment at their MKSM-based operations.

Consideration should be given as to whether a structured and segmented approach to location of Business Support sector functions should be undertaken. For example, should Aylesbury market itself as a location for market research companies and Luton target asset-backed finance firms? Or, alternatively, is there an MKSM-wide strategic approach to developing inter-relationships between firms and agencies that does not conflict with RDA-based approaches.

Undertake an assessment of the barriers that the small-medium sized businesses in the sector feel exist in relation to the funding and delivery, by the public and learning sector, of business support, skills development, etc. This could provide the means by which the range of publicly-funded programmes, such as Apprenticeships and work placements, could be introduced into this key growth sector.

Undertake an evaluation of the current stock and planned supply of premises that meet the needs of the sector in the next 10-15 years, ranging from managed workspace through to HQ operations. Whilst some of this can be evidenced through employment land assessments in different locations, there is no apparent cross-referencing across MKSM.



Annex B: Sustainable Construction Sector Analysis

Introduction B.1 For the purposes of this paper, the sustainable construction sector covers SIC 45 which

includes activities related to site preparation, demolition of buildings, construction of commercial and domestic buildings, civil engineering constructions, roof covering, construction of roads, airfields and sports facilities, water projects and other construction special trades, Building installation of wiring , plumbing etc, plastering, plumbing, joinery, floor and wall covering, painting and glazing etc and renting of construction or demolition equipment with operator (UK SIC1992)

B.2 However, it is important to note that this definition does not include:

• the important knowledge economy activities related to construction such as architectural and engineering activities and related consultancy, urban planning, quantity surveying, engineering consultative and design activities within SIC 74.2 (UK SIC 1992) (which form part of the MKSM Business Services and Creative Industries priority sectors)

• manufacture of building materials such as bricks, tiles, ceramic sanitary fixtures, cement, lime, plaster, concrete, stone , glass, glass fibres etc which are included in SIC 26 (UKSIC 1992).

Description of the sector

Employment and business units

B.3 Construction is a medium sized sector in the MKSM area with 33,120 employees in 2007, representing 4.3% of employment in the area. The sector has demonstrated growth with employment increasing from 27,830 in 2003 to 33,120 in 2007 – an increase of 5,290 or 19%.

B.4 This employment data does not capture self-employment, which is an important component of the construction industry. In the 2001 Census, self-employment represented 43% of employment in the sector. Consequently the employment figure for MKSM is likely to under-represent the size of the sector in the sub-region.

B.5 Whilst there has been a growth in jobs, there has also been a growth in the number of units from 6,590 in 2003 to 8,070 – an increase of 1,030 or 14%. These data demonstrate the small scale of the average construction unit/ site with some 4.1 employees per site. It is important to note that while the construction sector includes some major firms such a Kier, there is a very large number of small firms and one person businesses. As a consequence, it is likely that a considerable amount of activity undertaken by these micro and one person businesses may not be recorded in official statistics.

B-1


Locations/ concentration in MKSM

B.6 The construction sector is relatively widely spread across MKSM with five areas contributing 10% or more of the sub-region’s jobs. The largest share is contributed by Central Bedfordshire (16.3%) followed by Northampton (12.7%), Bedford (11.7%), Luton (11.5%) and Milton Keynes (10.1%).

B.7 Figure B-1 below compares the relative strength of employment in the sector by area against Great Britain (as measured by Location Quotients (LQ)). This shows that MKSM does not have relative strength in employment - no local area has a LQ above one (the average for Great Britain). This is surprising given the growth area status of MKSM. The local areas that come closest to the average are East Northamptonshire, South Northamptonshire and Central Bedfordshire.

Figure B-1 : Relative strength of sustainable construction sector against Great Britain, 2007

Location quotients of MKSM employees in construction, 2007, compared with Great Britain

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Important concentrations of activity – firms

B.8 Some of the significant companies operating in the construction sector within MKSM include:

• Kier at Tempsford near Sandy, Bedfordshire – a leading publicly listed construction company specialising in regional contracting, major projects, infrastructure, overseas construction, facilities management, maintenance, engineering services and sustainable buildings. The company operates across a wide range of sectors including private housing, social housing, PFI, rail, health, custodial, education, airports, retail etc. The company employs 11,000 people world-wide and has a turnover of some £2.4m

B-2


• Hanson at Stewartby Bedfordshire – a leading sustainable building materials manufacture. The Hanson site at Stewartby was at one time a very large brick making plant producing 20% of England’s bricks (738 million bricks per annum). However, the design of the plant became obsolete and requirements to reduce sulphur dioxide emissions led to its eventual closure. The site is now being transformed into the UK headquarters for Hanson UK.

• Kingspan – in the process of centralising its UK operations at Sandy, Bedfordshire. Manufacturer and supplier of advanced sustainable building systems for housing and commercial sectors

• Travis Perkins which has its head quarters and hub for its operations based at Northampton. Travis Perkins is a leading builders’ merchant in the UK with some 600 branches.

• Velux, the leading manufacturer of roof windows has established a training academy at Kettering which provides a centre of expertise and skills for merchants, installers, house builders, specifiers, architects, college tutors and students as well as Velux members of staff. The Academy is a purpose built centre of modern design with which provides opportunities to work ‘in situ’ in small groups.

Locational advantages B.9 MKSM has a number of locational advantages for the sustainable construction sector. This

includes its location at the heart of the UK with excellent road and rail networks within the area. In addition, parts of MKSM are within an hour’s drive of London providing opportunities for the provision of construction activities related to major projects such as Crossrail, Olympic Stadia and Village etc.

B.10 MKSM is also an important growth area in its own right with challenging targets for housing construction as well as improvements to roads and rail networks and developments planned to bring jobs to the area.

Supporting infrastructure B.11 The supporting infrastructure of expertise and testing facilities for the sustainable construction

sector includes:

Public sector / networks

• i.hub at Daventry - new sustainable building close to zero carbon which is due to open in 2010. The new building will have 4,000 square metres providing desk and office space for small start up businesses. The iHub has been described as a ‘state of the art facility to support the construction industry’

• iNet in Northamptonshire - there are four iNets, one of which is for Sustainable Construction and the iNet will in future be based at iHub after moving from the University of Northampton

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• planning policy – drive nationally for more sustainable physical development with on-site renewable generation and increased standards in waste management and recycling

Colleges and universities

• Further Education expertise – for example, Milton Keynes College is working in partnership with the HCA Academy for Sustainable Communities; Bedford and Barnfield Colleges have COVEs in house building; Dunstable College has plans for a ‘state of the art’ sustainable construction training centre; and Amersham and Wycombe College has a built Environmental Technology Centre at Chesham.

• Higher Education research and facilities – the University of Bedfordshire has spun–out a Centre for Sustainable Technologies which provides access to expertise and Cranfield University has a number of research and teaching strengths related to sustainable construction e.g. a major project on the development of thin film photovoltaics and in modelling rainfall and flooding models.

Standards, testing, certification and approvals

• BSI Standards - develops standards including those for the construction sector with its Head Quarters in Milton Keynes

• Access to expertise near to MKSM – including BRE, British Board of Agrement (BBA) (certification and approvals services at Garston) and BSI Testing (product testing services to a wide range of standards from its laboratories at Hemel Hemptead).

Sector forecasts B.12 Tables B.1 and B.2 present long-term economic and GVA forecasts for the sector.

Table B-1 : Construction sector employment forecasts, 2001-21 (‘000s)


% growth 01-21 2001 2007 2011 2021

2001-2007

2007-2011

20012-21

2001-21

MKSM 52.7 56.1 53.2 58.5 3.4 -2.9 4.8 5.8 11%

Aylesbury Vale 5.0 5.0 4.8 5.5 0.0 -0.2 0.7 0.5 10%

Milton Keynes 7.6 5.9 5.7 6.2 -1.7 -0.2 0.5 -1.4 -18%

Luton 5.9 6.6 6.3 6.8 0.7 -0.3 0.5 0.9 15%

South Bedfordshire 2.9 4.0 3.8 4.1 1.1 -0.2 0.3 1.2 41%

Corby 1.2 1.8 1.6 1.9 0.6 -0.2 0.2 0.7 58%

Kettering 2.5 3.1 2.8 3.3 0.6 -0.3 0.4 0.8 32%

Wellingborough 2.0 2.5 2.5 2.6 0.5 0.0 0.1 0.6 30%

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B-5



2001 2007 2011 2021 2001-2007

2007-2011

20012-21

2001-21

% growth 01-21

East Northamptonshire 2.4 2.7 2.4 2.9 0.3 -0.3 0.4 0.5 21%

North Bedfordshire 4.5 7.2 6.7 7.5 2.7 -0.5 0.7 3.0 67%

Mid Bedfordshire 4.9 5.9 5.6 6.0 1.0 -0.3 0.4 1.1 22%

Northampton 9.6 6.5 6.3 6.6 -3.1 -0.2 0.2 -3.0 -31%

Daventry 1.9 2.1 2.1 2.2 0.2 0.0 0.1 0.3 16%

South Northamptonshire 2.2 2.8 2.6 3.0 0.6 -0.2 0.4 0.8 36%


Table B-2 : GVA forecasts, 2001-21 (£2003m)

Total GVA Change in GVA

2001 2007 2011 2021 2001-2007

2007-2011

20012-21

2001-21

% growth 01-21

MKSM 1,511 1,797 1,706 2,069 286 -90 330 558 37%

Aylesbury Vale 140 167 159 202 27 -8 40 62 44%

Milton Keynes 214 195 188 229 -19 -6 37 16 7%

Luton 167 218 210 249 51 -8 36 83 50%

South Bedfordshire 83 131 127 149 48 -4 20 66 80%

Corby 36 54 49 61 18 -4 11 26 73%

Kettering 73 94 84 110 21 -10 23 37 50%

Wellingborough 59 77 74 86 18 -4 12 27 46%

East Northamptonshire 71 82 73 96 11 -9 21 25 35%

North Bedfordshire 129 239 225 276 110 -14 46 147 114%

Mid Bedfordshire 139 193 187 220 54 -6 30 82 59%

Northampton 282 196 190 218 -86 -7 26 -64 -23%

Daventry 57 64 62 72 8 -2 8 15 27%

South Northamptonshire 64 86 78 100 23 -9 21 37 58%


B.13 The tables forecast:

• The growth of the sector by 6,000 jobs between 2001 and 2021 reaching 59,000 jobs by 2021. The sector is forecast to contract by 3,000 jobs (and by £90m of GVA) in the current recession. Five thousand additional jobs are forecast between 2012 and 2021


• Growth in GVA of £558m or 37% between 2001 and 2021, a faster rate of growth than forecast for employment (11%)

• Most local areas of MKSM are forecast to experience some modest growth in employment (North Bedfordshire by 3,000 jobs). The sector is expected to contract in Milton Keynes and Northampton in employment terms.

B.14 Medium-term forecasts for construction employment have also been produced by Construction Skills, the Sector Skills Council for the construction industry. The forecasts indicate the major down-turn in the construction sector in 2009, continuing into 2010, leading to falling employment in the short term. However, Skills for Construction forecasts that, by the second half of 2010, the worst will be over, credit conditions will have eased and the economy will be expanding. In addition, a number of major construction projects are likely to impact including current and programmed improvements to roads (eg to the M1, A14 and A421) and rail (Midland mainline and Thameslink). Some projects outside MKSM may also benefit firms located within the area, including the 2012 Olympics, M25 widening scheduled to begin in 2009 and Crossrail..

B.15 The Skills for Construction forecasts for the MKSM regions are shown below.

Table B-3 : Skills for Construction employment forecasts, 2009-2013

Region 2009 employment 2013 Employment Net change % change

East Midlands 136,400 142,540 6,140 4.5

East of England 209,610 219,170 9,560 4.5

South East 336,150 347,330 11,180 3.3

Total 682,160 709,040 26,880 3.9

Source: Skills for Construction

SWOT analysis Table B-4 : SWOT analysis

Strengths

• Strong representation of major company head quarters –Kier, Kingspan, Travis Perkins

• Strong support among public sector partners e.g. Local Delivery Vehicles, for sustainability

• Excellent location for construction sector head office and sales, demonstration, logistics operations

• Strong sustainability activities in the area and demonstration of different construction solutions related to sustainability e.g. development at Oxley Woods which includes 145 properties that have been designed for optimal energy consumption and passive solar heating

• Infrastructure of colleges and universities with expertise relevant to sustainable construction

• Excellent location for supply of construction activities to wider markets e.g. in London and South east as well as Midlands

Weaknesses

• Uncertain prospects for economic recovery in the wider economy

• Pressure on public finances

• Lack of understanding of the sector locally

• Ageing workforce and need for career progression

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• High degree of dependence of future demand on public sector investment programmes e.g. in transportation

Opportunities

• Major house-building opportunities in the area – 224,000 new homes by 2021

• Forecast increase in jobs and GVA across most local areas of MKSM, with strongest growth in North Bedfordshire

• Major opportunities for a range of road and rail developments including £400m London to Oxford rail corridor scheme; £6.2 billion design, build finance and operate widening of M25 from Junctions 16-23

• Off site construction with key opportunity to link to sub-region’s strengths in logistics.

• Develop MKSM as the prime hub for knowledge and practical expertise in sustainable construction and related activities e.g. modelling on the Velux Academy which provides education and training for merchants, installers, housebuilders, specifiers, architects, college tutors and students

• Maximise advantage of the expertise available in universities and colleges and in major companies such as Kier, Kingspan

• Exemplar and demonstration projects

Threats

• Continued recession affecting demand for construction (3,000 job losses forecast locally 2007-2011)

• Cost pressures on delivering higher sustainability standards

• Sustainable construction prioritised in other construction markets and UK growth locations and corridors e.g. Thames Gateway and London


Contribution to overcoming jobs challenge B.16 The current recession has had a very serious impact on the construction industry nationally.

The lack of credit for businesses and homeowners and the uncertainty in labour markets have contributed to a major fall in output in the UK as a whole. A recent forecast made by the Construction Products Association (July 2009) indicated that, for the UK as a whole, there would be a fall in output of 16% in 2009 and a further fall in output of 55% in 2010. This has led to a forecast for the construction of some 72,000 new houses nationally this year, the lowest level since 1924. The CPA expects that by the end of 2013 output will only have recovered to levels achieved in 1999.

B.17 Despite this, the growing market in sustainability and environmental technologies offers a major opportunity for the construction industry in MKSM. Some of the underlying structural trends within the construction industry include:

• a general move towards higher levels of sustainability, energy efficiency, passive heating and cooling in all types of construction leading in general to higher value added in the construction process

• a general move towards greater off-site construction both for residential and commercial / industrial construction products.

B.18 Whilst new build offers an obvious opportunity for the sector in MKSM, it is important to note that some 80% of the buildings currently standing will still be in use by 2050, the target year by which the UK plans to reduce carbon by 80%. This draws attention to the role of the construction sector in refurbishment and adaptation of existing buildings as well as the construction of new build.

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B-8

B.19 Whilst it is important to applaud the demonstration of new techniques in sustainable buildings, it is also necessary to recognise the additional costs involved. These have been estimated at some 5-6% to attain Level 4 of the Code for Sustainable Homes above the costs for Level 3 and between 4- 8% additional cost to go from Building Regulations requirements to BREEAM Excellent. The move towards greater emphasis on sustainability is therefore likely to add to the output of the construction sector assuming that the additional costs do not depress demand.

B.20 For the future, there may be an opportunity for sites in MKSM to become a hub for offsite construction activities, thereby linking the twin drivers of sustainability (requiring higher quality production to tighter tolerances) and cost effectiveness of automation and logistics management. This is being driven by a range of factors including the greater ability to utilise automation and robotics offsite, the greater ability to control variability of off-site construction in a factory setting and achieve better tolerances, the ability to provide completed modules / units to the site just in time and the ability to control quality and prevent damage on site e.g. completed bathroom modules, kitchen modules, roofing structures etc for commercial and domestic construction.

B.21 The potential for developing a form of ‘Off-site construction module supplier park’ within MKSM may be worth exploration – in particular, the opportunities for delivering completed modules just in time to meet the construction schedule and the potential for greater automation and robotics.


Annex C: Creative Industries Sector Analysis

Introduction C.1 The Creative industries sector is a disparate sector including a wide range of craft,

manufacturing, design and technology based activities and products ranging from manufacture of clothes to publishing of books, publishing of software, architecture, motion picture production, news etc.

C.2 The Creative industries are, consequently, diverse and have been broadly categorised in a report by Frontier Economics for the DCMS into:

• Production industries (that are characterised by the production of physical or tangible products – for example the production of music CDs)

• Service industries (providing a service to customers e.g. architecture)

• Arts and crafts industries (characterised by people who engage in the industry for non-financial reasons).

C.3 The MKSM Economic Growth Group has developed its own classification system dividing the creative industry into two key types of organisations:

• Professional creative industry organisations which are service led and business focussed with commissions and activity based on client / customer needs / requirements (e.g. a graphic designer)

• Pure creative industry organisations that are bespoke and based on individual drive and creative license (e.g. a painter).

C.4 A third possible category of activity relates to the wide range of organisations and activities that provide publicly funded activities to support the arts, culture, disadvantaged minorities etc. It has been estimated that there are some 75 different organisations across MKSM providing this support for the creative business community.

Description of the sector C.5 The creative industries sector is a large and growing sector within the MKSM economy with

employment increasing from 50,840 in 2003 to 56,700 in 2007, an increase of 5,860 jobs (11.5%). Creative industries jobs accounted for some 7.4% of total jobs in MKSM in 2007. It is important to stress that self employment is not captured in the official data which may underestimate the importance of the sector.

C.6 There has also been an increase in the number of creative industry units / sites in MKSM from 11,000 in 2003 to 12,600 in 2007, an increase of 1,600 (14.5%) leading to en employment density of some 4.5 employees per site.

C.7 The ‘Creative Industries in Milton Keynes South Midlands’ report produced by Arts Council of England (ACE) identified 4,674 creative enterprises within MKSM (using a different

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definition to the one used here) with the design sector accounting for 22%, software, art and antiques accounting for 15% and music 10%.

Locations/concentration in MKSM

C.8 The major concentrations of employment in the creative industries are around Milton Keynes (22.1% of the total Creative Industries employment in MKSM), Northampton (13.5%), Central Bedfordshire (12.8%), and Aylesbury Vale (10.5%).

C.9 Figure C-1 below compares the relative strength of employment in the sector by area against Great Britain (as measured by Location Quotients (LQ)). This shows that five local areas are relatively strong compared with Great Britain – South Northamptonshire, Aylesbury Vale, Milton Keynes, Central Bedfordshire and Kettering (LQs +1).

Figure C-1 : Relative strength of creative industries sector against Great Britain and South East region, 2007

Location quotients of MKSM employees in creative industries, 2007, compared with Great Britain

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Corby

Daven

try

East N

ortha

mptons

hire

Ketteri

ng

Northa

mpton

South

Northa

mptons

hire

Welling

borou

gh

Bedfor

d

Centra

l Bed

fords

hire

Luton

Aylesb

ury V

ale

Milton K

eyne

s

MKSM Total



C.10 Work is being undertaken by the MKSM Creative industries group to map the concentrations of creative organisations. The evidence suggests some concentrations of creative industries companies in:

• Designer fashion in Luton and Northamptonshire

• Software, computer games and electronic publishing in Milton Keynes, Bedfordshire and Buckinghamshire

• Architecture in Milton Keynes, Bedfordshire and Buckinghamshire

• Book publishing and production in Buckinghamshire

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• Hat making / designing at Luton / Dunstable.

C.11 Key firms by area are shown in the table below.

Table C-1 : Creative industries key firms in MKSM

Milton Keynes

• National bowl Milton Keynes – an entertainment venue with a 65,000 capacity bowl (with planned expansion to 75,000 capacity) owned by a partnership between Live Nation and Gaming International

• Milton Keynes Theatre and Gallery – opened in 1999 presenting high quality performing arts and extensive educational activities

• BSI Head Quarters and publishing centre for standards and other related materials

• Open University – Open Broadcast Unit

• Milton Keynes City Orchestra

Cardington

• Two large former RAF hangars are now used as film, television and video production studios with one hangar leased to Warner Brothers

Northampton

• Doc Martens

• Church’s shoes – acquired by Prada in 1999

• Royal and Derngate Theatre - turnover of more than £8m

• Threshold Studios

• BBC Radio Northampton

• Big about music

Luton

• Senior King Communications

• Luton Arts Carnival

• UK Centre for Carnival Arts (UKCCA)

• BBC Three Counties Radio

Dunstable

• The Grove Theatre

• Heart FM


Locational advantages C.12 The review of the sector has identified the following locational advantages for MKSM:

• MKSM is located in a prime central location in the middle of the UK and is well served by road, rail and air communication

• MKSM contains attractive locations from small villages to county towns to modern cities making the area attractive to potential inward investors – also a wide range of cultural attractors

• Within around one hour’s drive from the southern part of the sub-region are major film, TV and video production studios at Pinewood, Shepperton, Teddington and Elstree

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• The sub-region contains a wide range of outside locations suitable for film production as well as historical sites and modern cityscapes.

Supporting infrastructure C.13 There is a strong infrastructure of supporting organisations in MKSM including:

Colleges and Universities

• Higher Education and Further Education – including University of Bedfordshire media courses, Bedford College which is a centre of excellence in media and Stella Mann college of the performing arts

• University of Northampton –Portfolio Innovation Centre supporting 25 creative enterprises, with additional funding of £3.5m secured to enable it to host a further 45 businesses by 2009

• Cranfield University – opened the Centre for Competitive Creative Design (C4D) in partnership with the University of the Arts London with the objective of improving the interface between creativity and business

• Open University - Open Broadcast Unit

Creative industries networks, events and programmes

• The ‘Hat factory’ at Luton - provides help to encourage creative practitioners develop new projects. It has a 96 seat cinema, dance studio, art gallery and recording studio

• Luton Carnival – positive contribution to local economy and community development

• UK Centre for Carnival Arts (UKCCA) - this is under development and is expected to attract significant numbers of national and international visitors

• ArtsworksMK

• Creative Northamptonshire

• Bedford Creative Arts – an educational charity promoting contemporary visual arts including film, photography and animation

• Milton Keynes media circle – a private sector partnership with a network of 430 members including advertising and design, actors and musicians

• Milton Keynes Cultural Alliance

Arts and creative facilities/ theatres/ galleries

• The Stables at Milton Keynes - state of the art venue presenting concerts and educational sessions founded by Dame Cleo Laine and Sir John Dankworth

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C-5

• Corby Cube – a £32m civic hub and arts centres due to open in 2010 with a 445 seat theatre studio

• Northampton Fish market – a flagship project of Northampton Arts Collective (NAC) providing a large art gallery space and hub for creative activity

• Fermynwoods – a gallery showing contemporary visual arts located in rural Northamptonshire.

Sector forecasts C.14 Tables C.2 and C.3 present long-term economic and GVA forecasts for the sector.

Table C-2 : Employment forecasts, 2001-21 (‘000s)


2001 2007 2011 2021 2001-2007

2007-2011

20012-21

2001-21

% growth 01-21

MKSM 30 66 63 70 36 -3 7 40 135%

Aylesbury Vale 2 7 7 8 5 0 1 5 221%

Milton Keynes 5 14 14 17 10 -1 3 12 257%

Luton 3 5 5 5 3 0 0 3 108%


Corby 1 2 2 2 1 0 0 1 54%

Kettering 2 3 3 3 1 0 0 1 40%

Wellingborough 2 3 3 3 1 0 0 1 47%

East Northamptonshire 2 2 2 2 0 0 0 0 -17%

North Bedfordshire 3 5 5 6 3 0 0 3 111%


Northampton 4 9 8 9 5 -1 1 5 115%

Daventry 1 3 3 3 2 0 0 2 167%




Table C-3 : GVA forecasts, 2001-21 (£2003m)


% growth 01-21 2001 2007 2011 2021

2001-2007

2007-2011

20012-21

2001-21

MKSM 888 2,569 2,662 4,061 1,680 93 1,298 3,173 357%

Aylesbury Vale 87 288 296 460 200 9 151 372 427%

Milton Keynes 171 669 687 1,138 498 18 419 967 566%

Luton 79 217 232 353 139 15 112 275 349%


Corby 32 67 66 91 34 0 23 58 180%

Kettering 39 97 99 122 57 2 22 83 210%

Wellingborough 44 102 107 165 58 5 55 121 276%




Northampton 94 263 267 391 168 4 115 296 314%

Daventry 34 94 98 156 60 4 54 122 360%



C.15 The tables forecast:

• Growth of the sector by 40,000 jobs between 2001 and 21 across MKSM, the majority of which had been secured by 2007. The forecasts predict a loss of around 3,000 jobs as a result of the current recession, with growth of 7,000 jobs between 2012 and 2021

• Growth in GVA of 360% 2001-21 (or £3.2bn), of which £1.3bn is forecast for the second ten-year period, suggesting MKSM is expected to attract high-value activities over the period

• The strongest growth locally is forecast for South Northamptonshire, but solid growth is expected across MKSM (with the exception of East Northamptonshire in employment terms), particularly in Mid Bedfordshire, Milton Keynes and Aylesbury Vale.

C.16 Separate forecasts commissioned by SEEDA from Experian for the South East region forecast a decline in the sector from 372,700 jobs in 2007 to 345,800 in 2010, before recovering to 375,200 in 2005. This is not dissimilar to the trajectory of the bespoke forecasts commissioned for this study. Locally, the MKSM Creative Group estimates that future growth (from 2008) to 2021 might be in the region of 5,000 jobs.

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SWOT analysis Table C-4 : SWOT analysis

Strengths

• Good central location and good connectivity including road, rail and air transport

• Strong base of small creative businesses in parts of the MKSM area in design, architecture and publishing

• Some major brands such as Doc Martens and Church’s Shoes

• Lower land and rental costs than London and suburban locations

• Supporting infrastructure of educational and artistic bodies

• Range of attractions for younger people including the National Bowl at Milton Keynes, Xscape Centre

Weaknesses

• Lack of obvious creative identity (and perhaps centre) – many dispersed activities

• The print industry has been strongly affected both by the recession and by the decline in traditional regional newspaper advertising

• Architecture has been particularly strongly impacted by the decline in requirements for new buildings due to the current recession

• Possible lack of articulation between publicly funded support programmes and the commercial creative sector

Opportunities

• Forecast growth in sector, particularly in Milton Keynes, with 40,000 additional jobs 2001-21

• Build on local strengths e.g. graphic and other design, architecture, film studios and locations (e.g. Cardington), publishing, brand identities

• Seek linkages between the creative sector and other major sectors in MKSM e.g. logistics and ecommerce sites (Amazon etc) and other important sectors e.g. High value engineering (Nissan R&D at Cranfield and others)

• Develop local creative identity through major development projects e.g. town centre re-development, rebrand city / town quarters as cultural / arts/ creative quarters

• Growing population with demand for leisure opportunities

• Build on the attractions for young people in the area e.g. MK Bowl, Universities, events and live performances

• Capitalise on the university presence and growing reputation of Universities of Northampton and Bedfordshire for their creative faculties.

Threats

• Concentration of forecast growth in sector in a limited number of locations

• Pressure on some existing business models (largely advertising funded models)

• Lack of liquidity in some businesses – inability to obtain loans / overdrafts

• Competition from other media hubs in the UK – particularly London, but also Manchester which is benefiting from a major investment in the development of a media hub ‘ Media City’ in Manchester which will provide a new location for many BBC activities

• The pull of major events elsewhere e.g. Olympics in London


Contribution to overcoming jobs challenge C.17 Research undertaken for this study suggests there is no current single theme that might

provide a driver for opportunities in the creative industries sector in MKSM. This is perhaps unsurprising, given the diversity in the sector.

C.18 There are drivers in the sector nationally and internationally which MKSM may be able to position itself to benefit from. One trend across most sub-sectors of the wider sector is digital convergence - both in the means of production e.g. editing and post production or sound

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C-8

recording, and in the final product e.g. computer games. The impact of digital technologies is having a major influence on almost all parts of the creative industries either directly ( e.g. digital post production ) or indirectly ( e.g. the market for traditional television advertising being impacted by young people spending time on computer games or social networking sites rather than watching television). There may be future opportunities in internet, social networking, ecommerce, games, virtual reality and internet gambling.

C.19 Strategies to assist the sector in MKSM will need to build on local assets. They include local strengths in graphic and other design, architecture, film studios and locations, publishing as well as some strong brand identities. A key role for the public sector will be to ensure the supporting infrastructure is in place, for example access to advice and information for fledging and start-up companies and broadband infrastructure.

C.20 The major development projects planned across the sub-region may provide openings for the creative industries sector, both as suppliers to the development industry and as occupiers of commercial development. There may be scope to further develop the leisure offer of Milton Keynes as a destination in its own right. Improving skills in the digital design field have been enhanced by the installation of infrastructures such as the C4D facility at Cranfield and there may be similar opportunities to encourage digital skills in other areas of the creative economy e.g. related to sound, film, graphics, architecture etc.

C.21 Possible actions to support the continuing growth of the sector are included in the box below.

Box C-1: Potential creative industries sector actions

• Seek linkages between the creative sector and other major sectors in MKSM e.g. logistics and ecommerce sites (Amazon etc) and other important sectors e.g. High value engineering (Nissan R&D at Cranfield and others)

• Develop local creative identity through major development projects e.g. town centre re-development, rebrand city / town quarters as cultural / arts/ creative quarters

• Build on the attractions for young people in the area e.g. MK Bowl, Universities, events and live performances

• Capitalise on the university presence and growing reputation of Universities of Northampton and Bedfordshire for their creative faculties.

• Explore the potential for an open innovation campus to be linked to Cranfield in creative/ design areas and maximise opportunities emanating from the C4D facility

• Develop the film and television production facilities at Cardington and enhance value added by encouraging a production village of supply companies to establish in the area.

• Build up a listing of suitable film locations in MKSM including the wealth of historical buildings as well as modern cityscapes. Facilitate access to locations through a well structured ‘permitting’ system that minimises the bureaucracy involved in gaining permission to film

• New opportunities in areas such as social networking, second life, computer games, simulation software etc

• Examine new opportunities in ecommerce software, wireless broadband and digital convergence



D-1

Annex D: High Performance Engineering and Motorsport Sector Analysis

Introduction D.1 The High Performance Engineering (HPE) and Motorsport industry is one of the sectors in

which the UK is strong internationally. This reflects both the UK’s history of engineering innovation and application, and as the home of Formula One motorsport teams and businesses in the industry’s supply chain.

D.2 The sector, in this assessment, is based upon a range of value-added engineering activities that include specialist parts research, design and manufacture of materials, coatings, tools and instruments. It also extends to include manufacture of a more mainstream nature, including motor vehicles, aircraft, marine and related components. Whilst it is recognised that this strays into mass production, and perhaps away from the ‘high performance’ element of engineering, it is not possible to extract the relevant activities from published statistics.

D.3 In 2009 work commissioned by the Advanced Institute of Management (AIM), research38, suggests 4,500 companies are involved in what they term the UK Motorsport and Performance Engineering Industry – with an annual overall turnover of £6billion and a contribution to the UK economy of £3.6billion worth of exports. The report goes on to describe the industry employing 38,500 full and part time jobs, including 25,000 engineers.

D.4 Within the UK, an area loosely defined as Motorsport Valley® is the core of the cluster activities of motorsport and wider HPE activity. The MKSM area is closely aligned to this, although it also extends further into Oxfordshire, Warwickshire, Cambridgeshire and Norfolk.

D.5 Despite the locational significance of the sector within a global and national context, it is generally viewed as a relatively niche sector in terms of contribution to GDP and employment, certainly compared to other sectors such as business services. Its importance is championed locally and nationally, partly due to its prominence in terms of ‘brand value’, but also because it has some key characteristics of a growth industry, both in terms of R&D as well as part of an otherwise declining manufacturing industry.

D.6 The Motorsport Industry Association (MIA), which devised the term Motorsport Valley®, and the Motor Sports Association (MSA) both recognise the local cluster and pro-actively support it with local industry and public sector partners, including Northamptonshire Enterprise, which has a dedicated sector manager for this sector.

Description of the sector D.7 Our analysis shows that in 2007 there were 25,160 employee jobs in the sector39. This had

declined over the previous four years by 8.6%, with the sector accounting for 3.3% of all jobs

38 Advanced Institute of Management Research (2009), Racing for Radical Innovation – how motorsport companies harness

network diversity for discontinuous innovation 39 Annual Business Inquiry – ONS; SQW Consulting; Note: # total adjusted for change in survey date from December to September


D-2

in MKSM in 2007. In the same year, there were 1,530 businesses active in the sector across MSKM (excluding the self-employed), accounting for 2.2% of all businesses. This represented a decrease of 5.6% over the previous four-year period.

D.8 Although this analysis is principally concerned with the HPE and motorsport industry, the wider impact of motorsport on tourism and the wider economy should not be forgotten. In recent research by Northamptonshire Enterprise for the Northamptonshire HPE & Motorsport Strategy40, it identifies that, within Northamptonshire alone:

• During 2009, 309 Motorsport related events will be held at 26 venues in the county

• Of these events, 59 will attract 5000+ visitors and 16 will attract 20,000+ visitors

• At least 35 car club events are hosted in Northamptonshire, attracting hundreds of car clubs from the UK and further afield

• Over 2.1m people attend Northamptonshire Motorsport venues / events each year

• Of these visitors 1.5m are day visitors (70%) and 0.6m are overnight visitors.

Locations /concentrations in MKSM

D.9 Based upon the proportion of employees working in the area, the ABI data indicates that three locations dominate the HPE and motorsport sector in the MKSM sub-region:

• Luton (24.1% of all HPE/motorsport sector jobs in MKSM)

• Milton Keynes (14.9%)

• Daventry (12.2%).

D.10 Perhaps surprisingly, Central Bedfordshire has the largest proportion of workplace units in the HPE and motorsport sector (19.2%).

D.11 Figure D-1 below compares the relative strength of employment in the sector by area against Great Britain (as measured by Location Quotients (LQ)). This shows that Daventry and Luton are particularly strong, followed by East Northamptonshire (local areas where the LQ is above one). MKSM as a whole also has LQs above one.

40 Northamptonshire Enterprise Ltd (2009) - High Performance Engineering & Motorsport: A Practical Strategic Plan for

Northamptonshire (consultation draft)


Figure D-1 : Relative strength of HPE and motorsport sector against Great Britain, 2007


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D.12 However, some caution must be noted in interpreting this data. The inclusion of the less ‘high performance’ end of the industry – mass production and distribution – partly explains the concentration of employment in Luton (IBC van plant) and Daventry (Ford parts distribution and Cummins engine plant). Conversely, there is no evidence in the data of the existence of Brawn GP/ Honda F1 which employed over 700 people in Brackley at its peak.

Important concentrations of activity – firms and other assets

Table D-1 : Important concentrations of activity – firms and other assets

Aylesbury Vale

• Part of Silverstone Circuit

• Porsche Driving Centre

Bedford

• Palmer Motorsport


• Cranfield University, including Cranfield Aerospace

• Nissan Technical Centre

• Millbrook Proving Ground

• Lockheed-Martin: Aerospace/Miltary Systems Integration

Corby

• Fairline Boats

Daventry

• Mercedes-Benz High Performance Engines (Brixworth)

D-3


• Ilmor Engineering (Brixworth)

• Ford parts distribution

• Cummins Engines


• Fairline Boats

• Rockingham Speedway

Luton

• IBC: Van plant

• MacDonald Humfrey Automation

• Vauxhall: UK HQ

• GM: Finance Division

Milton Keynes

• Red Bull Racing: F1 racing team

• Prodrive: composite facilities

• Suzuki GB & Suzuki Marine

• Aston Martin

• Volkswagen Group: HQ

• Mercedes-Benz: HQ

Northampton

• Cosworth: F1 engine supplier and aerospace technologies

• Mahle Powertain

• Mugen


• Silverstone Circuit

• Brawn GP: F1 team

• Force India: F1 team

• BAE Systems Advanced Technology Centre

Wellingborough

• Ray Mallock Ltd: Automotive Technology


Locational advantages D.13 The MKSM area is recognised as being at the centre of the loosely defined Motorsport

Valley® - a term created to describe the uniqueness of the HPE cluster within the UK. Northamptonshire promotes itself as being the ‘Heart of Motorsport Valley’ where there is a true cluster of motorsport related activity – including R&D, design, testing, manufacture and racing, with associated media and tourism businesses and a strong local skills base and educational provision.

D.14 The sector has clustered around a small number of key facilities and larger businesses over a period of time, in Northamptonshire and its environs – for example, the Cosworth engine design and manufacturing facility in Northampton and the Silverstone circuit and its inherent

D-4


association with UK motorsport and HPE activity that underpins it. As the sector, or indeed cluster, has grown, new companies have been formed and attracted to the area, with serial entrepreneurship a key characteristic. Critically, new skills have been developed and new skills and new people have arrived.

D.15 As with other sectors, the location of MKSM at the heart of the UK, with excellent strategic road links and easy access to five international airports, helps to sustain the area’s attractiveness in terms to the sector.

Supporting infrastructure D.16 The supporting infrastructure in MKSM for the motorsport part of the sector is second to none

at present: with the skills, sites, innovation, supply chain and facilities essential for any cluster to thrive. The presence of Cranfield University is particularly significant in terms of its postgraduate business-orientated programmes and partners (e.g. Boeing, Jaguar, Lotus, Nissan). So too is the presence of three international circuits at Silverstone, Rockingham and Santa Pod, as well as the GM-owned Millbrook Proving Ground, which all act as foci for investment and innovation by both large and small businesses in the sector.

D.17 Until recently this sector was supported by UK Government through the establishment of Motorsport Development UK (formerly the Government Motorsport Unit), which was based in the area and worked with the industry to supply funding for key projects with particular interest on educational issues and environmental technology advances. It was co-managed and funded by the three MKSM RDAs as well as Advantage West Midlands, but it has now ceased operating, and future delivery of support for the sector is in question.

D.18 Although based in Loughborough, the emda-funded Transport Technologies iNet (innovation network) supports the whole East Midlands region and promotes innovation in the motorsport, aerospace and marine sectors, including ERDF grant funding.

D.19 SEMTA, the Sector Skills Council for Science, Engineering and Manufacturing Technologies, continues to support the development of skills in the sector. It offers funding to businesses to support Level 2 and 3 qualifications and apprenticeships, which is to be extended to L4 qualifications this year. They have also supported the development and delivery of 14-19 Engineering Diplomas at Foundation, Higher and Advanced levels. Diplomas are also due to be available for Manufacturing & Product Design this year.

D.20 Whilst specialist sectoral support is usually directed through government department BIS (formerly BERR), UKTI and RDAs, the Northamptonshire county/sub-region is in the unusual position of having committed resources, secured through RDA and Growth Fund investment, to create a role for dedicated HPE and Motorsport Sector Development Manager, through Northamptonshire Enterprise Ltd. As a result Northamptonshire has rapidly increased engagement with the sector, including industry bodies such as the Motorsport Industry Association (MIA). It has also recently:

• Compiled an Asset Register of 450 companies engaged in the Motorsport & HPE sector located within the county.

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D-6

• Attended key international events for the sector – including Autosport (Birmingham), PRI Show (Orlando) and PMW (Cologne), as well as being represented at other fora through its network of industry partners, such as Brawn GP, Silverstone Circuits and the MIA.

• Commissioned an Economic Impact Assessment of the value of the 2008 FIA Formula One British Grand Prix, supported by MKSM partners.

• Initiated a JV with Silverstone Estates to support the development and implementation of the Silverstone Masterplan.

• Developed a High Performance Engineering & Motorsport Strategy41 with the pro-active engagement and endorsement of key industry representatives.

Sector forecasts D.21 Tables D.2 and D.3 present long-term economic and GVA forecasts for the sector.

Table D-2 : Employment forecasts, 2001-21 (‘000s)

Total employment Employment growth

2001 2007 2011 2021 2001-2007

2007-2011

2012 2021

2001-2021

% growth 01-21

MKSM 37.2 28.0 24.9 21.3 -9.2 -3.1 -3.2 -15.9 -43%

Aylesbury Vale 1.4 1.5 1.3 0.9 0.1 -0.2 -0.3 -0.5 -36%

Milton Keynes 4.4 4.3 3.9 3.4 -0.1 -0.4 -0.5 -1.0 -23%

Luton 12.1 7.3 6.2 4.7 -4.8 -1.1 -1.3 -7.4 -61%

South Bedfordshire 1.3 1.3 1.1 0.8 0.0 -0.2 -0.2 -0.5 -38%

Corby 1.0 1.1 0.9 0.7 0.1 -0.2 -0.2 -0.3 -30%

Kettering 0.9 1.0 0.9 0.7 0.1 -0.1 -0.2 -0.2 -22%

Wellingborough 1.1 1.0 0.9 0.8 -0.1 -0.1 -0.1 -0.3 -27%

East Northamptonshire 1.1 1.4 1.3 1.2 0.3 -0.1 -0.1 0.1 9%

North Bedfordshire 4.0 2.3 2.2 2.3 -1.7 -0.1 0.1 -1.7 -43%

Mid Bedfordshire 2.1 1.2 1.1 1.1 -0.9 -0.1 0.0 -1.0 -48%

Northampton 4.7 1.7 1.5 1.3 -3.0 -0.2 -0.1 -3.4 -72%

Daventry 2.1 3.2 2.8 2.4 1.1 -0.4 -0.4 0.3 14%

South Northamptonshire 1.1 0.9 0.9 0.9 -0.2 0.0 0.0 -0.2 -18%


41 Northamptonshire Enterprise Ltd (2009) - High Performance Engineering & Motorsport: A Practical Strategic Plan for

Northamptonshire (consultation draft)


Table D-3 Table - GVA forecasts, 2001-21 (£2003m)

Total GVA GVA growth

2001 2007 2011 2021 2001-2007

2007-2011

2012-2021

2001-2021

% growth 01-21

MKSM 1,372.4 1,407.8 1,261.3 1,444.4 35.4 -146.5 163.9 72.0 5%

Aylesbury Vale 47.2 85.2 74.4 77.0 38.0 -10.8 2.3 29.8 63%

Milton Keynes 146.7 212.7 194.5 227.8 66.0 -18.2 30.1 81.1 55%

Luton 369.9 349.8 309.2 340.9 -20.1 -40.6 28.2 -29.0 -8%

South Bedfordshire 43.9 60.7 50.3 50.4 16.8 -10.4 0.2 6.5 15%

Corby 44.4 56.0 48.2 53.6 11.6 -7.8 4.7 9.2 21%

Kettering 30.6 47.8 43.4 50.4 17.2 -4.4 6.1 19.8 65%

Wellingborough 48.1 57.8 50.8 59.6 9.7 -7.0 7.6 11.5 24%

East Northamptonshire 45.7 69.6 65.2 86.6 23.9 -4.4 19.4 40.9 89%

North Bedfordshire 175.7 116.4 111.8 137.0 -59.3 -4.6 23.1 -38.7 -22%

Mid Bedfordshire 96.1 56.2 51.7 63.4 -39.9 -4.5 10.8 -32.7 -34%

Northampton 193.1 82.6 70.6 78.2 -110.5 -12.0 6.3 -114.9 -60%

Daventry 85.3 169.6 149.2 164.9 84.3 -20.4 13.6 79.6 93%

South Northamptonshire 45.4 43.4 42.0 54.6 -2.0 -1.4 11.4 9.2 20%


D.22 The tables forecast:

• A sharp fall in employment of 16,000 jobs between 2001 and 2021 (a fall of 43%). A significant proportion of this decline took pace in the 2001-07 period (loss of 9,000 jobs)

• The majority of the losses are forecast to take place in Luton (-7,500 jobs) and Northampton (-3,500 jobs). Employment is forecast to grow in two areas – East Northamptonshire and Daventry

• A small increase in GVA of £72m (5%) across MKSM over the twenty year period. There is a mixed picture by local area, with some areas expected to secure GVA growth despite job losses.

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D-8

SWOT analysis Table D-4 : SWOT analysis

Strengths

• Location close to London and base of research and development expertise

• Excellent road connections to other parts of Motorsport Valley including Oxfordshire, Warwickshire, Cambridgeshire and Norfolk

• Good access to five international airports: Luton, Heathrow, Stansted, Birmingham and East Midlands, as well as an excellent facilities and connections for executive air travel

• Presence of high profile academic and technical institutions, particularly Cranfield University, which produces more than 10% of the UK’s post-graduate engineers

• Sites and premises: including Silverstone Innovation Centre for motorsport-related start-ups, as well as other innovation centres and enterprise hubs. Designated employment sites at Silverstone, Brixworth and Rockingham42.

• World-class facilities for motorsport testing, including Millbrook Proving Ground and numerous wind tunnels including at Brawn, Red Bull and Force India F1 teams

• Strong skills base in parts of HPE and in motorsport

• A strong base on which to build engagement with the motorsport sector e.g. through the work of Northamptonshire Enterprise

Weaknesses

• Sharp fall in employment forecast in MKSM over 2001-21, with expected loss of 16,000 jobs. Mass production part of sector expected to be especially hard hit

• Uncertain Government support for the motorsport sector, despite it being identified as a key cluster

• Engineering sector struggles to attract sufficient labour from universities and schools

• Lack of formalised structure for the sector, with elements of industrial and intellectual secrecy and ‘heads down’ approach hampering full potential of technology transfer and effective PR for the sector/area.

Opportunities

• Extend and externalise the core traits and values of the sector into other sectors – rapid problem solving and product development

• Harness the expertise and capacity of serial entrepreneurs in the sector to increase business formation and survival rates

• Changes to motorsport regulations could prove advantageous to ‘fleet of foot’ businesses in MKSM, e.g. Cosworth engine supplies to three new F1 teams in 2010.

• Harness brand value and international reputation of motorsport industry as a competitive advantage e.g. to investors, visitors, potential labour recruits to sector

• Take a lead in new low carbon technologies and activities connecting with the environmental technologies sector, but also in relation to motorsport and aspects of automotive R&D, .e.g. materials technology, fuel technology

• The global trend towards integration of developments in materials technologies with advanced engineering design and manufacturing processes provides opportunities for the sector.43

Threats

• Global economic recession has hit demand for vans, engines and yachts/marine equipment in the short and potentially medium-term

• The loss of skilled engineers to the industry in the recession could hamper the ability to source these skills for the sector when the industry recovers.44

• Ongoing changes to motorsport regulations and budgets will hamper R&D (e.g. cap on track testing and wind tunnel testing) and threaten jobs and technological applications

• Lack of adequate current intelligence on businesses in the sector, limiting ability to develop sound strategies and actions

42 Atkins & LSH, for Northamptonshire Enterprise Ltd & partners (June 2009), Strategic Employment Land Assessment (Consultation Draft) 43 Office of Science & Innovation (2006), Science & Technology Cluster: overview of key trends up to 2015-2020 44 SEEDA (June 2009), Regional Intelligence Snapshot for the South East


• Strong global competition, especially from US and BRIC nations

• Anticipated cuts in public expenditure will affect defence budgets and may have trickle-down effect on aerospace supply chain locally

• Loss of British Grand Prix will diminish the value of MKSM’s motorsport brand and USP (economic impact of event estimated as £54m supporting around 500 local jobs).


Contribution to overcoming jobs challenge D.23 The HPE and motorsport sector is a medium sized industry in MKSM, although an important

sector in specific local areas (Daventry, East Northamptonshire and Luton in particular). However, the prospects for growth are not as strong as for other priority sectors, with baseline forecasts completed for this study projecting a sharp fall in employment across MKSM as a whole between 2001 and 2021. This is likely to be concentrated in particular parts of the sector (e.g. mass production) but it raises important questions for public partners in MKSM.

D.24 The motorsport part of the sector is an area where MKSM and neighbouring areas have developed comparative advantage, with a critical mass developed over time of skilled workers, a mature supply-chain with excellence in innovation, R&D and design, and leading facilities. However, there must be some uncertainty about the long-term prospects of the sector if Britain loses its Grand Prix event.

D.25 The question for public sector partners in MKSM is which parts of the sector warrant support and which sectors have the strongest growth prospects. Consideration could be given to extending Northamptonshire’s approach to developing a sector action plan across the rest of MKSM and the wider Motorsport Valley. There may continue to be value in harnessing the brand value and international reputation of the motorsport industry as a competitive advantage for MKSM. Future funding for military research and procurement of products in the aerospace sector may have a trickle-down effect to some firms in MKSM. However, the electronics industry is expected to contract in MKSM and the impact of the recession on the consumer and commercial vehicle markets has left major employers in the automotive and marine sectors in MKSM severely at risk.

D.26 The environmental technologies sector is seen as a major opportunity for MKSM. Thinking has not developed into specific areas to target, but there may be opportunities in materials technology and fuel technology, building on existing strengths in the sub-region.

D.27 Possible actions to support the sector are included in the box below.

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Box: D-1: Potential HPE and motorsport sector actions

• Develop sector plan for MKSM, building on the Northamptonshire model

• Commission an updated industry survey (last undertaken in 2001)

• Undertake review of regionally funded/delivered programmes relate to the sector in MKSM, particularly in relation to business support, skills development and innovation, to ensure market focus

• Develop a more tailored and targeted engagement with the sector, establishing a form of ‘first stop shop’ for the sector to engage with the public sector in relation to its needs

• Promote greater awareness of the value of the sector to the local economies of MKSM and to the UK economy overall, both directly, and through related activity in the tourism sector

• Support the development of key assets and opportunities in the sector within MKSM, e.g. Silverstone Masterplan implementation, Millbrook Proving Ground facilities, Cranfield University

• Support knowledge development and technology transfer networks across sector

• Enhance the labour supply and skills in the sector through engagement with partners such as SEMTA and initiatives such as the University Centre Silverstone


Annex E: Logistics Sector Analysis

Introduction E.1 Logistics is one of the largest sectors within the MKSM economy. The sector covers the

traditional logistics activities of wholesaling warehousing and road and air transportation but has been transformed in recent years through the use of management systems that control and optimise these systems to maximise efficiency and market responsiveness. The ability to respond quickly to changing customer demands has become a key requirement of modern business processes.

E.2 The logistics sector includes a range of activities such as transport, warehousing, consolidation, fulfilment, rework, packaging, courier services, storage, mail order and ecommerce sites, inter-modal operations, integrators and third party logistics sites. Within the logistics sector there are important specialist sub-sectors with particular needs and requirements, for example the chilled food logistics sector where there are requirements to ensure the end to end temperature integrity of the product with temperature monitoring equipment or the distribution of products where the provenance needs to be assured e.g. specialist engineering products where lot traceability is required, or special foods for particular religions. In addition, there is a related industry supplying equipment and systems including ICT, software for routing, tracking systems, RFID, automated warehousing etc.

E.3 Whilst logistics may have traditionally have been seen as a ‘trucks and sheds’ type of industry, there is an increasing element of high level management skills required to optimise picking, routing, tracking operations and to manage the complex data, information and computing requirements. The need for the development of higher level skills is being recognised through the Sector Skills Council ‘Skills for Logistics‘.

Description of the sector E.4 The logistics sector is one of the major employers in the MKSM region with 94,450

employees in 2007 which represented 12% of employment in the area (higher than any government Office Region). The sector has also demonstrated strong growth with an increase of nearly 10,000 jobs from 2003 to 2007.

E.5 In relation to the total GB logistics industry, MKSM accounts for 94,450 employees out of a total GB employment of 1,991,574 (4.7%) (Source: MKSM Logistics Sub-group)

E.6 Whilst there has been a significant growth in employment, there has been a reduction in the number of logistics units in MKSM from 6,590 in 2003 to 6,450 in 2007, a decline of 140 units.

E.7 The Sector Skills Council ‘Skills for Logistics’ provided a ‘Profile of the logistic sector profile in MKSM’ in January 2009. Skills for Logistics have taken data from the Annual Population Survey (APS) which differs slightly to ABI data (total employment is 85,700 in the APS and 94,450 in the ABI). The Skills for Logistics data shows the following breakdown of employment by sub-sector:

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E-2

Table E-1 : Skills for Logistics MKSM logistics profile, January 2009

SIC Definition employment % of employment

51 Wholesale 26,300 30.7%

62.24 Freight transport by road 11,200 13.1

62.1 Scheduled air transport * *

62.2 Non-scheduled air transport 1,100 1.3

63.11 Cargo handling * *

63.12 Storage and warehousing 22,100 25.8

63.23 Other supporting air transport activities 4000 4.7

63.4 Activities of other transport agencies 9000 10.4

64.11 National post activities 9000 10.4

64.12 Courier activities 2900 3.4

Total logistics employment 85,700

Source: Skills for logistics

E.8 This shows that wholesale and storage and warehousing account for the largest employment in MKSM.

Locations/ concentration in MKSM

E.9 A large part of the sector in MKSM is located adjacent to the M1 corridor, in areas such as Milton Keynes, Northampton and Daventry but with strong logistics activities in other towns off the M1 such as Corby and Bedford.

E.10 Figure E.1 below compares the relative strength of employment in the sector by area against Great Britain and the South East (as measured by Location Quotients (LQ)). This shows that MKSM is particularly strong in logistics employment compared with Great Britain and the South East region. All areas have LQs above one, the average for the comparator areas. The strongest concentrations are in Corby and Daventry (LQs of between 4-5).


Figure E-1 : Relative strength of logistics sector against Great Britain, 2007


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E.11 Work is underway by the MKSM Logistics Group to map the major concentrations of logistics activities. Initial data indicates that important firms locally include those listed in the table below.

Table E-2 : Important concentrations of activity – firms and other assets

Bedford

• Asda chilled distribution

• Argos Direct

Corby

• Corby is the home of a major inter-modal logistics hub ‘Eurohub’ e.g. Prologis

• RS Components (electronic components)

Daventry

• Daventry International Rail Freight Terminal (DIRFT) is a highly successful inter-modal logistics centre providing warehouse, distribution and manufacturing units. Phase One opened in 1997 (372,000 sq metres) and is one of the busiest rail freight terminals in the UK (on the West Coast Main Line). Phase 2 extension of 180,741 sq metres is under development. Companies located at Daventry include:

Prologis

Tesco direct

Royal Mail

Ingram Micro

Stobartt

Mothercare

DHL / Excel Supply Chain

WH Malcolm logistics

E-3


Luton

• Luton is an important logistics centre and is also the location for a growing airport with small /modest air freight capacity.

Milton Keynes

• Tesco regional distribution centre

• Excel logistics

• House of Fraser

• Domino

• Alpia

• Polygram

• Office World

• Hays

• Amazon

Northampton

• Brackmills Industrial Estate

• Morrisons

• Sainsbury’s

• TNT

• Tuffnells

• Prologis

• John Lewis

• Coca Cola

• Wincanton


Locational advantages E.12 The location of MKSM at the heart of the UK is a major advantage for the logistics sector.

The sub-region has access to an excellent road network and major inter-modal rail heads at Daventry (DRIFT) close to M1 Junction 18 and at Eurohub in Corby. The route of the M1 corridor through MKSM as well as the West Coast Main Line rail route provides excellent advantages in terms of inter-modal activities. Good East West road linkages via the A14 to the East Coast ports and M6 to the West Midlands also facilitate logistics activities.

E.13 East Midlands Airport is a major air freight terminal about 50 miles from MKSM. Air freight capacity at Luton airport is relatively small/ modest currently.

Supporting infrastructure E.14 The supporting infrastructure for the sector locally includes:

• Skills for Logistics (Milton Keynes)

• Chartered Institute for Logistics and Transport (Corby)

• Northampton University and Northampton College developing Foundation Degree in Logistics

E-4


• Cranfield University with research and Master courses in logistics.

Sector forecasts E.15 Tables E.3 and E.4 present long-term economic and GVA forecasts for the sector.

Table E-3 : Employment forecasts, 2001-21 (‘000s)


% growth 01-21 2001 2007 2011 2021

2001-2007

2007-2011

2012-2021

2001-2021

MKSM 98 103 102 109 5 -1 7 12 12%

Aylesbury Vale 7 6 5 5 -1 0 0 -2 -22%

Milton Keynes 21 19 18 18 -2 -1 0 -3 -13%

Luton 11 10 10 11 -1 0 1 -1 -5%

South Bedfordshire 7 5 5 5 -2 0 0 -2 -26%

Corby 6 8 9 9 3 0 1 4 71%

Kettering 4 3 3 3 -1 0 0 -1 -22%

Wellingborough 7 6 6 6 -1 0 0 -1 -9%




Northampton 14 17 17 19 3 0 1 4 31%

Daventry 4 8 9 9 4 0 1 5 124%



Table E-4 : GVA forecasts, 2001-21 (£2003m)


% growth 01-21 2001 2007 2011 2021

2001-2007

2007-2011

2012-2021

2001-2021

MKSM 3,926 5,043 5,012 6,863 1,117 -31 1,703 2,937 75%

Aylesbury Vale 265 277 267 370 12 -10 96 105 40%

Milton Keynes 854 1,005 967 1,313 150 -37 320 459 54%

Luton 782 1,055 1,085 1,497 272 31 374 715 91%

South Bedfordshire 263 238 232 319 -25 -6 80 56 21%

Corby 180 305 306 417 124 1 103 237 131%

Kettering 120 108 105 139 -12 -3 31 19 16%

E-5



2001 2007 2011 2021 2001-2007

2007-2011

2012-2021

% growth 01-21

2001-2021

Wellingborough 233 229 224 290 -4 -5 61 58 25%


North Bedfordshire 251 298 291 404 47 -7 104 154 61%

Mid Bedfordshire 158 232 226 309 75 -7 77 151 96%

Northampton 491 650 654 896 160 4 224 406 83%

Daventry 141 323 325 450 183 2 116 309 220%



E.16 The tables forecast:

• Growth of 11,500 jobs (12%) between 2001-21 across MKSM. The increase is more evenly distributed by period than for other priority sectors, with growth of 6,500 jobs from 2012 (post recession)

• An increase in GVA of £2,900m or 75% over 2001-21, indicating the sector will secure higher value activities

• A fall in employment in a number of local areas, with job growth concentrated in local areas in the north of the sub-region, Daventry, Northampton and South Northamptonshire. Despite falls in employment locally, GVA is expected to increase across all local areas.

SWOT analysis Table E-5 : SWOT analysis

Strengths

• Relative strengths in employment (2007) compared with Great Britain and the South East region across all local areas, but particularly in Corby and Daventry

• Location in the centre of UK with excellent road and rail connections

• Access to large consumer markets (e.g. 8 million people within one hour’s drive of Milton Keynes)

• Excellent road access including the M1, M6, A14, A421 etc

• Major rail networks connect the region to London and onwards to Europe via the Channel Tunnel

• Two major inter-modal logistics centres at DIRFT (Daventry) and Eurohub (Corby)

• Good access to East Coast ports and from parts of the sub-region to international airports, with Luton in MKSM

• Situation within the Oxford – Cambridge Arc – Europe’s premier high tech region with opportunities for logistics related to high technology sectors

• Supporting infrastructure locally e.g. ‘Skills for Logistics’ at Milton Keynes, Chartered Institute of Logistics and Transport’ at Corby, Northampton University and Northampton College developing logistics Foundation Degree, expertise at Cranfield University

• In parts of the MKSM area prime industrial rents are between 30 -45% less than in London and some other parts of the South East region

E-6


Weaknesses

• Little dedicated air freight capacity in the MKSM area (major air freight capabilities at East Midlands Airport)

• Few Knowledge Transfer Partnerships linking Universities with expertise in logistics such as Cranfield with local logistics companies

• Few known examples of collaborative research between Cranfield and local logistics companies (e.g. using Technology Strategy Board funding)

• Current economic recession impacting on demand from retail, construction etc

• Loss of skilled staff including from Eastern Europe

• Perceptions in planning system that logistics has a low employment density, low value added and small multipliers – leading to a lack of enthusiasm for proposed new developments

• The quality and earnings of logistics jobs is often perceived to be low leading to a propensity not to encourage investment in new logistics developments

• Lack of detailed knowledge about logistics within parts of the public sector and the scope for higher value, more knowledge intensive activities

• Some parts of the logistics sector are poorly skilled and there is a need for wider understanding of career progression

Opportunities

• Sector forecast to grow to 2021, particularly in its GVA contribution to the sub-regional economy

• Encourage higher value added activities

• Encourage ‘reverse logistics’ linked into the need for sustainable recycling requiring high tech processes e.g. of white goods, computers

• Low carbon options in logistics – favouring activities such as inter-modal hubs

• Global trend towards outsourcing of much of UK production leading to increasing requirements for efficient logistics of imported goods

Threats

• Perception in planning system impinging on prospects for growth

• Closure of some logistics centres e.g. some automotive parts distribution facilities as a consequence of the current recession

• Development of major logistics hubs in other parts of the UK e.g. further along the M1 corridor

• Development of air freight activities at other locations encouraging companies to locate there

• Increased congestion inhibiting demand for logistics locations in the area.


Contribution to overcoming jobs challenge E.17 The prospects for growth in the logistics sector in the medium term after the end of the

current recession are good. The review of the sector for this study has identified concerns that logistics continues to be viewed as a low value added ‘trucks and sheds’ operation within the sub-region. However, although logistics operations require substantial land areas with good access, and job densities are low (often the main concern among local planning authorities), trends within the sector are towards higher value added activities and careers. Data collated by the MKSM Logistics Group shows that gross annual earnings in the logistics sector in MKSM in 2008 were £26,020 (mean) and £20,801 (median) (the mean earnings varied from £34,860 (scheduled air transport) to £20,941 (courier activities)).

E.18 The economic forecasts suggest the economic output of the logistics sector is expected to increase strongly. Fostering added value activities within the sector is a key opportunity for MKSM, for example by linking the logistics industry to other higher value activities, for

E-7


E-8

example electronic components, telecom components and medical and pharmaceutical products.

E.19 Specific actions for consideration are listed in the box below.

Box E-1: Potential logistics sector actions

• Explore links between logistics sector and other local sectoral strengths e.g. growing market for ‘off-site’ production of construction modules and need for just in time supply of construction products e.g. through an ‘off-site construction supplier park’; growth in ecommerce e.g. logistics sites such as Amazon, Tesco Direct

• Target head quarter functions of logistic operators

• Encourage enhancement / development of M1 junction/ interchanges – particularly the need to improve Junction 19 near Rugby with the A14 /M6

• Develop logistics technology test centre for advanced logistics products including RFID (Radio frequency identification), mobile handsets, auto ID etc

• Consider establishing a logistics institute for MKSM to bring together and build on local expertise e.g. Cranfield University, CILT at Corby and Skills for Logistics at Milton Keynes

• Encourage links between the logistics expertise in the area and the market analytics capabilities of companies such as ClarityBlue (an Experian company) in Luton

• Utilise the knowledge and capabilities of the Resource Efficiency Knowledge Technology Network to enhance the reverse logistics capabilities in the area

• Develop more Knowledge Transfer Partnerships (KTPs) between universities such as Cranfield and local logistics companies

• Promote the higher earning career opportunities in the sector and education and training opportunities e.g. Skills for Logistics Interactive Stairway’, the Foundation Degree in logistics and the Logistics Academy being set up by Skills for Logistics

• Case study major logistics developments/ initiatives in other countries in high value added areas e.g. Plaza at Zaragoza which is the centre for logistics for Zara, Logistics Institute in Singapore in collaboration with Georgia Tech



F-1

Annex F: Analysis of priority sectors performance, 2003-2007

Introduction F.1 This annex provides a summary of employee jobs and workplace ‘units’ in the five priority

industry sectors45 in MKSM, based on the sector definitions outlined at the end of the annex.

F.2 The time period covered is 2003 to 2007 as prior to 2003 it is not possible to provide a comparable breakdown of jobs by exactly the same industry sectors. The first section examines recent trends at the level of MKSM and the second section considers trends at local authority level.

F.3 The data in this paper is drawn from the regular business survey, the Annual Business Inquiry (ABI), published on Nomis by the Office for National Statistics (ONS). It is important to note that care should be taken in interpreting the findings. The data are estimates only and subject to sampling errors. There have also been changes to the ABI methodology over the period of analysis, leading to so-called discontinuities. This means that ideally time-series data should not be compared beyond 2004. However, policy-makers require more up to date information to assist them in making informed decisions, and there is no alternative to the ABI. The important point is that changes between years can result from changes in the methodology and/ or sampling errors as well as real changes in the economy. There is likely to be more certainty with the accuracy of the data for larger spatial areas such as the MKSM sub-region than for smaller areas such as local authorities.

F.4 The ABI analysis excludes most self-employment. There is very limited information on the detailed industries of self-employed people and only a very general assessment can be made, based on 2001 Census information. In 2001, of the 728,900 people employed in MKSM, 87% were employees and 91,800 were self employed (13%). However, self employment was particularly strong as a share of the total workforce in construction, (43%). Self-employment was also an important component of other business services (17% of the workforce) but not of financial services (only 5%). This suggests that the employment data in this annex is most likely to under-represent the size of the sustainable construction and business services sectors.

F.5 The analysis does not consider the impacts of the current recession as data is not currently available on employment and workplace units beyond 2007. With unemployment increasing and business output falling across the UK and in areas of MKSM, it is likely that there will have been some contraction in the priority sectors.

45 Creative industries; motor sport and high performance engineering (HPE), sustainable construction; logistics; and financial and business services.


MKSM analysis

Employee jobs

F.6 Tables F.1 and F.2 provide an overview of total employee jobs and percentages for the five key industry sectors for each year 2003 to 2007.

Table F-1 : Employee jobs in key industry sectors, MKSM, 2003 to 2007

Key industry sector 2003 2004 2005 2006 2007 2003/07

Creative industries 50,840 55,410 55,960 57,180 56,700 + 5,860

Motor sport & HPE 27,540 25,720 24,140 24,370 25,160 - 2,370

Sustainable construction 27,830 30,670 33,470 30,780 33,120 + 5,290

Logistics 84,670 85,980 91,210 92,940 94,450 + 9,780


64,840 71,850 73,520 69,210 77,350 + 12,510

Sub total key sectors 255,700 269,620 278,310 274,480 286,780 + 31,070

Total employee jobs 717,150 741,730 752,750 744,700# 763,180# + 46,020


F.7 Table F-1 shows that the five key industry sectors together provided:

• almost 287,000 employee jobs in the sub-region in 2007, suggesting growth of over 31,000 as compared with 2003

• logistics was the biggest sector, with around 94,500 jobs in 2007

• most of the key sectors had experienced significant growth in jobs, although motor sport & HPE (HPE) lost around 2,400 jobs between 2003 and 2007.

Table F-2 : Employee jobs in key industry sectors as a % of all, MKSM, 2003 to 2007

Key industry sector 2003 2004 2005 2006 2007 2003/07 (% change)

Creative industries 7.1% 7.5% 7.4% 7.7% 7.4% 11.5%

Motor sport & HPE 3.8% 3.5% 3.2% 3.3% 3.3% - 8.6%

Sustainable construction 3.9% 4.1% 4.4% 4.1% 4.3% 19%

Logistics 11.8% 11.6% 12.1% 12.5% 12.4% 11.6%


9% 9.7% 9.8% 9.3% 10.1% 19.3%

Sub total key sectors 35.7% 36.3% 37% 36.9% 37.6% 12.2%

Total employee jobs 100% 100% 100% 100% 100% 6.4%


F-2


F.8 Table F-2 shows that employment in the five key industry sectors increased from 35.7% of all employees in 2003 to 37.6% in 2007. Growth in the key sectors overall was equivalent to 12.2%, 2003 to 2007. This is almost twice as high as the rate of growth in all employee jobs in the sub-region, (6.4% estimated). In other words, together employment in the five priority sectors increased at double the rate of the rest of the MKSM economy.

F.9 Not all key sectors have grown at a similar rate. Sustainable construction and business services increased by around 19% while the creative industries and logistics both experienced an increase of around 11.5%. Motor sport & HPE, in contrast, experienced a 8.6% decline in numbers of employee jobs over the period.

F.10 Figure F-1 provides an overview of annual employment levels in each key industry sector between 2003 and 2007. It should be noted that the employee estimates are derived from a sample survey and year-on-year differences reflect sampling error as well as actual changes in numbers employed.

Figure F-1 : Employee jobs in key industry sectors, MKSM, 2003 to 2007

Employee Jobs in Key Industry Sectors, 2003 to 2007, MKSM, (source: ABI)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2003 2004 2005 2006 2007

Creative industries total Motor sport & high performance engineering Construction total

Logistics total Business services (n.e.s.) total


F-3


F.11 Figure F-2 shows the estimated number of jobs in key industry sectors in the MKSM for each year 2003 to 2007.

Figure F-2 : Employee jobs in key industry sectors expressed as a % of all employee jobs, MKSM 2003 to 2007

Key industry sectors: employee jobs in MKSM - % of all employee jobs, 2003 to 2007

0%

5%

10%

15%

20%

25%

30%

35%

40%

2003 2004 2005 2006 2007

Financial & otherbusiness services

Logistics

Construction

Motor sport & highperformanceengineering

Creative industries


Workplace ‘units’

F.12 Table F-3 provides an overview of the number of workplace ‘units’ in key industry sectors in the MKSM as a whole, 2003 to 2007.

Table F-3 : Workplace ‘units’ in key industry sectors, MKSM, 2003 to 2007


Creative industries 11,000 11,200 11,580 11,930 12,600 + 1,600

Motor sport & HPE 1,620 1,610 1,560 1,560 1,530 - 90

Sustainable construction 7,040 7,330 7,670 7,810 8,070 + 1,030

Logistics 6,590 6,440 6,500 6,430 6,450 - 140


10,920 11,410 11,620 11,900 12,430 + 1,510

Sub total key sectors 37,170 37,980 38,920 39,620 41,080 + 3,910

Total workplace ‘units’ 65,510 66,320 68,200 69,270 70,860 + 5,350

Source: Annual Business Inquiry – ONS ;Note: Units exclude agriculture

F.13 Table F-3 shows that:

• in 2007 there were just over 41,000 workplace ‘units’ in the five key industry sectors in the MKSM, almost 4,000 more than in 2003

F-4


• there were more ‘units’ in creative industries than in any other sector, (12,600), although financial & business services accounted for over 12,400 ‘units’

• the smallest sector, in terms of ‘units’, was motor sport & HPE, (1,530 in 2007).

Table F-4 : Workplace ‘units’ in key industry sectors as a % of all, MKSM, 2003 to 2007


Creative industries 16.8% 16.9% 17% 17.2% 17.8% 14.5%

Motor sport & HPE 2.5% 2.4% 2.3% 2.2% 2.2% - 5.6%

Sustainable construction 10.8% 11% 11.2% 11.3% 11.4% 14.6%

Logistics 10.1% 9.7% 9.5% 9.3% 9.1% - 2.2%


16.7% 17.2% 17% 17.2% 17.5% 13.9%

Sub total key sectors 56.7% 57.3% 57.1% 57.2% 58% 10.5%

Total workplace ‘units’ 100% 100% 100% 100% 100% 8.2%

Source: Annual Business Inquiry – ONS; Note: Units exclude farming

F.14 Table F-4 shows that the key industry sectors collectively accounted for 58% of all workplace ‘units’ in 2007, up from 56.7% of the total in 2003. This is a higher proportion that the five priority sectors accounted for of total employment.

F.15 Over the period 2003 to 2007 the number of key industry sector units as a whole increased by 10.5% (compared to growth of 8.2% in units in other sectors of the economy). Creative industries and financial & business services both accounted for shares of around 17.6% in 2007; sustainable construction accounted for 11.5% of the total, logistics for 9.1% and motor sport & HPE for 2.2%.

F.16 Three sectors experienced significant growth of around 14% to 15%: creative industries, sustainable construction and financial & business services. In contrast motor sport & HPE experienced a decline of 5.6% units and logistics a decline of 2.2%.

F-5


F.17 Figure F-3 provides an overview of the number of workplace ‘units’ accounted for by the five key industry sectors, 2003 to 2007.

Figure F-3 : Workplace ‘units’ in key industry sectors, MKSM, 2003 to 2007

Workplace 'units' in key industry sectors in MKSM, 2003 to 2007 (source ABI)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2003 2004 2005 2006 2007

Financial & otherbusiness services

Logistics

Construction

Motor sport & highperformanceengineering

Creative industries


Shares of employee jobs & workplace units, 2007

F.18 Figure F-4 provides a comparison of the relative shares of total employee jobs and workplace ‘units’ accounted for by each of the five key industry sectors in 2007.

Figure F-4 : Comparison of shares of employee jobs and workplace ‘units’, key industry sectors, MKSM, 2007

Key industry sectors, MKSM, 2007: comparison of % share of employee jobs & % share of workplace 'units' (excluding agriculture) Source: ABI

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Creative industries Motor sport & highperformance engineering

Construction Logistics Financial & other businessservices

% of employee jobs % of workplace units

Source: Annual Business Inquiry ONS. Note: ‘Total ‘units’ exclude farming

F-6


F.19 It shows that:

• in three sectors there is a significantly higher share of ‘units’ than of employees: creative industries, sustainable construction and financial & business services

• both logistics and motor sport & HPE show a different profile, with relatively more jobs than workplace

Employees per workplace unit, 2007

F.20 Table F-5 shows a simple calculation of the number of employee jobs per workplace unit for the priority sectors and MKSM overall in 2007.

Table F-5 : Employees per workplace unit, 2007

Employee jobs 2007

Workplace units 2007

Employees per unit 2007 (rounded)

Creative industries 56,700 12,600 4.5

Motor sport & HPE 25,160 1,530 16.5

Sustainable construction 33,120 8,070 4.0

Logistics 94,450 6,450 14.5

Financial & other business services 77,350 12,430 6.0

Sub total key sectors 286,780 41,080 7.0

Total employee jobs 763,180 70,860 11.0


F.21 Although the caveats about the certainty of the data remain, the table suggests a relatively low number of employee jobs per workplace unit for sustainable construction, creative industries and financial and business services (range of 4 - 6) and a relatively high number for logistics and motor sport and HPE (14.5 and 16.5 respectively). This is relative to the MKSM average in 2007 of 11 employee jobs per workplace unit. This serves to emphasise the importance of micro and small and medium enterprises in the priority sectors and across MKSM. The analysis does not highlight the employment density for each sector.

Local authority analysis

Employee jobs

F.22 Table F-6 provides a percentage breakdown of total employee jobs in each key industry sector by the 12 constituent local authorities in the sub-region.

F-7


Table F-6 : Percentage shares of employee jobs in key industry sectors, constituent local authorities, MKSM, 2007

Local authority Creative industries

Motor sport & HPE

Sustainable construction

Logistics Financial & business services

Sub-total : key industry sectors

Total employee jobs of MKSM

Corby 3.1% 4.2% 3.4% 7.6% 1.4% 4.2% 4% (30,500)

Daventry 4.6% 12.2% 4.1% 7.6% 2.9% 5.7% 4.6% (34,650)

East Northants 3.5% 5.3% 5.3% 3.8% 2.4% 3.7% 3.4% (26,100)

Kettering 5.4% 3.4% 6% 2.7% 3.5% 3.9% 4.8% (36,100)

Northampton 13.5% 6.3% 12.7% 15.8% 20.6% 15.4% 16.6% (125,650)

South Northants 5% 3.4% 5.5% 4% 3.7% 4.2% 3.7% (27,850)

Wellingborough 4.3% 3.8% 4.9% 5.7% 2.7% 4.3% 4.3% (32,250)

Bedford 7.9% 7.9% 11.7% 6.3% 6.4% 7.4% 9.2% (69,500)


12.8% 8.2% 16.3% 9.8% 10.2% 11.1% 11% (83,800)

Luton 7.3% 24.1% 11.5% 13.6% 11% 12.3% 11.5% (87,000)

Aylesbury Vale 10.5% 6.2% 8.5% 5.2% 8.6% 7.6% 8.7% (65,800)

Milton Keynes 22.1% 14.9% 10.1% 17.9% 25.8% 19.7% 18.3% (138,950)

MKSM 100% (56,700)

100% (25,150)

100% (33,100)

100% (94,450)

100% (77,350)

100% (138,950)

100% (758,200)


F.23 This shows that:

• for creative industries, Milton Keynes accounted for over one-fifth of all employee jobs, (22.1%). Northampton, (13.5% of the total), Central Bedfordshire, (12.8%) and Aylesbury Vale, (10.5%) were also relatively important. Collectively these four areas accounted for around 59% of all employee jobs in this sector

• the motor sport & HPE sector is particularly reliant on employment in three districts: Luton, (24.1%), Milton Keynes, (14.9%) and Daventry, (12.2%). Together these three areas contribute over 51% of the sector’s employment

• the sustainable construction sector is more widely spread with five areas contributing 10% or more of the sub-region’s employee jobs. The largest share is contributed by Central Bedfordshire, (16.3%)

F-8


F-9

• the large logistics industry is particularly dependent on the employment provided in Milton Keynes (17.9%), Northampton (15.8%), Luton (13.6%) and Central Bedfordshire (9.8%). These four areas account for over 57% of the total jobs

• two authority areas dominate the provision of financial & business service jobs, Milton Keynes (with 25.8%) and Northampton, with 20.6%. Central Bedfordshire and Luton are also both relatively important, each accounting for between 10% and 11% of total sub-region employment in this sector.

Location quotients

F.24 This section compares the ‘Location Quotients’ (LQ) of employment in the priority sectors in the local areas against Great Britain. The analysis also compares the LQ of employment in the local areas against MKSM as a whole.

F.25 LQs are a measure of relative employment strength. If the share of employment in a given sector and area is the same as the comparator area (i.e. Great Britain), then the ‘LQ’ is 1.00; if the share is lower then the LQ will be <1.00 and if it is higher then the LQ will be >1.00.

F.26 The ‘location quotient’ for each industry sector is calculated by comparing the share of all employee jobs in area X with the share of all employee jobs in the comparator area Y. For example, in 2007 logistics jobs accounted for 23.5% of the total employment in Corby (7,150 of 30,480). Logistics jobs in the MKSM accounted for 12.5% of all employee jobs. The ‘LQ’ for logistics employment in Corby is thus 1.88 in 2007, (23.5%/12.5%).

Relative strength to Great Britain

F.27 Figures F.5 to F.10 compares the relative strength of employment in each sector by local area against Great Britain.

F.28 For the five priority sectors combined (Figure F.5), this shows that most local areas of MKSM are relatively strong in the proportion of employment in the five priority sectors compared with Great Britain. Kettering and Bedford perform the worst against this measure.


Figure F-5 : Relative strength of employment in all priority sectors by local area against Great Britain, 2007

Location quotients of combined MKSM employees in key industry sectors, 2007compared with Great Britain

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MKSM Total


F.29 In the creative industries sector, five local areas are relatively strong compared with Great Britain – South Northamptonshire, Aylesbury Vale, Milton Keynes, Central Bedfordshire and Kettering (LQs +1).

Figure F-6 : Relative strength of creative industries sector by local area against Great Britain, 2007

Location quotients of MKSM employees in creative industries, 2007, compared with Great Britain

0.00

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F-10


F.30 In the business service sector, Milton Keynes and Northampton are relatively strong when compared with Great Britain.

Figure F-7 : Relative strength of business services sector by local area against Great Britain, 2007

Location quotients of MKSM employees in financial & business services 2007 compared with Great Britain

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F.31 The LQ analysis reveals that MKSM does not have relative strength in employment in the sustainable construction sector compared with Great Britain.

Figure F-8 : Relative strength of sustainable construction sector by local area against Great Britain, 2007

Location quotients of MKSM employees in construction, 2007, compared with Great Britain

0.00

0.10

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F-11


F.32 MKSM is particularly strong in logistics employment compared with Great Britain. All areas have LQs above one, with Corby and Daventry standing out (LQs of between four and five).

Figure F-9 : Relative strength of logistics sector by local area against Great Britain, 2007


0.00

1.00

2.00

3.00

4.00

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6.00

Corby

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MKSM Total


F.33 For the HPE and motorsport sector, the figure below shows that Daventry and Luton are particularly strong, relative to Great Britain, followed by East Northamptonshire.

Figure F-10 : Relative strength of HPE and motorsport sector by local area against Great Britain, 2007


0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Corby

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MKSM Total


F-12


Relative strength to MKSM

F.34 Table F-7 and Figures F.11 to F.15 compare the LQ for the five priority sectors by local area relative to the sub-region.

Table F-7 : Location quotients of employee jobs in key industry sectors, relative to MKSM (= 1.00), 2007


Motor sport & HPE




Corby 0.78 1.04 0.84 1.88 0.34 1.06

Daventry 1.00 2.69 0.90 1.66 0.63 1.26

East Northants 1.00 1.55 1.51 1.09 0.70 1.06

Kettering 1.13 0.72 1.25 0.56 0.74 0.82

Northampton 0.81 0.38 0.75 0.95 1.24 0.93

South Northants 1.35 0.94 1.49 1.09 1.00 1.15

Wellingborough 1.01 0.90 1.15 1.33 0.63 1.02

Bedford 0.86 0.87 1.27 0.68 0.70 0.81


1.16 0.75 1.47 0.89 0.92 1.01

Luton 0.63 2.11 0.99 1.18 0.96 1.07

Aylesbury Vale 1.21 0.72 0.98 0.60 0.99 0.88

Milton Keynes 1.20 0.82 0.64 0.97 1.41 1.08

MKSM 1.00 1.00 1.00 1.00 1.00 1.00

Sub-total 6 areas 4 areas 6 areas 6 areas 2 areas 8 areas

Source: Annual Business Inquiry ONS’ SQW Consulting

F.35 Key findings are:

• looking across all five key industry sectors the analysis indicates that the local authorities with the highest ‘combined LQ’ scores are Daventry (1.26) and South Northamptonshire (1.15). The authorities with the lowest combined scores are Bedford (0.81), Kettering, (0.82) and Aylesbury Vale (0.88)

• Figure F.11 shows that the highest ‘LQ’ for creative industries is 1.35 in South Northamptonshire. Other areas with an LQ above 1.00 include Aylesbury Vale (1.21), Milton Keynes (1.20) and Kettering (1.13). The areas with low scores recorded include Luton (0.63) and Corby with 0.78

• two areas with particularly high LQs for motor sport and HPE are Daventry (2.69) and Luton with 2.11, (see F.12). East Northamptonshire also had a relatively high LQ score of 1.55. In most other areas the LQ score is below 0.90; it is lowest of all in Northampton, 0.38

F-13


• the highest LQ scores for sustainable construction are in East and South Northamptonshire, with 1.51 and 1.49 respectively and in Central Bedfordshire, with 1.47. The lowest LQ recorded is in Milton Keynes at 0.54, (see Figure F.13)

• Figure F.14 shows the two areas with particularly high LQs for logistics employment are Corby and Daventry, recording 1.88 and 1.66 respectively. Wellingborough also recorded a relatively high ‘LQ’ of 1.33. Possibly surprisingly Luton had a lower LQ score of 1.18. Areas with the lowest LQs for logistics employment are Kettering (0.56) and Aylesbury Vale with 0.60.

• Figure F.15 shows that only two areas record an LQ in excess of 1.00 for financial & business services, Milton Keynes (1.41) and Northampton (1.24). Corby has the lowest score of 0.34.

Figure F-11 : Location Quotients: Employee Jobs in Creative Industries, by local area relative to MKSM, 2007

Location Quotients: Employee Jobs in Creative Industries, Local Authorities in Milton Keynes sub-region, 2007, (MKSM = 1.00)

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

South

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Milton K

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Bedford

Northa

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Corby

Luton

Loca

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Source: Annual Business Inquiry, SQW Consulting

F-14


Figure F-12 : Location Quotients: Employee Jobs in Motor Sport & HPE, by local area relative to MKSM, 2007

Location Quotients: Employee Jobs in Motor Sport & high performance engineering, Local Authorities in Milton Keynes sub-region, 2007 (MKSM = 1.00)

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Figure F-13 : Location Quotients: Employee Jobs in Sustainable construction, by local area relative to MKSM, 2007

Location Quotients: Employee Jobs in Construction, Local Authorities in Milton Keynes sub-region, 2007, (MKSM = 1.00)

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F-15


Figure F-14 : Location Quotients: Employee Jobs in Logistics, by local area relative to MKSM, 2007

Location Quotients: Employee Jobs in Logistics, Local Authorities in Milton Keynes sub-region, 2007, (MKSM = 1.00)

0.00

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Figure F-15 : Location Quotients: Employee Jobs in Financial & Business Services by local area relative to MKSM, 2007

Location Quotients: Employee Jobs in Financial & Business Services, Local Authorities in Milton Keynes sub-region, 2007, (MKSM = 1.00)

0.00

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Luton

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F-16


F-17

Workplace ‘units’

F.36 Table F-8 provides an analysis of key industry sector workplace ‘units’ in 2007 across all twelve constituent authorities of the MKSM. Generally speaking the area breakdown tends to follow the overall distribution of workplace units, emphasising the importance of Central Bedfordshire, Milton Keynes, Aylesbury Vale and Northampton as business locations.

Table F-8 : Percentage shares of workplace units in key industry sectors, constituent local authorities, MKSM, 2007


Motor sport & HPE




Total key industry sectors of MKSM

Corby 1.7% 3.6% 2% 3.3% 1.6% 2% 2.5% (1,750)

Daventry 5.8% 7.6% 4.7% 6.8% 5.9% 5.9% 5.6% (3,950)

East Northants 4.6% 4.1% 5.6% 5.4% 4.4% 4.8% 4.9% (3,500)

Kettering 4.1% 3.5% 5.5% 4.6% 4% 4.4% 4.8% (3,400)

Northampton 9.7% 9.2% 10.6% 12.2% 10.5% 10.5% 11.9% (8,450)

South Northants 6.4% 7.1% 6.7% 5.6% 6.8% 6.5% 6% (4,250)

Wellingborough 3.7% 4.3% 4.7% 5.3% 3.5% 4.1% 4.5% (3,150)

Bedford 8.6% 8.5% 8.8% 8.4% 9.3% 8.8% 9.1% (6,450)


16.8% 19.2% 20.2% 16.1% 15.3% 17% 15.7% (11,100)

Luton 7% 10% 8.5% 8.2% 6.5% 7.4% 8.1% (5,750)

Aylesbury Vale 14.2% 10.7% 12% 9.6% 14.4% 13% 12.2% (8,650)

Milton Keynes 17.5% 12.2% 10.8% 14.6% 17.8% 15.6% 14.8% (10,500)

MKSM 100% (12,600)

100% (1,550)

100% (8,050)

100% (6,450)

100% (12,450)

100% (41,100)

100% (70,850)



Standard Industrial Classification definitions for key industry sectors

Motor sport and high value engineering

SIC Code 25.11 Manufacture of rubber tyres and tubes

25.12 Retreading and rebuilding of rubber types

27.52 Casting of steel

27.53 Casting of light metals

27.54 Casting of other non-ferrous metals

28.4 Forging, pressing, stamping, etc

28.5 Treatment and coating of metals, etc

28.74 Manufacture of fasteners, screw machine products, chain and springs

28.75 Manufacture of other fabricated metal products not elsewhere classified

29.1 Manufacture machinery for production of mechanical power

29.4 Manufacture of machine tools

33.1 Manufacture of medical / surgical equipment, etc

33.2 Manufacture of instruments for measuring, etc

33.4 Manufacture of optical instruments

34.1 Manufacture of motor vehicles

34.2 Manufacture of motor vehicles bodies, etc

34.3 Manufacture of parts for motor vehicles

35.1 Building and repairing of ships

35.3 Manufacture of aircraft and spacecraft

35.4 Manufacture of motorcycles and bicycles

35.5 Manufacture of transport equipment

73.1 Research: natural Sciences/engineering

74.3 Technical and testing and analysis

Creative industries

SIC Code 1771 : Manufacture of knitted and crocheted hosiery

1772 : Manufacture of knitted and crocheted pullovers, cardigans and similar articles

1810 : Manufacture of leather clothes

1821 : Manufacture of workwear

1822 : Manufacture of other outerwear

1823 : Manufacture of underwear

1824 : Manufacture of other wearing apparel and accessories not elsewhere classified

1830 : Dressing and dyeing of fur; manufacture of articles of fur

1930 : Manufacture of footwear

2211 : Publishing of books

2212 : Publishing of newspapers

F-18


SIC Code 2213 : Publishing of journals and periodicals

2214 : Publishing of sound recordings

2215 : Other publishing

2231 : Reproduction of sound recording

2232 : Reproduction of video recording

2233 : Reproduction of computer media

5248 : Other retail sale in specialised stores

5250 : Retail sale of second-hand goods in stores

7221 : Publishing of software

7222 : Other software consultancy and supply

7420 : Architectural and engineering activities and related technical consultancy

7440 : Advertising

7481 : Photographic activities

7487 : Other business activities not elsewhere classified

9211 : Motion picture and video production

9212 : Motion picture and video distribution

9213 : Motion picture projection

9220 : Radio and television activities

9231 : Artistic and literary creation and interpretation

9232 : Operation of arts facilities

9234 : Other entertainment activities not elsewhere classified

9240 : News agency activities

9272 : Other recreational activities not elsewhere classified

Logistics

SIC Code 51 Wholesale Trade And Commission Trade, Except Of Motor Vehicles And Motorcycles

60.24 Freight transport by road

62.1 Scheduled air transport

62.2 Non-scheduled air transport

63.1 Cargo handling and storage

63.23 Other supporting air transport activities

63.4 Activities of other transport agencies

64.1 Post and courier activities


SIC Code 45 Construction

F-19


F-20

Financial & business services

SIC Code 65 Financial intermediation

66 Insurance & pensions

67 Activities auxiliary to financial intermediation

70 Real estate

71 Renting of machinery and equipment

72.1 Hardware consultancy

72.3 Data processing

72.4 Database activities

72.5 Maintenance and repair of office, accounting and computing machinery

72.6 Other computer related activities

73.2 Research and experimental development on social sciences and humanities

74.1 Legal, accounting, book-keeping and auditing activities; tax consultancy; market research and public opinion polling; business and management consultancy; holdings


G-1

Annex G: Priority Sectors Employment Projections by local area

United Kingdom46 Table G-1 : United Kingdom Priority Sectors Baseline Forecasts, 2001-21 (‘000s)

2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 1177.1 2433.4 2345.0 2604.7 1256.3 -88.4 245.6 1427.6 121% 10%

Sustainable Construction 1876.3 2186.6 1974.0 2296.9 310.3 -212.6 293.2 420.6 22% 15%

Business Services 2857.1 3216.2 3038.9 3492.0 359.1 -177.2 425.3 634.9 22% 14%

Logistics 2336.0 2311.2 2251.3 2290.0 -24.8 -59.9 38.7 -46.0 -2% 2%

HPE & motorsport 1067.4 892.7 806.1 710.4 -174.7 -86.6 -83.6 -357.0 -33% -11%

Source: Baseline projections consistent with Regional Economic Prospects, February 2009.

MKSM Table G-2 : MKSM Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 97.8 103.1 102.4 109.3 5.3 -0.7 6.6 11.5 12% 6%

HPE & motorsport 37.2 28.0 24.9 21.3 -9.2 -3.1 -3.2 -15.9 -43% -13%

Priority sectors combined 286.5 337.6 323.3 356.9 51.1 -14.3 31.4 70.4 25% 10%


46 The priority sectors forecasts for the UK are the same under the baseline forecasts and population enhanced scenario


Table G-3 : MKSM Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 97.8 103.1 102.5 109.8 5.3 -0.6 7.0 12.0 12% 7%

HPE & motorsport 37.2 28.0 24.9 21.4 -9.2 -3.1 -3.1 -15.8 -42% -13%


Source: Population enhanced scenario consistent with Regional Economic Prospects, February 2009.

G-2


Aylesbury Vale Table G-4 : Aylesbury Vale Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Aylesbury Vale 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 6.8 5.5 5.3 5.3 -1.3 -0.2 0.1 -1.5 -22% 2%

HPE & motorsport 1.4 1.5 1.3 0.9 0.1 -0.2 -0.3 -0.5 -36% -25%



Table G-5 : Aylesbury Vale Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Aylesbury Vale 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 6.8 5.5 5.3 5.3 -1.3 -0.2 0.1 -1.5 -22% 2%

HPE & motorsport 1.4 1.5 1.3 0.9 0.1 -0.2 -0.3 -0.5 -36% -25%



G-3


G-4

Milton Keynes Table G-6 : Milton Keynes Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Milton Keynes 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21


Sustainable Construction 7.6 5.9 5.7 6.2 -1.7 -0.2 0.5 -1.4 -18% 9%


Logistics 20.6 19.0 18.0 17.9 -1.6 -1.0 0.0 -2.7 -13% 0%

HPE & motorsport 4.4 4.3 3.9 3.4 -0.1 -0.4 -0.5 -1.0 -23% -13%



Table G-7 : Milton Keynes Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Milton Keynes 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 4.7 14.4 14 17.1 9.7 -0.4 2.8 12.4 264% 20%



Logistics 20.6 19.0 18.1 18.0 -1.6 -0.9 0.1 -2.6 -13% 1%

HPE & motorsport 4.4 4.3 3.9 3.4 -0.1 -0.4 -0.5 -1.0 -23% -13%




Luton Table G-8 : Luton Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Luton 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 11.4 10.4 10.2 10.8 -1.0 -0.2 0.6 -0.6 -5% 6%

HPE & motorsport 12.1 7.3 6.2 4.7 -4.8 -1.1 -1.3 -7.4 -61% -22%



Table G-9 : Milton Keynes Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Luton 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 2.6 5.2 5 5.4 2.6 -0.2 0.4 2.8 108% 8%



Logistics 11.4 10.4 10.2 10.8 -1.0 -0.2 0.6 -0.6 -5% 6%

HPE & motorsport 12.1 7.3 6.2 4.7 -4.8 -1.1 -1.3 -7.4 -61% -22%



G-5


South Bedfordshire Table G-10 : South Bedfordshire Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

South Bedfordshire 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 7.3 5.3 5.1 5.4 -2.0 -0.2 0.2 -1.9 -26% 4%

HPE & motorsport 1.3 1.3 1.1 0.8 0.0 -0.2 -0.2 -0.5 -38% -20%



Table G-11 : South Bedfordshire Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

South Bedfordshire 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 7.3 5.3 5.1 5.5 -2.0 -0.2 0.3 -1.8 -25% 6%

HPE & motorsport 1.3 1.3 1.1 0.8 0.0 -0.2 -0.2 -0.5 -38% -20%



G-6


North Bedfordshire Table G-12 : North Bedfordshire Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

North Bedfordshire 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21



Business Services 6.8 6.0 5.8 6.5 -0.8 -0.2 0.6 -0.3 -4% 10%

Logistics 7.0 6.7 6.6 7.3 -0.3 -0.1 0.6 0.3 4% 9%

HPE & motorsport 4.0 2.3 2.2 2.3 -1.7 -0.1 0.1 -1.7 -43% 5%



Table G-13 : North Bedfordshire Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

North Bedfordshire 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21



Business Services 6.8 6.0 5.8 6.5 -0.8 -0.2 0.6 -0.3 -4% 10%

Logistics 7.0 6.7 6.6 7.3 -0.3 -0.1 0.6 0.3 4% 9%

HPE & motorsport 4.0 2.3 2.2 2.3 -1.7 -0.1 0.1 -1.7 -43% 5%



G-7


Mid Bedfordshire Table G-14 : Mid Bedfordshire Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Mid Bedfordshire 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 4.5 5.2 5.1 5.6 0.7 -0.1 0.4 1.1 24% 8%

HPE & motorsport 2.1 1.2 1.1 1.1 -0.9 -0.1 0.0 -1.0 -48% 0%



Table G-15 : Mid Bedfordshire Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Mid Bedfordshire 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 4.5 5.2 5.1 5.6 0.7 -0.1 0.4 1.1 24% 8%

HPE & motorsport 2.1 1.2 1.1 1.1 -0.9 -0.1 0.0 -1.0 -48% 0%



G-8


Corby Table G-16 : Corby Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Corby 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21



Business Services 1.2 1.1 1.0 1.2 -0.1 -0.1 0.1 0.0 0% 9%

Logistics 5.5 8.2 8.5 9.4 2.7 0.3 0.9 3.9 71% 11%

HPE & motorsport 1.0 1.1 0.9 0.7 0.1 -0.2 -0.2 -0.3 -30% -22%



Table G-17 : Corby Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Corby 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21



Business Services 1.2 1.1 1.0 1.3 -0.1 -0.1 0.2 0.1 8% 18%

Logistics 5.5 8.2 8.5 9.5 2.7 0.3 1.0 4.0 73% 12%

HPE & motorsport 1.0 1.1 0.9 0.8 0.1 -0.2 -0.1 -0.2 -20% -11%



G-9


Kettering Table G-18 : Kettering Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Kettering 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 2.0 3.3 3.0 2.8 1.3 -0.3 -0.1 0.8 40% -3%



Logistics 3.6 2.8 2.8 2.8 -0.8 0.0 0.0 -0.8 -22% 0%

HPE & motorsport 0.9 1.0 0.9 0.7 0.1 -0.1 -0.2 -0.2 -22% -22%



Table G-19 : Kettering Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Kettering 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 2 3.3 3 2.8 1.3 -0.3 -0.1 0.8 40% -3%



Logistics 3.6 2.8 2.8 2.9 -0.8 0.0 0.1 -0.7 -19% 4%

HPE & motorsport 0.9 1.0 0.9 0.7 0.1 -0.1 -0.2 -0.2 -22% -22%


G-10


Wellingborough Table G-20 : Wellingborough Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Wellingborough 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21


Sustainable Construction 2.0 2.5 2.5 2.6 0.5 0.0 0.1 0.6 30% 4%


Logistics 6.9 6.1 6.1 6.3 -0.8 0.0 0.2 -0.6 -9% 3%

HPE & motorsport 1.1 1.0 0.9 0.8 -0.1 -0.1 -0.1 -0.3 -27% -11%



Table G-21 : Wellingborough Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Wellingborough 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 6.9 6.1 6.1 6.4 -0.8 0.0 0.3 -0.5 -7% 5%

HPE & motorsport 1.1 1.0 0.9 0.8 -0.1 -0.1 -0.1 -0.3 -27% -11%



G-11


East Northamptonshire Table G-22 : East Northamptonshire Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

East Northamptonshire 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 2.3 2.2 2.0 1.9 -0.1 -0.2 -0.1 -0.4 -17% -5%



Logistics 3.0 4.1 4.2 4.7 1.1 0.1 0.4 1.7 57% 9%

HPE & motorsport 1.1 1.4 1.3 1.2 0.3 -0.1 -0.1 0.1 9% -8%



Table G-23 : East Northamptonshire Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

East Northamptonshire 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 2.3 2.2 2 1.9 -0.1 -0.2 0.0 -0.4 -17% 0%



Logistics 3.0 4.1 4.3 4.8 1.1 0.2 0.5 1.8 60% 12%

HPE & motorsport 1.1 1.4 1.3 1.2 0.3 -0.1 -0.1 0.1 9% -8%



G-12


Daventry Table G-24 : Daventry Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Daventry 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 4.2 8.3 8.5 9.4 4.1 0.2 0.9 5.2 124% 11%

HPE & motorsport 2.1 3.2 2.8 2.4 1.1 -0.4 -0.4 0.3 14% -14%



Table G-25 :Daventry Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Daventry 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 1.2 3 2.8 3.2 1.8 -0.2 0.4 2.0 167% 14%



Logistics 4.2 8.3 8.5 9.4 4.1 0.2 0.9 5.2 124% 11%

HPE & motorsport 2.1 3.2 2.8 2.4 1.1 -0.4 -0.4 0.3 14% -14%



G-13


G-14

Northampton Table G-26 : Northampton Priority Sectors Baseline Employment Forecasts, 2001-21 (‘000s)

Northampton 2001 2007 2011 2021

2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21




Logistics 14.3 16.9 17.3 18.7 2.6 0.4 1.4 4.4 31% 8%

HPE & motorsport 4.7 1.7 1.5 1.3 -3.0 -0.2 -0.1 -3.4 -72% -7%



Table G-27 : Northampton Priority Sectors Population Enhanced Scenario Forecasts, 2001-21 (‘000s)

Northampton 2001 2007 2011 2021 2001-2007

2007-2011

2012-21

2001-21

% growth 01-21

% growth 12-21

Creative Industries 4 8.7 8.1 8.8 4.7 -0.6 0.7 4.8 120% 9%



Logistics 14.3 16.9 17.3 18.8 2.6 0.4 1.4 4.5 31% 8%

HPE & motorsport 4.7 1.7 1.5 1.3 -3.0 -0.2 -0.1 -3.4 -72% -7%



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