220_uk recession_recovery_cities-the work foundation

8/3/2019 220_UK Recession_Recovery_Cities-The Work Foundation

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Recession and Recovery:

How UK Cities can respond

and drive the recovery

Authors:

Neil Lee, Katy Morris and Alexandra Jones of The Work Foundation


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Recession and Recovery: How UK cities can respond and drive the recovery2

Contents

Executive Summary 4

1. Introduction Leadership in a crisis 10

2. Evidence of the impact of the recession 13

3. UK local responses to the recession 27

4. International responses to the recession 58

5. Conclusions and policy recommendations 68


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3Recession and Recovery: How UK cities can respond and drive the recovery

List of Figure and Tables

Figure 2.1: Male and female unemployment rate 17

Figure 2.2: Increase in unemployment rate by age (Jan/Mar 2007 vs Jan/Mar 2009) 18

Figure 2.3: Migration 20

Figure 2.4: Cities (travel to work areas) qualications and increases in the number

of claimants 22

Figure 2.5: Local Authorities qualications and increases in the number of claimants 23

Figure 2.6: Relationship between qualications and claimant count 24

Figure 2.7: Employment by sector and increase in the claimant count 25

Figure 2.8: Employment in nancial services and increase in the claimant count 26

Figure 4.1: Unemployment in selected international cities 59

Figure 4.2: Change in unemployment in selected international cities 59

Figure 4.3: House Price Index (selected cities) 60

Table 2.1: Forecasts for GDP growth 14

Table 3.1: Overview of local government areas of inuence 29

Table 3.2: City economies recessionary impact and local response 32

Table 3.3: People and labour markets recessionary impact and local response 37

Table 3.4: Local leadership recessionary impact and local response 43

Table 3.5: Quality of place recessionary impact and local response 46

Table 3.6: Preparing for the upturn recessionary impact and local response 51

Contents


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About this report

Understanding the impact of the recession and practical ways in which city leaders can

respond is vital. This report aims to investigate and contribute to this response. It asks

four questions:

How has the recession impacted on UK cities?

How have UK cities responded?

How does this compare to the response of international cities?

What should policymakers do to minimize the impact and prepare for the upturn?

This report is one of a series of reports on the recession which have been published

simultaneously. These are:

An OECD report reviewing the responses of international leaders to the recession;

An appendix containing the UK case studies from which much of this analysis is

taken;

A companion paper presenting some of the empirical data on the impact of the

recession.

The effects of the global crisis have been felt at a local level, with local leaders at the

forefront of the response to the recession. Yet they face a challenging time: as their

incomes decline, demand for their services is increasing.

Contrary to early expectations, the recession has not affected London and the South

East the most. The recession has reected existing patterns of economic decline: the

greatest job losses have been in ex-industrial areas such as the West Midlands.

One of the key reasons for this is the skill levels of the workforce. Cities with highlyskilled populations have experienced the smallest increases in unemployment, those

with low skill levels have experienced the largest increases.

Cities reliant on nancial services employment have not in general performed worse

where they have, it has tended to be those located outside the South East. This is

because job losses have often been higher in retail banking and support services,

which tend to be located outside the capital.

Executive Summary

What has the

impact of the

recession been

on UK cities?


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UK cities have been the engines of the UK economy in the last ten years and will be

vital to the recovery. Based on our twelve UK case studies, many cities are takinginnovative action to mitigate the effects of rising unemployment and position cities to

drive the recovery, even where funding and powers have been limited. It is vital that

cities learn from each others responses and a summary of these is set out in the box

below.

City economy. Cities have sought to improve their local economies by:

Improving business access to credit through working as lender to local rms,

engaging with banks, supporting the expansion of credit unions and paying invoices

promptly.

Increasing demand for local rms by making them aware of local authority

tender opportunities, supporting business information and networking events in

partnerships with universities and colleges, and supporting retail.

Reducing business cost reducing rent and service charges for business in local

authority owned properties and campaigning to increase take-up of Small Business

Rate Relief.

People and labour markets. Cities have focused efforts on minimizing the impact to local

people by:

Working to minimize the impact of job losses working with large employers to

investigate short time working schemes and lobbying for a fair deal for workers.

Tackling youth unemployment expanding apprenticeship schemes and targeting

university and school leavers.

Investing in skills working to retrain the unemployed and enhancing training

provision.

Tackling high consumer debt launching workshops and projects to give debt

advice to local residents.

Publicising existing vacancies improving information about available opportunities

by publicising them more widely. Addressing ongoing deprivation are not ignoring existing problems of social

exclusion and working to ensure these tackled as well.

How have

UK citiesresponded?

Executive Summary


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Local leadership. Cities have used their role as local leaders to anchor the response from a

variety of local partners by:Monitoring the local situation councils are convening high level stakeholder groups,

conducting business surveys and monitoring the economic situation closely.

Coordinating responses from multiple partners some innovative local authorities

have bought together a range of local stakeholders for coordinated campaigns.

Reducing the tax burden local authorities have worked hard to ensure council tax

rises are minimised but they face challenges in maintaining service provision.

Quality of place. Cities have sought to retain quality of place and respond to the decline in

the housing market in a number of ways by:

Reducing physical decline make creative use of empty shop fronts.

Working closely with developers reducing the barriers facing developers and

ensure that planned developments go ahead where possible.

Addressing the loss of homes improving access to housing services for those

who are made homeless.

Boosting the third sector enabling them to improve their ability to cope with

increased demand for their services.

Addressing reputation decline recruiting ambassadors to spread positive news

about local areas.

Preparing for the upturn. Local authorities are using the crisis as an opportunity in a number

of ways by:

Retraining the unemployed ensuring that people are kept close to the labour

market and are able to take advantage of the opportunities that do exist.

Encouraging FDI and tourism through campaigns for tourists and venture

capitalists and foreign rms.

Continuing investment continuing to invest in improving local infrastructure to

prepare cities for the upturn.

Nonetheless, questions remain about the extent to which these initiatives add up to

a strategic response to the recession that combines short term initiatives with longer

term strategies to invest in a sustainable economy.

In particular, in light of our analysis that skills are a key determinant of city success,

there are questions about the extent to which cities are investing in skills linked to

economic development, retention of jobs and development of jobs.

Executive Summary


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International cities have a wider range of powers over their local economies and have

enacted a wider range of responses. In a number of countries this has given them thecapacity to develop larger scale infrastructure projects. In the US this has been aided

by stimulus funding, for which a variety of local economic institutions can apply.

Other cities such as Hong Kong have been able to provide an independent

stimulus to the economy through the reduction in locally controlled taxes. This is not

an option for cities in the UK, and it is unclear why the benets would be greater at an

urban rather than a national level.

International examples show that UK cities would benet from greater freedoms and

exibilities in relation to funding. However, it is also important to learn lessons from

international cities. In the past, where international cities such as Pittsburgh have

relied on their local tax income for funding, this has made them vulnerable in periods

of economic turbulence as their ability to spend shrinks at the same time as their

needs increase, risking the creation of cycles of urban decline.

National government should:

Allow local authorities and sub regional partnerships, such as city regions, to1.

have greater freedom and exibilities in relation to funding, enabling them to

respond to local circumstances. Piloting tax increment nancing in the form

of accelerated development zones1 should be a priority. This learns from the

experience of the United States and incentivises local authorities to boost the local

business base. Pilots would need to be assessed rigorously but would enable cities

hit hard by the recession to invest in their infrastructure. In addition, Treasury should

consider allowing local authorities to balance their books over three years, in line with

the spending review settlements.2

Move quickly to agree the detailed powers to be devolved to Manchester2.and Leeds City Region pilots, and extend these pilots to other city regions.

Integration of employment and skills investment at a local level through Employment

and Skills Boards should be a priority within these city region pilots, given the

importance of skills to economic resilience. National industrial, skills and employment

1 Core Cities & PricewaterhouseCoopers LLP (2008) Unlocking City Growth: Interim Findings on NewFunding Mechanisms2 NLGN (2009) In the Balance: Granting local authorities new nancial exibilities to cope with the

downturn

What should

local and

national

policymakers

do next?

How does this

compare to theresponse of

international

cities

Executive Summary


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policy should be aligned to enable regions and city regions to integrate policies on the

ground.

Regional Development Agencies should:

Use the opportunity of integrated regional strategies to invest in and link1.

employment and skills policies more effectively. RDAs have the opportunity

to work with partners across the public, private and third sector to address the

challenges facing particular people and particular areas.

Convene partners at a regional and local level to develop a shared strategic2.

response to the recession and recovery that aligns with national policy, learns

from best practice and responds to the needs of the region. RDAs have an

important role to play in working with national government to align policies as well as

ensuring that local strategies are complementary in the short and medium term.

City regions should:

Work in partnership with other local authorities, universities, FE colleges,1.

JobCentre Plus, the Learning and Skills Council and others to develop a

strategic response to the recession. This should involve using existing government

powers, such as Multi Area Agreements and Employment and Skills Boards, in order

to develop a collective response.

Balance short term interventions, such as support for those made redundant,2.

with longer term priorities, such as investment in skills. Where possible, short

term actions such as infrastructure investment should provide infrastructure that will

benet the city in the longer term rather than only being a priority because of jobs

generated. Priorities should be:

Invest in skillsa. as this is one of the key determinants of how cities fare in the

recession;

Quick and cost effective actionsb. such as local websites coordinating

information on how to cope with redundancy;

Support entrepreneurshipc. amongst the newly redundant, which has longer term

benets.

Executive Summary


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Local authorities should:

Follow the Barcelona principles for action in the recession.1. The principles have

been developed by a group of city leaders and help leaders review their strategic

response.

Take advantage of the new local authority economic assessment role to map the2.

impact of the recession on their local area using the framework below and set out

in Section 3. This will enable a review of the extent to which current initiatives respond

to short and longer term challenges.

Understanding how the recession is impacting differently on the economy, labour markets,

places, leaders and long-term visions should enable cities to identify priorities for action.

Executive Summary


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The current global recession is a crucial moment for Britains cities. Over the past 15 years they

have received, albeit slowly, greater powers, exibility and funding. This decentralization hasbeen far from complete, but local authorities are increasingly responsible for the prosperity of

their local areas. Their knowledge of local areas, ability to tailor services according to local need

and ability to act as place shapers makes them important actors in mitigating against the impact

of a global crisis while preparing local areas for an upturn. Regional development agencies,

local leaders of businesses, universities, FE colleges, organisations such as JobCentre Plus

are also playing an increasingly important role, working in partnership with local authorities, in

enabling local people and places to thrive. For this emerging group of local economic leaders,

the current crisis represents an important test.

Internationally, leaders are responding to the crisis in a multitude of different ways. The OECD,

in partnership with The Work Foundation and Barcelona, has worked with a group of these local

economic leaders, learning lessons from recent and past experiences to develop a general set

of principles that can guide leaders in their responses to the recession. These principles are:

Barcelona Principles

Dont waste the crisis, but respond with leadership and purpose.i.

Make the case for continued public investment and public services and the taxes andii.

other sources of investment required.In the long-term: build local economic strategies which align with long-term drivers andiii.

identify future sources of jobs, enterprise, and innovation.

In the short-term: focus on retaining productive people, business, incomes, jobs, andiv.

investment projects.

Build the tools and approaches to attract and retain external investment over the long-v.

term.

Build genuine long-term relationships with the private sector, trade unions, and other keyvi.

partners.

Take steps to ensure the sustainability and productivity of public works, infrastructure,vii.

and major developments/events.

Local leaders should act purposefully to support their citizens in the face of increasedviii.hardship.

Local economies have benetted and should continue to benet from being open andix.

attractive to international populations and capital.

Communicate and align with national and other higher tier governments.x.

1. Introduction Leadership in a crisis

1.1

International

principles

for economic

leadership in

a crisis


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These principles set out a framework within which leaders can consider how they respond and

the detailed evidence underpinning these is set out in the paperThe Barcelona Principles:Recession Recovery and Reinvestment.

This complementary paper builds on these principles to investigate the impact of the current

recession on the UKs cities and local economies. It has three main aims:

To identify the impact of the recession on UK cities.1.

To map the ways in which UK cities are responding, showcasing best practice and2.

reviewing what lessons can be learned from international cities responses.

To provide realistic policy recommendations for how cities can and should respond to3.

mitigate the impact of recession, prepare for the upturn and to prepare themselves for

future downturns.

To do this, we have developed a framework to enable cities to develop a holistic view of how

the recession is affecting them and how they can respond in the short and longer term. This

framework, which draws on The Work Foundations Ideopolis research on cities3, is set out

below.

3 Alexandra Jones et al (2006) Ideopolis Knowledge City Regions: The Work Foundation

1.2

How can UK

city leaders

respond to

the crisis?

Introduction Leadership in a crisis


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Using this framework, cities can review the impact of the recession and the opportunities for the

recovery. This framework enables local areas to develop a holistic view of how the recession isaffecting them and how to plan for the recovery. Section 3 sets out more detail about how cities

can use this framework.

The remainder of this paper draws on analysis of secondary data and case studies of the

following cities: Belfast, Birmingham, Bristol, Cardiff, Chelmsford, Derby, Glasgow, Liverpool,

Manchester, Oxford, Newcastle and Swindon.

It is structured as follows:

Section 2 presents evidence on the impact of the recession and the geography of this

impact.

Section 3 presents the variety of ways in which cities have responded to the recession

for more detail see the appendix to this report.

Section 4 compares this response to the response of international cities.

Section 5 draws policy conclusions in three main areas: to minimise the impact; prepare

for the upturn and to enable local governments to respond to future economic crises.

1.3

This paper

Introduction Leadership in a crisis


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Table 2.1: Forecasts for GDP growth4

GDP growth 2009 2010

Average of independent forecasts (Treasury) -3.8 0.4

OECD4 -3.7 -0.2

IMF -4.1 -0.4

2.2.1 Credit, insurance and consumer condence remain key challenges

Particular characteristics of the national economic situation with implications for local economies

include:

Credit and insurance is still relatively difcult to obtain for rms and consumers.

The origins of the recession are linked to the Credit Crunch which followed the collapse of

several banks and the withdrawal of credit from late 2007. As a result, rms nd it harder to

nance future investment, reducing demand in the economy. Existing debt is harder and more

expensive to nance and many rms are struggling to gain insurance. This has consequences

for the supply chains of many rms who nd themselves unable to buy new stock to sell and in

some cases leading to collapse. Consumers can also no longer borrow to nance existing debt

and mortgages have become more difcult to obtain, one factor in the decline of the housing

market. Access to nance and insurance for local rms, and the ability to service debts for

individuals, create signicant challenges for local areas seeing a rise in unemployment and

people struggling to pay the bills.

Interest rates are very low, affecting the housing market, demand and savings. At the time

of writing, the base rate is at 0.5, the lowest since the 1600s.This will have impacts on local

rms. The hope is that low interest rates increase demand because of low incentives to save,

as well as reducing the costs of borrowing and servicing existing debts such as mortgages

(although many still face problems in obtaining credit and banks have not lowered many interestrates in line with the base rate). Lower interest rates will have reduced incomes for those who

save, consumers reliant on investment income, such as pensioners, and organisations such as

charities and local authorities. Many of these individuals and institutions will create new demand

for local services.

4 OECD Economic Outlook (March 2009) Interim Report: United Kingdom, Paris: OECD

2.2

What is the

impact of

the national

recession on

city economies?

Source: HM Treasury Forecasts for the UK economy: A comparison of independent forecasts, May

2009; OECD Economic Outlook; IMF Economic Outlook

Evidence of the impact of the recession


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Consumer and business condence is still low, but with signs of bottoming out. Local

areas need consumers and businesses to feel condent about spending their money andthere are signs that this is changing. The Nationwide Consumer Condence Index rose in April

2009, representing the belief that the worst of the recession was over. Yet only a quarter of

respondents felt that the economic situation would improve in the next six months.5 Business

condence has also been in steep decline, although there are also signs that the rate of decline

has slowed. The CBI have reported that there has been a slowing of the pace of decline in

condence among manufacturing rms: 34 per cent of manufacturing rms in their sample

predicted output volume to fall in the next quarter; 17 per cent expected increases. 6

Yet while the UK economy is performing badly and most indicators are still declining, there are

signs that the pace of decline has begun to slow. It is unclear whether this reects the start of a

recovery, or a false start.

2.2.2 Manufacturing and services have both been hit by the recession

The past year has seen sharp spikes in the number of redundancies in all sectors but the public

sector and agriculture. Changes between March 2008 and March 2009 have included:

Manufacturing : declined by 6.7 per cent;

Financial and business services 7: declined by 2.8 per cent;

Distribution, hotels and restaurants : also declined by 2.8 per cent;

Transport and communications : declined by 1.2 per cent;

Other services : declined by 0.5 per cent;

Construction : declined by 0.2 per cent;

Mining, energy and water supply : declined by 0.3 per cent;

Agriculture, forestry and shing : grew by 1.6 per cent;

Education, health and public administration : grew by 2.1 per cent.8

The public sector has not been hit hard to date but future cuts in public spending mean that it is

likely to experience job losses in a number of areas of the sector, including local authorities.

5 Nationwide Consumer Condence Index, April 2009. Sample of 1,000 people6 From a sample of 575 rms. CBI May Industrial Trends Survey, details from: www.cbi.org.uk7 Note that this is a broad sector (SIC J & K) and so includes more than simply nancial services8 ONS Labour Market Statistics, June 2009

http://www.cbi.org.uk/http://www.cbi.org.uk/


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Falling demand in the economy causes job losses, which in turn lead to further reduction

in demand because individuals have less income to spend. This will impact on differentgroups according to the industries they work in (see 2.2.2 above), their occupations and

qualications and the places in which they live. For city leaders it is vital to understand

who is losing their jobs, which sectors are seeing employment declines and the

geography of these declines.

2.3.1 Men and young people are particularly likely to lose their jobs

The impact of the recession will be felt by different people depending on their personal

characteristics, occupation, industry of employment and the place they live. This will also

be a lagging indicator: recruitment and redundancy are expensive, meaning that rms

will only make people redundant if necessary, and equally will only recruit when there is

a genuine business case. Instead, most rms will seek to work their existing employees

harder until the recovery is well underway. Characteristics of job losses to date are:

Both the claimant count and unemployment rate are increasing , and have

been doing so since the start of 2008. The most up to date data shows that the

upwards trend in the claimant count has been if anything sharper, at least for

men. Latest data also suggests that unemployment is increasing less rapidly,

although still increasing, but it is not clear if this is a genuine slow down in

redundancies or a short term trend.

Increases in unemployment have been greater for males than females .

Since the start of 2008 the claimant count and unemployment rate have

increased much more for males than for females (although the rate of increase

has slowed for both). The conventional explanation for this is that unemployment

has increased by a greater extent for men because they were more likely to

be employed in the industries which have experienced job losses9, such as

manufacturing. Women are more likely to be employed in counter-cyclical

industries such as the public sector, education and healthcare, although thesetend to offer lower wages.

9 Heather Boshey (2009) Gender and the Recession, Centre for American Progress Infographic,8.5.2009

2.3

What is theimpact of the

recession on

people and

labour

markets?



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Unemployment increases have been larger for younger people. The greatest

increase in the unemployment rate, as shown in Figure 2.2 below, was for the

population aged 18-24. Males in this category bore the brunt of job losses. This will

have consequences in the future; those who experience early periods of unemployment

are more likely to be unemployed later in life and likely to earn less in the future.10 In

the short term, existing vacancies are more likely to be taken by those with greater

experience and proven job histories.

Different regions have seen different increases in young unemployment . Northern

Ireland, the South West and South East have seen the largest increases in the number

of unemployed youths (although this may be from a small base). By contrast the low

gures for London may be due to a large youth unemployment problem initially and a

relatively robust labour market.

10 Paul Gregg and Emma Tominey (2005) The Wage Scar from male youth unemployment, LabourEconomics, 12 (14), 487-509

Figure 2.1: Male and female unemployment rate


Source: Claimant Count Claimant count by sex, Nomis. Unemployment Unemployment rate,

Annual Population Survey, Nomis


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There are few clear ethnic differences in increases in unemployment . Increases

have been largest for those of mixed ethnicity, followed by whites. If anything, ethnicminorities have experienced lower rates of unemployment increases (although most

ethnic minorities still have higher unemployment rates than whites). The group whose

unemployment has increased the least is the Chinese and other group.

Source: Labour Force Survey

Local leaders are being affected in particular by reductions in income at the same time as

increased demand for services, making it difcult to respond to individual need and to invest in

the infrastructure required to generate jobs now and competitiveness in the future. Particular

effects of the crisis are:

Lower council tax: Local authorities in the UK are likely to offer lower council tax rises overthe next year, with an LGA survey suggesting there will be an average increase of 3 per cent

compared to 2008/2009.11 This compares to an average increase of 3.9 per cent in the period

between 2007/8 and 2008/9.

11 LGA http://www.lga.gov.uk/lga/core/page.do?pageId=1645241. Tax gures are based on a sample of 300local authorities, income gures on 52 responses

Figure 2.2: Increase in unemployment rate by age (Jan/Mar 2007 vs Jan/Mar 2009)

2.4

Local

governance/

leadership

http://www.lga.gov.uk/lga/core/page.do?pageId=1645241http://www.lga.gov.uk/lga/core/page.do?pageId=1645241


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Lower income: At the same time as demand for council services is increasing, local authority

income for councils is predicted to fall by 2.5 billion because:

Public decit leading to constraints on all public spending;

Loss of fees from planning receipts;

Reduced income from section 106;

Increased concessionary travel;

Higher utilities costs;

Pension increases;

Reduction in prices for recyclable materials.

The reduction in interest rates (and problems due to Icelandic banks) have exacerbated this

problem. This will lead to sizeable reductions in income. Newcastle City Council for example

expect reductions in capital receipt income of approximately 20m over the next three years.

Budget decits: As a result of the income gaps above, many local authorities are expecting to

make a loss. Of our case studies, Essex County Council estimate a budget gap of around 5m

for 2009/10. Belfast forecast a fall in external revenue of around 2.6m for the nancial years.

Swindon estimate cost pressures at around 2 million.

Need to reduce staff numbers: Local government is also likely to reduce its staff numbers,

compounding the poor state of many local labour markets. A LGA survey indicates the scale of

cuts which have been made: 70 per cent of councils have made cuts, many of these jobs being

middle and senior management.12 The cuts were highest in London (92 per cent of authorities

made cuts) and the West Midlands (72 per cent).

The recession is also having an impact on local infrastructure, property and social issues.

Particular issues are:

There is initial evidence that labour migration is declining. Migration data is notoriouslypoor, but we can see a clear reduction in the number of National Insurance number allocations

(NINO) for foreign nationals in the period.13 There was a steep increase in NINO registrations in

the period to 2007, followed by a decline in the year 2008 for all cities, with migrants likely to be

less willing to take the risk of moving as well as nding it harder to nd employment. The pace

12 Based on a sample of 165 Authorities in March 2009. LGA Survey of Local Authority Staff Reductions.http://www.lga.gov.uk/lga/core/page.do?pageId=167015213 While imperfect, these are one of the best measures of labour migration

2.5

Quality

of place

http://www.lga.gov.uk/lga/core/page.do?pageId=1670152http://www.lga.gov.uk/lga/core/page.do?pageId=1670152


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of decline in some cities, notably Newcastle and London, was lower than might be expected,

however, and despite this decline the number of new registrations was still high. This is likely toreect the fact that the recession began fairly recently and also that, if economic conditions are

still worse in the country of origin, a move to a recessionary UK may still be a good option.

Figure 2.3: Migration

The housing market has collapsed: The last ten years saw substantial growth in house

prices driven by the ready availability of credit, high employment, low interest rates, shortage of

housing supply in many areas, and a perception that house prices would continue to rise. Since

the end of 2007, prices have fallen signicantly, with the decline in sales universal in the cities in

our sample fuelled by fewer sellers, less easy credit and labour market uncertainty. As demand


Source: Department for Work and Pensions, National Insurance Number Allocations to AdultOverseas Nationals entering the UK


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has fallen, new construction orders have declined in all regions. Where new construction is

taking place, it is increasingly funded by the public rather than the private sector. This puts theconstruction sector in a position of signicant disadvantage without local authorities having

greater access to funding.

In a companion paper, we analyse the characteristics of local areas and the extent to which

areas with different industrial structures and population characteristics have seen increases in

unemployment both the claimant count and the unemployment rate14. There are a number of

key ndings.

Skills are the key determinant of how well local areas have performed in the1.

recession: the lower the skills prole of an area, the worse it has been affected

by the recession. There is a clear relationship between low skills in a Local Authority

and Travel to Work Area and increases in unemployment, whether this is measured by

claimant count or the unemployment rate.

Areas with a high proportion of population who are highly skilled (those with a degree)

have seen lower increases in unemployment. By contrast, places with high proportions

of low skilled people (those with no formal qualications) have witnessed higher

increases in unemployment. This is true for both cities and local authorities; although

Swindons high increase in unemployment despite a reasonably strong skills prole is

the only exception to this trend.

There are a number of reasons why skills are important. One simple explanation

is that the low-skilled may be more likely to be employed in industries which have

declined most rapidly, such as certain aspects of the retail and hospitality sector or

manufacturing.

It is likely that the explanation goes deeper than this, however. Firms may be reluctant

to lose valuable skilled workers, who may be more expensive to recruit and retrainfor specialist jobs in the long term. And the low skilled may lose their jobs through a

process of bumping down in the labour market, as those who are better qualied move

into jobs for which they would have been overqualied.

14 The claimant count may undercount the number of unemployed, but is a much more accurate gure at

local areas

2.6

What are the

characteristics

of areas that

do better or

worse in a

recession?



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Moreover, long-term evidence from the US shows that cities with higher concentrations

of the skilled (normally, as here, qualications are used as a proxy) make cities morerobust to economic change15 the skilled nd it easier to use new technology and to

switch from declining sectors into new ones.

Figure 2.4: Cities (travel to work areas) qualications and increases in the number of

claimants

1) NVQ4 + 2) No Qualications

This nding also applies with more up to date measures using the claimant count and the

unemployment rate, and is consistent with higher increases in unemployment for the low

skilled.

15 Edward L. Glaeser and Albert Saiz (2003) The Rise of the Skilled City, HIER Discussion Paper 2025

0.035

0.03

0.025

0.02

0.015

0.01

0.005

0

0.035

0.03

0.025

0.02

0.015

0.01

0.005

0Increaseintheclaimantcount,April2007-Ap

ril2009

Increaseintheclaimantcount,April2007-Ap

ril2009

% of working age population with no qualications% of working age population qualied to degree level or above

0 0.05 0.1 0.15 0.2 0.250 0.1 0.1 0.3 0.4 0.5


Source: Qualications Annual Population Survey (2007), Claimant Count from Nomis


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Figure 2.5: Local Authorities qualications and increases in the number of claimants

1) NVQ4 + 2) No qualications

The relationship between the population with low skills and the claimant count is visible on

a map, with a large amount of overlap between increases in the claimant count and the

geography of those with no formal qualications, see Figure 2.6 on the next page. A number

of the areas which were previously identied as being of high levels of unemployment

also have low skills. For example, in South Wales job losses in manufacturing have been

severe, although the population without qualications is broader, with high rates stretching

north through Central Wales. The North East has also seen large increases in the claimant

rate, and these losses map closely onto large low-skilled populations. There is also some

concurrence between high numbers of low skilled workers and increases in claimants in the

area around Glasgow and the Northern belt which stretches between Liverpool and Hull.

While this relationship is important, it is not a perfect one other factors will intervene in

local economies. One such example is Swindon, where the claimant rate has increased toa large extent but which has relatively fewer of the low skilled population. Redundancies in

Swindon have been in the car sector and distribution for Woolworths.

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0Increasein

theclaimantcount,April2007-April2009

% of working age population qualied to degree level or above

0 10 20 30 40 50 60

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0Increasein

theclaimantcount,April2007-April2009

% of working age population without qualications

0 5 10 15 20 25


Source: Qualications Annual Population Survey (2007), Claimant Count from Nomis


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Figure 2.6: Relationship between qualications and claimant count

% of working agepopulation with noqualifcations, 2007

23 to 29.916 to 239 to 162 to 9

Change in claimantrate, May 2007-May2009

3 to 42 to 31.1 to 20.2 to 1.1

Areas with high levels of employment in manufacturing have lost jobs.2. There is arelationship between increases in the claimant count and manufacturing employment,

which is consistent with the general decline in the sector. Results for construction are

less clear, however, as shown in Figure 2.7 below. This is consistent with international

evidence which shows similar results for US cities, as those which tend to be reliant on

manufacturing are performing worse in this recession.16

16 Ed Glaeser (2009) How some places fare better in hard times, New York Times Economix Blog,24.3.2009


Source: Qualications: Nomis (2007) Annual Population

Survey Residence Based

Source: Claimants: Nomis (2007-2009) Claimant count

with rates and proportions

1) Proportion of working age population with

no qualications

2) Change in rate of Job Seekers Allowance

claimants


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Figure 2.7: Employment by sector and increase in the claimant count17

1) Manufacturing 2) Construction

Some areas dependent on nancial services have lost jobs but only outside3.

London and the South East. Areas with employment in nancial services had no

greater or lesser relationship with unemployment. But the picture is slightly more

complicated there is evidence that local authorities with high levels of employment in

SIC 65 (Financial Intermediation, except insurance and pension funding) and SIC 67

(activities auxiliary to Financial Intermediation) have had higher rises in the claimant

count. This might be because employment losses were in retail banking and activities

additional to the main activities of the nancial organisation. High prole employment in

the headquarters of the rms is likely to have been retained, at least to some degree,

while staff laid off in London may have been more successful in nding reemployment.

17 Only the relationships between employment in manufacturing is statistically signicant, = 0.4379, sig =

0.000

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.00.5

0Increaseintheclaimantcount,April2007-April2009

Employment in manufacturing 2007

0 5 10 15 20 25 30 35 40

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.00.5

0Increaseintheclaimantcount,April2007-April2009

Employment in construction 2007

0 2 4 6 8 10 12 14 16 18


Source: Annual Business Inquiry, Claimant Count from Nomis


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Figure 2.8: Employment in nancial services and increase in the claimant count

1) Within the greater South East 2) Outside the greater South East

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0Increaseint

heclaimantcount,April2007-April2009

Employment in nancial services (SIC J), 2007

0 2 4 6 8 10 12 14

3.0

2.5

2.0

1.5

1.0

0.5

0Increaseint

heclaimantcount,April2007-April2009

Employment in nancial services (SIC J), 2007

0 2 4 6 8 10 12 14 16 18


Source: Annual Business Inquiry, Claimant Count from Nomis


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Drawing on detailed case studies of twelve UK cities18, this section investigates the ways in

which UK cities have responded to the recession. It focuses on the direct and useful policymeasures which are being undertaken now by local authorities, local partnerships and other

local and sub regional institutions both to mitigate the impact of the recession and to prepare

for the upturn. These responses are mapped against the framework below, with each section

setting out a table enabling local authorities to consider different initiatives relevant to, for

example, the economy or to people and labour markets.

Whilst recognising that the impact and value for money over the long term is currently unclear,

and that the lines between new policies for the recession and older policies which are being

recongured is somewhat blurred, this section also questions whether the responses that UK

cities are undertaking now responds to our ndings in the previous section, and particularly the

importance of skills.

3.1.1 The role of local authoritiesDespite widespread recognition of the increasingly important role cities are taking in driving

regional and national economies and a push towards devolution, the UK remains one of the

most centralised state systems in Europe. The Communities and Local Government Select

Committee identies three ways in which the relationship between central and local government

in England deviates from the European norm: the level of constitutional protection, the level of

18 The twelve UK case study cities are: Belfast, Birmingham, Bristol, Cardiff, Chelmsford, Derby, Glasgow,Liverpool, Manchester, Newcastle, Oxford, Swindon

3. UK local responses to the recession

3.1

How can

UK local

institutions

inuence

their local

economies?


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nancial autonomy, and the level of central government intervention 19, with all three serving to

tilt the balance of power towards the centre.

Financial autonomy is a particularly signicant issue for UK local authorities, which on average

rely on central government for 75 per cent of their revenue.20 That less of the money that UK

councils spend is related to the local tax base is arguably benecial in a recession in the short

term: cities suffering the largest declines in their local economy and hence local tax base will

not experience declines of the same order in their nances. Over the longer term, however, the

aspirations of cities which experience the recession relatively lightly and are well-positioned to

raise revenue locally may be thwarted by the anticipated contractions in public spending.

In addition to limited local revenue raising powers, UK local authorities tend to have less

autonomy and exibility over how they spend their funds. They are empowered to take any

steps which they consider are likely to promote the economic, social and environmental well-

being of the area or inhabitants within their boundaries under the Local Government Act 2000,

but the more prescribed nature of local government spending in the form of ring-fenced

specic grants and the requirement under Section 32 of the Local Government Finance Act

1992 to balance income and expenditure for each separate year inevitably places limitations

on the ability of UK local authorities to respond proactively and quickly to the impacts of the

recession.

However, despite comparatively little reliance on local taxes and less autonomy over spending,

UK local authorities tend to be responsible for a relatively large proportion of spending in local

areas.21 This makes it particularly important to establish the ways in which local authorities can

maximise their impact. Table 3.1 below sets out a brief overview of some of the areas over

which local councils have inuence.

19 Communities and Local Government Select Committee (2009) The Balance of Power: Central and LocalGovernment20 Communities and Local Government Select Committee (2009) The Balance of Power: Central and LocalGovernment21 Roger Gough (2009) With a Little Help From Our Friends: International Lesson for English LocalGovernment, London: Localis

UK local responses to the recession


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Table 3.1: Overview of local government areas of inuence22

Local government areas of inuence

Education and Social Services Housing

Education Social housing

Childrens services Local planning

Social services

Economic development & planning Culture and leisure

Planning Cultural facilities

Strategic planning Sporting facilities

Transport planning Parks and open space

Passenger transport Libraries

Highways

Public Services

Waste collection, disposal and recycling

Environmental health

Environmental protection

Fire

3.1.2 Working at the sub regional level

It is widely recognised that local authority boundaries rarely match the level of the functional

economic area, the level at which people really live and work. As a direct result, local authorities

are increasingly working together under sub-regional partnerships to address economic

development issues at the most appropriate level.

The growing movement toward sub-regional partnership working has been bolstered by the

introduction of Multi Area Agreements. Multi Area Agreements or MAAs involve groups of localauthorities coming together on a voluntary basis to agree collective priorities, targets and

indicators for economic development in the sub-region over a three year period with central

government, regional bodies and other key stakeholders. More recently, the 2009 Budget gave

the green light to city-region pilots in Greater Manchester and Leeds City Region, with reports

that more city region pilots may be granted in the near future.

22 This can only be an overview: differences in national and regional government, and the different tiers oflocal authority make it difcult to generalise about the powers cities possess



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3.1.3 Regional development agencies

Regional development agencies are another key body inuencing economic developmentat a local level, and hence the response to the recession. RDAs are charged with providing

business support, sector specic support and investing in physical infrastructure. They play

a vital role in convening local partnerships. With the introduction of the Integrated Regional

Strategy combining the Regional Spatial Strategy and Regional Economic Strategy, RDAs will

play a critical role in the coming months in supporting local areas to mitigate the impacts of the

recession and position themselves for the recovery.

3.1.4 The role of other local institutions

Whilst individual and sub-regional groups of local authorities have a vital role to play in

supporting residents and businesses through the recession and positioning for the upturn, they

are by no means the only local bodies which exert inuence in local areas and sub regions.

Local business groups, higher and further education institutions, police and health services skills

bodies and local agencies such as Business Link and JobCentre Plus and that deliver national

programmes all have place-shaping roles. As such, local authorities work with other partners

locally to develop appropriate interventions and responses to the recession. Particular roles of

different partners include:

Businesses and local business groups : employment of local residents, trade and

procurement of goods and services, business to business support and networking,

hosting of business events.

Universities and further education colleges : research and creation of new

intellectual property, development of high level skills amongst students and graduates,

employment of teaching, research and support staff, procurement of goods and

services, local business links (business support, student and graduate placements,

spinout companies, joint research and innovation), investment in physical infrastructure

and the public realm, provision of business space, links to other national andinternational higher education institutions.

Third sector and social enterprise : provision of micro credit via credit unions, working

with deprived groups, social cohesion.



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JobCentre Plus & Learning and Skills Council : job opportunity listing, job search

support, training information and advice, administration of benets.

Health services : employment of healthcare professionals and support staff, provision

of healthcare treatments, preventative health interventions, procurement of goods and

services.

Police service : crime prevention and reduction, targeted early interventions,

community liaison.

Economic development powers for UK cities are principally held by local authorities and

Regional Development Agencies, although urban development companies also have powers

in some cities (for example, Shefeld). Local authorities have a range of specic economic

development powers, including powers to promote economic, social and environmental well-

being within their boundaries under the Local Government Act 2000. Other functions such as

infrastructure investment, social housing provision, local business interactions and support,

city centre management all have direct economic development implications and are key for

developing a successful economy in the long term. Table 3.2 on the next page summarises

some of the ways in which local authorities have responded to the recession.

3.2.1 Credit and nancial support

The drying up of credit has been one of the hallmarks of the current economic crisis, and local

authorities have adopted a number of strategies to ensure that local rms do not suffer from the

lack of credit available in the economy. Measures include:

Speeding up the payment of council invoices from small or local rms to help

ease cashow issues. In Oxfordshire, Cherwell District Council now pays all invoices

within 14 days, whilst Essex County Council is modifying payment systems to speed

up payment processes and Newcastle City Council is investigating the feasibility and

cost effectiveness of reducing the current 14-28 day period for processing invoices fromsmall businesses.

3.2

How are

local and

sub regional

institutions

responding to

support city

economies?



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Table 3.2: City economies recessionary impact and local response

Area of impact UK local response Example

Lack of Credit in theEconomy

Work as lender to local rms The Bank of Essex

Engage with local banks Swindon is in dialogue with localbanks to ensure rms receive credit

Ensure rms are paid promptly Cherwell District Council has a 14day payment guarantee

Make payments more exible Essex: Reduce requirements forprocurement eligibility

Falling Demand Provide information about local rmsto increase local demand

Derbyshire and NottinghamshireChamber of Commerce

Provide information on procurementopportunities to the council

Swindon: Doing business withSwindon Business event

Support retail Derby: free Shopper Hopper Bushelping take shoppers through citycentre

Open up public procurement Essex: reassessing insuranceand auditing necessities for publicprocurement

Targeted support for hard-hit sectors Bristol/SWRDA: Downturnreadiness reviews for manufacturers

Reduce business

costs

Reduce rent increases Derbyshire: Reducing rent increases

Reduce service charges Belfast: Reducing service charges

Reduce council taxes Hillingdon: council tax to be frozenfor two years

Information, supportand advice forbusinesses

Target for Small Business RateRelief take-up

Newcastle: target of 1 million takeup of small business rate relief overthe next two years

Publicise business support Liverpool: University businesssupport gives info on support forrms in recession

Ensure awareness of supportservices

Essex: Sector specic events tohighlight sources of help

Provide single point of contact forlocal rms

Swindon Action Force offers centralcontact number for information forlocal rms

Raise awareness of opportunities Bristol: Growth opportunities in therecession event

Local stimuluspackage

Increases spending to provide jobs Newcastle: Additional 21 million incapital investment in infrastructure,funded by borrowing



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Working with local banks to ensure that credit continues to ow to local rms.

Swindon Borough Council has engaged with and lobbied Lending Managers at localbanks in an attempt to persuade them that local businesses remain creditworthy.

Offering direct nancial support to rms in the form of loans for new and existing

businesses.

Glasgow: Business Investment Fund extension

As part of the West of Scotland Loan Fund, the Glasgow Business Loan Fund offers small

businesses access gap funding of up to 30,000 for new start businesses and 50,000 for

existing businesses, with a fast-track decision process for applications of up to 15,000. InNovember 2008 Glasgow City Council announced that it intended to expand the scheme,

offering repayment holidays and exible interest rates where appropriate, and potentially

taking equity stakes in companies in return for funding.

Taking equity stakes in local rms : Cardiff Council, which has budgeted an additional

750,000 of support for SMEs, is considering taking equity stakes in local rms via a

Cardiff Capital Fund.

Cardiff: Cardiff Capital Fund for SMEs

The Cardiff Council Budget for FY 2009/10 includes additional support of 750,000 toward

existing packages of support for SMEs looking to raise funds for start-up or capital investment.

Cardiff Council intend to use 650,000 of this 750,000 for the creation of a Capital Cardiff

Fund that offers support including loans, grants and, most signicantly, equity stakes to start

up businesses and existing companies that need assistance to undertake investment. Equity

investment does not increase the debt burden of a business and hence can give businesses

greater exibility.

Support will be targeted at businesses across sectors that are undertaking innovation, thoseseeking to improve competitiveness and businesses interested in investing in environmental

improvements to commercial premises. Recognising that taking equity stakes in local

businesses would bring increased risk and that robust due diligence is required, Cardiff

Council is seeking to adopt a partnership based strategy. In April 2009, discussions were

ongoing with Xenos which operates a Business Angel network for Finance Wales, UK Steel

and Media Wales.



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Direct provision of credit to local businesses via a local bank . Essex County

Council has set up one of the most imaginative policies: a Bank of Essex, a newmunicipal bank set up to offer funding to Essex-based SMEs.

Chelmsford (Essex): Banking on Essex

In partnership with the Santander banking group, Essex County Council has set up the rst

council-run bank since the Birmingham Municipal Bank closed down in 1976.23 Banking on

Essex is a special delivery vehicle which will act as an intermediary and release 50m of

European Investment Bank (EIB) funding (via loans of up to 100,000) for small and medium-

sized businesses based in Essex which have been trading for at least a year.24

3.2.2 Increasing demand: Procurement and local trade

A second important problem has been reductions in demand in the economy overall. Attempts to

deal with this include:

Mechanisms to make rms aware of the availability of local suppliers and

encourage rms to buy local. For example, Belfast staged a Local Sourcing

Initiative where the council and Chamber of Commerce ran a meet the buyer event

to help local suppliers meet large buyers from the public and private sectors, whilst

Swindon ran an event called Do Business with Swindon Business focusing on how to

get council contracts and how to trade with local rms.

Local procurement of council goods and services . Oxfordshire County Council

supports Keep Trade Local campaign of the Oxfordshire Federation of Small Business

and buys 52 per cent of its services from local SMEs, whilst Oxford City Council

procures 30 per cent of its annual spend on good and services locally and intends to

increase this percentage over time.

However it is important to be cautious about these issues of local procurement.Proximity can facilitate information sharing and the development of fruitful relationships

between organisations. However in the same way that protectionist efforts designed to support

national industry would eventually be very damaging if undertaken by all nations, it would

also be damaging if all local authorities and rms only bought goods and services locally. The

23http://www.telegraph.co.uk/nance/nancetopics/recession/5212048/Essex-County-Council-sets-up-bank-to-help-businesses-in-recession.html24http://www.essexcc.gov.uk/vip8/ecc/ECCWebsite/dis/cha.jsp?channelOid=134953

http://www.telegraph.co.uk/finance/financetopics/recession/5212048/Essex-County-Council-sets-up-bank-to-help-businesses-in-recession.htmlhttp://www.telegraph.co.uk/finance/financetopics/recession/5212048/Essex-County-Council-sets-up-bank-to-help-businesses-in-recession.htmlhttp://www.essexcc.gov.uk/vip8/ecc/ECCWebsite/dis/cha.jsp?channelOid=134953http://www.essexcc.gov.uk/vip8/ecc/ECCWebsite/dis/cha.jsp?channelOid=134953http://www.telegraph.co.uk/finance/financetopics/recession/5212048/Essex-County-Council-sets-up-bank-to-help-businesses-in-recession.htmlhttp://www.telegraph.co.uk/finance/financetopics/recession/5212048/Essex-County-Council-sets-up-bank-to-help-businesses-in-recession.html


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understandable desire to support local rms must be balanced with the benets of competition,

efciency and choice.

3.2.3 Provision of information, support and advice

Finally, local authorities are playing an important role in providing or signposting businesses

towards sources of information, advice and support. Measures include:

Website links to sources of information and advice are often highly cost efcient

ways of helping rms survive, for instance Swindon Borough Council has launched a

well-designed Pulling Together website, a repository for useful information and advice

for businesses as well as residents. The Swindon Action Force offers local companies

that are facing possible redundancies support by providing information via a central

contact number.

Raising awareness amongst local businesses of small business rate relief

entitlements. Newcastle City Council, for instance, intends to increase local take up of

small business rate relief to a targeted value of 1 million over the next two years.

Working with partners such as Business Link and local universities to host

information and networking events for local businesses. Belfast City Council, for

example, has obtained ERDF funding for a series of business workshops on sales and

marketing, good customer care, nancial planning and obtaining funding, online retail

and VAT. In Bristol 76 people attended an event entitled Growth Opportunities in the

Recession which was co-hosted by the Bristol Enterprise Network and the University of

the West of England in September 2008.

Working with partners to provide more direct support to struggling local rms

in the form of free business mentoring. Cherwell District Council announced in

November 2008 that it would use part of a grant of 160,000 to support the mentoring

service for new business start-ups and small companies administered by OxfordshireBusiness Enterprises, whilst Manchester City Council and partners are working with

large local professional service employers to roll out a Timebank mentoring scheme.



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Manchester: Timebank business mentoring

As part of the Helping Hand campaign, Manchester City Council, the Greater Manchester

Chamber of Commerce and a number of professional service companies have come

together to launch Timebank, a scheme which allows small and medium sized Manchester

organisations to get free business advice from participating professional consultancies and

support agencies.

The Big Four accountancy rms, as well as large law rms such as Addleshaw Goddard and

Halliwells, had pledged staff time worth an estimated 250,000 at the time of the schemes

launch, with advisers granting a free two-hour consultation on subjects such as nance, law,

employment, pensions, supply chain, process improvement and sales. The scheme, which

received a favourable write-up in the Financial Times, will run for an initial three months fromMay 2009.

Control over employment and skills policies is shared between the local authority, JobCentre

Plus, Learning and Skills Councils and Connexions services although local authorities will

deliver some employment provision themselves. Some new national funding for jobs has been

provided to respond to the recession. One example is the Future Jobs Fund, announced in the

2009 Budget which gives local councils and partners (such as social enterprises or other third

sector organisations) an opportunity to bid for money to provide innovative job creation schemes

for 18-24 year olds.


Local authorities have used a range of methods to provide information, support and advice,

including:

Signposting residents to appropriate sources of help and information via leaets

or websites. Birmingham City Council has produced and delivered a Coping with the

Recession leaet to all households in the Birmingham area, whilst Manchester City

Council and Swindon Borough Council are leading examples of local authorities thathave produced useful and well designed websites which offer access to information

about available help and support.

Providing information about affordable events and activities in their local area , for

instance Manchester City Councils easily navigable Helping Hands website includes

a section entitled Free Stuff which highlights free activities, events and places to go in

Manchester.

3.3

How are local

institutions

responding to

support people

and labour

markets?



37/74


Table 3.3: People and labour markets recessionary impact and local response

Area of impact UK local response Examples

Job losses Minimise the scale of redundancies Belfast: lobbied Ford to ensure fairredundancy packages

Create new labour market centres Newcastle: Three resource centresproviding early interventions for newlyunemployed

Coordinate redundancy support Chelmsford: Bringing together anumber of stakeholders to coordinatesupport

Youth unemployment Apprenticeship schemes Newcastle: fund of 0.5m on longterm youth training/apprenticeship

schemes

Low skilledunemployment

Retrain the unemployed Oxford Brookes: 2,000 to be trainedwith HEFCE money

Trainingopportunities

Training Newcastle University scheme inviteslocal SMEs to apply for a voucherworth up to 5,000 to use for trainingor advice from the university inJanuary 2009

New coordination of training centres Cardiff: extra 62k for coordinatedfront end support for local trainingand enterprise centres

Low incomes and

higher debt

Provide support Cardiff: Adult learners course on

coping with the recession

Debt advice Newcastle: 400k for four extra debtadvisers

Publicise council tax benets Chelmsford: Information provided toencourage uptake

Lack of vacancies Ensure vacancies are publicisedmore regularly

Derby Bites Back: Derby EveningTelegraph is printing redundanciesdaily rather than weekly

Aid and extend existing credit unions Cardiff Credit Union businessdevelopment supported by CardiffCity Council

Ongoing areas ofdeprivation

Continue to target existing socialproblems

Newcastle: 200k to supplement areabased grant


Local leadership has an important role in helping to mitigate the impact of job losses,

coordinating the responses to a crisis and offer an important focal point for the complex

networks of service delivery for unemployed people in the UK. Actions have included:



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Local leaders have lobbied to minimise the consequences of redundancies , with

Belfast City councillors supporting the campaign for a fair redundancy package forstaff dismissed with one hours notice from the Visteon manufacturing plant. This was

part of a wider package of protest, including a sit-in and union negotiations, which was

successful in achieving improved redundancy packages for the workers.

Working with partners to roll out a host of enhanced local unemployment

services in places such as Chelmsford and Cardiff.

Chelmsford: Redundancy initiative: Supporting enterprise

Chelmsford Borough Council launched a redundancy support scheme in June 2009 in

partnership with Chelmsford College, Business Link, Mid Essex Enterprise Agency and

Citizens Advice Bureau. Under the Redundancy Initiative: Supporting Enterprise (R.I:S.E)

scheme, advisers will provide advice and support to help people identify career options,

improve professional skills and network professionally for people interested in starting or

buying a business every Tuesday via seminars and advice surgeries.

Cardiff: ReAct redundancy support

Cardiff Council, Careers Wales, Jobcentre Plus and the Benets Agency have come togetherto offer a holistic redundancy support package named ReAct which provides a redundancy

action fund to help people attain skills, overcome obstacles and identify employment

opportunities following redundancy. Currently the ReAct team is contactable both day and

night to inform companies in Cardiff and the Vale of Glamorgan of the support available.

Increasing emphasis on shifting service provision towards early intervention . The

Newcastle Futures Partnership, for instance, has set up three new centres which will

provide services designed to address the psychological costs of unemployment as well

as more traditional job search support.



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Newcastle: Early interventions for the newly unemployed

Newcastle City Council and partners (including JobCentre Plus, the PCT, Northumbria

University and Newcastle College) are working together as the Newcastle Futures Partnership

to open three Resource Centres across the city. Set to open by June 2009, these will offer

early interventions on employability, skills assessment, mental health and debt advice to those

made newly redundant.

The Resource Centre will provide:

Job search and job hunting technique support (including access to the internet for jobsearching);

Skills assessment, with increased access to higher skills partners such as Newcastle

University and Newcastle College;Mental health and wellbeing advice;Debt advice.

The customer offer will typically involve an induction session, a number of core modules

(which can be opted out of/into) and the provision of job search facilities and advice. Clients

will be referred onto the service either at the point at which Newcastle Futures engages

with a rm that has announced redundancies, or through the normal JobCentre Plus referral

mechanism.

Newcastle City Council is underwriting the cost of the centres; with funding being made

available from the exible resources within the councils Area Based Grant. Other partners

are redeploying existing services, or increasing capacity.

3.3.3 Retraining and employment advice

Local authorities with skills decits have witnessed the largest increases in unemployment

rates. That the low skilled have been disproportionately impacted by the recession makes skills

particularly important. Measures undertaken by local partners have included:

Retraining for newly or temporarily unemployed workers . In Swindon, the unionUnite worked with Swindon College, Filton College, Wiltshire College, City of Bath

College and Norton Radstock College to provide a series of retraining courses for

Honda workers during the plants four month shutdown.



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Publicising available vacancies and employment opportunities . To this end,

Belfast City Council and the West Belfast Partnership organised an enterprise andemployability fair which offered attendees advice on the available employment in the

city.

3.3.4 Student and youth unemployment

There have been a variety of local efforts to address the problems facing graduates due to enter

the labour market in 2009, for instance by including beat the recession pages of information

and advice for nal year students on graduate careers websites. In addition, local authorities

are:

Supporting entrepreneurs : Belfast City Council and Queens University Belfast hosted

an E Factor Fair which helped students at local higher education institutions develop

their CVs and start their own businesses;

Equipping graduates for work : Liverpool John Moores University has increased its

efforts to equip graduating students with work-related skills.

Liverpool: Intensive WoW programme

Liverpool John Moores runs a World of Work (WoW) programme that aims to equip studentswith the skills needed for success in the world of work. WoW is a four stage process, that

involves an online virtual interview to assess current skills, training to address skills gaps,

the production of personal statements and an employer interview. Participating students are

allocated a coach from the WoW Delivery Team to support them through the process.

In light of the current economic situation, the Graduate Development Centre at Liverpool

John Moores is running an intensive programme of workshops and support during May and

June 2009 to fast track nal year students through the WoW process to help improve their job

prospects.

3.3.5 Support for the low paid

Even at a time when employment is scarce, employment alone does not always provide

an individual with a reasonable standard of living. Local authorities are therefore taking the

following measures:



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Addressing the ongoing problem of in work poverty by introducing more

generous local minimum wages for council employees and encouragingother organisations to do the same. Manchester City Council was the rst UK

local authority outside London to introduce a minimum wage in November 2008, with

Glasgow City Council following suit in April 2009.

Manchester: Manchester minimum wage

In November 2008, Manchester City Council became the rst local authority outside London

to sanction a top-up to the minimum wage. At 6.75 an hour, the Manchester minimum wage

is worth 1.01 more than the national minimum wage of 5.74 and is benetting 850 lower

paid council employees. Manchester City Council intends to work closely with other publicsector organisations to encourage take up across the city and improve the lives and working

conditions of low wage city employees.

Glasgow: Glasgow Living Wage

As part of a drive to tackle low pay, the Glasgow Living Wage of 7 an hour came into force

for employees of Glasgow City Council on 1 April 2009. Glasgow City Council is strongly

encouraging arms length organisations and contractors to follow its lead.

3.3.6 Debt advice and access to credit

As unemployment continues to rise, many people are facing higher levels of debt and difculties

in repaying money. Local authorities have an important role to play and are:

Providing debt management support and advice for residents . Newcastle City

Council has allocated 400,000 of funding for an extra four staff to provide expert debt

advice to help people manage their way out of nancial crisis and a debt prevention

publicity campaign. Bristol City Council is spending 170,000 on enhanced debt advice

and benet take-up campaigns for residents and on the recruitment of a FinancialInclusion Champion to combat loan sharks.

Supporting the activities of local credit unions to increase access to credit . For

example Bristol City Council has provided 30,000 support for the Bristol Credit Union

to enable it to increase the number of members and raise awareness of low-cost loans,

whilst Cardiff Council is providing 19,000 to fund a new post of Business Development

Worker for Cardiff Credit Union.



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Essex: Essex Savers

Essex County Council is supporting the development of Essexs credit union Essex Savers

into a sustainable 2 million business. Essex County Council is to provide start up grants,

seconded personnel, collection points, payroll deduction facilities and publicity to increase

awareness of the benets of credit unions and support the expansion of the Essex Savers

credit union.

3.3.7 Addressing deprivation

While much of the focus during the recession has understandably been on the newly

unemployed, pre-existing areas of deprivation still face considerable challenges. Indeed, given

the characteristics of the populations of these areas they may be affected more severely in the

recession than more prosperous areas. A number of local authorities have recognised the need

to continue or expand efforts to address existing areas of deprivation. Measures include:

Investment targeted at deprived communities : Of Bristol City Councils 1 million

investment to tackle the effects of the recession, 300,000 was given to the Bristol

Partnership to tackle the social impacts of recession (such as health, crime, incidence

of domestic violence, relationship breakdown and increased homelessness) on

deprived communities. Similarly, Newcastle City Council is investing a further 200,000

to supplement the Area Based Grant funded programme of initiatives to tackle multiple

deprivation.

Providing additional nancial help to people who start work in neighbourhoods

with the highest unemployment rates in Birmingham. For those who start work in

these areas, and continue to qualify for Housing Benet or council tax benet, the

council will top up payments to the level received while an individual was unemployed,

for up to 12 weeks.

Local authorities in the UK are the principal urban leaders. As well as working with RegionalDevelopment Agencies, local authorities link with local partners through Local Area Agreements,

which aim to improve the quality of life in local areas. Managed by Local Strategic Partnerships,

these can be funded through existing funding or the Area Based Grant, much of the funding of

which is already committed but which is increasingly being committed.25 Multi-area agreements

are cross-boundary versions, enabling local authorities to work together to address shared

25http://www.idea.gov.uk/idk/core/page.do?pageId=6908743

3.4

How are local

institutions

responding

at a strategic

level?

http://www.idea.gov.uk/idk/core/page.do?pageId=6908743http://www.idea.gov.uk/idk/core/page.do?pageId=6908743


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problems. Finally, more recent governance arrangements have been provided in the form of

City-Region Authorities. Manchester and Leeds received this status in the 2009 budget, with theinitial areas of inuence being skills, employment, housing and joint investment boards with the

RDAs.26

Table 3.4: Local leadership recessionary impact and local response

Area of impact UK local response Examples

Rapidly changingsituation

Monitor the economic situation Liverpool: Economy Review Group

Conduct own survey of local issues Swindon: SSEP conducting monthlyelectronic surveys of business needsin Swindon

Assemble crisis task force with localbusiness

Glasgow: Economic Advisory Board

Local governmenttax-burden

Make efciency savings to keepcouncil tax low

Swindon: 8.4m in efciency savingsfor 2009/2010, however this willinclude redundancies

Reduce council remunerations Derby: City councillors agree topostpone remuneration increasesuntil after the recession

Limited resources Coordinate response Derby: Derby Bites Back Campaign

Focus response on the recession Bristol: Recession action plan

3.4.1 Monitoring the local economy

To understand how best to respond to the recession, local leaders must understand the nature

of the impact on their locality. To this end, Bristol City Council is one of several local authorities

that has started to produce a monthly economic bulletin and more detailed quarterly

analysis of economic trends and recession impacts.

3.4.2 Leadership and engagement

Local areas are also working to improve the quality of local government responses to the

recession, with measures including:

Delegating responsibility for assessing the impact of recession and devising

ways of alleviating its impact locally to a specic group of individuals. Liverpool

City Council, for instance, has established an Economy Review Group which is led by

26HM Treasury (2009) Budget 2009: Building Britains Future, HMSO: London



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the Ci

220_uk recession_recovery_cities-the work foundation

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