/Summary_of_the_Evidence_Base by Northwest Regional Development Agency

Summary of the Evidence Base RS2010 Assets, opportunities and issues

Regional Intelligence Unit NWDA Renaissance House Centre Park Warrington WA1 1XB Tel: 01925 400 291

Doc ref: 692926 This report is published by the Regional Intelligence Unit as part of its continuing commitment to inform the sustainable economic development of the Northwest of England. It has been produced by the Regional Intelligence Unit, and whilst ever effort has been made to ensure the accuracy of the material in this report the NWDA or the RIU cannot accept any responsibility for decisions based on the material that follows The RIU would like to take this opportunity to thank all those involved in the production of the evidence base for RS2010. Further Information If you require further information on this report, please contact: Rebecca Riley Head of Research Rebecca.Riley@nwda.co.uk 01925 400281

Sourcing Notes: Maps produced by the Regional Intelligence Unit have been created using Ordnance Survey data and comply with copyright and licensing restrictions. ÂŠ Crown Copyright and database right 2009. Ordnance Survey Licence OS number GD 021102. Please note that all data provided by Office for National Statistics is Crown copyright material is reproduced with the permission of the Controller of HMSO. All analysis is prepared by NWDA Research Team or the referenced consultants/supplier.

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Contents 1. Introduction.............................................................................................................................................. 8 2. Executive Summary................................................................................................................................. 9 Economic Issues ................................................................................................................................ 9 Environmental Issues....................................................................................................................... 10 Social Issues .................................................................................................................................... 11 Delivering Outcomes........................................................................................................................ 12 3. The Northwest Economy ....................................................................................................................... 23 Longer Term Economic Performance .............................................................................................. 28 Productivity....................................................................................................................................... 35 Sectoral Strengths............................................................................................................................ 40 4. The Northwest Environment .................................................................................................................. 89 Ecological Footprint.......................................................................................................................... 89 Climate Change Scenarios .............................................................................................................. 90 Flood Risk ........................................................................................................................................ 91 Carbon Emissions ............................................................................................................................ 91 Green House Gases ........................................................................................................................ 93 Waste & Recycling ........................................................................................................................... 94 Energy Infrastructure........................................................................................................................ 96 Energy Intensity ............................................................................................................................... 98 Energy Production............................................................................................................................ 99 Energy Consumption...................................................................................................................... 100 Renewable Energy......................................................................................................................... 100 Nuclear Power................................................................................................................................ 102 Natural Economy............................................................................................................................ 105 Air Quality....................................................................................................................................... 107 Water Quality, Consumption and Resource................................................................................... 107 Natural Environment ...................................................................................................................... 109 Built Environment ........................................................................................................................... 112 5. The Northwest Society ........................................................................................................................ 114 Poverty ........................................................................................................................................... 114 Deprivation ..................................................................................................................................... 120 Worklessness................................................................................................................................. 125 The Regional Index of Sustainable Economic Wellbeing............................................................... 130 Children & Young People............................................................................................................... 132 Crime.............................................................................................................................................. 134 Social Cohesion ............................................................................................................................. 138 Population ...................................................................................................................................... 143 Health............................................................................................................................................. 145 Housing .......................................................................................................................................... 148 Social Assets.................................................................................................................................. 154 6. The Northwest Geography .................................................................................................................. 156 Performance Economies................................................................................................................ 166 Commuting Economies .................................................................................................................. 169 Agglomeration Economies ............................................................................................................. 173 Spatial Connectivity........................................................................................................................ 176 Spatial Overview ............................................................................................................................ 182 Mapping the Spatial Implications ................................................................................................... 185 Wider “Place” Based Evidence ....................................................................................................... 189 7. Delivering the Outcomes – Issues, Opportunities, Assets and Threats .............................................. 208 Outcome 1:: Developing a low carbon economy, promoting the sustainable use of resources and minimising and adapting to the impact of climate change...................................................... 207 Outcome 2: Ensuring the Northwest has vibrant and attractive cities, towns and rural areas, capitalising on the region’s rich cultural, heritage, sporting and university assets. ................ 214

Summary of the Evidence Base Outcome 3: Increasing the levels of enterprise and trade and creating the right conditions for business growth and sustainability in the region. Capitalising on the region’s strengths and assets in international trade, intellectual property, advanced manufacturing, bio-medical and digital/creative. ....................................................................................................................... 219 Outcome 4: Increasing productivity, capitalising on the region’s innovation, science and research assets and exploiting the Northwest’s potential in the renewable and nuclear offer and worldwide opportunities from low carbon technologies. .......................................................................... 224 Outcome 5: Protecting, enhancing and developing the quality of the Northwest’s outstanding environmental, natural and coastal landscape assets............................................................ 229 Outcome 6: Developing communities and places which are sustainable and safe, with less deprivation and disadvantage within the region. .................................................................... 236 Outcome 7: Creating a world class skills base, improving education, attracting and retaining talent as well as tackling gaps in basic and graduate level skills.......................................................... 241 Outcome 9: Improving the range and depth of quality employment opportunities for all. Linking areas of opportunity and need, significantly reducing low employment rates and improving the supply of labour to businesses. ......................................................................................................... 254 Outcome 10: Creating balanced housing markets across the Northwest that support economic growth, strengthen inclusion and ensure that everyone has access to appropriate, well-designed high quality, affordable housing in mixed, sustainable communities...................................... 258

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Summary of the Evidence Base Table of Figures Figure 1: Regional GVA per capita – 2007...................................................................................................29 Figure 2: Regional GVA and GVA per capita comparisons – 2007..............................................................29 Figure 3: Northwest GVA per capita index 1990-2007 Eng=100 ................................................................30 Figure 4: Share of total regional GVA at sub-regional level, 2006 ...............................................................31 Figure 5: Sub-regional GVA per capita, 2006...............................................................................................31 Figure 6: Sub-regional GVA per Capita 1997-2006 Eng=100 .....................................................................32 Figure 7: Working-age population trends, England and Northwest, 1990 – 2007 ........................................33 Figure 8: Regional employment and economic inactivity rates ....................................................................34 Figure 9: Average per annum growth rate of the GVA per capita gap .........................................................35 Figure 10: Average per annum growth rate of the GVA per capita gap .......................................................36 Figure 11: Change in output and productivity indicators in the Northwest, 1997-2007 Eng=100................37 Figure 12: Comparison of gross domestic household income, 1997-2007 Eng=1000.................................38 Figure 13: Labour Productivity, GVA £000’s per FTE, 2006 ........................................................................38 Figure 14: Change in Labour Productivity, 1998 to 2006, (Eng = 100) ........................................................39 Figure 15: Manufacturing Labour Productivity, GVA £000’s per FTE, 2006.................................................39 Figure 16: Change in Labour Productivity, 1998 to 2006, (Eng = 100) ........................................................40 Table 1: Location Quotient Bio tech .............................................................................................................52 Figure 17: Highest qualification attained ......................................................................................................61 Figure 18: Percentage in employment by educational attainment, 2008......................................................62 Figure 19: Percentage of employees & self-employed having undertaken training in the previous 4 & 13 weeks, 2008 .................................................................................................................................................63 Figure 20: Occupation by occupational category in 2001 and 2008 (% of total jobs)...................................64 Figure 21: Earnings by occupational category, 2008 ...................................................................................64 Figure 22: Total entrepreneurial activity in the UK, 2008 (% of adult population) ........................................66 Figure 23: Business start-ups per 10,000 resident adults by region, 2007 ..................................................67 Map 1: VAT registration rates per 10,000 resident adult population by district, 2007 ..................................68 Figure 24: Change in business start-up rates per 10,000 resident adult population, 1997-2007 .................69 Figure 25: Three year survival rate for business start-ups in 2004 (%)........................................................70 Figure 26: Investment by UK and foreign owned businesses in the Northwest and England as a percentage of GVA ..........................................................................................................................................................71 Figure 27: Investment by UK and foreign owned businesses in the Northwest and England as a percentage of GVA, 1998-2006.......................................................................................................................................72 Figure 28: Business enterprise research & development as a percentage of GVA .....................................73 Figure 29: Total expenditure on research and development as a percentage of GVA, 2007.......................74 Figure 30: Trade exports and imports as a percentage of GVA ...................................................................76 Figure 31: Stock of VAT registered businesses per 10,000 16+ population 2008 .......................................76 Figure 32: Stock of VAT registered businesses per 10,000 16+ population 2008 .......................................77 Figure 33: Number of fewer businesses in Northwest compared with England per 10,000 16+ population 78 Figure 34: Combined aspirations at the regional level, compared to the Panel’s Northwest baseline. ........81 Table 2 : CO2 Emissions by End User .........................................................................................................91 Figure 35: CO2 produced in the Northwest by End User 2007 ....................................................................92 Table 3: CO2 Emissions per Unit of GVA (£) ...............................................................................................92 Figure 36: The breakdown of GHG emissions by sub-region in 2005..........................................................93 Figure 37: Northwest total municipal waste arisings, 2000/01 – 2007/08 ....................................................94 Figure 38: Northwest sub regional household recycling and composting rates ...........................................96 Figure 39: Total energy intensity (KWh / £GVA) by UK regions 2003 – 2006..............................................99 Figure 40: Northwest electrical generation mix ............................................................................................99 Figure 41: English regions total energy consumption................................................................................100 Figure 42: Comparison between targeted and potential renewables capacity to 2020 by technology.......101 Figure 43: Decline in UK Nuclear Capacity in 2006 ...................................................................................103 Figure 44: Principle Nuclear sector sites in the Northwest .........................................................................104 Figure 45: Air pollutant decreases in Air Quality Strategy substances from Industrial premises in the Northwest between 1998 and 2007............................................................................................................107 Map 2: ‘Protected Landscapes’ in the Northwest .......................................................................................110

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Summary of the Evidence Base Table 3: Sub regional woodland cover .......................................................................................................111 Figure 46: Households at risk of falling below 60% median incomes per region 2007/8 (before housing costs)..........................................................................................................................................................114 Figure 47: Percentage of Households in Fuel Poverty by Government Office Region...............................115 Figure 48: Correlations between fuel poverty and the proportion of rural population per district ...............116 Figure 49: Northwest households by total weekly household income ........................................................117 Figure 50: London households by total weekly household income ............................................................117 Figure 51: Ratio of Highest to Lowest Earnings per GOR..........................................................................118 Figure 52: Income Gaps per GOR and UK 1999 to 2008...........................................................................119 Figure 53: Average Gross Weekly Earnings by GOR ................................................................................119 Figure 54: Average Gross Weekly Earnings by District..............................................................................120 Map 3 .........................................................................................................................................................121 Figure 55: Region level population-weighted average LSOA ranks on overall EDI 1999 to 2005 .............122 Figure 56: Biggest improvement/decline in deprivation in NW districts 1999-2005....................................123 Figure 57: ACORN Hard Pressed Households by Type in 10 Most Deprived Districts, Northwest............124 Figure 58: Ethnic Diversity and Deprivation ...............................................................................................125 Figure 59: IB Claimant Rate by Ward.........................................................................................................126 Figure 60: Correlation between the proportion of ‘Struggling Families’ and IB Claimants in NW Wards ...127 Figure 61: Correlation between inner city adversity and IB claimants by NW wards .................................128 Figure 62: GOR Employment rates across Minority Ethnic Groups ...........................................................129 Figure 63: GVA-ISEW per Capita Comparison by region...........................................................................131 Figure 64: Northwest R-ISEW Breakdown .................................................................................................131 Figure 65: Northwest GVA/R-ISEW & England R-ISEW per Capita 1994-2006 ........................................132 Table 4: Local Index of Child Well-being by GOR ......................................................................................133 Figure 66: LSOA Level Child Wellbeing Index in Greater Manchester.......................................................134 Figure 67: Sub-regional Crime Patterns as % of Regional Totals ..............................................................135 Figure 68: LSOA Level IMD Crime Domain Across Greater Manchester...................................................137 Figure 69: % who agree that their local area is a place where people from different backgrounds get on well together (NI 1) – GOR ................................................................................................................................139 Figure 70: The % of residents who think people from different backgrounds get on well together correlated with the Ethnic Fractionalisation Index .......................................................................................................139 Figure 71: Correlations between Community Cohesion, Deprivation and Ethnic Fractionalisation............141 Figure 72: Correlation between community empowerment, community cohesion and ethnic diversity .....142 Figure 73: Correlation between Community Cohesion and Volunteering...................................................143 Figure 74 Northwest population projections by quinary age cohort............................................................145 Figure 75: IMD 20% most and least deprived LSOAs ................................................................................146 Figure 76: life expectancy at birth rate trends for the region compared with England, by gender..............147 Figure 77: Ratio of lower quartile house prices to lower quartile earnings 1997-2008 by region ...............150 Figure 78: Ratio of lower quartile house price to lower quartile income, housing market areas in the Northwest 2002, 2007, 2008 ......................................................................................................................151 Table 5: Correlation Matrix for Social Indicators (2007 data) .....................................................................152 Figure 79: Historic Counties’ Populations 1801-1961/NW Population 1801-2001 .....................................157 Figure 80 ....................................................................................................................................................158 Figure 81: 2.1 GOR Populations 1801-2001 ..............................................................................................159 Figure 82: NW Population compared to England & Wales 1801-2001.......................................................159 Figure 83: NW Grouped Ages as a percentage of total population 1851-2001..........................................160 Figure 84: NW SIC Composition by Key Sectors 1841 – 2001 ..................................................................160 Figure 85: England SIC Composition by Key Sectors 1841-2001..............................................................161 Figure 86: Total employed in the NW Service and Manufacturing sectors 1841-2001 ..............................162 Figure 87: Quarter on Quarter GDP Growth (National) 1955-2008............................................................162 Figure 88: Retail Prices Index: quarterly index numbers of retail prices 1948-2008 ..................................163 Figure 89: Total Households in the NW 1831-2001 ...................................................................................164 Figure 90: Those with basic qualifications 1951 and 2001.........................................................................164 Table 6: Performance Driver Profile ...........................................................................................................166 Figure 91: Regional Performance Profiles LAD Distribution.......................................................................167 Table 7: Performance Rankings .................................................................................................................167

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Summary of the Evidence Base Table 8: Performance Matrix ......................................................................................................................169 Figure 92: Agglomeration Value Profile......................................................................................................175 Table 9: Agglomeration Matrix....................................................................................................................176 Table 10: Spatial Connectivity ....................................................................................................................178 Figure 93: Functional Role and GVA Comparison .....................................................................................185 Figure 94: Functional Role and Quality of Life Comparison .......................................................................186 Figure 95: Functional Role and Performance Comparison ........................................................................187 Figure 96: Functional Role and Environmental Comparison ......................................................................188 Figure 97: Benefits of Green Infrastructure ................................................................................................199 Figure 98: IMD Health Domain ...................................................................................................................202 Figure 99: SWOT analysis..........................................................................................................................208 Figure 100: Total energy intensity (KWh / £GVA) by UK regions 2003 – 2006..........................................210 Table 11: Possible future renewable generation targets ............................................................................211 Figure 101: SWOT analysis........................................................................................................................214 Figure 102: Top Visitor Destinations for International Visitors (exc. London) 1999-2008 ..........................215 Figure 103: Participation/Attendance across cultural activities per region .................................................216 Figure 104: Estimates of Capital Expenditure by HEI ................................................................................217 Figure 105: SWOT......................................................................................................................................219 Figure 106: SWOT......................................................................................................................................224 Figure 107: Productivity and GVA per capita performance for all GORs ...................................................225 Figure 108: Share of R&D to GVA..............................................................................................................226 Figure 109: Northwest electrical generation mix ........................................................................................227 Figure 110: SWOT......................................................................................................................................229 Figure 111: SSSI sites achieving target condition (left) and Agri-environmental schemes coverage (right) ...................................................................................................................................................................231 Table 12: Visitor number across different heritage assets (2006) ..............................................................232 Figure 112: Protected landscapes (left) and BAP Habitats (right) in the Northwest...................................233 Table 13: Registered historic assets in the Northwest ...............................................................................234 Figure 113: SWOT......................................................................................................................................236 Figure 114: Sub-regional Crime Patterns as % of Regional Totals ............................................................237 Figure 115: LSOAs in England’s Bottom 5% by GOR................................................................................238 Figure 116: Region level population-weighted average LSOA ranks on overall EDI 1999 to 2005 ...........238 Figure 117: SWOT......................................................................................................................................242 Figure 118: Working Age Population with No Qualifications Split by Gender – Regional ..........................245 Figure 119: SWOT......................................................................................................................................248 Figure 120: Incapacity Benefit/Severe Disablement...................................................................................249 Figure 121: CIS-R scores ...........................................................................................................................249 Figure 122: Sickness Absence ...................................................................................................................250 Figure 123: Average Life Expectancy.........................................................................................................250 Figure 124: Alcohol consumption ...............................................................................................................251 Figure 125: Participation rates among pupils .............................................................................................251 Figure 126: SWOT......................................................................................................................................254 Figure 127: Scatter diagram absolute increase in JSA v Percentage increase in JSA ..............................255 Figure 128: Workplace and residence based employment rates ...............................................................256 Figure 129: SWOT......................................................................................................................................258 Figure 130: Regional Household Growth by Region ..................................................................................259 Figure 131: Age of Stock in the Northwest .................................................................................................260 Figure 132: SWOT......................................................................................................................................263 Figure 133: Internet connection by speed and sub-region .........................................................................267 Figure 134: Top 10 flows to and from the RUS area, 2004/05 ...................................................................268 Figure 135: FTE Police Officers by Sub-region March 2009 ......................................................................275 Figure 136: Public Sector Debt as a Percentage of GDP...........................................................................277

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1. Introduction 1.1

The purpose of the Regional Strategy (RS2010) is to set out a long term strategic framework for the region which promotes sustainable economic growth and contributes to sustainable development. 1 As such the evidence base seeks to understand the connections and inter-relationships between economic growth, environmental limits and social welfare.

1.2

This report summarises the evidence collected to date for the development of the Regional Strategy (RS2010), it looks through the lenses of the pillars of sustainable economic development by exploring the Northwest’s economy, environment, society and wellbeing as the high level themes, and how these pillars play out spatially within the region.

1.3

The extent of interdependence between all these domains has become increasingly clear. Geography matters in relation to all the pillars of the region’s performance. Sometimes spatial variation is the evidence of a problem (e.g. deep-rooted area-based deprivation), sometimes it is a result of market processes working well (e.g. because of agglomeration effects). Hence, there are occasions on which, for reasons of equity and/or efficiency spatial differences need to be rectified. However, there are others on which eliminating the cause of spatial difference could be detrimental in terms of overall economic performance. This report seeks to explore these issues and highlight areas the Strategy needs to take action.

1.4

One of the real opportunities linked to the RS2010 is that the market-led perspective will engage seriously with supply side policies, such that regional development can be planned in a way that is genuinely taking account of real spatial processes and places.

1.5

As the previous Principles and Issues Paper details 2 stated “none of this is easy”. But this paper seeks to further develop the understanding of how the region works, through exploring: The challenges the region faces and how those issues are played out spatially; The opportunities and assets which are presenting themselves; The ideas which have developed out of the evidence; And, how we achieve the outcomes the region has already identified.

1.6

1 2

The challenge and opportunity for RS2010 is to bring these different worlds – and different world views – together. The purpose of this summary paper is to bring clarity and further develop the region’s understanding, based on the extensive evidence base developed to date, by regional and local partners.

Clauses 67 and 70 Local Democracy, Economic Development and Construction Bill Principles and Issues Paper, NWDA and 4NW, Feb 2009

Summary of the Evidence Base

2. Executive Summary 2.1

The evidence base developed over the last 18 months has highlighted many key opportunities, assets, threats and weaknesses in achieving the goals of the RS2010 outcomes. This executive summary provides an overview of those findings. The first 3 sections consider the key economic, environmental and social issues facing the region and the following sections then provide a summary of the region’s performance against the outcomes required and also the key implications for the strategy.

Economic Issues 2.2

It is fundamentally important to get the drivers of the economy right in order to sustain balanced growth into the future. Good performance on skills, investment, competition, enterprise and innovation are all essential to a strong economy and the region needs to continually improve on all of them. The strategy will also need to have a sufficiently flexible framework for identifying business growth opportunities across all places and sectors. As the sectoral analysis shows, it is often niche parts of sectors which are responsible for the growth not a sector as a whole. Whilst investment should be responsive to all opportunities across all sectors a current evidence shows the region’s niche areas are advanced manufacturing (aerospace and chemical production), composites (as part of defence and textiles industry), research capacity into printable electronics, low carbon (nuclear, low carbon aerospace and R&D), life sciences (pharmaceutical and biotech), digital and creative (Mediacity).

2.3

Examining the productivity gap, the region falls behind in terms of the numbers of those out of work, but also crucially, the occupational structure is detrimental. The region is getting closer to the England sectoral structure and as it does, the competitive advantage the structure used to offer (from a concentration of high value manufacturing jobs), is being lost. The sectors which do offer a strong comparative advantage at a broad industry level are agriculture, manufacturing and energy, but these sectors are at risk of further reductions in size. As the actual structure is nearing that of England, the region is not altering its occupational structure, which is leading to the disadvantages of similar sectors, but with lower value jobs within those sectors. Therefore the region has fewer managers and senior professional and technical roles, this fits with the region also having less head-quarter functions where these roles are usually concentrated. The evidence has also emphasised the role and importance of head-quarters as key major employers and the impact they have on local areas and economies.

2.4

In tackling the worklessness element of the productivity gap, potentially it can have a negative impact on the ‘in job’ productivity. Usually new entrants to the labour market are at the lower end of the jobs market, and by creating more opportunities for them, the balance of the occupations shifts to lower end, lower productivity entry level roles. Therefore it is vitally important to ensure a balanced labour market with opportunities at all levels. Specifically for the Northwest, it is vital to ensure the supply of high level roles and the range and quality of opportunity for those at the higher end of the market, fit the high supply of graduates the region has access to.

2.5

The evidence suggests that Manchester District and its neighbouring districts of Salford, Trafford and to a lesser extent Stockport is the economic hub of the region. This is followed by the hubs of Liverpool, Preston and Warrington, and to a much lesser extent, but equally important role in a sparsely populated area, Carlisle. These hubs generate the majority of the employment and agglomeration linkages and are the core hubs of the economic geographies. They are surrounded by an overlapping and diverse range of functional places, which are either dependent on them for jobs and business density, and on which hubs are equally dependant for supply of labour and skills.

2.6

Economic growth within the region is polarised with a small number of hubs at the top end of the growth and other areas, often relatively close to hubs, not accessing that growth or benefiting from it. These places are generally the wider series of conurbations in Manchester, Liverpool, and Lancashire. These places also have a poor balance of underlying economic performance and quality of life characteristics. This suggests they don’t have the economic drivers, and they also lack many of the positive attributes, of either being a strong hub or a strong support function.

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Summary of the Evidence Base Supporting and complementary places such as East and West Cheshire, Fylde & Wyre, Lancaster and Ribble Valley offer hubs a skilled workforce with good quality of life. 2.7

The evidence demonstrated that Cumbria is distinct, in that much of its economic underperformance is due to its location and distance from major economic hubs. Although most parts of Cumbria demonstrate balanced economic characteristics such as skills and labour, this is undermined by locational factors. In terms of quality of life most areas perform well, therefore regional priorities in Cumbria should focus on its assets and contributions which minimise locational factors, such as tourism offer, specialties within environmental opportunities, energy and natural assets. There are still areas in Cumbria which suffer detrimental issues relative to the rest of Cumbria, notably Barrow and parts of West Cumbria.

Regional economic priorities the evidence emphasises: 2.8

There is no single clear economic geography, rather a complex, interrelated and overlapping set of geographies.

2.9

The region has a small number of truly international competitive advantages, sectoral such as nuclear, advanced manufacturing and niches bio-tech, chemicals; environmental and physical assets such as Lake District, coastline and sport, heritage and major city brands; these must be developed and protected to ensure the region maintains its position and fundamental character.

2.10 Investing for economic growth should be focussed in Manchester, Salford, Trafford, Stockport, Liverpool, Preston, Warrington and Carlisle and this should be directed at improving and strengthening their business base. This should be through activity which enables them to move higher up the value chain in terms of quality of businesses, opportunities and jobs. Also ensuring continued and growing access to a skilled labour market. Part of the Greater South East’s advantage over the north of England is its high levels of agglomeration and its success in developing mutually supportive and synergistic relationships between the economic centres and surrounding towns. 2.11 Investing in Cumbria should be directed at the niche assets, which are not dependant on proximity to dense hubs, such as sectoral strengths which have grown despite the locational issues (such as nuclear and defence engineering), environmental, tourism and natural assets. 2.12 There needs to be a flexible approach to business and sectoral growth, and should support all opportunities as they emerge, especially in attracting inward investment. However, key regional strengths and assets have been demonstrated either due to sectoral competitive or comparative advantages. 2.13 The region lags behind in terms of business creation and enterprise, there is a need to create an environment which stimulates enterprising behaviour, encourages ability and offers resource in order for people to realise this potential. 2.14 Currently the region is a low cost option, in terms of labour supply and property, but as costs and energy prices continue to increase this advantage may not continue to make us attractive to investors. Environmental Issues 2.15 The most consistent cross cutting issue throughout the evidence base is that of low carbon and climate change. It has permeated through most evidence work from balancing growth, against impacts to loss of assets due to flood risk. Conventional wisdom and research has shown the positive correlation between increasing incomes and an expanding ecological footprint. This relationship has to be changed if growth is to continue in a sustainable manner. 2.16 The ‘do nothing’ scenario could cost the region £70 billion over the next 12 years. Flooding, loss of habitat, sea level rises, higher levels of rainfall with higher temperatures will all affect the region. Although the region is decarbonising (economic growth is continuing whilst carbon is reducing) climate change impacts will continue as they are an international issue. Therefore it is essential to mitigate and prepare for flooding, water storage and coastline defence.

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Summary of the Evidence Base 2.17 Although the region is an exporter of energy, the infrastructure needs upgrading and better connections for renewables or nuclear growth. There could be major constraints on growth in some major conurbations in the future specifically in terms of utilities supply and sustainable transport. 2.18 The evidence also highlighted the importance of our natural and historical landscape and environment to our past, present and future development. The Northwestâ&#x20AC;&#x2122;s environment is one of the key capital and social asset. Creating distinctive and high quality environments which maximise existing assets will be essential in attracting talent and investment. 2.19 Intelligent use of environmental assets and capacity in the region could be of benefit economically through growth in low carbon technologies and businesses developing them. Regional environmental priorities the evidence emphasises: 2.20 The need to protect the environmental and urban infrastructure from climate change 2.21 Protection of the uniqueness of the environment and its habitats as an asset. 2.22 The need to carry out essential upgrading of the infrastructure to cope with future growth demands especially electricity supply, water storage/supply, waste and sustainable transport 2.23 Major hubs and urban areas often have the poorest environmental profiles and these need to be addressed to ensure they remain attractive to businesses and people. Social Issues 2.24 The Northwest is one of the most wealth equal regions in the UK (on income measures) but this is in the context of a country within which, wealth is unevenly distributed. This further illustrates the narrower occupational structure and opportunity, as it leads to less variation in income and fewer, higher paid roles. In remaining competitive and offering a good quality of life it is important to move incomes up the value chain and prevent those at the bottom lagging further behind. Although the region has a more equal income structure overall, in the Northwestâ&#x20AC;&#x2122;s case the whole population is less wealthy (i.e. incomes are at the lower end of the distribution). 2.25 This income structure is further illustrated by the high levels of deprivation in the region with some of the most deprived conditions in the country. Although this picture has improved since 1999, the region is becoming more polarised. The evidence demonstrates that a higher level of deprivation also has strong links with other detrimental social factors such as crime, life expectancy, fear of anti social behaviour, social cohesion and poor school attainment. All of which create barriers for people wishing to improve their area or opportunities for themselves. 2.26 Deprivation and relative poverty are concentrated and converge in certain areas in the region, Blackpool, Bolton, Burnley, Liverpool and Salford score poorly (worse than regional average) across all these factors, and Barrow, Blackburn, Knowsley, Manchester, Oldham, Rochdale, Tameside are worse than the Northwest average across four of the factors above. 2.27 The region is facing significant demographic issues and this again will disproportionately impact on different places. Those places with the better quality of life and social factors, will suffer more from the impacts of an aging population, as older generations are most likely to be able to afford the house prices. This may potentially constrain economic growth, due to fewer working age people to carry out local jobs and fewer affordable houses in good places to attract and retain a productive population. It is important to ensure there are opportunities for all to remain productive and contribute for as long as they wish. 2.28 The region has significant social, cultural and heritage assets, with a thriving sports industry, football, golf and rugby being of major significance, and a strong industrial heritage and quality of place offer. Culturally there is an array of assets, across the whole region from the city brands of Manchester and Liverpool to the rural assets of the Lake District, all of which contribute to the regionâ&#x20AC;&#x2122;s other sectoral strength of tourism. Chester and Lancaster to a lesser degree, also play a significant role as visitor destinations offering strong heritage and tourism brands. Whereas Blackpool, although still the strongest performing coastal resort nationally, the brand is not always

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Summary of the Evidence Base positive and its offer also has significant constraints and the place itself suffers some of the worst deprivation in the region. Regional social priorities the evidence emphasises: 2.29 GVA as an indicator is not holistic enough to capture true sustainable economic development. A broader set of indicators should be used. The Quality of life index shows that areas which perform well across traditional indicators such as crime rates, deprivation, earnings and so on do not necessarily correlate with levels of life satisfaction. The opposite is also true with some of the most deprived areas in the region recording the highest levels of belonging, life satisfaction and satisfaction with services. 2.30 The areas most in need of social regeneration are similar to the areas in need of economic regeneration. The regional hubs and poorer performing districts of Manchester, Liverpool and Lancashire. 2.31 Social cohesion and community belonging are low in certain, predominantly urban areas, identified across the region, particularly in Pennine Lancashire and parts of Greater Manchester. 2.32 As demographic constraints of an aging population continue, the appropriate supply of skilled labour will have to be attracted. Housing will need to be accessible and appropriate both to this aging population and to attract and retain the labour force. 2.33 The Northwest lags behind England in terms of employment rates for disabled, elderly, ethnic minority and female populations. Discriminatory issues can affect some groups more than others and those who fall within a number of minority groupings can suffer from multiple discrimination. 2.34 More children in the Northwest are in low-income households compared to England, and are significantly disadvantaged because of where they are born. 2.35 The Northwest has some of the highest crime levels in England, particularly Greater Manchester and fear of crime is also highest in the Northwest. Crime and anti-social behaviour is one of the most important elements in creating a good sense of wellbeing and quality of life. 2.36 The region has significant cultural and heritage assets in Manchester, Liverpool, Chester, Lancaster and its rural environment, strongly recognised through the Lake District and Cheshire brands. 2.37 In order for Blackpool to maintain a strong market into the future it may need to address the significant social factors which could weaken further its tourism image.

Delivering Outcomes 2.38 The development of a low carbon economy, which promotes the sustainable use of resources and minimises, and adapts to the impact of, climate change (1) 2.39 The evidence tells us that climate change is a significant issue facing the region. Although the region has made some progress to reduce its carbon footprint by 2.86 MtC (from 63.5 to 60.79) under a business as usual forecast emissions are set to increase over the next decade, however, recent Environmental modelling which includes policy impacts also predicts a possible drop of up to 18% by 2020. Businesses and households failing to recognise and respond to the challenges posed by climate change means the region is not adapting quick enough to meet targets. Tackling the environmental impacts created by our industrial heritage and current manufacturing base is crucial to achieving this outcome. Retrofitting housing stock has both environmental and social advantages, for example, 16% of the regionâ&#x20AC;&#x2122;s households being fuel poor. Decarbonising the regions transport infrastructure is also key to meeting this outcome with road transport currently accounting for 25% of all CO2 produced. 2.40 Evidence implications for the strategy The region needs to mitigate and adapt to climate change, which presents many risks and opportunities; It is essential to increase our level of clean energy generation, taking responsibility for our

Regional Intelligence Unit

Summary of the Evidence Base use of resources also presents opportunities in terms of innovation and enterprise in renewables development. This is especially relevant where we have regional strengths such as nuclear. As it becomes increasingly costly to export due to energy costs, to take advantage of overseas growth especially BRICs growth, how we trade may have to change, adapt and be innovative. Markets, sectors and businesses need to adapt their business practices, cutting CO2 emissions and energy consumption to reduce bottom line energy costs. Increase the energy efficient housing and retro-fitting, to reduce energy use, improve quality and reduce fuel poverty. There is a need for improved and sustainable public transport for the region to ensure access to growth centres, international trade and rural areas. The availability of food will change and its security of supply will become more of an issue with increased importing costs, therefore our own food generation becomes more important. Make best use of and protect the natural environment to mitigate impacts including changing sea levels, increased risk of flooding, increased frequency and intensity of extreme weather events and hotter, drier summers which will impact on urban and rural environments and businesses A region attractive to the private sector which has……. Vibrant and attractive cities, towns and rural areas, capitalising on the region’s rich cultural, heritage, sporting and university assets (2) 2.41 Culturally vibrant and attractive cities, towns and rural areas are crucial to economic development through the positive perceptions they give to people visiting the region, be they business visitors, investors, or holiday makers. Overall, perceptions of the Northwest are positive; in terms of headline perceptions, more than twice as many GB residents consider the region to be a success as opposed to a failure (34% compared to 14%). The Lake District, Manchester and Liverpool are the places most strongly associated with the region and also tend to reflect the region’s perceived strengths. Nearly half of UK opinion leaders rate the quality of life in the Northwest as a little or much better than other regions in the UK. Showing that the region is regarded positively from a lifestyle perspective – this is important in the attraction of inward investors to the region, and for suitably qualified candidates to high value jobs. This manifests itself through visitor figures and the performance of the tourism sector, which is strong in terms of market share of the English regions. The region was the 3rd most visited region for inbound (2.5 million) and overnight domestic stays (37 million stays). Outside the obvious draw of London, Manchester is the most frequently visited destination by overseas visitors in England. Liverpool’s status as a visitor destination has increased markedly since 1999 rising 62% from 210,000 to 553,000 over 9 years to become England’s third most visited destination for international visitors. 2.42 The Northwest benefits from an extensive and unique historic environment with 25,000 listed buildings and 2 World Heritage Sites, Hadrian’s Wall and Liverpool Waterfront (with the potential for Manchester or the Lake District to become a third). The historic environment ranges in character from the industrial powerhouse towns in Merseyside, Greater Manchester and across Pennine Lancashire, traditional seaside resorts in Blackpool and Southport, Medieval cities like Chester and Carlisle and Georgian city like Lancaster. This environment contributes £1.6 billion per year to regional GVA with the majority of this accountable to visitor spend. The region has a range of cultural assets unmatched anywhere outside London with numerous national galleries, museums, theatres and high profile activities such as the European Capital of Culture ’08, Manchester International Festival and Cultural Olympiad programme. The European Capital of Culture – Liverpool 08 alone generated £800 million of expenditure in Liverpool as well as significantly improving its image. Ensuring that people in the region engage these unique cultural assets is vital as evidence shows cultural engagement has the potential to improve life prospects and act as a pathway into work. Evidence also shows that engagement is on the rise at a greater rate in the

Regional Intelligence Unit

Summary of the Evidence Base Northwest than other parts of the country, participation in cultural activities rose from 41% (2006/7) to 45% (2007/8). Finally, universities contribute considerably to the place making agenda attracting and retaining students within the region and transforming and supporting economies within parts of cities like Manchester, Liverpool, Lancaster and Preston. Higher Educational Institutions also generate significant economic impact in the region contributing £3.5 billion to the economy per year. 2.43 Although the evidence says that cities and towns have been and will potentially continue to be the focus of economic growth particularly in terms of their attractiveness to inward investment and tourism, with that growth comes the need to mitigate the potentially negative impacts on their society and environment, such as congestion, access, environmental impacts and utilities infrastructure. 2.44 Evidence implications for the strategy The economic and social contribution of the historic environment is now understood but this is an asset which must be protected by reducing the numbers of buildings at risk and by promoting the underexploited post-industrial historic environment across the region. Continue to promote the region’s tourism offer attracting visitors and business tourism, specifically where the offer needs to improve its standards. Continue building on the international brands (Manchester, Liverpool and The Lake District) and secure their future success, and provide new opportunities and focus for those areas not meeting their potential (Blackpool, Southport, Chester, Lancaster and Carlisle). Promote the image of the region both nationally and internationally through marketing, major events and positive television exposure. London 2012 and the World Cup 2018 bid offers the opportunity to promote the region internationally as does the legacy of Liverpool ’08. Improve the sustainable transport infrastructure to ensure the region is easily accessible to enable its tourism offer, cities, towns and rural assets be utilised effectively. Ensure that people fully engage with the outstanding cultural offer that the region has, evidence shows that participation and attendance at cultural events is on the increase which most likely due to the sheer quantity of cultural events that have been available in the region recently. A region attractive to the private sector which has… …..Increased levels of enterprise and trade, creating the right conditions for business growth and sustainability in the region. This will capitalise on the region’s strengths and assets in international trade, intellectual property, advanced manufacturing, bio-medical and digital/creative. (3) 2.45 The evidence tells us that there are low levels of business starts in the Northwest and that rates have been consistently poor over the last five years, with an average of seven less starts per 10,000 (16+ population) compared to England. The Northwest also does not punch its weight with regard to business turnover, between 2001 and 2007 whilst the region’s share of enterprises grew marginally from 10.7% to 10.9% of the UK total the share of turnover they produced declined from 9.3% to 8.4%. Therefore the region has lower numbers of businesses and these businesses have lower turnover. The region displays weaknesses across a number of factors identified as enablers of enterprise and which determine the level and quality of enterprise. The culture of enterprise in the Northwest lags leading regions with fewer individuals believing they have the skills to start an enterprise, 41.8% in 2008 compared with 51.7% for London. The Northwest also lags London and the South East in terms of perceived opportunities to start-up a business, 25.6% of people compared with 32.9% in London and 31.5% in the South East. Leadership and management skills in the region need to improve “Northwest Skills and Productivity” project suggests that if the region were in the top quartile in terms of management and leadership performance this would add £1 billion to the economy.

Regional Intelligence Unit

Summary of the Evidence Base 2.46 Market failures exist in terms of access to information, businesses can fail to understand the potential benefits of exporting, adapting to future markets and development of ICT and related skills. The success of Business Link in the region is rectifying some of the institutional failures related to accessing information; however access to finance continues to be an issue; highlighted in a number of business surveys including the CBI Industrial Trends Survey, along with an appropriately skilled workforce. 2.47 The current economic climate may exacerbate the issues the region faces such as fear of failure, highlighted in the 2008 Global Entrepreneurship Monitor; leadership and management skills, access to finance and business innovation. The concentration of trade in a small number of large firms, along with the fragility of supply chains remains a threat for the region in the current economic climate. Future energy costs along with the depreciation of sterling may impact the margins of firms, especially those that import material/inputs into their production process, threatening the region’s business base as well as its potential to grow; highlighted in the Institute of Chartered Accountants Enterprise Survey Report 2008. The region however has significant assets such as the size and capability of Aerospace within the wider Advanced Manufacturing sector. BAE systems is a major player in the international as well as national defence industry with a direct GVA contribution to the UK economy of £2.4 billion, 48% of the company’s UK staff are based in the Northwest. The Northwest has a concentration of Chemical production which between 2005 and 2008 experienced 19.8% growth in GVA. Other sectors of international and national strength in the region include composites, plastics and printable electronics, life sciences, digital and creative. 2.48 Evidence implications for the strategy Continue to improve the business support access and offer in the region. Ensure access to finance, especially in relation to innovation, training and skills development. Encourage and promote the region as a place for businesses to locate to, especially for Head Office and decision making functions. Increase levels of innovation, especially in the supply chain and sectors highlighted as key strengths for the region. Reduce energy consumption and its costs to businesses, and ensure energy supply for the future. Ensure the workforce has the relevant training and flexibility to cope with the workplace of the future Ensure a good supply of labour through growing the working age population and keeping people productive within the workforce. Continue to improve the skills of our leaders and managers to be able to deliver the changes required. Ensure business has the right infrastructure and quality of business environment to grow, access to energy, appropriate development sites and transport infrastructure, especially in relation to sectoral strengths and their supply chains.

A region attractive to the private sector which has…….. Increased productivity, which capitalises on the region’s innovation, science and research assets and exploits the Northwest’s potential in the renewable and nuclear offer and worldwide opportunities for low carbon technologies (4) 2.49 Evidence tells us that we continue to have a significant output gap with England (£19.7 billion), although the gap in GVA per capita growth rates has narrowed in recent years with the Northwest outperforming the England average in 2006 and 2007 (5.0% and 5.8% Northwest compared with 4.7% and 5.4% England). Analysis indicates that approximately 70% of the region’s output gap is due to lower productivity, with the remaining 30% a result of demographic and labour market factors.

Regional Intelligence Unit

Summary of the Evidence Base 2.50 In terms of labour productivity the Northwest remains 9% below the England average. This is due in part to a relatively unfavourable sectoral mix, in that most of the sectors in which the region is relatively specialised compared to England are at the low end of the productivity scale (manufacturing, transport and communications and energy the exceptions). The region also has a relatively unfavourable occupational mix, with a smaller proportion of workers in high level occupations. This is highlighted by differences in the nature and type of work carried out in the region, along with fewer head offices, which generate the higher level, decision making posts and activity, along with lower value service functions, which all impact on relative productivity. The region suffers significant weaknesses in its skills and labour market structure with businesses apparently failing to recognise the important role of highly qualified staff and the opportunities opened by gaining higher qualifications. All these factors have been important in determining the low productivity. In 2008 25.6% of the working age population in the region held NVQ level 4 qualifications compared with 28.7% for England overall. The “Northwest Skills and Productivity” project estimated that a 1% relative increase in NVQ level 3 and 4 qualified working age population would raise Northwest GVA by £0.29 billion. 2.51 The region is rich in science and technology and has a strong base in business R&D; between 2001 and 2006 the Northwest experienced the third largest growth of all English regions (4.1% per annum). However there is a threat that this performance is driven by a small number of large organisations which could potentially leave the region vulnerable to organisational restructuring. There are emerging strengths in HEI R&D, over the last five years the region has experienced a rapid expansion from £201 million in 2001 to over £500 million, a 10.2% per annum growth rate. Significant opportunities for the region exist in high productivity sectors especially nuclear where the region has 50% of the civil nuclear workforce, and life sciences where the region has a concentration of bio-technology in terms of employment and GVA. Research suggests that GVA per hour for bio-workers in the Northwest in 2006 was over three times the overall regional GVA per worker figure. 2.52 Evidence implications for the strategy Increase the level of knowledge intensive companies, especially in the sectoral strengths and their supply chains, highlighted above. Increase the number of decision making or HQ functions locating in the region and the associated occupations they bring with them. Support the growth of the HEI research and innovation base and its contribution to business. Support and develop the sectoral assets and their supply chains, improve suitable property availability and utilities infrastructure, connectivity and transport. Increase the number of level 4 qualified individuals in the workforce and the skills supply chain, by improving resident skill levels and attracting the highly qualified. Build on the region’s science base and grow the ICT, digital connectivity and property infrastructure to support its growth.

A region attractive to the private sector which has……..Protected, enhanced and developed the quality of the Northwest’s outstanding environmental, natural and coastal landscape assets (5). 2.53 The evidence tells us that the region currently faces significant threats which could impact on the economy and the uniqueness of the region, such as flooding, with some 224,500 properties are at risk and with an increased frequency of flooding likely to destroy habitats. Particularly at risk are coastal habitats such as coastal salt marshes, shingle beaches, mudflats and sand dune habitats. Such impacts will increase in the future due to climate change, which could lead to a sea level rise (of up to 68 cm by 2080), more frequent flood events and the possibility of an invasion of nonnative species, such as the American mink, due a shift in the climate envelope. This could also

Regional Intelligence Unit

Summary of the Evidence Base lead to the region losing habitats suitable for native species, such as the mountain ringlet butterfly (Erebia epiphron). 2.54 In 2005 transport emissions produced a total global warming potential for all six GHGs of over 13 million tonnes (CO2 equivalent), with the majority of the region’s urban areas still covered by Air Quality Management Areas. The region is also rich in a diverse natural and built environment with the largest area of SSSI of all regions (200,000 ha), a strong green infrastructure, including 8 regional parks, natural tourism assets such as the Lake District attracting approximately 8 million visitors per year, and coastline and heritage assets such as St Bees Head, the only section of heritage coast in the region. 2.55 Evidence implications for the strategy Provide a strategic approach towards multi-functional green infrastructure with an optimal mix of social, economic and environmental outcomes. Promote delivery of high quality, managed and accessible network of green infrastructure, green spaces and trails as a key component of sustainable communities, health, image and well-being. Agree a clear position how best to reduce the risks posed by climate change. Improve the condition, and numbers, of Biodiversity Action Plan species and habitats and Sites of Special Scientific Interest. Ensuring sustainable abstraction of water and improving the quality of inland and coastal waters. Promote good land management practices and remediate land affected by contamination. Assess environmental considerations of growth from housing and economic ambitions using the place-making agenda on the capacity of the natural environment and agree a conceptual understanding of ‘environmental limits’. Adopt the approach of seeking to avoid loss of or damage to environmental assets, mitigating unavoidable damage and, where appropriate, compensating for loss or damage through offsetting actions. Utilise the NW Regional Landscape Character Framework to underpin place-based approaches as the context and setting for development.

People at its heart with….Communities and places which are sustainable and safe, with less deprivation and disadvantage within the region (6) 2.56 Evidence tells us that many people in the Northwest live in the most relatively disadvantaged conditions in England. The region has above average crime rates (91 crimes per 1000 population compared to 85 for England) with 45% of these crimes taking place in Greater Manchester. However crime has fallen across the region at a greater rate than for England as a whole. Some of the most deprived areas in the country are in the Northwest particularly in Liverpool, Manchester, Knowsley, and Blackpool and Blackburn which are the 1st, 4th, 5th and 12th most deprived districts respectively (although high level deprivation is present in almost every district in the region). Evidence shows that the most deprived areas are generally populated by ‘blue collar communities’ (lower qualified people who tend to work in manufacturing, retail or construction), ‘multi-cultural communities’ (often non-white, mainly from Asian or Black British backgrounds, many first generation immigrants) or ‘constrained by circumstances’ (lower qualifications, public sector housing). These communities often live side by side with prospering suburbs and increasingly ‘city centre living’ communities (higher qualified, private sector renting, living alone). Certain areas in the region are showing improvement, particularly districts in North and Central Lancashire and Cheshire but other areas like Pennine Lancashire, North Greater Manchester and Blackpool are becoming steadily more deprived.

Regional Intelligence Unit

Summary of the Evidence Base 2.57 25% or 330,000 children in the Northwest live in relative poverty and these disadvantaged children are most likely to live in urban areas in Greater Manchester, Merseyside or Pennine Lancashire. Evidence shows that children living deprived areas within districts are far less likely to achieve 5 GCSE grades A* - C with as little as 14% attainment in the deprived areas of Crewe & Nantwich. More generally, children from rural areas have higher educational attainment levels than children from urban areas. 2.58 Income inequality (how much more the rich earn than the poor) varies across the region and for different reasons from 5 times more in Congleton to 8 times more in Allerdale with the Northwest ratio 6:1. Rural districts such as Congleton, Ribble Valley, and South Lakeland which are proximate to urban centres tend to have the lowest income inequality (but higher incomes overall) and the highest quality of life according to indicators like life expectancy, child poverty and crime rates. Sub-urban areas like Warrington, Macclesfield, Carlisle and Wyre have higher income inequality but are fairly strong in quality of life measures. Manchester and Liverpool perform averagely for quality of life and income inequality because they have complicated and often polarised social structures. Areas in Pennine Lancashire North Greater Manchester, Blackpool and North Liverpool perform the worst for quality of life but average for income inequality as the levels of income are typically lower. The challenge is therefore to ensure that the Regional Strategy recognises this balance of social equity and mitigates further externality impacts in a region which already suffers significantly from the effects of detrimental social factors such as deprivation, low economic activity, low skills levels, poor quality of life, and environmental impacts. 2.59 Evidence implications for the strategy The deprived areas are populated by similar types of people either white lower skilled families from industrial descent, who work in manufacturing where possible, construction or retail or people from BME backgrounds often new to the country with low skills and often cultural or language barriers. These groups are typically more reliant on public transport, and more reliant on the state for housing and benefit contributions and less socially mobile. An equitable strategy therefore must find a way to ensure that these groups are able to access entry level employment opportunities, if possible these should be close to where they live and relevant to skills levels which they posses. To ensure a strong workforce for the future, the strategy should enable children from the deprived areas to have access to good quality schools and have the same opportunities as those from affluent areas otherwise poverty will become even more intergenerational. Regeneration activity to develop these communities must be seen holistically, taking into account the need to create whole communities, and delivery to the needs of existing communities. Looking at access to employment, education, skills, mixed tenure and type housing and healthcare. Only increasing the numbers of high level jobs, risks making the situation worse for the poorest members of the Northwest society, therefore it is as important to lift the deprived communities to reduce polarisation and ensure barriers to accessing opportunities are tackled. People at its heart withâ&#x20AC;Ś.A world class skills base, with improved education, which helps to attract and retain talent as well as tackling gaps in basic and graduate level skills (7) 2.60 The evidence tells us that although the region has improved there is still a significant gap with the national picture, high levels of people with no qualifications (the region has the 2nd highest levels of all regions). 2.61 However the region, along with the North East, has the best rates of achievement for both literacy and numeracy for people with skills below the level of a good GCSE (grades A*-C). Employers in the Northwest are more likely to mention poor literacy and numeracy. There is also a significant gap with England at Level 3 and attainment by young people of Level 3, excluding A Levels, by age 19 is fairly low in the Northwest. In 2007 the region was ranked 6th of the nine English regions

Regional Intelligence Unit

Summary of the Evidence Base causing a significant gap between the Northwest and England, in terms of the proportion of young people achieving Level 3 between 16 and 19, as 22.5% of 17 and 18 years olds achieved this in England and only 15.9% in the region. There are relatively lower numbers of those with level 4 qualifications (only 25%, ranked 5th). There is a higher proportion of the young not in training or education in the region (with levels at just under 8%) and lower levels of aspiration amongst the young. The region is faced with a demographic challenge with fewer young people entering the labour market at 16-19 which is exacerbated by increased entrants to higher education. But the region is doing better at retaining graduates (with numbers increasing from 65% to 68%) and although the region has lower levels of managers (ranked 7th of all regions), they are becoming more qualified. Within the workplace there is a risk to long term investment in workforce development due to the current economic climate. FE colleges are amongst the best in the country with the second highest no of specialist schools and academies and 2 institutions delivering MBA qualifications amongst the top 30 internationally. The region has a strong HEI base making a large contribution to the economy in terms of students and supply chain. 2.62 Evidence implications for the strategy Ensure the business base (especially where the region has sectoral strengths) is supplied with the appropriately skilled workforce. Continue to reduce the numbers of people with no qualifications, especially the young leaving education. Raise the aspirations and attainment of the young. Ensure that employers (and individuals) continue to train and upskill their workforce to meet the demands of the future, especially as we go through recession Reskilling the older population as the size of the younger population declines Increase the numbers of those qualified to level 4 by retaining more graduates and growing the knowledge sector jobs to attract the highly qualified. Linking people to employment and ensure that the workless population have the right skills to access employment opportunities.

People at its heart withâ&#x20AC;Ś.A healthy population, with reduced health inequalities and which capitalises on the economic opportunities from changing health issues (8) 2.63 The evidence tells us that the regionâ&#x20AC;&#x2122;s population suffers from poor health and health inequalities just over 9% of the potential workforce is claiming incapacity benefits. The region has high levels of absenteeism due to ill health with an average of 9.3 days lost per employee per year. It is not just ill health itself, but the concentrations of ill health and its relationship with economic and social wellbeing, which presents the biggest challenge. Evidence has shown that ill-health is inextricably linked to lack of employment, deprivation and housing quality; the poorest places for health in the region are concentrated in the areas along the M62 corridor and East Lancashire and correlate with high levels of deprivation. This means we must see health issues within its wider context, and ensure we tackle these causal factors rather than just the symptoms. There are significant health issues for the region, especially within mental health, with levels of severe mental health symptoms highest in the Northwest when compared with the other English regions; alcohol consumption with the Northwest ranked joint worst performing region; low physical exercise with participation rates ranging from a high of 29.9% in Chester to 13.8% in Blackpool; and smoking. Regionally the most significant issues are to reduce health inequalities between the residents in the most deprived and least deprived areas and tackling levels of incapacity benefit claimants with the aim of reducing the gap between England and the Northwest. 2.64 There are also significant changes due to the demographic profile of the region, which will impact on provision of public health services to meet increased demand. The size and shape of the population of the Northwest will continue to change over the next twenty years becoming more

Regional Intelligence Unit

Summary of the Evidence Base ethnically diverse and with a higher proportion of older people. Current population is 6.9 million and projections suggest that by 2030 this will have increased to 7.6 million. By this time, those over 65 will number 1.7 million compared to 1.1 million now. The ratio of those over 65 will significantly increase from 16.5% in 2009 to 22.3% in 2030. By comparison, the proportion of under 25’s will fall from 31.4% in 2009 to 29.1% in 2030. The number aged over 85 will rise from 145,000 now to 285,600, a proportional change of 1.6 percentage points. 2.65 As a sector health is seeing significant changes through technology and development and there are key economic opportunities within the region in bio-med and health related innovation specifically. 2.66 Evidence implications for the strategy Improve access to employment opportunities for those with health issues Improve housing quality in areas with the most health issues. Improve health issues especially those of greatest impact in the region in terms of preventing individuals taking an active role in society and weakening the workforce. Increase levels of active participation in schools and within the workforce. Invest in and develop the bio-med and associated healthcare professions as growth sectors for the future.

People at its heart with….An improved range and depth of quality employment opportunities for all. There will be links between areas of opportunity and need, with reduced employment rates and an improved supply of labour to businesses (9) 2.67 The evidence tells us that the region has a high unemployment rate (8.7%) and an employment rate of 70.8% behind the England figure of 7.9%. Cities and major conurbations have been the source of much of the recent jobs growth in the region (approximately 33% of jobs growth over the last 5 years). Despite strong jobs growth in these areas, employment rates for local residents of Liverpool and Manchester have not significantly risen. Liverpool and Manchester offer significant job opportunities for residents of surrounding areas, although the area with the highest job density in the region is Preston (1.2 jobs per working age person). Public sector has been the source of recent jobs growth (growing by 1.7% p.a.) in the region; in fact the private sector saw a slight decline in jobs over the last 5 years. The region is heavily reliant on the public sector for employment and opportunities; some districts such as Blackpool and Sefton derive more than 40% of their employment from the public sector. 2.68 Ill health, poor or inappropriate skills and low aspirations contribute to low employment rates amongst the working age population. Employment rates for people with no qualifications are 47%; getting an individual to an NVQ level 1 increases the employment rate to 70%. The Northwest has a high proportion of disabled people, many of whom are unable to work because of it. 19.9% of the working age population in the Northwest are classified as disabled – the figure for England is 18%. 2.69 Employment rate for Black Minority Ethnic groups lag the Northwest average and comparative figure for England. The working age employment rate for ethnic minorities in the Northwest is 55% the equivalent rate for England is 61%. There are similar gaps for older workers; the employment rate for people aged between 50 and 65 is 67.3% - lower than England which stands at 72% - only the North East’s rate is lower than the Northwest. Other gaps in employment include women and disabled people, gaps which need addressing if the region is to improve the employment rate. 2.70 Evidence implications for the strategy Tackle barriers to work including discrimination, transport, childcare and low aspirations to improve labour market participation Encourage greater labour market participation, particularly in groups where there are persistent gaps with the England average such as BME, disabled, over 50s and females

Regional Intelligence Unit

Summary of the Evidence Base Promote the benefits of a diverse workforce to employers to encourage greater job creation especially for the most vulnerable members of society Link the areas of opportunity (the cities) to areas with fewer employment opportunities Encourage local residents to take advantage of opportunities created in their local area, particularly residents of Liverpool and Manchester Grow sectors which create high quality employment opportunities for workers of all abilities Reduce the region’s reliance on the public sector by growing a dynamic and prosperous private sector

People at its heart with….Balanced housing markets across the Northwest that support economic growth and strengthens inclusion that ensures that everyone has access to appropriate welldesigned high quality, affordable housing in mixed, sustainable communities (10) 2.71 The evidence tells us that the number of households in the region is growing with a growth of 18% in household numbers over the period 1976 to 2006. The region needs to improve its housing stock which is relatively old; the average age of dwelling stock was 64 years in 2007 with the third lowest proportion of newer post 1985 stock amongst regions. There is a need to increase the new build supply, across tenure, type and affordability to meet the changing socio-demographic profile of the region, such as an ageing population which has contributed to the forecast increase in one person households from the current level of 32% to 39%. 2.72 Whilst the region is one of the lower priced regions in England based on average house prices, affordable housing is a key issue with disparities in lower quartile house prices. The threshold is highest in Central Lakes where it is more than three times that for the lowest in Burnley/Pendle and reflects the view that demand is high among the more desirable areas of the region. 2.73 Poor quality housing impacts not just on the built environment but on carbon emissions, the health of the population and the wider economy. Issues such as energy efficiency of poor housing contributes to the Northwest having the largest number of households living in fuel poverty in England with 472,000 households classified as fuel poor, which accounts for 16% of total households. 2.74 Evidence implications for the strategy House building must reflect the tenure mix required and demanded, i.e., detached housing for high level occupations and affordable housing for lower level occupations Address fuel poverty through initiatives to improve energy efficiency of existing housing stock Identify housing needs at a spatial level to ensure there are linkages with key employment centres to positively affect commuting patterns People at its heart with….High quality, reliable and efficient infrastructure, transport and digital networks which contribute to sustainable development ensuring that the region is better connected, locally and internationally (11) 2.75 The evidence tells us that the Northwest needs to improve linkages between places, both physically and digitally. One challenge is to provide an efficient, integrated, affordable sustainable transport system, which will help reduce congestion, improve public transport and contribute to a low carbon economy. The other is to change people’s travel behaviour to make use of that system. As the region’s workforce is changing structurally (to higher level occupations), the demand for travel by bus has reduced while the number of rail journeys has increased by 20% since 1990. The region has strong international connections with Manchester Airport currently handling over 20 million terminal passengers p.a., Liverpool John Lennon Airport 5.5 million passengers p.a. and Blackpool around 500,000 passengers p.a. The regions ports handled 45 million tonnes of cargo

Regional Intelligence Unit

Summary of the Evidence Base (8% of total), but 21 million tonnes of this was distributed inland by road, adding to traffic and road transport emissions. Digitally we need to ensure that the whole region can benefit from digital infrastructure such as broadband. Currently, 82% of Northwest businesses use computers and 76% have internet access, with 87% of sites using broadband for their connectivity. The region currently consumes high levels of energy, 200,755 GWh in 2006, and water, 3,003 million litres per day (Ml/d) in 2005, but also contains relatively poor utility infrastructure. There is a perception in the region that ‘asset sweating’ has been particularly prevalent which has left a legacy of poor quality infrastructure, particular in areas of growth. In addition to investment in the new infrastructure needed to support the aspirations of the region, we also need to recognise the legacy of under investment. 2.76 Evidence implications for the strategy Improve public transport by identifying capacity issues and encouraging sustainable transport use. Provide appropriate public transport for the demand generated by the type of passenger. Balance the need to improve international connections (air and water) with the need to achieve reductions in CO2 emissions Improve the availability and speed of the region’s broadband connection, securing high capacity digital connectivity across the region. Encouraging energy efficiency alongside sustainable renewable energy generation. Continued advice to businesses and developers, through ENWORKS and others advisory groups on resource efficient options. Identify and take action towards securing the region’s energy supply and grid infrastructure, in particular replacing utilities assets and infrastructure. Encourage forward thinking in terms of spatial development, the growth agenda and electricity provision.

People at its heart with….High quality, efficient and responsive public services (12) The evidence tells us that the region is heavily reliant on public sector employment with public sector jobs accounting for 21% of all jobs compared to the England average of 18.9%. Public sector jobs as a proportion of the overall workforce are concentrated in Merseyside and Lancashire. Centre for Cities has identified Liverpool and Blackpool as highly vulnerable to public sector job losses as they are predominantly low value public sector activities. However, as the region is home to a number of key public sector organisations, there is an opportunity to attract others to relocate to the Northwest, building the professional occupational base. There is no clear picture as yet of how or where a reduction in public funding will impact however it is expected that health and education will stay relatively level with main impact on defence, transport and local authorities. The region continues to have a mixed standard of service delivery with 12 district councils received performance ratings of good or excellent, 30 primary schools among the poorest performing nationally based on KS2 national curriculum test results, 112 secondary schools listed as National Challenge schools and 6 NHS trusts in the bottom 10% of all England NHS trusts. The national trends relating to an ageing population will potentially put more pressure on public services. In certain parts of the region, that will have a particularly big impact such as Cheshire and Cumbria. 2.77 Evidence implications for the strategy Maintain standards of delivery to achieve PSA target delivery within a context of reducing public budgets

Regional Intelligence Unit

Summary of the Evidence Base 3. The Regionâ&#x20AC;&#x2122;s Economy It is expected that the current economic recession will be a little less severe than elsewhere in the UKâ&#x20AC;Śâ&#x20AC;Ś 3.1

In 2008 the global economy entered recession as the crisis in the banking and financial markets spread to the real economy. This has led to an unprecedented level of policy stimulation around the globe in an attempt to stabilise the banking system and combat the recession; governments have initiated tax cuts and additional spending to boost demand within economies.

3.2

The latest Regional Economic Forecasting Panel report highlights that as a result of the sharply weakened economic environment in 2008 the Northwest economy grew by just 0.6% compared to UK growth of 0.8%. In 2009 the panel expects that output in the region will shrink by 4.2%, less severe than the likely outturn for the UK as a whole. Sharp declines are expected in the manufacturing and construction sectors. It is expected that the strength of the initial recovery will be weak, with growth in 2010 for the Northwest forecast to be just 0.2%. Like the UK as a whole the Northwest economy is forecast to grow at rates below historical trend through to 2012.

3.3

The panel believes that in 2009 the recession in the Northwest will be less severe than in the UK overall, however recovery over the forecast period (2009-2012) is expected to be weaker in the region than nationally. Financial and business services in the Northwest are forecast to not be as badly effected by recession as the UK overall, however the panel expects that the sector will not benefit as much from the recovery as nationally. Expectations are that the decline in output from the region's manufacturing sector will be less severe than for other regions, with defence related business supporting the sector through the recession. Stimulus from global restocking is forecast to continue throughout 2010 sustaining recovery in manufacturing output. The collapse in construction activity in the Northwest is expected to be slightly less severe than for the UK overall, however prospects for the sector remain weak in the short-term with year-on-year growth not likely to occur until 2011. Prospects for consumer spending are likely to remain weak throughout the recovery 2010 and 2011, the impact being only modest growth for distribution, hotels and catering. Government and other services is forecast to be the only sector to see growth in 2009, looking forward over the remainder of the forecast period expected cuts in public spending will result in falls in output in 2010 and 2011. The scale and nature of the public sector in the region may mean that it is disproportionately affected by public spending cuts in the future.

3.4

The panel forecasts that Northwest employment will fall in 2009 with all broad sectors experiencing a decline, the largest of which are expected in manufacturing, financial and business services, transport and communication and distribution, hotels and catering. Employment is expected to continue to fall year-on-year through to 2012 as a lagged response to the prolonged economic downturn and subsequent cuts in government spending. Government and other services has been a major source of employment growth in the region, however prospects are that employment will now fall over the medium-term as public spending is reined in. Unemployment has continued to rise throughout 2009. Although the rate of unemployment growth has slowed the outlook is for unemployment to continue to rise over the forecast period. The unemployment rate is forecast to reach 7.5% by 2012 and will remain above the UK average.

3.5

Current data indicates a strengthening in global and UK economies with rising activity highlighted by a turnaround in the global inventory cycle. However uncertainty remains as to the strength and sustainability of the recovery. Whilst business confidence has improved throughout 2009 the panel sees this as typically reflecting a stabilising in demand at low levels rather than any sustained recovery. The underlying problem of levels of indebtedness within the economy remains a considerable risk. The is concerned over the number of companies that may currently be able to trade because of low debt interest costs and the accommodating actions of the financial sector, but which may find it hard to continue when the current policy stimulus is withdrawn and the cost of finance increases. Furthermore there remains little evidence that businesses have started to re-invest, this could hinder the capacity to take advantage of

Regional Intelligence Unit

Summary of the Evidence Base opportunities presented by the recovery. Consumer confidence in the region remains fragile with concerns continuing about unemployment whilst cuts in public spending and increases in taxation are expected to restrict growth. 3 What can we learn from previous recessions? 3.6

Comparing the causes and consequences of past recessions can help formulate an informed short-term view of an economy. This was the objective of a study carried out by Experian in June 2009 4 , to undertake a comparison to construct a short-term outlook for the Northwest. There was a focus on how a recovery is likely to unfold by looking at the sectors where ‘green shoots’ first emerged in previous recessions. The following section is the summary of this work. It is important to recognise:

3.7

Recessions are short-term corrections of deviations from trend growth rather than structural economic weakness.

3.8

Each recession has followed a period of strong growth as a natural part of the business cycle.

3.9

The macroeconomic environment of the two previous recessions - of high inflation and high interest rates - was very different from the current recession which has been preceded by a relatively benign macroeconomic environment.

What happened in the 1980s? 3.10

The global economy suffered two major oil price shocks in the 1970’s the second of which subsided in 1980. Around the same time, developments in oil extraction technology allowed strong expansion in North Sea oil operations. These developments, in addition to high interest rates in the UK, attracted investors who began to view the sterling as an investment asset. The increase in demand for sterling led to its rapid appreciation - to the extent that it overshot its long term equilibrium level - creating an asset bubble that would ultimately pull down growth. This appreciation came at a time when the government was already pursuing a tight fiscal policy to reduce its deficit. Thus, there was no support from the domestic sector, already under pressure from high interest rates and rising inflation, when the external sector was hit by unfavourable terms of trade. Industries that relied on global demand, mainly in the manufacturing sector, saw a sharp contraction in output. A large number of firms went out of business leading to sustained job losses which only added to the problem of soaring unemployment.

And in the 1990s? 3.11

It was high levels of investment in the technology sector that led to the creation of the ‘technology bubble’. While the IT industry and supporting sectors saw extremely high rates of growth over the period 1986-1990, the bursting of that bubble had a significant impact on economic growth. As output in the sector began to contract, the sharp deterioration in its prospects caused share prices of technology firms to plummet. The negative impact on the stock market and investor confidence was rapid and marked. This happened at a time when the UK government’s decision to join the European Exchange Rate Mechanism (ERM) in 1990 introduced inflationary pressures into the economy sparking fears of a run on sterling. To avoid this scenario, the government was forced to raise interest rates to 15% and use over £20 billion of reserves to buy sterling that investors were selling in large quantities. This raised the burden on indebted consumers which led to increased pressures in the housing market and a further dampening of domestic demand. The overall impact was to take the economy headlong into a recession from which it would only emerge a year later.

And in the current recession? 3.12

More recently, it has been the financial sector that has seen rapid growth in its growing set of complex asset-backed financial instruments. Globalisation of financial markets and the current

Regional Economic Forecasting Panel Business Forecast Report Autumn 2009 The UK Recession: a comparison with previous downturns, Retrospective analysis Experian, June 2009

Regional Intelligence Unit

Summary of the Evidence Base account surpluses of large emerging economies, such as China and the oil economies, allowed banks to access a rich source of cheap capital. The UK financial services sector saw annual rates of growth of between 7.5-8% in 2006 and 2007. However, what turned out to be its downfall and the trigger for the potent recession the world is going through was its heavy reliance on another over-valued and high-risk asset – property, in particular, the US sub-prime market. Low interest rates combined with low-cost and largely unregulated debt instruments had pushed up prices to levels far above their sustainable long-term equilibrium. The inevitable correction in the summer of 2007 brought down with it the entire global banking system, which had built up large and interdependent portfolios of mortgage-backed securities. The consequences of this have been severe as the ready availability of credit is vital for the health of all sectors of the economy. The choking up of the credit system - or the ‘credit crunch’ - led to a near halt in manufacturing and business activity in the UK and across the globe. The impact of the global slowdown, which has been more severe than ever seen before, has led to an unprecedented decline in export demand as giants such as China, Japan and the US come under pressure. The manufacturing sector has been particularly badly hit both domestically (lack of credit) and externally (lack of demand). Implications for the future 3.13

Past evidence suggests that the current recession is likely to follow the depth of the 1980s recession but the duration of the downturn of the 1990s. While all recessions have similarities, the set of factors under which each recession unfolds is unique. While it is useful to draw lessons from the past when evaluating the depth and duration of a recession, it is equally important to identify what makes a recession unique when discussing the green shoots that could point towards a recovery.

3.14

To this end, the factors that characterise the recession of the 2000s, broadly as they evolved:



A highly-integrated global financial system, overly reliant on mortgage-backed securities



A collapse in the US sub-prime market which leads to a deep global recession



Pressure on the housing market builds. Property prices fall and construction activity comes to a near halt



The fall in global demand hits the manufacturing sector which runs up inventories and subsequently scales back on production



The choking up of the financial system in a ‘credit crunch’ affects business investment and also hits the highly indebted consumer. Unemployment begins to soar.



The government steps in with unprecedented measures of quantitative easing and lowering interest rates.

3.15

What makes this recession different from those of the past is the massive fallout in the fastestgrowing sector: financial services. The complete freeze on lending activity was unprecedented, as was the collective global policy response. Thus, while like-for-like conclusions from past downturns cannot be simplistically applied to the current recession to draw out implications, there are some areas of similarity; and these primarily lie in the consumer and manufacturing sectors. The Northwest, like other regions to the north, is characterised by: A highly-indebted consumer sector reliant on credit to finance current spending and (housing) wealth A manufacturing sector that is restructuring, yet is still a significant generator of productivity, output and employment An expanding financial & business services sector which still remains at the lower-end of the skills spectrum compared to the regions in the south

Regional Intelligence Unit

Summary of the Evidence Base

Key messages from the study Opportunities in niche markets but at the moment they represent a small part of the economy…… 3.16

An important point to note is that during this recession some smaller sub-sectors of the economy – particularly those that serve niche markets (e.g. some high-value manufacturing); those for which demand is not entirely dependent on economic trends (e.g. healthcare); those that have strong ‘policy focus’ and government backing (e.g. environmental sectors); or those that can benefit from exchange rate movements (e.g. tourism-related activities) – have proved relatively resilient to the downturn and are strong within the Northwest.

3.17

There is much debate about whether it is within these sectors that the UK’s and region’s future lies. However, while these sectors may well be the high-growth sectors of the future, at this current time they represent a relatively small part of the regional economy, in terms of employment and in some cases productivity.

3.18

Indeed while the construction, manufacturing and consumer services sector are expected to be hardest hit during the downturn they are also the region’s biggest sectors and to some degree it is to these sectors that the Northwest must look for any green shoots that could precede a recovery.

What is the current picture of the recession? 5 The Northwest continues to move towards recovery, with continued resilience in the business environment and labour market……. 3.19

The latest figures from the Purchasing Managers Index (PMI) indicate the Northwest economy has started to grow again although at a slower rate than the UK for the last 2 months. Northwest private sector output growth accelerated to a three-month high in November, but remained slower than the UK average. At 55.2, up from 54 in October, the seasonally adjusted Business Activity Index was above the 50.0 ‘no-change level’ for the seventh month running and signalled a solid rate of expansion. Sector data indicated that both manufacturing and services output rose in November, with the latter recording the stronger rate of expansion. The incoming business was also up in November to 54.3, up from 51.8 in October and the highest reading since July. However, this still signalled that new work continued to rise at a slower rate than across the UK economy as a whole. Anecdotal evidence suggested that improved conditions in the wider economy, alongside successful promotional campaigns, were the main factors that boosted output.

3.20

Northwest businesses support the view that the business climate is improving, with many sectors reporting cautious optimism. This includes a small amount of optimism in some sections of the automotive sector, in part because of positive news over the future of the Vauxhall and Jaguar Land Rover plants. The chemicals, digital, environmental technology and food sectors also report a better outlook for sections of their sectors.

3.21

Unemployment continues to rise, although at a slower rate. The increase of 1.4% in September was the smallest quarterly increase in unemployment in 18 months. HR1 submissions also continue to decrease as the labour market stabilises

The region faces a period of risk aversion….. 3.22

Currently some Northwest businesses are increasingly risk averse, preferring to defer expansion rather than take on the risk and extra cost associated with growth. This is likely to continue until uncertainty over the future of the economy is resolved and may result in a slower recovery. Many

NW Regional Intelligence Snapshot, Sept 2009, Regional Intelligence Unit

Regional Intelligence Unit

Summary of the Evidence Base firms are hoping to continue trading into 2010 with expectations of improved conditions for trading next year. 3.23

Investment levels continue to remain very low in the Northwest despite the improved business climate. Firms in the region have become more risk averse, although there are signs that some firms, notably in the food sector, are looking to expand through schemes such as Grant for Business Investment. The announcement that the new Range Rover will be built in Halewood is a major opportunity for the region and should ensure the long term future of the plant. The move, which will result in the closure of a plant in the West Midlands, will create 800 new jobs in the Northwest.

Cautious optimism… 3.24

Businesses in the region are continuing to report an improvement in the business climate, with no slowdown in business sentiment after the summer. The vast majority of sectors are describing the outlook with cautious optimism. Firms are increasingly looking for new markets and opportunities as a source of growth, across a number of sectors. However, despite the strong PMI figures, there is a note of caution that some of the expansion was a result of backlog depletion of stock, potentially signalling an end to the period of strong expansion.

Emerging worries around young and long term unemployed …… 3.25

The effects of new graduates from school and University entering the labour market are difficult to correctly measure, given that every summer the vast majority of new claimants are generally young people. People aged 18-24 have seen a rapid increase in JSA levels, although they have been no more affected than other groups. The areas to see a high absolute change in young JSA claimants are Manchester and its hinterland. Young people are seeking work in administration, teaching, sales, science and technology and factory assembly, according to the Job Centre.

3.26

The proportion of total claimants who are young has remained relatively unchanged with 31.8% of claimants aged 18-24 in November 2009 compared to 32.9% in November 2008. However, the big worry surrounds long term JSA claimants in that age bracket. In November 2008 3.6% of all claimants were 18-24 who had claimed for over 6 months. In November 2009, this figure had significantly increased to 6.5%. In fact the rate of increase is 156%. For young people the most skilled and educated will always be able to find work, even in difficult conditions. For certain more vulnerable members of society, they have struggled to find work and there has been a significant increase in claimants for this group.

The Economic Forecast, Recession and Beyond Unemployment to increase through to 8% by 2012 and probably beyond……. 6 3.27

The panel forecasts that Northwest employment will fall in 2009 with all broad sectors experiencing a decline, largest of which are expected in manufacturing, construction and financial and business services. Employment in the region could fall further in 2010 and 2011 before levels stabilise and begin to recover. Government and other services sector has been a major source of employment growth in the region, however, prospects are that employment will now fall over the medium-term as public spending is reined in. Unemployment has increased rapidly in recent months. The outlook is that unemployment will increase through to 2012 and probably beyond. Unemployment claimants could account to almost 8% of the Northwest workforce by 2012 compared with 3.5% currently.

3.28

The NWDA commissioned a study from Oxford Economics and WM Enterprise to provide a robust projection/forecast of Northwest labour market supply and demand factors by sectors, subregional geographies. Phase one of the project undertook this work based on the existing REFP

The REFP forecasts will be updated in Jan 2010

Regional Intelligence Unit

Summary of the Evidence Base forecast for economic growth in the region to align with wider Regional Strategy work. This represents a baseline forecast of the Northwest’s labour market performance. Key messages from the research are: 

The immediate impact of the recession on jobs within the Northwest – the work forecast that the region will lose 127,000 jobs between 2008 and 2011 representing a loss of 4.2% of overall employment.



The recession is likely to have a long-term impact on jobs; by 2015 the region will not have recovered to the same level of jobs recorded in 2008. This will take until 2018 and by 2030, there will only by a 2.8% increase in jobs in the regional economy on the 2008 level, despite an forecast increase in population of 5.9%.



Job losses will primarily be in manufacturing while the numbers of jobs in public and private services are forecast to increase in the long term, however, the reductions in public expenditure over the upcoming period is likely to impact considerably on this forecast.



The reduction in jobs will impact differently on different sub-regions. Only Greater Manchester is forecast to have jobs growth above the regional rate. The numbers of jobs in the economy may reach pre-recession levels in Greater Manchester, Cumbria and Cheshire by 2016, later in Merseyside (2019) and later still in Lancashire (potentially as late as 2029).



Natural increase, as opposed to migration, is likely to be the key driver of population increases in the region – fundamentally different to patterns over recent decades where there has been little natural increase.



Replacement demand is more important than expansion demand when it comes to the supply of skills. Demand for new skills due to expansion demand will be less than 10,000 per annum on average over the period covered while the requirements from replacement demand 400,000 per annum on average.



There will remain demand for relatively low level skills within the Northwest economy – although also greater demand for persons capable of being ‘managers or senior officials’.

Levels of public debt a threat to recovery…….. 3.29

The recession has significantly dampened levels of consumer spending and investment whilst increasing levels of de-stocking and falls in trade. Current data indicates that the rate of economic decline is slowing, however, uncertainty remains as to the strength and sustainability of the recovery. The underlying problem of levels of indebtedness within the economy remains a considerable risk. If confidence in the financial sector and return to normal access to credit are not restored quickly recovery from recession could be extremely weak. The level of public debt is a potential risk to any recovery; as tax increases and cuts in spending are implemented to reduce public debt, levels of private spending may be insufficient to fill the gap stifling any fledgling recovery 7 .

Longer Term Economic Performance The Northwest is not punching its economic weight, it has the third largest population and economy but per capita terms it is ranked sixth, 15% below the England average…….. 3.30

Significant and persistent differences in economic performance exist between and within UK regions. Policy could be focused on raising the performance of the weakest regions rather than simply re-distributing existing economic activity. Policy must be designed to build on the indigenous strengths in each locality and region. Unless unfulfilled potential in every area is

Regional Economic Forecasting Panel Spring 2009 report, this forecast will be updated following the publication of the Regional Economic Forecasting Panel Autumn 2009

Regional Intelligence Unit

Summary of the Evidence Base released the UK will struggle to meet the challenge of increasing its long-term economic growth rate. 3.31

The broadest indicator of economic performance is Gross Domestic Product per capita, the total output of the economy relative to the total population; regionally this equates to Gross Value Added (GVA) per capita.

3.32

Within the UK there are persistent differences in GVA per capita performance. The latest official figures available at the regional level are for 2007 and show that although the Northwest has the third largest population (6.9 million) and the third largest economy (£119 billion), in GVA per capita terms it is ranked sixth out of the nine regions; at £17,433 it is 15% below the England average. London is the leading region with GVA per capita 48% above the England average whilst the North East has the lowest level of GVA per capita 23% below the England average. The Northwest is not punching its economic weight, its relative performance compared to the East of England highlights this fact, the East of England has an economy worth £116 billion (ranked 4th) however has a level of GVA per capita 15% above that of the Northwest. Figure 1: Regional GVA per capita – 2007 35 000 30 000 25 000

20 000 15 000 10 000

London

South East

East of England

South West

East Midlands

North West

West Midlands

Yorkshire & the Humber

North East

England

5 000

Source: ONS Regional Accounts

Figure 2: Regional GVA and GVA per capita comparisons – 2007 35 000

250 000

Total GVA

GVA per capita

30 000

200 000

150 000

20 000 15 000

100 000

10 000 50 000

GVA per cap

GVA £m

25 000

5 000 0 London

South East

East of England

South West

East Midlands

North West

West Midlands

Yorkshire & the Humber

North East

Source: ONS Regional Accounts

Over the economic cycle as a whole the Northwest outperformed its comparator regions…….

Regional Intelligence Unit

Summary of the Evidence Base 3.33

Over the period 1997 to 2007 8 average annual GVA per capita growth in the Northwest of 4.7% lagged the England average of 4.9%. The best performing region over the period was London (5.9%) followed by the South East (4.9%) and the South West (4.7%). Over the economic cycle as a whole the Northwest considerably outperformed its comparator regions in terms of GVA per capita growth (Yorkshire and the Humber 4.3% pa and the West Midlands 4.1% pa). Figure 3: Northwest GVA per capita index 1990-2007 Eng=100 90% GVA per capita 89%

Eng=10

88%

87%

86%

85%

84%

83% 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Source: ONS Regional Accounts

GVA growth has picked up whilst population growth has marginally declinedâ&#x20AC;Śâ&#x20AC;Ś. 3.34

Figure 3 shows that over the period 1995 to 1999 GVA per capita fell considerably from 88.6% of the England average to 85.9%, although GVA per capita continued to decline relative to the England average until 2004, the rate of decline slowed significantly. Since 2005 the Northwest has experienced an increase in relative GVA per capita as GVA growth has picked up whilst population growth has marginally declined.

3.35

Economic performance across the region varies considerably, the sub-regional GVA data for 2006 shows that 40% of Northwest GVA originates from Greater Manchester followed by 19% from Lancashire, 18% from Cheshire, 16% from Merseyside and only 6% from Cumbria.

HM Treasury estimate of the last UK economic cycle

Regional Intelligence Unit

Summary of the Evidence Base Figure 4: Share of total regional GVA at sub-regional level, 2006 6% 16%

Cumbria 18%

Cheshire

Greater Manchester 19%

Lancashire

Merseyside

40%

Source: ONS Regional Accounts

3.36

Sub-regional GVA per capita is a work based measure, and at the level of sub-regions (NUTS 2) commuting patterns skew the data. Essentially this leads to an overstatement of GVA per head in areas that encompass larger proportions of workplaces relative to resident populations. However, taking this into consideration, the data provides a useful indication of differing levels of economic activity and performance in the region.

3.37

GVA per capita is highest in Cheshire, £20,822; it is the only sub-region above the England average of £19,413. Merseyside has the lowest level of GVA per capita in the region £13,615, and along with Cumbria (£14,044) and Lancashire (£15,145) is in the bottom 10 NUTS 2 areas in England. Figure 5: Sub-regional GVA per capita, 2006 22 000 20 000 18 000 16 000

£000's

14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 Northwest

Merseyside

Cumbria

Lancashire

Greater Manchester

Cheshire

Source: ONS Regional Accounts

GVA per capita growth highest in the urban centres…… 3.38

Data for the sub-regions covering the period 1997-2006 shows that GVA per capita growth was highest in the urban centres of the region with growth of 5.0% pa for Merseyside and 4.8% pa for Greater Manchester; Cheshire experienced growth of 4.6% pa followed by 4.1% pa growth for Lancashire. Cumbria experienced the lowest per annum growth (3.1% pa) substantially below the other areas of the region; however this is a result of lower growth rates during the late 1990’s and

Regional Intelligence Unit

Summary of the Evidence Base early 2000’s, in recent years Cumbria has posted growth rates in line with the other sub-regions of the Northwest. 3.39

Over the period 1997 to 2006 Cheshire, Cumbria and Lancashire experienced a decline in GVA per capita relative to the England average. The largest decline being in Cumbria, were GVA per capita has fallen from 84.2% to 72.3% of the England average. Over the last couple of years GVA per capita in Cumbria and Lancashire has stabilised relative to the England average, whilst Cheshire has seen a small pick-up. GVA per capita in Greater Manchester and Merseyside remained relatively unchanged over the period of the last economic cycle. Changes in the labour market and demography of the sub-regions will have, to a certain extent, impacted on of GVA per capita trends (See Demography and Labour Market chapters for further details). Figure 6: Sub-regional GVA per Capita 1997-2006 Eng=100 110% 105% 100% 95% 90% 85% 80% 75% 70% 65% 1997

1998

1999

Cumbria

2000

Cheshire

2001

2002

Greater Manchester

2003

2004

Lancashire

2005

2006

Merseyside

Source: ONS Regional Accounts

GVA per capita differentials 3.40

At the most fundamental level regional and sub-regional differentials in GVA per capita will be due to variations in employment, the number of people who are working depending on; 

Demographics (the working age population)



Labour market participation rates



Unemployment



Productivity; the output each worker produced

3.41

Essentially there are two ways of increasing GVA per capita: 

To increase the total labour force input into the economy, by having a higher level of employment and number of hours worked.



To increase productivity, by increasing the amount of output each person produces.

Recent growth in population is a result of net immigration…… 3.42

Analysis of labour input in the economy indicates that whilst the working-age population in England increased by 8.3% between 1990 and 2007, equivalent to an average annual growth rate of 0.5% per annum; growth in the Northwest was far more modest at 2.2% (or 0.1% per annum). However this period as a whole conceals distinct trends; generally during the 1990’s the region experienced working-age population decline, in contrast since 2001 there has been recovery. Analysis suggests recent growth in the region’s working-age population has been the result of net immigration. A reliance on immigration for regional population growth is a risk, in terms of the

Regional Intelligence Unit

Summary of the Evidence Base growth potential of the region. This is highlighted by the slowdown in population growth since 2004 as net immigration has fallen back. Falling job opportunities in the region attracting fewer workers in the last few years……. Figure 7: Working-age population trends, England and Northwest, 1990 – 2007 1.2% England

Norhtwest

1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

-0.2% -0.4%

(Source: ONS Population Estimates)

Increasing numbers of older more dependant population……. 3.43

Whilst the Northwest, in line with England as a whole, has been reliant on immigration for working-age population growth, total population has been increasing due to growing numbers of older individuals. This not only posses a risk to future economic growth performance in the region, due to a larger number of dependent individuals relative to fewer economically active individuals; the trend could also provide an opportunity for the region, if we can successfully implement plans to keep older workers and their skills in the workforce.

3.44

Examining the latest employment rate figures indicates that 71.3% of the working-age population in the Northwest are in employment compared with 78.5% for the region with the highest figure, the South East, 78.3% for the South West and 77.2% for the East of England. In terms of economic inactivity the Northwest is ranked second behind London; the regions with the lowest levels of inactivity are the South East, South West and East of England. Significantly comparator regions in terms of GVA per capita exhibit similar employment and economic inactivity rates to the Northwest (Yorkshire and the Humber 73.0% and 21.9% and the West Midlands 71.7% and 22.7&).

Regional Intelligence Unit

Summary of the Evidence Base Figure 8: Regional employment and economic inactivity rates 90.0

30.0

Employment Rate

Economic Inactivity

80.0 25.0 70.0 20.0

50.0 15.0 40.0 30.0

10.0

% Economic Acti

% Employme

60.0

20.0 5.0 10.0 0.0

0.0 London

Northwest North East

West Yorkshire & England Midlands the Humber

East Midlands

East

South West South East

Source: ONS Annual Population Survey

Highly productive regions attract more people who wish to participate in the labour market, whilst a high proportion of these workers leave the labour force in low productivity regions….. 3.45

These datasets highlight the link between regional working-age population shares, employment and participation rates and regional productivity levels. Therefore to successfully impact regional economic performance and GVA per capita, policies need to tackle both labour market and productivity weaknesses more detailed analysis can be found in the Labour Market evidence papers.

Assessing the GVA per capita Gap Whilst the Northwest has the largest GVA per capita gap of all English regions, in 2007 it was the only region to experience a gap reduction…… 3.46

The Northwest’s GVA per capita gap with England is the largest of any English region at £19.9 billion, Yorkshire and the Humber has the second largest gap (£18.6 billion followed by the West Midlands (£17.9 billion). Only London and the South East create a GVA per capita surplus with England.

3.47

Over the period 1997 to 2007 the average rate of growth of the GVA per capita gap in the Northwest has been one of the lowest of any region, 6.0% pa compared with 11.1% pa for the West Midlands and 9.1% pa for Yorkshire and the Humber.

Regional Intelligence Unit

Summary of the Evidence Base Figure 9: Average per annum growth rate of the GVA per capita gap West Midlands

East Midlands

Yorkshire & the Humber

South West

East of England

North West

North East

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Source: ONS Regional Accounts

3.48

Analysis of the contributory factors to the GVA per capita gap shows that even though on average the Northwest suffers from relatively poor labour market performance (low participation rates and high unemployment) as well as a smaller working age population, lower productivity accounts for approximately 70% of the gap with England (£14 billion).

Productivity 3.49

The main ways of measuring the productivity of an economy are: 

Total Factor Productivity (TFP)



Labour Productivity

3.50

Total Factor Productivity is the rate of productivity after controlling for both labour and capital inputs into the production process, and seeks to isolate factors such as quality of capital investments, land use, the availability of infrastructure, innovations and new technology, and improved skills of workers. Growth in TFP can only be achieved through improvements in how the inputs to the production process are used, particularly the efficiency with which they are combined together.

3.51

Regional analysis of Total Factor Productivity is difficult due to limited data availability and measurement issues. However by analysing the different measures of labour productivity it is possible to strip out variation in GVA per capita performance due to differences in population and labour market structures across the regions.

GVA per filled job is closer to the national average than GVA per capita…. 3.52

GVA per filled job (approximately output per worker) strips out differences in dependency ratios between regions (taking out the impact of inactive population). Comparing economic performance indicators for the Northwest in 2007 shows that GVA per filled job in the region is closer to the national average than GVA per capita; 90% compared to 86%. This highlights the negative impact high levels of inactive people in the region have on its economic performance relative to England overall.

The region’s mix of jobs is not considerably different to the England average… 3.53

GVA per hour worked is considered the most appropriate measure of labour productivity as it takes into account the possible mix of full-time and part-time workers as well as job sharing levels; therefore taking account of the actual hours worked to produce regional output. A comparison of GVA per filled job and GVA per hour worked highlights that the region’s mix of jobs is not

Regional Intelligence Unit

Summary of the Evidence Base considerably different to the England average as to have a significant impact on the relative economic performance of the region. The analysis shows that after taking into account the dependency rate and job structure of the region, the relative economic performance of the Northwest compared with England is improved however labour productivity remains 9% below the England average. â&#x20AC;Śhowever labour productivity remains below England average. Figure 10: Average per annum growth rate of the GVA per capita gap 170 160

GVA per capita GVA per filled job

150

GVA per hour worked

Index Eng =

140 130 120 110 100 90 80 70 North East

North West

Yorkshire & the Humber

East Midlands

West Midlands

East of England

London

South East

South West

Source: ONS

Less productive jobs, more in employmentâ&#x20AC;Ś 3.54

In the Northwest over the period 1997 to 2007 until 2004, output and productivity indicators relative to England declined. Productivity indicators declined at a faster rate than GVA per capita. Since 2004 all three indicators relative to the England average have stabilised, with GVA per capita and GVA per filled job increasing in 2007. This could well be the result of employment growth in the region in the first half of the decade; increased employment lowering productivity because new workers can be less productive as they attempt to gain new skills.

Regional Intelligence Unit

Summary of the Evidence Base

Figure 11: Change in output and productivity indicators in the Northwest, 1997-2007 Eng=100 96 GVA per capita

GVA per filled job

GVA per hours worked

Eng=10

80 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Source: ONS

3.55

Between 1998 and 2007 only two regions experienced growth in GVA per filled job relative to the England average; London and the South East. In terms of GVA per hour worked four regions experienced relative growth, London, the South East, East of England and the South West. Since 1997 the Northwest has declined in ranking in terms of GVA per filled job, moving from 5th highest ranked region to 6th. For GVA per hour worked the Northwest moved from 7th to 6th ranked region, a result of other regions experiencing greater rates of decline for this productivity indicator.

Gross Disposable Household Income 3.56

Gross disposable household income (GDHI) represents the amount of money available to households after taxes; national insurance, pension contributions and interest have been paid. The dataset highlights how much disposable income households have to spend or save.

3.57

In 2007 the Northwest ranked 6th out of the nine English regions in terms of GDHI per capita, with a figure of ÂŁ13,038. London is the leading region with GDHI per capita 23% above the England average whilst the North East was 16% below the England average. Over the period 1997 to 2007 average annual GDHI per capita growth in the Northwest matched the England average rate of 3.8%. GDHI in the region has remained relatively stable, around 90 and 89% of the England average. Over the 1997 to 2007 period as a whole only two regions experienced GDHI per capita growth relative to the England average, London 3.3 percentage points and the East Midlands 0.5 percentage points.

Regional Intelligence Unit

Summary of the Evidence Base Figure 12: Comparison of gross domestic household income, 1997-2007 Eng=1000 125% North East

120%

North West

115%

Yorkshire and the Humber

Index Eng=10

110%

East Midlands

105%

West Midlands

100%

East of England 95% London 90% South East 85% South West 80% 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: ONS Regional Accounts

Cheshire and Cumbria are the only areas to see growth in GDHI relative to England…. 3.58

Data for NUTS 2 areas shows that there are large sub-regional disparities in GDHI. In 2007 there was a 17.5% difference between the best and worst performing NUTS 2 areas in the Northwest. In 2007 only Cheshire had GDHI per capita above the England average, Cumbria had GDHI per capita 95% of the England average, whilst Greater Manchester, Lancashire and Merseyside recorded levels below 90%. Over the period 1997 to 2007 only two NUTS 2 areas in the Northwest experienced GDHI per capita growth relative to the England average, Cheshire and Cumbria; all other areas experienced small declines.

Broad Sectoral Strengths Figure 13: Labour Productivity, GVA £000’s per FTE, 2006

Source: ONS Annual Business Inquiry and Regional Accounts

In 2006 the Northwest was more productive in only three sectors, Agriculture, forestry & fishing, Electricity, gas and water supply and Manufacturing……

Regional Intelligence Unit

Summary of the Evidence Base 3.59

Financial intermediation sector in the region is significantly less productive than nationally; to a lesser extent, Real estate, renting & business activities and Public admin Figure 14: Change in Labour Productivity, 1998 to 2006, (Eng = 100)

Source: ONS Annual Business Inquiry and Regional Accounts

For the majority of sectors in the Northwest the productivity gap with England has widened between 1998 and 2006…… 3.60

Only in three sectors has the Northwest increased its productivity advantage with England, Agriculture, forestry & fishing, Electricity, gas and water supply and Manufacturing. Transport, storage & communication were the only sectors to reduce its productivity deficit with England. Whilst a number of sectors saw an increase in their productivity deficit with England, Financial intermediation, Hotels & restaurants, Real estate, renting & business activities. Figure 15: Manufacturing Labour Productivity, GVA £000’s per FTE, 2006

Source: ONS Annual Business Inquiry and Regional Accounts

Regional Intelligence Unit

Summary of the Evidence Base 3.61

In 2006 only five manufacturing sub-sectors in the Northwest were more productive than for England, Chemical, chemical products & man-made fibres, Transport equipment, Food products, beverages & tobacco, Wood and wood products and Leather & leather products.

3.62

For all apart from Leather & leather products, these sectors are drivers of economic performance; with relative employment concentrations and being the three largest contributors to total manufacturing GVA. Figure 16: Change in Labour Productivity, 1998 to 2006, (Eng = 100)

Source: ONS Annual Business Inquiry and Regional Accounts

Half of all manufacturing sub-sectors in the Northwest experienced an increase in productivity relative to the England average between 1998 and 2006 including chemicals, chemical products and man-made fibres, transport equipment and food products, beverage and tobacco.… 3.63

Four productivity growth sectors had higher concentrations of employment than the England average which also increased over the period highlighting their significance to productivity growth in the Northwest economy, Chemicals, chemical products & man-made fibres, Food, beverages & tobacco, Transport equipment and Rubber & plastics products.

Niche Sectoral Strengths 3.64

This section outlines initial work on the international and national strengths of the Northwest (this is also relative to the national policy context of NINJ sectors). This work was intended to bring together thinking that is emergent from Task and Finish Group work being done by RDAs on the sectoral/market/technology areas, and also work being undertaken by GHK. The piece was also intended to inform that work, it building on previous studies undertaken for the development of the IRS.

3.65

The sectoral/market/technology areas are: 

Advanced manufacturing



Composites



Plastic/printable electronics

Regional Intelligence Unit

Summary of the Evidence Base 

Low carbon



Life science



Digital & Creative

Advanced Manufacturing - Advanced manufacturing - Northwest Aerospace ‘cluster’ of international significance 3.66

Size of and capability in Aerospace sector (and associated R&D, demand and end-use market for innovative products by OEMs (Original Equipment Manufacturer e.g. composite materials), supply chain and transferability of technology) plus international trade value – recognised as a hugely significant sector within the UK, but concentrated in the Northwest with necessary support infrastructure

3.67

Supporting the pre-budget report in 2008, HM Treasury published a document ‘The UK Economy: Addressing long-term strategic challenges”. 9 It built on previous HM Treasury documents that identified the long-term opportunities and challenges faced by the UK to which national policy makers should respond. The 2008 document included a focus on a number of sectors where the UK has a comparative advantage. It included a discussion of Advanced Manufacturing and specifically focussed on the long-term strategic value of the UK aerospace industry. It identified that the UK accounts for 13% of the total turnover of the global aerospace industry, that aerospace is one of the biggest export industries of the UK, and that that it directly employs 113,000 people and is equivalent to 0.5% of national GDP. The report further identified how significant the defence element of the aerospace industry is; the UK is the worlds largest defence exporter, with 33% of global market share.

3.68

Given the strategic importance of aerospace to the UK, the Northwest of England is an international centre for the aerospace industry because of the concentration of aerospace production and supporting assets located within the region. This is made up of:

The concentration of Aerospace production within the Northwest 3.69

The Northwest (and especially Lancashire) is the centre of much of BAE operations in the UK while the Northwest is also a key region in the civil aerospace industry with the Airbus site at Broughton located just outside Chester (but in Wales). With such large prime businesses at the top of supply chains, the Northwest has a developed supply chain and support infrastructure which comprises other prime businesses in their own right (Rolls Royce jet engine production at Barnoldswick) and a complete SME network.

3.70

BAE Systems is the major player in the UK aerospace defence industry. As a business (including its marine elements), it had exports worth £4.1 billion in 2006, has a direct tax contribution of £0.5 billion and an indirect contribution of a further £0.3 billion. The business employs 35,000 people directly, and a further 70,000 jobs are dependant on BAE Systems. The direct GVA contribution to the UK is £2.4 billion with the indirect and induced impacts adding a further £3.4 billion of GVA. GVA per worker is 72% higher than the average for the UK 10 .

3.71

BAE Systems has sites in numerous UK regions. However, 48% of all of the company’s UK staff are based in the Northwest with 7,500 at Warton, 4,100 at Barrow (dockyard), and 4,000 at Salmesbury. These sites are amongst the most significant within the BAE network; work commissioned for BAE specifically identifies the Northwest as a ‘cluster’ of aerospace production including a concentration of knowledge intensive employment and R&D capability 11 . BAE have further sites in Greater Manchester and Cheshire in the Northwest though the concentration of direct employment is within Lancashire.

HM Treasury (2008), “The UK Economy: Addressing long-term strategic challenges”. Available at http://www.hmtreasury.gov.uk/d/pbr08_ukeconomy_594.pdf 10 See work undertaken by Oxford Economics on behalf of BAE Systems as the source of this data – see http://www.oef.com/Free/pdfs/BAEFinalReport.pdf , and http://www.oef.com/free/pdfs/geobae0308.pdf - both these studies identify the value and impact of BAE Systems in the UK economy, but also acknowledge the concentration in the Northwest 11 See the Oxford Economic work on BAE impacts in the UK economy

Regional Intelligence Unit

Summary of the Evidence Base R&D and market driven demand for innovation in aerospace products 3.72

The size of BAE and of Airbus, Rolls Royce etc. as buyers of products drives innovation throughout the supply chain. Composite technology development has been driven by the requirements primarily of the defence aerospace industry but is increasingly significant in civil aerospace (for example, the next generation composite wing of Airbus 12 ) and other industries (composite capabilities in the Northwest are discussed later). The prime businesses themselves are major innovators, with significant R&D spend – estimates by Oxford Economics indicate that loss of BAE R&D spend would reduce the UK Total Factor Productivity by over 1%. BAEs activity in the Northwest is a significant part of the regions R&D base and as such, the region has a developed support infrastructure for the aerospace industry.

3.73

For example, the Science Technology and Facilities Council (STFC) facilities at Daresbury include capabilities such as residual stress-testing and supercomputing that enable aerodynamic testing. The Aerospace Research Institute at Manchester University 13 has research capabilities in power systems, materials and fluid dynamics and teaching areas include post-graduate MA courses such as Advanced Aerospace Materials Engineering. The latter links with the Northwest Composites Centre 14 , a partnership between Manchester, Liverpool, Bolton and Lancaster Universities.

3.74

This process can result in the development of new products - BAE Systems, working with partners have been developing the concept of Unmanned Aerial Vehicles (UAVs) for military use. The Military Air Solutions section of BAE, based in the Northwest, are leading the development of additional capabilities for UAVs, adding to their usefulness and applicability but working with SMEs utilising their specialist knowledge. The potential to allow civil application of UAVs is an area where a number of Northwest businesses have been seeking to take advantage of the new market opportunity with links to the ASTRAEA 15 project. UAVs itself may be seen as a technology area of considerable future market potential where the UK (and Northwest in particular) has a market lead.

The depth of supply chain capability (and the transferability of technology from within the aerospace supply chain to other sectors) 3.75

Mapping of the BAE principal suppliers within the UK shows a concentration within the Lancashire sub-region of the UK but extending into Greater Manchester 16 . The NWDA and Northwest Aerospace Alliance, working with the prime businesses seek to ensure that the supply chains are capable of meeting the requirement to maintain a competitive sector/industry. This includes the transferring of capabilities/innovations between businesses so that intermediate products are developed to a standard that fits with requirements of the prime businesses. The Aerospace Supply Chain Excellence Programme in the Northwest 17 is an intervention designed to facilitate this transfer within the aerospace sector.

3.76

The support infrastructures, both hard and soft, that is provided within the Northwest – within the Northwest, there is a depth of support infrastructures supporting the aerospace industry. The industry is acknowledged as strategically significant within the Regional Economic Strategy 18 and the Northwest Aerospace Alliance 19 represents the industry within the region (and extending into supply chains beyond the region) undertaking such activities that help represent, influence, shape and engage businesses in the supply chain and public sector support. These type of soft infrastructures have been acknowledged by the businesses in the industry in delivering benefits

See the Press Release from the Technology Strategy Board on the project which references the support of a number of RDAs including NWDA 13 See http://www.umari.manchester.ac.uk/ 14 See http://www.futurecomposites.org.uk/index.html 15 See http://www.projectastraea.co.uk/?OBH=354 for a description – the RDAs in the Northwest, South East and South West are contributors to this programme 16 See map, page 36 of http://www.oef.com/free/pdfs/geobae0308.pdf 17 See http://www.aerospace.co.uk/ascep/asce.php for a brief description with the steering group detailed here: http://www.aerospace.co.uk/ascep/steeringgroup.php which includes Airbus and BAE Systems as well as public sector bodies 18 See RES Action 8, http://www.nwda.co.uk/media-library/publications/strategy/regional-economic-strategy-200.aspx 19 See http://www.aerospace.co.uk/default.php

Regional Intelligence Unit

Summary of the Evidence Base for the sector, accruing additional economic benefits for all concerned. In addition, partners within the region have sought to ensure that hard infrastructures also support the industry – partners have come together to ensure that access to key BAE sites is sufficient to ensure that the sites are able to continue to be production centres 20 fitting with the NINJ call for creating a ‘total business environment’. Advanced manufacturing – A Chemicals production industry of European significance 3.77

Export value of chemicals industry for the UK, the ‘stickiness’ of the industry in the region due to intangible assets as well as the sunk capital investment, and a strategically significant product source to significant sectors (and new technology sources) at the national/European scale, as well as being a centre of R&D.

3.78

The chemicals sector is strategically important nationally because of its economic contribution to the UK economy and also because it is an necessary high value upstream ‘goods’ for a host of other industries (and technologies) with growth potential in the UK21. Chemical products extend into an array of different markets. UK Chemical manufacturing is worth £60 billion/annum, is used downstream in a vast range of markets and underpins sales of at least £700 billion22. The NW chemical sector is the largest in the UK and makes an annual GVA contribution of £3 billion to the regional economy (almost 1/6 of the total GVA from NW manufacturing) and is the regions largest export sector23.

The value of the industry is made up of: The concentration of chemical production in the region and presence of key businesses 3.79

The region has around 470 chemicals businesses, with a further 160 businesses providing direct support to the chemicals sector, and employs over 50,000 people directly 24 . The industry had an annual turnover in 2008 of £10.2 billion (an increase of 17% from 2005). The estimated GVA for the northwest in 2008 is £2.8 billion, a rise of 19.8% from 2005. R & D Investment is 3% of sales, 1.4% of GDP with capital investment running at 10% of sales. The productivity of the sector (as assessed by as GVA per employee) has increased by 27% during the period 2005-2008. The Northwest has a very strong international trade performance with a large proportion of its products being exported particularly to Europe and North America and increasingly to emerging economies. It is the UK’s largest chemical exporting region by far, accounting for 27% of UK chemical related exports. The competitiveness of the region is evidenced by the sustained growth in its exports, 8% pa during the period 2001-2008. This outstrips global chemical industry sales growth over the same period of 5% pa. The region is also successfully exporting to the new chemical tigers in China, India and South Korea with compound annual export growth rates of 20% during the period 2001-2008 25 . Around 30 of the worlds top 50 chemicals manufacturers have operations within the region including Astra Zeneca (with obvious linkages to life sciences), Unilever, Ineos and Shell. Three of Unilever’s production sites are located in the Northwest (Port Sunlight, Warrington, and Trafford Park) for example. The region has capabilities in petrochemicals, pharmaceuticals, basic and downstream chemicals, agrochemicals, polymers and plastics. Chemical production often involves a considerable sunk capital investment making existing centres of production ‘sticky’ within their localities.

Key intermediate product supporting other high value sectors in the UK and Europe 3.80

The key consideration of the importance of the chemicals sector is the value it adds to a host of other sectors in the UK and European economy. Recent debates about the extraction of fluorspar from a site in the Peak District National Park has shown the value of fluorochemicals production by Ineos Fluor in Runcorn; loss of an ability to extract the ore in the UK threatened not just the

See http://www.nwda.co.uk/news--events/press-releases/200901/bae-samelesbury-investment.aspx as an example, NWDA, the local planning authority, and other partners seek to ensure that obstacles to development at the sites are overcome. 21 See http://www.berr.gov.uk/files/file10002.pdf; produced in 2002 by Government. 22 Chemicals Industry Knowledge Transfer Network 23 Data provided by Chemicals Northwest, see http://www.chemicalsnorthwest.org.uk/main/homepage.asp?sectionid=1 24 See http://www.chemicalsnw.org.uk/doxuploaded/CNWdirectory0809.pdf as a directory of businesses located in the region operating in the chemical sector 25 Data provided by Chemicals Northwest

Regional Intelligence Unit

Summary of the Evidence Base production of a single chemical at a single site, but a host of further chemical production facilities for which fluorochemicals is an intermediate goods. The strategic nature of the activity was exemplified by the fear that the only alternate sources for upstream businesses may be in China where the Chinese government has been seeking to prioritise its own chemical industry by inhibiting exports 26 . Export value 3.81

Chemicals is a key export of the UK but more specifically, the Northwest. Trade data shows that the Northwest has a £6 billion positive trade balance in the chemicals sector. The Northwest is the highest exporting chemicals region in the UK. Around 60% of the whole chemical output of the region is exported out of the UK and 52% of the Northwest’s exports (by value) are Chemicals and related products 27 .

Centre of R&D 3.82

The chemicals industry represents about 1/3 of all R&D spend in the manufacturing sector as defined in ONS produced regional accounts with the Northwest having the third highest R&D spend on chemicals within the UK 28 . As the home to a number of significant individual businesses, the region is a centre for considerable private sector R&D and commercial research/product development. Businesses with R&D facilities in the region include Unilever, PZ Cussons, Shell, Innovia, Fujifilm, and Victrex.

The region also has a number of University based research capabilities 3.83

This includes the Organic Materials Science Centre (OMIC) and the Molecular Materials Centre, both at Manchester University, and the Centre for Materials Discovery (CMD) at Liverpool University. The region is also home to the Knowledge Centre Materials Chemistry (KCMC) 29 . This incorporates OMIC and CMD within the virtual materials chemistry centre and Centre for Biocatalysis, Biotransformations and Biocatalytic Manufacture (CoEBio3) at Manchester University. A directory of University capabilities within the Northwest relating to the chemicals industry is maintained is maintained by the Northwest Universities Association with Chemicals Northwest 30 .

Advanced manufacturing – Northwest assets of national significance

3.84



Export value of chemicals industry and value to other supply chains



Transfer of knowledge from NW advanced manufacturing to wider manufacturing base, and the multiplier impact of manufacturing demand for services on the service sector overall



Scale of employment in automotive industry (and supply chain extending across regions) Car manufacture remains a highly productive industry with GVA per worker comfortably above the average over the economy as a whole 31 . The Northwest is home to a number of automotive production sites with Vauxhall at Ellesmere Port, Jaguar Land Rover at Halewood (Merseyside) and Bentley Motors (Crewe). The cumulative employment in these sites is nationally significant (the region contains 12% of employment in automotive production) as is the supply chain that supports these sites, and the wider UK automotive base. The shift to low carbon vehicles requires innovation throughout the supply chain and the Northwest, as a major supplier to the wider industry, is an important centre to acknowledge in this regard irrespective of where the end product low carbon vehicles are produced. The region is also home to a number of commercial vehicle manufacturers including Leyland Trucks and Optare; the pressure for more low carbon

See http://resources.peakdistrict.gov.uk/ctte/authority/reports/2009/090130Item4.1.pdf for the planning submission and the summary of considerations including the summary of the Govt. submission (by DBERR) and submissions from NWDA, emda, Chemical Industries Association, CBI etc. 27 ARUP Consulting (for NWDA) (2008) Assessment of the Regions International Trade Performance 28 See http://www.nwriu.co.uk/aboutus/documents/MSAP-Volume_1.2_-_The_Evidence_Base_-_Statistical_Analysis.pdf - an analysis undertaken for the Northwest Manufacturing Strategy 29 See http://www.materialschemistry.org/kcmc/index.html 30 See http://www.chemicalsnw.org.uk/doxuploaded/Chemical_Science_Caabilities_2008.pdf for the directory 31 See http://www.berr.gov.uk/files/file29165.pdf

Regional Intelligence Unit

Summary of the Evidence Base vehicles in the commercial vehicle market is a an area where the Northwest has national specialisation – Optare for example are a national leader in the production of electric, low carbon busses. 32 Value and expertise of the manufacturing supply-chain (into Aerospace, Automotive (including low carbon potentially), printable electronics, bio-technology). 3.85

The NWDA will launch a manufacturing Strategy for the region this Autumn. It recognises that modern manufacturing is defined as everything from research and development, production itself, right through to end of life management 33 . Manufacturing therefore is an integral element of a value-web that generates economic returns from wider elements of the economy; the size of the manufacturing production in the Northwest (400,000 jobs, 12% of all jobs, 18% of regional GVA based on just traditional production based definitions) 34 means it that the overall benefits are considerably more. The region is acknowledged as the biggest manufacturing region in the UK 35 .

The regions HEI base has a host of research capabilities of national, and within their field, international significance. 3.86

The Manchester Organic Materials Innovation Centre is one example of a centre with international standing within its field (see the later section on printable electronics). The region has 14 HEIs, a number have manufacturing expertise or specialist research establishment of use to the Advanced Manufacturing sector with the Northwest Universities Association acting often as a conduit – many HEI capabilities have developed in the region in response to the manufacturing history of the Northwest.

3.87

As well as recognising that the Northwest as a whole is a national leader in advanced manufacturing in terms of scale and size of the economic base, the geographical concentration in Lancashire needs to be separately recognised. BAEs main sites are within Lancashire, their mapping shows the concentration of suppliers within the Lancashire sub- region (and extending south to northern parts of Greater Manchester), while Rolls Royce, Leyland Trucks, and other key businesses have sites in the sub-region. Supporting advanced manufacturing is a key objective of Strategy documents at the sub-regional scale 36 .

Composites 3.88

The end-user market in the region, particularly aerospace, can drive further innovation in the application/early adoption of composites (developing the technology as a ubiquitous platform technology) within a range of other industrial areas

3.89

As discussed with regard the Northwest’s international strength in aerospace, composite technology has become a key feature of modern aircraft design. The presence of the ‘early adopting’ defence industry and high investment in R&D and testing means the Northwest has witnessed considerable utilisation of composite materials. The benefits of composite technology are beginning to be utilised in other parts of the economy. The region therefore has international significance as an end-user market for the development and commercial testing of composite materials and technology.

3.90

The combination of path dependant industries within the Northwest has led to the region being a location in which composite materials can be developed, tested, and produced. The region is a centre of:

See http://www.nwautoalliance.com/template.asp?l1=5&l2=1110 which is the innovation strategy for the automotive sector in the Northwest; see http://www.nwautoalliance.com/template.asp?l1=5&l2=1110 for the range of reports on the Automotive sector in the region. 33 See http://www.ifm.eng.cam.ac.uk/cig/documents/HVM_summary_000.pdf by the Institute for Manufacturing for a discussion of the value web approach. 34 See http://www.nwriu.co.uk/aboutus/documents/MSAP-Volume_1.2_-_The_Evidence_Base_-_Statistical_Analysis.pdf - an analysis undertaken for the Northwest Manufacturing Strategy 35 See ONS Regional Accounts 2008. The figures are for 2006. Manufacturing in Northwest is worth £20.3 billion, with the next biggest region being the South East with manufacturing output of £18.6 billion 36 See http://www.lancashire-ep.org.uk/index.php?option=com_docman&task=cat_view&gid=168&Itemid=84 for work undertaken by Lancashire Economic Partnership. The LEP acknowledge Aerospace and advanced manufacturing as one of 6 key elements for the sub-regional economy. Advanced manufacturing is also a key element of a number of MAAs in the Lancashire sub-region.

Regional Intelligence Unit

Summary of the Evidence Base 3.91

The chemicals industry, an important downstream supplier of products for composite material production, including research capabilities within universities that might have traditionally supported chemical manufacture but also have expertise in materials testing and polymers – integral needs for composite application

3.92

Textile expertise, integral to the ability to weave composite materials to provide them with their strength at light weight

3.93

Engineering and manufacture – as discussed in relation to advanced manufacturing, the Northwest has been a traditional centre of manufacturing and engineering and remains the largest manufacturing region in the UK.

3.94

This ‘mix’ of path dependant industries not only means that the Northwest has the constituent requirements for development of composite materials, it provides an end and intermediate user market for further composite development (whether within the region, or overseas). The research undertaken by the RDA Task and Finish Group has identified the continued investment in aerospace use of composite technology (linked to the National Aerospace Technology Strategy (NATS 37 )) as well as the extension into other industries. The presence of BAE Systems is a significant demand pull for innovation in composite technology 38 . Given the importance of aerospace and the scale of continuing investment – the Northwest remains significant as a centre for continued composite technology application in the aerospace industry and a ‘demand pull’ for further innovation in composite processes and applications.

3.95

The region also has a host of supporting assets including the Northwest Composite Centre 39 which is part of the National Composites Network Centre of Excellence and is focussed on the development of new manufacturing techniques. Through bodies such as the Northwest Aerospace Alliance, the business base and research assets linked to composite technology are turned into opportunities. 40 The Composites Centre for example works closely with the NWAA, and is a partnership between Manchester, Liverpool, Bolton and Lancaster Universities and works closely with industry – particularly businesses located within the region including BAE Systems, Airbus, Rolls Royce, Aircelle, (all aerospace) Hyde Group (tooling), Leyland Trucks (automotive) etc.. The capabilities of the centre (linked with the wider network of facilities in Sheffield, Isle of Wight, South Wales, and the South West) are designed to provide services demanded by the industry base.

3.96

Of particular significance is the Composites Certification and Evaluation Facility (CCEF) which is intended to assist the supply chain of end use manufacturers to adapt to using composite materials in place of metals, for example, in flight critical components for the aerospace industry. This broadens the use of composites within the wider economic base of the Northwest, increasing the possibility of composite technologies being used in other areas.

3.97

In the future, the opportunity for Northwest is to utilise the knowledge in composite materials to develop the products as a platform technology with a broader range of uses by businesses in a range of market areas. This is being witnessed with firms such as Sigmatex using composite techniques to produce enhanced fire retardant materials for naval vessels, and Bentley Motors using the strength of composites as a tooling technology rather than an end-use product.

Composites – assets of national significance 3.98

Within the National Composites Network Centres of Excellence, the Northwest Composite Centre is a national asset, particularly with its Composites Certification and Evaluation Facility (CCEF)

3.99

Individual businesses using composites of national significance – BAE System, Airbus, Hyde Group, Sigmatex etc.

Available here: http://www.sbac.co.uk/community/news/files/1581/NATS%20Implementation%20Report.pdf See http://www.baesystems.com/Businesses/LandArmaments/Divisions/CompositeStructures/index.htm for BAEs capabilities in composite technology 39 See http://www.futurecomposites.org.uk/index.html 40 See http://www.aerospace.co.uk/technologies/stfcdaresbury.php for the linkages between the NWAA and the facilities at Daresbury Science and Innovation Campus and the range of capabilities available for composite testing 38

Regional Intelligence Unit

Summary of the Evidence Base 3.100 An adapting manufacturing supply-chain increasingly utilising composites (into Aerospace, Automotive (including low carbon potentially) Printable Electronics 3.101 Within the internationally recognised printable electronics research base in the North, the Manchester Organic Materials Innovation Centre is a key asset. 3.102 Printable electronics is an emergent, disruptive technology being driven by both the internationally recognised research capabilities of the UK (based in Cambridge, but also PETeC in the Northeast and linked to assets such as the Organic Materials Innovation Centre at Manchester University but a partnership of a host of other universities 41 ), and by some early adoption by businesses in the UK (but also, overseas conglomerates acting as early adopters of the technology). Printable electronics – of national significance 3.103 Northern Way projects stimulating university research to enable market application downstream – the linkages between PATeC, Manchester University and also Liverpool University in developing printable electronics is important within the national context as it is developing the technology which could be adopted by the UK business base in the future. 3.104 The above is particularly significant for the Northwest – the mix of industry in Northwest (chemical, textiles etc.) provides a ready market for potential end/intermediate users of printable electronics. There is considerable opportunity for both downstream supply to printable electronics manufacturers (from the Northwest chemicals base as an example) and for upstream production (e.g. the manufacture of printable electronics by existing high end polymer textile manufacturers). This means the Northwest could be a possible centre of early adoption of the technology and taking a UK/international market lead. 3.105 Presence of key businesses, with research and technology exploitation potential, such as Innovia Films and Harmon Technologies. 3.106 Research capability at Organic Materials Innovation Centre in Manchester and also capability in Liverpool (should be seen as a national strength and in conjunction with capabilities of Northern Way and around Cambridge as being of international significance)

Low Carbon – a growth market in all regions by necessity 3.107 The low carbon ‘sector’ includes many elements: 

Renewable energy (wind/tidal),



Carbon Capture and Storage,



Low carbon buildings,



Civil nuclear,



Low carbon aerospace,



Ultra-low carbon vehicles,



Energy management, and



Carbon finance/markets.

3.108 Because of this breadth, many different geographies will have a different mix of strengths across these areas – with some specialising in R&D in some ways, others specialising in the application of low carbon technology, others production, and others as ‘users’ of the benefits of low carbon advances.

See http://www.omic.org.uk/omic/main/home.asp?sectionid=128

Regional Intelligence Unit

Summary of the Evidence Base 3.109 As a consequence, ‘low carbon’ is a growth market in all regions irrespective of comparative advantages – demand side factors for a shift to low carbon at the macro-level means that all regions have business opportunities (even if not cutting edge) to take advantage of this agenda. 3.110 Some low carbon elements are ubiquitous across regions – for example, the need to modify housing stock etc is necessary throughout regions with concentrations of pre-1918 Victorian housing stock (which includes London, the North and Midlands, as well as locations in the rest of the UK). As a result, businesses in all regions can be ‘deployers’ of capability and take advantage of market/business opportunities that relate to the retro-fit of existing housing stock with such having indirect and induced economic benefits. Deployment of biomass/bio-renewables, decentralised energy networks are similarly ubiquitous opportunities throughout the UK. 3.111 With all the above, some regions are locations where technology can be researched and developed, and others where technology can be applied (i.e. act as markets for new low carbon goods/technology). And the opportunities to actual businesses will be different within each phase of the value web. 3.112 Greater Manchester for example has ambitious plans within its Multi-Area Agreement 42 to improve the housing stock of the City Region to a low carbon standard. This is anticipated to have economic benefits in terms of employment (and therefore, an induced economic impact on the local economy) and also, in the supply chain (with the Northwest chemicals industry interested in ways the products required to achieve a low carbon housing stock can be manufactured in the Northwest). Low Carbon – The Northwest as an international centre of the nuclear industry 3.113 Potential of the nuclear industry in the Northwest, with a concentration in West Cumbria but a network of assets throughout the region. Although reliant on external expertise with regard the new build programme the UK has the potential to develop expertise off the back of this strategic public sector investment and memorandums of understanding are in place to try and secure economic benefits to the UK. Decommissioning remains a significant business opportunity. Assets of national significance with regard the nuclear industry have the potential to be a critical mass and an international centre of civil nuclear research and deployment. Cumbria in particular is a location where assets are in place and where the geography of the location is beneficial (remoteness, community acceptance of nuclear) – the Northwest has the ambition of being a Nuclear Energy Low Carbon Economic Area 3.114 West Cumbria has a concentration of assets of national significance that combined with other assets in the Northwest, have the potential to be of international significance in the future. There is a global realisation that climate change commitments cannot be met without a substantial increase in non carbon generating energy supply - nuclear generation capacity, in tandem with a step change in renewable energy generation is seen as a key way forward in the UK and in a range of international markets. Currently there is approximately 11GW of nuclear generation capacity in the UK, accounting for approximately 15% of UK electricity, however the assets are ageing (the last nuclear power station in the UK, Sizewell B was commissioned in 1995) and by 2023 capacity will have fallen to some 1.2GW. 3.115 Decommissioning is likely to be a market growth area internationally as preceding rounds of nuclear power generation are replaced/upgraded. UK sites are decommissioning in advance of many sites internationally and there is the potential to export UK experience in the long-term. The UK has made significant efforts to remove planning barriers to new nuclear generation and two reactor designs (the EPR from Areva and the AP1000 from Westinghouse) are currently being licensed for operation in the UK. It is estimated that some 10-15GW MW of new capacity will be constructed in the UK over the next 15 years requiring a capital investment of around £30 billion. Worldwide current nuclear capacity is 373GW and is projected to increase to between 1,000 and 3,000GW over the next 50 years creating market opportunities for businesses that supply the industry. 42

See http://www.manchester-enterprises.com/documents/Manchester_MAA.pdf

Regional Intelligence Unit

Summary of the Evidence Base 3.116 Within the Northwest, there are around 25,000 civil nuclear employees accounting for about 50% of UK total in the industry. Over 300 nuclear related companies operate within in the NW with the Sellafield site (in Cumbria) a key nuclear facility in the UK while there is also the nuclear facility at Heysham (Lancashire). The region offers a unique proposition with virtually all the elements of the nuclear fuel cycle located with in the region (uranium enrichment, fuel fabrication, power generation, fuel reprocessing and waste management) including Springfield Fuels near Preston and with Westinghouse having their UK Headquarters in the region. BAE Systems in Barrow have indicated that they wish to enter the civil nuclear market potentially broadening the applicability of the technology and increasing new market opportunities. 3.117 The majority of the UK’s R&D assets and capability are based in the Northwest. The region has academic strength in nuclear research at the Dalton Nuclear Institute at Manchester University 43 and the Centre for Nuclear Energy Technology with the Nuclear Physics Group 44 of STFC based at Daresbury. This is in addition to 500 scientists and engineers the National Nuclear Laboratory 45 in West Cumbria which is the largest concentration of nuclear expertise in the UK. The region is also home to the National Skills Academy for the Nuclear Industry 46 which is also located in West Cumbria. Low Carbon – the potential of the Northwest as an international centre for low carbon aerospace 3.118 The Northwest is a leading international centre of aerospace production with both defence and civil expertise; the requirements to reduce the carbon emissions from aerospace places a considerable challenge on the industry – end use producers of in the aerospace industry will increasingly need to factor in lower carbon impacts into the design and manufacture of end use and intermediate components. 3.119 The Aerospace industry as a whole is responding to increased requirements to address the environmental and sustainability agenda. With global demand for air travel unlikely to diminish, there is a requirement to drive forward improvements within the existing production process to ensure a lower carbon impact for air travel in the future. 3.120 The future demand for new passenger aircraft that meet improved environmental and efficiency considerations. The ACARE targets seek to reduce CO2 emissions by 50% and NOX emissions by 80% (per passenger kilometre) by 2020 as well as halving noise. 3.121 There is considerable R&D activity taking place throughout the aerospace industry in the UK. This includes major programmes such as: 

Utilisation of light weight materials (composites), reducing the weight of aircraft and the fuel consumption needed to transport passengers and freight



Improved aerodynamics/ fluid dynamic technologies to reduce drag effect and energy usage



More fuel efficient engines (including open rotor technology and higher combustion temperatures on jet engines)



Increased use of electrical power (rather than hydraulics)



Improved manufacturing technologies (rapid machining, additive layer manufacturing, automated assembly)



The research capabilities of Northwest Universities in a number of areas are already focussed on some of the above. The Aerospace Research Institute 47 at Manchester University has capabilities in aerodynamics as well as engine manufacture – along with the use of composites and improved manufacturing techniques (as a member of the Northwest Composites Centre).

See http://www.dalton.manchester.ac.uk/ See http://193.62.115.16/NPG/ 45 See http://www.nnl.co.uk/ 46 See http://www.nuclear.nsacademy.co.uk/ 47 See http://www.umari.manchester.ac.uk/ 44

Regional Intelligence Unit

Summary of the Evidence Base 3.122 The key factor to consider is that the Northwest has a concentration of sunk capital in aerospace production as well as intangible capabilities (the skill-sets of the workforce for example) that mean the Northwest will remain a centre of production48 and that low carbon considerations will need to be ubiquitous in future design, production for both the end use, and intermediate goods within the supply chain. Major projects which Northwest businesses are involved with include: 3.123 Environmentally Friendly Engine (EFE) - The EFE project includes five industry partners, led by Rolls Royce and including Bombardier. Six Universities from 3 English Regions and Queens University Belfast are also part of the consortium along with BERR, the Technology Strategy Board, the Ministry of Defence, four English RDAs and the development agencies of Northern Ireland and Scotland. 3.124 The ÂŁ95 million 3 year EFE programme is the latest demonstrator to be launched by Rolls-Royce to demonstrate the technologies required to deliver the ACARE goals for 2020. It is due to complete its first phase by the by March 2010. The technology and improved efficiencies which EFE is planned to deliver will lead to reduced fuel consumption, emissions and noise. The top level EFE project objectives are to attain the goals set by ACARE (Advisory Council for Aeronautical Research in Europe) in reducing carbon emissions by 50% per passenger Kilometre, NOx by 80% and Noise emissions of 50% from Aircraft by 2020. EFE will provide the validation route for the next generation of gas turbine systems, through redesign of all the components, including a design that will allow the engine to run at a significantly higher temperature. This requires totally new approaches to engine air and fuel intake, fuel mixture and combustion, insulation and exhaust gases, durability of materials in the engine exposed to far greater heat stresses, and electronic monitoring and control systems etc. Rolls Royce are undertaking work at Derby and Bristol, and this will eventually impact on fan blade technology being undertaken at their Barnoldswick plant in Lancashire. 3.125 The project will help maintain the position of the UK Aerospace industry in a very competitive high technology market over the next 20 years. As well as Rolls Royce in the Northwest it provides for Unison Engineering Components, situated in Burnley, the key opportunity to develop their alternative fuel injector technology. The company is part of the US owned GE group. Under the terms of the collaboration Unison will be able to exploit their technology with other engine manufacturers. Unison have been investigating various fuel spray patterns with innovative fuel injectors using the technical support available of Salford University, and further work will start with Manchester University during September 2009 (these Universities are further regional collaborations outside of the national project). 3.126 The Next Generation Composite Wing (NGCW) project is led by Airbus UK and includes a total of 18 industry partners mainly drawn from the Airbus supply chain. Because that supply chain operates across many regions, numerous RDAs are collaboratively involved as well as drawing funds from the Technology Strategy Board. 3.127 The ÂŁ105 million NGCW 3 year programme is due to complete this first phase work in 2011. The objective is to develop the technologies and processes that will enable composites structures to be manufactured in a high volume cost effective manner, to meet the large future demand for the next generation New Short Range (NSR) Single Aisle aircraft. It will allow UK Aerospace companies throughout the supply chain to gain global advantage in the huge market opportunity and significantly contribute to maintaining Airbus wing leadership in the UK. 3.128 The technologies are required to meet the demand for rapid ramp up and high volume production, early product maturity together with high performance and reduced environmental impact. Current technology would be too slow, and lead to unaffordable capital outlay; hence radical new approaches are required. So NGCW will, through four discrete projects, investigate and develop the innovative integrated and optimised technologies for analysis design and simulation, a new 48

See the previous sections on aerospace within this document

Regional Intelligence Unit

Summary of the Evidence Base manufacturing approach, assembly and system integration related to advanced composite wing structures to meet the product requirements. 3.129 In the Northwest three Northwest companies participate in the programme (in addition to Airbus). As well as these businesses, the strategic consideration for the Northwest include the fact that although the Airbus facility at Broughton is in Wales, a significant proportion of Airbus employees reside in the Northwest. The programme is expected to positively contribute to safeguarding the future of the Airbus Broughton plant and hence several thousand Northwest residents jobs while the economic output contributions are of significance primarily in Wales but also at the UK level. The contribution of the regional partners in the Northwest will provide an advance in tooling technology, the design of an environmentally friendly factory to substantially reduce energy consumption, and the whole project involving many work packages will be completely systems integrated using the latest software modelling tools. This will also position them with the necessary technologies and techniques to win new future business not only with Airbus, but also possibly with its rival Boeing. 3.130 The NGCW project is aimed at the new civil airliner market, the next generation of ‘single aisle’ and short-range aircraft, where Airbus (EADS group) and Boeing is expected to deliver some of 15,000 new aircraft worth $1,000 billion over the next 20 years, significantly built of lightweight composites. The current fleet of aircraft use structures that use aluminium alloys. There is demand for aircraft which are lighter, more fuel efficient and provide lower CO2 emissions, and reducing the weight of an aircraft can be achieved through the increased use of carbon fibre composites. Low Carbon assets of National significance 3.131 The concentration of public sector supply side support to nuclear industry – National Nuclear Lab, Skills Academy etc., linked with key businesses and decommissioning activity 3.132 Mix of geography assets in Cumbria (coastline (wind/tidal), remoteness and low population density with a community acceptance of the nuclear industry suggests that Cumbria the ‘place’ can be a centre of low carbon energy production (though constrained by transmission/infrastructure issues). 3.133 The coastline of the Northwest is a potential source of tidal power with some of the largest tidal ranges in the UK. Tidal ranges on the Mersey and Ribble Estuaries, along with Morecambe Bay and on the Solway Firth between England and Scotland are all potential sites for tidal energy production. The Northwest region is also home to Lancaster University’s Renewable Energy Group 49 with capabilities in hydrodynamic modelling and marine energy capture, whilst the Lancaster-based Centre for Ecology & Hydrology 50 is the UK’s Centre of Excellence of integrated research into the environmental sustainability of estuarine energy generation. The Maritime Environment and Water Systems Research Group 51 and the Proudman Oceanographic Laboratory 52 at Liverpool University both bring internationally leading expertise in maritime & coastal engineering to address tidal energy issues. These Northwest assets, combined with the leading work being undertaken in the Southwest in developing tidal technologies. This is a proposed Low Carbon Economic Area but has identified collaboration with the Northwest as a key part of the bid given the assets of the region. 3.134 The development of smart grids and electricity networks to cope with the demands of low carbon energy generation which will include the testing the deployment of new technologies and new methods for managing the distribution network. Greater Manchester extending into the wider urban core of the Northwest, and Cumbria, as a remote rural location are areas where this technology can be tested. The region has research capabilities in the Electrical Energy and Power Systems Group 53 at Manchester University with other capabilities at Liverpool (Centre for 49

See http://www.engineering.lancs.ac.uk/lureg/ See http://www.ceh.ac.uk/# 51 See http://www.liv.ac.uk/engfac/industry/maritime.htm 52 See http://www.pol.ac.uk/ 53 See http://www.eee.manchester.ac.uk/research/groups/eeps/ 50

Regional Intelligence Unit

Summary of the Evidence Base Intelligent Monitoring Systems Research Group 54 ) and the major (formerly public owned) research facility within EA Technology 55 . With the network owner and operator in the region (Electricity Northwest) having a £1 billion investment plan over the upcoming five years, and with the presence of United Utilities, Siemans (UK HQ in Manchester) and ABB UK (based at Daresbury) the region has a considerable demand side industry presence to take future opportunities forward. Private sector partners already work together in new technology areas through co-funding (with NWDA) of incubation space at the Energy Innovation Centre 56 . Partners including Siemans, Electricity Northwest, ABB etc. are already working on the potential for demonstrator projects for Smart Grids and Networks with the Joule Centre 57 , with Greater Manchester authorities involved. 3.135 The aspirations of Greater Manchester to be a low carbon City Region, particularly with regard the necessary improvements to the housing stock. The conurbations industrial heritage means there is a considerable demand side pull for commercially testing retro-fitting technologies. The requirement for such extends throughout the region into areas such as Merseyside and Lancashire. As such, the potential market opportunity is considerable. 3.136 The Northwest is a considerable supplier to the national automotive industry (as well as having a number of significant production sites). In commercial vehicles in particular the region has strengths in low carbon automotive production with businesses such as Optare developing low carbon busses.

Life sciences – international pharmaceutical centre infrastructures in Merseyside and Greater Manchester

Cheshire

and

support

3.137 Life science ‘mix’ of international significance – a combination of various assets of national significance, all in reasonable proximity, represents a ‘cluster’ that is internationally recognised. This is through a combination of bio-tech and pharma (demand side (key businesses) and supply side factors (presence of chemical, advanced manufacturing capability)), with HEI base, and with hard infrastructures (e.g. incubators), and soft infrastructure (testing of medical technology). 3.138 The UK pharmaceutical industry was identified as strategically significant in the HM Treasury published a document ‘The UK Economy: Addressing long-term strategic challenges”. The work identified that that ‘pharmaceutical industry accounts for around 0.6 per cent of UK GVA (gross value added) and 70,000 jobs. The UK is one of the world's largest exporters of pharmaceuticals by value: exports in 2007 were £14.6 billion with a net trade surplus of £4.3 billion. The pharmaceutical industry also accounts for nearly one quarter of total business R&D expenditure in the UK, rising from £2.2 billion in 1997 to £3.9 billion in 2006’. 3.139 Data purchased for the Northwest Regional Intelligence Unit 58 using a 4digit SIC definition of biomedical 59 and including pharmaceutical. It identified the following: Table 1: Location Quotient Bio tech Indicator

Northwest - LQ against Cheshire & England Warrington- LQ against England 1.23 3.94 2.04 7.12 1.49 1.86

Employment GVA output Productivity

Source: Experian 2009 Sector GVA

See http://www.liv.ac.uk/eee/research/cims/index.htm See http://www.eatechnology.com/ 56 See http://www.energyinnovationcentre.com/ 57 See http://www.joulecentre.org/ 58 The work was commissioned from Experian and produced GVA, employment, and productivity figures for defined groupings of SIC codes reflecting Northwest RES priority sectors. 59 The SIC used were 2441 = Manufacture of basic pharmaceutical prods, 2442 = Manufacture of pharmaceutical preparations, 3310 Manufacture: medical/surgical equipment, 5146 = Wholesale of pharmaceutical goods 55

Regional Intelligence Unit

Summary of the Evidence Base 3.140 The data shows the scale of bio-technology concentration in the Northwest in terms of employment and GVA, the even stronger concentration in the Cheshire and Warrington subregion, and also, the high productivity (GVA per hour worked) of the bio-technology sector in the Northwest compared to the sector at the national level. GVA per hour for bio-technology in the region in 2006 was £64 compared to an overall regional figure of £20. 3.141 Reasons for this concentration in the region are historic due to links with the regions chemical industry, due to the research and capability base within the region, and due to the presence of a number of prime businesses. 3.142 AstraZeneca recognises eight operational sites in the UK. Three are within Cheshire at Alderley Edge, Macclesfield and a variety of satellite sites in Cheshire area. Its R&D elements, and its ‘buying’ of R&D from wider elements of the industry and HEI base. Pharmaceutical centre of national, bordering on international significance. Based on turnover, Astra Zeneca is the second largest pharmaceutical manufacturer in the UK after GSK. The region also has a number of other significant businesses located in the region including Eli Lilly, Novartis and support industries (such as drug testing and research). 3.143 A study undertaken for AstraZeneca showed that the company produces £1.5 billion of GVA in the UK (2004) with almost £1 billion generated within the Northwest. Around 31% person of AstraZeneca employment is Northwest based, 7,100 employed directly supporting a further 5,000 in the regional economy. Significantly, because of the concentration of R&D capability within the Northwest, the value added of AstraZeneca is significant. 60 3.144 The research undertaken for AstraZeneca showed that £560 million of the businesses £750 million in R&D spend took place at sites within the Northwest (Alderley Park and Macclesfield). The work estimated that this was equivalent to £1 in every £4 of R&D spend in the region as a whole. The business has made significant capital investments in the R&D capability in the region investing £58 million in the Centre for Advanced Lead Discovery, £27 million in a Safety Assessment Laboratory and a £60 million oncology facility (all at Alderley Park). 3.145 These compliment the R&D capabilities of other businesses locating within the region as well as the regions HEI research base and associated facilities. The Task & Finish research of the RDAs identified that the Northwest has the highest volume of incubator space of any region which builds on the density of businesses and Universities with potential for spin-out and new development capabilities. 3.146 Research establishments include facilities at Daresbury Innovation Centre 61 , National Centre for Zoonosis Research 62 , the National Bio-manufacturing Centre 63 , a number of national cancer research centres, and the UK Centre for Tissue Engineering and Regenerative Medicine 64 . Life sciences – assets of national significance 3.147 Location of Astra Zeneca, particularly its R&D elements, and its ‘buying’ of R&D from wider elements of the industry and HEI base. Pharmaceutical centre of national, bordering on international significance. 3.148 HEI research base within the region - Incubation facilities in the region meeting demand from a) spin outs of university base research to product driven), and b) from the changing nature of major pharmaceutical business (increased outsourcing, even of high-end capability from within domestic market) which is already situated in the region. 3.149 Geographical concentration of assets – Cheshire, southern Gt. Manchester and into Merseyside 65 . This concentration provides a critical mass for the industry to develop further. The 60

Regeneris Consulting (for Astra Zeneca) (2006) ‘The economic contribution of Astra Zeneca to the UK and its regions’ See http://www.daresburysic.co.uk/ See http://www.zoonosis.ac.uk/index.html 63 See http://www.biomanufacturing.co.uk/ 64 See http://www.ukcte.org/ and http://www.ukctr.manchester.ac.uk/ 65 See http://www.nwda.co.uk/pdf/SQW%20CandW%20Review%20Forecasts%20Final%20Aug%2007.pdf which mentions the significance of Astra Zeneca and bio/pharma to the Cheshire sub-region 61 62

Regional Intelligence Unit

Summary of the Evidence Base shared research capabilities, hard infrastructures (such as incubators) and soft infrastructures (networks, facilitated by organisations like Bio-Now) all stimulate further economic growth and benefit. 3.150 Market – the Northwest has close to 7 million people within it. This in itself provides a local demand for new products, goods, etc. to which businesses can supply (and prove concepts, markets, etc.).

The Digital & Creative Sector – an area of growth across all regions (but not to the same scale) 3.151 The Digital & Creative sector, broadly defined, is seen as a growth sector internationally and an area where the UK has particular strengths. It is seen by many regions in the UK as a growth area. This is rightly so given the importance of ICT as a business tool (and market accessing tool) and as demand for digital and creative products are likely to ubiquitously. MediaCityUK – a nationally important project with international potential 3.152 A market accessing set of assets and capabilities, specialist infrastructures, and creative ‘culture of international potential – located at the MediaCityUK project as a hub but with links throughout the North and of advantage to the UK 3.153 The digital and creative sector in the Northwest represented 7.3% of regional GVA in 2006 and was projected (without consideration of the impact of MediaCityUK) to rise to 9.7% by 2020 based on estimates provided by Experian 66 . The sector is strategically significant as each hour worked is 50% more productive in GVA terms than in the regional economy overall. The international growth of the industry, and the potential of the UK to benefit from that growth has been acknowledged by Central Government both in HM Treasury’s ‘The UK Economy: Addressing long-term strategic challenges” 67 but also in Digital Britain 68 which further identified the value of digital infrastructure to both social, and economic outcome achievement in the 21st Century. 3.154 Within Europe, the Northwest digital and creative cluster is second (only to London) with a diverse base in computer science (and ICT), computer gaming, recognisable global entertainment brands (such as Granada/Coronation Street/Guardian Media), is the UK’s second centre for television production (with further development due from the BBC relocation), and has a historically strong creative music industry (with successive waves of international success from the Beatles to Oasis, through to Elbow and the Ting Tings). This strength is widely acknowledged, with the re-location of BBC Departments to MediaCityUK being testament to the existing strength of the Northwest digital and creative sector and the potential of the sector in the region in the future. The value of MediaCityUK as a national hub within a growing global market 69 70 3.155 MediaCityUK will be an international hub for digital and creative industries providing world-class facilities for businesses from the largest broadcaster down to the innovative digital entrepreneur. The physical attributes of the site and the development will be key to the projects success. In terms of sheer size, the potential is significant. The site and development will comprise: 

A purpose-built set of facilities with associated infrastructure for major broadcasters to operate 24/7



Home to the largest HD TV production studio block in the country



Creation of over 7 million square feet of new and refurbished floorspace for business, retail and residential property creating a mixed use ‘city’ for the digital and creative industry

Experian data is provided to the Northwest Regional Intelligence Unit – analysis undertaken by NWDA HM Treasury (2008), “The UK Economy: Addressing long-term strategic challenges”. Available at http://www.hmtreasury.gov.uk/d/pbr08_ukeconomy_594.pdf 68 Department of Culture Media and Sport (2009) Digital Britain, available at http://www.culture.gov.uk/images/publications/digitalbritainfinalreport-jun09.pdf 69 Information provided here is from a detailed case study material relating to MediaCityUK and the nature of public sector intervention 70 The size and scale of MediaCityUK can be seen at a dedicated website: http://www.mediacityuk.co.uk/ 67

Regional Intelligence Unit

Summary of the Evidence Base 

Providing space for 1,150 media, creative and related businesses



Creating a centrepiece - a spectacular 15,000 sq m public piazza, twice the size of Trafalgar Square, which provides the perfect space for public interaction & performances



Based on 200 acres (37 acres of Phase 1) of former dockland at Salford Quays



Situated next to two of the most iconic buildings in the UK – the Lowry Theatre and Imperial War Museum North (designed by Daniel Libeskind)



The site will have a 20 minute drive time to Manchester International Airport, and will be a 12minute tram ride to Manchester City Centre with a dedicated new Metrolink station situated in the heart of MediaCityUK

3.156 The MediaCityUK project will also include a concentration of soft/intangible infrastructures to support the development of the digital and creative industry. The initiatives being taken forward in the Northwest anticipated much of what was announced in Digital Britain and the region is positioning itself as a key location for taking forward that national agenda. 3.157 For example, the Centre of Excellence for Games will be an industry led initiative with support from the governing bodies TIGA and ELSPA, aligned with DCMS and Digital Britain strategies. The project has been supported and directed by the industry, developed by independent consultants BOP and has a clear games industry focus but looks to provide resources, technology and facilities for a range of digital industries. The facilities in the centre will offer testing, evaluation and usability labs, public demonstration and launch facilities and commercial hire facilities including motion capture studios. The facility will also offer opportunities for post graduates placements and internships providing opportunities to enter the industry. The project is likely to seek funding in part from Industry, DCMS, TSB and NWDA (this project is being developed now under the auspices of the national Strategic Investment Fund). 3.158 Additionally, the Digital Content Lab is an initiative that will offer opportunities for the development of innovative new technologies and products that can sustain the Northwest and UK economy in the future. The Programme at MediaCityUK has been working in partnership with the other Northern RDAs to identify and develop initiatives to promote innovation and collaboration in the North of England, supported by the Northern Way “Innovation in Industry” Fund. Initiatives will include the NorthernNET 71 Innovation and Knowledge Transfer Project, which will build on the existing investment in infrastructure, and exploit the NorthernNET network as it stands to create a virtual Northern Digital & Creative industry cluster where businesses involved in the network will be able to share their capabilities throughout the wider network and exploit the gains to be had. This will be used to demonstrate the opportunity for innovation, collaboration and facilitate knowledge transfer between business, academia and the voluntary sector, through a range of activities and initiatives utilising NorthernNET connectivity. Digital & Creative – assets of national significance 

Daresbury Science Campus and ICT research/commercialisation



HEI research base within the region but also the supply of graduates



Demand side ‘market’ of significant size – 7 million people, with two City Regions of national significance represents a significant market to which digital content producers can supply.



Publishing centre – location of Guardian Media etc.



TV production centre – Guardian, but also future BBC location and supply chains that support these

NorthernNet is a high speed communications network for the creative and digital industry in the North of England, and the network links to MediaCity:UK as the hub. It provides high speed connectivity between 20 sites, supporting the creation of a Northern digital and creative industry.

Regional Intelligence Unit

Summary of the Evidence Base 

Geographical concentration of assets – Gt. Manchester and into Merseyside/Cheshire – drawing on supplier base and selling to market of 7 million people.



Link to regeneration – MediaCityUK is a project of national regeneration significance; demonstration of good practice.

The Tourism Industry 3.159 The tourism and leisure industry was described by the DCMS as one of Britain’s biggest employers and a flourishing industry in ‘Winning: A Tourism Strategy for 2012 and Beyond’. According to this the industry generates some £85 billion per year in the national economy and is directly responsible for 1.4 million jobs – or 1 job in every 20. Of this £85 billion £17 billion comes from overseas visits to the UK but the majority is spent by domestic residents with £44 billion spent on day trips and £23 billion spent on overnight visits. 3.160 Northwest Tourism Economic Account (TEA) estimates that visitor spending in 2007 totalled £8.7 billion in 2007. The largest element of visitor consumption was that by day visitors (£4.5 billion or 52% of all visitor consumption). The next-largest element was spending in the Northwest by UKresident visitors holidaying in the region, this totalling £1.5 billion (18%). Overall, visitor spending was directly responsible for the creation of £3.7 billion of value added. This tourism value added was equivalent to 3.1% of all (estimated) industry value added in that period. The largest portion of TVA, around a third, accrued to the restaurants, cafes & bars & canteen industry (£1.25 billion). Hotels, motels and other serviced accommodation accounted for a further £680 million, and retail & distribution £540 million. 3.161 Meanwhile, this visitor spending directly supported an estimated 168,000 workforce jobs in the region in 2007, this totalling 5.1% of the regional workforce in that year. This total, which includes part-time and seasonal workers as well as owner-managers and the self employed, is equivalent to around 125,000 full time equivalent jobs (FTEs). 3.162 The construction of the TEA helps estimate the indirect impacts of tourism, as wealth and employment are created in the supply chain and through wage effects. This analysis suggests that a further £2 billion of tourism value added was created in this way in 2007, bringing the total TVA in the region to £5.7 billion (or 4.7% of total industry value added in that year). There is of course additional employment associated with these indirect effects. The direct workforce employment of 168,000 generates a further 56,000 workforce jobs regionally, giving a total for all tourism dependent employees of just under 225,000 workers – around 6.7% of the regional workforce. Tourism Supply Chains in Central Manchester 3.163 Over the past two decades Central Manchester has transformed itself into a vibrant commercial core and modern visitor infrastructure with a diverse cultural offer and an impressive industrial heritage. It has much to attract and occupy the visitor. Nevertheless, the city continues to look for ways in which to diversify and increase the value of the visitor economy, particularly via events based tourism. Central Manchester is home to a range of tourism facing businesses. The area is populated by both independent establishments and those which are part of a larger group. Indeed, the regeneration of Castlefield, the redevelopment and expansion of the city centre and Manchester’s growth in popularity as a destination has attracted nationally and internationally recognised hotel and restaurant brands. The prevalence of such establishments does influence the economic impact upon the city and the wider region. Whilst these companies recruit locally, profits tend to flow out of the region (with the exception of any capital expenditure) and purchasing decisions are made outside of the region. Therefore, these establishments simultaneously grow, diversify and dilute the tourism economy. 3.164 In terms of the policy implications and possible public sector intervention to increase the local and regional impact of the visitor economy, the following is apparent: 3.165 The importance of securing and supporting major event based tourism (business or leisure) – The city’s success in attracting and hosting major events has fuelled the visitor economy and

Regional Intelligence Unit

Summary of the Evidence Base stimulates demand for the products and services of tourism facing businesses. It is important to maintain the current momentum via continual bidding and generating leads for new events, particularly, those events which generate the greatest economic impact (i.e. attract those who will stay within the city). 3.166 There may be greater scope to bridge an information gap – finding good local suppliers can be rather opportunistic. There may be greater scope for the public sector to support the promotion of local sourcing opportunities (e.g. promote existing or develop new themed supplier directories). There may also be greater scope for supporting interventions which seek to ensure that local/regional SMEs are aware of those services which are being procured by competitive tender. 3.167 Public sector procurement criteria can be influential – The criteria adopted by the public sector have been shown to influence the purchasing decisions of a large hotel in the city centre. It is unlikely that this hotel is alone. The public sector as a consumer of goods and services has considerable influence. Therefore it is important that procurement policies are reviewed and developed accordingly, and awareness is raised to the work of the PSFPI. 3.168 The importance of the environmental case for sourcing locally – Whilst this case study has focused on the economic impact of the supplier base for tourism facing businesses, there are also environmental considerations. The promotion of local sourcing has the potential to achieve both economic and environmental policy objectives. Therefore, there is the potential to achieve the former with the promotion of the latter. 3.169 Key Access Points to the Northwest: Regional Airports 3.170 In 2006, Oxford Economic Forecasting published a report on the Economic Contribution of the Aviation Industry in the UK. This study revealed that in 2004, aviation contributed £11.4 billion to GDP. Annual Business Inquiry data shows that in 2006, 87,000 people were employed by the air transport industry in Great Britain and 7% of these (6,000) were based in the Northwest. The UK aviation industry is expected to grow significantly over the next 22 years. The mid-range figures released by the Department for Transport show that between 2010 and 2030, total air traffic demand will increase from 280 to 490 million terminal passengers per year. 3.171 The Northwest’s airports have an enormous impact on the region’s economy. At the core there is the airport operator, the airlines and ground services. Then, as the airport grows, additional amenities and service functions are put in place to support the additional freight and passenger throughput. Once this infrastructure is established, economic impact arises from the passenger/employee spend and the additional supply chain opportunities that are created for local businesses. 3.172 Development of the retail, catering and accommodation facilities at the airport creates extensive supply chains that have the potential to generate enormous amounts of value in the region. However, as the airport develops from a low/medium density airport to that of high or even very high, these supply chains are likely to become more national and less local. This could then lead to leakage as national brands use their preferred suppliers via their centralised logistical systems. This presents the Northwest with somewhat of a challenge. As the airport expands and its functions increase, local businesses, especially catering companies, should be encouraged to enter into what are potentially national or even international supply chains. The Local Economic Impact of Tourism in Windermere & Bowness 3.173 Windermere and Bowness are a key part of the tourism economy in both South Lakeland and Cumbria as a whole, but are also an important loci (with Ambleside) for business more generally, servicing South Lakeland and then stimulating and supporting further commercial investment. It is estimated that in 2007 South Lakeland had £510.1 million of tourism revenue (44.6% of the Cumbria total), 10.2 million tourist days (36.2% of the Cumbria total), and 4.8 million tourists (Cumbria Tourism, 2007, and GTS STEAM data). A significant proportion of these totals reflect the tourism offer alongside Lake Windermere (centred on Windermere, Bowness and Ambleside).

Regional Intelligence Unit

Summary of the Evidence Base 3.174 There is a diverse tourism-facing sector in the area based in large measure on a flow of services deriving from natural capital (the lakes, fells and woodlands) and with spending focusing around accommodation provision, major attractions, and a developing local food and drink sector. This is a locality where much of the economic base is either directly or indirectly dependent on tourism demands. 3.175 There are a series of factors which strengthen local impacts within Windermere and Bowness. The area features large numbers of SMEs in retail and business services. The absence of major national (or international) retail and café outlets is very noticeable on the main streets. This conclusion also holds for hotels with the only ‘national’ brand names being McDonalds and the Best Western Burnhow hotel both in Bowness. The ownership structure of local business can be associated with local/regional impacts. Hotels are a good example. Where regionally based hotels are part of national/international groups then profits are often remitted out with the region, and with local managers having less control over the direction of re-investment. 3.176 A series of other factors have a strong effect on consolidating the local economic impact connected to tourism consumption in the area: 

Attempts by larger hotels to extend the shoulder season (i.e. the period in between the high and low seasons) by developing business and conference tourism;



The continued development of overseas markets niches; particularly those linked to various Beatrix Potter attractions, and Bollywood films. In this respect there had been strong returns to marketing Windermere and its attractions to Japanese markets



Local attractions networking to provide passport tickets, and linking infrastructure exhibits to attractions. For example tickets available to use Windermere cruises, and Lakes and Hawkshead railway to move between other attractions, although with remaining issues on the absence of central booking facilities.



The role of locally sourced food using local wholesale hubs (such as Plumgarths) to raise the tourism offer and instil a distinctive sense of place which is attractive to visitors.

Tourism – assets of international and national significance 3.177 Natural environment – the Lake District National Park is the Northwest’s leading visitor asset. It receives around 8 million visitors a year and is a central component of tourism in Cumbria which accounts for over 10% of its GVA. The park has numerous components of interest from its outstanding natural beauty through to water sports, adrenaline sports, cultural history particularly concerning the Lake Poets and important agricultural sites. 3.178 Sporting assets – the region is home to some of the most famous football clubs in the world as well as a number of other Premier League and lower league clubs which all bring visitors into the region. As well as this there are top tier Rugby League and Union clubs, national race courses, international quality golf courses and the world class sporting infrastructural legacy left by the Manchester Commonwealth Games. As well as this the region has an important part to play in the lead up to London 2012 with a number of businesses working on contracts through the Compete For programme and by having over 20 countries already signed up to train in the region including the Australian swimming team. 3.179 Retail – Manchester in particular is renowned for its shopping and this is partly due to its proximity to the Trafford Centre but also the high quality retail within the city itself. The region also has Liverpool One and Cheshire Oaks the UK’s largest designer outlet mall 3.180 World Heritage – the Northwest has 2 existing World Heritage Sites; the Liverpool Waterfront and Hadrian’s Wall. The Liverpool Waterfront was once the gateway to the Empire reflecting Liverpool’s glorious past as one of the biggest and most influential cities on Earth. Today it is a popular ‘neighbourhood’ with historic attractions, museums, bars and nightlife, the Liverpool Echo arena and conference centre and site of many apartments and hotels. The Lake District National

Regional Intelligence Unit

Summary of the Evidence Base Park and Manchester/Salford are bidding to become future world heritage sites which would generate significant international exposure and increase levels of visitors to the region. 3.181 Besides World Heritage the Northwest has an extensive historic environment ranging from medieval towns like Carlisle, seaside resorts like Southport and Morecambe, to Georgian towns like Lancaster. However it is unquestionably industrial revolution heritage which sets the region apart nationally – it was the birthplace of the revolution and has numerous ‘powerhouse’ towns most obviously Manchester and Liverpool but also the likes of Preston, Bolton, Rochdale, Burnley, Blackburn, Oldham, Ashton and so on. 3.182 Culture – the Northwest is renowned for its culture with a history of music, art and soul with which most regions cannot compete. This was reflected by the most successful Capital of Culture year in the competition’s history, through the Manchester International Festivals and through some of the most frequented museums and galleries in the UK. In the lead up to 2012 the We Play programme (or Cultural Olympiad) will also provide a diverse range of cultural events and participation opportunities such as Lakes Alive which had 43,000 people attend in July 2009 and the Abandon Normal Devices digital arts programme. 3.183 Night time economy – the Northwest has an exceptionally strong night time economy which caters for people within the region and attracts visitors from outside. Areas of particularly strength nationally include Liverpool City Centre, Manchester (Castlefield, Northern Quarter and Centre) and Blackpool.

Regional Intelligence Unit

Summary of the Evidence Base

Productivity Drivers 3.184 It is recognised that higher rates of productivity growth are essential to the growth and stability of the UK economy. Improvements in productivity benefit individuals in the form of lower prices, higher quality and innovative goods and services72. Productivity differences are driven by the size and structure of an economy, the levels and quality of its factors of production including capital investment, skills and infrastructure, as well as how efficiently such factors are utilised. 3.185 The Government’s current approach to enhancing regional economic performance involves: 

Maintaining macroeconomic stability to help businesses and individuals plan for the future.



Implementing microeconomic reforms to tackle market failures in the underlying drivers of growth.

3.186 The Government’s framework for tackling the productivity challenge has identified five key drivers that underpin long-term economic performance and productivity. The five drivers are: 

Skills



Investment



Innovation



Enterprise



Competition

3.187 Differences in regional performance against each of these factors relative to the national and international comparators will have an impact on the region’s relative economic performance, and may give some indications as to why the region falls short of its productive potential. This section will look at the five drivers of productivity. Skills 3.188 The overall level of education and skills in the workforce can have a critical impact on the output and productivity levels of an economy. Individuals can develop their skills through education, training and experience. Improved levels of skills enable individuals to utilise capital and advanced production techniques, facilitate new innovative ideas and adapt to changes in the economic environment including adopting new business practises. Skilled workers play a key role in knowledge creation and are more able and likely to receive training at work. An increasing proportion of jobs in the economy require a higher level of skills. 3.189 The acquisition of new skills helps individuals to find employment, especially those with limited formal education and training, as well as enabling individuals to progress in the labour market. Increases in employment or hours worked raise the total output of the economy and contribute to growth. However due to the finite nature of labour supply continued improvements to economic growth and living standards are largely dependent on increases in productivity 3.190 Significant research has been undertaken which highlights the positive relationship between skills and productivity. Mankiw et al (1992) found that human capital, measured by years of schooling had a positive impact on the growth in income per capita across a range of countries between 1960 and 1985 73. Therefore understanding how and why regions and their localities vary in their skills composition is central to understanding regional and local economic performance. The skills levels of the workforce depend on:

72 73



Production of skills in the region through education and training.



Movement of workers into and out of the region.

Office of Fair Trading, “Productivity and Competition: An OFT perspective on the productivity debate” BERR Nov 2001 “Productivity in the UK – The Regional Dimension”

Regional Intelligence Unit

Summary of the Evidence Base

The Northwest has tended to have relatively low recorded skills levels. 3.191 In 1999/00, 19.1% of the working age population had no qualifications compared to 16.5% for England and Wales. The comparative proportion with the highest level qualifications (NVQ4+) was 19.6% in the Northwest and 22.4% in England and Wales. However skills in the region have improved in recent years, there are now more individuals holding NVQ4+ qualifications in the region and fewer individuals with no qualifications. Figure 17: Highest qualification attained 35 30 25

20 15 10 5 0 Mar 1999-Feb 2000

Jan 2008-Dec 2008

Mar 1999-2000

Northwest No Quals

Jan 2008-Dec 2008 England

NVQ1

NVQ2

NVQ3

NVQ4+

Source: ONS Local Area Labour Force Survey & Annual Population Survey

Evidence indicates that the average educational attainment of those in lagging regions falls behind during compulsory education. 3.192 These differentials are then reinforced after students graduate from university; highly skilled labour especially recent university graduates are relatively mobile and will often relocate to regions and localities with more job opportunities and higher paid jobs 74 . A large number of graduates move from poorer regions to wealthier regions in particular the Wider South East (London, the South East and East of England). 3.193 The take-up of skills is influenced by a number of factors: 

An individuals investment



Government investment



Business investment

3.194 For individuals the decision to invest in skills is based on an assessment of the balance between the costs and benefits of gaining skills. Data shows that the employment rate is higher for individuals holding higher levels of qualifications, compared to those with fewer qualifications.

BERR Nov 2001 “Productivity in the UK – The Regional Dimension”

Regional Intelligence Unit

Summary of the Evidence Base

Figure 18: Percentage in employment by educational attainment, 2008 100% Northwest

England

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% NVQ 4+ in employment

NVQ 3 in employment

NVQ 2 in employment

NVQ 1 in employment

No qualifications in employment

Source: ONS Annual Population Survey

3.195 An individual’s decision about whether to invest in skills is influenced by the availability of and access to education and training including factors such as public transport, availability of training opportunities and future potential benefits. There is the potential for public policy decisions to influence these factors. 3.196 Firms benefit from workers with higher skills, who are generally more efficient and able to adapt to changes in the economic environment. Skilled workers enable firms to engage in sophisticated production processes through their ability to handle innovations and generate innovative ideas. Conversely firms can be detrimentally affected by skill deficiencies in the workforce, constraining both investment and the ability of firms to innovate. 3.197 Research by the London School of Economics’ Centre for Economic Performance and McKinsey & Company (2007) indicates that higher levels of management capability within firms are positively associated with performance increases in areas such as sales, labour productivity and return on capital employed 75 . The management of a firm can influence productivity outcomes, directly and indirectly through its role in determining innovation, workforce skills, investment and enterprise outcomes as well as a firms ability to exploit new market opportunities. The business strategies that managements choose to adopt shape the skills profile of a firm’s workforce, its efficient utilisation, and influence the level and type of skills investment undertaken. Thus strong leadership and management skills are critical in terms of resource management, achievement of business success and productivity growth. For more on Leadership and Management and skills in general see the portfolio of skills evidence papers. 3.198 Analysis of current and future skills needs is required to ensure that the region invests in the skills required for economic/productivity growth 76 . Government policy has attempted to address under investment in skills which can result from employers reduced incentive to invest, insufficient access to finance and lack of knowledge of the true benefits that result from skills acquisition. 3.199 Evidence suggests that increases in the amount of workforce training undertaken is associated with higher levels of productivity 77 . Annual population survey data shows that in 2008 the 75

BERR 2009, “The 2008 Productivity and Competitiveness Indicators” The NWDA is currently undertaking a research project investigating future labour market and skills demand and supply, the findings of which will be included in the evidence base once the project reports 77 BERR 2009, “The 2008 Productivity and Competitiveness Indicators” 76

Regional Intelligence Unit

Summary of the Evidence Base proportion of employees and self-employed individuals having under-taken job-related training in the previous year. Figure 19: Percentage of employees & self-employed having undertaken training in the previous 4 & 13 weeks, 2008 35 4 Weeks

13 Weeks

30 25

20 15 10 5 0 Mar 2001-Feb 2002

Jan 2008-Dec 2008

Mar 2001-Feb 2002

Northwest

Jan 2008-Dec 2008 England

Source: ONS Annual Population Survey

The Northwest has a low proportion of high level occupations 3.200 More highly educated/skilled individuals are associated with higher-level occupations and increased productivity, for which wage levels are often used as an indicator. Analysis shows that there remain significant differences in occupational structures across regions. Compared with England, and especially with the â&#x20AC;&#x153;Wider South Eastâ&#x20AC;? (East of England, London and the South East), the Northwest has a relatively low proportion of high-level occupations. Similarly, the region, along with comparator regions, Yorkshire and the Humber and the West Midlands, continues to have a higher share of low-level occupations than in England and the Wider South East.

Regional Intelligence Unit

Summary of the Evidence Base Figure 20: Occupation by occupational category in 2001 and 2008 (% of total jobs) 60% Higher Level Skills

Medium Level Skills

Low Level Skills

50%

40%

30%

20%

10%

0% Mar 2001-Feb 2002 Jan 2008-Dec 2008 Mar 2001-Feb 2002 Jan 2008-Dec 2008 Mar 2001-Feb 2002 Jan 2008-Dec 2008 Northwest

England

Wider South East

Source: ONS Annual Population Survey

Earnings are significantly lower than in England 3.201 In addition to a smaller share of high-level occupations in the Northwest, earnings in these occupations are significantly lower than in England and the Wider South East. Differentials in occupational structure and earnings between the Northwest and the England average as well as the Wider South East; go some way to explain maintained productivity differentials between regions. Figure 21: Earnings by occupational category, 2008 700 Northwest

Yorkshire & the Humber

West Midlands

600

500

400

300

200

100

0 Higher Level Skills

Medium Level Skills

Source: ONS Annual Survey of Hours & Earnings

The importance of skills to regional economic performance indicates that:

Regional Intelligence Unit

Lower Level Skills

Summary of the Evidence Base 3.202 Improving the human capital in under-performing regions and localities is a key factor in improving the economic performance of these areas. 3.203 It is crucial that measures to increase educational attainment and skills are undertaken in conjunction with measures to sustain high-wage jobs as a means of retaining and attracting highskilled workers in the region or locations. Enterprise 3.204 Enterprise is a key driver of productivity growth in the economy; it refers to the seizing of new business opportunities by both start-ups and existing firms. It stimulates dynamic competition or creative destruction78 whereby firms enter a market introducing new technology, processes or business practices and compete with existing firms, forcing the incumbent firms to increase efficiency to survive. 3.205 Enterprise increases productivity through new firms entering markets which can increase competitive pressures and lead to the introduction of new technologies, ideas, knowledge and skills as firms attempt to compete more effectively. Enterprise also stimulates the process of “churn”, were new firms in the market drive out inefficient firms unable to compete resulting in the average productivity level of the economy increasing. 3.206 Ahn (2002) suggests that up to 50% of a country’s growth is derived solely from this firm-level churn in which the process of entry, exit and changing market shares increases economic growth. In their review of UK manufacturing firms during 1980-1992, Disney et al (2003) show that 8090% of TFP (total factor productivity) growth comes from entry and exit of establishments, with 30% of TFP growth coming from highly productive new firms and 50% coming from the exit of the least productive firms 79 . 3.207 HM Government’s Enterprise Strategy identified five key enablers of enterprise. These enablers are the underlying factors which, in their absence, have the potential to limit the level and quality of enterprise. 

Culture of enterprise



Knowledge and skills



Access to finance



Business innovation



The regulatory framework

3.208 Important drivers to an enterprising economy are individuals’ attitudes to and experience of enterprise. “A positive enterprise culture increases willingness to develop entrepreneurial skills and impacts positively on the actual development of such skills. A positive culture also influences business innovation by providing the environment where people want to take risks and advantage of potentially viable business opportunities.” 80 3.209 Knowledge and skills are important for creating entrepreneurial ambition and driving entrepreneurial performance. “Entrepreneurs need to posses a personal skill set that includes the management, financial, business and communications skills required to identify opportunities and succeed.” 81 3.210 Access to finance has been highlighted as an enabler of enterprise, the creation, survival and growth of a business can depend on the availability and accessibility of finance. 3.211 Evidence from a number of business surveys has highlighted the negative impact that the current recession has had on the ability of firms to access finance. The ability and willingness of banks to 78

Schumpter 1942 “Capitalism, Socialism and Democracy” BERR 2009, “The 2008 Productivity and Competitiveness Indicators” BERR 2009, “The 2008 Productivity and Competitiveness Indicators” 81 BERR 2009, “The 2008 Productivity and Competitiveness Indicators” 79 80

Regional Intelligence Unit

Summary of the Evidence Base lend has been greatly reduced impacting on the cost of many types of finance and therefore firms’ investment and growth decisions. 3.212 “Business innovation is an enabler of enterprise and is a key motivation, for many entrepreneurs. Innovative businesses are more likely to achieve growth, and businesses which have experienced recent growth are more likely to introduce new or improved products and services or new ways of working. 3.213 The regulatory framework can impact on market outcomes by influencing the decisions of firms and individuals and the way markets operate. Regulation has implications in relation to the availability of business opportunities, the costs of pursuing these opportunities and the returns from doing so.” 82 3.214 The Global Entrepreneurship Monitor (GEM) creates an index of early stage entrepreneurial activity (TEA). It measures the characteristics of entrepreneurial individuals and types of entities they establish. At the regional level TEA in the Northwest was 5.5% in 2008, the same as the overall UK rate. The level of early stage entrepreneurial activity in the Northwest has tracked the UK trend very closely from 2002 to 2005, since when there has been a convergence as the UK rate has declined. 83 3.215 In 2008 the East of England had the highest rate of TEA 7.3% followed by the West Midlands 6.4% and the South West 5.9%. In comparison Yorkshire and the Humber had the lowest level of TEA with 4.2% of the adult population involved in entrepreneurial activity.

Figure 22: Total entrepreneurial activity in the UK, 2008 (% of adult population) 8% 7% 6%

5% 4% 3% 2% 1% 0% Yorks & Humber

North East

East Midlands

Northwest South East

London

South West

West Midlands

East of England

Source: Global Entrepreneur Monitor

3.216 Business start-ups are used as an indication of the level of entrepreneurial activity in an area; the most widely used proxy for rates of business start-ups in an areas is the number of new firms registering for VAT per 10,000 of the resident adult population. In the Northwest there were 37 82 83

BERR 2009, “The 2008 Productivity and Competitiveness Indicators” GEM UK: Northwest Summary 2008

Regional Intelligence Unit

Summary of the Evidence Base business start-ups per 10,000 adult population in 2007, below the UK average of 42. London had the highest rate of business start-ups in 2007 with 68 whilst the North East had the lowest rate at just 28 start-ups per 10,000 resident adult populations. Figure 23: Business start-ups per 10,000 resident adults by region, 2007 London South East East England South West East Midlands Northwest West Midlands Yorkshire and the Humber North East 0

Start-up rate per 10,000 resident adults

Source: Department of Business, Enterprise and Regulatory Reform, 2008

Start-up rates are highest in the south of the region 3.217 The map below shows that there are large differences in business start-up rates between districts in the Northwest. The highest start-up rates can largely be found in the south of the region. Macclesfield and Trafford have start-up rates of 58 per 10,000 resident adult population, followed by Congleton with 54 and Warrington with 49. Exceptions to this trend are Ribble Valley with a start-up rate of 58 per 10,000 resident adults and Copeland with 50. Districts in the region with the lowest business start-up rates in 2007 were Knowsley 21, Lancaster 22, Blackpool 26 and Burnley 27.

Regional Intelligence Unit

Summary of the Evidence Base Map 1: VAT registration rates per 10,000 resident adult population by district, 2007

VAT Registration per 10,000 resident adult population 21 - 27 28 - 33 34 - 39 7

40 - 45 46 - 58 0 = Macclesfield 1 = Crewe and Nantwich 2 = Chester 3 = Ellesmere Port and Neston 4 = Congleton 5 = Vale Royal 6 = Copeland 7 = Carlisle 8 = South Lakeland 9 = Allerdale 10 = Eden 11 = Barrow-in-Furness 12 = West Lancashire 13 = Lancaster 14 = Chorley 15 = South Ribble 16 = Rossendale 17 = Fylde 18 = Preston 19 = Wyre 20 = Pendle 21 = Ribble Valley 22 = Hyndburn 23 = Burnley 24 = Bolton 25 = Bury 26 = Knowsley 27 = Liverpool 28 = Manchester 29 = Oldham 30 = Rochdale 31 = Salford 32 = Sefton 33 = Stockport 34 = St. Helens 35 = Tameside 36 = Trafford 37 = Wigan 38 = Wirral 39 = Blackburn with Darwen 40 = Blackpool 41 = Halton 42 = Warrington

9 10

6 8

11 13

21 19

15 39

14 12

24 37

32 27

28 42

26 34 38

41 3

0 5 4

2 1

3.218 The map above highlights that the districts of Merseyside and the northern Greater Manchester have relatively low business start-up rates especially when compared with their neighbouring areas of south Greater Manchester and Cheshire. More than a quarter of VAT registrations in 2007 were in Manchester 1,615, Liverpool 1,055, Trafford 1,000, Stockport 980 and Wigan 820, analysis suggests that start-up rates in these areas are to an extent depressed due to their high resident populations. Start-ups in the region have remained stable with some improvement against England 3.219 Over the period 1997 to 2007 the number of business start-ups in the Northwest remained broadly stable, around 33 per 10,000 resident adult population; only in 2007 was there a significant

Regional Intelligence Unit

Summary of the Evidence Base increase to a rate of 37. The same broad trend occurred in England as a whole, however the Northwest experienced some improvement in its start-up rate compared with England, the Northwest start-up rate increased from 48% of the England average in 1997 to 64% in 2007. Figure 24: Change in business start-up rates per 10,000 resident adult population, 1997-2007 50 England

Northwest

45 40

Start-up Ra

35 30 25 20 15 10 5 0 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: Department of Business, Enterprise and Regulatory Reform, 2008

The Northwest performs relatively well on survival rates 3.220 Business survival rates provide an indication of how successful areas are in ensuring that new business start-ups survive. It is in the first few years that a business is considered to be at most risk of failure with the likelihood of survival increasing with time. The Northwest performs relatively well with regard to three year survival rates; of those businesses started in 2004 66.2% remained active three years later, above the England average of 65.2%. Three year survival rates are highest in the South West at 68.9% and lowest in London at 60.0%. The Northwest has experienced an increase in the three year survival rate over the last couple of years, other regions have experienced similar trends.

Regional Intelligence Unit

Summary of the Evidence Base

Figure 25: Three year survival rate for business start-ups in 2004 (%) South West East of England South East East Midlands Northwest West Midlands England Yorkshire and the Humber North East London 54%

56%

58%

60%

62%

64%

66%

68%

70%

Three year survival rate (%)

Source: ONS Business Demography: Enterprise Births, Deaths and Survival, 2008

Investment 3.221 Investment is a key driver of productivity, mainly through increasing the amount, quality and use of capital and the incorporation of new technology. Investment allows a greater level of output to be produced from the same level of inputs i.e. increasing output per worker. Recent research has highlighted the importance of investment in intangibles for example intellectual property (R&D), software, branding, process improvements and human capital. 3.222 Investment decisions are influenced by a number of factors including investment timescales, expected returns and associated risk; the current recession is likely to impact on these factors. The business environment in which firms operate will also impact on levels of investment including “the quality of infrastructure, the cost of doing business, the taxation system and macroeconomic, political and policy stability as well as domestic and international competition and opportunities.” 84 3.223 Agglomeration benefits can influence investment decisions. Firms are attracted to areas which can provide increasing returns to scale, gained from locating near to competitors, customers and employees. Agglomeration benefits include accumulation of information including new and innovative ideas, access to dense labour markets – a pool of skilled labour and proximity to inputs and customers. Research highlights that firms in the Greater Manchester and Liverpool areas have higher productivity than firms elsewhere in the Northwest 85 . Investment in infrastructure can improve the gains from agglomeration, for example, by providing greater connectivity and relieving congestion. 3.224 Foreign Direct Investment is a significant source of investment; there are a number of factors identified by UK Trade and Investment (UKTI) that can influence investment location decisions by foreign firms.

84 85



General business environment



Availability of skilled labour

BERR 2009, “The 2008 Productivity and Competitiveness Indicators” Manchester Independent Economic Review 2009, “The Case for Agglomeration Economies” & Pion Economics 2009, “Places Study”

Regional Intelligence Unit

Summary of the Evidence Base 

R&D base



Tax and regulatory environment



Culture, lifestyle and education system

3.225 A significant amount of research has highlighted that foreign owned firms are generally more productive than domestic firms. Moreover they can provide positive spill-over benefits to firms located in the same areas by introducing new technologies and business practices, as well as intensifying competitive pressures. In 2006 total investment by UK owned firms was equivalent to 7.4% of regional GVA, the highest proportion of any English region, and compared with an England average of 5.9%. 3.226 Total investment by foreign owned firms equated to 1.0% of regional GVA, the lowest of all regions and compared with an England average of 1.7%. Levels of investment by foreign owned companies as a proportion of GVA has been more stable than investment from UK owned companies; the Northwest has experienced decline in manufacturing and services investment over the period 1998 to 2006 as shown below. Figure 26: Investment by UK and foreign owned businesses in the Northwest and England as a percentage of GVA 8.0 Foreign Owned

UK Owned

7.0 6.0

5.0 4.0 3.0 2.0 1.0 0.0 Manufacturing

Services

Other

Total

Manufacturing

Services

England

Other

Total

Northwest

Source: ONS Annual Business Inquiry

Regional Intelligence Unit

Summary of the Evidence Base

Figure 27: Investment by UK and foreign owned businesses in the Northwest and England as a percentage of GVA, 1998-2006 12.0 1998 10.0

1999 2000

8.0

2001 2002

6.0

2003 4.0

2004 2005

2.0

2006

0.0 UK Owned

Foreign Owned

UK Owned

Manufacturing

Foreign Owned

Services

UK Owned

Foreign Owned

Other

UK Owned

Foreign Owned

Total

Source: ONS Annual Business Inquiry

3.227 Evidence suggests that investment to raise levels of capital and technology, for example ICT, has greater impact on productivity when undertaken along with investment in skills and changes in firm organisation structures. 3.228 The macroeconomic stability, consistent output growth and stable interest rates which the UK has experienced between 1997 and 2007 has facilitated increased levels of investment. “Economic theory suggests that business investment is procyclical (declines during a recession) as a result of weaker demand, increased risk, tighter cash flow, the deteriorating quality of trade credit assets and reduced lending by banks seeking to reduce their exposure to risk. Analysis suggests that the current recession will have a negative impact on business investment, through the tightening of credit conditions and opportunities as well as instability in relative UK macroeconomic conditions.” 86 Innovation 3.229 Innovation is the successful exploitation of new ideas. Innovation incorporates new or improved goods or services, new methods of working including new processes as well as business practices and workplace organisation and their commercial exploitation and diffusion throughout the economy. Figures suggest that innovation has accounted for around two thirds of UK economic growth in the post World War Two period. The future ability of UK business to compete with firms based in lower-cost economies will be dependent upon developing strong innovation processes. 3.230 ICT investment is a significant support to innovation development and implementation, facilitating communication and development of new products, processes and services. The development of innovations and their successful utilisation also requires individuals to hold appropriate skills and knowledge. “The lack of qualified personnel has been identified in the UK Innovation Survey as the sixth main barrier to innovation, emphasising the importance for firms of employing people

BERR 2009, “The 2008 Productivity and Competitiveness Indicators”

Regional Intelligence Unit

Summary of the Evidence Base with the necessary skills and ensuring their capabilities evolve in line with changing business needs.” 87 3.231 Genuinely new technologies and cutting-edge production processes are generally produced by a few world-leaders in relatively few countries. However not only does successful innovation benefit those firms undertaking it, it also tends to have spillover effects that create wider benefits to the overall economy. These spillovers can increase the productivity of all firms as new processes and ideas are emulated. Some new innovations are generated directly by firms; others particularly in completely new fields have their roots in research undertaken in universities and institutes. The commercial development of such research is another powerful example of a spillover. 3.232 Barriers can exist which limit the effective dissemination of technology and result in the spread of more innovative and efficient products and processes becoming localised. Under-performing regions and localities can experience particular problems in absorbing new technologies, businesses need to be able to adapt new innovations to industry and region specific circumstances, such problems are likely to be key to determining regional variations in innovation performance. 3.233 Expenditure on research and development (R&D) has been used as an indicator of how much investment in the production or adoption of innovation is taking place in an economy. It is acknowledged that R&D expenditure is an imperfect measure of innovation, measuring approximately only 40% of all innovation-related expenditure.” 88 Business R&D is high in the Northwest 3.234 Business enterprise R&D expenditure in the Northwest as a proportion of total expenditure on R&D was 76.7% in 2007, higher than the England average of 68.1%; the region has the second highest proportion of business R&D expenditure behind the East of England. Business enterprise R&D (BERD) measured as a percentage of GVA has been consistently higher in the Northwest than in England or regional comparators over the period 1997 to 2007. This, to a certain extent, is the result of the continuing relative importance of the manufacturing sector; however this expenditure is largely concentrated in a few industries, aerospace and pharmaceuticals, whilst other parts of the region’s manufacturing sector may be under investing. Figure 28: Business enterprise research & development as a percentage of GVA 2.0%

England

North West

1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Source: ONS Business Enterprise R&D Survey and Regional Accounts

87 88

BERR 2009, “The 2008 Productivity and Competitiveness Indicators” BERR 2009, “The 2008 Productivity and Competitiveness Indicators”

Regional Intelligence Unit

Summary of the Evidence Base 3.235 In 2007 BERD in the Northwest was equal to 1.8% of GVA compared with 1.5% for England. Regions with the highest level of BERD in 2007 were the East of England 3.7% and the South East 1.9%, the Northwest was ranked third. Levels of public sector R&D spend remain low 3.236 Public sector spend via government and higher education contributes to the total level of spend on R&D in an economy. In the Northwest in 2007 higher education contributed 20.5% of total R&D expenditure, marginally below the England average (and significantly below the highest regions of London and Yorkshire and the Humber 52.8% and 51.4% respectively). Government expenditure represented 3.3% of total R&D expenditure, below the England average of 8.3% (and significantly below the 15.9% in the South West and 12.3% in the South East). In 2007 the level of spending on R&D from higher education in the Northwest was equal to the England average of 0.5% of GVA. Levels of government R&D remain low in the Northwest, currently equivalent to just 0.1% of GVA, and half the national average of 0.2% of GVA. The East of England, South East and South West remain the areas where government R&D expenditure is concentrated. Figure 29: Total expenditure on research and development as a percentage of GVA, 2007 2.0% 1.8% 1.6% Business

1.4% 1.2%

Government

1.0% 0.8%

Higher Education

0.6% 0.4% 0.2% 0.0% 2005

2007 Northwest

2005

2007 England

Source: ONS Business Enterprise R&D Survey and Regional Accounts

3.237 Improving the regionâ&#x20AC;&#x2122;s ability to adopt new production or process innovations is crucial to improving productivity levels the key factors which will enable this include the skills of the workforce and investment in appropriate R&D and physical capital including information and communication and new machinery (see innovation section for further details). 3.238 The current recession may have a mixed impact on innovation levels, with reduced demand in the economy dampening levels of investment and thus innovation especially for small firms (innovation classes as an expenditure to cut back on); whilst other firms see innovation as a means of competing/surviving in the difficult market conditions. International competition impacts on level of innovation undertaken in an economy as firms decide where they want to locate different parts of their production process. The current recession is likely to heighten this trend. In recent years industrial R&D has become more internationalised with global supply-chains and customer bases. Over the same period skilled individuals have become increasingly mobile. In a time of increasing globalisation, collaborative innovation should be encouraged in the Northwest to ensure that the region continues to be internationally competitive and benefits from innovation/knowledge exchange. Competition 3.239 Competition plays a central role in driving productivity growth. In a competitive market customers are able to choose from whom and what they purchase. Firms compete for new customers by

Regional Intelligence Unit

Summary of the Evidence Base offering lower prices, a wider range and higher quality of products or services to increase profitability, sales or market share. 3.240 Competition impacts on productivity through several routes: 

Higher levels of competition can lead to reduced market prices increasing pressure on firms to reduce costs and increase efficiency.



Competition can increase the incentive for firms to innovate in an attempt to gain competitive advantage on rivals.’



Competition increases resource allocation efficiency as more productive firms gain and less efficient firms lose market share. This form of “churn” is a significant contributory factor in raising productivity levels in an economy. 89

3.241 Low barriers to entry are a key factor in driving competitive pressures, speeding up the reallocation of resources between firms and thus the process of “churn”. This highlights that regulation and government competition policy can raise productivity however these apply equally to all regions within the UK economy, making analysis at the regional level of limited use. Exports and imports represent 36% of GVA, 89% of the England average 3.242 Openness to international trade and investment can be used as an indicator of the state of the competitive environment; openness to international product and capital markets implies exposure to competitive pressure from abroad. On a measure of the value of exports and imports as a proportion of total GVA the Northwest has a relatively open economy, exports and imports represented 36% of GVA in 2007, equating to 89% of the England average and ranking the region 6th out of nine regions. Apart from 2006 the levels of exports and imports as a proportion of GVA in the Northwest relative to the England average has been stable at 89%. This illustrates that there is room for improvement in the Northwest performance. 3.243 The current economic downturn has mixed implications for trade in the UK and Northwest. The UK has experienced a reduction in the value of sterling, significantly relative to the dollar and euro, this has resulted in UK products becoming cheaper to purchase from abroad. However at the same time the cost of raw materials has increased offsetting some of the benefits from the fall in sterling (the eurozone and US are the UK’s major trading partners). Between 2007 and 2008 the value of Northwest exports increased by 12.2% compared with an England average of 11.8%; in contrast the value of Northwest imports between 2007 and 2008 declined by 1.0% compared with an increase of 4.5% for England overall.

BERR 2009, “The 2008 Productivity and Competitiveness Indicators”

Regional Intelligence Unit

Summary of the Evidence Base Figure 30: Trade exports and imports as a percentage of GVA 60%

50%

2004 40% 2005 2006

30%

2007 20%

10%

0% South East

East of England

North East

West Midlands

East Midlands

Northwest

Yorkshire & the Humber

London

South West

England

Source: UK Regional Trade in Goods Statistics HM Revenue & Customs and ONS Regional Accounts

The Northwest is ranked 7th for VAT registrations per 10,000 population 3.244 The level of competition in regional economies can vary. Firms in large densely populated regions with good access to markets are more likely to experience higher levels of competition. Business stock per head of 16+ population gives some indication of competitive pressures in an economy. Differences in competitive pressures can be a factor in determining variations in economic growth performance between regions. At the beginning of 2008 the Northwest had 349 VAT registered businesses per 10,000 16+ population, this compared with an average for England of 415. The Northwest is ranked 7th of the nine English regions, London is the top performing region with 523 VAT registered businesses per 10,000 16+ population whilst with 247 the North East is the lowest performing region. Figure 31: Stock of VAT registered businesses per 10,000 16+ population 2008 North East Yorkshire and the Humber Northwest West Midlands East Midlands East of England South West South East London England 0

100

200

300

400

500

Businesses per 10,000 16+ population

Source: Department of Business, Enterprise and Regulatory Reform, 2008

Regional Intelligence Unit

600

Summary of the Evidence Base 3.245 At the sub-regional level in 2008 Cumbria had the highest number of businesses per 16+ population, 479, approximately 1.4 times higher than the regional average and 1.2 above the national level. Merseyside (inc Halton) had the lowest number of businesses per 10,000 16+ population, 244, 70% of the regional average and 59% of the national average. Between 1997 and 2008 the stock of business per 10,000 in the region increased by 16.7% marginally above the England average of 16.3%. At the sub-regional level Merseyside (inc Halton) experienced the largest growth 24.8% (although from a low base), followed by Cheshire & Warrington 20.5%, Cumbria and Greater Manchester both 13.8% and finally Lancashire 11.5%. This suggests that there are parts of the region that are not punching their weight in terms of business stock, if the varying reasons for this can be addressed it will have an impact on the overall economic performance of the region. Figure 32: Stock of VAT registered businesses per 10,000 16+ population 2008 500 450

Businesses per 10,000 16+ popu

400 350 300 250 200 150 100 50 0 England

Northwest

Cumbria

Cheshire & Warrington

Lancashire

Greater Manchester

Merseyside (inc Halton)

Source: Department of Business, Enterprise and Regulatory Reform, 2008

3.246 At the beginning of 2008 the Northwest had approximately 37,000 fewer VAT registered businesses per 10,000 16+ population than found in England overall. Between 1997 and 2004 the gap with the England average rapidly increased from 31,000 fewer businesses to a peak at 38,300 in 2004, this trend has since reversed, although at a slower rate. Significantly analysis shows that strong economically performing regions such as London, the South East and the East of England have higher densities of businesses relative to the national average.

Regional Intelligence Unit

Summary of the Evidence Base Figure 33: Number of fewer businesses in Northwest compared with England per 10,000 16+ population 39,000

37,000

Number of fewer busines

35,000

33,000

31,000

29,000

27,000

25,000 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Department of Business, Enterprise and Regulatory Reform, 2008

Economic Forecast 3.247 The Regional Economic Forecasting Panel has led a process to develop a set of consistent economic forecasts for the region. This process was developed by setting the long term forecast for the region in February 2009 90 . The panel reviewed the long term forecasts of Cambridge Econometrics, Oxford Economics and Experian and by the deconstructing the drivers of productivity, these are discussed in more detail within the relevant outcome chapters. The forecast was set over two time periods, the first being highly impacted by the current recession the second the recovery phase. 3.248 The Panel agreed in January 2009 to assist with the development of forecasts to inform the forthcoming RS2010. The Panel’s input has been, and will be, in the following four stages: 1. To produce a regional baseline forecast – completed in January 2009 2. To agree five sub-regional baseline forecasts - completed in June 2009 3. To check and challenge five sub-regional aspirational forecasts – the focus of the Panel’s meeting in August 2009 and this report 4. To update the regional baseline forecast, and check and challenge the regional aspirations – to be completed in January 2010, for feeding into the final SRS due for publication in Spring 2010. 3.249 The following sections are a summary of stages 1 through to 3 as prepared by SQW/Cambridge Econometrics.

Baseline Forecast Regional baseline GVA growth forecast at 1.4% pa for 2008-15 and 2.1% pa for 2015-30. 3.250 The Panel expects that, in both of these periods, GVA generated in the Northwest will grow more slowly than in the UK by an average of some 0.3 percentage points (pp). In the first of these periods, GVA growth in both the Northwest and the UK is expected to be dampened by the effects of the recession. If growth in the UK turns out to average 1.7% per annum (pa), that in the Northwest should average 1.4% pa. The outlook for the second period, taking us to 2030 is brighter, with growth of 2.4% pa for the UK and 2.1% pa for the Northwest. 90

Long Term Forecasts Winter 2009, REFP, Regional Intelligence Unit

Regional Intelligence Unit

Summary of the Evidence Base 3.251 This regional baseline effectively constrained the ‘size of the baseline cake’ which has been shared across the sub-regions. The final sub-regional baseline forecasts for 2008-15 and 2015-30 relative to the regional baseline, as agreed by both the Panel and SRPs in June 2009 91 , are presented below. 3.252 Cheshire and Warrington is expected to outpace regional GVA growth over both periods initially by 0.2pp pa (2008-15), and falling to just 0.06pp pa (2015-30). Although forecast GVA growth in the sub-region is faster than the regional forecast, the gap has narrowed from that observed previously (e.g. GVA growth rate of 0.5pp from 1996-2006). 3.253 GVA growth in Cumbria will lag behind that of the region by 0.4pp pa over both periods. The deficit is narrower than that observed in the past, but future growth will be lower in Cumbria than across the Northwest’s other sub-regions. 3.254 In Greater Manchester, growth will outpace the Northwest by 0.2pp pa from 2008-15, although this is set to reduce to 0.1pp pa above the regional level from 2015-30. 3.255 Lancashire is expected to experience GVA growth behind the regional average (by 0.3pp pa) from 2008-15, although this gap will narrow to a deficit of 0.2pp pa for the 2015-2030 period. 3.256 Finally, GVA growth in Merseyside is forecast to be 0.1pp pa below that of the Northwest for 2008-15; a gap which will close by 2015-30 when GVA growth will stand at just 0.02pp pa below the regional average. 3.257 Each SRP has committed to these relative forecast positions of baseline growth forecasts for their geography against a long-term regional growth forecast of 2.1% pa.

Risks to the Forecast The future of public sector fuelled growth, especially in sectors we have strengths in renewables and defence; Dependence on and importance of a small number of major employers/high value added firms and their risk status in the current recession; Continued population growth through in-migration and growth from women entering the job market; Impacts of recession on automotive; Creating the graduate level jobs to retain talented people 3.258 The new long-term forecast looks forward to the year 2030, in line with RS2010. Because of the length of the forecasting period, the forecasts have been divided into two shorter periods: 2008-15 and 2015-30. Developing these long-term forecasts required the panel to make difficult judgments about whether the current recession is likely to have a lasting effect. This could include, for example, a permanent loss of capacity in some of the region’s key industries. They also had to reassess recent economic growth and the extent to which this was due to conditions that may not be repeated in future, such as a large debt overhang in household and government expenditure in a situation of low inflation. 3.259 In earlier REFP reports, they have commented on the period of rapid jobs growth experienced in the Northwest, especially between 2001 and 2004. This followed marked increases in public spending, making the Northwest more dependent on public sector jobs; it also involved the outsourcing of ‘back office’ jobs in financial and business services from higher cost locations in the South, following a downturn in international financial markets in 2001. They continue to regard this past growth as exceptional and most unlikely to be repeated. The forecasts anticipate a small reduction (0.1% pa) in employment in the Northwest over the period 2008-15, some 0.2 pp less than the UK which is expected to grow very slightly (0.1% pa). In the second period, to 2030, 91

REFP Sub-regional Baselines Report June 2009, Regional Intelligence Unit

Regional Intelligence Unit

Summary of the Evidence Base employment growth in the Northwest is expected to pick up to 0.3% pa closing the gap slightly on the UK, where the corresponding figure is 0.4% pa. 3.260 Both population and working age population have increased in recent years, reflecting favourable economic conditions which have fuelled the flow of net in-migration to the region and a rising employment rate among women. But, there is evidence that international migration, particularly from EU accession countries, is diminishing and this leads us to forecast that future population in both periods will be modest and some 0.3 – 0.4 pp less than that for the UK. 3.261 The Panel continues to be pessimistic about the ability of the Northwest to close the productivity gap with the UK. Gains in productivity will be modest. They based this on the conclusions of an assessment of the prospects for the factors affecting productivity, namely enterprise, skills, investment and innovation. The region may see an increase in the rate at which businesses are set up, as one consequence of the recession, but this will have a limited effect on the economy as a whole, particularly if many of these businesses fail to survive beyond the first two-three years. On skills, they see problems if, like other regions, the Northwest puts emphasis on raising higher level skills in order to meet national (Leitch) targets. 3.262 The Panel was not confident that investment will increase; there are sectors in which the Northwest could potentially have a differential advantage, such as renewable energy, but much will depend on how Government policy evolves. Public sector investment can be expected to decline in those areas, such as Merseyside, that have benefited substantially over the last twenty years or so. Innovation may increase, as a response to the recession, as industries seek to remain competitive and R&D, although affected by the recession, will recover in the long-term. In the Panel’s view, the region needs to consider how intellectual property can be developed more rapidly and here changes in public policy, including RS2010, may help to remove some of the constraints that limit this.

Aspirational Forecast Aspirational growth rate of 1.6% pa for the 2008-2015 and 2.6% pa for the 2015-30 period 3.263 As a reality check, the aspirational forecasts were amalgamated to see what this would mean for the region as a whole – both in terms of an aggregated regional aspirational forecast and the changes to the relative weights of each sub-region if they grow at the rates proposed 92 . It is important to note that the aspirational forecasts are not constrained to any degree by a ‘regional total’, as was the case in the baseline forecast process. This process of summing up provides the opportunity for a ‘reality check’ on what each sub-regional forecast would mean for the region as a whole, and therefore a check on whether this is coherent and sensible. 3.264 If all sub-regions were to achieve their aspirations, this would result in a regional growth rate of 1.6% pa for the 2008-2015 period, which represents a 0.2pp uplift on the Panel’s Northwest baseline, and a regional growth rate of 2.6% pa for the 2015-30 period, which would be a 0.5pp increase on the Panel’s long-term growth rate for the region of 2.1% pa. An uplift of 0.5pp in the long-term would mean: 

an extra £16 billion in total GVA by 2030 (compared to the baseline scenario)



and a GVA per head of £24,500 by 2030 (compared to a baseline of £22,600)



uplift weighted towards second period as “interventions” take effect

3.265 Furthermore, if the Northwest were to achieve a long-term growth rate of 2.6% pa, the region would close the gap with the UK’s baseline growth rate (which was expected to grow at 2.4% pa in the Panel’s Forecast in January 2009), and as such would represent a major shift with recent 92

Summary report produced by SQW/CE on behalf of the Sub – Regional Partnerships and the REFP Sept 2009

Regional Intelligence Unit

Summary of the Evidence Base history. Note, however, that the UK baseline is a moving target and this aggregation total of 2.6% pa for the Northwest does not discount for any displacement and spillover effects across the five SRPs, or take into account any “regional” activity or investment. 3.266 If we compare the relative weights of each sub-region in 2008, the data show Greater Manchester accounted for 40% of the region’s economic output. If aspirational forecasts are realised, the agglomeration of economic activity within Greater Manchester will continue, and by 2030 the subregion will account for 42% of GVA. The share of GVA accounted for by Cheshire & Warrington, Cumbria and Merseyside would remain relatively stable, but the contribution of Lancashire would fall slightly. Figure 34: Combined aspirations at the regional level, compared to the Panel’s Northwest baseline. 3.0

2.6

Growth % pa

2.5 2.1 2.0 1.5

1.6 1.4

1.0 0.5 0.0 2008-2015 Final baseline forecast

2015-2030 Aspirational forecast

Source: Cambridge Econometrics for the REFP

Panel Assessment of the Sub-regional Aspirations 93 Cheshire and Warrington - Overview 3.267 “Over the 20 year forecast period, Cheshire and Warrington will remain an outstanding place to live and work, with an exceptional quality of place and of people. It will be well connected and contribute to the increasing prosperity of the region. It will build on its diverse, high-value economy, and its unique environmental and cultural heritage, and will maximise residents' wellbeing, the skills of the workforce and strength of the business community, balancing urban and rural development”. (Cheshire and Warrington ambition). 3.268 Cheshire and Warrington is likely to suffer a significant setback during the first half of 2008-15, because of the impact of the current recession on key local sectors (e.g. automotive and financial). However, a relatively quick and full rebound is expected, with the sub-region resuming and maintaining its competitive advantage, creating high GVA (in total and per head) and new employment (both high-skill and lower level) for the local labour force. 3.269 The Sub Regional Partnership (SRP) has taken a cautious view that past trends can be maintained but are unlikely to be exceeded, and that out-commuting patterns are not sustainable in the long-term. Housing Growth Points are assumed to have an impact on housing, and the numbers of workers available to achieve growth aspirations, and enabling high value, innovative business starts and growth in the sub-region’s high productivity sectors are a priority. 93

Summary report produced by SQW/CE on behalf of the Sub – Regional Partnerships and the REFP Sept 2009

Regional Intelligence Unit

Summary of the Evidence Base 3.270 The SRP summarised the aspirational intents for C&W as falling into four priority areas: 

C&W’s key growth sectors: including pharmaceuticals, energy, tourism and the environment



Connectivity, including ICT (enabling maximum broadband capacity, and links to Media City) and physical transport improvements (better links to airports, connectivity in mid-Cheshire)



Developing skills (e.g. Crewe Academy), specifically utilising the skills and experience of the 50+ age group, and re-engaging early retirees/those made redundant into the local economy (e.g. via the Emeritus project, providing networks for knowledge transfer from experienced business people to local businesses)



Enterprise (e.g. via the Enterprise Generation Scheme and Rural Enterprise Hub).

Panel Assessment – Cheshire and Warrington Issues: Self containment is not realistic in a knowledge driven economy; new starts are not the job solution, ageing workforce. Opportunities: use the positive image and brand to attract business and residents; harness the ambition and innovation of non graduates; nuclear skills. Risks: Automotive sector Assets: Highly skilled residents, high business starts, significant regionally important companies 3.271 In response to the sub-regional aspirations the Panel’s main concern was that whilst agreeing with the SRP that current commuter patterns were unsustainable in the long-term, the Panel argued that C&W is likely to continue housing significant numbers of workers who often work in Manchester or Liverpool. The position is likely to increase as the economy becomes more knowledge centric, and the propensity to travel develops, as shown in the Pion/RIU Place research. The Panel questioned how far the sub-region can expect to change this mindset, and therefore realise its aspirations for locally based jobs growth. Whilst the Growth Points will lead to greater housing and population, many economically active residents are – in the large part - likely to continue to work elsewhere. 3.272 The Panel was also less confident that the focus on knowledge-based business start-ups would feed through into a significant uplift in the growth rate of jobs. In their experience - and evidence shows that fewer than 1 per 100 start-ups employ 50+ people, and that 89% of regional businesses employ less than 20 people - the Panel did not believe new starts would be big job creators. 3.273 In terms of opportunities, Panel members thought C&W could make better use of the sub-region’s positive image and brand to attract businesses and residents in the future, particularly as quality of life is likely to become an increasingly important factor in determining location decisions. Also, the Panel felt that nuclear opportunities and associated skills in the sub-region were underplayed (e.g. at Birchwood Park), as were the opportunities to link this in with wider energy assets in the region. The sub-region’s proximity to the West Midlands was also a factor to consider. 3.274 The aspiration focused on graduate retention (in addition to the 50+ age group). However, the Panel highlighted that some of the region’s fastest growing businesses and largest employers are often set up by individuals who leave school with GCSEs, and that early school leavers are more likely to root themselves locally. Whilst graduates are important to provide support infrastructure as a firm grows, the entrepreneurship, innovation and ambition of non-graduates is also important for C&W – and the region as a whole. 3.275 With regard to C&W’s assumptions, the Panel challenged the assertion that automotives will make a full recovery from the effects of the current recession, and was less optimistic on this front. The aspiration also assumed that large assets such as the Vauxhall plant in Ellesmere Port will stay in the sub-region, but provided little evidence to demonstrate what the sub-region/region was doing to ensure that these major assets remain locally. The Panel questioned the extent to which the Northwest’s manufacturing sector was planning ahead (as in the North East, where

Regional Intelligence Unit

Summary of the Evidence Base there has been considerable investment in power and battery electronics to support the automotives sector), and ensuring that new technology opportunities were developed and linked in to the region’s manufacturing capabilities. Cumbria - Overview 3.276 Over the period Cumbria aspires to be an energised and healthy environment, and one of the fastest growing economies in the UK. Building on the county’s major assets, including its unique landscape and natural resources, skills base in nuclear energy and marine engineering and its attractiveness as a place to live, work and visit; the delivery of a range of innovative and sustainable projects will secure a better quality of life for future generations. Its Strategic Priorities are: 

The opportunities of Energy and the Low Carbon Economy



Raising the attractiveness of ‘Destination Cumbria’ as a place to live, invest, work and visit.

Panel Assessment - Cumbria Issues: Balanced demographics make-up; inability to create dense employment opportunities; attracting inward investment in renewables. Opportunities: Nuclear and Energy Coast; high value spin offs; University of Cumbria; brand and tourism; non-working migrants and potential spend; government focus on low carbon objectives. Risks: Lack of employment land; short term employment in construction; reliance on and sensitivity to defence spending decisions; tension between nuclear and tourism offer; University offer too narrow. Assets: Nuclear; natural environment. 3.277 Cumbria’s aspirations for growth focused not only on nuclear developments, but also on those opportunities arising through the West Coast Masterplan and Energy Coast developments, which include offshore wind, tidal barrages and the spin-off opportunities associated with these. The sub-region has a history of success in generating high value spin-offs, including examples associated with marine engineering and construction at Barrow-in-Furness (such as subsea oil and gas installation). 3.278 Achieving a better balance in the sub-region’s demographic make-up is a second major priority for Cumbria. The sub-region has experienced substantial in-migration of older people, and many young people going to university elsewhere do not return. As a result, the SRP has focused on attracting and retaining 18-29 year olds, particularly those attending the University of Cumbria (by expanding out the university’s offer) and attracting back Cumbrian residents who study elsewhere. The nuclear sector is also seen as an opportunity to attract-in younger workers. 3.279 Spatially, Carlisle will be an important driver of growth. The city has underperformed to date, but the SRP believes that developments such as the northern relief road (which has just received confirmation of funding) and linking this to strategic investment sites will provide a growth opportunity. South Lakeland and Eden were also highlighted as areas of considerable growth potential. These geographies have performed well in the past, but growth has been constrained by a lack of employment land – if this issue were to be addressed, developers are well positioned on the demand side to drive growth. 3.280 The Panel highlighted that Cumbria’s aspirations are dependent on major capital expenditure, which is very uncertain going forward (especially in the short-to-medium terms). This makes it very difficult to assess whether these aspirations are realistic, but the fact that some of the proposed projects are of national importance and that policy shifts are favouring renewable energy gave the Panel more confidence in the aspirational forecasts. That being said, the Panel did highlight a number of challenges which need to be factored into Cumbria’s aspirational intents, including:

Regional Intelligence Unit

Summary of the Evidence Base 3.281 Many of the short/medium term jobs are in construction, especially those relating to Nuclear New Build, and many of these jobs could go to people from outside the sub-region, which would temper Cumbria’s aspirations for net internal job growth 3.282 Cumbria’s sparsity (and the associated difficulties in generating dense labour markets), and the lack of job opportunities for residents if they choose not to work in Cumbria’s main sectors 3.283 The need to focus efforts on attracting inward investment in renewables – whilst the sub-region performs well in nuclear, the Panel suggested more could be done to attract investment in renewable energy 3.284 The need to factor in Cumbria’s sensitivity decisions by future administrations on defence spending, particularly given the defence-related dependence of Barrow and its supply chain 3.285 A potential conflict between aspirations to develop tourism and the nuclear sector – for example, the Panel questioned whether Nuclear New Build activity would affect the ability of tourists to access some areas, especially given Cumbria’s policy to widen out tourism beyond the Lake District National Park. 3.286 In terms of Cumbria’s intentions to create a more balanced demographic profile, the Panel expressed concern that the impacts of the University of Cumbria on graduate retention may be overstated, particularly given its relatively narrow focus at present on health and teacher training. Given that is still early days for the university, the Panel was somewhat sceptical of its proposed impacts. 3.287 The Panel also highlighted that non-working migrants do bring money into the sub-region, and should be seen as an advantage for Cumbria compared to the other sub-regions. 3.288 The Panel highlighted that Cumbria’s aspirations gave little attention to the economic value of the environment in Cumbria. The sub-region’s internationally renowned environment provides the sub-region an advantage compared to elsewhere in the Northwest, and aspirations should build on this. Also, climate change mitigation is an opportunity for Cumbria, not only to meet government objectives but also in terms of its ability to generate tourism (for example, through low carbon tourism products) – at present, this is a missed opportunity. Greater Manchester - Overview 3.289 By 2020, the Manchester City Region will have pioneered a new model for sustainable economic growth based around a more connected, talented and greener city region where the prosperity secured is enjoyed by the many and not the few. Strategic Priorities are as follows: 

Radically improve the early years experience for hard to reach groups, particularly in the most deprived areas.



Improve life chances in the most deprived areas by investing in lifelong skills development and other forms of support so that people can compete in the modern labour market.



Increase the proportion of highly skilled people in the city region.



Attract, retain and nurture the best talent.



Significantly improve transport connectivity into and within the city region.



Expand and diversify the city region’s economic base through digital infrastructure.



Increase the international connectivity of the Manchester city region’s firms, especially to the newly-emerging economies.



Achieve a rapid transformation to a low carbon economy.



Creating quality places to meet the needs of a competitive city region.



Review city region governance to ensure effective and efficient delivery mechanisms.



Building the city region’s Sense of Place.

Regional Intelligence Unit

Summary of the Evidence Base Panel Assessment – Greater Manchester Issues: Wide disparity in performance across the sub-region; high numbers with little or no qualifications; high numbers disengaged from the labour market; environmental quality Opportunities: Statutory City Region; Media City Risks: Reliance on global performance; supply of labour from neighbouring areas and transport infrastructure to support flows; utilities and connectivity of infrastructure; impact for GM growth on neighbouring areas; Assets: Universities; dense labour markets and business; airport and international links 3.290 Greater Manchester’s aspirations presented were informed by the Greater Manchester Strategy, which builds on extensive evidence developed through the Manchester Independent Economic Review (MIER). 3.291 Based on this evidence, the top priorities in GM’s aspirations are: 

Raising skills – evidence shows that best returns result from early years intervention, followed by raising qualifications up to degree level and above



Raising productivity in all areas via improved international trade links, and also wider policy interventions such as transport/housing etc, the roll out of Next Generation Broadband pilots currently taking place in GM’s Media City, and a focus on the role of GM’s Universities (especially in the Oxford Road Corridor, and linking HEIs to regional businesses).

3.292 The sub-region’s aspirations are based on Oxford Economics’ work, but the SRP explained that they are likely to be revised down slightly (so reducing the current uplift of +0.7 pp on the REFP baseline by 0.1 or 0.2 pp). GM have assumed that all interventions will impact in the 2015-30 period, and therefore have only presented an uplift on the 2015-30 baseline in their aspirational forecast (the 2008-15 baseline has not been increased). The SRP is confident that sub-regional aspirations will be realised through GM’s Statutory City Region Pilot Status, and the greater control afforded to the sub-region over policy areas such as skills (and the ability to better align this with LA education activities) and transport (to manage its own system to address congestion). 3.293 On the whole, the Panel felt comfortable that the proposed aspirations and underpinning activities were both appropriate and logical, particularly given the extensive evidence base on which the forecasts are based. The powers associated with Statutory City Region Status, and the clearer lines of accountability as a result, were considered to be an advantage for GM. Transport projects are also going to be scrutinised more closely, and prioritised based on their contribution to raising productivity. The Panel also stressed that the implications of GM’s new powers, particularly in terms of planning and transport decisions, on other sub-regions need to be taken into account, and would need regional co-ordination. 3.294 Spatial issues and relationships did not feature in GM’s aspirations as much as Panel members might have expected, both in terms of the North-South divide (and the risk that GM North would fall further behind) and the contribution that places that surround Manchester city centre make to the sub-region’s ability to realise its growth aspirations. In response, the SRP argued that the approach in GM is now focused on connecting communities in the North to opportunities in the South, and therefore investment in public transport will be crucial. 3.295 The Panel also felt that issues around utilities and environmental capacity in GM had not been taken into account sufficiently, and would need to be addressed if GM’s aspirations were to be achieved. Lancashire – Overview 3.296 The aim of the Lancashire Economic Strategy is to move the Lancashire Economy up the value chain. Four drivers have been defined to address the economic challenges facing the sub-region; higher value activity and investment, investing in people, employment generation and entrepreneurship, and investment in quality of place.

Regional Intelligence Unit

Summary of the Evidence Base 3.297 The SRP made a key point of saying that Lancashire’s main strength is in its Advanced Manufacturing sector and, going forward, the SRP hopes to capitalise on the associated strengths in intellectual property and relations with the emerging economies. BAE is one of the region’s largest firms and, at the time of the meeting, had plans to expand capacity at its Salmesbury plant in Lancashire over the long term, which will make a significant contribution to realising Lancashire’s aspirations. The SRP also plans to improve the integration of Lancashire’s key advanced manufacturing businesses with the wider supply chain to boost multiplier effects and overall productivity in the sub-region. 3.298 The SRP’s aspirations also focus on the following priorities: 

Growth in the number of ICT SMEs, building on the success of InfoLab at Lancaster University, and the growth at Lancaster Science Park



Entrepreneurial activity and re-engagement in the labour market as a result of the LEGI initiative – the SRP acknowledges these are likely to be in low value added businesses/jobs in the short run, but believes productivity will improve in the longer term



Private sector investment, and the productivity of services



Housing Market Renewal activity and improved supply chain integration in Pennine Lancashire



Exploiting Green Infrastructure to improve productivity and the attractiveness of Lancashire as a place to invest.

Panel Assessment – Lancashire Issues: Ability of SMEs to create jobs growth; branding of the sub-region; low participation rates Opportunities: New clean technology and manufacturing; stronger demographic profile Risks: Recovery in automotive; reliance on public sector especially in defence; Assets: strengths in aerospace and advanced manufacturing 3.299 Whilst acknowledging the sub-region’s strengths and opportunities in these areas, the Panel expressed concern about the recovery in automotives in particular may not be as swift as expected, and argued that reinvestment in this sector will be skewed towards those companies which have been earmarked for new technology such as hybrids and electric vehicles, which is something the sub-region – and wider region – should take very seriously. 3.300 Given the level of market failure in Lancashire and the need for significant public sector investment, the sub-region is vulnerable to public sector investment cuts. These have been taken into account in the aspiration, and the private sector investment acts as a counter balance to this. Even so, the Panel expressed concern about the implications of public sector cuts for the defence sector and wider regeneration investments, which could impact on Lancashire disproportionately. 3.301 The Panel agreed that Lancashire’s nationally recognised strengths in aerospace and advanced manufacturing should provide greater opportunities for local suppliers to move up the value chain, and that aspirations should focus on this. However, as in C&W, the Panel questioned the ability of SMEs in the supply chain to generate a significant level of growth in jobs. 3.302 The Panel indicated that raising the profile of Lancashire to inward investors, students and residents who are based outside of the Northwest would be a challenge, and agreed that the subregion needs to improve its urban environments and invest in better branding if is to become an attractive proposition for relocation. Whilst acknowledging that Lancashire is home to high quality rural areas, the Panel questioned whether Lancashire has a competitive advantage in terms of Green Infrastructure. 3.303 Lancashire’s demographic profile puts the sub-region at a significant advantage, and this is perhaps a missed opportunity in the aspiration. Whereas the UK is experiencing ageing population (as demonstrated in recent IPPR research), Lancashire is experiencing the reverse, especially in areas such as Pennine Lancashire, which is home to a significant young Asian

Regional Intelligence Unit

Summary of the Evidence Base population. Participation rates are traditionally low here, especially for females, so the Panel suggested that addressing this should be the focus of activities. Merseyside - Overview 3.304 The vision as articulated in the Liverpool City Region Development Plan, is to establish its status as a thriving international City Region by 2030. This is predicated on the Liverpool City Region’s shared objective that improving the quality of life of our residents and supporting the building of safer, stronger and sustainable communities is underpinned by delivering significant improvements in our economic performance. 3.305 Whilst Merseyside has achieved some major successes over the last few years, the sub-region still faces significant challenges, and is starting from a low base. The aspirations aim to address both worklessness issues (and the need to generate a significant number of job opportunities to increase GVA) and raise productivity (by improving residents’ skills and encourage the growth of high value added businesses). The aspiration focuses on the sub-region’s key sector strengths, and assumes strong private sector investment given Merseyside’s improved position. They build on substantial research to underpin Liverpool City Region and MAA work, and current research into Merseyside’s transformational actions and assessing their potential impact. 3.306 Merseyside’s priorities focus on the following four areas: 

Improving the visitor economy, to build on international interest from European Capital of Culture Status 2008. This includes investment in infrastructure (e.g. hotels) and new markets (e.g. business tourism)



Low carbon, including tidal, off/on-shore wind, waste-to-energy, and the environmental technology sector. The sub-region hopes to secure major private sector investment from firms such as Peel Holdings (which is currently undertaking a feasibility study into tidal opportunities in the Mersey Estuary), with the intention to become energy self-sufficient. Connection to the National Grid will need to be addressed, but this aspiration should help to improve Merseyside’s competitiveness and links well with national policy drivers



SuperPort developments, including associated linkages with the airport and logistics/distribution sector. This aspiration will be driven by private sector proposals (e.g. Stobarts’ investment in rail freight). Some activities will be of national importance (e.g. the Post-Panamax development) and put the wider region in a more competitive trading position internationally. The sub-region also hopes to link developments in to Liverpool Science Park and Daresbury to generate innovative business spin-offs



Developing the Knowledge Economy, focusing on providing business incubation and growth facilities, improving graduate retention (building on a strong performance to date), and high value jobs in tourism and port-related developments.

Panel Assessment – Merseyside Issues: job opportunities and worklessness; reliance on public sector investment Opportunities: Visitor economy post Capital of Culture; Low carbon – tidal, off shore wind and waste; Private sector investment; relocation on civil service functions; strong health sector Risks: Private sector investment limited to small number of large companies; Public sector coordination Assets: Super Port, airport, Universities and Science Park 3.307 The Panel welcomed the private sector contribution to growth in Merseyside, but suggested that aspirations were very dependent on a small number of businesses. Furthermore, part of Merseyside’s recent success has been due to public investment and it is relatively certain that this will not continue at the same scale into the future. The Panel also raised some concern about the degree of competition between different public sector bodies operating within the sub-region which, the Panel argue, has been to the detriment of development in the past.

Regional Intelligence Unit

Summary of the Evidence Base 3.308 On the upside, the Panel highlighted a number of missed opportunities in the aspirations, including the potential relocation of civil service functions to the sub-region, potential investment in the Royal Liverpool Teaching Hospital, and the potential to link procurement and skills programmes to Merseysideâ&#x20AC;&#x2122;s health sector and other public sector institutions.

Regional Intelligence Unit

Summary of the Evidence Base

4. The Environment On current trends by the early 2030’s the human race will require the resources of two planets to meet its needs

Ecological Footprint 4.1

We are all increasingly aware that humanity's current ecological footprint is bigger than it should be. We use the equivalent of 1.3 planets to provide resources and absorb waste meaning it takes the Earth one year and four months to regenerate what we use in a year. It's estimated that by the early 2030’s we'll require the resources of two planets to meet our needs. So what can we do to live within the means of our planet? Put simply, we must adopt new ways to live within the Earth's limitations, and reduce our ecological footprint.

4.2

A healthy natural environment underpins all successful economic and social activity and is therefore a crosscutting theme for development in the region. There are many opportunities to gain benefits from the environment and draw on specific sub-regional strengths in the Northwest from the docks in Merseyside, the lakes in Cumbria to England’s highest mountain - Scafell Pike. The environment is a valuable capital asset that should be managed intelligently for long-term economic benefit, but managing the environment and protecting its resources has a wider importance. It can improve social networks, help reduce deprivation, increase the quality of life of residents (and visitors) and it allows us to draw investment and people into the region.

Liverpool, Manchester and Blackpool each have eco-footprints of 200 times their actual area 4.3

4.4

The Northwest region has an Ecological Footprint of 5.12 gha/capita (global hectare per capita), lower than the UK average. The sectors with the largest eco-footprint in the region are ‘food & drink’ and ‘home & energy’. The local areas with the highest eco-footprint per head are Macclesfield and Fylde. Halton and Barrow have the lowest. Liverpool, Manchester and Blackpool each have ecofootprints of 200 times their actual area. Residents in the Northwest have the third lowest transport footprint in the UK at 0.62 gha/capita. The region also has a relatively low amount of materials flowing through its economy. Regional Material Input (RMI) at 17.5 t/capita and Regional Material Consumption (RMC) at 6.8 t/capita (tonnes per capita) are the lowest of any region. In addition: 

The region has the highest throughput of chemicals of all regions at 2.0 t/capita.



The region has the second highest physical exchange with other UK regions at 133 million tonnes, being more or less equally driven by imports (51%) and exports (49%).



The region mainly imports quarrying materials and wood/wood products and predominantly exports food, pulp and paper products.

In terms of trade with regions and countries (subtracting imports from exports) the Northwest is one of five net importing regions with an import surplus of 10.2 million tonnes. The UK Government has identified key areas of high impact resource use where reducing consumption will have a significant impact, including the food supply chain, buildings, water efficiency, waste minimisation and recycling, and tourism. From a Northwest perspective, the food supply chain, chemicals and construction industries are critical to the regional economy and together have the potential to save £13.4 million water, £63 million energy and £230 million waste.

Regional Intelligence Unit

Summary of the Evidence Base

A 'do nothing' scenario on Climate Change could cost the Manchester city region £2 1billion & Northwest potentially £70 billion over the next 12 years.. Climate Change Scenarios 4.5

In 2008, a number of sub-regions in the Northwest published their own 'mini-Stern' reviews, including Cumbria and Manchester. Manchester's report (which also looked at regional impacts) found that a 'do nothing' scenario could cost the Manchester city region £21 billion over the next 12 years, with the cost for the entire Northwest potentially reaching £70 billion. Alternatively, by responding effectively to the opportunities stemming from the climate change agenda, the region can position itself as a leading international centre for climate change technologies and services.

4.6

Over the last fifty years, the Northwest has seen warmer weather with fewer days of frost and sea level rises. Based on the high emissions scenario for the Northwest in 2080 winter mean temperature will have increased by 3.1ºC and summer mean temperature of 4.7ºC. Based on the high emissions scenario for the Northwest in 2080 annual mean precipitation of will increase by 1% with winter mean precipitation increasing by 26% and summer mean precipitation decreasing by – 28%. Under the Low Emissions scenario there is no spatial differentiation for precipitation across the Northwest. All areas are projected to experience a 0 to 15% increase in winter precipitation by the 2020s (with no further change projected to change by the 2080s). Under a High Emissions scenario, the areas of Barrow-in-Furness, the western half of South Lakeland, and the southern part of Copeland would experience the largest increase in rainfall. By 2080 the spatial differentiation would no longer be apparent with a potential increase in rainfall of 30% 94 . With winters expected to get wetter, and severe downpours more common, buildings will be affected by flooding and damp across the UK 95

Cities in the Northwest could experience extremes of around 31°C by the 2050s 4.7

Cities in the Northwest could experience extremes of around 31°C by the 2050s, potentially reaching 34°C by the 2080s (to put this in perspective, the current average summer high in Manchester is 20°C). Temperature increases mean that there has been a decline by more than 15% in the number of days that would normally warrant the use of heating in buildings temperatures below 15.5°C) and an increase in number of days (almost 13 additional days) that would encourage people to use air conditioning to cool buildings (temperatures above 22°C).

4.8

Climate change will affect the design/build of new buildings and there will be a need to retrofit existing buildings 96 . This is because the deterioration of buildings will be exacerbated by climate change including subsidence, increased pressure on buildings affecting their lifespan, increased wind damage and risk from flooding. Increases in amounts and intensity of winter rainfall may further contribute to a greater number of delays in the construction process.

4.9

Based on the expected scenario of hotter summers and milder, wetter winters there will be a reduction in the need for winter heating and demand for summer cooling will increase 97 . The reduction in heating will provide organisations with cost savings. However these savings will be offset by an increase in electricity consumption during summer as a result of cooling to prevent buildings overheating unless buildings are retrofitted to avoid the need for air conditioning or can use their own supplies of renewable energy 98 .

ARUP fro Climate Change Northwest (2009) Climate Change Impacts and Responses for Key Business Sectors and Public Services in the Northwest of England - Final Report 95 UK Climate Impacts Programme (2005) Measuring progress - Preparing for climate change through the UK Climate Impacts Programme (UKCIP Technical Report) 96 Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) (2008) Stage one and Stage two 97 UK Climate Impacts Programme (2005) Measuring progress - Preparing for climate change through the UK Climate Impacts Programme (UKCIP Technical Report) 98 ARUP fro Climate Change Northwest (2009) Climate Change Impacts and Responses for Key Business Sectors and Public Services in the Northwest of England - Final Report

Regional Intelligence Unit

Summary of the Evidence Base Approximately 215,000 properties in the region are at risk of flooding and it is likely that climate change and land use changes will aggravate this situation... Flood Risk 4.10 Flooding is one of the most significant risks to our environment, mainly in light of uncertainty surrounding the effects of climate change, for example the intensity and locations of future flooding events as we are still second guessing the likely impacts. Other aspects of the environment can be used to prevent or alleviate flooding by creating sustainable drainage systems; this may be in the form of planting regimes and land use changes. Flood defences are expensive to build and maintain and may not always be economically viable. 4.11 Some 224,500 properties in the Northwest region are at risk of flooding from rivers and/or the sea. 28,845 of these are at significant risk, 110,157 are at moderate risk and 85,053 are at low risk. In 2006/07 the Environment Agency’s Flood warning service was accessible to 84,800 properties in the region. This was an improvement of 7,800 properties on the previous year. 4.12 In March 2009, 122,000 properties had been offered the flood warning service, 24,200 properties more than the target of 97,800 properties. By 2013 it is hoped the number of properties receiving flood warnings will have increased to 140,000. In 2008/09, 62% of the Northwest regions flood management systems met the performance specifications, but the target was 100%. NW economy is ‘de-carbonising’ as the result of the shift from manufacturing to services… Carbon Emissions 4.13 Carbon dioxide (CO2) is just one of several greenhouse gases (inc. methane, hydroflurocarbons, perflurocarbons, nitrous oxide and sulphur hexafluoride), which enhance global warming by reducing the reflection of solar energy back into space. This ‘blanket’ effect is leading to an increase in global temperatures and changes in weather conditions associated with climate change. CO2 emissions make up the largest component of Greenhouse Gas emissions (88%). 4.14 CO2 emissions are an important consideration for future economic policy given targets for a low carbon economy, and the economic value (or cost) attached to carbon. The new Climate Change Bill is the latest indication that each region and its economy, including the Northwest, will be subject to carbon budgets. The amount of CO2 produced in the region has in general fallen since 1990 and the regional economy is ‘de-carbonising’ as a whole as the result of the shift from manufacturing to services 99 . Table 2 : CO2 Emissions by End User Year Domestic Industrial/Public/Commercial Road Transport Land Use & Land Use Change Other Total Emissions

1990* 18.12 30.2 10.55

2003** 18.63 29.28 14.44

2004*** 18 26 17

2005**** 17.06 27.09 15.19

2006**** 17.29 26.59 14.98

2007***** 16.41 28.81 14.93

4.77 63.65

0.47 62.83

0.6 59.95

0.59 59.45

0.64 60.79

* Northwest Energy and Greenhouse Gas Inventory ** Local and Regional CO2 Emissions Estimates for 2003, Defra ***Experimental Statistics on CO2 emissions at Local Authority and Regional Level, Defra, 2004 **** Defra e-Digest Statistics: Emissions of CO2 for Local Authority Areas *****DECC National Statistics on CO2 emissions at Local Authority and Government Office Region 2007 Source: RES Assessment Report 2009

4.15 In 2007 47% of Northwest CO2 emissions came from the industrial, commercial and public sectors and 25% from domestic consumers, as set out in figure 35. 99

Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) (2008) Stage One – Environmental Capacity Themes

Regional Intelligence Unit

Summary of the Evidence Base Figure 35: CO2 produced in the Northwest by End User 2007 1%

25%

27%

Domestic Industrial/Public/Commercial Road Transport Land Use & Land Use Change

47%

Source: DECC National Statistics on CO2 emissions at Local Authority and Government Office Region, 2007

4.16 Between 1990 and 2006, CO2 emissions have reduced (although the 1990 data is not directly comparable to the 2005/06 data) and the GVA has increased, which means that as a region we have become more efficient since the baseline year 100 . Table 3: CO2 Emissions per Unit of GVA (£) Year Northwest CO2 Emissions per Unit of GVA (£) UK CO2 Emissions per Unit of GVA (£)

1990 1.16

2005 0.56

2006 0.53

% Change -0.84

1.15

0.48

0.45

-0.12

Source: Northwest RES Assessment Report 2009

4.17 Carbon profiles differ across the region depending on the population size; per capita emissions often conceal high absolute emissions from cities such as Manchester and Liverpool. Cumbria has high CO2 emissions per capita due to its relatively low population size 101 . 4.18 In terms of sources of emissions, whilst the overall split is generally similar in each sub-region, it is worth noting that the share of industrial emissions is the greatest in Cheshire (45%), in large part reflecting extractive and chemical activities around the Mersey estuary, and residential emissions are most prominent in Merseyside at 35%. Other emissions contribute the most in Cumbria (mainly due to higher methane emissions from agriculture), and road transport is typically between a quarter and a fifth of all emissions in all regions 102 . 4.19 There are significant opportunities associated with reducing carbon emissions. The Northwest could reduce its carbon (energy) intensity that would improve economic performance (cutting energy costs) and contribute to sustainability. The requirement for initial investment will bring, in the longer-term, tangible economic benefits to the parties involved and the region as a whole. Improvements to business resource efficiency are possible in virtually every sector, and the main contributors to emissions should be encouraged to do more 103

100

NWDA (2009) RES Assessment Report 2009 Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) (2008) Stage One – Environmental Capacity Themes Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) (2008) Stage One – Environmental Capacity Themes 103 Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) (2008) Stage one and Stage two 101 102

Regional Intelligence Unit

Summary of the Evidence Base Greater Manchester is the largest contributor of greenhouse gas emissions and Cumbria the smallest.. Green House Gases 4.20 In 1990, the 4NW inventory 104 estimates that in the Northwest the total Global Warming Potential (GWP) for all 6 greenhouse gases was just under 82.5 million tonnes (though there is uncertainty in this figure). It is estimated that this regional total reduced to just over 66.5 million tonnes GWP in 2005. This reduction was due to a decrease in emissions from industry and was irrespective of the increase in emissions from road transport (along motorways and A roads) and aviation. By 2010, the inventory projects that the regional total will decrease to around 65 million tonnes GWP but then increase to about 68 million tonnes GWP in 2020 under a business-as-usual scenario. Figure 36: The breakdown of GHG emissions by sub-region in 2005

Source: Northwest Energy and Greenhouse Gas Study update (2009)

4.21 Domestic and transport emissions will take larger shares of regional emissions in the future (these are already large emission sectors). Transport and mobility in general are the areas where efforts and policies should be focused, in order to reduce the regionâ&#x20AC;&#x2122;s carbon footprint 105 . 4.22 At sub-regional level, Greater Manchester is the largest contributor of greenhouse gas emissions and Cumbria the smallest. 4.23 Carbon profiles differ across the region depending on the population size; per capita emissions often conceal high absolute emissions from cities such as Manchester and Liverpool. Cumbria has high CO2 emissions per capita due to its relatively low population size and high use from agriculture and transport. 4.24 The share of industrial emissions is greatest in Cheshire (45%), in large part reflecting extractive and chemical activities around the Mersey estuary. 4.25 Residential emissions are most prominent in Merseyside at 35% while emissions from other sources are highest in Cumbria (mainly due to higher methane emissions from agriculture). 4.26 Road transport is typically between a quarter and a fifth of all emissions in all regions. Household waste arisings for the Northwest have declined over the last two years by 2.5% 104 105

AEA Energy and Environment for 4NW (2009) Energy and Greenhouse Gas emissions study update 2005 SQW Environmental Considerations of Sustainable Economic Growth 2008

Regional Intelligence Unit

Summary of the Evidence Base Waste & Recycling 4.27 People produce waste – this is a fact of life that cannot be change. However, we can change how much we produce, how we manage it and what we do with it. Indeed, managing waste in a sustainable way, optimising recycling and re-use, as well as limiting production, forms a core part of Government policy to protect the environment. The waste industry can also be viewed as an important economic sector in its own right as it can be a major employer in a local area. It is estimated that developing an industry of small-scale embedded EfW plants could generate up to 1,700 jobs. A Defra study estimates that there is the potential to save £299 million from improved waste efficiency in the region. 4.28 In 2007/08 the region produced just over 4 million tonnes of municipal waste 106 . Total household waste arisings for the Northwest have declined over the last two years with a -2.5% reduction from 2005/6 to 2006/7 and a further -3.3% from 2006/7 to 2007/8 107 . Household recycling and composting has increased to 36%, resulting in lower levels of residual waste collection. This is probably due to the recent acceleration in the roll out of kerbside recycling and composting collections 108 . Figure 37: Northwest total municipal waste arisings, 2000/01 – 2007/08 4600 4400

000 tonnes

4200 Total municiple waste arisings 4000

Total household recycling

3800 3600

20 06 /0 7 20 07 /0 8

20 02 /0 3 20 03 /0 4 20 04 /0 5 20 05 /0 6

20 00 /0 1 20 01 /0 2

3400

Source: 4th Waste Management Monitoring Report (2009)

4.29 The Northwest had average of 524 kilograms of household waste collected per head of population (per capita) in 2007/08, 6% higher than the national average of 495 kilograms per head of population. 14.6 million tonnes of construction, demolition and excavation waste was produced in 2006. This is an increase of 3.5 million tonnes from 2003. 4.30 The latest commercial & industrial (C&I) waste survey, carried out in 2006, estimated that the C&I wastearisings in the region totalled 8.1 million tonnes, with retail, wholesale and other services generating the most waste per sector 109 . The manufacturing sector that produced the most waste was ‘textiles, paper and pulp’ with an estimated 1.1 million tonnes. 4.31 The new hazardous waste (England and Wales) Regulations 2005, resulted in re-defined definitions of hazardous wastes (through the adoption of European Waste Catalogue Codes established in 2002). The new definitions mean that a number of waste types are now considered hazardous waste. Because of this, it is not possible to compare data directly from before July 2005 106

NWRTAB (2009) 4 Waste Management Monitoring Report th NWRTAB (2009) 4 Waste Management Monitoring Report 108 th NWRTAB (2009) 4 Waste Management Monitoring Report 109 rd NWRTAB (2008) 3 Waste Management Monitoring Report 107

Regional Intelligence Unit

Summary of the Evidence Base with data from 2006. In 2006 the Northwest produced just under 730,000 tonnes of hazardous waste: 31% of this was produced in Greater Manchester, 28% in Lancashire and 18% in Merseyside. Of this total, 367,271 tonnes (around 50%) were dealt with within the region 110 . Just under half of this waste (48%) was subject to treatment, transfer or other processes, with 24% being recovered (including incineration with energy recovery) and 28% going for disposal or being held in long term storage. In 2006 the import/export balance of hazardous waste for the Northwest was -409,646 tonnes. 4.32 Agricultural waste makes up only a small percentage of the total controlled waste generated in the region because most natural agricultural wastes, which are generated in large quantities on the farm, can often be put to good use at source either without the need for a permit or under free waste exemptions. In 2003 the Northwest generated around 6.8 million tonnes of agricultural waste, down 14.5% from the earlier survey in 1998. 4.33 Over 10 million tonnes of waste went through Northwest transfer and treatment facilities in 2006, whilst 9.5 million tonnes was disposed of to landfill 111 . The throughput of permitted waste incineration facilities within the region totalled 330,000 tonnes during 2006 112 . Since 2002/03 there has been a steady change in way waste is treated in the region, with more material recovery taking place and more waste treated using physio-chemical processes 113 . Similarly the amount of waste being composted has increased fourfold since 2002 4.34 Since 2002/03 there has been a steady change in way waste is treated in the region, with more material recovery taking place and more waste treated using physio-chemical processes. Similarly the amount of waste being composted has increased fourfold since 2002. A total of 10,868 tonnes of waste is imported into the Northwest region from abroad. The majority (84%) is waste from pharmaceuticals manufacturing (33%), WEEE (Waste Electronic and Electrical Equipment) (30%) and waste from the incineration/pyrolysis of waste (21%). 4.35 The disposal of non hazardous waste by landfill has decreased by 30% between years 2002/3 and 2006. This trend is expected to continue as local authorities divert increasing quantities of waste from landfill and the Landfill Tax Escalator begins to raise landfill disposal costs to levels at which alternative treatment options become more financially viable. Landfill remains the regionâ&#x20AC;&#x2122;s primary disposal method, although there is a reducing trend in landfilling household, industrial and commercial waste. 4.36 Landfill remains the regionâ&#x20AC;&#x2122;s primary disposal method, although there is a reducing trend in landfilling household, industrial and commercial waste. 114 . In 2007/8, all of the regionâ&#x20AC;&#x2122;s Waste Disposal Authorities were within their Landfill Allowance Trading Scheme allowances. Warrington Borough Council had the greatest percentage surplus in relation to its allowance allocation at 21.1%, followed by Cheshire County Council with a surplus of 20.2%. The Northwest Regional Technical Advisory Board on waste estimates that, as of 2007, there was 100,628 thousand m3 of landfill void capacity in the Northwest. This is enough to satisfy landfill requirements for the foreseeable future, although current planning agreements only run until 2020 for many landfill sites. 4.37 36% of municipal waste was recycled in 2007, this is ahead of the 2010 Defra waste target 115 . Although progress in meeting recycling and composting targets appears to be improving on a regional basis, there remains a considerable variation in performance between the sub-regions.

110

NWRTAB (2009) 4 Waste Management Monitoring Report th NWRTAB (2009) 4 Waste Management Monitoring Report 112 th NWRTAB (2009) 4 Waste Management Monitoring Report 113 Using chemicals to change the composition of the waste in order to reduce its volume, hazardous nature, facilitate its handling, or enhance recovery. 114 th NWRTAB (2009) 4 Waste Management Monitoring Report 115 th NWRTAB (2009) 4 Waste Management Monitoring Report 111

Regional Intelligence Unit

Summary of the Evidence Base

50 45 40 35 30 25 20 15 10 5 0

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Blackpool

Figure 38: Northwest sub regional household recycling and composting rates

Source: 4th Waste Management Monitoring Report (2009)

4.38 In 2007/8 Lancashire had the highest level of combined recycling and composting at 41.2%, Halton had the lowest rate at 25.5%. Recycling levels are high within the industrial sector with only 5% of readily recyclable materials sent for disposal. Within the public sector, 87% of readily recyclable waste materials are not recycled but sent for disposal. 4.39 The Defra 2007 Waste Strategy for England 2007 includes national targets for recovery of municipal waste: 53% by 2010, 67% by 2015 and 75% by 2020. The recovered value is the sum of recycled, composting and energy recovery. Whilst increased recycling rates have boosted the recovery total, currently there is only one facility in the Northwest, located in Bolton, that produces energy from residual municipal waste 116. In 2007/08 only 2% of the region’s recovered value from municipal waste was from energy from waste. 4.40 In January 2007, Envirolink Northwest commissioned a survey of the Recyclers and Reprocessors (RRs) operating in the Northwest region. The survey found that there were 162 RRs in operation in the region. The Northwest contains 1,934 sites specialising in metal recycling, including 149 vehicle dismantlers. In 2006 149,000 tonnes of metal were recycled by vehicle dismantlers and 178,500 tonnes recycled via metal recycling sites. The electricity network will experience a considerable degree of replacement and upgrading Energy Infrastructure 4.41 The provision of basic infrastructure including power supplies, water and drainage are fundamental to economic development. Utilities, including energy, are provided by the private sector and investment decisions are taken by private companies who, within strict regulatory frameworks, seek to maximise income whilst minimising risk. Research 117 and case studies 118 have identified a general problem of the utilities market not securing the advanced servicing of development sites. In addition, the University of Salford are investigating how to address the provision of critical infrastructure to city-regions 119 . In general terms, the studies have concluded: 116

NWRTAB (2009) 4 Waste Management Monitoring Report Vantage Point for English Partnerships (2002) Utilities Infrastructure Study. 118 OGC buying.solutions for English Partnerships (2004) Utility Procurement Monitoring Study: Best Practice Case Studies. 119 The Centre for Sustainable Urban and Rural Futures (SURF) (2007) City-Regions and Critical Infrastructure: Phase 1 final report ; The Centre for Sustainable Urban and Rural Futures (SURF) (2007) Northern City-Regions and Critical Infrastructures: Key Lessons in Organising and Achieving “Fit” Summary Report of Phase 1 and 2 of City-Regions and Critical Infrastructure 117

Regional Intelligence Unit

Summary of the Evidence Base 

There could increasingly be a mismatch between infrastructure planning and regional growth aspirations which requires urgent attention through promoting strategic understanding between all stakeholders;



Short-term local or development-specific solutions may no longer work as major development projects could run into serious delays or capacity problems;

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Often the cost of new or replacement infrastructure does not generate a sufficient return to the utility company, hence it is not considered to be economic and does not justify the capital investment;

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Delays and abortive costs may be reducing the effective regeneration budget in the UK as funds are diverted to finance utility infrastructure, which could also reduce the competitiveness of the development industry;

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Where sites within different regions are competing to attract investment, those without the necessary infrastructure could be at a significant disadvantage. This could have a disproportionate impact on less economically active areas, reinforcing the cycle of disadvantage; and



Where this problem has been addressed by the public sector, it is often on a project by project basis and there is a need for a much more co-ordinated and strategic approach.

4.42 The NWDA commissioned EKOS to carry out a study of Northwest infrastructure (2008) in order to help the region understand the issues and constraints (and also the opportunities) surrounding utilities infrastructure (including electricity and gas infrastructure) in the Northwest. From the EKOS report it became clear that the provision of utilities infrastructure remains a key concern for both the public and private sector in the Northwest. The report notes that current capacities in the region are relatively good compared to other English regions but that there are areas that need to be addressed to ensure future development can be delivered. In terms of spatial development and electricity provision the report found there appears to be particularly high utilisation rates for the following sub-stations (either at Grid supply level – 312kV – or Primary substation – 33kV): 

Parts of Central and Western Cumbria (132kV) and a small part of South-East

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Cumbria (33kV)

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Parts of the Fylde Coast (both 132kV and 33kV)

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The Lancaster area (33kV only)

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Parts of Greater Manchester (both 132kV and 33kV)

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The Warrington area (both 132kV and 33kV)

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Part of North Cheshire (132kV only)

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South and Central Lancashire (33kV only)

4.43 Such constraints have the potential to cause issues for planned major developments in the Northwest. The EKOS report singled out the following, but any new, significant development would have to take such a constraint into consideration: 

Greater Manchester – Growth point, Housing Market Renewal (HMR) areas and the Strategic Regional Sites at Barton, Carrington and Central Park.

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Fylde Coast and Lancashire Area – Growth point, HMR areas and the Strategic Regional Site at Bailrigg.

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Central Cumbria and parts of West and South Cumbria – Growth point and Strategic Regional Sites ar Kingmoor and Westlake.

Regional Intelligence Unit

Summary of the Evidence Base 

Warrington – Growth point area and Strategic Regional Site at Omega South.



South and Central Lancashire - Growth point and Strategic Regional Site at ROF Cuerden and Chorley.

Taking into account forecasts for economic and population growth, final energy demand could rise as high as 400,000 GWh by 2021 if we continue at current rates Energy Intensity 4.44 Energy and the Climate Change agenda are intrinsically linked. The production of energy from fossil fuels produces greenhouse gases, mainly CO2, which is the major cause of climate change. Reducing energy use and decarbonising energy production will help to tackle climate change, reduce dependency on high consumption and reduce adverse environmental impacts. Moving towards a low carbon economy will create wide ranging issues but also many economic opportunities, especially for businesses already involved or seeking to be involved in the increased activity of innovation in the Environmental Technologies sector. Energy is a major cross cutting theme and affects all areas of the development of the Northwest. This region is a major producer and consumer of energy. It is estimated that the region’s total energy demand in 2006 totalled 200,755 GWh 120 121 .If we keep using energy at the same rate, taking into account forecasts for economic and population growth, final energy demand could rise as high as 400,000 GWh by 2021. Energy and the climate change agenda are intrinsically linked. The production of energy from fossil fuels (oil, gas and coal) produces greenhouse gases, mainly CO2, which is the major cause of climate change. NW is progressively becoming less energy intensive… 4.45 Energy intensity is a ratio of total energy consumption and GVA. All regions improved their energy intensity ratio between 2003 and 2005 with the exception of the North East who’s rank dropped by 0.2 kWh/£GVA. The Northwest was ranked 7th in 2005 with 1.9 kWh/£GVA and improved on this in 2006, reducing energy intensity by 0.1 kWh/£GVA and ranking joint 6th (with Scotland and East midlands). In 2007 East and West Cumbria were the most energy intensive areas in the Northwest consuming 3.0 and 2.6 kWh/£GVA. Cumbria is known for housing a number of energy intensive businesses, the majority of which are foreign owned, and also for being the home of the Sellafield nuclear facility which engages in energy intensive processes. 4.46 There are some notable clusters of energy intensive activity in the Northwest, namely: Chemicals in Cheshire; Glass manufacturing in St. Helens and; Primary and secondary metals manufacturing with aluminium in Warrington. Cheshire (including Halton and Warrington) is home to a number of energy intensive chemical companies and processes such as Shell and INEOS Chlor, which produces 1% of the UKs total energy demand.

120 121

GWh are calculated by multiplying capacity by factor by hours in the year BIS (2008) Total Final Energy Consumption at Regional and Local Authority Level 2006

Regional Intelligence Unit

Summary of the Evidence Base

3.5 3.0 2.5

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0.0 Wales

Energy Intensity (KWh / £GVA)

Figure 39: Total energy intensity (KWh / £GVA) by UK regions 2003 – 2006

Source: Adapted from DECC ‘High Level Energy Indicators’ 2006

NW is a net exporter of energy and home to some of the UK’s most significant facilities Energy Production 4.47 The Northwest is a net exporter of energy and home to some of the most significant facilities in the UK for fossil fuels (Fiddlers Ferry, which has biomass co-firing capacity), nuclear (Heysham 1 and 2) and renewable generation (Burbo Bank and Barrow wind farms). The region has 5.7 GW installed electricity capacity. According to RESTATS in 2007 existing renewable capacity in the Northwest stood at approximately 477.7MW which generated 1,608 GWh if electricity. The greatest amount of onshore wind generation is located in Cumbria with 69.48 MW currently installed. Figure 40: Northwest electrical generation mix 2% 18% 36% Coal Nuclear Gas Renewables 44%

Source: ECOSEG (2008)

4.48 Most of the low voltage electricity distribution in the Northwest is currently owned by Electricity Northwest, with management and maintenance outsourced to United Utilities. The remainder of the Northwest’s network is owned and operated by Scottish Power Manweb. NW was the second highest consumer of energy in England (2006) only second to the SE

Regional Intelligence Unit

Summary of the Evidence Base Energy Consumption 4.49 In 2006 the Northwest region was the second highest consumer of energy in England, only second to the South East (figure 41). According to the Department of Business Innovation and Skills, in 2007 the region consumed 35,353 GWh of electricity, with an estimated 43,000 GWh of electricity being produced in the Northwest the region is a net exporter of electricity. In the same year the Northwest consumed 80,190 GWh of gas, 13% of the Great Britain total (614,093 GWh). Figure 41: English regions total energy consumption 250,000.0

200,000.0

GWh

150,000.0

100,000.0

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0.0 North East North West Yorkshire & Humber

East Midlands

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South East South West

4.50 It is estimated that the regionâ&#x20AC;&#x2122;s total energy demand in 2006 totalled 200,755 GWh, equivalent to 17,261.8 Ktoe. The main consumer of energy was the industrial and commercial sector (39.2%), followed by domestic customers (33.2%), while transport accounted for 27.5% of total energy consumed. 4.51 In 2007 the region consumed 35,353 GWh of electricity. Of the 3.4 million electricity customers in the Northwest, 92.7% were domestic customers who in total consumed 13,138.8 GWh of electricity (37.2%). The average commercial & industrial customer consumed 91,275 kWh while the average domestic customer consumed 4226 kWh. In the 2007 the Northwest consumed 80,190 GWh of gas, 13% of the Great Britain total (614,093 GWh). 4.52 98.5% of gas customers were domestic and 1.5% commercial and industrial. However the average domestic customer consumed 17, 932 kWh of gas in 2007, while the average commercial and industrial customer consumed 246,177 kWh of gas. At a sub-regional level, the greatest consumer of both gas and electricity is Greater Manchester (38,433 GWh). NW currently produces between 2 and 2.5% of electricity from renewable sourcesâ&#x20AC;Ś Renewable Energy 4.53 In July 2009 the Government published the UK Renewable Energy Strategy. The strategy recognises that the UK needs to increase its use of renewable electricity, heat and transport and explains how we will do this to so by 2020 15% of our energy comes from renewable sources (The Path to 2020). 4.54 The scenario used in the strategy suggests the UK could see: ď&#x201A;ˇ

More than 30% of our electricity generated from renewables, up from about 5.5% today. Much of this will be from wind power, on and offshore, but biomass, hydro and wave and tidal will also play an important role.

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Summary of the Evidence Base 

12% of our heat generated from renewables, up from very low levels today. We expect this to come from a range of sources including biomass, biogas, solar and heat pump sources in homes, businesses and communities across the UK.



10% of transport energy from renewables, up from the current level of 2.6% of road transport consumption. The Government will also act to support electric vehicles and pursue the case for further electrification of the rail network.

4.55 The region currently produces between 2 and 2.5% of electricity from renewable sources (these figures do not include offshore wind developments and those under construction, which accounts for the variation in Northwest renewable energy generation). Some estimates put renewable electricity generation in the Northwest as high as 4.7% including offshore renewable energy generation. Renewables will only be 7.4% of total generation by 2010 4.56 The National Grid estimates that renewables will only be 7.4% of total generation by 2010, which means that the region will not be able to meet its 10% target. Arup have performed an indepth study to check whether the minimum targets for 2010 (10%), 2015 (15%) and 2020 (20%) are in fact feasible. 4.57 Figure 42 compares targets (the RSS 2020 target) and current installed capacity and shows that there is a significant gap for these technologies between what is currently available and that required by the targets. However, some technologies are performing better than expected, and are contributing more to overall regional installed capacity than the targets would suggest. Taken in the round, it is clear that meeting the renewables targets for 2020 will be very difficult. Meeting the proposed RSS onshore wind target will require the region to install approximately 45% more than the ‘pragmatic’ level of wind energy development, as identified by ARUP. Figure 42: Comparison between targeted and potential renewables capacity to 2020 by technology

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Summary of the Evidence Base 4.58 Four areas have been suggested as possible locations for tidal power in a study by the Institution of Engineering and Technology: The Solway Firth, Morecambe Bay, the Dee and the Mersey. 4.59 Cheshire (including Cheshire and Halton) produced the largest share of electricity from renewable sources (37%) but also has the largest renewable capacity Northwest sub-regions (160.29 MW). This is related to the co-firing biomass facility at Fiddlers Ferry. Offshore wind generation only provided 35% of electricity generated despite having a capacity of 360MW in 2007/08, almost 200MW more capacity then Cheshire, demonstrating that wind generation is not currently meeting its full-potential. 4.60 The Northwest currently aims to double its installed Combined Heat & Power (CHP) capacity by 2010 to 1,500 MWe 4.61 A lot of research has been targeted at developing marine energy technologies – tidal and wave energy. The Northwest, as a coastal region, is considered to both possess a good natural resource to apply these technologies and offer specific viable sites for their deployment. However, given the early stage of development and demonstration of these technologies and some additional constraints to implementation (outlined below), it is unlikely that they will provide a significant amount of energy to the region within the specified timescale – to 2010. 4.62 Tidal energy is considered the more advanced and viable technology for the Northwest. The theoretical potential is estimated at up to 10 GW capacity (but more likely around 7 GW given that the resource is effectively shared with Scotland). As previously discussed four particular areas/sites are referred to as possible locations for tidal power - the Solway Firth, Morecambe Bay, the Dee, and the Mersey4. However, it is ‘highly unlikely that tidal range schemes would ever be developed in all four of these estuaries’. This is due to a range of technical, planning, nature conservation and other constraints. The key obstacle seems to be the lack of precedent in the UK – the Severn tidal barrage is seen as a test case and it is still awaiting final decision (not expected before 2015). On this basis, even if the Severn tidal barrage receives approval, any follow up schemes, e.g. in the Northwest will take a further few years, which altogether goes beyond the timescale explored (2021). 4.63 In terms of wave energy, the RSS suggests that one scheme could be implemented by 2020 with a capacity of 30 MW. However, the region’s wave resource, albeit being viable, is less favourable than in other regions and therefore developers are more likely to build schemes in these other regions before considering the Northwest. This scenario means that, as with tidal energy, by 2021 it is unlikely that wave energy capacity will be added to the region’s generation portfolio. Heysham 1 & 2 nuclear power stations provide 4% of the UK’s electricity Nuclear Power 4.64 The ‘Energy Coast’, located along the coast of West Cumbria down to Lancashire, is known for its strong links with the nuclear sector. Heysham 1 and 2 nuclear power stations, the last nuclear power stations built in the Northwest in 1989, provide 4% of the UK’s electricity. Heysham 1 (which has a capacity of 1,160 MW) is due to be decommissioned in 2014 and Heysham 2 (with a capacity of 1,230 MW) will be decommissioned in 2023. Once the Heysham reactors are decommissioned there is a projected decline in UK nuclear capacity. The Sellafield site (including Calderhall, Drigg LLWR and Windscale) currently employs around 12,000 people and is likely to remain at these levels until around 2015, when (due to decommissioning) it will decline to around 4,000 by 2035.

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Summary of the Evidence Base Figure 43: Decline in UK Nuclear Capacity in 2006

4.65 The figure above shows the projected decline in UK Nuclear Capacity and accordingly when the Heysham nuclear reactors will be decommissioned. It is unclear at this point what new regional nuclear capacity will be built in its place. It is also uncertain whether the decommissioning will mean problems for meeting consumer demand. The increase in offshore wind and onshore wind technologies may offset some of the supply gap. However, the extent to which this would be possible requires further analysis. 4.66 If new nuclear is given the go-ahead, building at the existing Heysham site is likely to present a real possibility in terms of cost efficiency, environmental impact, and support infrastructure (including grid connection). New-build at Sellafield is less likely if grid connections remain in their current state. 4.67 The Nuclear White Paper’s recommendations have lead to the Strategic Siting Assessment (SSA), managed by DECC, which has identified 4 sites in the Northwest with the potential to house new nuclear power: 3 in Cumbria (Braystones, Sellafield and Kirksanton) and 1 in Lancashire (Heysham). Nuclear sector supports 23,000 jobs in the NW, 1.5% of all employment.. 4.68 In total, the nuclear sector supports an estimated 23,000 jobs (approximately half of the UK total) in the Northwest region, accounting for about 1.5% of total Northwest employment. The sector is dominated by the operations at Sellafield in West Cumbria, which together with the adjacent sites at Calder Hall, Windscale and the Low Level Waste repository site at Drigg employs some 12,000 people. Other important sites in the region are the Springfields fuel fabrication facility near Preston, the central administration and engineering functions of British Nuclear Group at Risley near Warrington and British Energy’s power station at Heysham with around 1000 people. There are around 300 Northwest companies that are part of the nuclear supply chain. Nuclear Power is very important to West Cumbrian economy and accounts for 1 in 4 jobs. The largest concentration of people is employed at Sellafield where 12,000 people have jobs. The British Nuclear Group Sellafield Ltd’s own estimate is that the total number of jobs supported by this plant is closer to 50,000 and over 70% of employees live in the local boroughs.

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Summary of the Evidence Base 4.69 2007 saw the opening of the Nuclear Academy outside of Workington (Cumbria) and The John Tyndall Centre of Nuclear Research, with campus sites at Preston and near Sellafield emphasising the importance of the nuclear industry to the Northwest energy sector. 4.70 By 2020, it is estimated that 478,000 cubic meters of radioactive waste will need to be disposed of. Sellafield alone will account for 31% of this projected waste. Figure 44: Principle Nuclear sector sites in the Northwest

Gas demand will continue to grow gradually with an estimated increase of 2TWh between 2008 & 2017â&#x20AC;Ś 4.71 In 2007 the Northwest had 2.8 million gas customers, the domestic sector making up 98.5% of customers and accounting for 62.6% of gas sales. The commercial and industrial sector accounted for 1.5% of customers but also 37.4% of gas consumption, showing how heavily our industries rely on gas. National Grid believe that gas demand will continue to grow so securing the regions supply is essential. 4.72 National Grid is expanding the network of high-pressure distribution system including a highpressure gas pipeline through North Yorkshire and Lancashire, which will carry gas from the new import terminal at Easlington (Humber) to the Northwest. An important aspect of gas infrastructure

Regional Intelligence Unit

104

Summary of the Evidence Base is gas storage. In 2006 Cheshire County Council gave planning permission for a gas storage facility, capable of holding 700,000 tonnes of gas, on land near Lach Dennis. The region's environment generates an estimated £2.6 billion GVA and supports 109,000 jobs. Natural Economy 4.73 The environment is a highly valuable, capital asset that should be managed intelligently for longterm sustainable socio-economic benefit. The region's environment generates an estimated of £2.6 billion GVA and supports 109,000 jobs. It is also critical for economic security in relation to climate change, water supply and flooding. The environment also encompasses a number of aspects relating to the special locational strengths of the Northwest, as well as the potential opportunities to gain economically. NW quality of life is a major attractor of investment, business, workers, visitors and new residents 4.74 The functioning of our economy and society, as well as our quality of life, relies upon the healthy functioning of the natural environment. Our quality of life, often associated with environmental quality and cultural opportunities, is a major attractor of investment, business, workers, visitors and new residents, and as such they require protection and enhancement on economic grounds as well as for their own sake and for the social benefits they bring. Critically, the natural environment also provides ecosystem services which underpin the region’s economic and social functioning. Ecosystem services can be classed as follows: 

Supporting services; necessary for the production of all other ecosystem services including soil formation, photosynthesis, primary production, nutrient cycling and water cycling.



Provisioning services; the products obtained from ecosystems, including food, fibre, fuel, genetic resources, bio-chemicals, natural medicines, pharmaceuticals, ornamental resources and fresh water.

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Regulating services; the benefits obtained from the regulation of ecosystem processes, including air quality regulation, climate regulation, water regulation, erosion regulation, water purification, disease regulation, pest regulation, pollination, and natural hazard regulation.



Cultural services; the non-material benefits people obtain from ecosystems through spiritual enrichment, cognitive development, reflection, recreation and aesthetic experiences – thereby taking account of landscape values. This is the intrinsic value to having a healthy natural environment that is often difficult to measure and as a result not appreciated.

Intelligent use of environmental assets can lead to business success & increased prosperity… 4.75 As a result of these ecosystem services, environmental management needs to be integrated within strategy & policy at every spatial level and use sustainability as a driver for the region's future economic and social success. There is now strong support for the environment driver concept, which marks a radical shift away from the traditional view of economic and environmental conflict (the view that economic growth inevitably damages the environment and environmental preservation curbs economic growth). In reality, using our environmental assets intelligently can lead to business success and increased prosperity. A quarter of all tourism is thought to depend on the NW’s natural environment 4.76 Tourism is a very important sector for the Northwest and a huge asset worth in excess of £13.6 billion. The visitor economy supports over 215,000 jobs and a quarter of all tourism is thought to depend on the natural environment. Recent research by MORI shows that while 24% of Northwest residents think the countryside is a strength of the Northwest, only 12% of residents elsewhere think the same.

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Summary of the Evidence Base 4.77 In 2008 Cumbria had 15.3 million visitors, made up of 5 million who stayed overnight and 10.3 million day trippers. This brought in £1.17 billion to the region's economy. In the same year, the Lake District National Park Authority had a total economic impact of £677.19 million and 8.3 million visitors (this accounts for 54% of Cumbria’s total visitor number in 2008). 4.78 Between 2000 and 2008, Barrow, South Lakeland, and the Lake District National Park have seen the largest increase in tourism revenue, of 21%, 17% and 14% respectively. The region contains around 20,290 km of public rights of way (the total for England and Wales is around 225,000 km) and 263,200 ha of land designated as access land under the CRoW Act 2000. 3 National Trails pass through the region – Pennine Way, Pennine Bridleway and Hadrian’s Wall. The Pennine Bridleway Way National Trail alone provides 382 km of purpose built trail for walkers, cyclists and horse riders. 17.7% of our region has open access, compared with 6.5% for England overall, with the largest areas in the uplands and commons. 4.79 A study of the Osprey project at Bassenthwaite Lake (for Forestry Commission, RSPB and Lake District National Park Authority) showed that 100,000 visitors were attracted to see the birds per annum and this generated £1.7 million for the local economy. 4.80 The Northwest has 88 approved Walking for Health (WHI) schemes, more than any other region (national total is 550), located throughout the region. Thousands of walkers with a range of health problems take part in this scheme to get fit in the natural environment. The region has 26 Doorstep Greens and 35 Millennium Greens and 44 Country parks that provide opportunities for people to use green space close to where they live. The NW’s rich and diverse historic environment is one of its distinctive resources. 4.81 The historic environment includes all aspects of the environment resulting from the interaction between people and places through time, including all surviving physical remains of past human activity, whether visible or buried, and deliberately planted or managed flora (Conservation Principles). The historic environment supports environmental quality with obvious economic and social benefits in terms of heritage tourism and making areas better places to live, work and invest. The region’s rich and diverse historic environment is one of its distinctive resources. The historic environment embraces all the historic aspects of the region’s environment, including its archaeological sites, the wide range of standing buildings, parks and gardens, battlefields, managed historic landscapes and their land uses, including those associated with the birth of the Industrial Revolution in the Northwest. 4.82 The Northwest contains 859 Conservation Areas, 129 Registered Parks and Gardens of Historic Interest and 3 Registered Historic Battlefields. Cumbria has the only section of heritage coast in the region, St.Bees, it is 3.63 miles long and covers 551 hectares. 4.83 There are 22,731 hectares of ancient woodland (10.9% of the national area). There is 1 National Park (The Lake District) that is wholly in the region and parts of 2 others (The Peak District and The Yorkshire Dales). 4.84 Two World Heritage Sites (WHSs) at Hadrian’s Wall and Liverpool Maritime and Mercantile City, and two prospective WHSs (Manchester the Archetype City of the Industrial Revolution and the Lake District) 4.85 The region holds over 25,420 Listed Buildings, representing about 7% of the national stock, and over 1,316 Scheduled Monuments ranging in date from Neolithic henges to World War II military installations. 4.86 Tatton Park is the Northwest’s most visited historic park in the region attracting some 750,000 visitors each year and supporting some 159 gross additional jobs at the Cheshire and Warrington level and some 119 gross additional jobs, based on gross tourism expenditure of around £215 million annually.

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Summary of the Evidence Base 50 million regional visits are motivated by heritage, resulting in expenditure of approximately £1.96 billion 4.87 Some 50.5 million visits made to the region each year are motivated by heritage, resulting in expenditure of approximately £1.96 billion to the economy (after allowing for double counting). This supports some 20,400 jobs and generates annual GVA of approximately £804 million (figure excludes jobs and GVA due to management operations and conservation/maintenance). 4.88 Historical assets seem to affect their local economy, drawing on the local labour force, supporting specialist traditional skills. A number of businesses operate from heritage buildings and this analysis suggests that some 548,000 jobs are accommodated within heritage assets in the Northwest and that this generates some £21.1 billion in GVA annually. Air quality has broadly improved over the last 10 years but urban areas remain a pinch point… Air Quality 4.89 Air quality is an important environmental indicator. It has a direct impact on economic growth because it influences the health of the working population and quality of life within the region. Historically, particular urban areas in the Northwest have a bad public image when it comes to air pollution and the industrial haze associated with intense manufacturing cities. Fortunately, it appears that this era is coming to an end and there have been significant improvements in air quality over the last ten years 122 . This results from a combination of stricter regulations on emissions and a new trend in jobs (increases in the services sector and decreases in manufacturing). However, the majority of our urban areas are covered by Air Quality Management Areas, which means that air quality objectives are not being met in those areas, with particular issues around increasing traffic and congestion levels, carbon monoxide and particulates. Urban smog, sulphur dioxide and smoke from coal burning, is less of a problem and transport emissions have become the new concern. Figure 45: Air pollutant decreases in Air Quality Strategy substances from Industrial premises in the Northwest between 1998 and 2007

The region’s rivers are the cleanest they have been for a hundred years… Water Quality, Consumption and Resource

122

Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG)(2008) Stage one and Stage two

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Summary of the Evidence Base 4.90 The quality of our region’s water is another important environmental indicator. It is a prerequisite for continued economic growth as its quality affects many sectors including recreation, agriculture and tourism. The water quality in the Northwest has been improving over recent years. The region’s rivers are the cleanest they have been for a hundred years and 96% were rated ‘good’ or ‘fair’ in terms of chemical quality 123 . The latest 'headline indicator' survey (2007) shows that Northwest chemical quality is now better than the average for England, but it is not as good for biological quality. However, new European legislation is focussing more attention on the ecological well-being of our waters could lead to improvements in biological quality. Water resources are important for ensuring a sustainable supply of water in the region. 4.91 The Environment Agency has classified the region as ‘Low’ water stress. United Utilities, as a single provider, contributes to the flexibility to meet demand where and when it is needed. The sector is highly regulated by OfWat and the Environment Agency, which determine largely the standards to which the water company has to comply (dependent, for example, on the interpretation of EU Directives by the Environment Agency) 124 . 4.92 Taking action to use water more efficiently and ensuring it is used as a precious resource, essential for life and vital to our economy will allow us to plan ahead and help ensure there is sufficient water regionally and nationally in the future 125 . Water is becoming an increasingly expensive resource with the average bill increase by UK water companies set at 18 per cent over five years 126 . 4.93 Total water resource use across the region was estimated by Defra/EA to be 3,003 million litres per day in 2005. The majority of this (53%) was water demand from public water supply, with the remainder being used for power stations (19%) and other water resource use (28%). The bulk of ‘other water resource use’ (25% of the total), is for water supply to three main industrial sectors – chemicals, food and drink, and wood/paper manufacture. 4.94 The average household per capita consumption (pcc) (normal year) is 136 litres per head per day (l/p/d) 127 . United Utilities predict a reduction in pcc to 129 l/p/d by 2030 128 – in line with Defra’s aspirational pcc target of 130l/p/d by 2030. In addition, a target headroom value (an allowance for uncertainty) is required for public water supply between water available for use and demand. The 2006/07 value was 44.4 Ml/d 129 and the 2009/10 target headroom value is estimated as 56Ml/d (equivalent to 3% of the regional water source yield) 130 . 4.95 Household meter penetration in the Northwest is at 26% now and is forecast to rise to 38% by 2015 and 60% by 2034/35. Metering is a proven way of reducing demand by 5% to 15% per metered household. 6% of the UK's annual greenhouse gas emissions are related to water use, and nearly 90% of those emissions result from water use in the home. Northwest businesses use 596 million m3 of water every year - enough to fill over 150,000 Olympic-sized swimming pools. Manufacturers, retailers, hotels and restaurants all have a key part to play in reducing consumption 131 . 4.96 Water resource availability is forecast to decrease, but there is a well integrated and flexible water supply network in the region and United Utilities plans to increase the resource base with a number of new sites. Two priority places for biological river quality improvements are Halton and Liverpool, for chemical quality the Wirral and the Manchester conurbation. Two-thirds of our water supply comes from reservoirs in the Lake District and 1/4 from rivers (e.g. River Dee) and the rest from boreholes.

123

Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG)(2008) Stage one and Stage two SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Water NWDA (2009) Making it Happen - the Sustainable Consumption & Production Action Plan for England’s Northwest 2010-2012 (Draft) 126 Ofwat (2005) Future water and sewerage charges 2005- 10: Final determinations 127 United Utilities (2009) Annual Review 2008/09 128 United Utilities (2009) Final Water Resource Management Plan 129 SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Water 130 United Utilities (2009) Final Water Resource Management Plan 131 Envirowise (2008) Review of Water Use in Industry and Commerce N.B. statistics referenced exclude utilities, agriculture, fish farming, Mfr of coke & petroleum products 124 125

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Summary of the Evidence Base 4.97 Water resource demand may increase by about 107 extra million litres per day in 2025 under a ‘wet’ scenario, or decrease by some 429 Ml/day under a ‘dry’ scenario. The middle-model forecast, used for planning purposes, shows an overall decrease of available water (over an entire year) by 26 Ml/day (United Utilities 2008). 4.98 Overall, the capacity of the region to supply water is considered sufficient 132 to cope with current and predicted demand for the medium to long-term up to 2035. This is assuming a level of investment in leakage control and additional resources, as well as take-up of water metering, occur as per United Utilities’ draft Water Resources Management Plan. Planned resource support is particularly required for the Integrated Resource Zone, the largest of United Utilities’ four water resource zones. The region as a whole has relatively flexible supply routes, although the West Cumbria and Carlisle Resource Zones have less flexibility with regard to capacity for an additional major water user if one appears. Water resource deficits are already predicted in the region by 2014 as a result of climate change… 4.99 There is a degree of uncertainty, however, regarding water supply, stemming from two main areas: 

The interpretation of regulations by organisations such as the Environment Agency, with regard to the ‘sustainability reductions’ required. The EA has indicated, however, that the bulk of sustainability reductions are now known, with most driven by statutory drivers such as the Habitats Directive, and that they will use their powers to vary/revoke abstraction licences that are proven to damage the environment. In particular, the Habitats Regulations Assessment of the Northwest Regional Spatial Strategy indicates that current abstraction levels are already adversely affecting at least eight European sites in the region and the projected regional housing growth will add to existing pressure on water resources



The impact of climate change on water availability and regularity, which is inherently uncertain. Drought may be a problem in the summer with drier conditions and reduced water supplies during periods of higher demand. Water resource deficits are already predicted in the region by 2014 (including supply to significant areas of population) even without climate change impacts.

29% of the region is designated as protected landscapes.. Natural Environment 4.100 Some 29% of the region is designated as ‘protected landscapes’, compared to 23% for England. This includes extensive areas of National Park (the Lake District National Park) which account for 18% of the entire region (only second to Yorkshire & Humber) and 11% as Areas of Outstanding Natural Beauty (AONB) below the national average of 16%. (The North Pennines AONB spans across Cumbria, Northumberland and Durham and is also a European Geopark). The Lake District is the largest of England’s National Parks covering 229,159 ha. The Northwest has only six kilometres of Defined Heritage Coasts (around St Bees Head). Heritage Coasts are special coastlines managed so that their natural beauty is conserved; it is a non-statutory landscape designation.

132

NB: Subject to provisions set out in Policy EM5 as well as various mitigation measures included in the final RSS as a result of the Habitats Regulation Assessment of the plan.

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Summary of the Evidence Base Map 2: ‘Protected Landscapes’ in the Northwest

Source: Natural England and Countryside Agency (2008)

Neglected or diverging character areas are mainly around major centres of population & transport corridors 4.101 Natural England’s Countryside Quality Counts study (2008) found that of the Northwest region’s 29 National Character Areas, 14% are enhanced in character, 41% have maintained character, 7% are neglected and 38% are diverging from baseline character. Areas that are neglected or diverging are largely around major centres of population and transport corridors. Landscape character is being maintained in our protected areas such as Cumbria High Fells, which makes up a large part of the Lake District. There is considerable demand for wood processing in the UK, but only 19% of timber used by the processing industry is sourced from UK-grown timber 4.102 The region’s woodland is managed inline with the Regional Forestry Framework (RFF) 2005, which covers the period 2006-09. The RFF is covered by RES Action 117, which sets the priorities for the sector in the region covering 6 action areas with 26 priorities. The plan is being reviewed in light of

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Summary of the Evidence Base a new national strategy - England’s Trees Woods and Forests (ETWF) - and a new action plan is due out in spring 2010. 4.103 The main indicator for RES from the RFF is area of woodland cover. Increasing woodland cover will remain a core target for the RFF as it will help improve timber supply, biodiversity, climate change adaptation (city cooling and habitat resilience), wood-fuel production and access for people for health and wellbeing benefits. 4.104 Woodland (≥0.1 hectares in size) covers 96,171 hectares in the Northwest; this is 6.8% of the land area. The most dominant type of woodland (Map 13) is broadleaved woodland, representing 43.7% of all woodland, followed by Conifer woodland (36.7%), Mixed woodland (10.2%) and Open Space within woodlands (6.7%). Open space within woodlands is important for a number of butterfly populations. 4.105 Table 5 shows that sub regionally Merseyside and Greater Manchester have the lowest woodland area in hectares, correlating with the areas of major urban development. Table 1: Sub regional woodland cover County Cheshire Cumbria Greater Manchester Lancashire Merseyside Total

Woodland size (ha) 2.0 or more 0.1 - <2.0 9442 895 61753 2829 4329 366 13404 674 2404 73 91332 4838

Total area (ha) 10337 64582 4695 14078 2477 96171

Woodland cover (%) 4.4 9.5 3.7 4.6 3.8 6.8

Source: The National Inventory for Woodlands and Trees - Northwest region (2002)

The NW contains over a quarter of the English resource of blanket bogs, lowland raised bogs, upland calcareous grassland, upland meadows, limestone pavement and coastal saltmarsh. 4.106 The Northwest is important in a national context for its UK biodiversity Action Plan habitat area containing over a quarter of English resource of blanket bogs, lowland raised bogs, upland calcareous grassland, upland meadows, limestone pavement and coastal saltmarsh. The largest areas of habitat are found in the Pennines, Lake District and along the coast, elsewhere habitats tend to be small and fragmented. The Northwest should ensure it is not adding to the negative trends for these habitats in the UK. These habitats support many rare species. Limestone grasslands around Morecambe Bay contain important butterfly populations, the Sefton sand dunes support rare plants, natterjack toad and sand lizard populations, upland heaths are important for breeding birds including the Hen Harrier in the Bowland Fells. 4.107 40% of terrestrial and coastal UK Biodiversity Action Plan habitat area occurs outside statutory protected areas and is therefore vulnerable to habitat loss and damage. Delivery of the region’s share of the England Biodiversity targets is progressing on statutory designations, but is harder to achieve outside of these sites. Climate change is likely to have a significant impact on biodiversity in the medium to long term across the region 4.108 It is not possible to know exactly how the climate will change or how it will impact directly or indirectly on species, habitats and ecosystems, particularly at a local scale 133 . Climate change will create both opportunities and threats to the natural environment and the biodiversity. Action is needed to ensure the environment is resilient to climate change and that biodiversity is maintained and enhanced in the future. Ecological resilience ‘depends on a dynamic relationship within 133

DEFRA (2008) England Biodiversity Strategy Climate Change Adaptation Principles Conserving biodiversity in a changing climate

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Summary of the Evidence Base species, among species and between species and their abiotic environment, as well as the physical and chemical interactions within the environment’ (Convention on Biological Diversity, 2000). Ecological resilience does not simply mean conserving the biodiversity already present in the region, but management needs to ensure that ecosystems remain dynamic and maintain their functions and characteristics after being disturbed or damaged. 4.109 Direct impacts of climate change on biodiversity 134 include changes in: 

Climate envelope* shift – e.g. shifts in suitable climate conditions for individual species



Phenology – the timing of life cycle events leading to a loss of synchrony between species



Species abundance and distribution (as a result of arrival and loss of species)



Community composition



Habitat changes



Ecosystem processes and function – e.g. increasing decomposition in bogs and forest biomass



Loss of space – for example due to sea level rise

Climate change is likely to increase the impact of invasive species 4.110 A non-native species is 'a species introduced outside its natural past or present distribution 135 . Nonnative species have been introduced into the UK for thousands of years. Sometimes this has been deliberate, for social or economic reasons such as forestry, agriculture and horticulture. Sometimes, however, the introduction occurs by accident; for example Dutch elm disease was introduced in imported timber. The high economic cost and the scale of ecosystem damage mean invasive species are a great threat to our biodiversity, after habitat loss and climate change is currently not being addressed at the regional level. House building on Green Belt land has increased by 60% since 1997 Built Environment 4.111 The Northwest has 4 major linked areas of greenbelt. Population density and urbanisation is heavily concentrated in the southern part of the region, where housing density is also the highest. The northern part (Cumbria and parts of Lancashire) are much less densely populated, has a predominantly rural character, and housing density is low. The Northwest has four major, linked areas of Green Belt - in Greater Manchester, Merseyside, North Cheshire and Lancashire - plus one in South Cheshire, which is, in effect, part of the North Staffordshire Green Belt. 4.112 There has been a 60% increase in house building on Green Belt land since 1997. The average number of houses built on Green Belt land rose from 3,287 during 1994-1996 to 5,265 between 1998 and 2003. The Southeast and the Northwest experienced the sharpest rises in building on what was supposed to be land protected from large-scale development. Northwest numbers rose from 730 in 1996 to 1,049 in 1998 and 1,565 in 2003. Property values closer to green spaces are on average 8% more expensive than similar properties elsewhere. UK housing stock accounts for over 25% of carbon emissions.. 4.113 The existing UK housing stock accounts for over 25% of the UK’s carbon emissions. If the Northwest wants to become a truly sustainable and low carbon region, homes will need to find ways to reduce their energy consumption as well as carbon emissions. In doing so, the Northwest will contribute to the national effort to achieve GHG and CO2 targets.

134 135

DEFRA (2007) Conserving biodiversity in a changing climate: guidance on building capacity to adapt DEFRA (2003) Review of non-native species policy

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Summary of the Evidence Base 4.114 The 2006 EcoNW study 136 estimated that there are roughly 3 million dwellings in the Northwest and, net of clearances, about 143,000 new houses will be built over the next 11 years and by 2050 585,000 new dwellings will have been built - a total increase of 20% over today’s levels. The study used the REAP 137 to quantify the materials and supply chains involved in the average Northwest house consumes 9,127 KWh of energy, producing 5.18 tonnes of CO2. 4.115 Retrofitting reduces the amount of CO2 emitted by a building and can help reduce the amount of fuel and water consumed. This helps mitigate against the impacts of climate change and reduce fuel and water bills. There is currently no regulatory framework to govern the retrofitting process, the impetus is on the homeowner to adapt. Based on a 60% carbon saving for existing housing policy, the UK could reduce carbon emissions from housing by 56.5%. In comparison, a carbon neutral new housing policy starting today would only reduce emissions by 3.5% (based on current demolition and new build rates). 4.116 14.2% of households in the region are classed as being in fuel poverty (Eden is the local authority with the highest percentage of households in fuel poverty at 24.5%) 138 . Whilst the primary driver for retrofitting is to deliver improved environmental performance, it also provides an excellent opportunity for households to make energy savings, helping tackle fuel poverty. Moreover, it provides the opportunity to engage with communities, promoting shared learning and providing skills and employment benefits. 4.117 Construction in the Northwest will be transformed to be in the vanguard of meeting the climate change and SCP challenge, using fewer resources in construction, in the future use of buildings and recycling waste rather than sending to landfill. The built environment will provide the foundation for a low carbon, low resource economy, combining the skills and innovation of architects, engineers and the builders on the ground 139 . 4.118 Construction in the Northwest contributes 9% of regional GVA. It generates £2.84 economic activity for every £1 spent on construction. Growth in other sectors is created by its heavy reliance on extended and varied supply chains. Construction is one of the regions most resource intensive and environmentally damaging activities with an environmental footprint second only to food. Construction produces 45% of all waste generated in the Northwest: 10.4 million Tonnes per annum. Construction is responsible for 45% of CO2 emissions and uses 53% of primary materials including aggregates.

136

Centre for Urban & Regional Ecology (2006) EcoNW: Towards a One Planet region – Final draft v0.9 Resources and Energy Analysis Programme (REAP) is research area of the Stockholm Environment Institute and was set up to focus on Sustainable Consumption and Production. 138 DECC (2006) Local Authority Fuel Poverty Levels, 2006 – Excel Spreadsheet available via DECC website. 139 NWDA (2009) Making it Happen - the Sustainable Consumption & Production Action Plan for England’s Northwest 2010-2012 (Draft) 137

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Summary of the Evidence Base 5. The Northwest Society The Northwest has the equal highest proportion of households at risk of relative poverty in England

Poverty 5.1

When we talk of poverty in the context of the UK and the Northwest we talk of relative poverty. In the context of the world as a whole people in the Northwest live long, healthy and affluent lives. However relative to the rest of the country and relative to the Developed World there are many people in the Northwest who live in poverty. The most commonly used threshold of relative poverty in the UK is a household whose income is 60% or less of the average (median) UK household income in a given year. The official UK Government measure takes this value before housing costs are deducted.

5.2

The chart below shows the official DWP method for calculating poverty â&#x20AC;&#x201C; the risk of people falling into Households below Average Incomes. It shows that before housing costs (the official method) the Northwest has the highest proportion of households at risk of poverty in England alongside the West Midlands and the North East with 21% of households at risk of falling below the 60% median poverty line before housing costs. The England average is 18% and the South East has the lowest proportion at 13%.

Figure 46: Households at risk of falling below 60% median incomes per region 2007/8 (before housing costs) 25

% of households

0 South East

East of England

South West

London

East Midlands

Below 60% Median

Yorkshire and the Humber

North East

North West

West Midlands

England

Source: DWP, Family Resource Survey 2007/8

5.3

Since 2000 rates of risk of falling below the poverty line have fluctuated with a peak across all regions in 2001/2. Figures 46 and 47 show how the Northwest has seen a steady increase in the proportion of households below the poverty line since 2004 in line with a national increase. Most regions have seen an increase although the North East and the East have seen a plateau over the past few years.

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Summary of the Evidence Base

The Northwest has the worst levels of fuel poverty in England and has done for the past 5 years Fuel Poverty 5.4

A household is said to be in fuel poverty if it needs to spend more than 10 per cent of its income on fuel to maintain an adequate level of warmth (usually defined as 21 degrees for the main living area, and 18 degrees for other occupied rooms). The estimated number of households in fuel poverty in the UK rose between 2006 and 2007 by 0.5 million, to stand at around 4 million (around 16 per cent of all households). This is based on latest figures for England and Scotland, along with extrapolated estimates for Wales and Northern Ireland, based on earlier figures. In 2007, around 3.25 million vulnerable households in the UK were fuel poor, an increase from around 2.75 million the previous year. A vulnerable household is one that contains the elderly, children or somebody who is disabled or long term sick.

5.5

At the regional level the Northwest has the highest levels of fuel poverty out of the regions as has been the case since 2004. In 2003 14.6% of households were said to be in fuel poverty in the Northwest compared to 5.9% in England at the time. By 2007 this had risen absolutely by 13.1% in the Northwest to 16.8% (although it peaked in 2005 to 17.6%). In England the increase was far higher, 55.3% from 5.9% in 2003 to 13.2% in 2007. Figure 47: Percentage of Households in Fuel Poverty by Government Office Region 20

18 NW

% Fuel Poor

14 WM

SE Y&H

LON 10 EM SW EE 8 NE 6 2003

2004 NE

Y&H

2005 NW

2006 SW

2007 LON

Source: DECC 2009

5.6

Whilst there are only slight correlations between overall deprivation and fuel poverty. However as shown below there are more notable correlations between the proportion of the population who live in a rural area and fuel poverty. This demonstrates that fuel poverty is a more complicated phenomenon than income based poverty alone given that relative affluence does not improve average fuel poverty percentages.

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Summary of the Evidence Base Figure 48: Correlations between fuel poverty and the proportion of rural population per district

25.0%

Eden

South Lakeland Blackpool % households fuel poor

20.0%

Lancaster

Burnley Pendle

15.0%

10.0%

Barrow-in-Furness

Manchester Hyndburn Liverpool Wirral

Allerdale Ribble Valley Copeland

Wyre Carlisle Fylde

Rossendale Wigan Crewe and Nantwich Sefton Preston Salford Bolton Blackburn with Darwen Tameside St. Helens Rochdale Oldham Chester Trafford Macclesfield KnowsleyStockport Chorley Bury Warrington Halton Ellesmere Port and Neston South Ribble

5.0% 0.00

20.00

40.00

West Lancashire Vale Royal

60.00 % rural population

Congleton

80.00

100.00

120.00

Source: DECC 2006, DEFRA 2005

The NW is one of the most wealth equal regions in the UK but this is in the context of a country within which wealth is unevenly distributed Income Inequality 5.7

140 141

Higher incomes are not necessarily a barometer for higher levels of wellbeing. For example the famous Easterlin research from the 1970s found that the higher GDP per capita the lower recorded levels well-being were – the so-called Easterlin Paradox. 140 However recent research by Pickett and Wilkinson 141 shows that societies with less of a gap between the highest earners and the lowest earners do far better across a range of social indicators such as life expectancy, child poverty and educational attainment. The most reliable way to measure income inequality is to see how income is distributed across a society. The chart below shows the distribution of household incomes in the Northwest. It demonstrates that the bulk of household incomes are in the £200 but less than £300 per week bracket with 19% of Northwest households in this category. Household incomes then decline until the very wealthly £1,000 per week or more category which makes up 14% of Northwest households.

Clark et al 2006 Picket and Wilson (2009) The Spirit Level: Why More Equal Societies Almost Always Do Better

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Summary of the Evidence Base Figure 49: Northwest households by total weekly household income 20

Percentage of households

0 <£100

£100-200

£200-300

£300-400

£400-500 £500-600 £600-700 Total weekly household income

£700-800

£800-900

£900-1000

£1000+

Source: Family Resource Survey 2007/8

5.8

At the England level the distribution is similar in shape (the Poisson curve) but crucially differs in the fact that the largest proportion of earners fall into the £1,000+ per week category (19%). It also differs in that the decline in higher incomes immediately before the leap to £1000+ weekly incomes is more staggered. Looking at London shows an even greater leap towards the highest income group demonstrating a less even distribution of incomes. London is a society where the income distributed is skewed towards the top end of the scale and not evenly distributed across households. Figure 50: London households by total weekly household income 30

0 <£100

£100-200

£200-300

£300-400

£400-500

£500-600

£600-700

£700-800

£800-900

£900-1000

£1000+

Source: Family Resource Survey 2007/8

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Summary of the Evidence Base

5.9

The Spirit Level research uses income ratios to estimate income inequality. Whilst this is a less accurate way of examining the distribution of wealth it does allow for a lower level analysis. This method takes the top ten percent of earners and calculates how many times more they earn than the bottom ten percent – across the UK as a whole the richest 10% earn nearly 7 times more than the poorest. The Northwest’s highest earners earn on average 6.3 times more than the poorest – the second lowest income disparity in England behind only the North East. Across the Government Office Regions this varies with the highest gap between rich and poor in the South East of England where the rich earn 8 times as much as the poor. This goes someway to reinforcing the message that came through from R-ISEW. Those regions which are typically considered affluent like the South East, East and London are actually the most unequal in terms of earnings. Figure 51: Ratio of Highest to Lowest Earnings per GOR 9 8 7 6 5 4 3 2 1 0 North East

Northwest

Yorks & Hum

East Midlands

West Midlands Ratio

East

London

South East South West

Source: Annual Survey of Hours and Earnings 2008

5.10 Longitudinally figure 52 below shows that there has been considerable fluctuation in terms of the income ratio in many regions however certain trends persist. The Northwest had the lowest income gap between 1994 and 2005 only overtaken by the North East thereafter. London, the East and the South East have had consistently high income gaps, over the course of the 9 years shown below. The highest single income gap was in London in 2002 where the highest earners earned 8.2 times more than the poorest.

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Summary of the Evidence Base Figure 52: Income Gaps per GOR and UK 1999 to 2008 9.0

Ratio of high to low earnings

8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 1999

2000

2001

2002

2003

2004

2005

2006

2007

East

East Midlands

London

North East

North West

South East

South West

United Kingdom

West Midlands

Yorkshire and The Humber

2008

Source: Annual Survey of Hours and earnings 1999 to 2008

People earn less on average in the Northwest than in England and it varies across the region 5.11 The median gross weekly earnings for residents within the Northwest are £451 per week; behind London, the South East and the East. The average for England is £484 per week, above the Northwest average but this is heavily skewed by London. Since 2002 the median gross weekly pay for Northwest residents has risen from £370 per week to £451 per week in 2008 – an increase of 18%. At the England level pay has risen on average from £397 per week in 2002 to £484 per week in 2008 – also an increase of 18%. Figure 53: Average Gross Weekly Earnings by GOR 700.0 600.0 500.0

(£)

400.0 300.0 200.0 100.0 0.0 LON

Weekly pay - gross

England (£484pw )

Source: Annual Survey of Hours and Earnings 2008

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Summary of the Evidence Base 5.12 At the district level Copeland has the highest earning residents compared to Blackpool which has the lowest although there are confidence issues with the data. 142 Wage disparity between Copeland and Blackpool is £231 per week on average. Blackpool is £87 behind the Northwest average and £120 behind the England average whereas Copeland is £144 pw above the Northwest average and £111 pw above the England average demonstrating the considerable disparity in material conditions across the region. All in all there are 11 districts either above or roughly level with the England average in the Northwest – the other 32 districts are below. Figure 54: Average Gross Weekly Earnings by District Av. Gross Weekly Earnings By NW District 700.0

600.0

£ per week

500.0

400.0

300.0

200.0

100.0

Bl a H ckp yn o Kn db ol ow urn C sl e B' ar y bu li rn Bo sle w lt o D n Bu arw R H rnl . os e se alt y nd on Pe a l e Pr nd es le t R Won M och y an d re ch ale O este ld r Saham Li lf o Ta ver rd m po St es ol C He ide re w Wlen e & ig s Ba N an 'w rro w W i ch -in ir -F ral ur Ed n . La Se en nc fto So ut C ast n h h er La or k le S e y W to lan es ck d t L po E' Al an rt m V le cs er a rd e le al P R e W . & oya ar N ' l rin to gt n R ib o So ble B n ut Va ury h C Ri lley on bb gl le C eto h n M T est ac ra er cle ff o sf rd ie C Fy ld op ld el e an d

0.0

Source: Annual Survey of Hours and Earnings 2008

Weekly pay - gross

Northwest

England

Source: Annual Survey of Hours and Earnings 2008

5.13 Longitudinally the proportionate increase in gross median weekly wages varies significantly across the region. Fylde showed the largest increase of 28% between 2002 and 2008 with Eden showing the second largest increase at 27%. Conversely Blackpool has shown the smallest increase by just 11% from 2002 to 2008 with Hyndburn and Wirral in second and third worst position. Deprivation is a pressing issue in the NW with some of the relatively most deprived conditions in the country

Deprivation 5.14 Deprivation is another name for poverty. It takes the England average across a range of indicators and assumes that any areas which perform below these indicators are deprived of average living conditions. The reason it requires a different section to overall poverty is that the UK Government uses the Index of Multiple Deprivation (IMD) as a tool to measure deprivation to the neighbourhood level. The lowest available geography in the IMD is the Lower Layer Super Output Area (an area featuring around 1,500 people). There are 569 Northwest LSOAs in the bottom 5% worst for 142

Copeland value is subject to a 10% confidence interval and should be treated with caution

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Summary of the Evidence Base England (making up some 35% of the bottom 5%). 143 This is considerably more than any other Government Office Region as the chart below demonstrates. At the district level Liverpool is the most deprived in the country and another 14 Northwest Local Authorities feature in the worse performing 50 authorities in England (according to rank). Deprivation is most highly concentrated in the densely urban areas of Merseyside, Greater Manchester, Blackpool, Pennine Lancashire and parts of West Cumbria although deprivation is present in almost every district within the region to some degree. Map 3

Source: Indices of Multiple Deprivation 2007

Deprivation has decreased overall in the NW since 1999 but the region is becoming more polarised

143

Dept for Communities & Local Government The English Indices of Multiple Deprivation 2007

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Summary of the Evidence Base Trends in Deprivation 5.15 The Index of Multiple Deprivation 2007 offers the most comprehensive snapshot of deprivation across England but it does not demonstrate trends. The Economic Deprivation Index (EDI) 144 has recently been constructed to counter this but is only available up to 2005. 5.16 Figure 55 charts changes in the overall EDI between 1999 and 2005 and shows that there have been divergent trends in different regions, but that these changes have been relatively small in magnitude and have not, with the exception of Yorkshire and the Humber and the West Midlands, and London and the Northwest, altered the ordering of the regions in terms of their deprivation across the period. Nevertheless, improvements in average weighted LSOA ranks have been seen in Yorkshire and the Humber, the North East, the Northwest and, to a lesser degree, the East Midlands over this period, with improvements in these regions concentrated in the post-2001 period. London, the East and the South East have seen slight deteriorations in their relative position. Figure 55: Region level population-weighted average LSOA ranks on overall EDI 1999 to 2005

Source: SDRC 2008

5.17 The employment domain of the EDI at regional level between 1999 and 2005 shows broadly the same trends as those seen overall. However, there are differences in the ordering of the regions both in terms of relative deprivation and in terms of the average ranks. In terms of the overall EDI the Northwest begins in 1999 at a figure of around 20,000, and gradually improves from this stating point. In terms of employment deprivation, however, the average weighted ranking of LSOAs in the Northwest in 1999 is somewhat higher at around 21,000, i.e. somewhat more deprived in relative terms than when looking at the overall EDI. 5.18 Despite improving slightly at the regional level there are significant variations locally. The districts showing the biggest improvement between 1999 and 2005 were Lancaster down 41 places, Ribble Valley down 33 places, Vale Royal and Warrington both down 26 places and Chorley down 29 places. By contrast there were a number of areas which worsened over the period including Blackpool up 20 places, Bolton and Hyndburn up 12 places, Burnley up 9 place, Congleton and Pendle up 8 places and Oldham up 6 places. With the exception of Congleton, Blackpool and Copeland all of the districts which worsened were in either Pennine Lancashire or Greater Manchester. Liverpool and Manchester remained fairly stable and Preston improved somewhat. 144

Dept for Communities & Local Government The Economic Deprivation Index 2009

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Summary of the Evidence Base Figure 56: Biggest improvement/decline in deprivation in NW districts 1999-2005 -50

-30

Wyre

Wirral

West Lancashire

Vale Royal

Warrington

Tameside

Stockport

St. Helens

Salford

South Lakeland

Rochdale

Ribble Valley

Pendle

Oldham

Hyndburn

Lancaster

Halton

Copeland

Chorley

Congleton

Bolton

Burnley

-10

Crewe and Nantwich

-20

Blackpool

Change in rank 1999-2005 where up is worse

-40

Source: DCLG 2008

People living in the most deprived areas are most likely to be white, low income families or pensioners. What kinds of people live in deprived areas? 5.19 Using the indices above and CACI Insite ACORN classifications this section outlines deprivation across the most deprived districts in the Northwest. Insite uses a plethora of socio-economic data to classify the people living in areas across the UK. This kind of demographic analysis allows us to understand the types of people that live in deprived areas. The primary categories of classification in ACORN range from ‘wealthy achievers’ to ‘hard pressed’ with the majority of people in deprived areas falling into the latter. The ACORN Classifications used are explained fully in the Quality of Life Evidence Paper. 5.20 Across the most deprived local authorities in the Northwest there are notable trends in population structure and demography. As one would expect these areas have large populations within the hard pressed ACORN category. Further analysis shows (figure 57) that within this group the majority of people living in deprived areas are low income families living in terraced estates, single parent families and older people, often living alone. Given that multi-ethnic and Asian communities are classified separately it is likely that the majority of people in low income families and single parent families are white British. Although there are correlations between ethnic minorities and deprivation (see below) in the Northwest this does not account for a particularly high proportion of households.

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Summary of the Evidence Base Figure 57: ACORN Hard Pressed Households by Type in 10 Most Deprived Districts, Northwest 45 40

% households in type

35 30 25 20 15 10 5 0 Low income Low income Low income Low income Familes Large Single Single large older people routine jobs families single families elderly parents families small semis terraces terraced parents single council flats pensioners semis flats estates semis and parents council terraces council flats terraces

Barrow-in-Furness

Blackburn with Darwen

Blackpool

Families single parents many children high rise estates

Burnley

Old people many high rise flats

Halton

%Singles and Single Parents

Liverpool

% of MultiEthnic Purpose Built Estates

Manchester

% Multi Ethnic Crowded Flats of Hard Pressed

Rochdale

Crowded Asian Terraces

Low income Asian Families

Salford

Source: CACI Ltd 2009

5.21 As stated above there are correlations between the levels of ethnic diversity and deprivation within districts as evidenced by the chart below. This uses the Ethnic Fractionalisation Index which calculates the probability of two people from different backgrounds meeting at any given moment. The areas with the highest deprivation such as Manchester, Liverpool, North Greater Manchester and Pennine Lancashire all have high ethnic diversity and high deprivation. However as previously noted it is important to understand that the scale of deprivation in the Northwest and the demographic analysis strongly suggests that the white low income family is the typical resident of a deprived area.

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Summary of the Evidence Base

Figure 58: Ethnic Diversity and Deprivation 0.6

Manchester

Ethnic Fractionalisation Score

0.5

Blackburn with Darwen 0.4

Oldham Preston Pendle

Trafford

0.3

Rochdale Bolton Bury

Hyndburn

0.2 Stockport

0.1

0.0 7.00

Burnley Salford

Liverpool

Tameside

Lancaster Rossendale Cheshire East Ribble Valley Blackpool Cheshire West & Chester Warrington South Ribble Fylde Chorley Wyre Wirral South Lakeland Sefton Carlisle West Lancashire Wigan Barrow-in-Furness St. Helens Eden Copeland Halton Allerdale

12.00

17.00

22.00

27.00

32.00

37.00

Knowsley

42.00

47.00

52.00

Average IMD Score

Source: IMD 2007, Local Futures Ethnic Fractionalisation Index 2008

Worklessness in the Northwest has fallen over the last decade and is most prevalent in parts of Greater Manchester and Liverpool. Worklessness 5.22 Worklessness – which includes unemployment and economic inactivity – has fallen in the Northwest over the last decade. The employment rate of working age people has risen from 70.5% in 1997 to 71.3% in 2008 (although this has fallen sharply since 2007 in line with the current economic downturn). 145 The employment rate has risen roughly on a par with England over this period, with 165,000 more people in employment in the Northwest overall. 5.23 Concentrations of worklessness are particularly apparent at a ward or neighbourhood level. While there are large swathes of Merseyside and Greater Manchester with relatively high claimant count worklessness, there are neighbourhoods with severe worklessness issues (exceeding 30-40% claiming out-of-work benefits) in almost all districts across the Northwest. Districts are a much poorer way of targeting worklessness than wards or SOAs. The five ‘worst’ districts in the Northwest, which constitute around a fifth of the working age population, only capture 26.5% of workless benefit claimants. In comparison, the ‘top’ 20% of wards and SOAs capture 39% and 40% of claimant workless respectively. There are very few workless claimants in rural wards but there is a need for some flexibility in support, in order that it can be targeted on individuals rather than the specific geography. 5.24 Figure 59 demonstrates the wards within the region with the highest levels of IB Claimants. Those in blue have rates above the England average of 15.3% of the working age population and those in red above the England and Northwest average of 19.2%. The workless households and individuals within these wards present a challenge to the Northwest and are a significant element in its productivity gap compared to other English regions. Understanding the types of people who live 145

Office of National Statistics Annual Population Survey 2008

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Summary of the Evidence Base within these wards gives some kind of indication as to the nature of the problems they face and provides fit for purpose solutions. Figure 59: IB Claimant Rate by Ward

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Summary of the Evidence Base 5.25 Once more using the CACI Acorn tool it is possible to give a good estimation of the people who live in workless wards. This analysis focusses on the latter end of the ACORN spectrum, on households falling within the Moderate Means and Hard Pressed categories given that these are the most disadvantaged groups and hence contain the highest proportion of workless individuals. The types of people living in hard pressed wards with the most worklessness are typically struggling families which are comprised of low income families, single parents and older people reflecting the findings of the demographic analysis of deprived areas above. By way of a comparison the inner city adversity group has a low correlation with worklessness in the Northwest. The inner city adversity category is mostly comprised of ethnic minorities once more suggesting that the majority of workless households are white low income families. Figure 60: Correlation between the proportion of â&#x20AC;&#x2DC;Struggling Familiesâ&#x20AC;&#x2122; and IB Claimants in NW Wards

Source: CACI Ltd 2009 and DWP 2009

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Summary of the Evidence Base Figure 61: Correlation between inner city adversity and IB claimants by NW wards

Source: CACI Limited 2009 and DWP 2009

If the disabled employment rate of the region matched the England average, there would be 50,000 more workers in the labour force. 5.26 20% of the working age population in the Northwest is classified as disabled â&#x20AC;&#x201C; the figure for England is 18%. Only the North East has a higher proportion (22%). 146 A further 3.1% of the working age population are work limiting disabled, and 4.1% are Disability Discrimination Act (DDA) disabled. Out of the disabled populations in the Northwest the employment rate is 44.6% compared to 51.1% for England rate. Also 49.5% of the Northwest disabled population is economically active compared to 56.1% for England. If the employment rate of the region matched the England average, there would be 50,000 more workers in the labour force. 147 5.27 Since 2004 in the Northwest the disabled employment rate has increased from 43.9% to 44.6%. Economic activity has increased from 47.2 to 49.2. The Northwest has been below the England rates across these dates but larger proportionate increases in employment rates and economic activity rates. None of the Northern Way regions meet the England rate for ethnic minority employment. 5.28 The working age employment rate for ethnic minorities in the Northwest is 55% - the equivalent rate for England is 61%. 148 The Southwest has the highest ethnic minority working age employment rate at 71% and conversely the West Midlands has the lowest (53.6%) â&#x20AC;&#x201C; none of the Northern Way regions meet the England rate. 5.29 The highest employment rate by ethnic group is amongst Indians at 69% although this is below the England rate of 70.3%. The lowest employment rate by ethnic group is amongst Pakistanis and/or Bangladeshis at 47.3%. This is consistent with other regions and is above the England average of 146

IBID University of Salford for the NWDA Wealth bringers: the value of Disabled Entrepreneurs to the Northwest 148 Office of National Statistics Annual Population Survey 2008 147

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Summary of the Evidence Base 45.7%. This is the exception – for every other ethnic group the Northwest’s rate is lower than for England. 5.30 It is also interesting to note gender employment rate differences by ethnic group (below) with the most obvious disparity being amongst the Pakistani/Bangladeshi ethnic grouping in which males in employment out proportion females. The converse is apparent for Black or Black British working age adults in the Northwest where the rate is higher for females. What all this data does not show is why employment rates in various groups differ so much – this points to the need for further evidence. Figure 62: GOR Employment rates across Minority Ethnic Groups 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 England

Mixed ethnic group

NW Indians

Y&H

Pakistanis/Bangladeshis

LON

Black or Black British

Other ethnic group

Source: Annual Population Survey Jun 2007-Jul 2008

The Northwest has one of the lowest employment rates for over 50s 5.31 Employment levels regionally and nationally for over 50s are lower than for the under 50s. Inactivity amongst those aged 50-65 and over retirement age is also understandably higher than for working age people across the country but there are spatial variations that possibly reflect different working cultures. For example people in the South East – despite being more affluent overall than in the Northwest still tend to be more economically active throughout their later lives. 5.32 The employment rate for people aged between 50 and 65 is 67% - lower than England which stands at 72% - only the North East’s rate is lower than the Northwest. The employment rate for people aged over 65 in the Northwest is 9.8% which is lower than England (11.7%) and second lowest overall once more (to the North East). Inactivity rates for people aged 50-65 in the Northwest are just over 30% which is again the second highest behind the North East – England’s rate is 25.5%. The inactivity rate for the over 65s in the Northwest is 90.1% above England at 88.1% and second highest overall. 149 Gender inequality persists but the gap has narrowed between men and women over recent years 5.33 Gender inequality can be understood in terms of the difference in pay between male and female workers overall as a society or within similar positions. It can also be understood by looking at the proportions of both men and women who work in different parts of the country. 5.34 Men earn, on average, £494 per week in the Northwest, women earn on average £389 per week – 79% of the male earnings. For all England, men earn on average £529pw compared to £417pw for 149

Office of National Statistics Annual Population Survey 2008

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Summary of the Evidence Base women – also 79% of the male earnings. Men working part time in the Northwest earn less than part time women, with average earnings of £130pw compared to £148pw. For all England part time male workers earn £138pw on average compared to £149pw for female workers. 5.35 Since 2002 both male and female earnings have increased with female earnings increasing at a slightly higher rate for both Northwest and England. Female workers in the Northwest’s average earnings have increased by 5.4% from 2002-2008; this is better than the England equivalent which stands at 4.6%. Male workers in the Northwest’s average earnings have increased by 3.2% over the same period, this is lower than the England equivalent which stands at 3.4% 150 The Northwest has a substantial LGBT population but it isn’t openly recognised in policy terms 5.36 The Northwest region has a lesbian, gay, bisexual and transgender (LGBT) population of roughly 430,000 – that equates roughly to the population of Liverpool. However in spite of its size policy makers in the region have a limited knowledge and understanding of the needs of its LGBT population. The LGBT population tends to be invisible within much public discourse regarding equality programmes and initiatives and there exist a general perception that their issues are given low priority status. 5.37 There is evidence that this sizeable community is underemployed and unable to participate fully in the region’s economy or contribute to GVA to the fullest extent due to the discrimination they experience. Furthermore forms of discrimination which are a thing of the past for many equality groups are still regularly experienced by LGBT communities. Hate crime is an example of this. According to traditional measures of productivity the NW is weak but using a more rounded view of progress the region is stronger The Regional Index of Sustainable Economic Wellbeing 151 5.38 R-ISEW is an independently produced measure of how much a region’s economic activity contributes to, and detracts from, well-being, and how sustainable this activity is. It is an adjusted economic indicator which attempts to incorporate costs and benefits not traditionally measured in monetary terms. By monetising social and environmental issues, it brings them into a single analytic framework with economic ones, allowing us to explore trade-offs, and to assess whether economic well-being is really increasing sustainably in a given region. As a monetary figure 152 , the R-ISEW can be compared with Gross Value Added (GVA), and other economic indicators. At the same time, exploring the R-ISEW’s 20 separate components helps us to understand a fuller story of how economic well-being varies over time. 5.39 2008’s results revealed that 10 years of improving sustainable economic well-being between 1994 and 2004 have come to an end and that, for England as a whole, and for most regions, sustainable economic well-being was on the decline by 2006, well before GDP growth for the UK halted in September 2008.

150

Office of National Statistics Annual Survey of Hours and Earnings 2008 New Economics Foundation (2008) The Regional Index of Sustainable Economic Wellbeing for the Regions There are considerable drawbacks to monetising wellbeing (namely around the pricing validation used for certain indicators)however in order to be a counter-product to GVA it is necessary to record R-ISEW in a context that is familiar to everyone

151 152

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Summary of the Evidence Base Figure 63: GVA-ISEW per Capita Comparison by region 30,000 25,000

(ÂŁ)

20,000 15,000 10,000 5,000 0 NE

Y&H

GVA Per Capita

LON

ENG

R-ISEW Per Capita

Source: NEF October 2008

5.40 Looking across Government Office Regions, the R-ISEW tells a very different story to GVA. Whereas the top GORs in terms of GVA per capita are concentrated around London and the Home Counties (the South East and the East of England), the R-ISEW in 2006 was highest in the Northwest and South West, with London only making it to third place. For the Northwest, in particular, this represents a marked difference from GVA per capita, for which it is the third-poorest GOR in England.

Figure 64: Northwest R-ISEW Breakdown North West

Consumer expenditure Long-term environment

3.00

Resource depletion

Capital growth International position

Farmland & habitats

Consumer durables 0.00

Noise pollution

Public expenditure -3.00

Air pollution

Household labour

Water pollution

Income equality

Pollution control Industrial accidents Car accidents

Family breakdown Crime Commuting

Source: New Economics Foundation (2008)

5.41 In 2006, the Northwest had the second-highest R-ISEW in England, at ÂŁ12,133 per capita (15% above the English average). The region has always had one of the highest R-ISEWs; indeed it had the highest R-ISEW up until 2002, when it was displaced from top spot by the South West. The

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Summary of the Evidence Base region’s strong performance is particularly interesting as it has a low GVA, 15% below the English average in 2006. Indeed it has the smallest GVA–R-ISEW gap of any GOR. The Northwest’s success can be explained via a reasonably strong performance across a range of indicators shown in the chart above. Income inequality is lower in the Northwest than most regions and a strongly weighted indicator. 5.42 Nevertheless, as for England as a whole, this gap has increased in the last three years (from 22% in 2003 to 25% in 2006). Unlike for the rest of England, however, the region’s R-ISEW has continued to grow slightly, only faltering slightly between 2003 and 2005. What explains this relatively strong performance? The spider diagram reveals that the Northwest, unlike the North East, is not a region of extremes. The only component where it performs very well is industrial accidents – not a particularly major component in the index. Apart from a below-average level of consumer expenditure, however, it scores slightly above average in every single one of the largevalue components: capital growth, international position, public expenditure, domestic labour and volunteering, income inequality, air pollution, resource depletion, long-term environmental damage and commuting. The components where it does not do so well are mostly in the social costs portion of the chart: family breakdown, crime and car accidents (but not commuting). Figure 65: Northwest GVA/R-ISEW & England R-ISEW per Capita 1994-2006 18000.0 16000.0 14000.0 12000.0

(£)

10000.0 8000.0 6000.0 4000.0 2000.0 0.0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 North West R-ISEW

England R-ISEW

North West GVA

Source: NEF 2008

Children & Young People Children continue to be disadvantaged by where they live; deprivation has a direct negative impact on GCSE attainment 5.43 In 2007 25% of children in the Northwest were at risk of living in low-income households a proxy for child poverty 153 . This is above the England rate of 22% although is fifth compared to other government office regions. The percentage of children living in relative low-income households decreased in the NW between 1995/6-1997/8 and 2003/4 – 2005/6 by 6 percentage points before housing costs and 5 percentage points after. 5.44 Deprivation has an adverse effect on GCSE attainment. Just 25.4% of children living in bottom 20% most deprived LSOAs within the Northwest achieved GCSE grades A*-C in 2007 – 34.9% less than the overall figure. Within the region there is significant variation in attainment from deprived areas

153

Households below 60 per cent of median equivalised household income before housing costs

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Summary of the Evidence Base with just 14.9% of children in Crewe & Nantwich’s most deprived areas achieving 5 A*-C grades compared to 50% in Fylde’s most deprived areas. 5.45 There is a gap of 17.9% between the percentage of children achieving Key Stage 4 attainment in urban areas and those in villages. Attainment in the Northwest’s urban areas is 42.6% compared to 55.1% for town and fringe areas and 60.5% for villages. 5.46 The Department for Communities and Local Government recently released the Local Index of Child Well-being (CWI) following a pronounced need for separate indices for different groups of the population following the IMD. Child well-being is generally represented by how children are doing in a number of different domains of their life. At national and international level these domains have included those covered in the CWI. According to this study the Northwest has the second highest number of LSOAs in the worst quintile for child well-being out of the English regions. London has the highest number both proportionately and absolutely demonstrating that despite having some of the most prosperous communities in the country they live geographically close to some of the poorest. Table 2: Local Index of Child Well-being by GOR

East Midlands East of England London North East Northwest South East South West West Midlands Yorkshire and The Humber Total

No. of LSOAs in the worst 20% of LSOAs in England 413 288 1,598 429 1,240 438 293 885 912 6,496

No. of LSOAs in the region 2,732 3,550 4,765 1,656 4,459 5,319 3,226 3,482 3,293 32,482

% of LSOAs in worst quintile 15% 8% 34% 26% 28% 8% 9% 25% 28% 20%

Source: CLG Child Wellbeing Index 2009

5.47 Within the Northwest child wellbeing is immensely polarised. At the district level Manchester has the lowest levels of child wellbeing in England with 197, or 76% of its LSOAs in the bottom 20% worst for England for child wellbeing. The LSOA with the worst child wellbeing in the country is also in Manchester falling within the Lightbowne ward of the city. Liverpool has the third worst district level child wellbeing in England with 69% of its LSOAs in the bottom 20% for England. Overall there are 11 Northwest districts in the 50 districts with the lowest child wellbeing in England. Conversely Ribble Valley has the second best levels of child wellbeing in England demonstrating the polarisation within the region (see map 1). At the regional level Congleton has the second highest levels of child wellbeing behind Ribble Valley (18th nationally) and Fylde the 3rd. These are the only three districts from the Northwest to feature in the top 50 districts for child wellbeing for all England.

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Summary of the Evidence Base Figure 66: LSOA Level Child Wellbeing Index in Greater Manchester

Source: DCLG Child Wellbeing Index 2009

Crime Crime has fallen in the Northwest since 2004 but is still above the England average with concentrations in densely urban areas in particular 5.48 With a total of 624,500 crimes in 2008/9 the Northwest has a crime rate of 91 crimes per 1,000 population, a decline on 2007/8 when there were 661,000 crimes and 97 crimes per 1,000 population. 154 Only London (113) and, Yorkshire and Humberside (94) have higher rates and the average for England is lower than the Northwest at 86 crimes per 1,000 population. Criminal damage (23%) and other theft (21%) are the most common crimes in the Northwest, accounting for 44% of the total. 5.49 Total crime in every GOR has fallen since 2004/5 with the Northwest falling by more than most regions from 115 crimes per 1,000 population in 2004/5 to 91 crimes per 1000 population in 2008/9. England has fallen from 106 crimes per 1000 population in 2004/5 to 86 in 2008/9. Drug offences, whilst only accounting for 6% of recorded crimes in 2009, rose by 12% since the 2007/8 survey and have risen 30% since 2004/5. Conversely vehicle offences and criminal damage have both fallen 11% over the last year and by 24% and 27% respectively since 2004/5.

154

The Home Office British Crime Survey 2008/9

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Summary of the Evidence Base Figure 67: Sub-regional Crime Patterns as % of Regional Totals 100% M'side 80% Lancs 60% GM 40% Cumb 20% Ches 0% Violence Sexual Robbery Burglary Offences Other against offences against theft the vehicles offences person

Fraud and forgery

Criminal Drug Other damage offences offences

Source: British Crime Survey 2008/9

5.50 Within the region, the Greater Manchester Police (GMP) area accounted for around 280,000 crimes in 2007, which was equivalent to 45.3% of the Northwest total. The lowest crime figures were in Cumbria, which accounted for around 31,000 crimes or 5% of the regional total. GMP, Merseyside and Lancashire Police areas accounted for 83% of all crime committed in the Northwest region. Proportionally speaking Greater Manchester makes up the majority of crimes for the sub-regions across almost every offence group accounting for 70% of all robberies, half of all fraud and forgery offences, half of all sexual offences and half of all burglaries within the region (figure 64 above) although Merseyside has a markedly higher proportion of drugs related crime than anywhere else in the region. By contrast Cumbria has the consistently lowest levels of crime across offence groups. When looked at as a rate Greater Manchester also shows consistently higher rates per 1,000 population than every other sub-region and of course the Northwest. 5.51 Knife crime is a topic of increasing scrutiny following a perceived increase in knife attacks particularly in Englandâ&#x20AC;&#x2122;s major cities with Greater Manchester and Liverpool often places of focus. In total there were just over 5,200 serious offences 155 involving a knife in 2008/9 in the Northwest which is 14% of the England total. 54% of these were in Greater Manchester, 17% were in Merseyside, 16% were in Lancashire, 11% in Cheshire and 2% in Cumbria. 5.52 Nationally London had by far the highest amount of knife crime in 2008/9 with just over 12,200 offences in 2008/9 or 34% of the England total. The Northwest had the second highest absolute number of serious incidents involving a knife and the West Midlands had the third highest. In terms of the percentage of serious crimes involving a knife the Northwest at 20% is below the England average of 21% but is still the second highest region overall because of the skewing effect of London within which 24% of serious incidents involved a knife in 2007/8. 5.53 According to the British Crime Survey (BCS) the proportion of those serious incidents involving a knife fell in every Government Office Region between 2007/8 and 2008/9 down from 21% to 8% in the Northwest and from 17% to 7% at the England level. However in absolute terms the number of serious incidents involving a knife 156 in the Northwest rose by 42% between 2007/8 and 2008/9 from 3,700 to 5,200. Which suggests that overall the number of serious incidents has risen considerably. 5.54 Econometric evidence suggests that there is a strong geographical element to crime, and that drugs crime and criminal damage are those most closely related to economic development. Our 155

Serious offences include attempted murder, wounding with intent to cause GBH, wounding or inflicting GBH without intent, and robbery Other offences exist that are not shown in this table that may include the use of a knife or sharp instrument. In this table 'offences involving a knife' refers to the use of a knife or sharp instrument. Total of selected serious offences only include the five offence types shown in this table. Collection expanded in 2008/09.

156

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Summary of the Evidence Base analysis used VAT registrations and de-registrations as a proxy for economic development, but findings are corroborated by other studies that have linked high crime rates with low skills levels and high unemployment rates. Businesses located in more deprived locations are more likely to be the victims of crime (30% in Greater Manchester against 25% in Cumbria) and have a more negative view on the perception of crime. 5.55 The average cost of crime per business is £1,402, which generates an annual impact of crime of £353.2 million or 0.4% of the regional economy. This is a conservative estimate compared to some other research conducted recently, which places the cost to the region’s businesses at anywhere up to £900 million. Spatial Differences in Crime 5.56 Evidently crime plays out differently across the region with hotspots typically found in denser urban areas and areas with greater deprivation. It is important however to remember why areas with higher deprivation tend to have higher crime and this is often because some people within deprived areas do not have the access to opportunities that would otherwise lead away from criminal activity. 5.57 The maps below show how crime converges in certain places across the region based on the IMD Crime Domain from 2007. The map shows crime in Greater Manchester which according to the BCS experiences the highest absolute numbers of crimes and the highest crime rates in the region. It demonstrates that recorded crime is fairly high across the sub-region but that there are significant spatial variations particularly around the edge of the conurbation where crime rates drop to amongst the lowest levels in the country. Districts such as Trafford, Bury, Stockport, Oldham, Bolton and Wigan have highly variant levels of crime. Even the city itself varies with concentrations of higher crime around the northeast and east of the city, concentrations in the south of the city going down towards Wythenshawe and on the border with Trafford in Stretford in particular. Even within these areas however there are variations; for example in the area between the centre of the city and Gorton crime rates are in one of the lowest deciles nationally. Similarly in areas surrounding Harpurhey (one of the most deprived wards in the country) there are lower crime rates in lower deciles. Acutely lower crime rates are clustered around the centre of the city, towards the north going towards Bury, around the airport and immediately south of the city in Chorlton-cumHardy and Didsbury.

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Summary of the Evidence Base Figure 68: LSOA Level IMD Crime Domain Across Greater Manchester

Source: DCLG Social Mapping Tool, IMD Crime Domain

Hate Crime 5.58 The Home Office defines a hate crime as; “any incident, which constitutes a criminal offence, which is perceived by the victim or any other person as being motivated by prejudice or hate.” 157 Statistics for hate crime are scarce, particularly at the regional and local level. In 2007-08 across England and Wales police recorded 4,823 racially or religiously motivated crimes in which somebody was injured, 4,320 crimes without injury, and 26,495 cases of of harassment. There were also 4,005 cases of criminal damage related to hate crimes. The Crown Prosecution Service Hate Crime Report in 2007/8 released statistics for areas across England on successful and non-successful hate crime prosecutions. The majority of convictions are in Greater Manchester. 5.59 In total there were over 14,000 hate crime prosecutions in the Northwest in 2007/8 of which 74% were successfully convicted. Nearly 40% of prosecutions were in Greater Manchester and nearly 30% were in Lancashire. Merseyside accounted for 17% of hate crime prosecutions, Cheshire 12% and Cumbria 5%. Greater Manchester’s number is the second highest nationally behind only the Metropolitan and City area in Greater London. 5.60 Breaking down these results shows that the majority of hate crime prosecutions were racially or religiously aggravated. Homophobic or transphobic related incidents were far lower most likely because of under-reporting which is also the case for hate crimes relating to disabled people which is even further under reported.

157

http://www.homeoffice.gov.uk/crime-victims/reducing-crime/hate-crime/

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Summary of the Evidence Base Perceptions and fear of crime are higher in the Northwest than in England but broadly reflect recorded trends 5.61 According to the British Crime Survey 2008/9 18% of Northwest residents perceived high levels of anti-social behaviour in their area according compared to 16% for England. Perceptions in the Northwest were joint second highest with the North East, both behind London (22%). Subregionally Greater Manchester had the highest perceptions of anti-social behaviour at 21%, Cumbria had the lowest at 12% which is reflective of broad quantitative trends. 5.62 Drugs crime was perceived to be a problem by 32% of Northwest residents compared to 27% of England residents. Sub-regionally drug related incidents are perceived by residents to be the biggest problem in Merseyside with 36% of residents affirming this position. In Greater Manchester the proportion is slightly lower at 35%, in Cheshire and Lancashire the proportion is 28% and Cumbria 25%. This once more reflects recorded crime levels with Merseyside the most prevalent area for drugs offences and Greater Manchester the second. Social Cohesion Social cohesion is lowest in deprived areas 5.63 Social cohesion in this context is how well people living in communities get on together. It normally has the greatest relevance in areas with a diverse ethnic make up like Liverpool or Manchester as well as in areas where there are large concentrations of ethnic minorities such as Blackburn and Burnley. Ensuring that people from different backgrounds live together in a cohesive and progressive manner is vital to the wellbeing of the Northwest and is recognised through two National Indicators â&#x20AC;&#x201C; NI 001 and NI002. 5.64 The 2007 DCLG Report Predictors of Community Cohesion analysed 2005 Citizenship Survey data to come up with the following conclusions which are framed in a Northwest context by using data from the DCLG Place Survey 2008 and the Local Futures Ethnic Fractionalisation Index which measures the probability that two individuals randomly selected from the population belong to different ethnic groups. The index is scored between 0 and 1, with scores closer to 1 indicating higher levels of diversity. The component indicators that have determined this fractionalisation index are the Proportion of all people classified as Indian, Bangladeshi, Caribbean, Chinese, African, Pakistani, White British, White Irish and Mixed. 5.65 For the purposes of this analysis National Indicator One: The Proportion of People who think that people from different backgrounds get on well together in their area is used as a proxy for social/community cohesion. At the regional level the Northwest has the second lowest proportion of those who believe people from different backgrounds get on well together at 73.6%, above only Yorkshire and Humberside at 71.6%. The South West had the highest value at 80% and the South East has the second highest at 78.9%. 5.66 At the district level Oldham has the lowest level of agreement on National Indicator 1 at just 50.4% (although with a response rate of less than 30%) and Pendle is second lowest at 52.4%. 5 out of 10 of the lowest agreement levels were from districts within Pennine Lancashire and the other 5 were in Greater Manchester suggesting that there are low levels of cohesion in these areas. Conversely Fylde has the highest level of agreement with NI 1 at 85.5% with West Lancashire and Trafford in second and third. It is interesting to note that the majority of those districts with the highest scores are rural. 5.67 Another indicator which plays an important part is National Indicator 2 â&#x20AC;&#x201C; the proportion of people who belong to their immediate area. 59.5% of people feel they belong to their immediate neighbourhood in the Northwest. The highest sense of belonging is felt in the South West at 62.3% and the North East at 62.2% and the lowest is felt in London at 52%. At the local level the highest levels of belonging are felt in Eden with 75.1% of people recording high levels of belonging. Ribble

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Summary of the Evidence Base Valley and Allerdale record similarly high levels of belonging. Conversely Manchester records the lowest levels of belonging at 47.5% although low sample sizes limit its reliability. Every district in the top 10 lowest levels of belonging is a sizeable urban district. Figure 69: % who agree that their local area is a place where people from different backgrounds get on well together (NI 1) – GOR 82.0 80.0 78.0 76.0 74.0 72.0 70.0 68.0 66.0 Y&H

LON

Source: DCLG Place Survey 2008

Ethnic diversity drives cohesion but ethnic ‘clustering’ has the reverse effect 5.68 Once other factors are accounted for ethnic diversity is, in most cases, positively associated with community cohesion. However, the relationship between diversity and cohesion is complicated and the nature of this relationship is dependent on the type of ethnic mix in an area. Ethnic diversity needs to be understood to mean areas with a variety of ethnic groups and not necessarily areas with high numbers of one or 2 ethnic groups. Figure 70: The % of residents who think people from different backgrounds get on well together correlated with the Ethnic Fractionalisation Index 0.6

Manchester

0.5

Ethnic Fractionalisation Index

Blackburn with Darwen

0.4

Oldham

Preston

Pendle

0.3

Trafford

Rochdale Bolton Burnley

Salford

Hyndburn

0.2

Liverpool

Bury

Tameside

Stockport Lancaster

Rossendale Cheshire East Ribble Valley Cheshire West and Chester Warrington Wyre South Ribble Fylde Wirral Chorley South Lakeland Carlisle Sefton Knowsley West Lancashire Halton St. Helens Eden Copeland Barrow-in-Furness Allerdale Blackpool

0.1 Wigan

0 47.0

52.0

57.0

62.0

67.0 72.0 National Indicator One

77.0

82.0

87.0

Regional Intelligence Unit

92.0

139

Summary of the Evidence Base Source: DCLG Place Survey 2008, Local Futures Ethnic Fractionalisation Index 2008

5.69 Living in an area which has a broad mix of residents from different ethnic groups was consistently shown to be a positive predictor of cohesion. However, having an increasing percentage of inmigrants born outside of the UK, is a negative predictor. Having friends from ethnic groups other than one’s own is a strong positive predictor of cohesion. Part of the positive effect of diversity is a result of increased proportions of inter-ethnic friendships (i.e. bridging). 5.70 The chart above demonstrates that within the Northwest there are only a few societies that meet the hypothesis set out in the DCLG report namely Manchester, Trafford and Preston which have reasonably high cohesion and high ethnic diversity. The majority of districts with high perceived community cohesion are areas with lower levels of ethnic diversity. Areas with lower levels of social cohesion and higher ethnic diversity tend to be in Pennine Lancashire or Greater Manchester although these are largely areas where there are large groups of different ethnic groups rather than a diverse collection of peoples. Disadvantage erodes community cohesion 5.71 Irrespective of the level of ethnic diversity in a community, disadvantage consistently undermines perceptions of cohesion and operates in a similar fashion for all communities. However, not all deprived areas have low cohesion. Deprived, diverse areas have higher average cohesion scores than deprived, homogeneous White areas. It is thus deprivation that undermines cohesion, not diversity. It has already been demonstrated that the Northwest has extensive deprivation and one the whole these are areas with high levels of multi-cultural populations in Greater Manchester, Pennine Lancashire and to an extent Merseyside. 5.72 The chart below demonstrates correlations between community cohesion taken by proxy as National Indicator One, deprivation taken from the IMD 2007 and ethnic fractionalisation. The chart shows that cohesion is highest in areas with the lowest deprivation and lowest ethnic diversity. Trafford is a unique example of a district with high ethnic diversity, low deprivation and high community cohesion. Manchester, Liverpool, Bolton, Bury and Preston have diverse societies, high levels of deprivation but also high community empowerment. In contrast the majority of Pennine Lancashire districts and some of the Greater Manchester districts (notably Oldham, Rochdale and Salford) have highly diverse and deprived societies within which community cohesion is deemed to be lower. Community incohesion manifested itself to extremes in 2 of these districts, Burnley and Oldham, in the 2001 Race Riots.

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Summary of the Evidence Base Figure 71: Correlations between Community Cohesion, Deprivation and Ethnic Fractionalisation 95.0

Fylde Trafford West Lancs Wyre S. Lakeland S. Ribble Chorley Warrington Eden Lancaster Stockport R. ValleyCheshire E Cheshire W Allerdale

85.0

Community Cohesion

75.0

Sefton Preston

Bury Carlisle Copeland

St. Helens

Halton

Bpool

Bolton Wigan Tameside

The larger the bubble the greater the ethnic diversity

65.0

Barrow

Wirral

Manchester Knowsley Liverpool

Salford Bburn

Rossendale Hyndburn 55.0

Rochdale Burnley

Pendle Oldham

45.0

35.0 8.00

18.00

28.00 Average Rank of IMD

38.00

48.00

Source: IMD 2007 Average Score, DCLG Place Survey 2008, Local Futures Ethnic Fractionalisation Index 2008

Empowerment is an important driver of community cohesion 5.73 Feeling able to influence local decisions is a strong positive predictor of community cohesion. Feeling that an individual would be unfairly treated because of their race (especially by local housing authorities), coupled with a feeling of racial prejudice has a strong negative impact on cohesion. The chart below shows how empowerment, taken by proxy via National Indicator 4 (the ability to influence local decisions) correlates with community cohesion as well as how ethnic diversity figures in this correlation via the size of the bubbles. It demonstrates that there is a correlation between higher community cohesion and empowerment reinforcing the findings from the DCLG report. There is less of an obvious correlation between ethnic diversity and empowerment with a relatively even spread of ethnically diverse districts either side of the trend line. However it is noticeable that the Pennine Lancashire districts are clustered in broadly similar parts of the chart. According to this Manchester residents perceive themselves to be the relatively most empowered residents in the Northwest at 34% where as those in Wigan are the least at 23%. The Northwest average is 27.4% and the England average is 28.9%.

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Figure 72: Correlation between community empowerment, community cohesion and ethnic diversity 38.0

36.0

Ability to influence decisions (NI4)

34.0

The larger the bubble the greater the ethnic diversity

Manchester Carlisle Knowsley

32.0

Preston

St. Helens 30.0

Chorley Eden Ribble Valley

South Lakeland South Ribble Stockport Warrington

Blackburn with Darwen Pendle

28.0

Bolton Liverpool

Hyndburn 26.0 Oldham

Burnley Rochdale Rossendale

Tameside

24.0 Salford Wigan

Wyre West Lancashire Cheshire West and Chester Fylde Allerdale Lancaster Barrow-in-Furness Wirral Trafford Blackpool Halton Cheshire East Bury Sefton Copeland

22.0

20.0 40.0

50.0

60.0

70.0

80.0

90.0

Community Cohesion (NI1)

Source: DCLG Place Survey 2008, Local Futures Ethnic Fractionalisation Index 2008

Volunteering is a positive predictor of cohesion in the Northwest 5.74 Individuals who engage in formal volunteering are more positive about cohesion. These individuals are likely to feel more empowered, have more interaction and form networks with individuals in their communities that they may not be in contact with otherwise. The chart below affirms this within the Northwest by showing a correlation between the proportion of people who have given unpaid help over the last year (National Indicator 6) and National Indicator 1 (cohesion).

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Summary of the Evidence Base

Figure 73: Correlation between Community Cohesion and Volunteering 90.0

Fylde

85.0

West Lancashire Wyre Chorley Sefton South Ribble Stockport Barrow-in-Furness Warrington Lancaster Wirral Cheshire East Cheshire West and Chester Allerdale Preston Carlisle Bury Copeland Halton Blackpool St. Helens Manchester Trafford

80.0

Cohesion (NI 1) %

75.0 Knowsley 70.0

65.0

Liverpool Bolton Wigan Tameside Salford Blackburn with Darwen Rossendale

60.0

Rochdale 55.0

South Lakeland Eden Ribble Valley

Hyndburn

Burnley Pendle Oldham

50.0

45.0 14.0

19.0

24.0 Unpaid Help (NI 6) %

29.0

34.0

Source: DCLG Place Survey 2008

Local area satisfaction is lower in the Northwest than in most other regions but within the region it is highly varied 5.75 Local area satisfaction here is measured via the Place Survey within which people were asked how satisfied they were with their local area. According to the Place Survey 2008 people in the Northwest are less satisfied with their local areas than across most areas in the country. Other than London (74.9%) the Northwest has the lowest proportion of people satisfied with their place as a place to live at 76.9%. The region with the highest score in this indicator is the South West at 84.9% and the England Average is 79.7%. 5.76 For elderly people the positions are similar with the Northwest having the second lowest proportion of people aged over 65 behind only London once more at 82.5% compared to Londonâ&#x20AC;&#x2122;s 77.1%. The England average is 83.9% and the best performing region is once more the South West at 87.3%. 5.77 At the local level there is distinct variation in these indicators. Ribble Valley has the highest regional levels of place satisfaction at the district level at 94.2% with South Lakeland the second highest performer at 90.9%. Ribble Valley is also the highest performing district nationally. Regionally 9 out of the top 10 performing districts on this indicator are rural and conversely all of the bottom 10 districts are urban. Population The Northwest population continues to rise but unevenly across the sub-regions and is generally getting older 5.78 The resident population of the Northwest has risen by 11,400 from 6,846,300 in mid-2007 to 6,875,700 in mid-2008, a growth of 0.17%; this is below the predicted growth over the period 2006

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Summary of the Evidence Base – 2016 of 0.5% per year. 158 There were 3,377,300 males and 3,498,400 females; the gender ratio is 49:51% with females outnumbering males in all age groups over 35. 5.79 At sub-regional level, Greater Manchester has the highest population with an estimated population of 2,573,500 in mid-2008, which equates to 37.4% of the region’s population. Cumbria has the lowest population level accounting for 7.2% of the region’s total population. Merseyside has experienced a decline in population when comparing mid-2007 population estimates with mid-2008 population estimates, as a result of net migration. Greater Manchester has experienced the most significant population change, with an absolute increase of 11,300 people. The key driver of population change in Greater Manchester over this period has been natural change. 5.80 The proportion of children (aged 14 and under) has been falling across the Northwest and England, however, this decline has been more pronounced in the region than nationally. The picture is similar for those aged between 15 and 39 where the population has been declining in the region compared with a moderate increase nationally. By contrast, there have been significant increases in the older working age (40-59 years) and pensionable age 159 has been expanding considerably, although at a slower rate regionally than nationally. 5.81 The change in population over the period 1998 – 2008 is spread unevenly across the region with a declining population in 11 districts; no change in one district and a rising population in the remaining 27 districts. The districts of Liverpool, Sefton, Wirral, Stockport and Burnley have seen the biggest absolute decrease in population over the period 1998 to 2008 with Liverpool experiencing the most significant population decline in absolute terms. In 2008, there were 18,300 fewer people than there were in 1998; a proportional fall of -4.0%. Conversely the districts of Manchester, Lancaster, Cheshire East, Cheshire West & Chester and Wyre have witnessed the greatest absolute increases in population over the same period. The Northwest population will be over 7.5 million by 2031 with the over 85s one of the largest growing age groups 5.82 The 2006 based sub-national population projections, which are consistent with the mid-2006 population estimates, provide an indication of future population levels if current trends continue. The projections indicate that growth will be highest among the older age cohorts both nationally and regionally. It is projected that by 2031 the Northwest will have an additional 842,700 people, which equates to a 12.3% proportional increase since 2006.

158 159

Source: 2006 Based Sub-National Population Projections for England Pensionable age refers to those aged 60 and over

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Summary of the Evidence Base Figure 74 Northwest population projections by quinary age cohort 600.0 2006

2031

500.0

Thousands

400.0

300.0

200.0

100.0

85 +

59 10 -1 4 15 -1 9 20 -2 4 25 -2 9 30 -3 4 35 -3 9 40 -4 4 45 -4 9 50 -5 4 55 -5 9 60 -6 4 65 -6 9 70 -7 4 75 -7 9 80 -8 4

0.0

Source: Table 1, Sub-national Population Projections 2006, ONS

5.83 If current trends continue, it is projected that the greatest population increase will be amongst the 85+ age cohort with 162,400 more people; this equates to a proportional increase of 120.8%. By contrast, the 55-59 age cohort is projected to experience negative growth with 38,800 fewer people; a proportional loss of 8.6%. Health There is a clear link between levels of deprivation and poor levels of health 5.84 The map below shows the 20% most deprived and 20% least deprived lower super output areas 160 based on overall rank of the Index of Multiple Deprivation 2007. The 20% most deprived lower super output areas fall predominantly within the more urbanised districts in Merseyside and Greater Manchester. The 20% least deprived lower super output areas fall within the more rural districts of Cumbria and Cheshire

160

Super Output Areas (SOAs) are a new geography hierarchy designed to improve the reporting of small area statistics. Lower Super Output Areas (LSOAs) have a minimum population of 1,000.

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Summary of the Evidence Base

Figure 75: IMD 20% most and least deprived LSOAs

5.85 In England, the average life expectancy at birth rate in 2005/07 was 79.7 years compared with 78.2 years in the Northwest for all persons. The charts below compare life expectancy at birth rate trends for the region compared with England, by gender.

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Summary of the Evidence Base Figure 76: life expectancy at birth rate trends for the region compared with England, by gender Average Life Expectancy: Trend for the period 1991/93 to 2005/07 81.0

England

80.0

North West

79.0

Years

78.0 77.0 76.0 75.0 74.0 73.0 72.0 19911993

19921994

19931995

19941996

19951997

19961998

19971999

19982000

19992001

20002002

20012003

20022004

20032005

20042006

20052007

Source: Life Expectancy at Birth (Years) by Government Office Region, Office for National

5.86 Analysis over the period 1995-97 to 2005-07 shows an improvement in life expectancy at birth rates for both genders at district level. The greatest increase over the period for females has been in Ribble Valley. Oldham has experienced the lowest increase over the same period. The male population of Macclesfield has experienced the greatest increase in life expectancy at birth rates over the period 1995-97 to 2005-07. The lowest increase for the male population has been in Blackpool over the same period. In 2005-07, life expectancy at birth rates for men ranged between 73.2 years in Blackpool to 79.4 years in South Lakeland. Life expectancy at birth rates for the female population ranged between 78.6 years in Halton to 83.1 years in South Lakeland. The choices people make about their lifestyle can have a major impact on their health and wellbeing. 5.87 The General Household Survey (GHS) is a multi-purpose continuous survey carried out by the Social Survey Division of the Office for National Statistics (ONS). Analysis of smoking prevalence and alcohol consumption is based on the findings of the 2007 General Household Survey. 5.88 Smoking prevalence is higher amongst routine and manual workers, regardless of gender whereas managerial and professional workers have the lowest prevalence. At a regional level, four of the nine English regions have a higher prevalence rate than the national average; West Midlands, Northwest, North East and Yorkshire & the Humber. Despite a trend of decline in cigarette smoking the Northwest has the joint highest prevalence rate of cigarette smoking for all persons - 23%, above the England figure of 21%. 5.89 The percentage of persons aged 16 and over who drank in the week prior to interview ranges from 53% in London to 68% in the South West and Northwest. The results highlight that men have a greater propensity to drink alcohol with all regions evidencing a higher proportion of men drinking in the last week than women. 5.90 Analysis of alcohol consumption by socio-economic classification and gender indicates that more employees in the managerial and professional classification drank in the week prior to survey than those in the intermediate and routine and manual cohorts. Drinking prevalence is lower among those in the routine and manual cohort. As with previous indicators, a higher proportion of men drank in the previous week than women. 5.91 According to the Northwest Public Health Observatory, the Northwest has the highest rate of hospital admissions for alcohol specific conditions among the under 18 years of age population,

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Summary of the Evidence Base and is significantly worse than the England average. The only other region which was significantly worse than England was the North East. The East of England has the lowest rate. 5.92 ‘Forecasting Obesity to 2010’ is a report written by the National Centre for Social Research and Royal Free and University College Medical School for the Department of Health in 2006. The purpose of the report is to forecast levels of obesity in England by 2010 if current trends continue. The prevalence of obesity ranges from 18% to 25% in the male population and 19% to 29% in the female population across the English Government Office regions. The worst performing regions are Yorkshire & The Humber and West Midlands. The best performing regions are South East and London. It is predicted that by 2010, obesity prevalence among men will have increased by 11% from 22% in 2003 to 33%. There is predicted to be a 5% increase among women from 23% in 2003 to 28% in 2010. 5.93 The Northwest has the lowest percentage of population without a mental disorder – 71% compared with the England figure of 77%. Analysis of people by number of mental disorders indicates that the Northwest Regional Office area has the highest percentage of adults with one disorder – 26% of women and 23% of men; above the England prevalence ratios of 20% of women and 19% of men. 161 Housing The Northwest has the second highest numbers of homeless out of the regions but those in priority need have reached their lowest point in 20 years 5.94 Between April 2007 and March 2008 there were 19,030 households accepted as homeless in priority need 162 in the Northwest which is 14.5% of the England total (130,840). This is the second highest amount of any GOR behind London which made 29,010 in total (22%). 163 5.95 The Northwest rate of homeless per 1000 households is 3 this is the same as the England rate. Homeless households accommodated in temporary accommodation in the Northwest amounted to 2190 up to 31st March 2008. 40% of those accommodated were placed in Local Authority/Housing Association homes, 31% were homed in hostels, 8% in B&Bs, 4% in private sector leases and 18% in other forms of accommodation. London makes up 71% of all accommodated homeless households in England with 55,500 accommodated in March 2008 out of 77,510 in England in total. 5.96 Greater Manchester accounted for 35.6% of all homeless decisions in the region, Merseyside 17.9%, Lancashire 19.6%, Cheshire 9.4% and Cumbria 7.6%. At the district level Wigan made the most homeless decisions between 2007 and 2008 with 2,106 decisions, 11% of the Northwest total. Blackpool also had a high amount, 1343 or 7% of the Northwest total. 5.97 In the Northwest there were 8530 homeless households classed as being in priority need which is 3 per 1,000 households overall. This compares to 63,170 households in England at the same rate of 3 per 1,000 households overall. London has the highest overall numbers and the highest rate per population. Like other regions the Northwest count has fluctuated fairly considerably since 2000 reaching a high point in 2003/4 before declining to its lowest rate in nearly 20 years in 2007/8. Social housing supply is not meeting the increasing demand 5.98 There were 235,559 households on the Local Authority Social Housing register in the Northwest in 2008 (latest available at regional level). The amount of households on waiting lists has increased by 6.5% in the Northwest since 1997 compared to a 5.6% increase in England. 164

161

Source: Psychiatric Morbidity Among Adults Living In Private Households, Office for National Statistics. The priority need groups include households with dependent children or a pregnant woman and people who are vulnerable in some way e.g. because of mental illness or physical disability. 163 Dept for Communities and Local Government Live Homelessness Statistics 2008 164 Dept for Communities and Local Government Live Homelessness Statistics 162

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Summary of the Evidence Base 5.99 Despite these increases in demand there has been an overall decline in additional social housing provided at the national level which is demonstrated in the Northwest above although it has begun to increase again in recent years. 5.100 Between 1991 and 2000 there were on average 5,176 additional social houses per year in the Northwest whereas between 2001 and 2008 the figure has halved to 2,256. This is also reflected through the construction of new housing in the Northwest which is almost entirely concentrated in private provision with 97% of new homes in 2004/5, compared with 90% for England. 5.101 If projections are correct social housing will become particularly important over the next couple of years as the economic downturn takes effect. House repossessions have already shown a rapid increase in England and the Northwest. 5.102 The most recent data shows that there were 4,297 mortgage repossessions in the Northwest during the last quarter of 2008 an increase of 8% on the preceding quarter. The district with the highest amount was Liverpool with 551, an 11% increase on the quarter. The district with the highest percentage increase was Manchester with 402 mortgage repossessions, an increase of 51% on the quarter. 5.103 Some districts have shown a decrease on the quarter however (Chester, Lancaster, Runcorn and Warrington). Year on year change from 2007 to 2008 shows that mortgage repossessions have increased by 23% in the Northwest compared to 19% for England and Wales. This is a total of 18,644 mortgage repossessions in the Northwest and 114,296 in England and Wales. The district with the most mortgage repossessions during the whole of 2008 in the Northwest was Liverpool with 2,332 in all, an increase of 23% on 2007. The district with the highest year on year percentage increase was Blackburn with an increase of 45% but this was only 586 repossessions. 5.104 Conversely, as would be expected, the demand for social housing is increasing rapidly. According to the National Housing Federation, which represents England’s housing associations, more than 200,000 households are projected to join waiting lists for social housing by 2011 at the national level, as the recession fuels demand – taking the overall number to a record high of around two million. The demand for social housing had already begun to rise before the downturn so there will be a pronounced need for more social housing over the next couple of years. The Northwest remains one of the most affordable regions but affordability has decreased sharply since 2003 5.105 Figure 74 shows CLG’s index of changing comparative affordability at regional level over the 19972008 period, which uses the lower quartile threshold prices as indicative of ‘entry level’ prices for first time buyers and lower quartile personal earnings as indicative of typical first time buyer incomes. The Northwest (broken line) along with the North East and Yorkshire and the Humber is one of the most affordable regions, with a ratio of about 5.7 in 2008 compared to 7.0 for England (solid black line). In London the ratio was 9.3. However the chart also shows the worsening affordability situation in all regions over the 1997-2008 period, with affordability in the three Northern regions worsening sharply from 2003 onwards. The ratio fell slightly between 2007 and 2008 as a result of the fall in house prices but still remains high in historical terms. 165

165

DCLG and ONS Annual Survey of Hours and Earnings & HM Land Registry Data

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Summary of the Evidence Base

Figure 77: Ratio of lower quartile house prices to lower quartile earnings 1997-2008 by region

5.106 As with prices, regional level figures on affordability conceal major variations at a smaller scale. Figure 75 shows the ratio of lower quartile prices to household incomes for housing market areas in the Northwest in 2002, 2007, and 2008. The chart uses CACI Paycheck estimates of the lower quartile household income which provides a better measure than the data on personal earnings used earlier. Ratios are shown for 2002 and 2007 as these span the period of the most intense deterioration in the affordability position in the region, and for 2008 to demonstrate the impact of reduced prices. There were generally sharp increases in the ratio in all housing market areas between 2002 and 2007. Markets in areas such as Cumbria, North Lancashire and Cheshire remained the least affordable in the region throughout the period, whilst Pennine Lancashire, the inner areas of the conurbations and West Cumbria remained the most affordable. However, affordability worsened more, relatively speaking, in the lower priced markets, largely as a result of the rise in lower quartile threshold prices in these areas. In 2002 there was a significant supply of very low value dwellings in lower priced markets, but by 2007 this supply had disappeared.

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Summary of the Evidence Base Figure 78: Ratio of lower quartile house price to lower quartile income, housing market areas in the Northwest 2002, 2007, 2008

Convergent Factors in Social Decline Detrimental social factors converge at specific geographic areas across the region 5.107 It is becoming clear through social indicators that the areas with the greatest social challenges suffer across a number of themes. The table below shows every district in the Northwest (pre-2009) and how they figure against Northwest averages for a range of indicators covering crime and fear of crime, health, social cohesion and educational disadvantage. 18 of these districts are above the regional average for 3 or more factors; 11 are above average for 4 or more districts and finally Blackpool, Blackburn, Bolton, Burnley, Liverpool and Salford are above average across every indicators. Unsurprisingly these districts and those with four or more factors feature prominently in the Indices of Multiple Deprivation as having the highest levels of deprivation regionally and nationally. 5.108 Conversely there are districts below the regional average for every indicator; Allerdale, Chorley, Fylde, Ribble Valley, Trafford and West Lancashire. Again it is no surprise that these districts figure higher on the IMD. What this shows is that there are a relatively small selection of areas which suffer from high levels of severe crime, high fear of crime, low life expectancy, poor social cohesion, disadvantaged GCSE attainment and overall poor figuring on the IMD. This suggests that investment in areas of multiple detriment will potentially have benefits that impact across a range of social indicators.

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Summary of the Evidence Base Table 3: Correlation Matrix for Social Indicators (2007 data) Ten Most Deprived Districts

Northwest Allerdale Barrow-in-Furness Blackburn with Darwen Blackpool Bolton Burnley Bury Carlisle Chester Chorley Congleton Copeland Crewe and Nantwich Eden Ellesmere Port and Neston Fylde Halton Hyndburn Knowsley Lancaster Liverpool Macclesfield Manchester Oldham Pendle Preston Ribble Valley Rochdale Rossendale Salford Sefton South Lakeland South Ribble St Helens Stockport Tameside Trafford Vale Royal Warrington West Lancashire Wigan Wirral Wyre

Violent Crimes per 1,000 population 17.0 15.5 21.8

Fear of anti-social behaviour

Life Expectancy

Social Cohesion

22.9 14 27.9

76.4 76.9 76.0

73.6 77.2 80.5

GCSE Attainment from deprived areas 25.4 26.2 23.5

19.1 34.8 18.7 24.3 16.3 22.3 17.0 12.6 8.3 16.9 14.3 9.6

27.7 24.2 24.1 33.8 22.9 16.3 19.6 13.6 16.3 23.6 16.3 8.8

74.2 73.2 75.1 75.4 76.6 76.7 78.3 77.4 78.6 76.6 77.0 78.2

61.0 74.0 69.4 55.7 74.7 74.7 78.9 81.9 77.4 74.8 77.4 80.4

32.3 23.2 24.3 21.7 38.2 18.1 19.3 32.1 19.3 15.4 14.9 22.0

18.1 10.2 20.1 15.8 10.2 15.1 22.8 11.9 28.8 16.1 14.2 25.5 6.6 18.8 14.5 23.7 10.7 9.9 11.7 13.9 13.3 20.5 15.1 13.1 17.2 11.3 16.9 12.3 10.8

19.6 11.3 24.4 23.2 27.9 17.3 31.4 16.3 34.0 30.4 31.0 23.1 7.9 35.7 19.3 31.5 22.6 10.2 13.6 26.2 16.0 28.7 17.0 19.6 15.6 17.2 26.1 18.7 14.6

77.2 78.7 74.5 75.4 74.9 76.8 73.9 79.2 73.4 75.3 76.1 75.0 78.8 75.1 75.4 74.6 76.6 79.4 77.5 75.4 77.4 75.3 77.7 78.0 76.4 77.7 75.4 75.7 77.0

78.9 85.5 74.5 58.2 71.9 79.8 69.8 77.4 73.5 50.4 52.4 76.2 79.4 57.2 61 65.4 81.0 83.0 81.0 73.5 80.6 67.1 83.5 78.9 80.5 83.6 68.5 79.6 83.3

21.2 50 30.8 30.8 22.5 25.1 24.4 17.1 25.9 24.1 25.1 25.8 25.3 29.3 30.7 22.7 23.9 22.0 21.6 26.1 21.5 27.2 34.1 21.8 23.2 27.6 23.6 27.5 16.8

IMD Rank (NW) 25th 9th 6th 4th 16th 7th 26th 23rd 34th 35th 43rd 20th 32nd 37th 28th 39th 10th 11th 3rd 24th 1st 41st 2nd 12th 13th 15th 42nd 8th 22nd 5th 21st 40th 38th 14th 29th 17th 33rd 36th 30th 27th 19th 18th 31st

Source: IMD 2007, Home Office Recorded Crime 2007/8, British Crime Survey 2008, DCLG Place Survey 2008, DCSF

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Summary of the Evidence Base Low quality of life factors converge in similar areas and affect similar communities – interventions should be tailored to meet the specific needs of these communities 5.109 Many low quality of life factors converge in a relatively small selection of places notably within parts of Merseyside and Greater Manchester (particular the centre and north of the conurbation), Pennine Lancashire, Blackpool and Barrow. It is also important to note that in general similar ‘types’ of people live in the most disadvantaged and deprived parts of the region. Evidence has shown that there are over representations of white blue collar workers and ethnic minority communities in the most deprived areas. Furthermore these communities are highly reliant on social housing and public transport, tend to have lower qualifications, work in entry level jobs and have high proportions of young people. Blue collar workers are deprived because they come from a heritage of forms of employment and lifestyle that no longer exist en mass within the region anymore such as low tech manufacturing and mining. Multi-cultural groups are often deprived because they face cultural or language barriers or lack the skills to fully engage with higher level jobs. It is therefore vital to afford these areas and these communities the kinds of employment and educational opportunities that are appropriate for the skills, transport access and cultural backgrounds that they possess. 5.110 It is easy to view many equality issues as detrimental factors in the region when actually they should be considered opportunities. For example if the Northwest can raise its employment rate amongst disabled adults to England levels it will add 50,000 people to the workforce. Likewise there are opportunities to increase the levels of over 50s workers in the region which is particularly pertinent given demographic projections around an ageing population. The gender pay gap is decreasing but more can be done to ensure equality through increased flexible working, facilitative childcare arrangements and encouraging entrepreneurial activity. Employment rates and economic activity varies across ethnic groups and meeting England averages would benefit the Northwest economy substantially. 5.111 Disadvantage is largely spatially determined with attainment directly affected by where children live. It is therefore important that interventions are made early in children’s lives within areas of need to prevent more children becoming Not in Employment, Education or Training (NEETs), to improve life chances and to assist economic development. 5.112 The average cost of crime per business is £1,402, which generates an annual impact of crime of £353.2 million or 0.4% of the regional economy. This is a conservative estimate compared to some other research conducted recently, which places the cost to the region’s businesses at anywhere up to £900 million. There is an opportunity both to reduce this deficit and to improve the image of the region to businesses and potential investors. 5.113 With increased demand and low levels of supply in the social rented sector, this suggests that the private rented sector will grow in importance. However given the poor conditions in significant parts of the sector, relatively high levels of poor management standards, the private rented sector is likely to become a high priority for policy interventions in some areas. 5.114 According to recent research commissioned by the NWDA there is an opportunity to build a more detailed picture nationally and regionally of the needs of LGBT communities. Recent evidence gathered as part of this research is vital in enabling LGBT communities to fulfil their potential and contribute to the regional economy as well as having access to equal opportunities in terms of employment, learning, health and personal safety in relation to hate crime.

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Summary of the Evidence Base Social Assets Pursuing just economic growth can have negative impacts, economically successful regions such as London and the South East are in fact highly polarised and unequal 5.115 The Northwest is one of the most equal societies in the UK according to income equality and according to the R-ISEW. Indeed looking at the region alone most of the social indicators are not massively polarised, they only become polarised when looked at in national terms. This brings into question what is true socio-economic progress pursuing economic growth when the so-called successful regions such as London and the South East are in fact highly polarised and unequal? 5.116 The Northwest’s people historically are amongst its greatest assets. The Northwest was the birthplace of the industrial revolution and this was in part thanks to the entrepreneurial and innovative nature of the people who lived there at the time. The Co-operative movement, originating in Rochdale originated at the same time, emphasising the community and co-operative spirit. Port Sunlight in Wirral and the Eldonian Village in Liverpool are also examples of the strength of Northwest communities. Fostering this kind of community and civic spirit is playing on an advantage that sets the Northwest apart from many regions. 5.117 The Northwest has, in places, a very ethnically diverse population which itself is an asset. These areas provide types of economy and business that can only exist within certain cultures. Examples of this include the ‘Curry Mile’ in Manchester which is one of the most vibrant areas of the city and the China Towns in both Liverpool and Manchester. They also give the region an important international dimension. The Voluntary and Community Sector is a vital vehicle in intervening at the community level 5.118 The Voluntary Community Sector is a vital tool in developing wellbeing at the grassroots level and has the best access and the most up to date knowledge on the issues that effect communities and neighbourhoods. 5.119 Perhaps the most important contribution of the VCS is that it provides a social safety net for those issues that the market and the legislative framework fail to pick up. In many respects the VCS, along with faith communities (see next section), is able to reach out to people that formal structures are unable to. The VCS contributes to the Northwest in distinct ways: 5.120 As a significant regional employer a. The VCS in the Northwest employs at least 64,000 people. b. There are at least 31,400 voluntary and community sector groups, or units, in the Northwest. c. The VCS in the Northwest employs more workers than two of the six key NWDA sectors. d. Despite this, VCS employment in the Northwest (in comparison to national VCS employment) is still under-performing. e. Guidestar UK (a free website that collects data on the voluntary and community sector) shows that in 2005, the total income of Northwest charities amounted to £3,214 million 5.121 Through supporting community engagement in service design (commissioning) and evaluation. Evidence of the benefits of community engagement in a number of service areas including crime, health, education and employment were highlighted in The benefits of community engagement: a review of the evidence, (Home Office 2004) and confirmed through ODPM’s Research Report 16 that service design involving communities has a greater short and long term impact 5.122 Through innovation: According to the House of Commons Public Administration Select Committee: Public Services and the Third Sector: Rhetoric and Reality public service innovation comes from those who “are closest to the users of a service”. This report also highlights the typical added value of the VCS : 

involving local people to build community ownership

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Summary of the Evidence Base 

building the skills and experience of volunteers



Increasing trust within and across communities thereby building social capital

5.123 Through social enterprise: Social enterprise is not separate to the voluntary and community sector. There are strong links: 

Firstly, many VCS organisations engage in social enterprise without necessarily thinking of themselves as social enterprises.



Secondly, local and regional infrastructure organisations often support the formal conversion of current VCS groups and encourage the setting up of new social enterprises.

5.124 Working with the voluntary and community sector, there are: 5,000 social enterprises in the Northwest. 4,750 social enterprises (95%) working in urban areas in the Northwest and approximately 2,250 (45%) working in the areas of greatest deprivation.

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Summary of the Evidence Base 6.

The Northwest Geography

6.1

All economic activity takes place in a spatial context. The location of firms in any given area reflects a variety of historic and market drivers, the location of workers reflects the distribution, quality and pricing of housing, in the context of the wage incomes earned, and the interaction of the two generates flows across the length and breadth of the country.

6.2

It is convenient to think of ‘places’ – whatever the level of geography – as a simple collection of economic ‘assets’ and to assume that simple description or analysis of these assets will be sufficient to explain the way in which places operate or perform.

6.3

These ‘thematic’ overviews – typically reviews of business structure, labour market and skills and infrastructure development – all help understanding of why areas perform in the way they do, but they do not typically assess the extent to which places perform differently because of the mix of assets within them. Similarly, they are not capable of comparing ‘places’ in terms of the mix of productive assets therein.

6.4

One of the primary objectives of the Places Study (RIU/Pion Economics) was to try and bridge this gap, to deliver a better understanding of the relationship between the asset ‘portfolio’ of place and economic performance, and to assess the status and future potential of areas within the Northwest in terms of the asset mix ‘on the ground’ in such places.

6.5

The study also has a series of other objectives, driven by recognition of the fact that thematic reviews do not generally reflect the ‘interdependencies’ that exist across or between places. As economies develop – at all levels of geography - levels of integration expand and different forms of network structures (formal and informal) emerge.

6.6

The fortunes and prospects of places become intertwined in a variety of ways as well as to variable degrees and patterns of spatial dependence grow and wane. The study seeks to investigate aspects of these links through detailed analysis of commuting and agglomeration flows across the Northwest and seeks to bring the strands of research together in a series of exploratory spatial analysis frameworks.

Historical context of the Northwest as a Place 6.7

The Northwest has seen incredible change over the last two hundred years, on a scale unmatched by almost anywhere else in the country. This is because the Northwest was the birthplace of the industrial revolution and as such saw remarkable growth in the 19th Century in particular with Liverpool, the 2nd port of the British Empire and Manchester the centre of the world cotton trade. As de-industrialisation occurred in the 20th Century many parts of the region saw an equally rapid decline. The majority of statistics are from the University of Portsmouth/ESRC Vision of Britain Through Time project, a robust study which takes Census data and redistricts it to various contemporary and historic geographies. Where possible trends are shown for 1801-2001, in line with census data however there are of course some datasets that do not correspond to this timeline and indeed there a number which only refer to very recent historical trends

A Changing Northwest 6.8

Until the Local Government Act of 1974 the Northwest was divided into what are now commonly referred to as Historic or Ancient Counties. Cheshire, has remained largely unchanged over the last 200 years. Cumberland was made up of the modern day LAs of Carlisle, Eden, Copeland and Allerdale and is now a part of Cumbria. Lancashire was much larger than it is today incorporating both Merseyside and Greater Manchester. Finally there was Westmorland which was made up of parts of modern day Cumbria including Kendal. These notable differences in regional breakdown make comparisons between contemporary sub-regional populations and historic sub-regional populations difficult.

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Summary of the Evidence Base Figure 79: Historic Counties’ Populations 1801-1961/NW Population 1801-2001 166 8000.0 7000.0 6000.0 5000.0 4000.0 3000.0 2000.0 1000.0

Cheshire

6.9

Cumber.

Lancs.

Wmorl.

2001

1991

1981

1971

1961

1951

1931

1921

1911

1901

1891

1881

1871

1861

1851

1841

1831

1821

1811

1801

0.0

NW Total

Every historic county in the region saw an overall steady rise in populations with Lancashire demonstrating the sharpest rise accounting for a significant proportion of the region’s total population. This reflects the massive growth of the two driver cities of the industrial revolution, Liverpool and Manchester, which until 1974 were in Lancashire. Cheshire also saw a considerable rise which is on account of the success of the industrial towns in the district such as Macclesfield, Crewe and Warrington.

6.10 The Northwest as a geographical concept has only really been defined recently. However the ancient counties, which later became Administrative Counties, have been around for sometime. Cheshire has remained fairly constant in size since 1800; Cumberland remained constant in size until it was scaled up to Cumbria from 1974; Lancashire was the largest sub region until 1974 after which time it was divided up into Merseyside, modern Lancashire and Greater Manchester both of which appear after 1974. Westmorland disappeared after the Local Government reorganisation in 1974 although its legacy was retained in the naming of Appleby-in-Westmorland – a town in modern day Eden. The size of the region today is 1,410,600 hectares compared to 1,304,824 hectares in 1800.

166

Census of Population/Office of National Statistics (Census Marketing, Room 4300S, Office of National Statistics, Titchfield, PO15 5RR). Redistricted by the University of Portsmouth Vision of Britain project 2008

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Summary of the Evidence Base Figure 80

6.11 Today the Northwest is made up of Cumbria to the north of the region which represents half the regionâ&#x20AC;&#x2122;s land mass and is the most sparsely populated sub-region in the Northwest. Below Cumbria is Lancashire, much smaller than the historic county of the same name it has a population of around 1.4 million and covers 2,903 km 167 . 6.12 Merseyside and Greater Manchester, which did not exist prior to 1974, are the most populated subregions in the Northwest with a combined population of 4 million people in a combined land area of 1,999 kmÂ˛ which is smaller than any other individual sub-region. Population change 6.13 The Northwest population increased at an enormous rate during the 19th and early 20th Centuries reflecting the role the industrial revolution played in developing the region. Only towards the middle of the 20th Century did this trend begin to flatten out. In the 1930s, following a prolonged global recession Liverpool and Manchester were hit with unprecedented job losses as sea trade slowed and mechanisation reduced the need for jobs. A similar exodus occurred in the 1970s/80s with Manchester and Liverpool again at the heart of decline although other areas such as Birkenhead and Blackburn also declined rapidly. This saw the regional population fall for the first time in 200 years. Since the 1990s however it has recovered and is increasing year by year. 6.14 In regional terms nowhere outside London saw the growth in population that the Northwest did over the 19th and 20th Centuries and whereas London experienced a huge decline in the latter half of the 20th Century the Northwest experienced only a slight downward trend. In 2001 the Southeast was the most populated region in England and has experienced the greatest upward trend of the regions in recent times.

167

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Summary of the Evidence Base

Figure 81: 2.1 GOR Populations 1801-2001 9000000 8000000 7000000

E Lon

6000000

NE 5000000

4000000

SE SW

3000000

WM Y&H

2000000 1000000

18 01 18 11 18 21 18 31 18 41 18 51 18 61 18 71 18 81 18 91 19 0 19 1 11 19 21 19 31 19 4 19 1 51 19 61 19 71 19 8 19 1 91 20 01

6.15 In absolute terms both the Northwest population and the wider England & Wales population have grown consistently (1.3pp). Proportionately this was highest in 1891 when the NW population accounted for 17.2% of England & Wales compared to 11.6% in 1801 and 13.6% in 2006 which shows how significant the region has been in the countryâ&#x20AC;&#x2122;s recent history. 6.16 In 1851 there were less than 100,000 people aged over 65 in the Northwest which was just 3.4% of the population. This has grown considerably over time with a particular upward trend in the middle of the 20th Century possibly as a result of the founding of the NHS or maybe because of the impact of the two world wars on younger populations. Overall in 1851 the population was made up of 35% 0-14 year olds, 61% 15-64 year olds and 3.4% over 65s. In 2001 the equivalent ratios are 19% (014), 65% (15-64) and16% (over 65) which in crude terms means that the 0-14 population has proportionately lost around 15% to the elderly population in the past 150 years. Figure 82: NW Population compared to England & Wales 1801-2001 70000.0 60000.0 50000.0 40000.0 30000.0 20000.0 10000.0

NW Total

19 91

19 71

19 51

19 21

19 01

18 81

18 61

18 41

18 21

18 01

0.0

England & Wales

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Summary of the Evidence Base

Figure 83: NW Grouped Ages as a percentage of total population 1851-2001 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1851

1881

1891

1911

1931

0 to 14

1951

15 to 64

1971

1981

1991

2001

65 and up

Industry 6.17 There are perhaps few places in the world as the Northwest that have seen such an intensification of industrial development over so short a time followed by an equally rapid decline in many places. Demonstrating this using statistics is difficult but it is possible using employees as a measure. The most fundamental message from this is the decline of manufacturing sector employees from over 60% in 1841 to under 20% in 2001. 6.18 Using SIC key sectors it is possible to see the proportions of people working in each employment sector since 1841 from which point employment sector was distinguished in the census. Figure 81 shows SIC ‘key sectors’ and their contribution to NW industrial makeup. Figure 84: NW SIC Composition by Key Sectors 1841 – 2001 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1841 Agriculture

1881 Mining

1931

1951

Manufacturing

1971

Construction

1981 Utilities

1991 Services

2001

Unknown

6.19 The service sector has expanded noticeably over 160 years to form the largest industrial sector in 2001 although it was the second most significant in 1841. Manufacturing saw an initial decline in the first half of the 20th Century as the staple industries of the industrial revolution went into terminal decline, made worse by economic recession and war during which many workers would have been conscripted. It then saw a revival from the 1980s in such areas as Kirkby, Trafford Park and Halewood and new-town status invigorated areas like Warrington and Skelmersdale. Construction

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Summary of the Evidence Base and Utilities worker proportions have remained fairly consistent whereas those working in Mining and Agriculture have dropped to barely register in 2001. Figure 85: England SIC Composition by Key Sectors 1841-2001 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1841

1881

1931

1951

1971

1981

Agriculture

Mining

Manufacturing

Utilities

Services

Unknown

1991

2001

Construction

In 1841 manufacturing accounted for 49.4% of NW jobs but just 31.6% nationally 6.20 The Northwest picture isnâ&#x20AC;&#x2122;t radically different from the SIC breakdown for the whole of England which shows a similar decline in manufacturing against a rise in service sector employment. The notable difference is that manufacturing in the Northwest makes a larger contribution over the 160 year time span. Agriculture is also notably different at this period accounting for twice the percentage of English jobs than in the Northwest alone. 6.21 Although the Northwest is very much an industrial region, which is largely grouped under the manufacturing key SIC group, between 1841 and 1931 there were only 70 years when it accounted for a greater number of employees and even then the service sector was strong. From the 1970s onwards the service sector and the manufacturing sectors have shown diametrically opposed fortunes in terms of numbers of employees. 6.22 In terms of total jobs since the earliest available regional data in 1841 the Northwestâ&#x20AC;&#x2122;s workforce more than tripled in size over the course of a century. Global industrial restructuring saw a steady decline in absolute jobs in the latter half of the 20th Century but this began to even out going into the 21st Century. Other heavily industrialised regions like the West Midlands, Yorkshire and London saw similar trends whereas regions like the East and South East have seen a steady and consistent rise in total jobs. Until the mid 70s the NW had the second highest total jobs behind London after which it slipped to 3rd place behind the Southeast.

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Summary of the Evidence Base

Figure 86: Total employed in the NW Service and Manufacturing sectors 1841-2001 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1841

1881

1931

1951

1971

Manufacturing

1981

1991

2001

Services

Longer term instability in growth has been replaced by a largely stable economy 6.1

In the recent economic climate it is easy to forget that economic growth fluctuates massively over time, indeed discounting the current recession there have been three since the Second World War. The figure below shows quarter on quarter GDP growth for the past 50 years demonstrating that during the 1970s in particular growth was massively unstable even throughout a given year. In the 00s the fluctuations have been minimal demonstrating a largely stable economy.

6.2

This fluctuation is also noticeable in the price of retail goods since 1948 (4.6) which also saw a noticeable percentage rise during the 1970s. Regional breakdown is not available in this detail for either datasets but the point of this chart is to demonstrate the massive fluctuations over the past half century. Figure 87: Quarter on Quarter GDP Growth (National) 1955-2008 168 10

Quarterly growth %

168

ONS National Accounts time series data accessed on 16.10.2008

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2006 Q4

2004 Q3

2002 Q2

2000 Q1

1997 Q4

1995 Q3

1993 Q2

1991 Q1

1988 Q4

1986 Q3

1984 Q2

1982 Q1

1979 Q4

1977 Q3

1975 Q2

1973 Q1

1970 Q4

1968 Q3

1966 Q2

1964 Q1

1961 Q4

1959 Q3

1957 Q2

-2

1955 Q1

Summary of the Evidence Base

Figure 88: Retail Prices Index: quarterly index numbers of retail prices 1948-2008 169 30 25

% Change

20 15 10 5

19 48 19 3 51 19 1 53 19 3 56 19 1 58 19 3 61 19 1 63 19 3 66 19 1 68 19 3 71 19 1 73 19 3 76 19 1 78 19 3 81 19 1 83 19 3 86 19 1 88 19 3 91 19 1 93 19 3 96 19 1 98 20 3 01 20 1 03 20 3 06 1

0 -5

The Labour Force 6.3

A key aspect of any type of economic stability is high employment levels with the converse apparent in times of instability and recession. Census data is able to broadly capture levels of unemployment and the total working age population however it is limiting in terms of mapping against wider economic trends because it is only done every 10 years.

6.4

Worklessness and unemployment is a key policy concern nationally in the 21st Century but compared to the 20th Century the Northwest is at one of its lowest rates as of 2001. The highest unemployment rate was in 1931 at 17.8% in the NW with historic Lancashire accounting for the highest sub-regional rate at 18.8%. This reflects the Great Depression which lasted from 19291939, the longest economic down turn in the past 100 years. Global cities like Liverpool were particularly hard hit during this period; the port city had a staggering unemployment rate of 27.4%. The next notable peak is in 1991 although this is probably more a result of the long term economic problems throughout the 1980s.

Housing 6.5

As rural populations flocked to the urban centres of Manchester, Liverpool, Preston et al, in the 18th and 19th Centuries there was a need for the rapid construction of houses. This was commonly done by the employing companies themselves. Creweâ&#x20AC;&#x2122;s housing stock, for example, was mostly built by the Grand Junction Railway Company. This often resulted in mass overcrowding and the health problems this brought with it because of poor or at worst unplanned rapid expansion. Today the Northwestâ&#x20AC;&#x2122;s industrial heritage is still very much apparent in the housing stock with the quintessentially industrial rows of terraced houses a common feature in many towns and cities in the NW.

6.6

From past census data we can tell how many houses were inhabited from 1841 to 1961 with a gap in records during the Second World War. House habitation has risen fairly consistently with population increase although the estimated moving average dips during WWII as a result of war damage and a period of very little house building.

6.7

By mapping inhabited households against total households it is possible to see how many households were uninhabited. This shows that as the timescale progresses many more houses are built and many more are inhabited but the rate of habitation is never as much as the total houses. This is especially so going into the mid-20th Century which reflects the inner city clearing in

169

ONS Time series data accessed 16.10.2008

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Summary of the Evidence Base Liverpool and Manchester following war damage which left street upon street of abandoned housing. Figure 89: Total Households in the NW 1831-2001 3000.00 2500.00 2000.00 1500.00 1000.00 500.00

18 31 18 41 18 51 18 61 18 71 18 81 18 91 19 01 19 11 19 21 19 31 19 51 19 61 19 71 19 81 19 91 20 01

0.00

Education 6.8

Comparing educational levels across a historic timescale can be difficult given the immense development of education both in social and institutional terms. However it is possible to measure, in the crudest terms, the levels of qualified and unqualified people in the region. According to Vision of Britain caution must be taken in comparing these dates for in â&#x20AC;&#x2DC;1951, the figures are for the proportion of people leaving school at or before age 15, i.e. before the ages at which public exams are usually first taken, while for 2001 they are simply for people without any qualificationsâ&#x20AC;&#x2122;.

6.9

The data therefore shows that proportionately more people left school without qualifications in 1951 than today. However it is noticeable that the actual numbers of those without qualifications are very similar â&#x20AC;&#x201C; this suggests that although more people are benefiting from GCSEs and A-Levels there remains a considerable population untouched by this progress, and possibly largely the same individuals in both cohorts due to the baby boom years. Figure 90: Those with basic qualifications 1951 and 2001 3500.0

Persons (000s)

3000.0 2500.0 2000.0 1500.0 1000.0 500.0 0.0 1951

2001 Unqualified

Qualified

Migration 6.10 The Northwest saw the highest volume of people leaving borders for other areas in the UK during the 1990s although it slowed down from 1996 onwards. It is likely that the majority of this outward flow was from Manchester and Liverpool which, until the mid 1990s at least, saw huge population losses. Manchester has recovered better than Liverpool and in the latest estimate saw one of the largest gains in the country.

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Summary of the Evidence Base 6.11 International immigration, a particularly hot topic in recent years, has risen steeply since the mid 1990s for England as a whole reflecting increased EU inter-state migration. The Northwest has seen relatively little change compared to London or the South East. Unsurprisingly given its status as a global city London has seen the greatest international immigration out of the English regions. London has also seen the greatest international emigration although this could merely reflect the fact that the majority of migrant workers who come to England arrive in London first because of its apparent centrality and global renown.

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Summary of the Evidence Base Performance Economies Location and accessibility to London and other large business centres and airports are the most prominent determinants of performance… 6.12 The measure used to analyse performance is GVA per employee. This was chosen as an indicator because it is a broad measurement of productivity in an area. Using an indicator such as overall GVA or overall employment would mean that the size of a place would dominate the pattern of performance. Standardising GVA by employment within areas avoids this issue and also gives us a much better indication of the underlying competitive position of places. The table below illustrates the indicators which were found to be most associated with high performance. 6.13 In practice, the location drivers are indicated to be the most prominent determinants of performance. The labour market is defined as second most prominent, followed closely by skills and industry structure with enterprise and property drivers least prominent Table 4: Performance Driver Profile Performance Driver ‘Group’ Enterprise

Performance Drivers/Assets  Proportion of micro firms (<5)  VAT registrations per 1,000 persons of working age  VAT deregistrations per 1,000 persons of working age  Business density  Activity Rates  Full-time jobs & wage levels  Job density  Population density  Working Age Population  Rail journey time to London  Accessibility (distance) to 8 largest business centres  Accessibility (distance) to all airports with 5m+ scheduled air passengers  Industry Sector employment (GVA weighted)  Knowledge Based Industry (KBI) concentration  Agglomeration Elasticity  Managerial and Professional Jobs  Level 4+ qualifications  GCSE 5+ A-C Performance  Factory and Office Workspace  Factory and Office Rateable Value

General Labour Market

Accessibility/Location

Industry Structure

Skills Structure

Property Structure

Source Places Overview report Sept 2009 Pion Economics

6.14 This statistical analysis gives us a basis for assessing the relative importance of the associated drivers in terms of contributing to GVA performance. This work has given us an understanding of the mix of these drivers present in each Local Authority District (LAD) area and developed statistical weights to assess the ‘standing’ of each area in terms of its asset mix. In effect, we can assess how the specific mix of assets/drivers in each area is likely to enhance or constrain the productive performance of each LAD.

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Summary of the Evidence Base 6.15 The figure below reports the outcomes of such an analysis for each LAD in England, by region. Figure 91: Regional Performance Profiles LAD Distribution

0 = England Average

20 WM

15 10

5 0 London

-5 -10

East

-15 -20

Region Source Places Overview report Sept 2009 Pion Economics

6.16 Regional distribution findings: 

the Greater South East (South East, London and East) contain higher and more positive scores;



the Midlands have higher densities of areas in the positive range than do other regions;



Yorkshire and the Northwest have more values in the negative range with the South West and North East displaying the most negative scores.



Some have very defined ‘tails’ with LADs that lie some distance from other LADs in the region and others have some LADs that operate in the reverse way at the top of the regional range.

6.17 The performance analysis is confirmation that many Northwest places have performance asset mixes that are less conducive to strong economic performance than other parts of the country. The table below shows were Northwest LADs rank in the all England quintiles. Table 5: Performance Rankings England Bandings

NW LADs

Top Quintile 20%

Macclesfield, Trafford (5%)

Second 20%

Stockport, Fylde, Congleton, Warrington, Manchester, Chester (14%)

Third 20%

Vale Royal, Ribble Valley, Crewe and Nantwich, Salford (9%)

Fourth 20%

Wigan, Chorley, South Ribble, Bury, Bolton, Preston, West Lancashire, Ellesmere Port & Neston, Liverpool, Halton, Sefton, Wirral Rochdale, Wyre, Tameside (35%)

Fifth quintile 20%

Lancaster, St Helens, Oldham, Rossendale, South Lakeland, Blackburn with Darwen, Pendle, Eden, Burnley, Barrow-in-Furness, Hyndburn, Knowsley, Carlisle, Copeland, Blackpool Allerdale (37%) Source Places Overview report Sept 2009 Pion Economics

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Summary of the Evidence Base Cheshire, Warrington and Greater Manchester South are amongst the highest performing areas and West Cumbria, Blackburn and Darwen, and Blackpool are amongst the lowest. 6.18 The advantage of the methodology used, was that we can go beyond a simple overall ranking of LADs as above, and examine the reasons for the rankings in terms of the underlying driver groups/asset mix. 6.19 Accessibility is the most dominant feature for 16 of the 43 places listed. All are signed negatively and most are located either in the far north of the region, in rural districts or in the outer urban ring, this reinforces the role of underlying geography to place performance and prospects. The extent of the accessibility issue, on the other hand, varies. Places defined as especially vulnerable in terms of accessibility include Copeland, Allerdale, Eden and Carlisle whereas places least affected include Blackburn with Darwen and Burnley. 6.20 Beyond accessibility, skill structure is the second most prominent asset group and is evenly distributed between negative and positive performance areas. The places defined as particularly inhibited through poor skills structures include Tameside, Knowsley and Halton, with a second tier including Blackpool, Bolton and Rochdale. Places defined as having strong skills assets include Chester, Macclesfield, Stockport, Trafford, Vale Royal and Warrington. 6.21 Labour market weaknesses appear particularly evident in Merseyside (Sefton, Wirral and Liverpool) and to a lesser degree Oldham, Rossendale and Hyndburn. 6.22 Three places are identified as particularly weak in terms of enterprise structures, Ellesmere Port and Neston, Salford and South Ribble. 6.23 Only three places are identified where property performance is the dominant asset category. Of these Manchester and Wigan had positive scores and Crewe and Nantwich a negative score. 6.24 This simple analysis illustrates the complexity faced in designing area-based policy in the sense that places are very different, are dominated by different features or by the same features in different ways. Very few of the places in the analysis have asset structures that are either all positive or all negative. Most display different combinations of strengths and weaknesses (complete LAD profiles can be found in the RIU Place Profiles 170 ) 6.25 The table below contrasts the overall ranking performance of each Northwest Place (classified into very strong, strong, weak and very weak) against asset mix. Asset mix is assessed according to the extent of performance across the six asset groups. 6.26 The bottom right cell lists places that are very weak in terms of overall performance and where asset mix is also very weak. These are places that could be viewed as severely disadvantaged in economic terms and where wholesale restructuring of the economy is likely to be required to enhance performance prospects. The top left cell, on the other hand, contains areas that are very strong overall and very strong in terms of asset mix. These are areas where the local economy is well placed to enjoy strong GVA performance. Most places lie between these two extremes:

170

ď&#x201A;ˇ

the position of Copeland, for example, has very weak overall ranking due to accessibility in the context of an otherwise fairly positive asset mix;

ď&#x201A;ˇ

South Lakeland, Eden and Rossendale are grouped together as having very weak performance but a moderate asset mix. The first two places, like Copeland, also suffer from poor accessibility but are not as strong in other aspects of their asset mix. Rossendale is less disadvantaged by accessibility (though it remains evident) but the economy is weaker with the result that it is placed in the same cell;

ď&#x201A;ˇ

Manchester is ranked relatively highly overall and fairs relatively well in terms of asset mix though weaknesses are evident in terms of enterprise, labour market and skills structure. Liverpool is broadly similar to Manchester in nature in that enterprise, labour market and skills

Place Profiles, Regional Intelligence Unit, Oct 2009

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Summary of the Evidence Base structures are weak but they are also notably weaker than in the case of Manchester and accessibility is more of an issue. Table 6: Performance Matrix Performance Across Asset Groups Overall Ranking

Very Strong

Strong

Very Strong

Macclesfield, Trafford, Stockport, Fylde

Strong

Warrington, Congleton

Manchester, Chester

Moderate

Vale Royal, Ribble Valley, Crewe & Nantwich

Salford

Moderate

Weak

Chorley, Bury, Halton

South Ribble, Bolton, Preston, West Lancashire, Ellesmere Port & Neston, Liverpool, Sefton, Rochdale

Wigan, Wirral, Wyre, Tameside,

Very Weak

Copeland

Rossendale, South Lakeland, Eden

Lancaster, St. Helens, Oldham, Pendle, Barrowin-Furness, Knowsley

Very Weak

Blackburn with Darwen, Burnley, Hyndburn, Carlisle, Blackpool, Allerdale

Source Places Overview report Sept 2009 Pion Economics

6.27 Macclesfield, Trafford, Stockport, Fylde, Warrington, Congleton, Manchester and Chester have strong performance profiles. 6.28 Blackburn with Darwen, Burnley, Hyndburn, Carlisle, Blackpool, Allerdale, Lancaster, St. Helens, Oldham, Pendle, Barrow-in-Furness, Knowsley, Wigan, Wirral, Wyre and Tameside have weak performance profiles. Commuting Economies 6.29 Very few â&#x20AC;&#x2DC;placesâ&#x20AC;&#x2122; are truly independent in a spatial sense. As local and regional economies develop, levels of integration between them expand and different forms of network structures (formal and informal) emerge between and across geographies. These can take many forms such as labour market links, business supply chains and networks, housing markets or leisure patterns. The fortunes and prospects of places become intertwined in a variety of ways as well as to variable degrees and patterns of spatial dependence grow and wane 171 . 6.30 Understanding the nature of these interdependencies is difficult due to the lack of consistent and comparable data, but one of the clearest forms of interaction lies in the commuting flows that we observe on an everyday basis. Commuting is the mechanism through which spatial differences in the demand for, and supply of, labour balance is vital to the efficient functioning of local and regional economies.

171

Places Overview report Sept 2009 Pion Economics

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Summary of the Evidence Base 6.31 Understanding the pattern of commuting within the region helps us to appreciate the spatial adjustment processes at play and brings the nature and extent of links between ‘places’ to the forefront. Equally as important is understanding what drives commuting flows, what roles do features such as wage differences, public transport and house prices play in determining the spatial processes at work? 6.32 This section summarises the places work undertaken in both these regards and attempts to do so in a relatively comprehensive way, in that analysis focuses on commuting patterns across nine occupational groups as well as in total. Commuting Patterns Greater Manchester is the substantial attractor for commutes… 6.33 Around 3 million full-time work commutes are made on an everyday basis within the Northwest. Managerial and administration groups both account for over 13% of the gross total flows, elementary and associate professional and technical (APTC) groups account for just under 13%, skilled trades and professional account for 11% and 10% respectively and all other occupations constitute less than 10%. Analysis of flows between sub-regions provides an early insight into commuting dynamics across the region 172 . 6.34 Cumbria (88% of flows within the sub-region) - Flows out of the sub-region are dominated by Lancashire as a destination in all instances; Greater Manchester is the secondary destination for flows with proportions of skilled trades and process occupation group flows as high as, if not higher than, those for managerial and professional occupations; 6.35 Cheshire (49%): Flows out of the sub-region typically flow either to Greater Manchester or Merseyside with two thirds of higher order occupations typically flowing to Greater Manchester rather than Merseyside offset by a more balanced pattern for some lower order occupations. 6.36 Lancashire (75%): Flows out of the sub-region are dominated by Greater Manchester in all instances, followed by Merseyside with relatively limited commutes to Cumbria and Cheshire. 6.37 Greater Manchester (82%): Flows out of the sub-region are dominated by Cheshire in all instances, followed by Lancashire and Merseyside with next to no commutes to Cumbria. 6.38 Merseyside (65%): Flows out of the sub-region are also dominated by Cheshire in all instances, followed by Greater Manchester and Lancashire with next to no commutes to Cumbria. 6.39 It is evident that Greater Manchester acts as a substantial sub-regional ‘attractor’ of commutes, generally dominating flows from Cheshire and Lancashire and acting as a secondary destination of importance for Merseyside. Lancashire attracts flows from Cumbria and Greater Manchester while Cheshire is itself an attractor of flows from Greater Manchester and Merseyside. In no instance is Merseyside a primary attractor. The largest commuter flows are within LAD boundaries 6.40 In terms of LAD level geography, flows within LAD boundaries represent 65% of the overall flow total indicating that a very large proportion of the population choose to live and work within close proximity. This is highest for ‘places’ located in Cumbria with own-LAD commutes reaching over 90% in Carlisle and over 80% in Barrow, Copeland, Eden and South Lakeland. The only other comparable places, in terms of magnitude, are Lancaster and Crewe and Nantwich. In contrast, several LADs have relatively low own-LAD flow proportions. Notable in this regard are Bury, Chorley, Congleton, Ellesmere Port and Neston, Knowsley, South Ribble and Wyre. 6.41 The two primary urban centres as ‘dominant’ in generating the largest volumes of commuting interaction but other LADs are also prominent in this regard. Trafford, Salford and Stockport are areas where volumes are high as are, though to a lesser extent, Wigan, Sefton and Warrington. 172

Figures in brackets show the proportion of within sub-region flows.

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The volumes for Manchester and Liverpool are dominated by inflows whereas other areas display differing mixes… 6.42 Just 15 of the 43 LADs display positive net inflows overall. These are led by Manchester and Liverpool but include, Preston, Trafford, Salford, Warrington, Fylde, Blackburn with Darwen, Chester, Carlisle, Copeland, Macclesfield, Halton and Blackpool with a very marginal positive for Burnley. 11 LADs act as employment hubs for wider geographies… 6.43 Analysis by occupation group provides additional clarity in that just six ‘places’ display positive net inflows across all groups – Manchester, Warrington, Preston, Carlisle, Blackburn with Darwen and Fylde – though a further five (Liverpool, Macclesfield, Trafford, Chester, South Lakeland) have net positive values in at least seven of the nine groups. These areas are clearly operating as employment hubs within either their localities or the wider region. 16 LADs act as exporters of workers 6.44 At the other end of the spectrum are ‘places’ that are net exporters of workers across all occupational groups. These include Allerdale, Bury, Chorley, Congleton, Hyndburn, Lancaster, Oldham, Rossendale, Sefton, Stockport, St Helens, Tameside, Vale Royal, Wigan, Wirral & Wyre. Commuting drivers 6.45 The modelling of commuting carried out for the places study was able to assess the nature of the link between flows and drivers. It showed that: The largest driver of commuting flows, by far, is the larger number of jobs on offer elsewhere… 6.46 This driver is of particular relevance for higher order occupations - managers, professionals and associate professionals. 6.47 Whilst differences in houses prices play a role in explaining flows, the direction of influence varies across occupation groups. Managers, professional and associate professional occupations typically live in high house price areas and commute to low price areas and vice versa… 6.48 Lower occupation groups typically live in areas where prices are low and commute to work in areas where prices are higher. Variations in housing stock, work as expected, in that flows are indirectly related to volume, other things equal. More housing stock in a given destination, relative to a given origin, tends to reduce flows between the two areas and the driver is noticeably stronger for higher order groups. 6.49 Commuters generally travel from areas where wages are low to areas where wages are high with the model indicating that wage differentials are important for all occupation groups. The availability of public transport systems encourages flows between areas although higher order occupations are less likely to use such transport than other groups. Spatial Drivers of Commuting 6.50 The places study defines a number of ‘places’ as primary ‘attractors’ of commutes due to the relative size of their employment offer relative to origin areas.

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Summary of the Evidence Base Primary Attractors - Liverpool and Manchester; city region heartlands (Wirral and Sefton for Liverpool and Stockport, Trafford, Salford, Bolton, Wigan and Oldham for Manchester) and larger free-standing centres across the region: Warrington, Preston and Macclesfield. 6.51 The most notable aspect of the wage analysis is the presence of Copeland and Fylde at the top of the inflow distribution. This appears to be linked to very specific occupational groups and probably reflects the presence of large multinational firms paying high wages to attract appropriately skilled employees. 6.52 Another twenty ‘places’ have positive flow values, many of which are areas that either have a large presence of manufacturing activities, which typically pay well, or are more developed services centres. At the other end of the distribution, Sefton, Tameside, Blackpool, Rossendale, Hyndburn and Eden are indicated to be areas that particularly ‘lose out’ in the battle of relative wages and display significant wage-related outflows. 6.53 Housing stocks have an impact on flow levels and distribution, where there are large existing stocks in the urban centres of Liverpool and Manchester the inflows are reduced. Most of the ‘places’ identified as attractors above are of this nature, though their scale is dwarfed by Manchester and Liverpool. Residential development away from primary employment nodes will increase commuting flows or employment land development closer to where people live will act to reduce commuting. 6.54 There is a clear occupational impact on the relationship between house prices and commuting, higher order groups (managers, professionals) tend to reside in areas such as Macclesfield, Ribble Valley, Trafford, South Lakeland, Fylde, Chester and West Lancashire 173 and commute outwards to work. These are places where lower order groups do not tend to reside but commute-in for employment. In the reverse case, areas where higher order workers tend to commute in and lower order workers commute out include Barrow-in-Furness, Carlisle, Blackpool, Copeland, Crewe and Nantwich, Wigan, Halton, Salford, Tameside and Liverpool. 6.55 Lower order occupation groups are much more likely to live and work in close proximity, mostly regardless of geography, demonstrates that issues of housing availability and affordability, close to local employment nodes, are fundamental in determining the residence and commuting profiles of different skill groups. 6.56 In terms of public transport Manchester and Liverpool are the best served in terms of connectivity with the wider region, along with many other urban areas such as Sefton, Wirral, Salford and Preston, Trafford and Oldham. At the other end of the spectrum are areas where public transport is indicated to play a limited role in supporting in-commuting. These areas are led by Vale Royal and Congleton, followed by Ellesmere Port & Neston, Halton, Macclesfield and Chorley. Dispersed residential development will raise commuting flows… 6.57 Wage and house price differences do influence patterns of commuting but they are much smaller in scale than the distribution of job opportunities and housing stock levels. The role of public sector transport is also identified as an important influence on flow patterns for most occupation groups. This does raise the possibility that some of the negative results of dispersed housing development might be offset by enhanced public transport provision but the analysis suggests that the scale of improvement required would be substantial, and would need to be different for different occupation levels. 6.58 Commuting flows are a by-product of economic and spatial development patterns and policies. People have a choice of where to live and where to work but these depend upon the employment opportunities and housing available, as well as the wage that they can ‘capture’ in the light of their 173

And to a lesser extent Stockport, Eden, Wyre, Sefton, Warrington, Vale Royal, South Ribble, Chorley and Bury.

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Summary of the Evidence Base skills and a host of other non economic preferences. Changes to any of these aspects will typically generate a response in commuting flows. Agglomeration Economies 6.59 Agglomeration is normally explained by reference to either ‘localisation’ or ‘urbanisation’ economies. Localisation economies are created when plants from the same industries are geographically located together. Firms cluster together for a number reasons, all of which improve efficiency and productivity, namely clustering: 

allows plants to specialise;



facilitates more proximate supplier linkage;



facilitates R&D, information and technology transfer & spillovers; and



reduces risk for both employers and employees by developing specialist labour pools.

6.60 Therefore whilst business to business supply-chain interaction plays a role in determining localisation benefits, they are far from being the only source of such benefits. 6.61 Urbanisation economies result from the concentration of a large number of economic activities that are not necessarily in the same industry but emerge to serve several different industries. These include: 

urban transport systems;



well organised labour markets;



legal, finance and commercial services;



services to support & sustain large population concentrations; and



pubic infrastructure.

6.62 Such ‘agglomeration economies’ are typically measured in terms of a productivity ‘gain’ and while estimates of their scale vary, the recently published MIER report 174 shows that research generally places their scale at between 5% and 10% across industry sectors. In other words doubling the concentration of an area might add between 5% and 10% to the GVA of that area. 6.63 The places work estimates agglomeration using the extensive econometric work that has already been undertaken on behalf of the Department for Transport (DfT) as part of its Transport Analysis Guidance (TAG) framework for assessing the benefits of transport investment 175 . 6.64 Taking each place in turn, the surrounding area (or hinterland) is defined and the productivity ‘gain’ to each place by having access to the hinterlands businesses and employment base was analysed. The approach made allowances for distance – agglomeration benefits are weighted by distance so that a hinterland will add more benefits if businesses are closer to the place rather than further away 176 . Liverpool and Manchester dominate agglomeration benefits… 6.65 Our estimates of agglomeration, evaluated for a 10 mile hinterland, are equivalent to 3.7% of regional GDP, rising to 7.1% at 30 miles. Agglomeration profiles have been generated for each individual LAD across the region (See RIU Place Profiles). The figure below shows how much benefit is generated (or given out) by each LAD (the positive blue box), as well as the benefit received in from others (the negative purple box). 6.66 The figure confirms the dominance of the primary urban centres – Liverpool and Manchester – within the region. These areas generate benefits that are close to double those of any other area in 174

The Case for Agglomeration Economics, (2009), Manchester Independent Economic Review (MIER), Manchester Enterprises. See TAG Unit 3.5.14 and the April 2009 TAG Unit 2.8. 176 A technical report is available to explain the detailed methodology. 175

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Summary of the Evidence Base the Northwest and both generate significant net positive benefits. Other areas demonstrating notable net positive benefits include Wigan, Preston, Trafford, Stockport, Blackburn, Warrington and Blackpool. 6.67 Table 9 provides another perspective. It classifies ‘places’ in terms of how many other LADs fall within its agglomeration ‘hinterland’ and the total value of that agglomeration between them (either generated or received). 6.68 The first row shows the NW ‘places’ that are identified as having hinterlands extending across a large number of other LADs. These are typically areas that lie in or close to the central core of Manchester (Manchester, Salford, Trafford, Bolton, Bury), areas that lie between the major urban nodes (Warrington, St Helens, Wigan) or areas that benefit from a geography in which they are surrounded by ‘circle’ of LADS (Blackburn & Darwen, Chorley and South Ribble). 6.69 In contrast, the final row shows the NW ‘places’ that are identified as having hinterlands extending across few if any LADs – Allerdale, Barrow-in-Furness, Carlisle, Copeland, Lancaster, South Lakeland and Eden. These lie in the north of the region and all are defined earlier as places having accessibility barriers. 6.70 The columns of the table indicate whether the value of estimated agglomeration for each ‘place’ is high or low and bringing the rows and columns together provides another view on the spatial dynamics of the region. In particular, it shows that having a large number of links does not necessarily translate into large agglomeration values: Manchester and Salford are defined as the only two places that have extensive hinterland overlap and high agglomeration values. In effect, these two places are the agglomeration ‘heart’ of the region 177 ; 6.71 Trafford and Warrington run Manchester and Salford fairly close but provide lower agglomeration flows and the three Lancashire ‘places’ – Blackburn with Darwen, Chorley and South Ribble – are identified as being far less interconnected than their geographical position would indicate. This may reflect the fact that, despite having a high degree of overlap, distances between the places are more extensive, reducing the scale of agglomeration benefits. 6.72 Liverpool presents an interesting contrast with Manchester in that it is defined as having a high agglomeration value but limited hinterland overlap with other places. This suggests that the agglomeration benefits emerge from a few surrounding areas only, compared to the much broader ‘sweep’ of Manchester. In terms of other places, areas delivering relatively high agglomeration values, given the breadth of their hinterland overlap include Macclesfield, Stockport and Wirral with most other LADs tending to punch below their ‘weight’

177

Wigan is omitted from this discussion due to the fact that, as outlined in the Technical Report, it reflects a very particular set of data circumstances.

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Figure 92: Agglomeration Value Profile

Agglomeration Value Profile

ÂŁm (-ve Receives; +ve = Generates) -1500

-1000

-500

500

1000

1500

Allerdale Barrow Blackburn Blackpool Bolton Burnley Bury Carlisle Chester Chorley Congleton Copeland Crewe EPort Eden Fylde Halton Hyndburn Knowsley

LAD

Lancaster Liverpool Macclesfield Manchester Oldham Pendle Preston RValley Rochdale Rossendale SLakes SRibble Salford Sefton StHelens Stockport Tameside Trafford VRoyal WLancs Warrington Wigan Wirral Wyre

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Table 7: Agglomeration Matrix Value of Link Hinterland Overlap

High

Moderately High

Moderate

Moderately Low

High number of hinterland crossovers

Manchester, Salford, Wigan

Trafford, Warrington

Bolton, Bury, St Helens

Blackburn & Darwen, Chorley, South Ribble

Moderately High

West Lancashire

Oldham, Rochdale

Preston

Halton, Hyndburn, Rossendale

Moderate

Sefton

Macclesfield, Stockport

Ribble Valley, Vale Royal

Burnley, Ellesmere Port & Neston, Knowsley, Pendle, Tameside

Moderately Low

Liverpool, Wirral

Chester, Congleton, Crewe & Nantwich

Very Low

Blackpool, Fylde, Wyre

Allerdale, Barrow, Carlisle, Copeland, Lancaster, South Lakeland, Eden

Very limited range of hinterland crossovers

6.73 Areas in the north of the region are ‘isolated’ in agglomeration terms, consistent with the accessibility barrier this is similar for those areas bounded by the coast. Any agglomeration benefits which exist in these locations are primarily limited to within the ‘place’ itself and there are limited benefits generated to or received from surrounding places. The implication is that these ‘places’ are less likely to perform a functional growth pole role in any meaningful manner, given the existing hinterland structures. 6.74 Places in Lancashire and Cheshire are generally less dispersed than those in Cumbria. As such they demonstrate much more extensive hinterland overlap but they also tend to operate at the lower end of the spectrum in value terms. Part of the reason lies in the absence of any large ‘hubs’ to provide a focal point for agglomeration. The two exceptions – both in Cheshire – are Warrington and Macclesfield. 6.75 Agglomeration – with its link to density - invariably increases in value from less dense to more dense, or generally, urban areas. The hinterlands of the areas substantially overlap and agglomeration values are generally higher but there is some variation as exemplified by Manchester and Liverpool. Spatial Connectivity 6.76 The spatial connectivity of the region can be examined by considering: 

patterns of spatial connectivity; and



two typology structures, based on current Northern Way Research Programme work, (undertaken by SURF, the centre for Cities and the Work Foundation). This is developing a

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Summary of the Evidence Base typology of links between cities based upon levels or volumes of interaction and the relative strengths of local economies; the second extends this by introducing direction of flow as a determinant of typology and allows an assessment of functional roles for places. Manchester dominates the regionâ&#x20AC;&#x2122;s spatial connections 6.77 The Places Overview Report details the process through which an assessment of spatial connectivity is pursued. The table below provides an overall summary and displays the number of times that a â&#x20AC;&#x2DC;placeâ&#x20AC;&#x2122; is defined as having a commuting or agglomeration link to other places in the region. 6.78 Scrutiny of the profiles shows that they are dominated by Manchester, which is identified as having commuting and agglomeration links with some 70% and 50% of other places in the region. No other place displays a similar level of prominence though the areas that follow most closely (and lie in the top 10 of both columns) include Warrington, Trafford, Wigan, Bolton and Salford. 6.79 This set of six places are defined as the most extensively integrated in terms of the frequency with which they occur in the table and all but Warrington lie within Greater Manchester. A secondary tier (places that lie in the top 15 positions of both columns) additionally includes Preston, Blackburn, Bury, Ribble Valley and Liverpool. 6.80 At the other end of the scale, places that lie in the bottom of both rankings include virtually all Cumbria LADS, along with a number in Lancashire (Burnley, Blackpool, Hyndburn, Wyre) and Ellesmere Port and Congleton. These are areas that display low levels of connectivity and relative isolated.

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Table 8: Spatial Connectivity Place Allerdale Barrow Blackburn Blackpool Bolton Burnley Bury Carlisle Chester Chorley Congleton Copeland Crewe EPort Eden Fylde Halton Hyndburn Knowsley Lancaster Liverpool Macclesfield Manchester Oldham Pendle Preston Ribble Valley Rochdale Rossendale South Lakeland South Ribble Salford Sefton St Helens Stockport Tameside Trafford Vale Royal West Lancs Warrington Wigan Wirral Wyre

Commuting Links 5 5 12 6 17 5 13 5 8 11 4 5 4 6 5 8 11 7 9 9 12 11 29 9 5 14 11 9 8 6 12 17 12 8 13 8 18 9 8 20 19 10 7

Agglomeration Links 2 0 12 3 14 5 10 1 7 8 4 1 6 4 3 3 6 5 7 3 10 10 21 9 5 11 11 14 7 2 9 11 10 8 10 8 14 11 12 13 14 6 4

Total 7 5 24 9 31 10 23 6 15 19 8 6 10 10 8 11 17 12 16 12 22 21 50 18 10 25 22 23 15 8 21 28 22 16 23 16 32 20 20 33 33 16 11

Green = top tier, Blue = second tier, Red - Bottom tier

Spatial Relationships 6.81 While the above provides an insight into spatial processes, it does tell us about the nature of relationship structures.

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Summary of the Evidence Base 6.82 A current Northern Way research study, (undertaken by SURF, the centre for Cities and the Work Foundation) is developing a typology of links between cities based upon levels or volumes of interaction and the relative strengths of local economies. Relative to a given place (place A), any other place (B) is defined as being: 

independent if links are relatively weak but the (other) local economy is relatively strong;



isolated if links are relatively weak and the (other) local economy is relatively weak;



dependent if links are relatively strong but the (other) local economy is relatively weak; and



interdependent if links are relatively strong and the (other) local economy is relatively strong;

6.83 Taking this typology further adapts the city relationships approach and considers the net direction of flows in relation to the relative size of places. Relative to a given place (place A), any other place (B) is defined as being 178 : 6.84 Place 1 is nodal or hub if flows are primarily directed from 2 to 1 and 1 is the larger economy. The place has more commuting and agglomeration links (larger economy) than others and smaller places act as commuter suppliers (flow direction can also be calculated for agglomeration rather than commuting). .

Place 1

Place 2

6.85 Place 1 is competitive if flows are primarily directed from 1 to 2 and 1 is the larger economy, the place has a larger economy and acts as a worker supply to other smaller areas.

Place 1

Place 2

6.86 Place 2 is satellite if flows are primarily directed from 1 to 2 and 2 is the smaller economy; the place is the smaller economy which receives the flows.

Place 1

Place 2

178

This explanation is given in terms of commuting flows. The Overview Report details the more complex situation connected to agglomeration flows.

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Summary of the Evidence Base 6.87 Place 2 is dependent if flows are primarily directed from 2 to 1 and 1 is the smaller economy, the place is the smaller economy which gives flows to the larger economy.

Place 1

Place 2

Places and Spatial Roles 6.88 Bringing the typology evidence together allows us to review the spatial roles of places within the region from a number of perspectives. It is important, however, in following the thread of this discussion, to appreciate the complexity of what is being attempted here. 6.89 The analysis seeks to make sense of a large number of individual place ‘networks’ - in effect, simultaneously examining 43 networks, understanding how many times any given place appears in the network of other places and the characteristics of that appearance in terms of flow volume, flow direction and the relative strength and size of the relevant economies involved. Large Economies performing hub roles Manchester, Trafford, Stockport, Salford, Bolton, Wigan, Liverpool, Sefton, Wirral, Warrington, Preston 6.90 Although the dominant city relationships typology classification for the group is ‘independent’, the important feature is the extent to which independence is complemented by interdependence – this defines and separates places that operate from a position of relative economic strength in the network structure and that attract both high and low flow volumes of agglomeration and commuter flows: 

Manchester, Stockport, Trafford, Warrington and Wigan independence and interdependence account for more than 75% of the links



Salford, Preston and Bolton generate values close to or marginally above 50%



Liverpool, Sefton and Wirral all have combined values lower than 50%;

6.91 Liverpool is indicated to have no ‘independent’ flows and is defined as having only moderate linkage, and in the context of a relatively weak economy, its ‘pull’ extends much less than other areas of broadly comparable size. In contrast to many of the other economies in this group, the Merseyside places are all relatively weak economically, with limited spatial linkage and generally low flow relationships with the stronger economies in their networks. 6.92 Salford and Bolton also display notable high isolation scores but compensate in terms of independence (low interaction with weaker economies). 6.93 In contrast Preston has moderately high independence and dependence (strong interaction with stronger economies). Functional Typology of Large Economies 6.94 This provides another set of perspectives for these larger economies and is, as anticipated, generally dominated by nodality or ‘hub’ roles. 

Manchester, Liverpool, Trafford, Salford and Preston – Strong hub roles in more than 70% of the links.



Warrington and Stockport – weaker hub roles.

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Summary of the Evidence Base 

Bolton, Wigan, Sefton, Wirral and Wigan – all display high competitive linkages, either netoutflows of commuters to smaller economies or net out-flows of agglomeration to larger economies.

Moderately Large Economies dominated by dependence (Macclesfield, Oldham, Tameside, Rochdale, Chester, Bury, Blackburn with Darwen, St Helens, Blackpool, Knowsley, Crewe)

6.95 There are now only two instances in which independence and interdependence account for more than 75% of the city relationships typology – Macclesfield and Chester. While Bury comes close to this threshold, it is evident that the dominant city relationships classification for the group as a whole is isolation (low flow links with stronger economies). Oldham, Rochdale, Blackburn, St Helens, Blackpool and Knowsley all score highly here, indicating limited economic integration with stronger economies across the Northwest. Only in the case of Crewe is dependence more prominent than for the isolation classification. Functional Typology of Moderately Large Economies 6.96 The functional typology for this group of places is much less nodal in character. Only Blackburn is identified as operating as a clear node. Other profiles are dominated by the dependence classification (net commuting out-flows and/or net agglomeration in-flows to/from larger economies) indicating substantial reliance on the fortunes of the larger economies in their networks. Moderately Small Economies majority characterised by dependent roles, but overall a wider variation in functional role (Halton, Lancaster, Carlisle, Vale Royal, South Lakeland, West Lancashire, South Ribble, Fylde, Chorley, Wyre, Burnley) 6.97 There are two instances in which independence and interdependence account for more than 75% of the city relationships typology – South Lakeland and Fylde – though Wyre also comes close with 73%. In the case of South Lakeland, the profile is dominated by the ‘independent’ classification (weak interaction with weaker economies) and reflects the general nature of Cumbrian places with interaction mostly limited to within the sub-region 179 . Fylde displays a broad balance between independence and interdependence, with examples of both strong and weak interaction in relation to weaker economies. 6.98 Wyre is similar to South Lakeland in that the independence rating is balanced more by indications of dependence (strong interaction with stronger economies) than interdependence (strong interaction with weaker economies). The dependence scores of Wyre and South Lakeland, on the other hand, are only half that of Burnley – one of only three places in the table (along with Halton and Carlisle) where the combination of isolation (low interaction with stronger economies) and dependence account for more than 60% of the city relationships typology. Functional Typology of Moderately Small Economies 6.99 In common with the previous grouping, the functional typology for this group of places is much less nodal in character and only Carlisle is identified as operating as a clear node. Many of the profiles are again dominated by the dependence classification (net commuting out-flows and/or net agglomeration in-flows to/from larger economies) indicating substantial reliance on the fortunes of the larger economies in their networks. West Lancashire, Vale Royal, Wyre and Chorley are the most evident in this regard. 6.100 Nevertheless, there are some variations. Halton, South Ribble and Fylde display notable ‘satellite’ components (net commuting in-flows from larger economies and/or net agglomeration in-flows from smaller economies) while Lancaster and Burnley display notable ‘competitive ’ components (net commuting out-flows to smaller economies and net agglomeration out-flows to larger economies).

179

The profiles naturally reflect the number of spatial links identified – South Lakeland has just eight links overall.

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Summary of the Evidence Base

Small Economies dominated by dependent (Allerdale, Congleton, Pendle, Ellesmere Port & Neston, Copeland, Hyndburn, Barrow, Ribble Valley, Eden, Rossendale) 6.101 There is just one instance in which independence and interdependence account for more than 75% of the city relationships typology – Ribble Valley – which displays a broad balance between independence and interdependence (examples of both strong and weak interaction with weaker economies). 6.102 Congleton and Eden have combined values above 60% though both also have notable dependence (Congleton) and isolation (Eden) scores. Barrow displays a high independence score though this is explained by the fact that interactions are limited and relate to weaker Cumbria economies. 6.103 Two places (Allerdale and Hyndburn) are dominated by their isolation and dependence classifications, reflecting the relative weakness of their economies. Indeed, there are five places Pendle, Copeland, Hynburn, Eden and Rossendale - in which the isolated classification is the dominant or equal dominant classification type and indicates weak economies not generally interacting with stronger economies in their networks. Functional Typology 6.104 This group of places indicates that none (not surprisingly) operate as nodes/hubs within the region. Indeed, the dominant classification type is dependent (net commuting out-flows and/or net agglomeration in-flows to/from larger economies) with six of the ten places (Congleton, Pendle, Barrow, Ribble Valley, Eden, Rossendale) displaying dependence scores that account for 50% or more of the linkages typology and with Ellesmere Port and Neston displaying a 40% figure. Of the other three (Allerdale, Copeland and Hynbdurn) all display a mix of types with the Cumbria profiles reflecting the particular conditions of these places in the sub-region. Spatial Overview 6.105 The Places Study attempts to provide a better understanding of the relationship between the assets of places and their economic performance as well as the interdependencies that exist between places through a detailed analysis of both commuting and agglomeration flows across the Northwest. The key findings are: 

The importance of underlying geography to place performance and prospects is emphasised and Northwest ‘places’ do not perform particularly well in terms of productivity performance;

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The majority of places lie somewhere between the extremes of overall performance and asset mix – some places face structural difficulties of a high magnitude whilst others face different sets of challenges but very few are strong in all asset attributes;

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Commuting flows within local authority boundaries in the region represent 65% of all commuting flows, demonstrating that a very large proportion of the population choose to live and work within close proximity;

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The two primary urban centres of Manchester and Liverpool are ‘dominant’ in generating the largest volumes of commuting interaction. Other areas which are prominent in this regard are Trafford, Salford, Stockport, Wigan, Sefton and Warrington;

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In terms of generating agglomeration benefits, again Manchester and Liverpool are dominant and generate significant net benefits. Other areas demonstrating net positive benefits include Wigan, Preston, Trafford, Stockport and Warrington.

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Manchester and Salford are the only two places that have extensive hinterland overlap and high agglomeration values, followed by Trafford, Warrington and Wigan;

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Summary of the Evidence Base 

Liverpool has a high agglomeration value but limited hinterland overlap with other places – this is in contrast to Manchester which has a much broader ‘sweep’;

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Manchester has material commuting and agglomeration links with 70% and 50% of other places in the region respectively. No other place demonstrates a similar level of prominence, although the areas that most closely follow include Warrington, Trafford, Wigan, Bolton, Salford, Liverpool and Preston.

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Liverpool has no ‘independent flows’, with only moderate linkage – its pull extends much less than other areas of broadly comparable size. This is replicated in other parts of Merseyside.

6.106 A complex pattern emerges with extensive diversity in the patterns of interaction and places interact differently both in terms of strength and type. Manchester lies at the core of the region’s network structure followed by a number of other relatively large or emerging centres within the region. 6.107 The places work shows that Northwest places vary in terms of the quality of their underlying asset mix and in terms of interaction. The picture that emerges, even with a relatively small number of elements, is inevitably complex. The analysis of connectivity, at the outset, suggests extensive diversity in patterns of interaction between places and even in the same broad sub-region they can interact very differently with other parts of the region. Indeed, it is evident that any one place may feature in any number of overlapping interaction networks across the region and that different network may exist for different flow structures 180 . 6.108 Despite this complexity, consideration of simple connectivity does tend to provide some indication of those places that lie at the ‘core’ of the network structure. The list is led by Manchester and features a number of other relatively large or emerging centres within the region. 6.109 Connectivity, however, is only part of the picture. Appreciating spatial dynamics requires that such patterns be embedded in a broader framework using intelligence as to the relative economic status and size of places. The following concept maps attempt to give an overview of the functional roles and other core spatial concepts, GVA, performance profile, Quality of life, major commuting and agglomeration links and environmental quality. 6.110 These maps demonstrate the varied role above and beyond the functional typology role. It can bee seen that although economically a place may perform a function either in commuting or agglomeration terms, there are other fundamental purposes for place. These purposes give rise to a number of choices for the Regional Strategy. Economic Spatial Function In economic terms not everywhere can be the same, and places are connected in a myriad of supporting infrastructures and networks and it is for the wider benefit that some places are strong and provide key hub roles. The implications of this are that places already serving a function should be allowed to grow within that function and that other places should neither be encouraged to compete or subvert that function. 6.111 From the map below it can clearly be seen the importance of Manchester and surrounding cluster of strong places to the region, the functions of its surrounding places contribute to its strength. The urban centres of Manchester and Salford, supported by Trafford and to a lesser extent Stockport form the economic core of the region. Manchester’s reach and impact is felt much further than anywhere else. Combining this functional role with the size of its GVA further illustrates this. 6.112 Liverpool conversely has a substantial GVA but does not benefit from strong hinterland places, its linkages and benefits come from a fairly narrow group of places. This would suggest that economically developing Liverpool and its hinterland offers great potential.

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Exemplified here in terms of commuting and agglomeration.

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Summary of the Evidence Base 6.113 It can then been seen from the map that Warrington , Preston remain the only other strong hubs with high numbers of linkages and relatively large GVA outside the wider Manchester or Liverpool conurbations with Blackburn with Darwen to a much lesser extent. 6.114 Carlisle performs the only hub function in the north of the region; however its size in terms of linkages and GVA and its distance from other places mean that its benefit to other areas is much smaller. None the less it is important in a sub-region with a lack of dense conurbations from which to create agglomeration benefits. 6.115 Cheshire as the main labour supply to the two major conurbations has much better performance profiles. In this respect Chester would seem to be underperforming given both its size and performance profile. This analysis did not look at connections outside the region due to constraints on data for the agglomeration elements, and it needs to be recognised that Chester has strong links with North Wales and this may affect its linkage profile regionally. Environmental Spatial Function Places should be grown at the expense of their environment and at the same time those places with strong environments should be protected. 6.116 From the map below it can be seen that the places above, operating as economic hubs, also have the poorest environmental quality. If growth is to continue to be concentrated in the economic hubs of the region, then their environmental quality will need to be addressed and the growth impacts mitigated. 6.117 Conversely places functioning as dependant or mixed roles have strong environmental quality, as the detrimental activity, transport and business emissions, often takes place in the large conurbations on which they rely. It is therefore important to consider what the pursuit of economic growth would have on their environment and protect their current environmental attributes. Well Being Spatial Function Wellbeing and quality of life are an essential foundation for place, as seen earlier the region has one of the worst profiles in terms of satisfaction in the places to live and high levels of deprivation, it is essential that this is addressed, to maintain the attractiveness of the region. 6.118 Again hubs display much more detrimental quality of life factors than those areas dependent on the hubs, with the exception of Warrington, and Trafford as part of the Manchester Core. It is also apparent that places which also have good environmental profiles are also the places which have strong quality of life profiles. They are also more likely to be dependant on larger economies and are essentially the better places to live within the region. They often provide the workforce for the larger economies. These places often have strong performance profiles, with many of the factors which are associated with strong GVA growth; this is especially true of Cheshire. Poor quality of life is also strongly associated with high level of other negative social indicators and deprivation.

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Summary of the Evidence Base Mapping the Spatial Implications Figure 93: Functional Role and GVA Comparison

Functional Role and Economic Profile 6.119 The map above takes the functional role and compares with the GVA size of a place, in this pictorial representation it can be clearly seen the size and importance of the two cities in terms of GVA. It can also be seen how the functional role is often reflective of the GVA size. However the two differing roles of the 2 major cities is also evident. Manchester is a strong economy, but it is also benefiting from having very strong economies around it. Liverpool does not have this same supporting hinterland, but despite this still has strong GVA. The map also demonstrates that despite the relative size of their economies some places perform a hub role because of their distance from other strong hubs, Preston and Carlisle for example.

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Summary of the Evidence Base

Figure 94: Functional Role and Quality of Life Comparison

Functional Role and Quality of life 6.120 This map reflects the idea that people like to live in â&#x20AC;&#x2DC;niceâ&#x20AC;&#x2122; places, in that they have low levels of crime, good levels of health care and services and a strong sense of cohesion and belonging. These places are often playing a dependant role to major hubs. Conversely the hubs are the places with lower quality of life, Liverpool, Manchester Salford, Preston, and Carlisle. Again bucking this trend are Warrington and Trafford. 6.121 However the map also highlights another group of places, these are places which are dependant but also have significant pockets of deprivation issues, Wirral, Blackpool, Burnley, Hyndburn, Blackburn, Halton, Oldham, Tameside and Bolton. These places as well as having poor quality of life profiles also have poor performance profiles, this would suggest that these places also lack the positive attributes associated with being a hub, such as higher levels of jobs and opportunities, and the labour market to serve more successful areas.

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Summary of the Evidence Base

Figure 95: Functional Role and Performance Comparison

Functional Role and Performance Profile 6.122 As discussed in the section earlier about performance one of the greatest drivers of performance as measured by GVA per employee are location factors, being closer to major hubs, London and major airports, therefore it is no surprise that areas within Cheshire have such strong profiles. They are also areas with better quality of life factors supplying labour to the hubs. What does stand out from the map is Fylde, here the impact of one of the regions major employers, BaE, is evident, and it is a single large employer based within a high performing local authority in terms of performance factors and quality of life.

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Summary of the Evidence Base

Figure 96: Functional Role and Environmental Comparison

Functional Role and Environmental Profile 6.123 The map above demonstrates the clear link between economic performance and impacts on the environment. Places acting as hubs or on the periphery of hubs are severely impacted in environmental terms. This raises implications in terms of where you concentrate growth and where you invest in the environment.

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Summary of the Evidence Base Wider “Place” Based Evidence 6.124 In further developing the understanding of the places within the region a number of studies were commissioned which explored some places in more depth. A Manchester-Liverpool Growth Corridor 181 6.125 This study investigated whether there is an economic growth corridor running between the two cities of Manchester and Liverpool. It found that the area displayed few characteristics of economic growth corridors elsewhere in the world, for instance with respect to a strong sector focus and identity, strong collaboration between the public, private and higher education sectors and governance arrangements. 6.126 It stated that recent GVA growth has been driven by a series of growth nodes as opposed to a corridor and concluded that a single functional economic geography does not exist. 6.127 Despite this, the study reveals a number of findings which would support further work to develop interventions which can be most effectively delivered on a cross City Region basis as follows: 

The study highlights a range of international precedents where inter City Region collaborative projects have boosted economic growth;

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The cities of Manchester and Liverpool are the main growth nodes for economic growth in the region with regards to GVA, knowledge based employment and expenditure per business unit;

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There is the potential for the two cities to further strengthen their positions and for towns and districts outside the cities to benefit from spillover effects;

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There are some clustering effects evident within both cities such as the financial and professional services sector in Manchester;

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The area is home to some significant assets which may drive future growth, including development sites, HEIs and research and innovation sites; and

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The future economic geography of the area may be different from its current geography.

Summary - Although the report comes to the conclusion that an economic growth corridor does not currently exist in the study area, this does not preclude the potential to deliver cross City Region interventions to support the economic growth of the study area.

Liverpool Manchester Vision: Strategy and Action Plan

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6.128 This document provided a framework for ongoing collaboration between the cities of Manchester and Liverpool. It consists of an agreement of how policy makers and practitioners should seek to work together in a mutually reinforcing way and provides a series of demonstration projects where joint working makes sense. The report cites the following reasons for greater collaboration between the two cities: 

There are significant commonalities between the two areas;

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Interaction between Manchester and Liverpool at various levels is an important component of the regional economy;

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The two cities interact in a variety of ways particularly in the day to day flow of goods, services, people and information;

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SQW Consulting for the Northwest Regional Intelligence Unit, March 2009

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Regeneris, Surf & DTZ for Liverpool City Council, Manchester City Council and NWDA, Nov 2001

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Summary of the Evidence Base 

Few European regions benefit from the presence of two, internationally recognised hubs of economic activity which can increasingly be the motors of an evolving regional economy;

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Some areas of interaction and joint working will work best at a City Region level, others at a core city level and a few between the city centres;

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There has been a growth in inter-city working including rapid growth in the development of networks between EU cities to promote trading links, exchange good practice and promote the interests of cities; and

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Cross city collaboration should ultimately lead to more innovative ‘solutions’ than would otherwise be the case.

6.129 The work highlighted areas where the two cities could work together more effectively, including: 

The five sectors of tourism; financial, business and professional services; cultural and creative industries; sports-related industries; and pharmaceuticals and biotechnology;

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Providing better transport connections between Manchester and Liverpool to strengthen economic linkages;

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Joint activities between higher education institutes, in particular applied research and the growth of high tech spin-of companies;

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Some degree of common place marketing and inward investment activity;

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Using European funding streams to facilitate both conurbations working together on common projects;

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Sharing experience and best practice in regeneration.

6.130 The report classed the benefits of collaboration as a sharing of ideas and best practice, the potential increased impact which can be achieved and the economies of scale when enabling nonviable projects to happen. Summary – Though post dated by other work, this study highlights a series of areas where enhanced collaboration across the wider geography would offer additional growth potential. It goes on to highlight a number of priority activities and themes which are now emerging in other work. City Links: Integration and Isolation 183 6.131 This research examines the issue of connectivity between large and medium sized cities, explains the importance of city links and sets out how they drive economic performance. It seeks to examine how firms and individuals interact and make decisions about their locations beyond administrative boundaries. It looks at why economic benefits have spread faster from London to surrounding cities and towns than is the case in the North of England. 6.132 Key headline findings include the following:

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The Greater South East has an advantage over the Northern economy through specialisation in those sectors which benefit more from agglomeration economies;

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Smaller cities in the South East operate as a network linked up through advanced producer services supply chains but this does not occur in the North;

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Businesses and legal firms based in northern cities tend to have stronger supply chain linkages to London than they do with other northern towns and cities.

Paula Lucci and Paul Hildreth, Centre for Cities for the Northern Way

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Summary of the Evidence Base 

There is a growing economic gap between places within the Northwest, for example between Manchester South and Warrington and Burnley and Blackburn;

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Travel to work analysis for the north of England shows that residents from smaller urban areas in Lancashire such as Preston, Blackburn, Burnley and Blackpool do not appear to be integrated into the Manchester labour market despite being quite close and having reasonable transport links;

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Transport infrastructure and commutability play a key role in strengthening links and ultimately economic growth.

6.133 The report draws on the comparison of two case studies, one of which has mutually supportive relationship already (London and Reading), the other which has as yet under-exploited links (Manchester and Burnley). It found that Reading has been able to develop firms in related sectors that complement London’s specialisations and has also been able to develop its own specialisations in R&D and computer software consultancy. Reading also benefits from being well connected by road and rail to London. 6.134 Burnley on the other hand has relatively poor transport links to Manchester, and its industrial heritage has meant that adjusting to a changing economy has been particularly challenging. It has not developed close economic linkages as a result, and has retained a strong base of manufacturing and engineering companies. Another reason cited for this is that employment growth within financial and business services sectors in Manchester seems to still be dominated by support functions and it is too early to develop synergistic relationships within this sector. Summary - The key conclusions arising from the research are that: It is important to understand the economic, infrastructure and labour market links between cities as within cities themselves; City-specific policy should be matched by a wider suite of policies to facilitate inter-city connectivity; Large cities can drive the economic performance of both their wider regions and smaller cities within them; Synergistic relationships allow the smaller city to develop its own specialist growth momentum on the back of the larger neighbour; The key considerations in developing synergistic growth are spatial realties, the strengths of infrastructure links and the ability of the smaller town to develop complementary specialisms. 6.135 The report recommends that there is a case for investment in new infrastructure linking more isolated towns to regional economic hubs; regional agencies should channel resources into key regional assets such as transport infrastructure to ensure that the benefits of growth are widely disseminated across the region; and smaller cities should focus on specialisms which complement rather than compete with those of the regional hub. 6.136 These conclusions would support improvements connectivity between deprived area’s of the region and the key economic centres of Manchester and Liverpool. City Relationships, Economic Linkages in Northern City Regions

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6.137 This research sought to examine why towns and cities in the North of England do not appear to have as many complementary economic relationships as the Greater South East and whether stronger and more complementary economic relationships would generate higher levels of sustainable economic growth and development. 6.138 It examined the five core economic centres in the North and examined their relationships with towns and cities nearby looking at labour market linkages and connections between businesses. The research did not examine links between the major cities themselves but produced a number of relevant findings, including: 184

Work Foundation, Centre for Cities and SURF for the Northern Way, Nov 2009

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Summary of the Evidence Base 

Links between economic centres and surrounding towns have the potential to generate mutually beneficial impacts;

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Places with strong labour market links to the economic centre have seen an increase in GVA, resident or workplace earnings;

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Skills were the most important factor in determining whether economic relationships are more or less complementary;

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Good transport can enable stronger economic relationships between places and also make areas more attractive locations for higher skilled workers. However, improving transport alone will not develop mutually beneficial economic relationships in its own right – there needs to be demand for it;

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In some sectors, business clusters, supply chains and innovation that takes place through interactions between firms will inform and shape the economic relationships between places;

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Labour market links, in particular commuting links, are the most important indicators of the strength of economic relationships and between places;

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There are benefits associated with enabling strong interaction between and within sectors through networks and demand-led infrastructure investment; and

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Skills, transport and firm links do impact upon the relationships between places but there are additional influencing factors, including the pull of the economic centre, industrial history and physical legacy, quality of place and housing.

Summary - The report highlights the importance of a skilled labour pool, quality transport connections in terms of supporting sustainable economic growth and sets out recommendations relating to cross administrative boundary policy development and the need for flexible governance and collaborative relationships. City Relationships, Manchester and Liverpool City Region Analysis

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6.139 The report examined the specific features of the five City Regions in the North. The Manchester and Liverpool City Regions were found to be significantly different. Manchester City Region was classed as monocentric, the principal employment centre within the City Region, acting as a strong draw for residents of neighbouring areas, with a travel to work area stretching well beyond its contiguous area. Liverpool City Region on the other hand was considered as polycentric, with Liverpool as the main driver and employment centre, but with Warrington and Chester as two other high value employment centres. 6.140 The report examined the relationship between the City Regions and six selected local authorities, classing each as dependent, isolated, interdependent or independent. 6.141 Of particular relevance were the positions of Chester and Warrington, both classed as independent to the Liverpool City Region and Manchester City Region respectively. This means that they are classed as having a strong economy, independent of the principal economic centre. 6.142 The main findings and policy conclusions were:

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Manchester is the economic centre, dominating commuting flows across the wider region and with the highest GVA in the City Region, a large proportion of knowledge based employment and many company head quarters;

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Labour market constraints (skills gap and high levels of worklessness) are the most significant issues facing the City Region;

Work Foundation, Centre for Cities and SURF for the Northern Way, Nov 2009

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Summary of the Evidence Base 

An integrated approach to transport planning is recommended, including better aligning public transport policy beyond the GMPTE boundaries, including areas such as Blackburn and Warrington;

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The City Region as a whole can benefit from strengthening Manchester’s economy and the links between neighbouring areas and the centre;

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Bury is an example of a town which aspires to have a complementary relationship with Manchester through improving education, infrastructure and quality of life;

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There is an increasing productivity gap between the north and south of the City Region; and

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Manchester needs to ensure that it makes the most of its relationships with neighbouring areas, in particular developing firm relationships and cross sectoral relationships across the City Region as a whole.

Summary – The report flags up the importance of Manchester and Liverpool as drivers of economic growth in the Northwest, it highlights the extensive connectivity and ‘reach’ of Manchester with other centres across the region, and highlights the overlapping connections which Liverpool has with Warrington and Chester. Spatial Evidence Study 186 6.143 This research sought to establish the spatial patterns of economic performance in the Northwest and provide the evidence base for the development and selection of strategic options as part of the Single Regional Strategy. It examined past performance, recent development trends, deprivation and spatial context and accessibility and spatial dynamics. The following findings of relevance were made:

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In terms of labour market and productivity drivers, southern Manchester, Liverpool and the Wirral perform the strongest within the region but success has been spatially constrained to the main city hub rather than spreading out to the entire conurbation;

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In terms of the knowledge economy and employment centres, Manchester stands out as the powerhouse of the region, followed by Liverpool, Cheshire East and Cheshire West. The southern part of Greater Manchester and Warrington are also amongst the best performing areas;

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The spatial distribution of enterprise culture and productivity is mixed across the region, with the best performers the southern Manchester sub-region. However Manchester itself, Liverpool and Knowsley perform less well;

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Across almost all domains of the IMD, parts of the City Regions display the most concentrated deprivation within the region;

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The analysis uses a market potential measure to measure agglomeration economies to demonstrate which areas are strategically most important in terms of their agglomerative potential. The spatial concentration of agglomeration potential is heavily weighted towards Manchester (the clear regional leader) and Liverpool (a stand alone agglomeration centre). This is followed by the reminder of the Liverpool and Manchester City Regions;

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In terms of functional connection, looking in particular at travel to work patterns, the Merseyside and Greater Manchester areas are fused together with significant connectivity between districts. When compared with elsewhere in the country, employment in Liverpool and Manchester is heavily supported by the process of commuting from neighbouring districts and those further a field.

The Centre for Urban Policy Studies for NWDA, Oct 2009

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Summary of the Evidence Base Summary – This report highlights the importance of Manchester, Liverpool as the ‘engine room’ of the Northwest’s economy. Of particular relevance to Atlantic Gateway is the analysis of travel to work patterns, which highlights the strong commuting patterns which exist across the south of the region. The depth of these travel to work relationships is greater than anything else outside of London and the South East. It also graphically illustrates their significance in comparison to Trans-Pennine linkages or connections to Lancashire. City-States and the Spatial In-between 187 6.144 This paper examines trends and theories relating to the economic, population and commuting changes in large cities and small cities in the UK. Of particular relevance is its analysis of changes in commuting networks using Census data from 1981, 1991 and 2001. The key findings include: 

For the most part (including for the Northwest) regional boundaries match the network density boundaries reasonably closely;

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Despite this, clusters exist which show little respect for administrative boundaries;

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England and Wales as a whole is becoming more polycentric but is also becoming increasingly dominated by large City Regions;

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As the UK’s economy does not rely on manufacturing, its spatial form should change to reflect that;

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The report highlights a series of tracts of space between ‘embryonic city states’;

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The Manchester - Liverpool geography forms one of the three areas of the UK with the greatest network interaction along with Birmingham and London;

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Although interaction between Manchester and Yorkshire has increased it is still relatively low when compared with the southern parts of the region.

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In concluding, the paper makes the case for a national spatial strategy to bring various issues together.

Summary – This paper again emphasises the significance of the network of travel to work patterns across the Atlantic Gateway area. It also highlights how these extended networks have ‘thickened’ between 1981, 1991 and 2001. It is anticipated that the 2011 Census will reveal how this trend has continued to grow. Economic Linkages between Leeds and Manchester: feasibility and implications 188 6.145 This report seeks to understand the current economic integration and interaction between the Manchester and Leeds City Regions as well as the potential future economic impacts of increased integration. The report states that evidence points towards a future where more economic activity could be concentrated in a small number of larger cities. It investigates the interaction between Leeds and Manchester as there is little current evidence of the links between the two cities and that increasing these links could play a part in improving the economic performance of the Northern regions in a similar way to both the South East and a series of international comparisons. The report examines patterns of commuting, earnings, employment and output. The main findings from the work are: 

There is little evidence of current interaction between business connections or commuting, despite the geographical proximity of Leeds and Manchester;

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Green, N published in Town & Country Planning May 2008, p 224-231

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SERC May 2009

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Summary of the Evidence Base 

Commuting levels are around 37% lower than would be expected when compared to inter City Region commuting flows between other local authorities of a similar distance;

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Much of the gap is explained by relatively high commuting time and costs between Manchester and Leeds, and their current industrial and occupational composition, not cultural or social factors;

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For earnings, employment and growth in output per worker there is little evidence of comovement between Manchester-Leeds and their neighbours in the same way as between London and the South East;

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Structural change, for example towards higher skilled jobs, is required to increase the interaction between the two City Region economies;

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Closer integration between Manchester and Leeds may deliver additional benefits in terms of increased wages for workers; and

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If increased integration leads to structural change such as changing the composition and skills of the workforce, the impacts will be higher.

Summary - The report also concludes that whilst both intra and inter city transport schemes would deliver productivity benefits, inter-city schemes would favour Leeds whilst intra-city schemes would favour Manchester. Improved Leeds-Manchester linkages would concentrate more of the benefit in the North and generate a greater impact on the north-south economic differential, although this may result in some negative impacts in peripheral areas within the North.

The Northern Connection: Assessing the comparative economic performance and prospects of northern England 189 6.146 This research programme involved assessing the comparative economic performance, connectedness and prospects of northern England, providing an evidence base for the Northern Way and its partners relating to the position of northern City Regions within a national urban hierarchy and issues relating to connectivity and spatial economic change. Some of the key findings include: 

Travel to work patterns illustrate the scale of commuting flows in the southern part of the Manchester City Region and, importantly, the higher level of interaction found between the areas focused upon Manchester and Liverpool compared to any other pair of northern hubs;

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In contrast, there are low levels of labour market interaction between the main urban centres of Central Lancashire and commuting between Manchester and Leeds is low;

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The north as a whole continues to lose ground on the vast and better connected London superregion;

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The North’s most buoyant economies are focused on Manchester, which has good international connectivity, and Leeds. At the next level is Liverpool which is loosely connected to Manchester. Finally, located on the fringe of this growth belt, Chester has also performed well over the past decade;

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There is very little evidence of trade in services across the Pennines – although there are close business links in financial and legal firms these largely replicate each other and serve different markets;

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The Institute for Political and Economic Governance and the Centre for Urban Policy Studies, the University of Manchester for the Northern Way, Jan 2008

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Summary of the Evidence Base 

The future prosperity of the North is likely to be driven increasingly by the economic performance of the Manchester and Leeds City Regions and the growth belt that connects them to Liverpool and Sheffield respectively;

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Policy initiatives should seek to find better ways of linking the fortunes of places together for mutual benefit rather than changing the balance between different areas;

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Greater investment should be made in understanding the interconnectedness between urban economies and how these may be more effectively encouraged;

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There needs to be more concern given to the implications of better transport links for the nodes that they connect when planning transport infrastructure improvements;

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The report recommends discussion of a strategic approach to inter-city connectivity that focuses on prioritising interaction between relative equals (Manchester and Leeds) and between centres which vary in their economic specialisms (Liverpool and Manchester) to improve the labour market between them; and

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There is a weak relationship between advanced academic research strengths and the innovation needs of employers across the North.

6.147 The report advocates ensuring that the concentration of activity and processes of agglomeration in and around the most important cities secures economic opportunities across the City Regions. Summary – The report emphasises the scale of the interrelationships between centres the importance of City Regions in driving growth across the wider geography and the importance of developing physical connectivity and policy linkages to improve labour market supply. Manchester Independent Economic Review

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6.148 The Manchester Independent Economic Review provides a detailed assessment of the Manchester City Region’s economy and its future potential. The review describes Manchester as ‘outside of London most likely to be able to increase its long term growth rate, to access international networks and enjoy strong connections to the rest of the world’. It does however conclude that the city is currently punching below its weight and should prioritise raising skills, improving education and tackling worklessness in order to enable it to grow at a faster rate and improve productivity. Although focusing on a detailed analysis of the Manchester City Region economy, the report produces the following findings of note:

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MIER concluded that firms in the Manchester and Liverpool City Regions had the highest productivity followed by Leeds, Tyne and Wear and Sheffield;

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Whilst key sectors are all strongly linked to the local economy, the Manchester City Region has a tendency to be inward facing and should seek to further develop international trading links;

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There is a lack of internal linkages which allow innovation to be spread and become ‘domesticated’ within the city;

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The report mentions the growth of businesses connected to the regional centre in sectors such as ICT Digital, Communications and financial and Professional Services, located in Stockport, Bolton, Bury and Warrington;

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Agglomeration economies arise from a large, diverse urban region;

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There may be net economic benefits to investment in some external links to other cities (such as Leeds) which could become more connected to the City Region, although an analysis of this was not within the scope of the Review;

Manchester Economic Review 2009

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Summary of the Evidence Base 

The report cites the importance of growing a larger and single pool of skilled labour, but that in the short term the creation of more jobs for skilled workers is likely to rest on projects such as MediaCity and Daresbury; and

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The work highlights the potential of Daresbury as an engine of economic growth for the region, although it emphasizes the need to attract major scientific investment in order that it is more attractive to partners in the Manchester City Region.

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There is a mismatch between supply and demand - not enough houses of the right type in the places where people (in particular high-skilled and professional workers) want to live, significant supply side failures in the City Region's housing stock. There is an over supply of small flats in the urban core and too few larger properties in the southern suburbs

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Improving the attractiveness of Manchester City Region as a location for mobile skilled workers requires improvements in housing and transport

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Need to improve housing to attract new people from elsewhere

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MIER recommends a review of housing strategy with emphasis on demand conditions and easing planning restrictions

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The review also portrays the Manchester City Region as a single economic geography stretching as far as Helsby in the west and Alsager in the south, demonstrating the reach of the City Region and its overlap with that of Liverpool.

Summary – The report emphasises importance of Manchester as a city region, with a complex and highly connected set of relationships with the surrounding areas, but with significant skills, and labour supply issues. Adapting the Landscape 191 6.149 This study was commissioned a complementary study to the work carried out on the Liverpool Manchester growth corridor work, its geography follows the natural landscape, commonly referred to as the Mersey Basin. The starting point for the project was to review existing research and policy to understand the current position in relation to green infrastructure. This helped identify the key challenges that green infrastructure could be used to address and understand the benefits it might provide. Climate change 6.150 Of critical importance to the future is the issue of climate change, potentially the single biggest challenge facing the world’s population. An increasing body of research identifies the need for intervention from all actors to change behaviours, introduce new legislation and place a higher value on natural and green infrastructure assets and systems. 6.151 Whilst the emphasis in policy and action suggests progress in addressing climate change there is still an overriding emphasis on the delivery of economic growth in the form of new jobs and increased productivity. At a time when the economy is shrinking, jobs are being lost and a decreasing pool of investment capital is available, there is a need to consider an alternative approach. Global economy 6.152 Recent events have shown how closely the economies of the world’s nations are linked and how quickly actions in one area of the globe can spread and impact on others. These changes have affected people at all levels of society and demonstrated how no individual or area is insulated from change. The current economic situation has also identified the pressing need for collective action to tackle these challenges. 191

This section is the evidence and summary section of the Adapting the Landscape Study, Oct 2009, URS.

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Summary of the Evidence Base 6.153 Maintaining economic competitiveness is a major challenge, particular for areas like the Mersey Basin which are historically reliant on manufacturing industries and which have significant areas of deprivation. Creating distinctive and high quality environments that maximise existing assets will be essential in attracting talent and investment in the future. It is also a critical factor in changing the external perceptions of the region. Water 6.154 Clean water and effective water management is essential to sustaining human life. Demand for water can be broadly split into four main areas – electricity generation, public water supply, industry and agriculture. Over 50% of this water is used in electricity generation demonstrating the strong links between energy and water use and demand. 6.155 Demand for both energy and water increases with income. As income increases people gain access to a range of new resources and experiences that require both additional water and energy, examples include air conditioning, refrigeration, transport and watering. In the UK the Environment Agency suggests that water consumption has increase by 50% over the past 25 years. Population and household growth places additional demands on existing water and energy systems. 6.156 Water is a central component of the natural and man made features of the Mersey Basin and as such plays a central role in the current and future fortunes of the area. The existing water infrastructure is already under stress and recent estimates suggest that it will cost more than £21 billion to continue to operate and maintain existing water resources and supply, water quality and flood risk infrastructure in the Northwest up to 2029. Energy 6.157 Energy and water are inextricably linked and essential for every aspect of life. One cannot be tackled without action to address the other. Tackling climate change requires all energy users to make efficiency improvements and reduce their demands on the existing supply. At the same time the issue of energy security is of growing importance as reliance on imported oil and gas increases against a backdrop of falling oil supplies. 6.158 These two critical and related issues have led to a move toward both nuclear and renewable energy sources as a partial solution. The Cumbria Energy Coast already embodies the Northwest region’s leading role in the development of the country’s nuclear power industry. Similarly the study area can position the region at the cutting edge of the renewables sector through investments including the Mersey tidal barrage. Food 6.159 Food is a major contributor to climate change and waste production. In the UK food supply is increasingly sourced from outside the UK and UK farmers have seen a significant fall in their share of the retail food market since the 1990s. 6.160 The Mersey Basin has the potential to start producing more of its own food both through small and large scale interventions ranging from allotments and local food schemes to increasing production on larger tracts of high quality agricultural land and agricultural glasshouses. This will not only help reduce the climate change impacts of food consumption and waste production but can help to boost and secure local employment and retain greater amounts of spend within the economy. Regeneration 6.161 Whilst many areas and individuals within the UK have experienced improvements in their quality of life over the past two decades there still remain major concentrations of deprivation within many of the cities and towns of the UK. The Mersey basin exhibits high levels of deprivation particularly within the urban cores of Liverpool and Manchester but also within many of the smaller towns including Warrington, St Helens and Runcorn. 6.162 In response to these and other issues, the policy environment is rapidly changing. At the regional level a move toward integration of economic and spatial policies coupled with an increasing emphasis on infrastructure planning at larger scales presents new challenges and opportunities.

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Summary of the Evidence Base Benefits of Green Infrastructure 6.163 Green infrastructure is receiving an increasing level of policy and research interest and this has resulted in the production of a number of useful publications. These provide a basis for understanding how and what contribution the landscape and natural systems can make to current and future challenges. 6.164 The work to date identifies a series of eleven benefits that investment in green infrastructure can provide. This provides a useful framework with which to understand the conditions, opportunities and constraints. Figure 97: Benefits of Green Infrastructure

Source: Adapting the Landscape, URS

6.165 Plans, strategies, proposals and activities should seek to adapt the landscape and promote investment in green infrastructure to increase the resilience of natural and human systems, tackle climate change and underpin economic growth (detailed examples can be found in the full report).    

Ensure multi-functional green infrastructure - Interventions should aim to maximise the multiple uses of green infrastructure from the detailed scale to the sub-regional scale. Develop productive landscapes - Interventions should focus on under-utilised land, including brownfields, urban fringe land, waterfront land and railway sidings. Create quality places with quality values - Interventions should focus on developing quality places that reflect the character of the subregion and integrate spaces encouraging activities devoted to place-making. Build a sense of localism through local networks - Interventions should develop key linkages integrated with green infrastructure that connect to and between open spaces and key destinations.

6.166 The study also identified a series of different conditions and impacts that will affect the area in the future. This section also sets out these issues and identifies how landscape adaptation and investment in green infrastructure can contribute and bring about a more sustainable future for the area. Protecting and investing in green infrastructure can help deliver economic development

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Summary of the Evidence Base 6.167 The evidence base shows the Mersey Basin area to be the part of the primary economic and population centre for the region – protecting and enhancing all assets whether natural or man made is critical to maintaining or improving the quality of life and supporting economic development in the future. 6.168 At the same time the current trends scenario predicts lower growth in employment and productivity for the area. The most recent work by the regional forecasting panel alongside shows a much slower level of employment and productivity growth over the long term compared to the experience over the past eleven years. This situation could be accentuated by the impacts of climate change that have the potential to place further constraints on growth. 6.169 Investment under the “Adapting the Landscape” theme has the potential to create jobs in new and developing sectors that would help to counteract this trend, supporting the sectors identified earlier. Examples here include the rapidly expanding environmental technologies sector and renewable energy, potential job opportunities linked to major investment in critical (see below) and green infrastructure including extensive tree planting and the development of alternative fuel sources. This can also prove to maintain the quality of life benefits which attract a higher skilled workforce. It can also help tackle climate change, and its constraints and increase collaboration 6.170 Research including the mini-Stern report highlights the increasing costs to individuals, businesses and the public sector if no action is taken to address climate change and other constraints identified here. 6.171 As well as the cost the ongoing effects of climate change will constrain economic development and subsequently reinforce negative characteristics of the study area including further reductions to economic activity and employment and increasing numbers of people living in deprivation. Help ease an overstretched infrastructure 6.172 Numerous studies undertaken in the Northwest that show a number of pinch points on the existing energy, water, waste water networks when taking into account future growth in households, housing and population. There are also increasing pressures on the region’s green infrastructures and stress on the landscape is likely to increase, particularly in areas with low landscape capacity. 6.173 As stated earlier it is anticipated that it will cost approximately £29 billion to continue to operate and maintain existing environmental infrastructure in the Northwest up to 2029. Of this the maintenance and operation of water resources and supply, water quality and flood risk infrastructure will cost approximately £21.651 billion 192 . 6.174 With the growth targets defined in the RSS of between 23,000 houses, this figure could increase by approximately £7,983 for all environmental infrastructures (equivalent to £16,528 per additional house), of which £7,869 million will be for water and flood risk related infrastructure. Green space can deliver benefits from under-utilised land 6.175 There are a large number of brownfield sites across the Northwest and Mersey Basin a significant number of which suffer from contamination as a result of a legacy of industrial use, waste disposal and mineral extraction. In some instances the financial costs of clean up relative to land and potential development values do not justify the redevelopment of some sites particularly given current economic conditions. 6.176 Tree and mixed planting in this instance can be a very effective form of management which not only helps to naturally tackle some issues of contamination but also improve visual appearance, provide new greenspaces for communities and enhance potential values of surrounding land. In addition re-

192

ARUP & SURF -report

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Summary of the Evidence Base population of contaminated sites can help to support natural ecosystems and encourage greater biodiversity. The effective management of greenspace can offer flood prevention and protection 6.177 Extensive evidence points towards flooding being the key climate change challenge and this will act as a significant constraint on economic development. The predictions for the Northwest are for hotter summers, wetter winters, and increased flooding and as such there is an urgent need to start dealing with the consequences of these changes. 6.178 The Environment Agency, along with other key stakeholders, have developed Catchment Flood Management Plans (CFMP) to identify the risks and these set out actions which recognise the spatial scale of flood risk is at catchment level. This work highlights a range of different issues. 6.179 There are over 19,000 residential and commercial properties at risk from a 1 in 100-year (1% annual risk) flood event within the Lower Mersey catchment, 4,675 in the Upper Mersey and 1,134 in the Weaver Gowy catchment. Over the next 100 years the impacts of climate change are expected to increase the number of residential and commercial properties at risk from a 1 in 100year flood event. In the Lower Mersey this may increase to 24,843 properties, 19,350 in the Upper Mersey, and 1,392 in the Weaver Gowy catchment. The level of risk and potential financial cost associated with a 100 year event is a strong rationale for the use of green infrastructure to reduce flooding. Important role in agriculture, reducing food miles and food security 6.180 The production and transport of food is a key driver of the carbon footprint of the UK. The Mersey Basin is characterised by its proximity to large urban customer markets and therefore there is the potential to increase and improve the amount of food produced, sold and eaten locally and increase the Mersey Basinâ&#x20AC;&#x2122;s resilience in this context. 6.181 The Mersey Basin plays a significant role in cereal crop production accounting for over one third of all cereal production in the Northwest. Horticulture is less important with vegetables and fruit representing only 5% of the area dedicated to cereals. 6.182 Previous research carried out by URS identified that climate change is likely to increase the productivity of food crops in the Northwest in contrast to many negatively impacted farming regions elsewhere in the world, thus increasing the regionâ&#x20AC;&#x2122;s comparative advantage. This is a major opportunity for the area. The main constraints to food production on agricultural land are an increased flood risk due to climate change, water supply and competition for land with other uses. What is clear is that the Mersey Basin has additional potential for food production and a move toward self sufficiency. Helping to respond to population and household growth 6.183 The Mersey Basin area contains the majority of the regions population and as such provides the focus of investment to improve individualsâ&#x20AC;&#x2122; quality of life. The current trends scenario shows that in the majority of the Mersey Basin authorities population is set to increase over the longer term. At the same time household numbers are predicted to grow driven both by population growth and increases in the number of single households. 6.184 As a response to this and other issues there are a range of existing and planned investments to accommodate future growth in parts of the Mersey Basin area. It is sensible and logical to ensure that this investment delivers the highest quality developments. To this end green infrastructure investment can play a major role to enhance the visual and environmental quality as well as play a role in the uplift of land and housing values. Green infrastructure can help tackling poor health

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Summary of the Evidence Base

6.185 Poor health is a persistent feature of significant numbers of communities and individuals within the Mersey Basin area and a major issue for the Northwest region as a whole. Life expectancy figures compare poorly with most other regions. The distribution of poor health within the population closely mirrors the pattern of the wider Index of multiple deprivation. 6.186 Green infrastructure investment offers a number of potential benefits which can make a contribution in terms of offering new areas for sport, leisure and recreation, improved environments in which to live and work alongside improvements to the quality of water, air and soils. 6.187 In many instances it is individuals within low-income families that suffer from the worst health so improving accessibility to these types of opportunities is critical if green infrastructure is going to realise these types of benefits. In this context programmes including Newlands have already been successful in developing brownfield sites for community use in deprived areas. Figure 98: IMD Health Domain

(Source: URS Adapting the Landscape)

Increasing congestion and stress on the transport network 6.188 Whilst the area has a well-developed transport and movement network at present â&#x20AC;&#x201C; modelling work suggests that by 2026 the road network, particularly in the Manchester area, will be under significant stress and increasing congestion a persistent feature if current patterns do not change. This will place some constraints on the ability of individuals and goods to be transported efficiently and place constraints on development. Using the waterways more effectively could be an opportunity to help ease this. Growing disparities 6.189 The current trends scenario clearly shows major concentrations of deprivation across the study area and this provides a partial rationale (on equity grounds) for spatially targeting these areas with investment to improve economic, physical and social conditions.

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Summary of the Evidence Base 6.190 At the same time the economic data has shown higher levels of GVA, employment and investment growth in close proximity to these areas of need. If additional investment in green infrastructure is to be made on the basis of an equity argument it is these areas of need that would form the geographic priorities. Improving access to recreation and Leisure 6.191 Whilst the Mersey Basin does not have the inherent natural assets of the nearby Lake District, Snowdonia National Park or Peak district, there are a number of country parks and including Croxteth Country Park and Tatton Park. In addition there are nature reserves including Clock Face and Pennington Flash Country Parks. 6.192 The Mersey Estuary, with its associated mud flats, is a bird habitat of national importance as represented by its RAMSAR designation. This is indicative of the Mersey now being it’s cleanest since the Industrial Revolution. 6.193 A national cycle route, the Trans Pennine Way, links Manchester and Liverpool with off-shoots extending into the Weaver Valley and Croal Irwell. There is also a strong network of regional and local cycle routes extending south into the Cheshire Plains, although the frequent smaller urban areas to the north of the M62 are not well connected by recognised cycle routes. 6.194 The study area’s canal network provides excellent walking routes with the Cheshire Ring being a formalised walking route along former towpaths. The study area is not an area characterised by large tracts of woodland and opportunity exists for more woodland to provide a broader range of informal recreation opportunities, biomass and carbon sequestration. 6.195 Knowsley was named the ‘Wildflower Borough’ in 1992 and is home to Europe’s only centre for wildflower conservation, one of only two in the world, which is due to expand. 6.196 A wide range of recreational destinations exist within the study area, with the urban centres of Manchester and Liverpool providing a strong concentration of cultural attractions, shopping opportunities and being home to two of the world’s most famous sports teams. 6.197 The separate identity of the smaller towns within the study area is evident in their sports teams, in particular through the predominantly northern sport of rugby league with the stadiums of St Helens, Warrington and Wigan major features of their town centres. 6.198 Public art is a key feature of the study area, with Antony Gormley’s modern sculpture exhibition ‘Another Place’ on Crosby Beach is an extremely successful example of its transformational power, both in terms of place making and economic development. Another public art work, The Dream – a 20m high sculpture of a small girl’s head by Catalan artist Jaume Plensa – was unveiled along the M62 corridor near St Helens in April 2009 and is already a local landmark. Economic Impact of Preston 193 6.199 This study was undertaken to explore the opportunities posed by Preston as the regions 3rd city. The headline finding from the work was that Central Lancashire has performed well over the past several years, with strong growth in employment and GVA. In addition, Central Lancashire is a resilient economy and well placed to weather the current economic downturn, as it has previous times of economic difficulty. There are a number of reasons for this but the broad spread of sectors is still its main economic strength. 6.200 However, despite this Central Lancashire has not delivered to its full potential over the past ten years of broadly positive economic performance. This is illustrated by a number of key facts: 6.201 Inward Investment - Central Lancashire’s failure to attract a significant share of Northwest FDI over recent years, NWDA Inward Investment Team Statistics indicate that Central Lancashire has had just a 3% share of inward investment projects over the period 2004-2008, and has captured just 1.5% of the new jobs created and 3.4% of the safeguarded jobs. 193

Economic Potential of Preston; May 2009; GVA Grimley

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Summary of the Evidence Base 6.202 Business Base - Central Lancashire’s growth in VAT stocks trails the Northwest and England averages. Within Central Lancashire itself, growth in VAT stocks has been underpinned by South Ribble and Chorley, Preston’s performance has been weak. Chorley and South Ribble’s VAT stocks have increased by 15.4% and 14.7% respectively over the period 2001-2008, whereas Preston’s VAT Stock grew by just 6.1%, less than half of the UK or Northwest rate. 6.203 Employment Growth – Since 1998 employment in Central Lancashire has increased by more than the Northwest average, with employment growth of around 19%, compared to 8% in the Northwest. Employment growth varied from 15% in Preston to 31% in Chorley. However a significant number of new jobs have come not from private sector employers, but from public sector growth, with public administration and defence, education and health and social work accounting for almost 15,000 of the new jobs. Private sector growth has been equally strong in some sectors such as Other Business Activities. 6.204 GVA – growth in employment has not translated into a concomitant increase in GVA. Whereas regionally employment has grown by 8% since 1998, GVA has grown by 28% during roughly the same period; Central Lancashire on the other hand has posted an employment increase of 19%, GVA has grown by 29%. By implication, if productivity growth ratio had kept pace with the regional average then GVA growth should have been 67%. 6.205 Occupational Structure – workplace analysis of Central Lancashire’s occupational structure indicates that a high proportion of its employment remains in administrative and secretarial occupations (17% - compared to Northwest and England and Wales averages of 13% and 12% respectively. 6.206 Earnings – Although Gross Weekly Pay (workplace earnings) in Central Lancashire is only slightly below the Northwest average (£441 per week compared to £450 per week) wages are significantly lower in Preston, at around £426 per week. Earnings in Central Lancashire, like the rest of the Northwest, trail England and Wales earnings by almost 7%. Gross weekly pay in Preston is significantly lower than earnings in Liverpool and Manchester, the two Northwest Cities it aspires to compete with. 6.207 Population Growth – Although the Central Lancashire population has been growing steadily, and in line with the England and Wales average, Chorley and South Ribble are the real drivers of population growth. Recent recovery in population growth for Preston since 2003 cannot hide the fact that its rate of growth has been less than a quarter than that for the wider Central Lancashire area since 2000. 6.208 City Centre ‘Offer’ – Although Central Lancashire has increased its retail floorspace by more than the regional average, growth has been driven by out of town retail, particularly in South Ribble. Preston has seen only a 2% increase in retail floorspace since 1998, compared to a rise of 22% in Manchester and the development of Liverpool One. Preston City Centre is therefore falling behind its competing cities elsewhere in the Northwest and has failed to bring forward the Tithebarn redevelopment quickly enough. 6.209 Housing – Central Lancashire has improved its housing offer, with new suburban housing development at Cottam, East Preston and Buckshaw Village and the beginnings of city living apartment development around Preston City Centre, but a significant proportion of the housing stock within inner east Preston remains low price and low quality. 6.210 Capitalising on its Transport Links – Central Lancashire has not capitalised on its position as the transport hub of Lancashire. Despite having excellent motorway links, and access, through Preston station, to fast, frequent rail services to London, Birmingham, Glasgow, Manchester, Manchester Airport, Liverpool and beyond (with Preston being by some distance the busiest NW station outside Manchester and Liverpool), as discussed above Preston has seen low business formation rates and little of the Northwest’s national and FDI has chosen to locate in central Lancashire, instead locating at less well connected destinations such as Chester Business Park (MBNA, Marks and Spencer Financial Services).

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Summary of the Evidence Base 6.211 These key findings and a range of other issues are explored and also the Strengths, Weaknesses, Opportunities and Threats. Strengths 6.212 Economic structure aligned with higher value sectors that are growing nationally (computing, business services and finance) and advanced engineering, software and digital design. Strong service sector performance particularly connected to public-sector related activity. Although declining, manufacturing will still make an important (and disproportionate) contribution to the strength of the Core Central Lancashire economy. 6.213 The presence of BAE systems at Warton and Samlesbury provides Central Lancashire with a substantial base of intellectual capital, a core of skilled, well paid employment. More than half of the workforce is skilled technicians and nearly a quarter are classified as (non-executive) professionals. 6.214 Central Lancashire is well placed to capitalise on the expected renaissance in the UK Nuclear Industry. Westinghouse has recently established their UK HQ in Preston and are one of the two companies short listed to build new reactors. The proximity of Heysham Power Station, the relative proximity of Sellafield, its strong engineering base, UCLan and Preston’s position as the closest emerging regional services city make Central Lancashire well placed to capture a large share of any new opportunities in this area. 6.215 At the heart of Lancashire – Preston acts as the ‘hub’ for all communication flows throughout Lancashire (75,000 journey to work trips into Preston); Access to major centres of London, Manchester and Glasgow via rail and serves Manchester / Manchester Airport by good road links. Direct rail links to Manchester Airport and (outside of peak times) fast journey times by road to both Manchester and Liverpool Airports, serving more than 200 destinations worldwide. 6.216 Increasing population since 1981 (over 8%) set against a population decline in Northwest of 3% since 1981, forecast to continue to increase to 2031 (compared to decline in Liverpool). Large working age population within 30km, over 800,000 people providing larger workforce potential than Chester, Blackburn and almost as many as Liverpool. Working age population within 10km also significantly larger than NW competitors. Access to more than 200,000 people of working age qualified to NVQ4 within 30km, providing large and skilled workforce. 6.217 The University of Central Lancashire (6th largest University in the country) providing a highly skilled population. The presence of the University offers a significant driver for economic growth and is increasingly aligning its knowledge base towards some of those sectors that have made Central Lancashire prosper in recent years. The university has invested over £60 million in new facilities over the last few years with student numbers expected to increase from 35,000 to 50,000 by 2010. 6.218 Weaknesses 6.219 The Gross Value Added (GVA) gap with the rest of the UK is about £600 million. By far the majority of the GVA gap is attributed to services, with substantial productivity gaps apparent in Finance and Banking; Professional Services; Business Services and Computing Services 6.220 Central Lancashire at a significant disadvantage to major conurbations of Manchester and Liverpool in terms of working age population living within 10km, and almost 500,000 fewer people of working age living within 30km as Warrington. 6.221 Strategic and functional relationships with the surrounding Lancashire sub-areas, as well as Liverpool and Manchester have not been fully exploited particularly given Preston’s strategic location and infrastructure advantages. 6.222 Despite the presence of UCLan, lack of graduate level employment means many leave Preston once their studies are completed. 6.223 Whilst the levels of achievement in Central Lancashire schools have generally risen, and are well above average in South Ribble and Chorley, Preston’s overall performance is significantly below average.

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Summary of the Evidence Base 6.224 The indicators of multiple deprivation highlight significant areas of Preston are in need of comprehensive socio-economic and physical regeneration with the inner urban areas of Chorley, Leyland and most, especially Preston display incidents of being ranked within the 5% most deprived wards in the country. Levels of long term limiting illness are highest in the inner urbanised areas of Preston, Leyland and Chorley fluctuating from between 16% and 24%. 6.225 Preston (more specifically Preston east) suffers from the high levels of persons with no qualifications (those aged 16-74) with levels between 42.1% and 48.6%; this is replicated in Chorley and in parts of Leyland and Bamber Bridge. 6.226 Labour supply constraints (skills, deprivation) act as a constraint to further economic growth. 6.227 A city centre falling behind - Preston has seen only a 2% increase in retail floorspace since 1998. The city centre office market has historically been constrained by supply-side factors - primarily constrained by the unwillingness of developers to undertake speculative development. 6.228 Strategic leadership is currently hampered by the two-tier system, which frequently directs resources and priorities away from the City. 6.229 Opportunities 6.230 Capacity for growth - strong supply of employment land, with almost 300 ha available for employment development in Preston, South Ribble and Chorley. Strong housing growth potential â&#x20AC;&#x201C; with the Central Lancashire Growth Point proposing to develop 21,200 new homes by 2020. 6.231 The development of Tithebarn would substantially increase retail floor space within the city centre and improve the retail and cultural offer of Preston City Centre, a crucial factor in maintaining the wider appeal of the Central Lancashire area. Tithebarn and the proposed Central Business District would jointly expand the city centre office offer, and address the lack of new, Grade A office accommodation in Preston City Centre, and improve chances of professional and business services to the City. 6.232 The development of an enhanced city centre offer would be the catalyst for a wider platform of investment into Central Lancashire, including foreign direct investment. International image and marketing represents a key long term goal. 6.233 Recent years have seen strong growth in the education and health sectors, with UCLan a key driver, continued growth at UCLan, the continued improvement of its reputation and its ability to draw in young, talented under and post graduates is important to Central Lancashireâ&#x20AC;&#x2122;s appeal. 6.234 Results from the Business Survey suggest that the relationship between UCLan and Central Lancashire businesses is relatively weak, but this does not capture the full scope of the Universityâ&#x20AC;&#x2122;s business and knowledge transfer activities. The University is actively encouraging start up businesses and graduate entrepreneurs, developing a new business incubator facility alongside other activities. The University offering the potential for further knowledge and skills transfer, and can help address the difficulty some Central Lancashire businesses have in findings the skills they nee.; 6.235 The new Preston Vision, if adequately resourced, offers significant potential to galvanise new investment into the city and look to strengthen links across Central Lancashire and the region. The New Growth Point Partnership also brings a new phase of joint-delivery for the districts of Central Lancashire and the Fylde Coast authorities of Blackpool, Fylde and Wyre. Threats 6.236 Central Lancashire has seen relatively little additional, new, Grade A city centre office supply developed over the last 10 years, but this is increasingly the office product demanded by major professional and business services firms, that are moving away from the out of town business park due to lack of the wider vibrancy and retail offer of city centre locations. Central Lancashire risks losing office employers to other regional cities that have or are developing this offer.

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Summary of the Evidence Base 6.237 The slow pace of delivery of the Tithebarn development, if left unaddressed, will harm the attractiveness and competitiveness of Central Lancashire relative to its competitors, but may also harm Central Lancashireâ&#x20AC;&#x2122;s reputation in the private sector as a place to invest. The slow pace of delivery has already meant that the housing led redevelopment of the wider city centre area, especially the mixed use area to the south of Church Street and Fishergate has not come forward, and further delay might mean additional missed opportunities. 6.238 The Central Lancashire housing offer, and especially the offer in Preston itself, does in part act as a disincentive to those with higher skills / prospective graduates / professionals to live and work in Preston â&#x20AC;&#x201C; meaning the benefits of Prestonâ&#x20AC;&#x2122;s higher paying jobs do not get retained within the local economy and meaning that some employers find it harder to attract the workforce they need.

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Summary of the Evidence Base 7. Delivering the Outcomes – Issues, Opportunities, Assets and Threats The following sections are summaries of the evidence base against the 12 outcomes identified in the strategy. Outcome 1: Developing a low carbon economy, promoting the sustainable use of resources and minimising, and adapting to the impact of, climate change

Stern Review - do nothing scenario could cost Northwest £70 billion Strong & diverse energy sector and a net exporter of energy The region is ‘decarbonising’ but business as usual forecast emissions to increase over the next decade. Electricity network will require a considerable upgrading & include connections for renewable sources. Good renewable energy resource base presenting opportunities for economic growth and security of supply, potentially separating economic growth from carbon emissions

    

Figure 99: SWOT analysis

Weakness – defined as an issue performing poorly against National comparators

Threat – an issue which is showing deterioration in position or risk/signs of weakening

Energy from renewables

Transport emissions

Planning legislation

apathy Affluent society

Energy Consumption

Industrial and commercial

Increased energy demand

Energy intensive sites

Outcome 1: Low carbon economy Energy exporting

Clean technology

Renewables – Wind Tidal

Carbon reduction

Nuclear skills and research

NDA, Tyndal, Man UNI

Nuclear

Supporting opportunity – an issue showing signs of improvement or policy opportunity

Energy Coast

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.1

In 2008, a number of sub-regions in the Northwest published their own 'mini-Stern' reviews, including Cumbria and Manchester. Manchester's report found that a 'do nothing' scenario could cost the Manchester city region £21 billion over the next 12 years, with the cost for the entire Northwest potentially reaching £70 billion.

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Summary of the Evidence Base

7.2

7.3

In 1990 it was estimated 194 that in the Northwest the total Global Warming Potential (GWP) for all greenhouse gases was just under 82.5 million tonnes (though there is uncertainty in this figure). It is estimated that this regional total reduced to just over 66.5 million tonnes GWP in 2005. This reduction was due to a decrease in emissions from industry. The Northwest economy is therefore ‘de-carbonising’ as the result of the shift from manufacturing to services. Forecasts however see this increasing over the next decade under a business as usual scenario.

7.4

Energy and the Climate Change agenda are intrinsically linked. The production of energy from fossil fuels produces greenhouse gases, mainly CO2, which is the major cause of climate change. Reducing energy use and decarbonising energy production will help to tackle climate change, reduce dependency on high consumption and reduce adverse environmental impacts. Moving towards a low carbon economy will create wide ranging issues but also many economic opportunities, especially for businesses already involved or seeking to be involved in the increased activity of innovation in the ETS sector.

7.5

It is estimated that the region’s total energy demand in 2006 totalled 200,755 GWh, equivalent to 17,261.8 Ktoe. The main consumer of energy was the industrial and commercial sector (39.2%), followed by domestic customers (33.2%), while transport accounted for 27.5% of total energy consumed. In 2007 the region consumed 35,353 GWh of electricity.

7.6

Energy intensity is a ratio of total energy consumption and GVA. All regions improved their energy intensity ratio between 2003 and 2005 with the exception of the North East who’s rank dropped by 0.2 kWh/£GVA. The Northwest was ranked 7th in 2005 with 1.9 kWh/£GVA and improved on this in 2006, reducing energy intensity by 0.1 kWh/£GVA and ranking joint 6th (with Scotland and East midlands). In 2007 East and West Cumbria were the most energy intensive areas in the Northwest consuming 3.0 and 2.6 kWh/£GVA.

194

AEA Energy and Environment for 4NW (2009) Energy and Greenhouse Gas emissions study update 2005

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Summary of the Evidence Base

3.5 3.0 2.5

2003

2.0

2004

1.5

2005 2006

1.0 0.5

South West

South East

Greater London

East of England

West Midlands

East Midlands

Yorkshire & Humber

North West

North East

Scotland

0.0 Wales

Energy Intensity (KWh / £GVA)

Figure 100: Total energy intensity (KWh / £GVA) by UK regions 2003 – 2006

Source: Adapted from DECC ‘High Level Energy Indicators’ 2006

7.7

The Regional Economy Environment Input Output Model (REEIO) model projects total energy demand to decrease over the period to 2020 (REEIO 2008) by around 12%. Electricity consumption is forecast to fall by 6%. However, the National Grid expects that there will be a growth in demand of 1.1 % per annum from 2005/6 to 2011/12.

7.8

The regional electricity and gas infrastructures are broadly in good condition, and the service operators make the necessary investments in maintenance. There is a list of infrastructure projects in the pipeline, which are intended to address the future demands on the networks from capacity and resilience/security perspectives.

7.9

The electricity network will experience a considerable degree of replacement and upgrading. The network operators are anticipating (and planning for) a surge in the requirement for new generator connections, most notably from renewable sources, but also a range of new customers (of varying sizes) which requires new sub-stations.

7.10 The region currently produces between 2 and 2.5% of electricity from renewable sources (these figures do not include offshore wind developments and those under construction, which accounts for the variation in Northwest renewable energy generation). Some estimates put renewable electricity generation in the Northwest as high as 4.7% including offshore renewable energy generation. The National Grid estimates that renewables will be 7.4% of total generation by 2010. 7.11 Table 13 takes two demand growth scenarios (zero growth and a growth rate of 1.1%) and forecasts the amount of electricity that will have to be generated in order to meet the targets. The base year used for the growth assumption is mid-2005 and the estimated consumption use in the base year is 35,925 GWh.

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Summary of the Evidence Base Table 9: Possible future renewable generation targets Year 2010 2015 2020 2020

Annual consumption (GWh) 35,925 - 37,660 35,925 - 39,778 35,925 - 42,014 35,925 - 42,014

Target renewables (%) 10% 15% 20% 20%

Target (GWh) 3,592 - 3,766 5,389 - 5,967 7,185 - 8,408 12,574 - 14,705

Source: Towards Broad Areas for Renewable Energy Development (2008)

Opportunities 7.12 Responding effectively to the opportunities stemming from the climate change agenda, the region can position itself as a leading international centre for climate change technologies and services. There is for example large potential for region to innovate and develop new forms of renewable energy and local generation and to develop the associated environmental technologies sector and supply chain. 7.13 Scarcity is a threat but it also encourages innovation, demands ideas and solutions and the Northwest's Universities and its industrial heritage provide the basis for this. 7.14 There exists a clear opportunity to build on the region’s nuclear sector. Nuclear is likely to emerge as an alternative and there are strong skills and expertise in the region, especially sites such as Sellafield in Cumbria and the Nuclear Skills Academy. 7.15 Utilising our environmental assets as an opportunity to produce clean energy e.g. 1000km of coastline for tidal and wind energy. 7.16 Additional future opportunities include: 

Making our housing stock carbon neutral (new builds and retro fitting existing stock).



Demand for work/life balance means less commuting in peak times.



Community based micro-generation schemes and local energy storage.



Increased investment in the public transport infrastructure and other schemes to reduce congestion.



Localisation of food production, reducing need and impact of transporting goods.



Cities present opportunity to achieve sustainable planning and create sustainable lifestyles.

Assets 7.17 The Northwest is a net exporter of energy and home to some of the most significant facilities in the UK for fossil fuels (Fiddlers Ferry, which has biomass co-firing capacity), nuclear (Heysham 1 and 2) and renewable generation (Burbo Bank and Barrow wind farms). 7.18 The Northwest is in a strong position to innovate and implement renewable and natural energy sources due to its location, for example the potential for tidal and wind energy. 7.19 There are historical strengths in chemicals, sciences, technology, manufacturing and engineering which can be applied to develop skills and businesses in energy efficiency. 7.20 The ‘Energy Coast’, located along the coast of west Cumbria down to Lancashire, is known for its strong links with the nuclear sector. With almost half of the region’s energy from nuclear sources, there is nuclear heritage and expertise. Assets: Low Carbon sector 7.21 Demand side growth market across all regions

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Summary of the Evidence Base 7.22 The environmental need for a lower carbon economy means there are ubiquitous opportunities across all regions. The ‘mix’ by region will be different, in terms of research and technological development ability but also in terms of downstream deployment. This creates a range of different business opportunities. 7.23 Cumbria as an international centre of the nuclear industry 7.24 Potential of the nuclear industry in the Northwest, with a concentration in West Cumbria but a network of assets throughout the region. Although reliant on external expertise with regard the new build programme the UK has the potential to develop expertise off the back of this strategic public sector investment and memorandums of understanding are in place to try and secure economic benefits to the UK. Decommissioning remains a significant business opportunity. Assets of national significance with regard the nuclear industry have the potential to be a critical mass and an international centre of civil nuclear research and deployment. Cumbria in particular is a location where assets are in place and where the geography of the location is beneficial (remoteness, community acceptance of nuclear) – the Northwest has the ambition of being a Nuclear Energy Low Carbon Economic Area 

Concentration of assets in one location linked to wider set within region



Decommissioning and new build – future domestic and then overseas markets



Concentration of R&D and science/skills assets

7.25 Potential for the Northwest to be a centre of low carbon aerospace 7.26 The Northwest is a leading international centre of aerospace production with both defence and civil expertise; the requirements to reduce the carbon emissions from aerospace places a considerable challenge on the industry – end use producers of in the aerospace industry will increasingly need to factor in lower carbon impacts into the design and manufacture of end use and intermediate components 

Existing ‘sunk’ capital and intangible capabilities in aerospace production



Key projects – next generation composite wing and environmentally friendly engine



R&D in aerospace, composites and engines (see earlier)



Of national significance

7.27 Geography of the region – potential for tidal and renewable exploitation (especially along coast) 

Geography of Cumbria – remoteness and community acceptance



Aspirations for low carbon housing – Greater Manchester MAA but across the region



Potential of a smart grid network – urban and rural testing

Threats and weaknesses 7.28 Once the Heysham reactors are decommissioned there is a projected decline in UK nuclear capacity. The Sellafield site (including Calderhall, Drigg LLWR and Windscale) currently employs around 12,000 people and is likely to remain at these levels until around 2015, when (due to decommissioning) it will decline to around 4,000 by 2035. 7.29 As society becomes more affluent energy consumption will increase. High income groups currently have little incentive to reduce their carbon footprint. 7.30 Energy often wasted due to inefficiencies in domestic and business processes. For example, almost half of C02 emissions are caused by building, maintaining and occupying buildings. This presents an opportunity to retrofit existing buildings and housing stock. 7.31 Additional threats and weaknesses include:

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Summary of the Evidence Base 

Too few companies involved with new technologies e.g. fuel cells and wind power.



Failure to break the link between economic growth and carbon consumption



Too little public and private sector collaboration to tackle infrastructure issues.



Congestion causes more cars to be on the road for longer than is required, thus emitting more CO2.



Lack of efficiency in green technologies which give disproportionate return on investment.

7.32 Different energy standards and practices across local authorities in the way they deploy their statutory duties and monitor progress leading to a distorted view of the actual picture. A more coordinated approach is therefore required and the SNR presents and opportunity in which this could be achieved. Threats 7.33 Energy prices forming a barrier to entry for new businesses and also a barrier to investment in the region as well as a lack of support for business in implementing energy efficient schemes required by legislation. 7.34 Northwest depends on manufacturing and rising energy and fuel costs will potentially make businesses uncompetitive and the region less attractive to inward investors. In addition rising energy costs will affect affordability of fuel and quality of life of low income groups. 7.35 Higher costs particularly affect costs of living in rural areas of the region which could fall behind more energy efficient urban areas. Low income groups are less able to invest in energy saving solutions and available support not promoted as well as it could be. Movement of affluent groups to rural locations increased need for travel to service centres and increases carbon footprints. 7.36 Continuing apathy towards the issue of climate change remains a key threat and could eventually lead to a ‘perfect storm’ scenario where global resource demand and costs outweigh supply capacity. 7.37 The current network infrastructure is dated and in urgent need of upgrade. A continuing trend for development could case distribution problems with growth of urban areas. Planning legislation and amount of time needed for green schemes such as wind farms and eco-friendly housing to gain permission. There is the associated danger of investment in quick win energy gap solutions, such as gas fired power stations, which are much cheaper in the short term but do not present a sustainable alternative. 7.38 A wholesale move to home working could actually increase the amount of energy consumed compared to office working. Home working should be appropriate to the context which it is being applied in both ‘sustainability’ and cost effectiveness terms. 7.39 The image of the region is a key consideration, especially with regards to the nuclear agenda. Cumbria could be perceived to be a waste disposal container for nuclear waste, outweighing its competitive advantage in the natural environment and tourism offer.

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Summary of the Evidence Base Outcome 2: Ensuring the Northwest has vibrant and attractive cities, towns and rural areas, capitalising on the region’s rich cultural, heritage, sporting and university assets.

     

The performance of the tourism sector in the NW is strong in terms of market share of the English regions. Outside the obvious draw of London Manchester is the most frequently visited destination by overseas visitors in England The Northwest benefits from an extensive range of historic assets which contributes £1.6 billion per year to regional GVA Levels of cultural and social engagement are low overall in the Northwest and there is a high correlation with levels of deprivation and low engagement Universities contribute considerably to civic and community engagement as well as capital expenditure within the built environment Cultural engagement in the Northwest has improved significantly compared to other regions over recent years. Figure 101: SWOT analysis

Weakness – defined as an issue performing poorly against National comparators

Perceptions of crime

Threat – an issue which is showing deterioration in position or risk/signs of weakening

Urban warming

Image of nuclear

Arts attendance

Outcome 2: Attractive Places Sport - football Arts

Liverpool

Cheshire Brand Capital of Culture

Media City

Heritage

Universities

Industrial heritage

Supporting opportunity – an issue showing signs of improvement or policy opportunity

Env. Tourism

World Heritage Sites

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.40 The performance of the tourism sector in the NW is strong in terms of market share of the English regions. In terms of overnight tourism, the Northwest was the third most visited region for domestic overnight stays in England in 2008 after the South West and South East, receiving 13 million trips (14% share of the England total), producing 36.6 million nights and £2.4 million in visitor expenditure.

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Summary of the Evidence Base 7.41 Looking at individual destinations, outside the obvious draw of London, Manchester is the most frequently visited destination by overseas visitors in England and has been for every year bar one since 1999. Its closest competitor is Birmingham but the West Midland capital has fallen in visitor numbers in recent years. Liverpool’s status as a visitor destination has increased markedly since 1999 rising 62% from 210,000 to 553,000 over 9 years to become England’s third most visited destination for international visitors. The other Northwest place to appear on the top 20 UK visitor destinations is Chester although it hasn’t featured in 2008 or 2007. Figure 102: Top Visitor Destinations for International Visitors (exc. London) 1999-2008 1200

1000

(000s)

800

600

400

200

0 1999 Liverpool

2000 Manchester

2001 Birmingham

2002 Bristol

2003 Leeds

2004

2005

Nottingham

2006 Cambridge

2007 Newcastle

2008 Oxford

Source: International Passenger Survey, ONS

7.42 The Northwest benefits from an extensive range of historic assets across the region, from preRoman through to the industrial revolution and the 20th Century. There are some 25,413 listed buildings, 1,329 ancient monuments, 133 historic parks and gardens, 3 historic battlefields, and 2 World Heritage sites. Of these, a significant number (some 6,700) are identified as potentially having direct economic benefit. However, many of the Northwest’s assets are considered to be ‘at risk’, including some 135 listed buildings and 553 ancient monuments. 7.43 The overall contribution of heritage to the Northwest economy is £1.6 billion per year with the majority of this attributable to the 50.5 million visitors to heritage assets each year and the economy they support. It is also estimated that over half a million jobs are housed within historic buildings giving an indirect benefit of £21 billion GVA per annum. 7.44 The sports industry in the Northwest is comprised of 8,350 companies, employs 97,565 people and has an annual turnover of £6.5 billion 195 . The ‘Taking Part’ survey suggests that participation in active sport is the lowest of all English regions at 64%: this measures participation on one or more occasions in the last 12 months. However, the latest Active People survey (2007-08) shows the Northwest to be the fourth most active region, with 21.3% participating in moderate intensity sport and physical activity on three or more occasions per week. 196 7.45 Levels of participation in sport and physical activities are evidenced at a local level by Active People data, which supports the measurement of the national indicator NI8 for setting targets for 195 ONS data, prepared by Knight Kavanagh Page on behalf of the NWDA Research team 196 Unlike the Taking Part survey, Active People is sensitive to sub-regional differences and also measures different frequencies of participation (rather than numbers of times participated over one year). It therefore provides a more valuable measure of participation for the relationship between sports activity and health outcomes.

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Summary of the Evidence Base participation. 197 The areas with the highest levels of sports participation are Ribble Valley (24.4%), South Ribble (24.7%), South Lakeland (24.2%), Cheshire East (24%), and Cheshire West & Chester (23.8%). These areas share in common the fact that they are predominantly rural, ethnographically and demographically similar and generally affluent. Conversely Blackburn with Darwen, Oldham, Tameside, Liverpool and Blackpool have the lowest levels of sports participation. These areas are similarly deprived, densely populated and ethnographically diverse suggesting a link between affluence and healthy living/deprivation and unhealthier lifestyles. 7.46 Taking Part also measures participation rates across cultural activities. The Northwest is below the England average on participation and attendance for every cultural activity bar archives (see chart below). It performs particularly poorly on arts attendance and arts participation. Conversely the highest levels of participation and attendance are within the South East and South West. However cultural engagement in the Northwest has improved significantly compared to other regions over recent years. Attendance has increased markedly between 2006/7 and 2007/8 from 62% to 66% and participation from 41% to 45%. Figure 103: Participation/Attendance across cultural activities per region 80

0 East Midlands

East of England

Historic Environment

England

London

Museums Galleries

Northeast Libraries

Northwest Archives

South East South West

Arts Attendees

West Midlands

Yorkshire

Arts Participants

Source: Taking Part Survey, DCMS 2008

7.47 Further analysis of the Northwestâ&#x20AC;&#x2122;s poor performance in arts attendance and participation shows that it is highly variable across the region with as many as 35% of people disengaged in Knowsley, 31% in Liverpool and 30% in Manchester to just 17% in South Lakeland, Macclesfield and Ribble Valley. As expected these latter areas also have the highest proportions of people classified as highly engaged as do areas like Chester but also interestingly Manchester demonstrating the mix of people in the city. Boiling down further using Manchester as an example shows very high levels of engagement in wards like Chorlton, the City Centre and Didsbury and conversely very high levels of disengagement in areas like Gorton North and South, Harpurhey, Ardwick and Blackley. Once again this demonstrates the link between cultural disengagement and deprivation. 7.48 Major events and festivals have played an important part in the Northwestâ&#x20AC;&#x2122;s cultural economy in recent years. The largest impact came through the Liverpool European Capital of Culture year in 2008 which generated and economic benefit to the Liverpool city region of ÂŁ800 million. The first 197

The definition for NI8 is the percentage of the adult population who participated in sport and active recreation, at moderate intensity, for at least 30 minutes on at least 12 days out of the last 4 weeks (equivalent to 30 minutes on 3 or more days a week). The variation in participation levels in the Northwest can be seen in Table 10.

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Summary of the Evidence Base Manchester International Festival in 2007 saw around £30 million of visitor expenditure and the Cheshire Year of Gardens 2008 attracted some 300,000 visitors over the course of its run. 7.49 There are 15 Higher Education Institutions in the Northwest with 1 in both Cheshire and Cumbria, 6 in Greater Manchester, 3 in Lancashire and 4 in Liverpool. The impact of HEIs within their local context through community interaction, regeneration and civic engagement is long recognised. Northwest HEIs put on over 1,000,000 events classified as social, community and cultural engagement events in 2006/7. Of these 570,000 were free events and 466,000 were chargeable events. The events covered public lectures, performance arts, exhibitions, museum education and other. 7.50 HEIs are also important contributors to regeneration with an estimated £260 million worth of capital expenditure made by Northwest HEIs in the region in 2007/8. The distribution of this regenerative impact is demonstrated below. The University of Manchester at nearly £130 million makes up the most significant amount of capital expenditure for any HEI. Figure 104: Estimates of Capital Expenditure by HEI Salford RNCM Open MMU Manchester LIPA Liv. JM Liv. Hope Liverpool Lancaster Edge Hill Cumbria Chester UCLAN Bolton

20000

40000

60000

80000

100000

120000

140000

£000s

Source: Reported spend from HEI returns to SQW on behalf of NWDA 2009

Opportunities 7.51 Excluding the large cities of Liverpool and Manchester which have significant heritage appeal, there is a hierarchy of towns and cities in the region, formed by the character of their heritage. Chester is in a league of its own in the Northwest as a heritage city, but Lancaster and Carlisle are in a second tier of cities that have appeal that transcends their size, almost certainly because of the quality and nature of their heritage. The same is true of Southport which, because of the heritage of Lord Street, has strong appeal. Most of the other cities/large towns can be categorised as ‘powerhouse’ – in other words, their character is determined largely by post industrial heritage. One of the challenges for the region is to make more of the heritage in these places and to change the popular perception of their heritage. Assets 7.52 The Northwest’s cultural offer, taken in the broadest sense of the word is one of the strongest in the UK evidenced by increasing popularity in the region’s two major cities in terms of visitor numbers and the continuing strength of the Lake District as a major destination.

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Summary of the Evidence Base 7.53 The Northwestâ&#x20AC;&#x2122;s sporting assets are irrefutably amongst the greatest in the world particularly in terms of football through the likes of Manchester United FC, Liverpool FC and Manchester City FC. 7.54 The significant impact of HEIs both in terms of capital spend on public realm, in terms of the gentrifying effects of student populations and the civic engagement they offer is a vital aspect of the visitor economy and the quality of place more widely. The Northwest has a natural advantage over many regions given the sheer quantity of HEIs and students particularly in areas where they cluster namely Liverpool and Manchester. 7.55 The success of the European Capital of Culture in Liverpool 2008 is something that the city and the region more widely should try to sustain. The UK City of Culture title 2013 is evidence of the success of Liverpool â&#x20AC;&#x2122;08 and Pennine Lancashire, Chorley Council, Chester, Carlisle and Manchester are all in the running to win it. Threats 7.56 Participation rates, both culturally and sportingly, are low in the Northwest despite the strong range of assets. There is also a notable decrease in participation and engagement within deprived areas. There is a need to ensure that cultural opportunities are available for all. Evidence exists to show that cultural and particularly arts programmes operate predominantly in areas of high deprivation and worklessness. The important part cultural institutions play in running these kind of programmes must be recognised. 7.57 Culture and sports are typically amongst the first things that suffer when public funding is squeezed. There are already many museums and galleries which are suggesting the need to return to charging entry fees despite the increase in visitor numbers at major galleries over recent years. How can the cultural sector maintain its important role within the region in such a climate? This is particularly pertinent with the inevitable draw of funding which London 2012 will instigate.

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    

The Northwest is ranked 3rd of the nine English regions for total imports & exports in line with the size of its economy International trade is a major contributor to the regional economy Foreign owned companies are more productive and pay more wages on average than indigenous companies Multinationals and exporters have a higher than average productivity levels 37 business starts per 10,000 versus 43 for England

Figure 105: SWOT

Weakness – defined as an issue performing poorly against National comparators

Threat – an issue which is showing deterioration in position or risk/signs of weakening Energy barrier to entry/growth

Start up

sterling

Drop in spending

Access to finance Automotive

Appropriate property Leadership and management

Perceptions

Aging workforce Exports

Outcome 3: Enterprise

Social enterprise

Asia

Survival rates Tourism

Biomed

AEM, defence

DCI

Bus R&D and IP

chemicals

Supporting opportunity – an issue showing signs of improvement or policy opportunity

Nuclear

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.58 Business starts in the NW compared to England have been consistently poor over the last five years. On average there were 7 less business starts per 10,000 (16+) compared to England. There is no doubt the poor performance of Merseyside is a significant contributing factor to this. 7.59 Differences between Northwest and England survival rates over a 36 month period demonstrate business survival over this period is better in England. Survival rates vary across the region; it is suggested that increased competition in Greater Manchester makes it difficult for younger businesses to survive whilst lower competition in Cumbria makes it easier for newer businesses to survive. Competition is a driver of productivity.

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Summary of the Evidence Base 7.60 Evidence suggests that the region does not punch its weight with regard to business turnover. Between 2001 and 2007 whilst the region’s share of enterprises grew marginally from 10.7% to 10.9% of the UK total the share of turnover they produced declined from 9.3% to 8.4%. 7.61 HM Government’s Enterprise Strategy identified five key enablers of enterprise. These enablers are the underlying factors which, in their absence, have the potential to limit the level and quality of enterprise. 

Culture of enterprise



Knowledge and skills



Access to finance



Business innovation



The regulatory framework

7.62 People in the region have a fear of failure, this may inhibit their desire to take risks and therefore advantage of potentially viable business opportunities stifling business innovation/growth; survey evidence suggests that the current economic downturn may have heightened such fears. People’s attitudes and experience of entrepreneurship varies considerably across the region. 7.63 Northwest lags London and the South East in terms of perceived opportunities to start-up a business; survey evidence suggests that the current economic downturn has negatively impacted on such perceptions. 7.64 Leadership and management skills profile in the region needs to improve, its development will provide the knowledge and skills to further entrepreneurial ambition and drive entrepreneurial performance, stimulating innovation and productivity improvement “Northwest Skills and Productivity” project suggests that if the region were in the top quartile in terms of management and leadership performance this would add £1 billion to the economy. 7.65 Access to finance has been highlighted as an enabler of enterprise, the creation, survival and growth of a business can depend on the availability and accessibility of finance. Evidence from a number of business surveys has highlighted the negative impact that the current recession has had on the ability of firms to access finance. The ability and willingness of banks to lend has been greatly reduced impacting on the cost of many types of finance and therefore firms’ investment and growth decisions. 7.66 Business innovation is an enabler of enterprise. Innovative businesses are more likely to achieve growth, and businesses which have experienced recent growth are more likely to introduce new or improved products and services or new ways of working. 7.67 The Northwest lags London and the South East in terms of the number of businesses exporting to Non EU 25 countries and the value of those exports, this will impact on the region’s relative economic performance. 7.68 Research shows that the Northwest has the third highest number of exporting firms in the country; however as a proportion of all VAT registered firms the region is only ranked 7th. This reflects the fact that a large proportion of goods/exports are accounted for by sectors such as chemicals where a small number of firms produce a large output. 7.69 Globally there is a divergence in the rates with which economies are recovering from the downturn. In the second quarter of 2009 the UK reported -0.6% GDP growth, the Eurozone reported -0.1% GDP growth in comparison China experienced 7.9% GDP growth and is expected to meet its target of 8% GDP growth in both 2009 and 2010. This trend has significant implications for the Northwest, as the Eurozone represents its major trading partner, its slower recovery in growth could be a brake on regional growth. Because of the dominant weight of the Eurozone in regional trade, strong growth in UK exports requires strong growth in Eurozone imports.

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Summary of the Evidence Base 7.70 Northwest goods/exports are focused on chemicals, pharmaceuticals and various intermediate manufactured goods representing 61% of the regional total compared with 27% in the UK. The Chemicals and pharmaceutical sectors have been the drivers of Northwest’s export growth performance in recent years. 7.71 The Institute of Chartered Accountants Enterprise Survey Report 2008 shows: 

Northwest slightly below the national average in terms of global engagement (59% vs 64%).



Northwest has lower levels of customers and outsourcing from outside the UK.



Northwest’s customer base is below the national average in all of the global regions.



Northwest remains a little more cautious than average about the continued globalisation of markets. 34% vs 42% think it will have a positive impact on their business in the next 5 years.



Businesses in the Northwest are among the most likely to say that exchange rate movements and change in raw material costs have had a significant effect on the international markets they target, the location of their global operations and their global pattern of suppliers.

Opportunities 7.72 Social enterprise is an area of opportunity in the region especially in terms of its role in regenerating deprived parts of the economy since, as successive GEM Social Entrepreneurship Monitors have shown, individuals with lower rates of engagement in the formal labour market (the unemployed, women and ethnic minority groups for example) are proportionately more likely to be social entrepreneurs. 7.73 The current depreciation in sterling represents an opportunity for the Northwest business base, the fall in sterling results in Northwest exports increasing in competitiveness. 7.74 Asia’s quicker rebound from the recession represents an opportunity for Northwest businesses; the proportion of exports/value going to Asia over the last 10 years has risen significantly albeit from a low base. It has been reported that Asian consumer spending in 2009 will more than off-set the drop in spending in America and the Euro area. 7.75 Analysis shows that the region has specialisation in manufacturing sub-sectors both in terms of employment and GVA and that these sectors are highly productive, the further development of conditions for growth in these sector provide the region with opportunities to improve relative economic performance.

Assets Advanced Manufacturing 7.76 Advanced manufacturing of international significance: Size of and capability in Aerospace sector (and associated R&D, demand and end-use market for innovative products by OEMs (e.g. composite materials), supply chain and transferability of technology) plus international trade value – recognised as a hugely significant sector within the UK, but concentrated in the Northwest with necessary support infrastructure:

23.1



A concentration of Aerospace production



R&D and market driven demand for innovation



Depth of supply chain capability



Support infrastructures in place, both hard and soft



Development of innovative products – eg. UAVs Chemicals production industry of European significance: Export value of chemicals industry for the UK, the ‘stickiness’ of the industry in the region due to intangible assets as well as the sunk capital investment, and a strategically significant product source to significant sectors (and new technology sources) at the national/European scale, as well as being a centre of R&D;

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Summary of the Evidence Base 

Concentration of chemical production and key businesses



Key intermediate product of other sectors/technologies



Export value



R&D centre

7.77 Of national significance 

Transfer of knowledge from NW advanced manufacturing to wider manufacturing base



Scale of employment in automotive industry



Value, expertise and sheer scale of manufacturing in the region



The regions HEI base



Concentration, size and productivity of manufacturing in the Northwest (Lancashire especially)

Composites 23.2

End/intermediate user/market of international significance: The end-user market in the region, particularly aerospace, can drive further innovation in the application/early adoption of composites (developing the technology as a ubiquitous platform technology) within a range of other industrial areas; 

End user market driving innovation



Path dependant industrial mix (chemicals, textiles, engineering)



Research assets

7.78 Of national significance 

National Composites Centre



Key businesses



Adapting supply chain

Plastic/printable Electronics 7.79 Research establishments (within the Northern Way) of national significance and industrial players with potential to use the technology. Within the internationally recognised printable electronics research base in the North, the Manchester Organic Materials Innovation Centre (OMIC) is a key asset 

OMIC and link to Northern Way research base



Presence of Innovia Films, Harman Technologies

7.80 Of national significance 

University linkages with PATeC (North East)



Industrial mix and potential for early adoption

Life sciences 7.81 International pharmaceuticals centre and life science ‘mix’: Life science ‘mix’ of international significance – a combination of various assets of national significance, all in reasonable proximity, represents a ‘cluster’ that is internationally recognised. The combination of bio-tech and pharma (demand side (key businesses) and supply side factors (presence of chemical, advanced manufacturing capability)), with HEI base, and with hard infrastructures (e.g. incubators), and soft infrastructure (testing of medical technology). 

Concentration of the industry in Northwest and key businesses (Astra Zeneca)

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Summary of the Evidence Base 

R&D in aerospace, composites and engines (see earlier)

7.82 Of national significance 

Incubation facilities across the region



Links between bio-industry, pharmaceuticals, chemicals



Concentration of assets in Cheshire

Digital & Creative 7.83 Global and national growth potential: The Digital & Creative sector, broadly defined, is seen as a growth sector internationally and an area where the UK has particular strengths. It is seen by many regions in the UK as a growth area. This is rightly so given the importance of ICT as a business tool (and market accessing tool) and as demand for digital and creative products are likely to ubiquitously increase. There will be differentiation in how regions can access such markets. 7.84 MediaCityUK – project of national significance with international market accessing potential 7.85 A market accessing set of assets and capabilities, specialist infrastructures, and creative culture of international potential – located at the MediaCityUK project as a hub but with links throughout the North and of advantage to the UK 

Huge investment; relocation of BBC, international class facility



New, high innovation developing projects focussed on one location (with Northern Way linkages)



National regeneration project

7.86 Of national significance 

Daresbury and ICT potential



HEI base and supply of graduates



Geographical concentration in Manchester but extending to Liverpool

Threats 7.87 The depreciation of sterling may impact the margins of firms; firms that import raw materials/inputs into their production process especially from the Eurozone will see costs increase. 

Strength of developing economies



Concentration of trade in a small number of large firms



Fragility of supply chains



Increased protectionism in the economic downturn



Low numbers of those thinking of and having the confidence to start a business



Low levels of business starts in Merseyside

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Summary of the Evidence Base Outcome 4: Increasing productivity, capitalising on the region’s innovation, science and research assets and exploiting the Northwest’s potential in the renewable and nuclear offer and worldwide opportunities from low carbon technologies.

   

Significant and persistent differences in productivity exist between and within regions Labour productivity in the Northwest is 9% below the England average The NW has seen the highest HEI R&D growth of any GOR. Business R&D has been strong in the NW, although slower than at the end of the 1990’s Low levels of GFCF suggesting under-investment

Figure 106: SWOT

Issues 7.88 Productivity is important if the economy is to grow and improve standards of living. A comparison of GVA per filled job and GVA per hour worked highlights that the region’s mix of jobs is not considerably different to the England average as to have a significant impact on the relative economic performance of the region. The analysis shows that after taking into account the dependency rate and job structure of the region, the relative economic performance of the Northwest compared with England is improved. However, labour productivity remains 9% below the England average. 7.89 In the Northwest over the period 1997 to 2007 until 2004, output and productivity indicators relative to England declined. Productivity indicators declined at a faster rate than GVA per capita. Since 2004 all three indicators relative to the England average have stabilised, with GVA per capita and GVA per filled job increasing in 2007. This could well be the result of employment growth in the region in the

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Summary of the Evidence Base first half of the decade; increased employment lowering relative productivity because new workers can be less productive as they attempt to gain new skills. Figure 107: Productivity and GVA per capita performance for all GORs 170 160

GVA per capita GVA per filled job

150

GVA per hour worked

Index Eng =

140 130 120 110 100 90 80 70 North East

North West

Yorkshire & the Humber

East Midlands

West Midlands

East of England

London

South East

South West

Source: ONS, Economic Performance evidence paper pp 10-11

7.90 The Northwest is rich in science and technology and has a good base in business Research and Development (R&D). Both science and R&D are crucial to business and the wider economy. Growth in the Northwest has been strong, with business R&D increasing by 4.1% pa between 2001 and 2006, the 3rd highest growth rate of all Government Office Regions (GORs) after the North East and East of England. The Northwest also has the 3rd highest share of business R&D at 13.6% of all spending in England. 7.91 Despite the strong performance of business R&D, there are weaknesses; 79% of business R&D is from large enterprises in the Northwest, compared to 74% in England. Medium sized enterprises account for the same share of enterprises in the region as they do nationally. However, medium enterprises only account for 7.4% of Northwest spending, compared to 11.3% in England. There are 260 enterprises with 500 or more employees in the region, between them they spend over £1.7 billion on R&D. This averages over £6.5 million per large company, higher the comparative England figure of £4.3 million. The work that full time employed in the Northwest perform is high value added. The average expenditure per FTE is £113,000 in the Northwest, well above the England average of £99,690. There are 19,000 Full Time Equivalents (FTEs) in the Northwest working in R&D. 7.92 An emerging strength of the region is HEI R&D. The last 5 years have seen a rapid expansion in HEI R&D in the Northwest; spending has increased £201 million since 2001 to over £500 million. The Northwest has seen the highest growth of any GOR over this time period, 10.2% pa. The Region performs poorly on Government R&D, accounting for 4.6% of all Government R&D expenditure in 2006, up from 3.9% in 2001. Despite the high growth in the Region, Government R&D remains low. When expressed as a proportion of GVA, Government R&D is 0.08% of R&D, less than half the England figure of 0.19%. 7.93 The region ranked top in 4 subjects based on quality (cancer studies, dentistry, nursing and midwifery and physics) and 5 subjects based on research power (nursing and midwifery, preclinical and human biological sciences, metallurgy and materials, business and management and architecture and built environment). The University of Manchester dominates the table and was 4th in the national league table behind Oxford, Cambridge and University College London based on research weight.

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Summary of the Evidence Base Figure 108: Share of R&D to GVA 2.5

2 2001 2002 2003 2004 2005 2006

1.5

0.5

Business

Government

HEI

Total

England

Source: BERD 2007, GOVERD 2007, HERD 2007, Office for National Statistics, Regional Accounts December 2008, Science and R&D evidence paper

7.94 The ‘Energy Coast’, located along the coat of West Cumbria down to Lancashire, is known for its strong links with the nuclear sector. Heysham 1 and 2 nuclear power stations, the last nuclear power stations built in the Northwest in 1989, provide 4% of the UK’s electricity. 7.95 National Goals for the UK are informed by EU policy. The EU target is to source 20% of all energy from renewable resources as stated in the proposed EU Renewable Energy Policy (2007). Through this Policy, the weighted UK target is set as 15% of total primary energy demand to come from renewables by 2020 -lower than other member states but more onerous given the UK’s lower starting point (baseline). 7.96 The region currently produces between 2 and 2.5% of electricity from renewable sources (these figures do not include offshore wind developments and those under construction, which accounts for the variation in Northwest renewable energy generation). Some estimates put renewable electricity generation in the Northwest as high as 4.7% including offshore renewable energy generation. The National Grid estimates that renewables will only be 7.4% of total generation by 2010. 7.97 Offshore wind generation only provided 35% of electricity generated despite having a capacity of 360MW in 2007/08, almost 200MW more capacity then Cheshire, demonstrating that wind generation is not currently meeting its full-potential. Four areas have been touted as possible locations for tidal power in a study by the Institution of Engineering and Technology: The Solway Firth, Morecambe Bay, the Dee and the Mersey. Cheshire (including Cheshire and Halton) produced the largest share of electricity from renewable sources (37%) but also has the largest renewable capacity Northwest sub-regions (160.29 MW). This is related to the co-firing biomass facility at Fiddlers Ferry.

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Summary of the Evidence Base Figure 109: Northwest electrical generation mix

Source: Environmental Considerations of Sustainable Economic Growth (2008)

Opportunities 7.98 The region still maintains strengths in high productivity sectors, for instance sub-sectors of manufacturing such as chemicals and nuclear. This will continue in the future as they become more capital intensive. 7.99 The Northwest has only the 6th highest expenditure for services R&D at £118 million. To highlight the magnitude of difference, the East of England spends £1.5 billion on service sector business R&D, demonstrating the scale of opportunity. If the Northwest follows the restructuring of the regional economy, i.e. move from manufacturing to services, there is a great deal of potential for expansion. This can maintain the region’s strength as a business R&D hub. Business R&D continues to grow year on year in the Northwest, however, the rate of growth is slower now than at the end of the 1990’s. Expanding beyond reliance on manufacturing R&D should help to maintain the region’s position as a centre for business R&D. 7.100 This diversification can also be achieved by investing in HEI R&D. This has emerged as a real strength in the Northwest. The region has closed the gap with the East of England (which includes the hub – Cambridge) which has the 3rd highest expenditure, to just £13 million. Supporting the sector could be a valuable way of growing the technology and innovation base of the Northwest. 7.101 There is an opportunity to build on current nuclear sector. Nuclear is likely to emerge as an alternative and there are skills and expertise in the region, especially sites such as Sellafield in Cumbria and the Nuclear Skills Academy. Using our environmental assets as an opportunity to produce clean energy e.g. 1,000 km of coastline for tidal and wind energy. Assets 7.102 A number of Global organisations in high value added sectors are located in the Northwest. These include Astra Zeneca, which is located in Macclesfield, and is a global centre for R&D in the pharmaceuticals sector. Other major organisations with significant investments in the Northwest include the global conglomerate Unilever and BAe systems the defence firm with a major presence throughout Lancashire. 7.103 A clear regional asset is the current level of Business R&D. The Northwest is the third highest spender on business R&D and has major firms investing in R&D in the Northwest, such as the three named above. This is a clear asset to the Northwest and something that needs to be preserved to maintain innovation and technology base. 7.104 The Universities are a major strength to the region. Not only do they attract skilled young people to the Northwest, they also provide technological progress through their research. Daresbury Science

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Summary of the Evidence Base and innovation campus is also a strength for the region. This site gives companies a platform and the infrastructure to grow and innovate, which helps to grow the economy. It also encourages new start ups in high technology sectors. 7.105 The region has many niche sector strengths such as chemicals, bio-medical, nuclear and aerospace which are all important to increasing productivity and growing the Northwest economy. 2007 saw the opening of the Nuclear Academy outside of Workington (Cumbria) and The John Tyndall Centre of Nuclear Research, with campus sites at Preston and near Sellafield emphasising the importance of the nuclear industry to the Northwest energy sector. Historical strengths in chemicals, sciences, technology, manufacturing and engineering can be applied to develop skills and businesses in energy efficiency 7.106 In terms of energy, the Northwest has many assets including its position as a net exporter of energy. This is achieved through the significant nuclear presence at Heysham and Sellafield as well as through renewable energy production through wind. With almost half of the regionâ&#x20AC;&#x2122;s energy from nuclear sources, there is nuclear heritage and expertise. The Northwest is in a strong position to innovate and implement renewable and natural energy sources. The regionâ&#x20AC;&#x2122;s geographical position means there is an absolute advantage in energy production, through tidal power from the surrounding sea and the windy coast line of Cumbria. Threats 7.107 The productivity of the Northwest is maintained by high productivity in the manufacturing sectors. As these sectors continue to be eroded as the economy restructures, they are likely to be replaced by lower productivity service sector jobs. This could further expand the productivity gap the Northwest has with England. The lack of head office locations in the region means it is hard to influence partners in their decisions. It also means that there are fewer high value added (and hence high productivity) jobs in the Northwest. 7.108 As a culture R&D is limited to large firms. The proportion of R&D from large firms is higher in the Northwest than in England. Latest data from ONS (2007) shows that 79% of business R&D is generated from large enterprises in the Northwest, compared to 74% in England. The over reliance on a small number of large firms means that were these organisations to move out of the Northwest, the economy would see R&D levels plummet. Improving expenditure amongst medium firms would help to increase levels of spending in the region and reduce the risk that large firms moving out of the Northwest presents. 7.109 A problem generally with all forms of R&D going forward is lower levels of investment for R&D. This reduces a regional strength and reduces innovation. Businesses and Government will be affected by a tighter financial climate and maintaining the high levels of expenditure will be difficult for all types of organisation. 7.110 The Sellafield site (including Calderhall, Drigg LLWR and Windscale) currently employs around 12,000 people and is likely to remain at these levels until around 2015, when (due to decommissioning) it will decline to around 4,000 by 2035. Heysham 1 (which has a capacity of 1,160 MW) is due to be decommissioned in 2014 and Heysham 2 (with a capacity of 1,230 MW) will be decommissioned in 2023. 7.111 Once the Heysham reactors are decommissioned there is a projected decline in UK nuclear capacity. This could harm levels of energy production; energy consumption is forecast to increase over the next 20 years 198 . A threat from lower levels of energy produced is energy prices forming a barrier to entry for new businesses and also a barrier to investment in the region, our businesses are more energy intensive so this has a disproportionate effect in the region. This will also impact on jobs and erode a sector that the Northwest has a strength in relative to England. 7.112 Renewable energy production is constrained by planning legislation and amount of time needed for green schemes such as wind farms and eco-friendly housing to gain permission. In the Northwest few companies involved with new technologies e.g. fuel cells and wind power

198

Energy Evidence paper

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Summary of the Evidence Base

Outcome 5: Protecting, enhancing and developing the quality of the Northwest’s outstanding environmental, natural and coastal landscape assets.

   

The environment generates an estimated of £2.6 billion GVA & supports 109,000 jobs The economic value of heritage to NW economy is estimated at £1,327 million pa 29% of the region is designated as 'protected landscapes’ Historical strengths based on natural assets

Figure 110: SWOT

Weakness – defined as an issue performing poorly against National comparators

Urban landscape character

Threat – an issue which is showing deterioration in position or risk/signs of weakening Transport emissions

Habitat loss Flood defences Green belt house building

Reduced water quality Water availability and storage

Non-native species

Climate change

Outcome 5: Protecting Environment

Green infrastructure

Water quality

Coast and estuaries

Biodiversity

Lake District Open waters and rivers

Supporting opportunity – an issue showing signs of improvement or policy opportunity

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.113 The Northwest is home to 29% of England’s wetlands (by area) including 28% of England’s Blanket Bog resource and 56% of its lowland raised bog. Over 50% of lowland raised bog SSSI is in unfavourable condition mainly because of drainage and unsuitable water levels. 7.114 Of terrestrial and coastal UK Biodiversity Action Plan habitat, 40% occurs outside statutory protected areas and is therefore vulnerable to habitat loss and damage. Delivery of the region’s share of the England Biodiversity targets is progressing on statutory designations but is harder to achieve outside of these sites, with pressure from development and agricultural intensification. 7.115 Over 30% of woodland area is in unfavourable condition mainly because of the impacts of nonnative species and overgrazing by sheep and deer. 69% of SSSI woodland is in favourable or recovering condition. The Woodland Trust estimate that 85% of ancient woodland (the most valuable and irreplaceable woodland resource) is not protected by SSSIs or similar designations.

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Summary of the Evidence Base 7.116 The majority of our urban areas are still covered by Air Quality Management Areas, which means that air quality objectives are not being met in those areas with particular issues around increasing traffic and congestion levels, leading to increased levels of carbon monoxide and particulates. In 2006, the Northwest emitted 136,200 tonnes of nitrogen oxides (NOx), 50,200 tonnes of sulphur dioxide (SO2) and 12,000 tonnes of particulates (PM10) 199 . This accounted for 10% of the total England NOx emissions, 8% of the total SO2 emissions, and 9% of all PM10s 200 . 7.117 Some 224,500 properties are at risk of flooding from rivers and/or the sea in the Northwest. 28,845 are at significant risk, 110,157 are at moderate risk and 85,053 are at low risk. Warrington is ranked 10th nationally for number of properties at significant risk of flooding 201 . At present some 122,000 properties have been offered the flood warning service and by 2013 it is hoped the number of properties receiving flood warnings will have increased to 140,000. A major factor in preventing flooding is the standard of the flood management system and in 2008/09, 62% of the Northwest regions flood management systems met the performance specifications. Opportunities 7.118 Northwest has the largest area of SSSI of all regions, with 200,000 ha covering 18% of the region. Overall 90% of SSSI area in the NW is in favourable or recovering condition and the NW is expected to meet the PSA 2010 target of 95% 202 . SSSI management contributes significantly to the delivery of regional biodiversity targets for maintaining extent of habitat and achieving condition. 7.119 In 2008 the region had 496 active Environmental Stewardship schemes - that provide funding to farmers and other land managers who deliver effective environmental management on their land. Of the 496 schemes: 433 where for Entry Level Stewardship; 42 Entry Level plus Higher Level Stewardship and 4 Higher Level Stewardship schemes. There where also 13 Organic Entry Level Stewardship and 4 Organic Entry Level plus Higher Level Stewardship 203 . 7.120 Standards for bathing waters have improved dramatically over recent years - all the region's beaches tested passed compliance with the European mandatory in 2006 compared with only 50% in 1997. The last two summers were unusually wet, but even then only a handful of NW beaches failed - 3 in 2007 and 4 in 2008. In 2008, 6 of the 36 NW beaches passed the more stringent 'guideline' standards. 7.121 Access to green space in urban and rural areas is vital to quality of life. 17.7% of our region has open access, compared with 6.5% for England overall, with the largest areas in the uplands and commons. The region has a strong green infrastructure network and research by Natural Economy Northwest (NENW) found that green infrastructure adds to the region’s economy, with the environment supporting 109,000 jobs and a GVA of approximately £2.6 billion. Other benefits of green infrastructure include long term employment, better health, engaging education and social cohesion 7.122 Tourism to natural and historical assets is a very important sector for the Northwest and a huge asset worth in excess of £13.6 billion. The visitor economy supports over 215,000 jobs and a quarter of all tourism is thought to depend on the natural environment 204 . In 2008 Cumbria had 15.3 million visitors, made up of 5 million who stayed overnight and 10.3 million day trippers. This brought in £1.17 billion to the region's economy205 . In the same year, the Lake District National Park Authority had a total economic impact of £677.19 million and 8.3 million visitors (this accounts for 54% of Cumbria’s total visitor number in 2008). Between 2000 and 2008, Barrow, South Lakeland, and the Lake District National Park have seen the largest increase in tourism revenue, of 21%, 17% and 14% respectively.

199

DEFRA (2009) Northwest Regional Sustainable Development Indicators Factsheet, 31 March 2009 DEFRA (2007) Air Quality Strategy for England, Wales and Northern Ireland Environment Agency (2009) Investing for the future: Flood and coastal risk management in England, A long-term investment strategy 202 Natural England (2009) State of the natural environment in the Northwest 203 Data obtained from directly Natural England 204 Natural Economy Northwest (NENW) (2008) Summarising the evidence for developing the natural economy. 205 Cumbria Tourism. (2008) Tourism Volume and Value 2000 - 2008 200 201

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Summary of the Evidence Base 7.123 Figure 111: SSSI sites achieving target condition (left) and Agri-environmental schemes coverage (right)

Source: State of the natural environment in the Northwest (2009) 7.124

Approximately 50.5 million visits made to the region each year are motivated by heritage, resulting in expenditure of approximately £1.96 billion to the economy (after allowing for double counting). This supports some 20,400 jobs and generates annual GVA of approximately £804 million (figure excludes jobs and GVA due to management operations and conservation/maintenance). A number of businesses operate from heritage buildings and this analysis suggests that some 548,000 jobs are accommodated within heritage assets in the Northwest and that this generates some £21.1 billion in GVA annually 206 .

7.125 Tatton Park is the Northwest’s most visited historic park in the Northwest attracting some 750,000 visitors each year and supporting some 159 gross additional jobs at the Cheshire and Warrington level and some 119 gross additional jobs in Northwest, based on gross tourism expenditure of around £215 million annually. 206

Amion, Locum Consulting, Taylor Young for NWDA (2009) The Economic Impact of Heritage in the Northwest.

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Summary of the Evidence Base

Table 10: Visitor number across different heritage assets (2006) Type of attraction Museums Historic properties Galleries Gardens Other heritage attractions with less than 25,000 annual visits Total

Visitor numbers 3,000,000 2,800,000 1,850,000 300,000 500,000 8,500,000

Source: Economic impacts of English Heritage (2009)

Assets 7.126 The Lake District is the largest of England’s National Parks covering 229,159 ha. The Lake District National Park is the only National Park completely within the Northwest. Both the Yorkshire Dales and Peak district National Parks are only partly within the Northwest region. There are 4 AONB in the region: Solway Coast, Arnside & Silverdale, Forest of Bowland and North Pennine (which is only partly within the Northwest and a European Geopark) which account for 11% of the region 207 . 7.127 Northwest region is important for biodiversity, containing 35 out of the 40 UK Biodiversity Action Plan (UK BAP) terrestrial and freshwater habitats. The region is important in a nationally for containing over a quarter of English resource of blanket bogs, lowland raised bogs (around 50% of English resource), heath habitat (around 18%), upland calcareous grassland and upland meadows (over 40% and 30% respectively), limestone pavement (50% of English resource) and coastal saltmarsh – many of which support rare species. The largest areas of habitat are found in the Pennines, Lake District and along the coast 208 . 7.128 The Northwest coast and estuaries are internationally important for wildlife with over 80% of the coastline’s length designated as SPA, SAC or Ramsar sites, including all the major estuaries (Dee, Mersey, Ribble and Alt, Morecambe Bay, Duddon and Solway Firth). Morecambe Bay is also a Marine Special Area of Conservation. These sites support internationally important populations of wildfowl and wading birds and include 5 out of the top 10 estuaries in the UK for numbers of wintering waterfowl 209 . 7.129 The Northwest also has the greatest extent of designated rivers and open waters of English regions. In Cumbria 644 km of river are designated as SAC and many of the major lakes are SSSI. The rare freshwater fish vendance and arctic char are confined to two lakes within Cumbria, while two Cumbrian rivers remain a stronghold for the declining native white-clawed crayfish. 7.130 The region has a strong green infrastructure network including 26 Doorstep Greens, 35 Millennium Greens, 44 Country parks and 8 regional parks (Croal Irwell; East Lancashire; Mersey Waterfront; Morecambe Bay & Duddon; Ribble Coast & Westlands; Weaver Valley; West Cumbria energy Coast and Wigan Greenheart) that provide opportunities for people to use green space close to where they live.

207 208 209

Natural England (2009) State of the natural environment in the Northwest Natural England (2009) State of the natural environment in the Northwest Natural England (2009) State of the natural environment in the Northwest

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Summary of the Evidence Base

Figure 112: Protected landscapes (left) and BAP Habitats (right) in the Northwest

Source: State of the natural environment in the Northwest (2009)

7.131 In terms of access, the region contains around 20,290 km of public rights of way (approximately 9% of the total for England and Wales) and 263,200 ha of land designated as access land under the CRoW Act 2000. Three National Trails pass through the region – Pennine Way, Pennine Bridleway and Hadrian’s Wall. The Pennine Bridleway Way National Trail alone provides 382 km of purpose built trail for walkers, cyclists and horse riders. 7.132 Natural tourism covers a range of activities from rambling around the Lake District to more extreme sports like sailing and rock climbing. Whilst the Lake District is internationally renowned for its scenery, many of the region’s natural assets are not nearly so well known. Nationally important natural assets in the Northwest include: 7.133 The largest area of undeveloped dune coastline in England on the Sefton Coast between Liverpool and Southport

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Summary of the Evidence Base 

The biologically rich meres and wetlands of Cheshire



The heather moorlands of the Pennines and the Forest of Bowland



The limestone hills and woodlands of the southern fringes of the Lake District



The estuaries of the Mersey, Ribble, Dee, Solway and Morecambe Bay



The best region in England for internationally important raised mires.

7.134 The Northwest contains 859 Conservation Areas, 3 Registered Historic Battlefields and 129 Registered Parks and Gardens of Historic Interest. The region also holds over 25,420 Listed Buildings, representing about 7% of the national stock, and over 1,316 Scheduled Monuments ranging in date from Neolithic henges to World War II military installations. There are 22,731 hectares of ancient woodland (10.9% of the national area) and Cumbria has the only section of heritage coast in the region, St.Bees, which is 3.63 miles long and covers 551 hectares. Heritage Coasts are non-statutory but special coastlines managed so that their natural beauty is conserved. 7.135 The region also has Two World Heritage Sites at Hadrian’s Wall and Liverpool Maritime and Mercantile City, and two prospective Two World Heritage Sites in Manchester (‘the Archetype City of the Industrial Revolution’) and the Lake District (‘a superlative example if man’s harmonious interaction with his natural environment’). Table 11: Registered historic assets in the Northwest County Cheshire Cumbria Gtr Manchester Lancashire Merseyside NW Total England NW as % of England

Listed building 5,624 7,545 3,772 5,450 3,022 25,413 373,315 6.8%

Monuments 245 855 45 146 38 1,329 19,720 6.7%

Parks & gardens 24 19 29 29 23 133 1,595 8.3%

Battlefields 2 1 0 0 0 3 43 7.0%

World heritage Sites 0 1 0 0 1 2 17 11.8%

Source: Adapted from Heritage Counts (Northwest Data) (2008)

Threats 7.136 The biggest threat to the Northwest’s environmental, natural and historic assets is posed by climate change. Over the last fifty years, the Northwest has seen warmer weather with fewer days of frost and sea level rises. Based on the high emissions scenario for the Northwest in 2080 winter mean temperature will increase by of 3.1ºC and summer mean temperature by 4.7ºC. Annual mean precipitation will increase by 1% with winter mean precipitation increasing by 26% while summer mean precipitation will decrease by –28%. 7.137 The impacts on the environment could see climate change exacerbate habitat fragmentation and thus reduce the ability of the region’s species to adapt by migrating to more suitable habitats. Action is needed to ensure the region’s environment is resilient to climate change and that biodiversity is maintained and enhanced. 7.138 If the region continues to grow at current rates, without policy intervention, the environment will come under increasing pressure for development. An increase in growth in the region could put the water environment under threat by increasing demand but climate change adds significantly to the uncertainty surrounding future levels of water supply and demand. This is especially the case as warmer weather may cause an increase in demand and a decrease the availability of water supplies, with increased instances of drought. More severe and prolonged droughts would affect water availability, even in the Northwest, which is traditionally seen as having high rainfall. Storing water at times of excess precipitation depends on the available capacity, which could be problematic – i.e.

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Summary of the Evidence Base available reservoirs filling up and overflowing, with the additional available water resource not being captured for times of greater demand 210 . 7.139 The threat posed to the environment from growth could also see the quality standards of surface waters and groundwater fall with increased levels of pollution and water abstraction. A 2009 Environment Agency report 211 found that for levels of growth required within the current RSS, without additional investment into the water infrastructure, the combination of higher loads due to population growth and an anticipated reduction in water consumption will reduce water quality in the region. Source control of run off and measures to control water quality and flooding from sewers will be a major challenge. 7.140 An increase in the demand for land under growth scenarios could see more inappropriate development in the floodplain. This demand combined with increased winter precipitation and sea level rises, of around 67 cm by 2080, could see the region suffer more costly incidents of flooding 212 . There are around 95,000 people located in the Northwest region coastal floodplain, along with major sites of manufacturing (25% of the UK's chemical industry), and primary tourist destinations. Exposure to coastal flooding from storm surges has the potential to become a common problem and storms would present greater concerns inland, with network assets such as overhead cables at risk. An increased frequency of flooding is likely to destroy habitats (potentially wiping out some species), increase soil erosion, and intensify sediment deposition in lakes. 7.141 The environment is also under threat from increasing transport emissions, again linked to regional growth. While the regional economy is ‘de-carbonising’ road transport accounted for 24% of CO2 emissions in 2005, with transport as a whole accounting for 32% of CO2 emissions. It is anticipated that domestic and transport emissions will take larger shares of regional emissions in the future (these are already large emission sectors), 39% by 2020. Transport and mobility in general are the areas where efforts and policies should be focused, in order to reduce the region’s carbon footprint 213 . 7.142 The natural environment provides a number of ‘ecosystem services’ which are critical in the region’s economic and social functioning. 7.143 As threats to the Northwest increase, ecosystem services provide the opportunity for environmental management to be integrated within strategy and policy at every spatial level and use sustainability as a driver for the region's future economic and social success while enhancing the state of the Northwest’s environment.

210

Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) (2008) Stage one and Stage two Environment Agency (2009) Costs of Environmental Infrastructure Needs to Meet the Northwest Regional Spatial Strategy, Resource Efficiency science programme 212 Sanderson, V. prepared on behalf of the Environment Agency & GONW (2008) Climate Change in the Northwest: Annex 1 213 SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 211

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Outcome 6: Developing communities and places which are sustainable and safe, with less deprivation and disadvantage within the region.

    

The Northwest has one of the highest crime rates in England with concentrations in Greater Manchester in particular Fear and perception of crime is roughly concordant with recorded crime statistics Deprivation in the Northwest is amongst the worst in the country but has improved slightly since 1999 The region is becoming more and more socio-economically polarized with areas in parts of Lancashire and Greater Manchester deteriorating year on year Child poverty has improved over recent years but children are still highly disadvantaged by where they live particularly in terms of educational attainment Figure 113: SWOT

Weakness – defined as an issue performing poorly against National comparators

6 worst places

Threat – an issue which is showing deterioration in position or risk/signs of weakening Declining young population

Deprivation

Business crime Knife crime

Poor place satisfaction

Social cohesion

Crime

Child wellbeing

Energy deprivation

Polarising deprivation

Outcome 6: Sustainable Community Voluntary/Community

Total Place initiative 6 best places

VCS Infrastructure Organisations

Community & culture

Community Empowerment networks

Supporting opportunity – an issue showing signs of improvement or policy opportunity

International/National Asset – an issue which has some form of competitive advantage for the region

Issues Crime 7.144 With a total of 624,500 crimes in 2008/9 the Northwest has a crime rate of 91 crimes per 1,000 population above the England average of 86 and the third highest for the regions behind London and Yorkshire & Humberside. Total crime in every GOR has fallen since 2004/5 with the Northwest falling by more than most regions from 115 crimes per 1,000 population in 2004/5 to 91 crimes per 1000 population in 2008/9. England has fallen from 106 crimes per 1000 population in 2004/5 to 86 in 2008/9. Drug offences, whilst only accounting for 6% of recorded crimes in 2009, rose by 12% since the 2007/8 survey and have risen 30% since 2004/5. Conversely vehicle offences and criminal damage have both fallen 11% over the last year and by 24% and 27% respectively since 2004/5. 7.145 Within the region, the Greater Manchester Police (GMP) area experienced 45% of the Northwest total whereas Cumbria experienced the lowest proportion; just 5% of the regional total. GMP,

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Summary of the Evidence Base Merseyside and Lancashire Police areas accounted for 83% of all crime committed in the Northwest region. Proportionally speaking Greater Manchester makes up the majority of crimes for the subregions across every offence group with accounting for 70% of all robberies, half of all fraud and forgery offences, half of all sexual offences and half of all burglaries within the region (figure 111 below). By contrast Cumbria has the consistently lowest levels of crime across offence groups. When looked at as a rate Greater Manchester also shows consistently higher rates per 1,000 population than every other sub-region and of course the Northwest. Figure 114: Sub-regional Crime Patterns as % of Regional Totals 100% M'side 80% Lancs 60% GM 40% Cumb 20% Ches 0% Violence Sexual Robbery Burglary Offences Other against offences against theft the vehicles offences person

Fraud and forgery

Criminal Drug Other damage offences offences

Source: British Crime Survey 2008/9

7.146 According to the British Crime Survey 2008/9 18% of Northwest residents perceived high levels of anti-social behaviour in their area according compared to 16% for England. Perceptions in the Northwest were joint second highest with the North East, both behind London (22%). Subregionally Greater Manchester had the highest perceptions of anti-social behaviour at 21%, Cumbria had the lowest at 12%. 7.147 Econometric evidence suggests that there is a strong geographical element to crime, and that drugs crime and criminal damage are those most closely related to economic development. Our analysis used VAT registrations and de-registrations as a proxy for economic development, but findings are corroborated by other studies that have linked high crime rates with low skills levels and high unemployment rates. Businesses located in more deprived locations are more likely to be the victims of crime (30% in Greater Manchester against 25% in Cumbria) and have a more negative view on the perception of crime. 7.148 The average cost of crime per business is £1,402, which generates an annual impact of crime of £353.2 million or 0.4% of the regional economy. This is a conservative estimate compared to some other research conducted recently, which places the cost to the region’s businesses at anywhere up to £900 million. Deprivation 7.149 Deprivation is a pressing issue in the Northwest with some of the relatively most deprived conditions in the country present within the region. At the district level Liverpool is the most deprived in the country and another 14 Northwest Local Authorities feature in the worse performing 50 authorities in England (according to rank). Deprivation is most highly concentrated in the densely urban areas of Merseyside, Greater Manchester, Blackpool, Pennine Lancashire and parts of Barrow, although deprivation is present in almost every district within the region to some degree. At the Lower Layer Super Output Area (an area featuring around 1,500 people) there are 569 Northwest LSOAs in the

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Summary of the Evidence Base bottom 5% worst for England (making up some 35% of the bottom 5%). This is considerably more than any other Government Office Region as the chart below demonstrates. Figure 115: LSOAs in Englandâ&#x20AC;&#x2122;s Bottom 5% by GOR

2% 5% 17%

East of England

East Midlands London 10%

North East North West

17%

South East South West West Midlands

3% 2%

Yorks. Humber 35%

Source: Indices of Multiple Deprivation 2007

7.150 Longitudinally deprivation has to be measured using the Economic Deprivation Index. Improvements in average weighted LSOA ranks have been seen in Yorkshire and the Humber, the North East, the Northwest and, to a lesser degree, the East Midlands over this period, with improvements in these regions concentrated in the post-2001 period. London, the East and the South East have seen slight deteriorations in their relative position. Figure 116: Region level population-weighted average LSOA ranks on overall EDI 1999 to 2005

Source: SDRC 2008

26.1

Despite improving slightly at the regional level there are significant variations locally. The districts showing the biggest improvement between 1999 and 2005 were Lancaster down 41 places, Ribble Valley down 33 places, Vale Royal and Warrington both down 26 places and Chorley down 29

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Summary of the Evidence Base places. By contrast there were a number of areas which worsened over the period including Blackpool up 20 places, Bolton and Hyndburn up 12 places, Burnley up 9 place, Congleton and Pendle up 8 places and Oldham up 6 places. With the exception of Congleton, Blackpool and Copeland all of the districts which worsened were in either Pennine Lancashire or Greater Manchester. Liverpool and Manchester remained fairly stable and Preston improved somewhat. Disadvantage 7.151 In 2007 25% of children in the Northwest were at risk of living in low-income households a proxy for child poverty 214 . This is above the England rate of 22% although is fifth compared to other government office regions. The percentage of children living in relative low-income households decreased in the NW between 1995/6-1997/8 and 2003/4 – 2005/6 by 6 percentage points before housing costs and 5 percentage points after. 7.152 Child well-being is generally represented by how children are doing in a number of different domains of their life. According to a recent study 215 the Northwest has the second highest number of LSOAs in the worst quintile for child well-being out of the English regions. London has the highest number both proportionately and absolutely demonstrating that despite having some of the most prosperous communities in the country they live geographically close to some of the poorest. 7.153 Within the Northwest child wellbeing is immensely polarised. At the district level Manchester has the lowest levels of child wellbeing in England with 197, or 76% of its LSOAs in the bottom 20% worst for England for child wellbeing. The LSOA with the worst child wellbeing in the country is also in Manchester falling within the Lightbowne ward of the city. Liverpool has the third worst district level child wellbeing in England with 69% of its LSOAs in the bottom 20% for England. Overall there are 11 Northwest districts in the 50 districts with the lowest child wellbeing in England. Conversely Ribble Valley has the second best levels of child wellbeing in England demonstrating the polarisation within the region. At the regional level Congleton has the second highest levels of child wellbeing (18th nationally) and Fylde the 3rd. These three districts are the only from the Northwest to feature in the top 50 districts for child wellbeing for all England. 7.154 Deprivation has an adverse effect on GCSE attainment. Just 25.4% of children living in bottom 20% most deprived LSOAs within the Northwest achieved GCSE grades A*-C in 2007 – 34.9% less than the overall figure. Within the region there is significant variation in attainment from deprived areas with just 14.9% of children in Crewe & Nantwich’s most deprived areas achieving 5 A*-C grades compared to 50% in Fylde’s most deprived areas. 7.155 There is a gap of 17.9% between the percentage of children achieving Key Stage 4 attainment in urban areas and those in villages. Attainment in the Northwest’s urban areas is 42.6% compared to 55.1% for town and fringe areas and 60.5% for villages. Opportunities 7.156 Although only a slight improvement the Northwest is less deprived than it was in 1999 according to the EDI. This is in contrast to many of the Southern regions which have shown some decline, particularly London. 7.157 A number of government initiatives have the potential to significantly improve community level disadvantage and deprivation such as the Total Place initiative which has a pilot across Greater Manchester and Warrington looking at the organisations and resources involved in 0-5 year old children’s services. 7.158 By providing better services for communities: As a service provider the Voluntary and Community sector provides a number of opportunities for impact within deprived communities. The National Consumer Council report, Delivering Public Services highlights excellent VCS service delivery and customer service in delivering employment services and outperforming both the private and public sectors.

214 215

Households below 60 per cent of median equivalised household income before housing costs DLCG Local Index of Child Wellbeing 2009

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Summary of the Evidence Base 7.159 Through supporting community engagement in service design (commissioning) and evaluation: Evidence of the benefits of community engagement in a number of service areas including crime, health, education and employment were highlighted in The benefits of community engagement: a review of the evidence, (Home Office 2004) and confirmed through ODPMâ&#x20AC;&#x2122;s Research Report 16 that service design involving communities has a greater short and long term impact 7.160 By building stronger communities: Working as part of those communities, tackling inequality, building individual and group skills and confidence, improving quality of life and supporting social enterprise development. Key to this work is a region-wide network of infrastructure agencies that include: Assets 7.161 The Northwest has a large and influential voluntary sector. It contributes to the Northwest as a significant regional employer (with over 64,000 people and over 30,000 groups), by providing better services to communities (including adapting service design and through community level innovation), through social enterprise and finally by building stronger communities (through Community Empowerment Networks and region-wide infrastructure organisations). Perhaps the most important contribution of the VCS is that it provides a social safety net for those issues that the market and the legislative framework fail to pick up. In many respects the VCS, is able to reach out to people that formal structures are unable to. 216 Threats 7.162 Despite improving slightly overall there are parts of the region becoming increasingly deprived particularly Blackpool and Pennine Lancashire. This is contrasted by other areas becoming markedly less deprived often in close proximity to the poorly performing areas like Ribble Valley and Chorley. The region is therefore becoming more polarized in respect to deprivation as is the country as a whole. 7.163 Knife, gun and drugs crime is largely centred in urban areas within Greater Manchester and Merseyside this is not only a blight on people living in those areas but also undermines efforts to change persistent negative images about crime in the Northwest. 7.164 Children are persistently disadvantaged by where they are born and educated with children from deprived areas demonstrating often vastly lower GCSE attainment. The region has areas which are showing little improvement in levels of deprivation â&#x20AC;&#x201C; children and families in these areas are within cycles of intergenerational poverty, worklessness and social exclusion. The prevalence of low wellbeing amongst children in Manchester is evidence of the massive polarization â&#x20AC;&#x201C; Manchester is the economic powerhouse for the regional economy but it is an area of social extremes.

216

Hoshin for Voluntary Sector Northwest (2007) The Contribution of the Voluntary and Community Sector to the Economy of the Northwest pp.29

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Summary of the Evidence Base

Outcome 7: Creating a world class skills base, improving education, attracting and retaining talent as well as tackling gaps in basic and graduate level skills 217 . 

2nd highest level of working age population with no qualifications, above the England average, but is experiencing the largest decreases of all of the regions



In 2007 the region was ranked 5th, out of all English regions, in terms of working age population qualified to at least NVQ level 4



Skills levels amongst adults and young people across the region have improved in recent years, although a significant gap remains with the national picture, and people in the region remain more likely to have no qualifications or hold a level 4+ qualification than the England average



Literacy and numeracy skills are more likely to be mentioned by employers in the Northwest than the national average as skills gaps within their existing workforce



Higher proportion than the England average of 16-18 year olds classed as NEET



In 2006/7 the region was 2nd for retention of graduates and 1st for retention of postgraduates



Lower levels of managers and senior officials in the region but they are becoming more highly qualified and reducing the gap with the England average and firms find it difficult to attract and retain mobile, highly skilled staff for higher level occupations



FE colleges in the Northwest are among the best in the country with 23 Beacon Colleges, 41% of all colleges in the region, which is the highest proportion in the country and college success rates in the region are frequently higher than the national average



In 2007/8 the Northwest had the 2nd highest number of HE students, after London, accounting for 10.4% of all UK students and 40.5% of all students in the region were studying STEM subjects, 6.2% higher than the England average



The Northwest has the 2nd highest number of specialist schools and academies out of all English regions and 2 institutes in the region, delivering MBA qualifications, are ranked amongst the top 30 in the world

217

This outcome is a summary of the following Regional Strategy Evidence Papers: Responding to the challenges of economic recession by helping employers to plan and provide for their current and future skills needs, Raising the aspirations and attainment amongst young people, especially amongst 16-19 year olds, and stimulate an interest in and progression towards higher skills, Ensure a commitment amongst adults to the skills and qualification they need for employment, with a focus on Skills for Life and Level 2 attainment, as well as attainment of Level 3 and higher level skills and Stimulate employers to invest more in workforce development at all levels, including innovation, leadership and management, and entrepreneurial skills

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Summary of the Evidence Base Figure 117: SWOT

Weakness – defined as an issue performing poorly against National comparators

Level 4

Threat – an issue which is showing deterioration in position or risk/signs of weakening

NEET

IT skills

Higher level job ops Workforce skills gaps

White male attainment Aging population

GCSE attainment

Level 4 workforce

Graduate Salaries

Level 2 at 16

Fewer young entering labour market

No qualifications Young Attainment level 3

Early years

Outcome 7: Skills Base

Skills pledge

Right to funding

Graduate retention

universities

A level scores

Student population

Level 2 Train to Gain

Specialist FE colleges

Maintain improvement in STEM Apprenticeships

Student attraction

Senior managers Improv. quals Reducing nos of no quals

IiP

Supporting opportunity – an issue showing signs of improvement or policy opportunity

International/National Asset – an issue which has some form of competitive advantage for the region

7.165 The evidence base to inform the skills agenda for the Regional Strategy 2010 has been based on the challenges identified in the Northwest Skills and Employment Challenges document. The report was commissioned by the Regional Skills and Employment Board (RSEB) and its purpose was to set out the key skills and employment challenges for the region and the broad priorities for the partners in the region and to build on the Northwest Employment and Skills Evidence Base 2008. The challenges identified were:

Impact of Recession upon Employment and Redundancy - respond to the economic recession by tackling the economic and social effects of redundancies and lower levels of recruitment across the region



Impact of Recession upon the Region’s Skills Needs - responding to the challenges of economic recession by helping employers to plan and provide for their current and future skills needs



Employment and Worklessness - providing the support that the workless need to gain sustainable and rewarding employment, especially those from the groups and communities most adversely affected by unemployment, a lack of work or underemployment



Aspirations and Achievement of Young People - raising the aspirations and attainment amongst young people, especially amongst 16-19 year olds, and stimulate an interest in and progression towards higher skills and ensuring a commitment amongst adults to the skills and qualification they need for employment, with a focus on Skills for Life and Level 2 attainment, as well as attainment at Level 3 and higher skills



Employers Investment in Workforce Development and Related Practice - Stimulate employers to invest more in workforce development at all levels, including innovation, leadership and management, and entrepreneurial skills

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Summary of the Evidence Base Issues 7.166 High proportion of working age population with no qualifications the Northwest has the 2nd highest level, of the English regions, who are without any qualifications and has consistently maintained this level which is well above the national average and as a result Skills for Life is a key issue of importance to the region. The region is more likely to have no qualifications and less likely to have Level 4+ than working age people across England. 7.167 National Indicator 78 looks at reducing the number of schools where fewer than 30% of pupils achieve 5+ A*-C GCSEs including English and Maths. In 2007/8 15.4% of all schools within the region had fewer than 30% of pupils achieving 5+ A*-C GCSEs including English and Maths, the fourth highest amongst the nine English regions. Considerable reductions have been made since 2004/5 when it was over a third of all schools. 7.168 There is a growing concern at the number of young people entering the labour market with low or no skills, including many who face functional literacy or numeracy barriers. Many of these young people will be at increasing labour market disadvantage as unskilled jobs become increasingly hard to find and basic or entry level employment requires ever greater skills and qualifications. The educational underachievement of its young people and preparation for work are major issues for the region and continue to be constraints upon its economic performance. 7.169 The National Employer Skills Survey asked employers about the skills gaps observed within their existing workforce, rather than application, and establishments identified approximately 27% of employees lacked literacy skills, 24% lacked numeracy skills and written communication was also identified in 37% of employees with skills gaps. Literacy and numeracy skills are more likely to be mentioned by employers in the Northwest than the national average. 7.170 Recently the region has made good progress in terms of the educational achievement of young people at 16 and their subsequent academic and vocational achievement at 17 and 18 but there remains important challenges around Level 2 attainment amongst 16-19 year olds with the region lagging the national average for Level 2 attainment at 16, and although the gap closes somewhat in the intervening years, there remains a gap at the age of 19. Consequently, despite recent improvements, there remains a significant proportion of young people (16-19) who do not have a Level 2 qualification and attainment varies markedly across the region, with some of the lowest rates in the country in the regionâ&#x20AC;&#x2122;s urban heartlands of Greater Manchester and Merseyside, but also parts of Lancashire. There is the need to increase the numbers of young people gaining a Level 2 qualification and tackling the persistent of low levels of achievement in some parts of the region. 7.171 The Northwest continues to have high numbers of the working age population without an NVQ Level 2 qualifications although females have experienced large decreases, between 2005 and 2007. Throughout the region there are extensive differences between the Local Authorities with the highest and lowest numbers and proportions with rural Local Authorities being some of the better performing. 7.172 White boys from working class backgrounds have the lowest aspirations and their educational attainment is also failing to improve at the rates of most other ethnic groups. 7.173 Attainment by young people of Level 3, excluding A Levels, by age 19 is fairly low in the Northwest and in 2007 the region was ranked 6th of the nine English regions causing a significant gap between the Northwest and England, in terms of the proportion of young people achieving Level 3 between 16 and 19, as 22.5% of 17 and 18 years olds achieved this in England and only 15.9% in the region. 7.174 Increasing the number of people with a Level 3 qualification - one of the most significant challenges for the region in terms of increasing the number of people with a Level 3 qualification is developing learners after the age of 19. Research suggests that the majority of people gain their Level 3 qualifications by the time they are 19 with very little achievement beyond that age. In recognition of this government outlined the creation a new entitlement to free training to enable young people to complete their initial education and training to Level 3 up to the age of 25. The Train to Gain offer has been extended in two trial regions with the Northwest being one of them. The sector contributing most to the GVA gap, business services, is an area where there is a particular issue at level 3.

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Summary of the Evidence Base 7.175 Level 3 and Level 4 skills - there is a critical need to increase the attainment of Level 3 qualifications amongst adults in light of the strong replacement demand at this level, but also the ability to secure the progression of adults qualified at this level to Level 4. Ensuring that the provision and qualifications at Level 3 and 4 in particular are relevant (especially at Level 4) to employers needs which will require investment on the part of employers, the state and the individuals. 7.176 In 2008 7.8% of 16-18 year olds across the region were classed as NEET compared to 6.7% across England, the regional figure was slightly above the PSA target of 7.6% by 2010, and ranked the region 3rd highest of all English regions and in line with all regions the Northwest’s figure improved between 2006 and 2008. Given the balance between the supply and demand of the future workforce it will be important to continue to reduce the number of 16-18 year olds who are NEET. 7.177 The region is faced with a demographic challenge with fewer young people entering the labour market at 16-19 which is exacerbated by increased entrants to higher education. As the Northwest’s population ages, provision needs to be made to re-skill the working population as they change jobs, organisations and re-enter the workplace. 7.178 Maximising the important contribution that the FECs make to the Northwest economy there is a need to ensure that provision is available, co-ordinated and promoted through a demand-led system in a way which aligns to regional economic priorities and delivers qualifications for key growth sectors. 7.179 Recession impact on long term training, helping employers to plan and provide for their current and future skills needs, both through the recession and longer term, as experience of past recessions highlight there is a tendency to overlook the need for longer term planning of skills and recruitment requirements. Failure to adequately plan for the future will undermine the productivity of employees and the competitiveness of firms in the longer term. There is also a potential negative impact up on employer’s planning for and investment in workforce development and this is especially the case for what is deemed to be non essential training provision especially off the job training which does not have an immediate effect on worker productivity. Employers may also suspend or cease other discretionary employment practices which are important in the attracting, motivating and retaining of staff which could mean that skills are lost if the current workforce is not maintained or replaced. 7.180 According to The Association of Graduate Recruiters, Winter Review 2009 graduate salaries are expected to be frozen for the first time in the survey’s history while some employers, notably in banking and financial services, will be cutting graduate salaries - by up to 8% in some cases. The salary freeze will be a particular blow to 2009’s graduates who are the first to have contributed tuition fees for the full three years of their degree courses. Opportunities 7.181 Up-skill workforce with no qualifications, the employment rate of those with no qualifications is markedly lower than those skilled to other levels and in 2004/5 50%, with no qualifications, were in employment in England compared to 47% in the Northwest which rises to 70% for those with level 1 qualifications alone. 7.182 Raising awareness of benefits of Education and Skills Act ensuring that all adults in the region take advantage of the legal right to funding, which came into force from August 2009, for basic skills courses (literacy level 1 and numeracy entry level 3), a first level 2 vocational qualification (the same standard as 5 good GCSEs) and a first A level equivalent (level 3) qualification for all 19-25 year olds (including vocational qualifications at this level). 7.183 Promote the benefits of the Skills Pledge which is an organisation's voluntary public commitment to training its staff, in their own time and in their own way. Firms that do not train are 2.5 times more likely to fail than those who do and those that unlock the potential of every employee to the full will be best placed to weather challenging economic conditions and to capitalise on opportunities for growth. 7.184 The number of people over the age of 50 with no qualifications or without an NVQ Level 2 qualification is higher than for any other age cohort and as this cohort retires the number of people with no qualifications or without an NVQ Level 2 qualification is reduced. Therefore, if people are

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Summary of the Evidence Base educated at a younger age this will have a big impact on reducing the working age population with no qualifications or without an NVQ Level 2 qualification over the long-term. 7.185 Maintaining largest decreases in population with no qualifications the Northwest has high numbers and rates of the working age population with no qualifications but is experiencing the largest decreases of all of the regions with the biggest impact being amongst females. Figure 118: Working Age Population with No Qualifications Split by Gender – Regional 20.0

15.0

10.0

5.0

0.0 England

North West

East Midlands

2005 - Total

East

2007 - Toal

London

2005 - Male

North East

2007 - Male

South East

2005 - Female

South West

West Midlands

Yorkshire and the Humber

2007 - Female

Source : Annual Population Survey, Office for National Statistics

7.186 Maintaining the region’s improvement level of the percentage of pupil’s achieving at least 5 A*-C GCSEs which has seen the region move from 7th position in 2001/2 to 3rd in 2007/8. Girls consistently out perform boys and in 2007/8 in the Northwest 69.7% of girls achieved this level compared to 61.3% of boys. 7.187 National Indicator 84 looks at achievement of 2 or more A*-C GCSEs in Science and if the region can maintain its improvement level which has seen the proportion of pupils achieving 2+ Science GCSEs improve by 8.3% between 2005/6 and 2007/8 which is considerably higher than the England average of 4.7%. 7.188 Between 2004 and 2007 the proportion of Managers and Senior Officials in the region with a NVQ level 4 or above as their highest qualification increased and the proportion with no qualifications fell and these results indicate that Managers and Senior Officials within the Northwest are becoming more highly qualified and are reducing the gap with the England average. 7.189 Change to basic skills qualifications position the region for the change from basic skills to functional skills qualifications, after the pilot comes to an end in September 2010, they will become mandatory for national assessment. 7.190 Expanding Adult Advancement and Careers Service building on 2 prototypes, in Greater Manchester and Greater Merseyside, which by 2010 will have run for 2 years. Testing a range of approaches to establishing local partnerships to act as both outreach points and sources of wider advice on getting on in work. 7.191

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Summary of the Evidence Base Assets 7.192 Good achievement rates of Skills for Life - the Northwest, along with the North East, has the best rates of achievement for both literacy and numeracy for people with skills below the level of a good GCSE (grades A*-C). Numeracy participation and achievement figures are rising each year, however, they still lag behind those for literacy. 7.193 A level QCA point score and regional ranking â&#x20AC;&#x201C; A level grades are attributed to a QCA points system, introduced in 2005/6 which replaced the UCAS points system. In 2007/8 the average A Level QCA total score per candidate in the region was 740.6, 100.1% of the England average, which ranked the region 1st out of all English regions, a position which has been maintained from 2006/7 after improving from a ranking of 3rd in 2005/6. 7.194 Train to Gain performance at Level 2, the Northwest was the best performing region on Level 2 starts and achievements for Train to Gain and between April 2006 and July 2007, over 32,000 learners started a Level 2 and almost 8,500 achieved their chosen qualification. 7.195 Following the academic year 2006/7 2/3 67% of students who studied at Northwest HEIs remained in the region which was the second highest rate of all English regions after London. Looking at the same academic year 67.7% of postgraduates who studied in the Northwest remained in the region which was the highest rate of any of the nine English regions ahead of London at 64.5%. Some caution is advised when interpreting these figures as the data is collected through a survey carried out approximately six months after students leave a HEI and not all students take part in the survey or are in their preferred location or job when the survey takes place. 7.196 Every Local Authority in the Northwest will offer 5 or more Diploma lines by 2010 and almost 200 Diploma lines will be offered across the region for 2010 delivery which will be the highest figure in the country. Provisional data indicates that in 2008/9 the Northwest had the highest figure, of all English regions, of young people starting an apprenticeship which accounted for 15.2% of the English total although some caution is advised with these figures as the Northwest has the third highest population of all English regions and so it stands to reason that there would be a higher number of young people compared to other regions and so a higher number would start an apprenticeship. 7.197 FE colleges in the Northwest are among the best in the country with 23 Beacon Colleges in the region, representing 41% of colleges, this is the highest proportion in the country and significantly higher than the national average of 22%. In addition 96% of colleges were judged satisfactory, good or better by Ofsted for their overall effectiveness and colleges have one of the highest satisfaction rates in the public sector from both learners and employers. College success rates in the Northwest are frequently higher than the national average. In May 2009 the region had 442 specialist schools, up from 405 in March 2008, and 16 academies, double the number of 12 months earlier. The Northwest had the second highest number of specialist schools and academies out of all English regions. 7.198 In 2007/8 the Northwest had just over 240,000 higher education students, the second highest number after London, accounting for 10.4% of all UK students, and a 27.8% growth in the number since 1998/9 which was 2.5% above the UK average. In the academic year 2007/8, 40.5% of all students at NW HEIs were studying STEM subjects, 6.2% higher than the proportion of students across England, a trend which has continued since 1998/9. 2 institutes in the region delivering MBA qualifications are ranked amongst the top 30 in the world. 7.199 In 2009 the Northwest had the highest number of Foundation Degree students of all English regions following a large expansion in student numbers between 2003 and 2009. There was an expansion in all regions in terms of the number of students undertaking Foundation Degrees between 2003 and 2009. 7.200 The National Employer Skills Survey (NESS) 2007 results indicate that the overall level of provision of training and development in the Northwest is high and exceeds the England average in a number of indicators such as incidence of off-the-job training and use of Further Education provision.

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Summary of the Evidence Base 7.201 At the end of March 2009 4,641 organisations in the region were either committed or recognised Investors In People which was the highest figure out of all English regions and represented 16.9% of the England total. Threats 7.202 The 2006 Regional Economic Strategy set a target to reduce the number of working age people with no qualifications above the England average to 40,000 (reducing the baseline figure of 120,000 by 80,000) but despite progress being made against this 2009 target it was not achieved and stood at 85,000. Between 2005 and 2007 the Northwest has been one of the worst performing regions in terms of the working age population with no qualifications with a higher proportion than the England average. 7.203 The true impact of the Skills for Life programme on the skills base is not known. The 2003 Skills for Life survey identified the scale of the problem at that time but until a follow-up survey is undertaken the impact of the programme on the skills base will not be known. 7.204 ICT skills need to be addressed at entry level as without them people will find it increasingly difficult to gain access to employment and will also suffer from social exclusion as more services become available on line, therefore, it is important to decrease the number of people excluded from social and economic activity due to poor IT skills. Low managerial understanding and awareness of ICT were listed as the 2 biggest skills problems in the Northwest Business ICT Survey 2007, therefore, the region needs to establish ICT related managerial skills in the workforce, both through skills training and changes to education systems. 7.205 In 2007 the Northwest was ranked 5th out of the nine English regions in terms of the working age population who were qualified to at least NVQ level 4 and between 2005 and 2007 all regions saw an increase in the share of their working age population who held NVQ 4+ with the Northwest experiencing the second lowest increase of all English regions. 7.206 Some PSA targets may not be met - the Northwestâ&#x20AC;&#x2122;s qualifications profile has been changing but there has been little closing of the gap with England and although the region is moving in the right direction meeting the PSA targets (for literacy and numeracy skills, apprenticeships and NVQ Levels 2, 3 and 4) by 2011 will be challenging and there is the prospect that some targets will not be met. 7.207 Stimulating a higher level of investment in skills, if this is not done then the skills needs of sectors and growth locations may not be met and the critical challenge is to stimulate employers to invest more in workforce development at all levels. 7.208 Attraction and retention of higher level occupations, firms find it difficult to attract and retain mobile, highly skilled staff for higher level occupations, such as managers and senior officials, due to the character of the work and wages offered in the Northwest which is in a different league to that in the Wider South East. In 2007, the region had less of its workforce employed as Managers and Senior Officials than the England average, ranking the region 7th out of the nine English regions, and between 2004 and 2007 the Northwest was the only English region to experience a fall in the proportion of its workforce employed as Managers and Senior Officials over this period. 7.209 Skills shortage vacancies (SSVs) are higher amongst applicants for Managers and Senior Official vacancies in the region than in England as a whole. The NESS 2007 reports that out of all skills gaps identified amongst managers, 69.1% of respondents in the Northwest identified management skills as needing to be improved, the 3rd highest level out of the nine English regions, but the largest decrease since 2003 suggesting that management skills within the Northwest are improving. 7.210 Potential increase in NEET if there is a reduction in entry level and low-skill employment opportunities it will make it harder to tackle long term worklessness and the NEET (Not in Education, Employment or training) group and the number may increase as young people find it harder to secure employment or training opportunities. 7.211 There are some concerns as to whether current skills and education funding may be cut in the future and any cuts could have wide ranging impacts in the region from schools to adult skills and targeted programmes.

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Summary of the Evidence Base

Outcome 8: Having a healthy population, with a reduction in health inequalities and capitalising on the economic opportunities from changing health issues

     

Second highest proportion of working age population claiming Incapacity Benefit at regional level. High levels of mental disorder which are forecast to continue. High levels of alcohol consumption and alcohol related hospital admissions. Prevalence is highest among managerial/professional workers. Third worst performing region in relation to absenteeism among workforce. Smoking prevalence has fallen although the Northwest continues to have higher prevalence rates than the national figure. Participation rates in physical exercise among pupils in Year 10 and 11 are significantly below the national target.

Figure 119: SWOT

Weakness – defined as an issue performing poorly against National comparators

Threat – an issue which is showing deterioration in position or risk/signs of weakening

Incapacity benefit

Mental disorder

Raising pension age

Smoking prevalence

Polarised life expectancy

Older population

Alcohol consumption

Workforce absenteeism

Outcome 8: Healthy Population Healthcare Sector

Medical research

NHS

Medical Inst

Change4life

Supporting opportunity – an issue showing signs of improvement or policy opportunity

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.212 The number of Incapacity/Severe Disablement Benefit (IB/SDA) Claimants has fallen by c.11,000 over the period February 2007 to August 2008, however, this equates to 9.4% of the working age population compared with 6.7% nationally; the second worst performing of all English regions. The map below highlights that there is a correlation between highest IB/SDA claimant numbers and the 20% worst deprived lower super output areas.

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Summary of the Evidence Base Figure 120: Incapacity Benefit/Severe Disablement

7.213 The Northwest has the highest proportion of adults with a CIS-R 218 score of 21 and over compared with other NHS Regional Office areas and England, with a particular problem in the 40-54 age cohort. In addition, the proportion of IB claimants with a mental or behavioural disorder in the Northwest is above the England average. Figure 121: CIS-R scores CIS-R Score of 12 and over, by sex and NHS regional office area 30 Women

Men

All Adults

South West

England

20 15 10 5 0 Northern and Yorkshire

Trent

West Midlands

North West

Eastern

London

South East

Source: Psychiatric Morbidity among adults living in private households, 2000

7.214 This is a significant problem for employers tackling the issue of mental health in the workplace.

7.215 Levels of absenteeism are 3rd highest among the regionâ&#x20AC;&#x2122;s workforce when compared with the other English regions. Despite reducing the gap with England, the Northwest continues to record higher 218

Clinic Interview Schedule (CIS-R) data are presented on the prevalence of 14 neurotic symptoms. Adding up the scores on all 14 symptoms covered by the CIS-R produces a total CIS-R score which reflects the overall severity of neurotic symptoms.

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Summary of the Evidence Base levels of absenteeism with an average of 9.3 days lost per employee compared to the national average of 7.1 days per employee. Figure 122: Sickness Absence Sickness absence: average days lost per employee, 2001 to 2008 12 UK

North West

Days

8 6 4 2 0 2001

2002

2003

2004

2005

2006

2007

2008

Source: CIPD Absence Management Annual Survey Report, 2008

7.216 Life expectancy rates continue to improve at both national and regional levels with an average increase of 3 years over the period 1991-1993 to 2005-2007, resulting in an ageing population. The average life expectancy at birth rates for the Northwest was 78.2 years in 2006/07 compared with a national average of 79.7 years. Figure 123: Average Life Expectancy Average Life Expectancy: Trend for the period 1991/93 to 2005/07 81.0 80.0

England

North West

79.0

Years

78.0 77.0 76.0 75.0 74.0 73.0 72.0 19911993

19921994

19931995

19941996

19951997

19961998

19971999

19982000

19992001

20002002

20012003

20022004

20032005

20042006

20052007

Source: Life Expectancy at Birth (Years) by Government Office Region, Office for National

7.217 Lifestyle factors such as cigarette smoking, alcohol consumption, poor diet and obesity are contributing factors to serious health conditions such as cardiovascular disease, liver disease and diabetes. 7.218 The Northwest has a higher prevalence of cigarette smoking than the national average â&#x20AC;&#x201C; 23% compared to 21% for all persons. Analysis by socio-economic classification highlights that people in the lower socio-economic classifications have a higher propensity to smoke, start smoking earlier and consume more cigarettes daily than their counterparts. Smoking is generally more prevalent among the male population.

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Summary of the Evidence Base 7.219 The Northwest is the worst performing region for units of alcohol consumed on at least one day. Alcohol consumption is highest among those in employment compared with the unemployed or economically inactive. Of statistical significance is the propensity for alcohol consumption among those classified as managers and professionals. 219 Figure 124: Alcohol consumption Proportion of the working age population who drank on any one day last week, by sex and economic activity status 60 Working

Unemployed

Economically Inactive

50 40 30 20 10 0 Men

Women

All Persons

>4/3units

Men

Women

All Persons

>8/6 units

Source: Table 2.11, General Household Survey 2007

7.220 Analysis of Statistics on Obesity, Physical Activity and Diet 220 , highlight that whilst physical activity participation rates have increased significantly among pupils in year 1 participation rates among pupils in years 10 and 11 continue to be noticeably lower than the national target. With prevalence of Type 2 Diabetes on the rise, it is important to ensure that the benefits of physical activity and a healthy diet are promoted to the general population. Figure 125: Participation rates among pupils Participation rates among pupils, by school year group for England 120 04/5

07/8

Target

100

80 60 40 20 0 Year 1 Year 2 Year 3 Year 4 Year 5

Year 6 Year 7 Year 8 Year 9 Year 10 Year 11

Source: Table 5.8, Statistics on obesity, physical activity and diet (Feb 2009), NHS Information Centre

219 220

Source: General Household Survey 2007 Source: NHS Information Centre

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Summary of the Evidence Base Opportunities 7.221 There are specific public and private healthcare sectors that could capitalise on areas of need associated with an ageing population which could in turn increase the size of the labour market in the region, for example, expansion of the social care sector to provide additional sheltered accommodation. 7.222 Continued investment in knowledge based industries, for example, medical research would strengthen the region’s biomedical sector. 7.223 The Change4Life programme, which aims help families eat well, move more and live longer, is a national programme the region could benefit from. Assets 7.224 As an employer, the NHS is one of the largest in the region. According to the NHS Information Centre, the Northwest Strategic Health Authority employed a total of 208,983 staff as at March 2009, of which 104,050 are professionally qualified clinical staff. 7.225 There is a concentration of specialist health centres in the region, particularly in Merseyside: 

Clatterbridge Centre for Oncology NHS Trust



Royal Liverpool Children’s NHS Trust



The Cardiothoracic Centre – Liverpool NHS Trust



The Christie NHS Foundation Trust



Liverpool Women’s Hospital NHS Trust



Walton Centre for Neurology and Neurosurgery NHS Trust

7.226 The region is at the forefront of medical research. The Liverpool School of Tropical Medicine, founded in 1898, is a centre of excellence which aims to promote improved health, particularly for people of the less developed countries in the tropics and sub-tropics 221 . 7.227 In April 2007, The Royal Liverpool & Broadgreen University NHS Trust along with its partners, University of Liverpool and the Liverpool School of Tropical Medicine, were awarded a specialist Biomedical Research Centre in Microbial Disease which was launched in February 2009. The award, which was made following a competitive bidding process, was in recognition of the research excellence within the field in the city. The Trust has been awarded £2.5 million per year over the next five years to develop research which focuses on Microbial Disease 222 . 7.228 The Northwest is well placed in the biomedical sector with c.160 biotech/pharam companies and c.120 medical device and healthcare technologies employing around 25,000, including six multinational pharmaceutical companies. Major employers include Renevo, the UK’s largest biotechnology company; AstraZeneca; Novartis; Eli Lilly and Bristol-Myers Squibb. The annual turnover for these companies is approximately £5 billion and GVA is £2 billion. Exports account for 50-60% of output. Threats 7.229 IB/SDA Benefit Claimants has historically been used as an indicator to measure the number of people of working age who are economically inactive due to health issues. There are, however, concerns that a reduction in IB/SDA claimants does not provide an accurate picture of health related economic activity as a reduction may indicate that claimants are now claiming another benefit. 7.230 An ageing population presents several threats that will impact on the health and social care sectors and employees. A consequence of improving life expectancy at birth rates is an ageing population which will increase the burden on public health services. It is likely that difficult choices will have to be made to balance the benefits of health interventions for an individual with efficient use of NHS resources. One controversial approach is to use quality adjusted life years (QaLY) interventions, a 221 222

Source: Liverpool School of Tropical Medicine website Source: www.rlbuht.nhs.uk/NIHR_BRC/Introduction.asp

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Summary of the Evidence Base measure of disease burden which assesses the benefits of health interventions, i.e. the ratio cost of an intervention to QaLYs saved for a healthcare intervention. 7.231 Proposals to raise the State Pensionable Age (SPA) will result in an older workforce. As preponderance of poor health is more likely to increase with age, employers will need to address the potential increase in days lost through sickness absence, which will result in reduced productivity. One intervention would be to introduce flexible working patterns to accommodate the changing demographic of the workforce. 7.232 A reduction in public health spending would affect delivery of primary and secondary health care provision. Direct Health has reported that there is a ÂŁ22 million funding crisis affecting childrenâ&#x20AC;&#x2122;s hospitals, including Alder Hey in Liverpool. The proposed funding will damage the provision of cardiac surgery, neurosurgery and spinal surgery. 7.233 Closure of public health services according to Health Direct there have been significant job cuts in the last 6 months which have affected the Northwest where it is estimated c1,100 NHS jobs have been cut.

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Summary of the Evidence Base

Outcome 9: Improving the range and depth of quality employment opportunities for all. Linking areas of opportunity and need, significantly reducing low employment rates and improving the supply of labour to businesses.

  

Job creation has centred around the cities and conurbations Despite high jobs growth in the cities, local employment rates have not improved significantly Jobs density is higher in Manchester than London

Figure 126: SWOT

Weakness – defined as an issue performing poorly against National comparators

Mismatch of skills

Over 50’s employment

Threat – an issue which is showing deterioration in position or risk/signs of weakening

Reduced public sector employment

Recession

Falling job opportunities Ethnic and BME employment Medium to large employers High levels of inactivity

Employment land

Public Sector Growth

Employment deprivation

Outcome 9: Employment Opportunities Equalising gender pay Sectoral growth assets

11 employment hubs

Growth sectors

Supporting opportunity – an issue showing signs of improvement or policy opportunity

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.234 After 16 years of continuous economic growth, the Northwest economy has entered into a period of recession. Part of the process of a recession is job losses; this has been evident in the current recession with over 30,000 jobs lost in the Northwest between May 2008 and May 2009. Many analysts forecast that unemployment will continue to increase throughout the short to medium term until a full recovery takes place. 7.235 The chart below ranks districts based on absolute changes in JSA claimants and percentage increase in JSA. Although some districts have seen the biggest percentage increases in JSA, this is from a low base and the absolute increase may be very small. Districts in the top right quadrant are of least concern, having seen low increases and low percentage increases. The districts in the bottom left quadrant are of most concern, they have seen high increases in both percentage terms and absolute terms. This suggests that some of the region’s better performing areas have been adversely affected (Cheshire East, Cheshire West and Chester, Stockport, Warrington and Trafford).

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Summary of the Evidence Base Figure 127: Scatter diagram absolute increase in JSA v Percentage increase in JSA LA rankings of absolute increases in JSA and % change in JSA

Point to watch - % increase high

Best situation

Low absolute increase in numbers

Eden

Ribble Valley

Copeland

South Lakeland

Fylde

Barrow-in-Furness Allerdale

40 Wyre Congleton

Rossendale

Pendle

Hyndburn 32 Ellesmere Port and Neston

South Ribble

Burnley

Chester High % change JSA

Macclesfield

Lancaster

Preston

Crewe and Nantwich West Lancashire 8 Vale Royal

Warrington UA

32 Bury

Halton UA Trafford

St. Helens

Blackpool UA

Low % change JSA

Knowsley

Oldham Cumbria Salford

Stockport 8 Cheshire East UA

40 Blackburn with Darwen UA

16 Tameside Rochdale

Cheshire West and Chester UA Wigan

Worst situation

Carlisle

Chorley

0 High absolute increase in numbers

Bolton Sefton Wirral Manchester Liverpool Point to watch absolute increase high

7.236 The majority of jobs created in the lower performing parts of the region have been in the public sector. In fact there has been an overall decline in the number of private sector jobs in many parts of the Northwest. The high reliance on the public sector for job opportunities is a worry, particularly in Merseyside and Blackpool, with over 40% of all jobs in the public sector in those areas. Given a tighter climate for public expenditure, increases in public sector jobs are doubtful. A fundamental problem in the Northwest economy is an over reliance on low level public sector jobs. 7.237 Parts of the private sector are creating jobs, such as business services. However, the number of jobs being created (in east Lancashire for instance) are not replacing losses in manufacturing. There are also additional issues around loss of productivity and developing appropriate opportunities for skilled technical staff who have lost jobs in manufacturing. Often they have a skill set which doesnâ&#x20AC;&#x2122;t match the requirements of the opportunities which are emerging. 7.238 In some of the districts there are high quality opportunities, but potentially these are taken by residents of other districts, for example Blackburn and Knowsley. The opposite is true in places like Wirral, where the labour force access better paid jobs in other districts.

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Summary of the Evidence Base

Figure 128: Workplace and residence based employment rates 180.0

160.0

140.0

Index (NW=100)

120.0

100.0

80.0

60.0

40.0

20.0

0.0 Allerdale

Blackburn

Blackpool

Copeland

Knowsley

workplace based

Pendle

Rossendale

Wirral

ENG

Residence based

Source: ASHE 2008, ONS

7.239 Jobs growth in Liverpool has been marginally quicker than the Northwest, although slightly behind the England average. Manchester, Salford and Trafford all saw modest growth in jobs over the time frame, with Trafford seeing no growth. Despite the low percentage increase, the majority of jobs created have still been in the cities. 7.240 Liverpool is a very important source of jobs for its surrounding districts, particularly Wirral and Sefton. The job density level of 0.88 jobs per working age person is very high; this is despite a very low employment rate of 64%. This suggests that a considerable proportion of jobs in Liverpool are taken by residents outside the city. There are even more opportunities in Manchester, despite a low employment rate from the indigenous population. This suggests that Manchester is an area with considerable jobs, which are filled with the help of residents of surrounding areas. The area with the highest job density rate in the Northwest is Preston with approximately 1.2 jobs per working age person. The employment rate is very close to the regional average. There is still a gap between the employment levels in Preston and the number of jobs there. Local districts use Preston as a hub; residents of areas like Chorley, South Ribble and Wyre are able to access jobs in Preston. 7.241 Employment rates for certain groups in the Northwest are low compared to the average rate (of 72%). Employment levels regionally and nationally for over 50s are lower than for the under 50s. Inactivity amongst those aged 50-65 and over retirement age is also understandably higher than for working age people across the country but there are spatial variations that possibly reflect different working cultures. For example people in the South East – despite being more affluent overall than in the Northwest still tend to be more economically active throughout their later lives. 7.242 The working age employment rate for ethnic minorities in the Northwest is 55% - the equivalent rate for England is 61%. The highest employment rate by ethnic group is amongst Indians at 69% although this is below the England rate of 70.3%. The lowest employment rate by ethnic group is amongst Pakistanis and/or Bangladeshis at 47.3%. This is consistent with other regions and is above the England average of 45.7%. This is the exception – for every other ethnic group the Northwest’s rate is lower than for England. 7.243 20% of the working age population in the Northwest is classified as disabled – the figure for England is 18%. Only the North East has a higher proportion (22%). A further 3.1% of the working age population are work limiting disabled, and 4.1% are Disability Discrimination Act (DDA) disabled. Out

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Summary of the Evidence Base of the disabled populations in the Northwest the employment rate is 44.6% compared to 51.1% for England rate. If the employment rate of the region matched the England average, there would be 50,000 more workers in the labour force. Since 2004 the Northwest the disabled employment rate has increased from 43.9% to 44.6%. There are some barriers for certain groups in the Northwest, including disabled and BMEs. To improve the overall employment rate in the Northwest, tackling gaps for these groups is important. Opportunities 7.244 The renewable sector will continue to grow and is forecast to be the source of much jobs growth when the economy comes out of recession. This represents an opportunity for Northwest residents to gain employment. There is an opportunity to create opportunities through the major long term projects of OMEGA and Media City. Both of these schemes will bring thousands of new jobs with the potential to bring high quality opportunities to much of the Northwest. 7.245 The recession so far appears to be having a less detrimental affect on the Northwest economy than other parts of England. This means that when the economy comes out of recession, the Northwest is in a stronger position to take advantage of opportunities and not have vastly depleted employment issues to contest with. 7.246 There are significant employment gaps between the Northwest and England for BME, over 50s and females in the Northwest. This is an opportunity to close the employment gap for the overall Northwest. Assets 7.247 Liverpool and Manchester are areas of opportunity for employment and jobs. They support multiple jobs for residents of surrounding areas and are areas of opportunity. Preston is also an area of opportunity as there are 1.2 jobs per working age person. 7.248 There are a number of world leading employers in the Northwest that create high value jobs and offer new jobs and high value activity to Northwest residents. These include BAe, BNFL, AstraZeneca and Tesco. The Northwest also has strengths in growing sectors with high quality opportunities such as Nuclear, Digital & Creative and Renewables, with the latter two growing employment sectors. Threats 7.249 A major threat to the Northwest is a long lasting recession. No one is sure of the depth of the recession and if it is prolonged will it disproportionately affect the Northwest. If this happens the region will continue to lose jobs and the gap with England in employment rates could widen; the most affected groups are likely to be from the already deprived communities. There may be greater affects in the region because of the headquarters affect. As there are fewer headquarters in the region, it is more difficult for the Northwest to influence strategic decisions over job losses. It becomes easier for companies to remove jobs from the Northwest. 7.250 The Northwest has strengths but has few sectors which it truly has a competitive advantage. This suggests that there is a possibility that the region bears the brunt of job losses because of a lack of specialism. 7.251 Related to this one of the sectors the Northwest has a specialism in is manufacturing. The Northwest and UK economy are increasingly moving towards service sector work. This has resulted in continued job losses in manufacturing. This means that the region is disproportionately affected because of the specialism. The Northwest is too reliant on the public sector. The majority of the jobs growth in the Northwest has been in the public sector. In a tighter financial climate this is unlikely to continue. The Northwest needs to start creating jobs in the private sector. 7.252 London is a dominant world city that has seen strong population, GVA and employment growth. It continues to draw young, dynamic and talented people from the Northwest. The region needs to address this issue. Additionally the capital acts as a hub, creating jobs often at the expense of the Northwest. If this continues it is difficult to create jobs in the region.

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Summary of the Evidence Base

Outcome 10: Creating balanced housing markets across the Northwest that support economic growth, strengthen inclusion and ensure that everyone has access to appropriate, well-designed high quality, affordable housing in mixed, sustainable communities.

     

3 million households in the region 2nd lowest household growth rates over the 1976 – 2006 period Projected increase in one parent households Polarisation in household earnings with two thirds of household incomes below the regional level Owner occupation is showing signs of decline whilst the rental sector is growing, however, there are high levels of vacant dwellings Significant loss of stock due to demolition and remaining stock is relatively old.

Figure 129: SWOT

Weakness – defined as an issue performing poorly against National comparators

Threat – an issue which is showing deterioration in position or risk/signs of weakening Low levels of detached

Poor quality stock

Affordable housing

Aging population

Old Stock

Pressure on rental market

Low sales Transport links

Availability of social housing

Energy efficiency

House building slowdown

One person household growth

Outcome 10: Housing Markets Renovation

Path finders

High value attractive housing

House prices

Supporting opportunity – an issue showing signs of improvement or policy opportunity

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.253 The Northwest had the second lowest growth household growth rate over the 1976 to 2006 period reflecting the major restructuring of the region’s economy. Over the period 1976 – 2006 the number of households living in the region increased by 448,000 or 18%. This represents average annual growth of just under 15,000 households.

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Summary of the Evidence Base

Figure 130: Regional Household Growth by Region

7.254 In 2006, one person households accounted for 31% with 15% attributable to pensioners living alone. Projected household composition indicates that the proportion of one person households will rise to 40% in 2031. Projections indicate that the average household size will fall from 2.3 persons per household in 2006 to less than 2.1 persons per households in 2031, resulting in a wider gap between the Northwest and England average. By 2031, almost one third of households in the region will have a household representative aged 65 or more, compared with just over a quarter in 2006. This is extremely significant in policy terms as the older population are most likely to need adapted housing, specialist housing provision and social, nursing or health care. 7.255 The average household income 223 in the Northwest in 2008 was £32,223 however, distribution of incomes is biased with two thirds of households having an income below this level. At a local level, households incomes vary considerably from £41,000 per annum in the Macclesfield housing market area and £26,000 per annum in Alston Moor, Cumbria. Greater Manchester Central, West Cumbria, Barrow and Pennine Lancashire had low average incomes. 7.256 Lower quartile house prices provide an indication of housing affordability for first time buyers. The lower quartile house price for housing market areas in the Northwest in 2008 was £95,000. The threshold is highest in Central Lakes where it is more than three times that for the lowest in Burnley/Pendle. The Central Lakes have the highest house prices at housing market area level 224 , however, anecdotal evidence suggests that the indigenous population face barriers in accessing the housing market due to the prevalence of second home ownership in the area. 7.257 The Northwest has a relatively old dwelling stock in comparison to other regions. The average age of dwelling stock was 64 years in 2007. The Northwest has the third lowest proportion of newer 223

CACI Paycheck The Northwest has 27 housing market areas covering the region and these have been widely used as the basis for local planning and housing analysis. In some cases, these correspond with local authorities but in other they are amalgamations of authorities or parts of them. Prices can vary within these areas. 224

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Summary of the Evidence Base post 1985 stock amongst regions. Despite past investment in the demolition and replacement of substandard or obsolete housing, this profile represents the legacy of the regionâ&#x20AC;&#x2122;s industrial past. Many of these dwellings fall below modern standards and expectations in terms of space, design, density and amenities such as gardens, space for childrenâ&#x20AC;&#x2122;s play and car parking. They are also often concentrated in neighbourhoods which provide poor and polluted environments and associated with concentrations of crime and deprivation. Dealing with this legacy of older housing through upgrading and replacement is one of the key housing challenges for the region. Figure 131: Age of Stock in the Northwest

Opportunities 7.258 A major issue is the location and nature of demand. Additional potential growth has been identified in the six growth points. The current hiatus in housing supply and some potential deferment of demand in the shorter term provides an opportunity to review the growth points carefully to ensure that they are integrated within the overall framework implied by the RES and RSS. This might mean the deferral of some growth point developments but the prioritisation of others, perhaps even at the expense of currently planned growth. 7.259 The Northwest is one of the lower priced regions in England based on average house prices. 225 In the current economic climate, the region could capitalise on this as a way of attracting/retaining people in the region. 7.260 The price gap between new dwellings and the second hand stock is greatest in lower value areas such as Blackburn/Hyndburn and Burnley/Pendle. This reflects the relatively high demand and lack of supply of new housing in these areas. There is an opportunity to renovate existing housing stock to a high standard to narrow the gap between supply and demand. The costs of removing obsolete stock are high, and in the private sector at least attract considerable opposition. This suggests that upgrading the existing stock in combination with achieving high standards in future new dwellings should be a priority for the region. 7.261 The ageing of the population has specific implications for housing and associated services. With a higher proportion of the households entering old age as owner occupiers there is an opportunity to develop solutions which allow them to remain in their own home, for example, adaptations. 7.262 Household energy consumption is responsible for 27% of carbon emissions in the UK, and the Government has set a long-term target of reducing carbon emissions by 80% by 2050. As part of 225

Source: CLG Live Tables

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Summary of the Evidence Base this, the Government intends that all new homes will be carbon neutral by 2016. Even assuming that this target can be achieved despite short-term problems in the market, there is a need for action to tackle the region’s existing housing stock, much of which has low standards of energy efficiency. 7.263 The economic renaissance and assumed high level of new employment generation in Manchester has had a positive impact on projected household growth rates with a projected increase of 48% over the 2006-2031 period. Assets 7.264 The region has pockets of high value attractive housing. Prices are generally relatively high in the north of the region with the exception of inner Carlisle, West Cumbria and Barrow-in-Furness. Cheshire and West and North Lancashire have higher priced areas separated by a band of lower prices across the ‘M62 corridor’. 7.265 As a result of planning policies, the proportion of new housing on previously developed (brownfield) land in the Northwest has increased from 58% in 2001/02 to 88% in 2007/08. This proportion varies at local authority level depending on the current degree of urbanisation but exceeds 50% in the majority of areas. 7.266 The Northwest has four housing market renewal (HMR) Pathfinder areas: 

Manchester-Salford



Elevate East Lancashire



Partners in Action (within Oldham and Rochdale)



NewHeartlands (within Liverpool, Sefton and Wirral)

7.267 HMR’s are the focus of activity to rejuvenate housing markets where prices lag behind those of surrounding areas, where vacancies are high and where there has been significant population loss. 226 Prices in the region’s HMR Pathfinder areas have converged with the median for sales in the region outside Pathfinders, though with a loss of ground in 2008. Threats 7.268 There are significant implications for the housing market associated with an ageing population. Many older people suffer a reduction in income on retirement and a reduction in savings during old age, as well as a gradual decline in their capacity to carry out repair and maintenance tasks. For owner occupiers, this can lead to an increase in the level of disrepair in their homes with potential impacts on health and well-being. There is also a major task in restructuring of housing and support services for older people over the next decade to prepare for the changes brought about by an ageing population and current and future service requirements. 7.269 The move towards a higher degree of renting looks set to accelerate over the longer term due to increased polarisation of incomes and the selective accumulation of wealth leading to some concentration of home ownership with more households owning more than one dwelling and more who are obliged to rent. Changes to lender attitudes will contribute to this process if they persist. The allocation of social housing remains driven by needs and pressures on this sector can only increase. Ways of mainstreaming intermediate housing to make it more understandable and acceptable to consumers and lenders; a review of social rented housing allocation principles and a full review of the private rented sector in light of changed market circumstances are likely to be needed. 7.270 The breakdown of the dwelling stock by Council Tax banding is a useful general indicator of dwelling quality. The Northwest is characterised by one of the highest proportions of dwellings in Band A, the lowest value band, in England. Conversely, the region also has a very low proportion (5%) of higher band dwellings (Bands F, G, H and I). This indicates the relatively poor ‘offer’ represented by much of the stock in the region. The core cities and some older urbanised areas of Liverpool,

226

See www.communities.gov.uk under ‘Housing Market Renewal Pathfinders’ for more information on these areas.

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Summary of the Evidence Base Manchester, Knowsley, Barrow-in-Furness and Salford have three quarters or more of their dwellings in Bands A and B. 7.271 The region has low levels of detached housing supply â&#x20AC;&#x201C; 17% of total dwellings were detached in 2007. A relatively poor supply of detached homes may result in difficulties in attracting and retaining homeowners in the managerial and professional socio-economic classification. 7.272 The credit crunch and the subsequent economic recession have impacted seriously on new house building, perhaps more seriously in the Northwest than in the south or Midlands. Retrenchment by investors has impacted particularly on this sector. Government interventions to assist developers with strategically important schemes have had an impact, but it is doubtful whether the level of assistance being provided can be sustained beyond the short-term. Improvements to the supply of finance for development and house purchase and to the underlying economic position to restore confidence across the market will be necessary to restore activity to something approaching previous levels. It is likely that developers will want to rethink the nature and location of new housing supply, given the relatively severe impact of the recession on the demand for high density flat and apartment developments. It seems even more unlikely that the increased supply targets set by the Government will be achieved in the short or even medium term and this could have serious impacts both on housing needs and on economic recovery. 7.273 The volume of house sales in the region has plunged from around 16,000 per quarter in September 2007 to around 3,000 per quarter in January 2009, a reduction of four fifths. The reduction in sales turnover characterises the current housing market recession and indicates difficulties in accessing mortgage finance but also shows an unwillingness to sell at lower prices and reluctance by potential buyers to enter the market as prices continue to fall. If this trend continues it may impact the mobility of the labour market. 7.274 There has been a decline in the proportion of owner occupiers purchasing with a mortgage in England, reflecting both the ageing of the population and the tendency of older households to own outright and later entry into the sector by younger households, either because of problems in accessing or affording the cost of borrowing or through a preference for renting. Data on regional changes suggest that these trends are also apparent in the Northwest. 7.275 Falling house prices have not significantly reduced the need for affordable housing. The impact of the economic downturn, which has affected unemployment levels, is increased repossessions, higher levels of personal debt and a likely increase in bankruptcy rates of non-prime households who will experience major difficulties in accessing loans while there is a general shortage of finance. Low interest rates are currently limiting mortgage distress, and the future trajectory of interest rates will be a further crucial determinant of the scale of the problems that arise in the shortterm. 7.276 The location of new housing should take account of commuter patterns. The Northwest has key employment hubs, for example, Liverpool and Manchester and to a lesser extent Preston, Salford, Trafford and Warrington. Provision of suitable housing to meet the needs of the occupational groups commuting into these local areas would reduce in-flows.

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Summary of the Evidence Base

Outcome 11: Delivering a high quality, reliable and efficient infrastructure, transport and digital networks to contribute to sustainable development and ensuring that the region is better connected, locally and internationally.

        

57 billion km traveled on a network of 37,000 km Increasing volume of traffic and expected to worsen 64% of travel is by road, 33% air, 2% rail, .6% water Decline in bus use, increase in train 65% of commuter flow is within LADs, only 15 LAs have net inflows 64% of travel is by road, 33% air, 2% rail, 0.6% water Traffic on the region’s major roads is expected to increase by 27% by 2020 Demand for travel by bus has fallen while the number of rail journeys has increased - but capacity is an issue Businesses with the highest levels of ICT adoption had the highest growth prospects and the highest average turnover per employee

Figure 132: SWOT

Weakness – defined as an issue performing poorly against National comparators Water supply

Threat – an issue which is showing deterioration in position or risk/signs of weakening Transport solutions for knowledge workers

Gas storage

Integrated public transport

Waste/Landfill Utilities infrastructure

Digital Connectivity

Carbon emissions

High levels private road usage

Aging transport infrastructure Capacity of rail system

Increased housing in constrained areas

Aviation emissions

Increased road freight

Outcome 11: High Quality Infrastructure IPC

waterways

Bridgewater Canal

Manchester Airport

Port of Liverpool

West Coast Mainline

Liv/Manc Connections

Supporting opportunity – an issue showing signs of improvement or policy opportunity

International/National Asset – an issue which has some form of competitive advantage for the region

Issues 7.277 Since 1996, the volume of traffic on the region’s major roads (measured in vehicle kilometres) has increased by 16%, 1% more than the national. Major routes, especially motorways, already experience severe congestion and ‘stress’. This is expected get worse through to 2026 based on current patterns of travel 227 .

227

SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport

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Summary of the Evidence Base 7.278 A key issue for transport in the Northwest is the level of road usage by private transport, especially at peak hours. If current commuting patterns continue, alongside the high levels of car use amongst commuters, the increasing pressure on capacity will be a serious constraint to economic growth 228 . 7.279 Capacity issues on the current rail network are a significant concern for growth, especially if any modal shift towards more sustainable travel is achieved. The importance of Manchester, Liverpool, Preston, Crewe, and Chester is expected to grow in the future and rush hour demand already exceeds capacity on many of these routes 229 . 7.280 Demand for travel by bus has generally fallen across the Northwest (with the exception of

Blackpool), and with some operators struggling to ensure bus routes are commercially viable. In Merseyside, there are 430 bus routes, of which half are commercial whilst the other half is supported by MerseyTravel. In Cheshire, approximately 16% of bus journeys are supported by the Council and in Lancashire 80% of bus services are commercial 230 . 7.281 In terms of environmental impact, transport’s relative share of regional carbon emissions was 32% in 2005, which is projected to increase to 39% by 2020. The majority of transport emissions will continue to be from road transport, with users also responsible for two thirds of emissions of nitrous oxide (N2O), approximately two-thirds of all carbon monoxide (CO), half of the nitrogen oxides (NOx) and PM10 black smoke, and 60% of Volatile Organic Compounds (VOCs) pollution across the region. In all cases, the levels of pollution generated by transport are projected to rise considerably by 2020 231 . 7.282 Research by the Tyndall Centre suggests that aviation will use almost all of the UK’s ‘carbon budget’ for all sectors by 2050, leaving very little ‘carbon budget’ left for other sectors and a fundamental conflict between promoting the region’s airports (as key drivers of economic growth) and the carbon footprint of the region 232 . 7.283 Road transport is also known to cause considerable noise pollution and, according to data collated by Defra and the Campaign to Protect Rural England (CPRE), almost half (48.6%) of the region’s land was disturbed by noise and visual intrusion in 2007. This has risen from 41.5% in the early 1990s. 7.284 BERR paper (2009) New Industry New Jobs (NINJ) recognises that substantial investments will be needed in new and/or upgraded national infrastructure in the coming decades in a number of key areas, including energy, transport and communications, but that one of the difficulties in doing so is ‘unnecessary’ delays or uncertainty in respect of planning decisions concerning strategic infrastructure 233 . 7.285 There is a lack of understanding of how the utilities markets and companies are structured, regulated and operated by the public and private sector within the region. There is also a lack of understanding about how the distributors operate. The investment planning process is completely separate to the strategic planning process for economic development and regeneration, and has historically not aligned with the timescales for the preparation of the Regional Economic Strategy, the Regional Spatial Strategy and Sub-Regional Action Plans, nor more recent initiatives such as Housing Growth Points and Eco-Towns 234 . 7.286 There are also issues surrounding the cost of utilities infrastructure. The Northwest was one of the first regions to heavily invest in utilities infrastructure (including electricity and gas supply) and as a result some of the infrastructure now requires replacing or considerable investment. The utilities companies have invested heavily in upgrading their network assets but it is likely further investment will be needed to meet the demand of planned development. This could lead to what is known as

228

SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport Network Rail (2007) Northwest Route Utilisation Strategy SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 231 SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 232 SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 233 SQW (2009) Developing our infrastructure - A Report to the Chief Executives of the Regional Development Agencies 234 EKOS for NWDA (2008) Northwest Utilities Infrastructure Study - Final Report 229 230

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Summary of the Evidence Base ‘asset sweating’, an asset management strategy whereby investment is kept to a minimum to defer capital and revenue expenditure. 7.287 Furthermore, the Northwest electricity network is run by two different distributors, United Utilities for Electricity Northwest (ENW) and Scottish Power Manweb (SP Manweb). SP Manweb has a network architecture that is unlike the standard network architecture found in the ENW network area and costs more to develop, manage and maintain, approximately 5 times more 235 . The expenditure of the utilities companies is regulated by Ofgen to ensure the companies do not spend too much, which would result in higher bills for customers. This limits the amount utilities companies can spend on infrastructure improvements. 7.288 An important aspect of utilities infrastructure is gas storage, which may be increasingly required to help meet future fluctuations in demand, especially peaks. Gas storage development and expansion is not currently addresses by National Grid in strategic documents and plans and little progress is expected on developing gas storage. 7.289 Recycling potential is not developed in the commercial sectors where 25% of readily recyclable waste is sent for disposal. However, the worst recycling performance is seen in the public sector where 87% of readily recyclable waste materials are not recycled but sent for disposal. 7.290 There is enough landfill capacity in the region to satisfy landfill requirements for the foreseeable future but current planning agreements only run until 2020 for many landfill sites, even though they have the capacity to be open for longer 236 . 7.291 The CO2 emissions associated with water abstraction, treatment, conveyance, use and disposal are predominantly from water use in the home (89%). 7.292 Leakage through old pipework is a major issue for water companies and there is constant work on the distribution system to replace old pipes. The current rolling annual average leakage for UU is 462Ml/d and is the third highest leakage rate in country 237 . 7.293 There is some uncertainty about future water use. United Utilities expects overall demand of water to decrease to 2035, while an Environment Agency study 238 predicts an increase in demand for water within the region over the next 25 years from factors including population increase, increased economic output and possible increase per capita consumption. 7.294 Waste water infrastructure is complex and tends to be more sensitive to demand created by individual developments. Supply-demand imbalances are harder to predict and creating a comprehensive regional picture of the issues is constrained the operational focus on catchments and uncertainties around the scale and nature of future development. 7.295 The Environment Agency estimate that sewage materials were responsible for 23% of serious water pollution incidents in 2007, up from 19% in 2006 239 . 7.296 The sewerage system can become overloaded in times of heavy rainfall, leading to flooding of homes and gardens. There are approximately 3,500 external flooding incidents from sewers (2,000 adjacent to properties), and 1,100 internal flooding incidents (400 below ground level, 700 at ground level) annually 240 . Opportunities 7.297 A national opportunity that will help the provision of infrastructure at regional level is the creation of the Infrastructure Planning Commission (IPC). The 2008 Planning Act gave power for the IPC (a new non-departmental public body) to be created to over see planning permissions for infrastructure. Once fully established, the IPC will consider and decide applications for nationally significant

235

EKOS for NWDA (2008) Northwest Utilities Infrastructure Study - Final Report SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Waste Environment Agency (Northwest Region) (2008) Regional Contribution – Resource Efficiency 238 Environment Agency (2009) Costs of Environmental Infrastructure Needs to Meet the Northwest Regional Spatial Strategy 239 Environment Agency webpage – State of the Environment Northwest – ‘Water’ webpage 240 SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two -Water 236 237

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Summary of the Evidence Base infrastructure projects (NSIPs), reducing the time it takes for such applications to navigate the planning system 241 . 7.298 The total number of rail journeys increased by 20% between 1999/2000 and 2004/05, with growth

concentrated at Manchester and Liverpool. Manchester’s stations now account for about 23 million journeys p.a., with Liverpool in second (20 million). The Northwest Rail Productivity Study (2008) suggests that pull factors will continue to be strong to Manchester, Liverpool and Preston, and that these nodes will continue to grow in importance in the future. 7.299 The development of post-Panamax facilities at Liverpool will create important opportunities for the region, which could be boosted further by the development of the Liverpool ‘SuperPort’ concept that amalgamates the areas port, airports, intermodal terminals, and distribution centres 242 . 7.300 Manchester Airport currently handles over 20 million terminal passengers p.a. to a range of international destinations (including trans-Atlantic). Liverpool John Lennon Airport handles approximately 5.5 million passengers p.a. and Blackpool around 500,000 passengers p.a. There are no capacity issues at any of the region’s main airports and as such all could sustain further growth. The development of Carlisle airport would provide additional capacity in the north of the region. 7.301 There are features of the Northwest’s current utilities situation which could benefit the region. The region has a long established tradition of specialist companies, facilities and staff in the nuclear sector and has an emerging concentration of renewable technologies based around the regions potential for renewable energy installation 243 . 7.302 Issues with electrical infrastructure capacity seem to be confined to certain parts of the region rather than widespread when compared to other regions (for example water in the South East). Where infrastructure does need upgrading, the region has the opportunity to install ‘smart grids’ and reduce energy consumption 244 . 7.303 In 2007/08 the region produced just over 4 million tonnes of municipal waste 245 . Total household waste arisings for the Northwest have declined over the last two years with a ~2.5% reduction from 2005/6 to 2006/7 and a further ~3.3% from 2006/7 to 2007/8 246 . 7.304 Household recycling and composting has increased to 36%, resulting in lower levels of residual waste collection. Recycling is high within the industrial sector, with the survey indicating that only 5% of readily recyclable materials in the sector were sent for disposal. The amount of waste being composted has increased fourfold since 2002. 7.305 There is a reducing trend in land-filling household, industrial and commercial waste. The disposal of non-hazardous waste by landfill has decreased by 30% between years 2002/3 and 2006 247 . This trend is expected to continue as local authorities divert increasing quantities of waste from landfill and the landfill tax escalator begins to raise landfill disposal costs 248 . 7.306 The waste industry can be viewed as an important economic sector in its own right as it can be a major employer in a local area. It is estimated that developing an industry of small-scale, embedded EfW plants to supply the rest of the UK could generate up to 1,700 jobs 249 . It is also a highly innovative sector driven by the development and adoption of new technologies. 7.307 There are significant opportunities to instigate clusters around large-scale waste management facilities or Resource Recovery Parks (RRPs). RRPs carry the potential to make considerable efficiency savings from having a number of different waste management options all within close proximity on one site, located near the market for value-added products (i.e. recyclate materials) 250 .

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SQW (2009) Developing our infrastructure - A Report to the Chief Executives of the Regional Development Agencies SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport EKOS for NWDA (2008) Northwest Utilities Infrastructure Study - Final Report 244 EKOS for NWDA (2008) Northwest Utilities Infrastructure Study - Final Report 245 th NWRTAB (2009) 4 Waste Management Monitoring Report 246 th NWRTAB (2009) 4 Waste Management Monitoring Report 247 th NWRTAB (2009) 4 Waste Management Monitoring Report 248 th NWRTAB (2009) 4 Waste Management Monitoring Report 249 SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Waste 250 SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Waste 242 243

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Summary of the Evidence Base They offer significant economic opportunities for businesses involved in the supply chain of the waste management sector to develop markets 251 . 7.308 The Environment Agency has classified the region as ‘Low’ water stress and water abstraction is relatively modest in the Northwest, at less than half the daily requirement of the North East region. The relatively low figure for the Northwest may be accounted for by a combination of factors, such as reasonably extensive use of sea water for power generation. 7.309 Household meter penetration in the Northwest is at 26% and is forecast to rise to 38% by 2015 252 and 60% by 2034/35. Metering is a proven way of reducing demand by 5% to 15% per metered household 253 . 7.310 In terms of digital connectivity, 82% of Northwest business sites use computers and 76% have internet access (93% of those with computers). Overall, 87% of sites with internet access use broadband for their connectivity (i.e. 66% of all respondents), with relatively little variation across sectors (no significant differences from the regional average) 254 . Figure 133: Internet connection by speed and sub-region 100%

% of those who know

90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Cheshire & Warrington < 250 kbps 2 - 5 Mbps

Cumbria

Greater Manchester

250 - 500 kbps 5 - 10 Mbps

Lancashire

Merseyside

500 - 1000 kbps > 10 Mbps

Average

1 - 2 Mbps

Base: Broadband users, excluding those who didn’t know what their download speed is (634) Note: significance colour coding not used in this chart Source: Northwest Business ICT Survey (2007)

7.311 In terms of the impact of ICT, a 2007 survey for the NWDA revealed that the businesses with the highest levels of ICT adoption had both the highest growth prospects (75% expecting to grow in the next two years, vs 31% of non-adopters) and the highest average turnover per employee (£87,500, vs £25,000 for non-adopters) 255 . Assets 7.312 In 2005, there were 115 billion passenger kilometres (km) in the Northwest, of which 64% was by road (59% travelled by car, 0.5% by motorbike, and 4% by bus), 33% by air, 2% by rail and 0.6% by water. The majority of freight was moved by road (74%) and water (23%) 256 . 7.313 The region contains four major motorways that connect the Northwest to other regions and internally: 

M62 – Connects Liverpool and Hull via Manchester and Leeds and is part of the North European Trade Axis.

251

SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Waste SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Water Environment Agency (Northwest Region) (2008) Regional Contribution – Resource Efficiency 254 SQW (2008) Northwest Business ICT Survey 2007 255 SQW (2008) Northwest Business ICT Survey 2007 256 SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 252 253

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Summary of the Evidence Base 

M6 – The M6 is the longest stretch of motorway in the UK and connects the Northwest with Scotland (where it becomes the A74 (M)), the Midlands and south east England (Catthorpe).



M56 – This connects Greater Manchester and north Cheshire with Wales but is also important for access to Manchester Airport.



M60 – While the M60 does not connect the Northwest to another region it is important in forming an orbital motorway around Greater Manchester.

7.314 The main rail operators in the Northwest include Northern Rail, Arriva Trains Wales, Mersey Rail, TransPennine Express, and Virgin West Coast. Network Rail split the management of the Northwest rail network into four main ‘routes’: West Coast Main Line, Northwest Urban, Northwest Rural and MerseyRail. In addition, there are a number of routes that are not centred on the Northwest but will also have an impact on the region’s capacity, including North Trans Pennine, South Trans Pennine and North Wales and Borders 257 . 7.315 In the Manchester conurbation, Metrolink covers 38km of rail track and is used by over 20 million passengers per annum. MerseyRail carried around 35 million passengers in 2007 on 120km of rail track which is concentrated in the Merseyside sub-region but also reaches into Cheshire and Lancashire 258 . 7.316 In July 2009 it was announced that the railway between Liverpool and Manchester will under go upgrades in a £100 million project to electrify the line. The 32 mile line - which runs from Liverpool Lime Street to Manchester Victoria - is currently served by diesel trains. Electrification, combined with other improvements to track and signalling on the line, will mean that minimum journey times between Liverpool and Manchester will be reduced from 44 to 30 minutes, whilst also being quieter, cleaner and more reliable than the diesel trains currently used 259 . 7.317 Links to London from both cities are vital and feature at the top of the most popular journey destinations outside of the region. Services to London will become quicker after the announcement by Network Rail in August 2009 that a new £34 billion high speed line linking Scotland and London will be built. The line will improve services to and from Liverpool and Manchester; with Rail passengers able to get from London to Liverpool in one hour and 23 minutes, from two hours and eight minutes now, and Manchester in 1hr 6mins, down from 2hrs 7mins 260 . Figure 134: Top 10 flows to and from the RUS area, 2004/05 Station 1 Manchester stations Liverpool stations Manchester stations Manchester stations Manchester stations Crewe Preston Manchester stations Chester Stockport

Station 2 London London Leeds Sheffield Huddersfield London London Birmingham Llandudno junction London

Total journeys (p.a.) 1,566,000 686,000 500,000 337,000 317,000 301,000 293,000 265,000 236,000 225,000

Source: Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) (2008)

7.318 The Northwest’s ports handled 45 million tonnes of cargo, equivalent to about 8% of total UK port traffic in 2003, with 70% handled at Liverpool 261 . The Northwest’s major ports are: 

Barrow



Fleetwood

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SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport DfT public transport statistics webpage 259 DfT (2009) Press Release (23 July ) 260 Nation Rail (2009) Press Release (26 August) 261 SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 258

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Summary of the Evidence Base 

Port of Liverpool



Manchester Ship Canal



Silloth



Workington

7.319 Of the 45 million tonnes of cargo bought into the UK via the Northwest, 21 million tonnes were distributed inland from the ports by road or rail and the remaining tonnage (mainly petroleum) processed within the port area. Manchester Ship Canal is the second largest port by volume after Liverpool (handling six million tones of bulk cargoes). 7.320 The region has three main airports, namely Manchester, Liverpool John Lennon, and Blackpool. Manchester airport offers access to a full range of national and international destinations and there is a regular shuttle service between Manchester and London Heathrow. Liverpool John Lennon airport and Blackpool airport mainly have flights departing to European destinations. A shuttle service exists between Liverpool and Manchester airport. 7.321 The combination of renewable and nuclear assets could produce areas of national and international significance, such as West Cumbria as ‘The Energy Coast’, and could contribute significantly to UK and European energy goals 262 . 7.322 United Utilities 263 supplies most of the region’s water and wastewater services via four ‘Water Resource Zones’ in the Northwest 264 : 

The Integrated Resource Zone – serving 6.5 million population;



The Carlisle Resource Zone – serving 106,000 population;



The North Eden Resource Zone – serving 14,000 population;



The West Cumbria Resource Zone – serving 152,000 population.

7.323 United Utilities wastewater operations currently consist of 265,266 : 582 wastewater treatment works; 43,419 kilometres of sewers; 1,826 pumping stations; 42 sludge treatment facilities; 143 detention tanks; 2,275 combined sewer overflows; 3,137 storm overflows; 980 emergency overflows, and; 230 storm tank overflows. 7.324 Four waste Private Finance Initiative (PFI) projects have been approved in the region to develop new and sustainable waste management facilities 267 : 

In Greater Manchester, a £109.5 million PFI project was approved in January 2005. This will house five mechanical biological treatment (MBT) plants, two materials recycling facilities (MRFs), four in-vessel composting plants and one energy from waste (EfW) plant.



In Merseyside, a £90 million PFI project was approved in April 2005, providing one MBT plant and one refuse derived fuel burner.



Cheshire County Council had a £40 million project bid approved in May 2006. As in Merseyside, this will provide one MBT facility and one refuse derived fuel burner (although both will operate at a smaller scale than in Merseyside).



‘Woodlands from waste’ is a 25 year project to plant 100,000 trees per year, creating new native woodland for Lancashire and Blackpool and off-setting CO2 emissions from the Lancashire Waste Network. This is funded by a £2 billion Lancashire Waste PFI Contract with Global Renewables

262

EKOS for NWDA (2008) Northwest Utilities Infrastructure Study - Final Report United Utilities does not cover the extreme southwest of the region (i.e. the Chester area), most of which is covered by Dee Valley Water, and a small (largely rural) part of the eastern edge of the region, covered by Yorkshire Water. 263

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SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Water SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two -Water 266 Ofwat (2009) June Return 267 SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Waste 265

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Summary of the Evidence Base Lancashire Ltd, which will also include the creation of two waste technology parks at Leyland and Thornton 268 . 7.325 Planning permission has been granted for a combined heat and power facility at Runcorn (with a capacity to accept over 800,000 tonnes of waste derived materials) and for Ince Resource Recovery Park (RRP) (to be developed by Peel Holdings Ince Ltd). It is envisaged the RRP will be anchored around a Refuse Derived Fuel (RDF) Power Plant. Threats 7.326 There has been a gradual shift from infrastructure being a series of unconnected structures to now becoming an interconnected national infrastructure where failure or damage in one part has disruptive impacts in others. A significant proportion of national infrastructure – including railways and roads – was constructed in the nineteenth or early twentieth century and that much of it needs to be renewed, replaced or modernised to maintain future economic competitiveness 269 . 7.327 Since 1996, the volume of traffic on major roads (measured in terms of vehicle kilometres) has increased by 15.8% – this is broadly comparable with most other regions as well as the national average of 14.6%. By 2020, the total number of passenger km is projected to increase by 27% to 154 billion. The number of car passengers is projected to rise by 8% (to almost 78,000 million passenger km), compared to a 23% increase in bus passengers, a 22% increase in rail and a 59% increase in air passengers 270 . 7.328 With regional population growth expected to be sustained at around 0.3% per annum by 2020 and the RSS housing growth projections showing that most new dwellings will be built in the southern, urbanised part of the region – particularly in Greater Manchester and Liverpool (and the corridor in between), these areas could see the issues of localised issues of air pollution, congestion and noise compound 271 . 7.329 In regions where population and employment growth pressures have been strongest there has been an assumption that much of the ‘unlocking’ infrastructure investment will be funded by the private sector through Section 106 (now in the process of being replaced by Community Infrastructure Levies). But in the short-to-medium term, market conditions imply that the private sector may not be as willing or able to fund this infrastructure. The public sector may go some way to addressing the potential shortfall in developer-funded infrastructure provision 272 . 7.330 In 2005, the majority of freight was moved by road (74%) and water (23%). Between 2005 and 2020, the amount of freight moved in the region is projected to rise by 15% from 55.4 billion tonne km in 2005 to 63 billion tonne km by 2020 (with increase in freight projected to be 15% across all modes). This will lead to an increase in the amount of freight traffic using the region’s infrastructures but also increased emissions and associated pollution 273 . 7.331 There are different forecasts for future carbon emission levels from transport. The REEIO model acknowledges that transport will comprise a larger share of total regional emissions, reaching 38.5% in 2020. This is in contrast with other datasets and forecasts such as the AEA E&E study on Northwest regional emissions (2008), which suggests that road transport emissions will increase to 16.2 MtCO2 in 2020 (13% increase) 274 . REEIO also predicts that transports share of greenhouse gas emissions will increase to 73% by 2020 (REEIO 2008 7.332 There are issues surrounding the electricity infrastructure in the Northwest, with particularly high utilisation rates at a number of sub-stations in the region. This constraint has the potential to cause issues for planned major developments in the Northwest and any new and significant development

268

Lancashire County Council (2008) Rubbish to Resources: A Strategy for Woodlands from Waste SQW (2009) Developing our infrastructure - A Report to the Chief Executives of the Regional Development Agencies SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 271 SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 272 SQW (2009) Developing our infrastructure - A Report to the Chief Executives of the Regional Development Agencies 273 SQW (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage Two – Theme 4 Transport 274 AEA Energy and Environment for 4NW (2009) Energy and Greenhouse Gas emissions study update 2005 269 270

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Summary of the Evidence Base would have to take such a constraint into consideration but could cause issues for investment opportunities, including 275 : 

Greater Manchester – Growth point, Housing Market Renewal (HMR) areas and the Strategic Regional Sites at Barton, Carrington and Central Park.



Fylde Coast and Lancashire Area – Growth point, HMR areas and the Strategic Regional Site at Bailrigg.



Central Cumbria and parts of West and South Cumbria – Growth point and Strategic Regional Sites ar Kingmoor and Westlake. (It was highlighted in the BERR UK Renewable Energy Strategy Consultation (2008) that Cumbria has limited potential to accommodate new generation without further system reinforcement).



Warrington – Growth point area and Strategic Regional Site at Omega South.



South and Central Lancashire - Growth point and Strategic Regional Site at ROF Cuerden and Chorley.

7.333 The Government’s decision not to grant planning consent to the proposed development of an underground gas storage site at Preesall in Lancashire has created uncertainties about the need and timing for delivery of a gas infrastructure projects in the Northwest 276 , 277 . In February 2009, Canataxx, the developer of the proposed gas storage site, submitted a new application to Lancashire County Council with a decision expected in January 2010 278 . 7.334 In 2007/08 only 2% of the region’s recovered value from municipal waste was from energy from waste (EfW). Long lead times for delivering new EfW plants means that the 2010 Regional Waste Strategy target of 45% is likely to be missed whilst meeting the 2015 target of 67% will require local authorities to increase recycling and also implement proposals for residual waste treatment 279 . There are also concerns that, in the medium to long term, there will not be enough waste to act as a feedstock for energy from waste. This could become a particular issue as recycling rates improve and the amount of municipal waste collected for treatment falls. 7.335 In January 2007, Envirolink Northwest commissioned a survey of the Recyclers and Reprocessors (RRs) operating in the Northwest region. A gap analysis revealed capacity gaps for the region as a whole for dealing with 280 : Mixed ordinary waste; Non metallic wastes; Animal & vegetable wastes; Chemical wastes; Common sludges, and; Health care waste. 7.336 There is a psychological barrier among the general public who tend to view all waste management facilities in negative terms, even in cases where the proposed new facility is based upon new, safer technologies 281 . 7.337 The Northwest is already a net importer of hazardous waste and future developments could see the region become a net importer of ‘all waste’. Whilst this would bring economic benefits to the region, it may also impact upon traffic levels and transport emissions, be unpopular with the resident population and harm the region’s image, particularly among those for whom quality of life issues are paramount 282 . 7.338 An Environment Agency study 283 has estimated the total costs of providing waste infrastructure for the Northwest in 2029 will be £7,476 million under the RSS growth scenario and could increase to £7,627 million if the region under goes growth beyond the RSS scenario. 7.339 For the level of growth projected in the RSS the cost of water resource and supply infrastructure is around £8,008 per new house 284 . The total costs of providing water resources and supply 275

EKOS for NWDA (2008) Northwest Utilities Infrastructure Study - Final Report SQW (2008) The Environmental Considerations of Sustainable Economic Growth (ECOSEG) A final report to the Northwest Development Agency and its Partners Stage 2 – Theme 1 Energy 277 Planning Portal website (2007) Lancashire gas storage scheme rejected news story 278 Presall Application website- Proposed Natural Gas Storage Facility webpage 279 th NWRTAB (2009) 4 Waste Management Monitoring Report 280 th NWRTAB (2009) 4 Waste Management Monitoring Report 281 SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Waste 282 SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Waste 283 Environment Agency (2009) Costs of Environmental Infrastructure Needs to Meet the Northwest Regional Spatial Strategy 276

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Summary of the Evidence Base infrastructure in 2029 will be £12,246 million under the RSS growth scenario and could increase to £14,486 million if the region under goes growth beyond the RSS scenario 285 . 7.340 The estimated total costs of providing waste water infrastructure for the Northwest in 2029 will be £12,827 million under the RSS growth scenario and could increase to £13,962 million if the region under goes growth beyond the RSS scenario. The combination of anticipated reduction in water consumption and higher biological load due to growth is likely to reduce water quality in the region without additional investment. 7.341 The future supply of water is set to decrease for two main reasons 286 : 

The impact of sustainability reductions - Abstraction of water adjacent EU Habitats Directive sites and other nature conservation sites will be restricted to protect aquatic plants and animal species from the potential adverse effects of low flows during prolonged dry periods.



Impact of climate change - The estimated impacts of climate change on water resources vary significantly across the region between an increase of 130 Ml/d (under wet scenario) and a reduction of 428Ml/d (under a dry scenario). Following national guidance, the central estimates have been used which suggest a steady reduction in supply – due in large part to drier summers – to 17.5Ml/d by 2034/3514.

7.342 Information and Communication Technology (ICT) is increasingly recognised as a major driver of productivity growth. Businesses, particularly strategic science sites and science clusters, must have world-class digital connectivity if they are to compete on an international scale. World class digital connectivity will help promote the sites, will help put them on the world stage 287 . 7.343 If the Northwest is able to procure high capacity digital connectivity across the region this will raise the profile of the region, particularly as a leading-edge, innovative science, technology and knowledge economy 288 . If it cannot secure such digital capacity, the region could find itself facing competition for investment from other English regions and countries.

284

Environment Agency (2009) Costs of Environmental Infrastructure Needs to Meet the Northwest Regional Spatial Strategy Environment Agency (2009) Costs of Environmental Infrastructure Needs to Meet the Northwest Regional Spatial Strategy SQW for NWDA (2008) Environmental Considerations in Achieving Sustainable Economic Growth (ECOSEG) Stage two – Water 287 Adroit Economics for NWDA (2009) Northwest high impact ICT strategy – Role of ICTs in the NW science strategy 288 Adroit Economics for NWDA (2009) Northwest high impact ICT strategy – Role of ICTs in the NW science strategy 285 286

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Summary of the Evidence Base

Outcome 12: Ensuring high quality, efficient and responsive public services  

Heavily reliant on public sector employment in the region 30 primary schools among the poorest performing nationally based on KS2 national curriculum test results 112 secondary schools listed as National Challenge schools Six NHS trusts in the bottom 10% of all England NHS trusts Liverpool is the lowest scoring council in the region 12 districts councils received performance ratings of good or excellent Home to key public sector organisations with opportunity to attract others to relocate to the Northwest Forecast to be significant public sector cuts in terms of employment and expenditure

     

Issues 7.344 The Northwest’s economy is heavily reliant on public sector employment with public sector jobs accounting for 20.8% of all jobs compared to the England average of 18.9%. Public sector jobs are concentrated in Merseyside and Lancashire. Centre for Cities has identified Liverpool and Blackpool as highly vulnerable cities to public sector job losses as they have low value public sector activities. This raises the issue of high risk jobs in lower quality occupations. Education 7.345 Results of the 2008 education league tables highlight that 30 Northwest primary schools were among the 201 primary schools with the poorest Key Stage 2 national curriculum test results in England. 289 3 Northwest primary schools featured in the worst 10. 7.346 In 2008, there were 112 secondary schools in the region listed as National Challenge schools 290 . Although the majority of these schools are below the target attainment level of 30%, a proportion has higher attainment rates with a range of 0% to 57%. Public Health Services 7.347 The 2007/08 Annual Health Check, a national overview of the performance of the 391 NHS trusts in England 291 , assesses a wide range of areas including those that are of high importance to patients and the public, and focuses on whether requirements in areas such as safety, access and clinical effectiveness are being met on behalf of patients across the NHS. Six of the region’s NHS trusts featured in the bottom 10% of all England NHS trusts based on quality of services score: Sefton Primary Care Trust; Stockport Primary Care Trust; Tameside and Glossop Primary Care Trust; Trafford Primary Care Trust; Warrington Primary Care Trust and Western Cheshire Primary Care Trust. Of these, both Tameside and Glossop Primary Care Trust and Warrington Primary Care Trust have received a lower rating against the quality of services score when compared with 2006/07. Comprehensive Performance Assessments (CPA) 292 7.348 Comprehensive Performance Assessments (CPA) report on how well a council is performing overall compared to other countries in England. It provides a judgement on a council’s corporate ability to improve services for local people and its leadership of its local community. 7.349 For single tier and county councils, the first three components were combined using rules designed to ensure that minimum standards were being met across the board, to generate one of five star 289

Each primary school had an ‘aggregate’ score of 164 or less out of 300 in all three test results achieved by their Year 6 pupils. Source: BBC News (http://news.bbc.co.uk/1/hi/education/7974691.stm) 290 Schools are listed as National Challenge schools if they do not meet the Government target of 30% of pupils attaining 5 or more GCSEs at A* to C grade including both English and mathematics. Source: DCSF 291 Source: Healthcare Commission. NB: The Healthcare Commission ceased to exist on 31 March 2009. The Care Quality Commission is now the independent regulator of health and social care in England. 292 Source: National Audit Office Corporate Performance Assessment

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Summary of the Evidence Base categories (4-0 stars), where is 0 is weak performance and 4 is strong. Like single tier and county council CPA, district council CPA also comprises the four key elements but were assessed and pulled together in a different way. The CPA score was based on a corporate assessment, carried out at all district councils in 2003 and 2004. 7.350 In 2007, the single tier councils of Bury, Liverpool and Rochdale all dropped a star rating. Liverpool was the lowest scoring single tier council in the region. 7.351 The district councils of Congleton, Fylde, South Lakeland and Wyre were rated as weak both in 2004 and 2007. Resident Satisfaction with Services 7.352 In 2008 32% of Northwest residents believed their council provided value for money and 43% were satisfied with their council overall this compared to 33% and 45% respectively at the England level. Locally the lowest levels of overall satisfaction were in Oldham (22%) and Copeland (28%) and the highest were in Knowsley (61%) and Ribble Valley (60%). 293 Prisons and the Justice System 7.353 There are 13 prisons in the Northwest which have a population of 8,500 men and 450 women according to the latest Ministry of Justice figures. There were 5,747 people given Community Order and Suspended Sentence Order supervisions by the Probation Service in the Northwest in 2009, a rise of 10% over the year. Assets 7.354 The Northwest is home to a significant number of key public sector organisations, including 14 higher education institutions; the Health & Safety Executive, HM Customs & Excise and National Nuclear Skills Academy Headquarters. 7.355 The Northwest has high quality assets in terms of public sector employment, for example, Manchester Health Corridor and university clusters. 294 Education 7.356 Results of the 2008 education league tables highlight that there are 37 Northwest primary schools among the 201 highest attaining primary schools at national curriculum Level 5 in the Key Stage 2 tests taken by year 6 pupils in 2008 in England. That is the level above the standard for their age group, and is usually expected of children three years older. 3 Northwest primary schools feature in the top 20. 295 7.357 The region has 56 further education colleges (FECs). They employ over 24,000 full-time equivalent staff and have a combined turnover of £1,050 million. In direct terms, accounting for spend that leaves the region and multiplier effects, they contribute £1,450 million of output to the Northwest economy. They also bring learners to the region who, while studying, contribute a further £277 million per annum. 296 7.358 There are 14 Higher Education Institutions in the Northwest, employing over 36,000 staff they generate a combined annual income of more than £2 billion. They bring students to the region, with over 27,000 overseas students (70% from outside the EU). There are more than 67,000 students graduating annually in the Northwest. 297 Public Health Services 7.359 As an employer, the NHS is one of the largest in the region. According to the NHS Information Centre, the Northwest Strategic Health Authority employed a total of 208,983 staff as at March 2009, of which 104,050 are professionally qualified clinical staff. 7.360 There is a concentration of specialist health centres in the region, particularly in Merseyside: 293

Source: DCLG Place Survey 2008 Source: SQW Consulting 295 Source: BBC News (http://news.bbc.co.uk/1/hi/education/7974668.stm) 296 Source: The Economic Impact of Further Education in the Northwest, SQW Consulting 297 Source: Northwest Universities Association 294

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Summary of the Evidence Base 

Clatterbridge Centre for Oncology NHS Trust

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Royal Liverpool Children’s NHS Trust

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The Cardiothoracic Centre – Liverpool NHS Trust

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The Christie NHS Foundation Trust

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Liverpool Women’s Hospital NHS Trust

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Walton Centre for Neurology and Neurosurgery NHS Trust

7.361 The 2007/08 Annual Health Check is a national overview of the performance of the 391 NHS trusts in England 298 . Of the 60 Northwest NHS trusts, 7 were ranked in the top 10% of all England NHS trusts based on quality of services score; 3 of these trusts – Christie Hospital NHS Foundation Trust; Clatterbridge Centre for Oncology NHS Foundation Trust and East Lancashire Hospital NHS Trust received an excellent rating for quality of services and use of resources scores. Police Service Strength 7.362 There are 19,900 full time equivalent police officers in the Northwest with 14,850 male and around 5,000 female officers. Greater Manchester has the largest number of FTE officers; 8,200, Merseyside the second largest number 4,500, Lancashire 3,700, Cheshire 2,200 and Cumbria 1,280. The numbers of FTE police officers in the Northwest has increased by 1.7% since 2008. The 8 metropolitan police forces in England (including Greater Manchester and Merseyside) account for nearly 50% of all police officers in the country. 7.363 When looked at per 100,000 population Merseyside has the most officers with 33 per 100,000 inhabitants. Greater Manchester has 321 per 100,000 population, Lancashire 259, Cumbria 258 and Cheshire 217. Figure 135: FTE Police Officers by Sub-region March 2009

11% 23% 6%

Cheshire Cumbria Greater Manchester Lancashire Merseyside 19%

41%

Source: Home Office

Opportunities 7.364 The Northwest has an opportunity to attract public sector relation. A good example of this is the relocation of BBC to Salford. 7.365 Multi Area Agreements are a new initiative through which the Government hopes to promote prosperity and development by granting new powers to collaborate across Local Authority 298

Source: Healthcare Commission. NB: The Healthcare Commission ceased to exist on 31 March 2009. The Care Quality Commission is now the independent regulator of health and social care in England.

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Summary of the Evidence Base boundaries, on themes such as worklessness, transport, investment and housing. Local Authorities and partners in four sub-regions of the Northwest have either signed off or are exploring the following agreements: 

Greater Manchester: Bolton, Bury, Manchester City Council, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan.

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Liverpool City Region: Liverpool, Sefton, Knowsley, St Helens, Wirral and Halton.

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Fylde Coast: Blackpool, Lancashire, Fylde and Wyre.

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Pennine Lancashire: Blackburn, Lancashire and Burnley, Pendle, Rossendale, Hyndburn and Ribble Valley.

7.366 The Total Place Initiative, designed to maximise potential across service delivery areas has a pilot in Greater Manchester and Warrington concerning service delivery for 0-5 year olds. This offers the opportunity for increased efficiency, the better use and co-ordination of essential services and of course the chance to cut costs across public spending areas without necessarily needing redundancies. 7.367 The Voluntary and Community Sector is a strong asset within the Northwest (see Outcome 6). Specifically in relation to this outcome as a service provider the National Consumer Council report, Delivering Public Services highlighted excellent VCS service delivery and customer service in delivering employment services which outperformed both the private and public sectors. Education 7.368 In 2008, 112 secondary schools were listed as National Challenge Schools as they were failing to reach the 30% target for attainment of GCSE’s, however, there is an opportunity to improve these schools and the achievement of pupils with the support of funding through National Challenge Schools Funding and other interventions. There are 77 secondary schools listed as receiving funding through the National Challenge (see Annex 1). Threats 7.369 Over the past decade, the public sector has been a key driver of growth across England and the Northwest, however, it cannot continue to rely on public sector employment as public sector cuts are inevitable. SQW Consulting’s draft autumn forecast expects: 7.370 Cuts in public sector expenditure and employment which will intensify in scale by 2010H2 and 2011; 7.371 Capital investment in the government services sector is expected to be cut sharply in 2010 by perhaps 10-12% alongside cuts in government spending to deliver services; and 7.372 By 2012 public sector expenditure will be 1.5% lower than in 2010. 7.373 In response to the forecast public sector cuts, the Northwest needs to understand the impact this will have on its economy, absolutely and relatively to other regions. 7.374 Secondary schools listed as a National Challenge School may face difficulties in the recruitment and retention of experienced teaching staff which may in turn contribute to further difficulties in reaching the attainment and achievement levels under the National Challenge Plan. 7.375 The Government announced that it would substantially increase the proportion of public funding that is ‘demand led’ and that it expected individuals and employers to take much more responsibility for improving their own skill sets and qualifications. 299 Given the current economic climate there is likely to be less investment by employers and individuals in training. 7.376 A reduction in public health spending would affect delivery of primary and secondary health care provision. Direct Health has reported that there is a £22 million funding crisis affecting children’s hospitals, including Alder Hey in Liverpool. The proposed funding will damage the provision of cardiac surgery, neurosurgery and spinal surgery.

299

Source: The Economic Impact of Further Education in the Northwest, SQW Consulting

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Summary of the Evidence Base 7.377 Closure of public health services is a significant threat as it will impact healthcare professionals due to job losses and the public who would potentially have to travel further to access healthcare services. A reduction in public health services would also affect NHS trusts’ ability to meet referral and waiting list targets. According to Health Direct there have been significant job cuts in the last 6 months which have affected the Northwest where it is estimated c350 jobs have been lost. Public Sector Debt 7.378 The public sector current budget was in deficit by £12.8 billion; this is a £5.1 billion higher deficit than in August 2008, when there was a deficit of £7.7 billion; public sector net borrowing was £16.1 billion; this is £6.2 billion higher net borrowing than in August 2008, when net borrowing was £9.9 billion. The public sector net cash requirement (see table PSF4) was £10.4 billion, a £5.3 billion higher net cash requirement than in August 2008, when there was a net cash requirement of £5.1 billion. 7.379 At the end of August 2009 public sector net debt was £804.8 billion (equivalent to 57.5 per cent of GDP). This compares to £632.8 billion (44.0 per cent) as at the end of August 2008. The chart below demonstrates that public sector debt has increased steadily since the turn of the millennium and the debt spent on financial sector interventions has increased markedly over the last couple of years as a percentage of Gross Domestic Product. Figure 136: Public Sector Debt as a Percentage of GDP 60

(% of GDP)

0 2000

2001

2002

2003

2004

2005

Public Sector Debt as % of GDP Excluding financial sector interventions

2006

2007

2008

Public sector debt as % of GDP

Source: HM Treasury and Office for National Statistics 2009

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