Appendix 2: More jobs, better jobs baseline study: local data analysis

1 Growth and the Leeds City Region economy

Jobs Growth

Poverty

The recent economic downturn hit hard, and while growth has now returned, it is not being felt equally across all parts of the Leeds City Region, nor, or average is it forecast to keep pace with growth across the rest of the UK to 2020.

In summary As an area historically focused on production and manufacturing, the Leeds City Region has experienced significant economic structural changes over the past 30

years, and has had to re-establish itself with a greater focus on service-related,

technological and innovative new industries.

Overall, it was hit harder and for longer by the recent recession that the rest of the UK, and its economy is currently worth £53.1 billion (2008 prices), less than it was worth in

2007. However, although growth of 13.9 per cent is forecast to 2020, it will still

probably lag the UK average (forecast at 15.1 per cent), thereby increasing the productivity gap further. Fully closing this productivity gap in 2013 could add an additional £9.1 billion to the city region’s economy.

Leeds accounts for over a third of the city region economy, and growth to 2020 will be driven predominantly by the finance, wholesale, administrative and supportive

services, professional services, real estate, retail, health, and land transport, storage

and post sectors.

The Leeds City Region: the restructuring of an economy: Over the last 30 years, the Leeds City Region has seen a restructuring of its economy on a massive scale. Driven by the ongoing shift towards globalisation, an expanding EU and greater

1 opportunities and fewer barriers to trade, it has experienced wholesale change in the make-up of its industrial base. In 1994, manufacturing represented 22.5 per cent of all Leeds City Region employment. By 2013, this had declined to 10.8 per cent, while employment in the services industries increased from 67.3 per cent of the workforce to 78.5 per cent.

This decline in the manufacturing sector had a greater than average impact on Calderdale and Kirklees, where manufacturing formed over 30 per cent of employment in 1994, as well as on Bradford, Wakefield and Barnsley, although most districts across the city region had over a fifth of their workforce in manufacturing at this time (except Craven, Harrogate and York).

The city region was similarly more affected than average by the decline of the coal mining industry. In 1981 the UK was the fourth largest coal producing nation in the world, but the rapid and significant scale of pit closures during the 1980s and 1990s still has a lasting legacy on local communities, in particular in Wakefield and Barnsley, but also Selby.

The shift towards the services sector has benefited some, and Leeds and Calderdale in particular have taken advantage of the growth in banking, insurance and the legal sector.

Public administration, education and health remains an important sector to the city region, with 30.4 per cent of the workforce currently employed in this area, compared with 27 per cent in 2004. Over recent years, austerity measures have reduced the public administration workforce; however, this has been offset by population driven increases in the health and education sectors.

Against this backdrop of change, the city region has re-established itself over recent years as one of the most important economic centres in the country outside London; with particular strengths1 quoted in: • life sciences and related industries (particularly biosciences and healthcare/medical technologies); • low carbon industries (particularly energy technologies); • digital technologies (particularly in telehealth and IT); • financial and businesses services that complement the global financial services hub of London; • innovative manufacturing across a diverse range of sub-sectors; • A large and diverse food and drink sector, including two of the UK’s biggest supermarkets being headquartered in the city region, to a wide range of manufacturers and cutting edge research in biosciences;

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• a network of local clusters of activity in the creative and cultural industries; • a strong tourism/leisure industry. The size of the economy: In 2013 it was estimated that the size of the Leeds City Region economy stood at £53.1 billion 2 (2008 prices) and represented 4 per cent of UK Gross Value Added (GVA). However, the recent economic downturn reduced the economy to pre-2004 levels, and the height of growth in 2007 has not quite been reached again yet. That said, growth across the city region outstripped the UK average in 2011 and 2012, but is not forecast to continue to do so.

At the local level, Leeds accounts for over a third (34.1 A £53.1 billion economy, per cent) of the Leeds City Region economy, while the forecast to grow by 13.9 remaining districts of West Yorkshire make up a further per cent to 2020. 43.2 per cent (see Figure 1).

Figure 1: Industry output (GVA) in £billion across the Leeds City Region, 2013

Source: Experian 1.2, 2% Business Strategies, 4.0, 8% 2.6, 5% Barnsley Regional Econometric Model, September Bradford 1.1, 2% 3.2, 6% 8.0, 15% 2013. Chart shows Calderdale output in £billions by local authority district, Kirklees and percentage of 5.5, 10% 3.4, 7% Leeds overall Leeds City Wakefield Region economy. Craven 5.9, 11% Harrogate Selby 18.1, 34% York

Growth in the economy: Current forecasts suggest that to 2020, GVA across the Leeds City The ‘welfare of a nation can scarcely Region is expected to grow by £7.4 billion or 13.9 be inferred from a measurement of per cent (from a 2013 baseline). The greatest national income’. levels of growth are forecast in Leeds (16.5 per Simon Kuznets, US economist who cent) and Wakefield (15.6 per cent), which could formalised GDP as the yardstick of both outperform the UK average level of forecast economic performance growth over the same period (15.1 per cent). Employment across the same period is expected to increase by around 5.5 per cent (see next section).

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Figure 2: Average annual percentage growth rates in GVA, 2007–2020 6

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2

0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -2 Leeds City Region -4 United Kingdom -6 Leeds -8

-10

Source: Experian Business Strategies, Regional Econometric Model, September 2013. Based on 2008 CVM prices.

By detailed industry sector, this GVA growth is forecast to come predominantly from finance, wholesale, administrative & supportive service activities, professional services, real estate, retail, health and land transport, storage and post (see Figure 3), all sectors which are forecast to show employment growth over the next seven years (see Figure 7).

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Figure 3: GVA forecasts by top twenty industry sectors, ranked on 2013 GVA contribution, across the Leeds City Region 2013 2020 Growth rate in GVA £m Industry ranked on 2013 GVA GVA £m % of total GVA £m % of total 2007-2013 2013 - 2020 industry industry Finance 4,549 8.6 5,526 9.1 - 364 977 Real estate 3,934 7.4 4,481 7.4 - 26 547 Wholesale 3,929 7.4 4,721 7.8 - 601 792 Education 3,809 7.2 3,845 6.4 - 214 37 Health 3,441 6.5 3,906 6.5 783 465 Administrative & supportive service activities 3,189 6.0 3,813 6.3 658 624 Professional services 3,041 5.7 3,638 6.0 - 6 596 Public administration and defence 2,902 5.5 2,983 4.9 186 81 Retail 2,804 5.3 3,279 5.4 - 56 475 Land transport, storage and post 2,330 4.4 2,751 4.5 - 365 421 Utilities 1,891 3.6 2,132 3.5 218 241 Specialised construction activities 1,636 3.1 1,953 3.2 - 685 318 Residential care and social work 1,453 2.7 1,597 2.6 76 143 Food, drink and tobacco 1,338 2.5 1,374 2.3 - 8 36 Accommodation and food services 1,292 2.4 1,548 2.6 - 190 256 Media activities 982 1.9 1,132 1.9 34 150 Telecoms 894 1.7 1,086 1.8 176 192 Other private services 842 1.6 925 1.5 177 83 Metal products 778 1.5 897 1.5 - 217 120 Machinery and equipment 734 1.4 792 1.3 -85 58

Source: Experian Business Strategies, Regional Econometric Model, September 2013. Based on 2008 CVM prices.

Productivity in the economy: Industry output (or Gross Value Added) is affected At higher levels of income, by workforce productivity levels, which in increases in GDP can have a diminishing effect on social turn are influenced by a number of other progress. factors, including the industry make-up of Social Progress Index, 2014 an area, levels of innovation, enterprise and The Social Progress competitiveness as well as the skill levels of Imperative the labour market. However, the ‘head The Social Progress office’ effect also needs to be factored in, Imperative with some industries, especially those with multiple sites/offices recording their output through the localitySocial Progressof their Index,head 2014office; and although the Office for National Statistics seek to apportionThe Social to local Progress units, Imperative it is not always straightforward.

Across the Leeds City Region, productivity rates in 2013 were estimated to be £43,600 per worker, compared to £51,100 per worker on average across the UK as a whole.

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Over time, this gap to the national average has been gradually increasing from around £7,000 per worker in 2006 to a forecast £8,500 in 2020. Locally, all districts within the Leeds City Region have lower than average levels of productivity per worker, with the strongest Overall, the productivity gap to rates exhibited in Leeds (£46,800 per worker) and the lowest the UK average is rates in Selby (£38,200) and Barnsley (£38,400). Again, rates widening. were affected by the economic downturn, falling by 3.8 per cent between the high of 2007 and 2013 (or an average reduction of £1,700 per worker). Certain districts were hit harder than others, particularly in North Yorkshire, where productivity rates fell by 10.7 per cent in Selby, 8.2 per cent in York, 7.8 per cent in Craven and 5.4 per cent in Harrogate.

However, current forecasts suggest that across some areas of the city region, the gap may begin to narrow again in the future with Wakefield and Kirklees both forecasting growth of 10.1 per cent between 2013 and 2020, compared with a Leeds City region average of 8 per cent and a UK forecast of 8.9 per cent. While productivity rates are likely to increase again across North Yorkshire, growth could remain subdued.

Figure 4: Productivity per worker rates across the Leeds City Region, 2013 to 2020 60 12

10.1 10.1 55 10 9.1 8.9 8.5 8.5 8.0 2020 7.5 - 50 8 6.6

45 6 4.2 4.2 40 4 2.8 Percentage growth2013 Productivity per worker£'000s 35 2 38.4 41.7 44.8 48.2 41.7 45.4 41.7 45.9 46.8 50.8 41.3 45.5 43.4 45.3 43.4 44.6 38.2 40.7 42.2 44.0 43.6 47.1 51.1 55.7 30 0 UK LCR York Selby Leeds Craven Kirklees Barnsley Bradford Harrogate Wakefield Calderdale

2013 2020 % growth 2013-2020

Source: Experian Business Strategies, Regional Econometric Model, September 2013. Note: productivity per worker is industry output (GVA) divided by the number of workers i.e. GVA per worker head.

At the broad level of 12 industry sectors, the city region has productivity rates lower than the UK average across all areas, and is forecast to continue to do so by 2020 (see

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Figure 5). However, when compared with employment levels across the UK, using a Location Quotient where 1 = the same proportion of employment in the sector as the UK average, the city region has higher than average employment in the: • construction industry (Location Quotient (LQ) of 1.06 i.e. employment is 6 per cent higher than the UK average in this sector); • finance and insurance (LQ of 1.2 – employment is 20 per cent higher than the UK average in this sector); • manufacturing (LQ of 1.24),a sector hit particularly hard in the recent economic downturn • public services (LQ of 1.02); Closing the productivity • transport and storage (LQ of 1.04); gap would add an • utilities (LQ of 1.16). additional £9.1 billion to the city region economy Should the productivity levels across all industries in 2013. perform at the same level as the UK average, then based on current and forecast employment levels, the economy of Leeds City Region could be worth an additional £9.1 billion in 2013 and £10.9 billion by 2020.

Figure 5: Productivity per worker rates and employment location quotients across the Leeds City Region, compared to the UK average, 2013

1.4 1.2 1.2

1.0 1.0

0.8 0.8 0.6 0.6 0.4

0.2 0.4 Location Quotient, comparedto UK = 1 Productivity per workercompared UK to = 1 Utilities Construction PublicServices Manufacturing Wholesale & Retail Extraction & Mining Transport storage& FinanceInsurance & Accom, Food Recreation & Prof & Other Private Services Agriculture, & Forestry Fishing Information & communication

Productivity 2013 Productivity 2020 LQ2013

Source: Experian Business Strategies, Regional Econometric Model, September 2013.

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2 Jobs in the Leeds City Region

Jobs Growth

Poverty

With 81,200 jobs forecast to be created across the city region to 2020, many requiring higher level skills, there is a need to not only increase the employment rate, but also re-connect many more of the 1.5 million that are currently economically inactive, and ensure young people; especially those facing disadvantage are given the best possible chance to capitalise on these opportunities.

In summary An extra 81,200 jobs are forecast across the city region between 2013 and 2020, a growth rate of 5.5 per cent with the greatest increase in jobs expected in professional services, health, administrative, financial, transport, storage and warehousing, retailing and construction related sectors.

With almost a third of all employment based in Leeds, the city is expected to attract around 34,300 of these new jobs over the next seven years.

44.3 per cent of new jobs created will most likely be in occupations that require qualifications at Level 4 or above. Replacement demand, however, will account for 617,000 jobs between 2010 and 2020 of which 138,000 will be in administrative, elementary administration and service and sales occupations and ensure there are sufficient jobs available across the spectrum of all qualification and skill levels.

The challenge remains in better connecting people to these jobs. Working-age employment rates across the city region continue to lag behind the UK average (70.3 per cent, compared with 71.1 per cent), and while there are many reasons for economic inactivity, there are currently 1.5 million working-age people across the city region that are economically inactive, of which just over a quarter want a job.

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It is not just an issue of reconnecting those on the edge of the labour market however; ensuring a child’s life chances are not jeopardised by poverty and low income is a significant challenge to the school system, and while excellent progress has been made recently in reducing the number of 16–18-year-olds not in education, employment or training (NEET) down from around 7,000 in December 2011 to 5,500 by December 2013, the associations between poverty and low educational achievement and subsequently reduced employment chances are well documented.

Labour market supply and productivity are also impacted upon by health, both in terms of (healthy) life expectancy and determinants of health. There is considerable variation across the city region, with areas with higher incomes and employment rates (in York and North Yorkshire) having health indicators that outperform other areas of the city region and England average.

The current labour market: a UK context

Since the labour market recovery started in 2010, the UK has generated 1.6 million new jobs, and 30.4 million people are now currently employed in the UK. Within Europe only Germany, Austria, Denmark, Luxembourg and the Czech Republic have lower unemployment rates.

The composition of the UK’s job growth sheds light on the changing structure of the economy though, with a shift to an older, more international, more female labour force where the private sector plays a bigger role. Almost half of the new jobs created since 2010 have gone to foreign born workers, driven by EU enlargement and globalisation, and almost 60 per cent have gone to those aged over 50, as a result of longer life spans and diminishing pension entitlements.

The proportion of people working in the UK who were not born in the UK has risen from 9 per cent to 15 per cent in the last 10 years and female participation in the labour force has also risen to record levels, while male participation is lower today than at any time since 1971.

In its early stages, part-time work and, more recently, self-employment, have been significant drivers of the jobs recovery, although over the last two years, growth in the number of full-time jobs has overtaken part-time job growth. Of the 1.6 million jobs created since 2010, about 40 per cent were self-employed and a quarter part-time. Currently, 37 per cent of all of those in work are either part-time or self-employed, and for the majority of these people, this is through choice and reflects the preferences of women who are playing a much bigger role in the UK labour force, as well as high satisfaction levels of those in self-employment.

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However, although the trends are positive, there are still 2.2 million economically inactive people who would like a job; 339,000 claimants who have been unemployed for more than a year; a further 2 million part-time and temporary workers would like to work longer hours and one third of all 16–17-year-olds who want to work are unemployed. 3

Labour market demand across the Leeds City Region

Employment across the Leeds City Region: Between 2007 and 2013 total employment grew by only 12,000 across the Leeds City Region (or 4,400 in terms of full-time equivalent (FTE) employment), and currently stands at around 1.47 million. However, to 2020, current forecasts suggest an additional 81,200 jobs (or 66,600 FTE jobs) will be added to the economy – a growth rate of 5.5 per cent, similar to the UK average of 5.6 per cent. Total employment across the city region in 2013 stood At the local level in 2013, 31 per cent of employment across at 1,473,700 jobs and is the city region was in Leeds, 15 per cent in Bradford and 12 forecast to grow by 5.5 per per cent in Kirklees; Craven and Selby each represented cent to 2020. around 2 per cent of city region employment.

York and Leeds in particular, were affected significantly with job losses as a result of the economic downturn, and by 2013, pre-recession employment rates in these areas had not yet been recovered. However all districts are forecast to show employment growth between 2013 and 2020, ranging from a high of 7.4 per cent in Harrogate and Leeds and a low of 2.4 per cent in Selby and 2.8 per cent in Kirklees (see Figure 6).

Figure 6: Total employment by district in ‘000s of jobs, and proportion of Leeds City Region employment by district at 2013

Source: Experian Business Strategies, Regional Econometric Model, September 2013.

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The industries driving employment demand: The largest employing sectors across the city region (2013) are:

• education with 138,000 workers (9.4 per cent of the workforce); • retail – 135,200 workers (9.2 per cent of the workforce); • administrative and supportive service activities – 121,300 workers (8.2 per cent); • professional services – 100,800 workers (6.8 per cent); • health – 99,800 workers (6.8 per cent); • accommodation and food services – 92,300 workers (6.3 per cent).

Those sectors that are forecast to show the greatest growth in terms of total job numbers are shown in Figure 7, and include: Admin and supportive services, professional services, land • an additional 14,800 jobs in administrative and transport, storage and post, supportive services activities (12,900 FTEs) accommodation and food • 13,400 jobs in professional services (11,700 services and residential care FTEs) and social work will drive the greatest demand over the next • 9,900 in land transport, storage and post seven years for workers across (8,300 FTEs) the Leeds City Region. • 9,100 in accommodation and food services (6,800 FTEs) • 8,100 in residential care and social work (6,300 (FTEs).

At the other end of the scale, 15,700 (12,900 FTEs) are forecast to be lost in public administration and defence; 4,700 jobs lost in textiles and clothing, and 2,300 in machinery and equipment.

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Figure 7: Total employment forecasts by industry sector to 2020 across the Leeds City Region 2013 2020 Growth rate in Total Employment '000s Industry ranked on 2013 total employment levels 000s jobs % of 000s jobs % of 2007-2013 2013 - 2020 workforce workforce Industry Total 1473.7 100 1554.9 100 12.0 81.2 Education 138.0 9.4 142.5 9.2 8.0 4.4 Retail 135.2 9.2 141.9 9.1 -13.4 6.7 Administrative and supportive service activities 121.3 8.2 136.2 8.8 11.2 14.8 Professional services 100.8 6.8 114.2 7.3 17.9 13.4 Health 99.8 6.8 106.7 6.9 8.5 6.9 Accommodation and food services 92.3 6.3 101.4 6.5 3.6 9.1 Wholesale 86.4 5.9 91.3 5.9 -9.6 4.9 Residential care and social work 83.6 5.7 91.7 5.9 8.4 8.1 Land transport, storage and post 76.4 5.2 86.4 5.6 5.5 9.9 Specialised construction activities 74.4 5.1 79.3 5.1 -9.6 4.9 Finance 62.8 4.3 69.7 4.5 2.7 6.9 Public administration and defence 62.1 4.2 46.4 3.0 -7.4 -15.7 Other private services 36.3 2.5 38.9 2.5 4.8 2.6 Recreation 32.2 2.2 34.3 2.2 -5.5 2.1 Food, drink and tobacco 25.2 1.7 25.0 1.6 -0.8 -0.2 Other manufacturing 21.7 1.5 20.0 1.3 3.4 -1.6 Computing and information services 20.3 1.4 23.6 1.5 5.2 3.2 Media activities 19.6 1.3 22.1 1.4 0.3 2.5 Metal products 18.4 1.3 17.4 1.1 -1.9 -1.1 Rubber, plastic and other non-metallic mineral products 17.0 1.2 15.8 1.0 -2.2 -1.3 Utilities 16.6 1.1 17.9 1.1 8.0 1.3 Textiles and clothing 15.4 1.0 10.7 0.7 0.3 -4.7 Real estate 14.3 1.0 16.0 1.0 -2.5 1.7 Construction of buildings 14.0 1.0 16.5 1.1 -8.6 2.5 Agriculture, forestry and fishing 13.4 0.9 17.6 1.1 3.7 4.2 Machinery and equipment 13.2 0.9 10.9 0.7 -3.1 -2.3 Telecoms 9.7 0.7 10.1 0.6 0.1 0.4 Printing and reproduction of recorded media 9.5 0.6 9.7 0.6 -3.3 0.2 Computer and electronic products 8.7 0.6 7.2 0.5 -1.5 -1.5 Civil engineering 8.2 0.6 9.0 0.6 -3.1 0.8 Wood and paper 6.7 0.5 5.3 0.3 -2.2 -1.4 Chemicals 6.7 0.5 6.0 0.4 -1.0 -0.7 Transport equipment 4.8 0.3 5.0 0.3 -2.0 0.2 Insurance and pensions 3.8 0.3 4.1 0.3 -2.3 0.2 Pharmaceuticals 1.6 0.1 1.2 0.1 0.2 -0.4 Air and water transport 1.3 0.1 1.4 0.1 0.4 0.1 Extraction and mining 1.3 0.1 1.2 0.1 -0.3 -0.1 Fuel refining 0.6 0.0 0.5 0.0 0.2 -0.1

Source: Experian Business Strategies, Regional Econometric Model, September 2013.

The occupations driving employment demand: Of the 81,200 jobs currently forecast to be added to the Leeds City Region economy between 2013 and 2020, the largest increases in employment are expected in occupations that are more likely to require higher levels of qualifications (see Figure 8). In particular, an additional 11,500 jobs are expected in occupations allied to the health profession (driven by an increasing and ageing population), where almost 94 per cent of the current workforce is qualified to National Qualification Framework (NQF) Level 4 or above. Similarly, strong growth is also forecast in:

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81,200 new jobs are • business and public service associate professionals – forecast to be added to the an additional 8,900 jobs between 2013 and 2020; Leeds City Region • corporate managers and directors – 8,900 new jobs; economy between 2013 • business, media and public services professions – and 2020; 44.3 per cent of these will be in jobs 8,000 new jobs. requiring NQF Level 4 or above. Indeed, current forecasts suggest that the demand for higher level skills across the Leeds City Region (NQF Level 4 or above) will increase overall by 7.5 per cent (or another 36,000 jobs) to 2020, with the growth occupations identified above driving much of this.

However, around 9,900 new jobs are also forecast in elementary administration and service occupations, where 35.2 per cent of the current workforce have either no formal qualifications or are qualified below NQF Level 2. Sales occupations are also forecast to grow by 5,200 jobs, but have lower levels of qualification requirements. Overall though, only an additional 13,000 new jobs requiring either no qualifications or those below NQF Level 2 are expected to be added to the economy between 2013 and 2020.

Figure 8: Occupational forecasts across the Leeds City Region to 2020 2013 2020 2013 Occupation Name 000s % of 000s % of Growth 2013 - % with either no % NQF Level 4 or jobs workforce jobs workforce 2020 ('000s qualifications or above jobs) below NQF Level 2 Administrative Occ. 122.3 8.3 122.5 7.9 0.2 20.8 26.7 Business and Public Service Associate Prof. 99.8 6.8 108.7 7.0 8.9 10.4 50.5 Business, Media and Public Services Prof. 60.5 4.1 68.5 4.4 8.0 3.6 74.4 Caring, Personal Service Occ. 99.2 6.7 107.8 6.9 8.7 14.1 21.7 Corporate Managers and Directors 95.4 6.5 104.3 6.7 8.9 14.7 45.1 Culture, Media and Sports Occ. 23.5 1.6 27.9 1.8 4.4 7.6 55.5 Customer Service Occ. 35.9 2.4 38.8 2.5 2.9 24.8 22.9 Elementary Administration and Service Occ. 167.8 11.4 177.7 11.4 9.9 35.2 8.7 Elementary Trades and Related Occ. 31.7 2.2 33.5 2.2 1.8 46.5 6.6 Health and Social Care Associate Prof. 18.0 1.2 18.7 1.2 0.7 15.4 50.3 Health Prof. 54.6 3.7 66.1 4.2 11.5 1.0 93.8 Leisure, Travel and Related Personal Service Occ. 31.7 2.1 33.4 2.1 1.7 21.1 14.2 Other Managers and Proprietors 46.3 3.1 50.1 3.2 3.8 20.6 35.8 Process, Plant and Machine Operatives 48.6 3.3 43.8 2.8 -4.8 35.6 6.5 Protective Service Occ. 15.7 1.1 12.9 0.8 -2.8 11.4 30.9 Sales Occ. 100.2 6.8 105.3 6.8 5.2 28.1 13.7 Science, Engineering and Technology Associate Prof. 24.7 1.7 24.0 1.5 -0.7 12.2 43.7 Science, Research, Engineering and Technology Prof. 61.7 4.2 64.7 4.2 2.9 3.6 74.4 Secretarial and Related Occ. 35.0 2.4 31.9 2.1 -3.1 21.5 24.6 Skilled Agricultural and Related Trades 19.5 1.3 23.3 1.5 3.8 34.9 14.9 Skilled Construction and Building Trades 49.0 3.3 52.9 3.4 3.9 18.7 8.6 Skilled Metal, Electrical and Electronic Trades 65.4 4.4 63.8 4.1 -1.5 15.2 10.5 Teaching and Educational Prof. 60.8 4.1 61.8 4.0 1.0 0.5 95.0 Textiles, Printing and Other Skilled Trades 39.4 2.7 40.2 2.6 0.8 27.8 15.2 Transport and Mobile Machine Drivers and Operatives 67.1 4.6 72.1 4.6 5.0 30.9 5.3 Source: Experian Business Strategies, Regional Econometric Model, September 2013. Highest proportions of workforce with no qualifications or qualifications below NQF Level 2 are highlighted in red. Highest proportions of workforce with NQF Level 4 or above are highlighted in blue.

At the same time, declines in job numbers will generally be felt in occupations where lower levels of skills are required such as process, plant and machine operatives (- 4,800 jobs), protective services (-2,800 jobs), and secretarial and related occupations (-

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3,100 jobs). However, some skilled trades will also be affected (e.g. skilled metal, electrical and electronic trades (-1,500 jobs)). Leeds however, will be less likely to be affected by declines in the need for administrative roles, which will be felt more keenly across other parts of the city region.

This ‘hollowing out’ of the workforce in lower-middle skill level occupations can be seen in Figure 9, where the changes in employment levels between 2004 and 2013 can be seen to be most affecting administrative and secretarial occupations, the skilled trades, sales and customer services and elementary occupations; while professional, associate professional and caring, leisure and other services occupations showed the greatest levels of growth. Forecast trends between 2013 and 2020 show this declining pattern continuing to affect the administrative and secretarial occupations, although the predominance of the manufacturing industry across the Leeds City Region may mean that skilled trades occupations show some growth, in comparison to national downwards trends.

The importance therefore of replacement demand for workers occupying these types of occupation cannot be understated.

Figure 9: Percentage change in employment by broad occupational group 2004– 2013 and 2013–2020 across the Leeds City Region 40 Source: % change 2004 - 2013 30 Office for % change 2013 - 20 National 20 Statistics, Labour 10 Force Survey, 0 2004 – 2013, and -10 Experian -20 Business Strategies, Regional Econometric Model, September 2013 for operatives officials occupations occupations

occupations 2013 – 2020

9: elementary occupations 9: elementary forecasts. 2: professional occupations 2: professional 5: skilled trades occupations trades 5: skilled 7: sales and customer service customer 7: and sales 8: process, plant and plant machine 8: process, 4: administrative and secretarial 4: administrative 1: managers, directors and senior directors 1: managers, 6: caring, leisure and leisure service other 6: caring,

3: associate prof & tech occupations prof & tech 3: associate

Replacement demand figures for the period 2010–2020 for the Leeds City Region shows an overall net requirement of 617,000 people across all occupations including, 61,000 workers for administrative occupations, 44,000 for elementary administration

14 and service occupations and 33,000 for sales occupations. Replacement demand data So, although the demand from new jobs for workers with shows a net requirement middle and lower level skills will reduce, replacement demand of 617,000 across all will still mean there is an ongoing requirement for people occupations in the Leeds qualified at these levels.4 City Region between 2010 and 2020 – an extremely important factor for those with low-middle level qualifications.

Figure 10: Replacement demand (‘000s jobs) by detailed occupation, 2010–2020 across the Leeds City Region 53 11 Corporate managers and directors 18 30 12 Other managers and proprietors 9 27 21 Science, research, engineering and technology professionals 7 26 22 Health professionals 6 34 23 Teaching and educational professionals 7 37 24 Business, media and public service professionals 12 9 31 Science, engineering and technology associate professionals 2 7 32 Health and social care associate professionals 1 6 33 Protective service occupations 0 12 34 Culture, media and sports occupations 5 47 35 Business and public service associate professionals 15 61 41 Administrative occupations 0 9 42 Secretarial and related occupations -14 10 Net Requirement 51 Skilled agricultural and related trades 3 17 52 Skilled metal, electrical and electronic trades -8 Expansion Demand 20 53 Skilled construction and building trades -1 2 54 Textiles, printing and other skilled trades -10 56 61 Caring personal service occupations 13 11 62 Leisure, travel and related personal service occupations -1 33 71 Sales occupations -5 17 72 Customer service occupations 7 6 81 Process, plant and machine operatives -14 28 82 Transport and mobile machine drivers and operatives -1 14 91 Elementary trades and related occupations 2 44 92 Elementary administration and service occupations -1 -20 -10 0 10 20 30 40 50 60 70

Source: University of Warwick, Institute for Employment Research, 2010 – 2020.

Labour market supply across the Leeds City Region

Participation in the labour market: Not all those who want a job currently have one. For example, the Leeds City Region has failed to keep pace with the UK over the last six years in terms of employment levels. This gap does, however, now appear to be narrowing, with 70.3 per cent of the working-age population in employment in the year to September 2013, compared with 71.1 per cent across the UK.

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At the local level, employment rates are much lower in Bradford (65.4 per cent to September 2013); Leeds and Kirklees also track below average with rates at 69.2 per cent and 69.5 per cent respectively. Across the rural districts of North Yorkshire, data suggests higher than average employment rates (driven by higher rates of self- employment and business ownership, higher qualification levels on average, an older population profile, and higher house prices fuelling the need for employment) and although Craven appeared to be badly hit by the recent recession, it has now recovered for the most part.

Across the Leeds City Region as a whole, in line with UK trends self-employment rates have increased (from 10.3 per cent ten years ago to 12.5 per cent in 2013), but part- time employment has remained around the same – representing almost 26 per cent of the workforce.

Figure 11: Employment rates of working-age people (16–64) across the Leeds City Region, with Leeds and UK comparisons

76 Source: Office for Leeds City Region National Statistics, 74 Leeds Annual Population United Kingdom Survey, employment rates of working-age 72 people (aged 16 – 71.1 64). Annualised for 70 70.3 October – 69.2 September each year. 68

66 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

The EU has a target to 2020 to raise employment rates for those aged 20–64 to 75 per cent. Based on current employment levels for this age group, the Leeds City Region would need to increase the number of people in employment by 27,850 people to achieve this target. In particular, employment levels are far lower than average in Bradford, Barnsley, Kirklees and Leeds, affected by factors such as higher levels of deprivation across localised pockets within each district, the legacy of industry closures (e.g. mining and manufacturing), and lower levels of economic activity within certain cohorts of the population.

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Figure 12: Employment rates of 20–64-year-olds across the Leeds City Region

2000 2004 2007 2010 2013 Source: Office for National Statistics, Annual Population Survey, 2004 – Barnsley 69.3 69.7 67.8 65.6 71.2 2013 and Local Area Labour Force Bradford 70 67.5 66.7 61.8 66.5 Survey, for 2000, employment rate Calderdale 74.9 72.3 71.8 68.6 71.9 aged 20 –64. Craven 81.6 79.2 79.5 81 75.2 Red shading indicates lower than Harrogate 80.4 81.5 79.2 72.2 80.2 average employment rates, while blue shading represents higher than Kirklees 72.5 73.2 73.3 69.2 68.6 average rates. Leeds 79.4 73.3 73 69 68.2 Selby 77.8 73 73.3 75.8 76.2 70 per cent of 20–64-year- Wakefield 73.9 75.3 70.8 70 71 olds across the Leeds City York 81 78.1 75.2 71 73.3 Region are in employment LCR 75.3 73 71.8 68.3 70 – slightly lower than the England 74.5 72.8 72.6 70.4 71.7 UK average. UK - 72.4 72.4 70.1 71.3

As well as connecting more of the economically active population to the economic opportunities available, there is also a job to be done with the 1,515,000 economically inactive people across the Leeds City Region; while many of these people do not want/are unable to take a job for reasons ranging from early retirement, ill health, caring duties and student responsibilities, 26.2 per cent, or 334,300 do.

Qualifications available in the labour market: Across the Leeds City Region, qualification levels are generally slightly Qualifications of the lower than average, with 11.3 per cent of the working-age workforce are a useful population currently holding no qualifications, compared proxy for determining skill with 9.9 per cent across the UK. The districts of North levels, and are slightly Yorkshire (York, Selby, Craven and Harrogate) have lower across the Leeds City Region than the UK greater levels of highly qualified people, while Barnsley, average. Bradford and Wakefield lag the national average. However, while Leeds also has slightly more than average with no qualifications (10.2 per cent), given its role as the major economic centre of the city region, it does have a higher than average proportion of working-age people qualified to NQF Level 4 or above at 35.1 per cent, compared with 34.2 per cent across the UK, and 30.9 per cent across the city region as a whole.

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Figure 13: Proportion of working-age people (aged 16–64) across the Leeds City Region with i) no qualifications, and ii) qualified to NQF Level 4 or above

45

41.3 40.8 Source: Office for 64)

- 40

35.1 National Statistics, 35 34.2 31

30.9 Annual Population 30.8 30 Survey, January – 24.7 25 December 2012 (latest 21.3 20.2 date for which district 20

15 level data is available). 13 12.7 15 12.4 11.3 Note: due to small 10.2 10.2 9.9 10 8.3 sample sizes, Craven, 6.4 5 Harrogate and Selby are combined and the 0 average shown. UK York

Leeds Kirklees Barnsley Bradford Percentage of working age population(16

Wakefield Calderdale

NQF4+ Leeds City Region No qualifications Craven, Selby, Harrogate

There are well documented individual benefits to achieving a higher level of skills; for example, the UK Commission for Employment and Skills (UKES), ‘UK Employment and Skills Almanac 2010’ (March 2011) quotes that across the UK, those with qualifications at NQF Level 5 (i.e. a post-graduate qualification or equivalent) get paid 66 per cent more than the UK average. In contrast, those with no qualifications tend to earn 39 per cent less than the UK average and this pattern of higher pay rates for higher qualification levels has remained consistent over time.

To put the relevance of this into context, if the average wage differentials quoted by UKES are applied, then at least 604,200 people across the Leeds City Region area are 39 per cent worse off than average, and therefore much more likely to be experiencing income deprivation, and all the knock-on effects of this (see next section for further details).

The supply of people: Between 2013 and 2020 the Leeds City Region's population is forecast to grow by around 174,400 people (5.8 per cent), while the working-age population (16–64) will increase by 3.1 per cent (299,800 people). This increase will not be spread evenly across all age groups. The 25–34 age group is forecast to increase by 44,000 or 10.8 per cent, and for the time-being, fewer younger people aged 16–24 will be available to enter the workforce with a forecast reduction of -14,600 or -3.8 per cent expected in this cohort.

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At the other end of the scale, more people will be exiting the Population forecasts workforce into retirement, with an increase of 66,400 people aged to 2020 suggest an 65 and above (+13.4 per cent), and although the future workforce increase of 3.1 per (0–15 year olds) will rise by 48,900 or 8.4 per cent, almost a fifth cent in the working of the current workforce will be aged 55–64 by 2020. From a age population across purely economic perspective, it is therefore important to the city region – an additional 299,800 strengthen people’s chances, and ability, especially at a younger people. age, to enter into and remain in the labour market.

Figure 14: Population forecasts 2013–2020 across the Leeds City Region Age group Population in % of working Population in % of working Increase 2013 - % increase 2013 2013 age in 2013 2020 age in 2020 2020 - 2020 0-15 582,495 631,439 48,944 8.4 16-24 386,175 20.0 371,564 18.7- 14,611 -3.8 25-34 407,532 21.1 451,562 22.7 44,030 10.8 35-44 392,103 20.3 388,845 19.5- 3,258 -0.8 45-54 412,108 21.3 406,136 20.4- 5,972 -1.4 55-64 334,405 17.3 373,285 18.7 38,880 11.6 Working age 16 - 64 1,932,324 1,991,392 299,783 3.1 65+ 496,053 562,404 66,351 13.4 Total 3,010,872 3,185,236 174,364 5.8 Source: Office for National Statistics, sub-national population projections 2011 – 2021.

However, given changes to the pensionable age in response to increasing life expectancy, retaining people in the workforce beyond 65 will become increasingly important to prevent the dependency ratio reducing even further – currently around 0.85 workers in the Leeds City Region for every non-worker (including children, those of employment age but not working, and those retired).

Health as a driver of labour market participation: Figure 15 shows overall life expectancy over a 19-year period up to the most recently available data (a rolling three- year average for 2010–2012). It provides a context for both the increases in lifespan (and therefore available working years) and shows the localised differences within the city region and how these have changed over time.

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Figure 15: Overall life expectancy (at birth, males and females, 1991–2012) Male life expectancy at birth (3yr averages) Female life expectancy at birth (3yr averages) 91-93 01-03 04-06 07-09 10-12 change 91-93 01-03 04-06 07-09 10-12 Change (+yrs) (+yrs) England 73.7 76.2 77.3 78.2 79.2 5.5 79.1 80.7 81.5 82.3 83 3.9 Bradford 72.2 74.6 75.5 76.5 77.5 5.3 78 79.1 79.8 80.4 81.5 3.5 Calderdale 72.3 75.3 75.9 77.1 77.5 5.2 77.6 80.3 81.3 81.2 82.2 4.6 Kirklees 72.9 75 76.3 76.9 78.2 5.3 78.3 79.3 80.6 81 82 3.7 Leeds 73.5 75.5 76.5 77.3 78 4.5 79 80.7 81.4 81.7 82.1 3.1 Wakefield 72.4 75.1 75.8 76.5 77.8 5.4 77.9 79.7 80.3 80.9 81.3 3.4 Barnsley 72.3 74.6 75.4 76.5 77.8 5.5 77.7 79.6 79.5 80.2 81.5 3.8 York 74.2 76.8 77.8 79.5 79.6 5.4 79.9 81.9 83.1 83.1 83.2 3.3 Craven 74.1 78.3 79 80 80.6 6.5 79.9 82.2 83.4 83.9 84.6 4.7 Harrogate 74.8 77.5 78.9 79.2 80.6 5.8 79.3 82.1 82.5 83 83.8 4.5 Selby 74.4 76.9 77.9 78.9 80.6 6.2 78.9 81.2 82.8 82.9 83.5 4.6 LCR Range 2.6 3.7 3.6 3.5 3.1 0.5 2.3 3.1 3.9 3.7 3.3 1 Source: Office for National Statistics, 2014. Life expectancy at birth (years), unitary and local authorities in England & Wales, 1991–1993 to 2010–2012.

In 2010/12, everywhere within the city region within York and North Yorkshire had life expectancy that was above England average, while Barnsley and everywhere within West Yorkshire were below the England average. The city region is polarised in terms of the health inequalities between districts, as it is in other inequalities.

Life expectancy has increased significantly between 1991–1993 and 2010–2012, typically by 5–6 years for men and 3–5 years for women. However, those increases have tended to be largest in the places that already had highest life expectancy – Craven, Harrogate and Selby in particular. So while life expectancy is growing, so are health inequalities between places.

While not shown by the district level data, health inequalities within local areas are greater than those between them. Figure 16 illustrates this for unitary local authority areas through ‘slope index of inequality’ (SII) data. This shows the difference in life expectancy, and disability-free life expectancy5, between the most and least deprived areas within the local authority 6. In short, the greater the SII figure, the greater the extent of health inequalities.

There are significant differentials in life expectancy and disability-free life expectancy rates between the most deprived and least deprived areas in the city region, with implications on employment, income and poverty levels.

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Figure 16: Health inequalities within local areas – difference in life expectancy and disability-free life expectancy in years between the most and least deprived areas Males Males - Slope Index of Females Females - Slope Index of Inequality (SII) - years Inequality (SII) - years Life SII - life SII - Life SII - life SII - Expectancy expectancy disability Expectancy expectancy disability (2006-2010) free life (2006-2010) free life expectancy expectancy Bradford 76.6 12 15.1 80.8 8.3 14.8 Calderdale 77.1 11.4 10.8 81.5 8.3 10.5 Kirklees 77 10.6 11.4 81.3 7.6 11.4 Leeds 77.9 12.4 15.5 82.2 8.2 13.4 Wakefield 77 9.9 14.2 81.1 7.9 11.5 Barnsley 76.8 8.7 14.4 80.4 7.4 12.1 York 79.8 9.7 10.1 83 5.1 7.6 Y&H 77.7 10.6 12.9 81.8 7.7 10.9 England 78.6 8.9 10.9 82.6 5.9 9.2 Source: Marmot Indicators for Local Authorities in England, The Public Health Observatories in England, 2012 (based on analysis of ONS mortality data and population estimates & Department for Communities and Local Government, Indices of Deprivation 2010.)

Life expectancy in the city region is substantially longer for those in wealthier areas than more deprived areas within every local authority – typically by around 9–12 years for men, and 7–8 years for women (with only York having a notably lower figure for females). Those figures are higher than the national average, and much greater than the gaps between local authority areas within the city region (which were around three years for men and women in 2010–2012).

Inequalities in life expectancy free from limiting illness or disability are even greater – around 10–15 years for men and women, with the lowest figures in York.

The key implications of this data in terms of the labour market are that lifespans, and healthy lifespans (which allow the possibility of work), are much shorter in more deprived areas. This will limit the supply of labour, mean more time taken off work through illness or health needs, and will be likely to impact on the productivity of staff in the workplace. Besides being a concern in their own right, health inequalities contribute to economic inequalities (for instance through reduced earning power) and undermine overall economic output and productivity.

Figure 17 sets out data across the city region for other (often lifestyle and culturally related) factors that will play a role in determining health outcomes, life expectancy and labour market supply, as well as mortality rates for cancer, heart disease and stroke. There are strong relationships between poverty and these indicators, whereby reducing

21 income inequalities and poverty will impact positively on health, in turn further improving the economy and creating a virtuous circle.

The focus is on illustrative lifestyle related indicators where data is available, but it is important to stress that determinants of health also include wider factors including employment and incomes, education, housing, the environment, social and family factors and psychologically related factors such as having a sense of purpose and control over one’s life.

Figure 17: Lifestyle and poverty related determinants of health with labour market impacts Health and lifestyle based indicators Early deaths from Area Childhood Teenage Adults Alcohol Physically Cancer Heart disease obesity pregnancies smoking related active adults And stroke hospital stays (% age 10- (per 1,000 (% over age (per 100,000, (% achieving (per 100,000 (per 100,000 11, 2011-12) females aged 18, 2011-12) 2010-11) 150 mins per below age 75, below age 75, 15-17, 2009-11) week, 2012) 2009-11) 2009-11) Barnsley 19 50.5 25.6 2,351 50.8 128.9 79.5 Bradford 21.6 34.7 21.5 2,565 49.4 112.8 81.1 Calderdale 19.2 40.1 22 2,052 50.3 120.3 73.6 Kirklees 19.9 39.8 23.6 1,781 55.8 110.6 70.5 Leeds 19.7 43.4 23 1,883 61.3 116.1 70.3 Wakefield 19.6 42.2 23 1,778 58 121.7 74.4 York 16.1 26.6 17.1 1,413 56 107.8 53.8 Craven 12 21.6 8.2 1,719 57.9 93.9 46.6 Harrogate 12.2 16.8 14.5 1,756 60.4 97.3 49.9 Selby 18.5 20.6 15 1,382 59.8 105 46.3 England 19.2 34 20 1,895 56 108.1 60.9 Source: Public Health Profiles 2013, Public Health England, September 2013 [accessed at www.healthprofiles.info/PHOF on 2 June 2014].

For all of the indicators there are considerable local variations. By and large, York, Craven, Harrogate and Selby fare much better than Barnsley and districts within West Yorkshire. Early deaths from heart disease and stroke illustrate these gaps starkly, with early death rates typically around a quarter higher than the England average in West Yorkshire/Barnsley and a fifth lower in York and North Yorkshire. The lifestyle/culture and poverty related determinants of health will impact on these early death rates, as well as on labour markets in their own right. For instance, teenage pregnancies can limit the career opportunities of young women that may have impacts well into their lives, while alcohol related harm and conditions can impact on time off work through sickness and on productivity. Contrastingly, evidence shows that physical activity (e.g. cycling to work) can enhance health and productivity.

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The future labour market: A person’s life chances, their contribution to the economy and to society in general are influenced by a range of interconnected factors and the degree to which the circumstances such as parental employment/unemployment, family wealth or poverty, housing conditions, substance abuse etc are either present or absent.

Low educational attainment is both an indicator of child poverty and a factor that increases the chances that poverty is sustained through the teenage and adult years. In addition, learning and development during the first years of life are thought to have a more significant impact on life outcomes than developments and interventions in later years. For example, MP Frank Field's recent report on child poverty (The Foundation Years) argues that parenting, care and learning during infancy are more important than material wealth for tackling child poverty and ensuring that poor children do not become poor adults.

Educational attainment has a circular relationship with child poverty. It is partially determined by the socio-economic status of the pupil, and also determines the likelihood of escaping poverty in the future. Poverty provides a context shaping educational outcomes, but schools play a role in reducing the impact of poverty.

Starting at the beginning, Early Years Foundation Stage Profile data assesses learning and development of children during their first five years against standard benchmarks of ability and development.

On average, across England 64 per cent of pupils aged five are classed as having a ‘good level of development’ across all measures at Early Years Foundation Stage assessment. However, as Figure 18 shows, there is a significant difference between the results of pupils in the 30 per cent most deprived areas in the country, and the remaining areas. Across the Leeds City Region, this gap is as wide as 23 percentage points in York, but across all areas the discrepancy is more significant than the national average.

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Figure 18: Percentage of pupils achieving a ‘good level of development’ at Early Years Foundation Stage assessment, 2012 Overall 30% most Remaining Gap between 30% deprived areas areas most deprived and the remaining 70% Barnsley 59 53 66 13 Bradford 58 53 69 16 Calderdale 60 52 65 13 Kirklees 68 60 76 16 Leeds 63 53 71 18 Wakefield 63 55 71 16 York 61 43 66 23 North Yorkshire 62 49 64 15 Yorkshire and Humber 61 53 68 15 England 64 56 68 12 Source: Department for Education, Early Years Foundation State Profile, full child collection, 2012. A pupil achieving at least the expected level within the three prime areas of learning and within literacy and numeracy is classed as having ‘a good level of development’. Red shading indicates lower than average rates, while blue shading represents higher than average rates. Note: 2013 data is available, however, due to changes in the curriculum and discrepancies around moderation in 2013 producing results with significant differences to trend patterns; 2012 data is presented here.

As would be expected, children with statements of special educational needs (SEN) associated with learning disabilities have poorer educational attainment than their peers, and across the Leeds City Region learning difficulties account for 87 per cent of the 11,000+ pupils with SEN statements.

There is, however, considerable variation in attainment among children with SEN associated with learning difficulties. It is more commonly seen in boys (boys represent 72.6 per cent of all SEN in England); among children from poorer families and among some minority ethnic groups. There are also some marked regional variations in attainment (Department of Health, ‘People with Learning Disabilities in England, 2010’).

Across the Leeds City Region, Barnsley, Wakefield, Calderdale and Kirklees had the highest proportion of pupils with SEN statements in 2013, with attainment at GCSE (5+ A*–C, including maths and English) of SEN pupils ranging from a high of just 15.4 per cent in Calderdale, down to 6.7 per cent in Leeds.

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Figure 19: Pupils with statements of special educational needs across the Leeds City Region, 2013 2,500 Number Percent 4 3.5 2,000 3.6 3 1,500 2.5 2.8 2.7 2.8 2 1,000 2 2 2 1.5 1.7 1 500 0.5 - 0 York Leeds Kirklees Barnsley Bradford Wakefield Calderdale

North Yorkshire Source: Department for Education, 2013.

The gap in achievement of 'the basics' at Key Stage 4 (GCSE level) between those eligible for free school meals and those not is one of the Government's 2011–14 Child Poverty Strategy indicators.

The differential is stark with children from lower income families being far more likely to have lower levels of educational attainment, resulting in a 26.4 percentage point gap on average across England in 2012/13. Somewhat surprisingly, in rural areas, these differences are even more pronounced with North Yorkshire exhibiting a 34 percentage point gap in attainment between those eligible for free school meals and the rest.

Educational attainment has a circular relationship with poverty and is heavily influenced by early years’ development, which in turn is affected by parental care and learning during infancy. Pupils facing disadvantage e.g. those with SEN statements or in receipt of free school meals subsequently perform far less well than their peers at Key Stage 4.

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Figure 20: GCSE attainment between pupils not eligible for free school meals and pupils eligible for free school meals (2011/12) All pupils Pupils known to be All other Gap between pupils eligible for free school pupils eligible for free school meals meals and those not Barnsley 45.3 22.5 50.4 27.9 Bradford 52.4 34.9 57.4 22.5 Calderdale 61.1 35.4 64.7 29.3 Kirklees 62 39.3 66 26.7 Leeds 55 26.7 61.3 34.6 Wakefield 59.3 32.1 63.4 31.3 York 62.7 36.2 65.1 28.9 North Yorkshire 65.6 33.9 67.9 34 Yorkshire and Humber 57.3 31.3 61.9 30.6 England 59 36.4 62.8 26.4

Source: Department for Education, attainment for five or more GCSEs grades A* – C (including Maths and English), by eligibility for free school meals. Red shading indicates lower than average rates, while blue shading represents higher than average rates.

The Department for Education’s latest destination statistics for 2010/11 found that nationally, 82 per cent of pupils claiming free school meals (FSM) went on to further education or employment/training at age 16, while 90 per cent of pupils not claiming FSM did.

The most common destination for FSM pupils was a further education college (40 per cent) and for non-FSM pupils, a school sixth form (39 per cent). However, a higher proportion of FSM pupils did not sustain an education/employment destination at all, or were categorised as being not in education, employment or training (NEET ) (16 per cent, compared with 8 per cent of non-FSM pupils).

In later life, the linkages between low levels of educational attainment and subsequently reduced levels of engagement in the labour market are well understood, and the cost to both society and the individual of non-participation in employment can be very high.

Across the Leeds City Region in December 2013, it was estimated that there were around 5,500 16–18 year old NEETs (compared with around 7,000 in December 2011). This cohort of young people that are not currently in education, employment or training represent 6.7 per cent of their age group in Leeds, 5.7 per cent in Calderdale and Kirklees, 5.4 per cent in Bradford and Barnsley, 5.3 per cent in Wakefield, 4.3 per cent across North Yorkshire and 4.2 per cent in York.

There have been many risk factors and precursors identified that are known to be associated with being NEET at age 16–18; such as:

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• having parents who are poor and unemployed; • living in a deprived neighbourhood near schools with poor overall average attainment; • living in, or having lived in care; • having a disability, special educational need or learning disability; • being a young carer; • having a mental illness; • misusing drugs or alcohol; • pre-16 educational disaffection (truancy and/ or school exclusion); • dropping out of post-16 educational attainment.

These are all factors that limit an individual’s contribution to society and the economy, and have negative costs to society, the individual and their families, creating, in essence, a poverty trap.

Completing an apprenticeship, however, can have a positive impact on the income of young people who have fewer than five GCSEs grades A* – C, with research summarised in a recent report by CEBR 7 finding that wages are 19.1 per cent higher than for comparable workers for those that have completed an apprenticeship. For females, this differential is around 21.6 per cent.

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3 Poverty in the Leeds City Region

Jobs Growth

Poverty

20-25 per cent of the city region's workforce is paid below the living wage, while unemployment continues to track above the national average. Across large parts of the city region, over half of all families are classed as low income, with more working families than workless families affected. In summary A higher proportion of the Leeds City Region experiences severe deprivation, with 26.9 per cent of its Super Output Areas in the 20 per cent most deprived in the country. Significant localised pockets of deprivation are apparent in Bradford; while Barnsley, Wakefield and Bradford also exhibit much higher than average levels of employment deprivation.

20-25 per cent of workers (274,700 – 343,400 people) across the Leeds City Region are currently earning below the living wage, and the city region has a higher proportion of workers in the occupations paying below average, especially in Barnsley, Bradford and Wakefield, where higher than average numbers of workers are in sales and customer service, elementary and process, plant and machine operative occupations.

The recession impacted significantly, with recovery in jobs growth taking longer to bounce back, and ILO unemployment rates continue to track above the UK average (8.7 per cent, compared with 7.7 per cent). The impact of long-term unemployment, however, can be extremely detrimental; not only to a person/household’s income, but also to their mental health and overall well-being, and 22,600 people have been claiming unemployment benefit for over a year across the city region.

The remnant effects of an industrial heritage in mining linger, with both Barnsley and Wakefield retaining a higher proportion of Incapacity Benefit/Severe Disablement Allowance/Employment Support Allowance claimants, at 9.4 per cent and 8.3 per cent of working age people respectively (LCR and England averages are 6.2 per cent and 6 per cent).

The impact of household worklessness affects around 16,700 dependent children across the city region, with a fifth or more children across West Yorkshire and Barnsley classed as in poverty in 2010-11. That said, almost 40 per cent of working families in Bradford are classed as low income, with Kirklees, Leeds, Wakefield, Calderdale and Barnsley all 28 experiencing higher proportions of working families receiving low income benefits.

The costs of poverty are difficult to quantify, but broad analysis suggests that 'out of work' benefit costs The impact of household worklessness affects around 16,700 dependent children across the city region, with a fifth or more children across West Yorkshire and Barnsley classed as in poverty in 20100–11. That said, almost 40 per cent of working families in Bradford are classed as low-income, with Kirklees, Leeds, Wakefield, Calderdale and Barnsley all experiencing higher proportions of working families receiving low-income benefits.

The costs of poverty are difficult to quantify, but broad analysis suggests that 'out of work' benefit costs could be costing the Leeds City Region in the order of £2.06 billion (for 2013); troubled families cost around £600 million and child poverty around £700 million in

Leeds and Bradford alone.

Localised deprivation: The latest Index of Multiple Overall, 26.9 per cent of Deprivation (2010) reports that overall, 26.9 per cent of Super Leeds City Region’s SOAs Output Areas (SOAs) across the Leeds City Region are fall into the 20 per cent classed within the 20 per cent most deprived in England. most deprived in the country, with significant At the local level, deprivation is particularly stark in Bradford, levels of employment deprivation experienced in Barnsley, Wakefield, Leeds and Kirklees, while Craven, Bradford, Barnsley and Harrogate, Selby and York exhibit much lower levels – Wakefield. although there has been a recent increase in deprivation in Craven with 2 of its 32 SOAs now in the most deprived 20 per cent.

Figure 21: Proportion of Super Output Areas across the Leeds City Region in the 20 per cent most deprived in the country, 2004–2010 20% most deprived No of SOAs 2004 2007 2010 #%#%#% Bradford 307 128 41.7 126 41 133 43.3 Leeds 476 151 31.7 131 27.5 136 28.6 Calderdale 129 30 23.3 29 22.5 29 22.5 Kirklees 260 74 28.5 70 26.9 73 28.1 Wakefield 209 73 34.9 64 30.6 60 28.7 York 118 10 8.5 8 6.8 8 6.8 Craven 32 0 0 0 0 2 6.3 Harrogate 104 1 1 1 1.0 1 1 Selby 50 1 2 1 2.0 1 2 Barnsley 147 66 44.9 56 38.1 49 33.3 LCR total 1,832 534 29.1 486 26.5 492 26.9 Source: Department of Communities and Local Government, Index of Multiple Deprivation, 2010. Red shading indicates higher levels of deprivation, blue indicates lower levels.

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Income deprivation is particularly high in Bradford, where 39.1 per cent of Super Output Areas (SOAs) are in the 20 per cent most deprived in the country; while Barnsley (54.4 per cent), Wakefield (37.3 per cent) and Bradford (29.6 per cent) also exhibit much higher than average levels of employment deprivation. 46.3 per cent of Barnsley’s Super Output Areas are also in the 20 per cent most deprived for education, skills and training, with Bradford (45.3 per cent), Wakefield (42.6 per cent), and Leeds (31.3 per cent) also faring much less well than average. As discussed in section 2, poor educational outcomes can have a strongly negative effect on future employment and income prospects.

Across Craven, Harrogate, Selby and York, only a handful of Super Output Areas fall within the 20 per cent most deprived in the country. However, York has 15 of its 118 SOAs in the 20 per cent most deprived for education, skills and training, so although more prosperous in general, localised pockets of deprivation should not be ignored in more affluent parts of the region.

Overall, if total equity across the country was apparent, you would expect 10 per cent of the SOAs in each area to be in the 10 per cent most deprived, 20 per cent to be in the 20 per cent most deprived and so on.

Figure 22: Proportion of Super Output Areas in the 20 per cent most deprived in the country by local authority district Proportion of Super Output Areas in the 20 per cent most deprived in England Income Employment Education, skills and deprivation deprivation training deprivation Bradford 39.1 29.6 45.3 Leeds 22.5 22.7 31.3 Calderdale 21.7 24 24.8 Kirklees 24.6 23.1 27.7 Wakefield 21.1 37.3 42.6 York 5.9 5.1 12.7 Craven 6.3 6.3 6.3 Harrogate 1 1.9 3.8 Selby 2 2 8 Barnsley 29.9 54.4 46.3 LCR total 22.8 25.1 31.3

Source: Department of Communities and Local Government, Index of Multiple Deprivation, 2010. Deprivation by income, employment and education, skills and training domains. Red shading indicates higher levels of deprivation, blue indicates lower levels.

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To put the localised nature of deprivation into context, the following maps highlight the SOAs in the 10 and 20 per cent most deprived in Leeds in terms of income and employment deprivation. As can be seen, there are significant pockets of poverty in Harehills, Seacroft, Beeston and Middleton, for example.

Figure 23: Income and employment deprivation in Leeds, 2010

Income Employment

Source: Department of Communities and Local Government, Index of Multiple Deprivation, 2010, income and employment deprivation domains. Red shading shows SOAs in 10 per cent most deprived; orange in 20 per cent most deprived.

In-work poverty

As previously stated, between 2013 and 2020, around 81,200 net new jobs are forecast to be added to the Leeds City Region economy, many of these at the higher end of the skills spectrum. However, not all employment is good employment, and not all employment reduces poverty levels.

The challenge is to ensure that not only these new jobs, but also the ongoing churn of replacement demand provides employment that pays at least the living wage, and avoids the increasing polarisation of the labour market into high and low wage employment, with increasing wage inequality, for which the harmful social consequences and costs are well documented. 8

Around 20-25 per A living wage: Based on gross hourly pay figures from the Annual 9 cent of workers in Survey of Hours and Earnings , around 20 – 25 per cent of workers the Leeds City (274,700 – 343,400 people) are currently falling below the living Region are earning wage of £7.65 an hour across the Leeds City Region. When split by below the living full-time and part-time working, about 10 per cent of full-time wage, with part-time workers are earning below the living wage, but at least 40 per cent workers significantly more likely to be of part-time workers are, and 26.1 per cent of the city region’s affected. workforce is part-time. This part-time workforce is predominantly

31 female (with over two-fifths of all females (42.5 per cent) working part-time, compared with only 11.4 per cent of males).

These figures are broadly consistent with the Department for Work and Pensions, Households Below Average Income Statistics, which report that in 2011/12, 17 per cent of working-age adults were in households in the UK with incomes below 60 per cent of contemporary median net disposable household income before housing costs, and 22 per cent after housing costs.10

Figure 24: Median gross hourly pay, 2013 12 11.86 Source: Office for National Statistics, 11.55 11.62 Annual Survey of Hours and Earnings, 11.5 11.36 11.19 2013. 11.07 10.91 11

10.46 10.5 10.31 10.07 10.1 10 Gross £ perhour

9.5

9

UK York Selby Leeds

Craven Kirklees Barnsley Bradford Harrogate Wakefield Calderdale

By locality, median gross hourly pay ranges from a high of £11.86 in Selby, down to £10.07 in Craven, with a UK average of £11.62. However, for part-time workers, the median gross hourly pay rates range from a high of £8.96 in Harrogate, down to £7.43 in Selby, with a UK average of £8.29.

However, the difference between the 25th percentile and the 75th percentile ranges quite significantly, with most local authority districts showing an average gross hourly pay rate of around £7.70 – £8.17 at the 25th percentile (i.e. 25 per cent of the workforce are earning below this rate); while the top 25 per cent are earning at least double that, with the greatest differentials observed in Selby and Harrogate.

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Figure 25: Gross hourly pay at the 25th and 75th percentiles, 2013

20 17.9 17.71 17.61 17.21 17.07 16.19 16.17 14.86 14.76 15 14.45 13.16

10 8.17 8.14 8.03 7.95 7.92 7.79 7.77 7.74 7.67 7.63 7.08

5

0 UK York Selby Leeds Craven Kirklees Barnsley Bradford Harrogate Wakefield Calderdale 25 percentile 75 percentile

Source: Office for National Statistics, Annual Survey of Hours and Earnings, 2013.

Occupational differences: By occupation, Figure 26 highlights the median gross hourly pay differentials across the UK, with sales occupations, elementary administration and service and elementary trades and related occupations receiving the lowest levels of pay, while corporate managers and directors and teaching and educational professionals earn the highest rates on average.

The current minimum wage of £6.31 (set to rise to £6.50 later in 2014), and the living wage of £6.65 are shown. However, for those occupations at the lower end of the scale, it must be noted that the median point of pay means that half of workers are earning less than this, and may be on the minimum wage.

The Leeds City Region has a higher proportion of workers in the occupations paying below average, especially in Barnsley, Bradford and Wakefield, where higher than average numbers of workers are in sales and customer service, elementary and process, plant and machine operative occupations.

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Figure 26: Median gross hourly pay by occupation across the UK, 2010

25

20

15

10

5

0 Sales occs Sales Living wage Living Health profs Overall average Overall Customer service Administrative occs Administrative Secretarial & related Secretarial Current minimum Current wage occs Protective service Science, research, eng,… Science, research, Caring personal service Caring personal Skilled metal, electrical,… Skilled metal, Culture, media, sports occs media, sports Culture, Skilled agri & related trades Skilled agri Elementary admin & admin Elementary service Elementary trades & related trades Elementary Other managers/proprietors Other Teaching & educational profs Teaching & Process, plant & machine ops & machine Process, plant Health, social care assoc profs social Health, Corporate Corporate managers/directors Skilled construction & building… Skilled construction Bus, media, public service profs service media, public Bus, Bus & public service assoc profs &service public Bus Textiles, printing & skilled… printing other Textiles, Science, engineering, technology… Science, engineering, Transport, machine drivers & ops machine & drivers Transport, Leisure, travel & personal related Leisure, travel Source: Office for National Statistics, Annual Survey of Hours and Earnings, 2010, 2-digit occupational gross hourly pay across the UK.

These lower paid occupations are more prevalent across the residents of certain localities of the Leeds City Region. For example, as shown by Figure 27, Barnsley has a Location Quotient of 1.79, compared with a UK average of 1 for process, plant and machine operatives – an occupation that pays less per hour than the average.

Sales occupations form a larger part of the workforce across Barnsley and Bradford in particular, but also in Leeds, Wakefield and York, while elementary occupations – which form the lowest paid occupations, are more prevalent across residents of Craven, Wakefield and York. At the other end of the scale, Harrogate has a much higher than average proportion of managers, directors and senior officials.

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Figure 27: Location quotients by occupation and locality across the Leeds City Region Managers, Professional Associate prof Administrative Skilled trades Caring, leisure Sales and Process, plant Elementary directors and & tech and secretarial and other customer and machine occupations senior officials service service operatives Leeds City Region 0.90 0.97 0.96 0.93 0.97 1.01 1.14 1.13 1.09 Barnsley 0.65 0.69 0.83 0.78 1.13 1.30 1.52 1.79 1.07 Bradford 0.72 0.88 0.83 0.95 1.11 1.14 1.28 1.27 1.12 Calderdale 1.05 1.01 1.04 0.87 1.00 0.92 0.85 1.25 1.03 Craven 1.24 0.85 1.09 0.66 1.73 0.63 N/A 1.25 1.31 Harrogate 1.62 1.17 0.81 1.09 0.99 0.90 0.95 0.57 0.70 Kirklees 0.87 0.96 1.10 0.91 0.95 1.08 0.82 1.25 1.03 Leeds 0.80 1.10 1.04 0.92 0.79 0.95 1.28 0.95 1.07 Selby 1.31 1.29 0.97 1.12 1.12 0.75 0.86 0.83 0.47 Wakefield 0.95 0.61 0.86 1.05 1.04 1.00 1.20 1.46 1.41 York 0.94 1.15 1.03 0.81 0.77 0.98 1.20 0.63 1.28

Source: Office for National Statistics, Annual Population Survey, 2013. Compared to UK = 1. Data for sales occupations in Craven is not available. Blue shading – lower proportion of employment than UK average; red shading is higher proportion of employment than UK average.

Minimum income standards and low income families: The Joseph Rowntree Foundation report A minimum income standard for the UK in 2012 said that, ‘Since 2008, household incomes in the UK have tended to stagnate or fall in real terms. In the same period, the minimum that households need for an acceptable living standard has not generally fallen, and for some households it has risen. The consequence is that households are in general finding it tougher to reach the standard.’

This has affected households differently, depending on their composition, with working- age households without children seeing spending requirements rising faster than earnings. For those out of work, benefits have remained at a similar percentage of the minimum income standard (around 40 per cent), but more people are affected as unemployment has increased. Pensioners have generally seen both their minimum income requirements and their minimum guaranteed benefits rise roughly in line with inflation, and therefore just over what is needed to meet the MIS.

However, families with children have ‘faced the toughest situation in keeping up with the minimum. Their needs have gone up in real terms – most severely for lone parents, for whom the cost of owning a car represents a large proportion of spending needs. Cuts in tax credits have also hit such families, and only partially been compensated by the increased tax allowance. Over the period as a whole, the joint amount that a couple with two children needs to earn in order to make ends meet has risen by £5,000 a year, after inflation.

‘An important aspect of these changes for families is that those receiving tax credits and in-work benefits find it hard to make up income shortfalls by increasing their earnings –

35 for example, by working longer hours. The situation is the most extreme for lone parents.’

This need is demonstrated in Figure 28, which highlights that of the total low-income families, a higher proportion are working than non-working, with Bradford, Kirklees, Calderdale and Barnsley especially affected. This measures the proportion of dependent children in families in receipt of out-of-work benefits, and the proportion in families in low income work (receiving Working Tax Credit and Child Tax Credit at the same time).

However, this is not the only stark message apparent from the data shown in this figure. Even in the more affluent areas of the Leeds City Region, such as Harrogate, there are still 29 per cent of families that are classed as low-income families, and a third across Selby and Craven. In Bradford, almost two-thirds of families are classed as low-income. It should be noted though, that moving from workless to working is still a route out of poverty, and a step in the right direction.

Working families make up a larger proportion of the total low-income families than workless ones, with particular issues in Bradford, Kirklees, Calderdale and Barnsley.

Figure 28:Low-income working families, 2011/12 Total low-income Working families (receiving both Workless families (receiving families (%) Working Tax Credits and Child workless benefits: JSA, IB, IS, Tax Credits) (%) Carer's Allowance (%) Barnsley 53.6 29.7 24 Bradford 63.2 39.5 23.7 Calderdale 50.6 30.6 20 Kirklees 53.5 34 19.5 Leeds 49.2 27.6 21.6 Wakefield 49.9 28.7 21.2 York 36.9 23.7 13.2 Harrogate 29 20.4 8.6 Craven 33.4 24.8 8.6 Selby 33.9 21.5 12.4 UK 45.6 25.4 20.2

Source: Her Majesty’s Revenue and Customs, Child and Working Tax Credit Statistics, Child Benefit Statistics, summarised in the Centre for Economic and Social Inclusion’s Child Poverty Toolkit. Red shading indicates rates worse than the national average; blue shading indicates rates better than the national average.

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Out-of-work poverty

Unemployment: Unemployment is obviously a significant factor in 69 per cent of people think it is the government’s increasing poverty levels, and in responsibility to reduce 2013 there were around 237,600 income differences between out-of-work benefit claimants across the rich and the poor. the Leeds City Region of which 26.4

British Social Attitudes Survey, per cent were resident in Leeds, 2012, National Centre for Social 20.7 per cent resident in Bradford Research and 14.2 per cent resident in Kirklees.

The recession hit the Leeds Indeed, the city region has struggled to keep City Region harder than pace average, and unemployment with regards to reducing unemployment levels. In rates continue to track above February 2014, the claimant count the UK average, while jobs unemployment rate stood at 3.8 per cent (72,000 growth has taken longer to people), tracking above the UK since 2006, with recover. the gap to the UK average widening during the recession; during the height of the economic downturn, unemployment reached 4.6 per cent. However, the city region continued to be affected well after the recession, with claimant count rates as high as 4.8 per cent in 2012 and 2013. Indeed, ILO unemployment 11 reached its peak of 9.5 per cent in 2011, before dropping back to 8.7 per cent in 2013 (131,700 people). If annual jobs growth is viewed alongside this, (see Figure 29) it can be seen that the city region was more severely impacted before the UK in terms of declines in jobs growth, and took longer to reach positive growth again after the downturn i.e. the recession hit much harder and for a lot longer.

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Figure 29: Claimant count and ILO unemployment rate and annual jobs growth across the Leeds City Region, compared to the UK average: 2006 –2014 12 LCR claimant count UK claimant count

LCR Jobs growth UK Jobs growth 10 LCR ILO unemployment UK ILO unemployment 8.7 8 7.7

6 4.8 3.8 4 3.9 3 2 0.9 0.7

Average Average annual percentagegrowthrates 0 0.2

-2

-4 2006 2007 2008 2009 2010 2011 2012 2013 2014

Sources: Office for National Statistics, residence-based claimant counts with rates and proportions, based on claimant count rates as of February each year; Annual Population Survey for ILO unemployment (Jan–Dec each year) and Experian Business Strategies, Regional Econometric Model, September 2013, total employment for annual jobs growth percentage rates.

At the local level, claimant count unemployment rates currently range from a high of 5.3 per cent in Bradford, 4.2 per cent in Barnsley and 4.1 per cent in Leeds to a low of 1.1 per cent in Harrogate and 1.4 per cent in Craven. Across the city region overall, 65.9 per cent of claimants are male and 34.1 per cent are female. ILO unemployment rates track far above the claimant count rates, and are more prevalent than claimant count rates in Leeds, Wakefield, and Barnsley.

Figure 30: Claimant count and ILO unemployment rates by district and overall proportion of Leeds City Region unemployment Claimant count ILO unemployment Sources: Office for National Feb 2014 (%) Proportion of LCR Jan-Dec 2013 (%) Proportion of LCR Statistics, claimant count claimaints (%) unemployment (%) unemployment with rates and proportions, February 2014 Barnsley 4.2 8.6 10.6 9.3 and Annual Population Bradford 5.3 24.1 11.3 21.3 Survey, ILO unemployment, Calderdale 4 7.3 9.1 7.1 aged 16–64, Jan–Dec 2013. Craven 1.4 0.6 5.8 1.1 Note, ILO unemployment Harrogate 1.1 1.5 1.9 1.1 rates for Craven Harrogate Kirklees 3.7 14.0 7.3 10.9 and Selby are based on very Leeds 4.1 28.8 9.6 31.2 small sample sizes, and Selby 2.2 1.6 4.2 1.4 should be used with caution. Wakefield 3.6 10.4 10.3 12.8 York 1.7 3.1 4.6 3.9

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There are currently 19,130 (26.6 per cent of all 33,000 Leeds City Region people claimants) aged 18–24, of which 6,580 (34.4 per cent) have been claiming have been claiming for over 6 months. Across all age unemployment benefit for six groups, 33,000 (46 per cent) have been claiming for months or more, and 22,600 for 12 months or more. The impact of over six months, and 22,600 for over twelve months. long-term unemployment can have devastating effects on a However, the impact of long-term unemployment goes person’s mental well-being. much wider than simply the economic costs. For example, The Prince’s Trust latest Macquarie Youth Index (released in January 2014) found that 40 per cent of jobless young people across the UK have faced symptoms of mental illness (including suicidal thoughts, feelings of self-loathing and panic attacks) as a direct result of unemployment. The research also highlights that unemployed young people are significantly less likely to ask for help if they are struggling to cope, with three quarters of long-term unemployed young people stating that they do not have someone to confide in.

Yet the available data does not currently 62 per cent of people think it is capture the full picture of unemployment. the government’s responsibility For example, the statistics do not well to provide a job for everyone who wants one. represent certain migrant groups or asylum seekers, nor do they pick up those that are British Social Attitudes Survey, 2012 not in a position to start work straight away National Centre for Social Research /fairly imminently. There are many examples

of people excluded from the workforce through lack of confidence, skills, other vulnerabilities, disadvantage, deep exclusion and the need for specific attention for integration in some cases. For example, Migration Yorkshire estimates that there are around 30,000–45,000 Roma living in the Leeds City Region area – a group of people that have traditionally faced very high levels of unemployment and exclusion, and while the ILO definition of unemployment suggests a likely unemployment rate of 8.7 per cent across the Leeds City Region in the year to December 2013 (more than double the claimant count), estimates of all those ‘seeking or wanting work’, but not necessarily able to start work any time soon generally puts the rate at about double again.

52.9 per cent of all There are also significant differentials in unemployment rates unemployment in the based on ethnicity12; 74.6 per cent of all unemployed claimants in Leeds City Region is the Leeds City Region are white, 18.9 per cent are of ethnic in Bradford and Leeds, where the minority origin. In comparison, the working-age (16–64) highest levels of BME population of black and minority ethnic (BME) origin in the Leeds unemployment can City Region is 13.1 per cent. Of all the BME groups, Pakistani is also be found. the largest group of claimants at 5,660 (January 2014).

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While in general age is not a specific factor of unemployment for most ethnic groups, there are a significantly larger proportion of 18–24-year-old claimants in the white and black Caribbean, white and Asian and Pakistani ethnic groups.

In 2006, across the Leeds City Region there were 27,700 households across 16,100 households (1.7 per cent of all households) that the Leeds City Region were classed as wholly were classed as 'all residents being unemployed'. By unemployed in 2012, and of 2011, this had risen to 32,100 (3.2 per cent of all these 16,700 had households), falling back to 27,700 (2.7 per cent) by dependent children. 2012 (the same as the UK average). Of these, 16,700 had dependent children living in them. 13

Driven in part by the remnants of an industrial heritage in mining, Barnsley and Wakefield have a higher than average proportion of working-age people currently claiming Incapacity Benefit/Severe Disablement Allowance/Employment Support Allowance (IB/SDA/ESA); representing 9.4 per cent and 8.3 per cent respectively of working-age people in the area. In comparison, the average across the Leeds City Region is 6.2 per cent and across England it is 6 per cent.

Over time, across all areas, there has been a reduction in the number of claimants, but this is in part influenced by ongoing changes to the benefit system and enticements into work, as well as the reduction in the number of working-age people that have experienced largescale mining industry closures, with associated health risks, as these people move into retirement age.

Figure 31: Proportion of working-age people claiming Incapacity Benefit/Severe Disablement Allowance/Employment Support Allowance, 2013 10 9.4 Source: Department for Work 8.3 and Pensions, Employment 8 Support Allowance, and 6.9 6.6 Incapacity Benefit and Severe 6.4 6.2 6.0 Disablement Allowance, as of 6 5.4 August 2013. 3.9 Note: Employment and Support 3.8 3.6 3.5 4 Allowance replaced Incapacity Benefit and Income Support 2 paid on the grounds of incapacity for new claims from 0 27th October 2008. However, not all clients have been moved LCR

York over to ESA, so data includes Selby Leeds Craven Kirklees

England an amalgamation of both ESA Barnsley Bradford Harrogate Wakefield

Calderdale claimants and remaining IB and SDA claimants.

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There are currently 121,380 people claiming IB/ESA/SDA across the Leeds City Region, with the highest rates in Barnsley and Wakefield.

Figure 32: Working-age people claiming Incapacity Benefit/Severe Disablement Allowance/Employment Support Allowance, 2004/2013 Incapacity Benefit, Severe Disablement Allowance and Employment Support Allowance Number of claimants As a % of LCR/England 2000 2004 2007 2010 2013 Claimants as Working Claimants a % of age working age population Barnsley 19,240 19,090 16,970 16,040 13,610 9.4 7.4 11.2 Bradford 24,280 25,960 24,490 24,870 22,780 6.9 16.8 18.8 Calderdale 8,910 9,370 9,010 8,930 8,540 6.6 6.5 7.0 Craven 1,560 1,600 1,490 1,430 1,280 3.8 1.7 1.1 Harrogate 4,230 4,050 3,810 3,800 3,490 3.6 4.9 2.9 Kirklees 17,940 18,890 18,130 17,800 17,000 6.4 13.5 14.0 Leeds 31,660 33,160 31,330 31,340 30,350 5.4 28.7 25.0 Selby 2,470 2,470 2,290 2,310 2,100 3.9 2.7 1.7 Wakefield 21,550 21,480 19,670 19,240 17,150 8.3 10.5 14.1 York 6,050 5,850 5,600 5,410 5,070 3.5 7.3 4.2 LCR 137,880 141,920 132,780 131,170 121,380 6.2 5.8 6.0 Source: Department for Work and Pensions, Employment Support Allowance, and Incapacity Benefit and Severe Disablement Allowance, as of August each year.

Child poverty: As Figure 28 shows, there is a high proportion of dependent children in low-income families that are both working and not working across all areas of the Leeds City Region, and across the city region 26 per cent of children overall are classed as in poverty in Bradford, 23 per cent in Barnsley and 21 per cent in Leeds.

Figure 33: Child poverty across the Leeds City Region, 2010/11 30 Source: Centre for Research in 26 Social Policy, Loughborough 25 23 University, Poverty map of the 21 20.9 20 20 20 UK, January 2012, (dependent 20 children are those aged under 16, or aged 16–18 in full-time 15 12 11 education). 10 8 8

5 0

UK York Selby Leeds Craven Kirklees Barnsley Bradford Harrogate Wakefield Calderdale

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Child poverty represents the official definition of children classified as being in poverty i.e. if they live in families in receipt of out-of-work benefits or in receipt of in-work tax credits where their reported income is less than 60 per cent of median income. The measure is of income before housing costs, and therefore replicates the more modest, official estimate of how many children are in poverty, not taking account of the impact of high rent or mortgage payments.

At the UK level, the Department for Work and Pensions estimate that 29 per cent of children are in households in the UK with incomes below 60 per cent of 2010/11 median net disposable household income after housing costs.

The implications of this are multiple and well documented, for example: lower levels of educational attainment (as presented earlier); unemployment/under-employment, increased likelihood of substance abuse; increased criminal activity rates etc.

For example, figures for the percentage of children looked after by the local authority (i.e. in care) highlight York as a hotspot for intervention, with 10.9 per cent of looked- after children (as of 31 March 2012) in York having been convicted of a criminal offence, compared with the England average of 6.9 per cent. Across North Yorkshire, this rate is low at 2.8 per cent, while for West Yorkshire the percentage of children looked after by the local authority that are convicted of a criminal offence is as follows: Leeds: 8.6 per cent; Bradford: 6.6 per cent; Kirklees: 6.6 per cent; Wakefield: 6.1 per cent, and Calderdale: 5.6 per cent.

Based on the Department for Work and Pensions’ Households Below Average Income statistics, the Child Poverty Action Group also identifies that (in 2009/10):

• 53 per cent of those living below the poverty line had children; • lone parent families were almost twice as likely to live in poverty than two-parent families; • families with at least one disabled member were 30 per cent more likely to live in poverty than families without disabilities; • people from ethnic minorities were 64 per cent more likely to live in poverty than average, particularly those of Pakistani or Bangladeshi ethnic origin; • families with one or more workless parent were seven times more likely to live below the poverty line than those where both parents had jobs.

‘The link between

economic growth and poverty is not inevitable.’

Professor Mike Campbell

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The costs of poverty

A person’s life chances, their contribution to the economy and to society in general are influenced by a range of interconnected factors and the degree to which the following sorts of circumstances are either present or absent: parental employment/ unemployment, alcohol/drug misuse, family wealth or poverty and housing conditions. These risk factors and many others are well known to be associated with lower levels of educational attainment, skills, employment levels and employment opportunities as well as being NEET (not in education, employment or training) at age 16–18.

While it is not easy to quantify the costs of poverty, and there are a number of overlapping factors, some examples of the costs are outlined here to give an indication of the scale of the challenge.

The cost of exclusion: Early intervention in addressing Troubled families what can often be a complex range of individual and family could be costing the circumstances and issues can result in significant personal Leeds City Region benefit as well as substantially decreased negative costs to around £600m a year. the economy. For example, troubled families (of which there are around 8,000 across the Leeds City Region) are each estimated to cost the public sector around £75,000 per year in responding to their problems – an estimated £600 million per annum across the city region.

The Prince’s Trust 2010 report The Cost of Exclusion: Counting the cost of youth disadvantage in the UK estimates that youth unemployment could cost the UK economy up to £155 million a week in benefits and lost productivity. On top of this, youth crime is estimated to cost a further £23 million and week and educational underachievement at £22 billion for a generation.

Meanwhile, the Home Office and Ministry of Justice state that the cost to the taxpayer of re-offending is estimated to be £9.5 to £13 billion per year.

The cost of NEET: The specific cost of NEET has been quantified by some research done by the University of York on behalf of the Audit Commission 'Estimating the life- time cost of NEET: 16–18-year-olds not in Education, Employment or Training (2010)’. This research sought to estimate two costs:

• The impact on public finances arising from the NEET group. This takes into account tax and benefits, together with health, welfare and criminal justice expenditure.

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• Total resource costs. This involves estimates of the loss to the economy, welfare loss to the individual and the family, as well as the impact in terms of the resources or opportunity cost to the rest of society.

When the research was undertaken, the average individual lifetime public cost of NEET was estimated at £56,300 and the average lifetime resource cost for each of the young people who were NEET was £104,312 (the methodology of the research includes some overlapping costs, so the two figures should not be added together). Based on today's prices, these figures will very Conservative likely now be considerably higher. estimates for the public cost of 16–24- year-old NEETs across As a broad guide, if these figures are applied to the the Leeds City Region December 2013 16–18 NEET figures for Leeds City Region, could be around £1.4 then a conservative estimate of the public cost could be in billion and £2.55 the order of £335 million and the resource cost along the billion for the resource lines of £621 million. costs.

Similarly, if these figures are applied to the 18–24-year-old age cohort, then in February 2014 a conservative estimate of the public cost of 18–24-year-old NEET in the Leeds City Region could have been in the order of £1.05 billion, and the resource costs along the lines of £1.94 billion.

The costs of child poverty: A recently updated The costs to society of child analysis by the Child Poverty Action Group states that poverty are substantial, with the total financial cost to society of child poverty Leeds and Bradford in the across the UK has risen from £25 billion a year in top five local authority areas 2008 to £29 billion in 2013. These costs are made up facing the largest annual of £15 billion spent on services to deal with the economic costs generated by child poverty. consequences of child poverty, £3½ billion lost in tax receipts from people earning less as a result of having grown up in poverty, £2 billion spent on benefits for people spending more time out of work as a result of having grown up in poverty, and £8½ billion lost to individuals in net earnings (after paying tax). The analysis also identifies the local authorities with the largest annual economic costs generated by child poverty as being: Birmingham (£914 million a year); Manchester (£446 million); Glasgow (£395 million); Bradford (£360 million); and Leeds (£340 million).

The costs of unemployment: Based on some recent work produced by the Centre for Economic and Social Inclusion for Leeds, an estimated 'out of work' benefit cost to the Leeds City Region overall could be in the order of £2.06 billion for 2013. However, by moving a person into full-time employment, in which they are assumed to stay for at

44 least one year, then taking into account all direct and indirect Out of work benefits costs and savings, the positive annual impact on the economy is are estimated to have in the order of around £36,300 per person (again, based on cost the Leeds City figures produced for Leeds). Region over £2 billion in 2013. In summary: Attitudes are changing. In 1987, 55 per cent of respondents to the British Social Attitudes Survey said that the government should spend more on welfare. By 2012, 34 per cent said the same.

However, even though more people are working, this does not mean that they are not poor; a higher proportion of working families now make up the total proportion of low- income families than workless families, both across the Leeds City Region and the UK as a whole. Indeed, the Institute for Fiscal Studies 2013 analysis of the Households Below Average Incomes data to 2011/12 finds that in the aftermath of the recession, average incomes across the UK have fallen for two consecutive years and inequality has fallen back to levels last seen in the mid-1990s. The poverty line has fallen as average incomes fell, and the poor have become worse off in absolute terms.14

Nevertheless, between 2013 and 2020, around 81,200 net new jobs are forecast to be added to the Leeds City Region economy, many of these at the higher end of the skills spectrum. The challenge is to ensure that not only these new jobs, but also the ongoing churn of replacement demand provides employment that pays at least the living wage, and avoids the increasing polarisation of the labour market into high and low wage employment, with increasing wage inequality, for which the harmful social consequences and costs are well documented. 15

The challenge, however, does not stop at providing the living wage for those in employment. It also means working with those people not currently connected to the labour market to develop their confidence, life and employability skills: the 22,600 long- term unemployed; the 334,000 economically inactive that want a job; the 18,600+ 18– 24-year-old NEETs for example – small steps which can have very positive results in the long run.

These challenges do not only make sense on a social and moral basis; they also make economic sense. The cost of failing to address poverty and better connect people with jobs and economic growth, as has been demonstrated, is simply just too high.

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Notes

1 Source: Leeds City Region Enterprise Partnership, Strategic Economic Plan, 2014. 2 Figure based on CVM (Chain Volume Measure) data which adjusts all figures in a time series to be consistent with the buying power of money in a given year (the reference year – in this case, 2008). Recently released data by the Office for National Statistics, suggests the Leeds City Region economy was worth £55.9 billion in 2012 based on nominal (i.e. unsmoothed) GVA in current price terms, not real terms; and therefore not adjusted for inflation. For the purposes of allowing for forecasting and local authority district level analysis, GVA data from the Experian Business Strategies, Regional Econometric Model, utilised by the Leeds City Region Enterprise Partnership and Leeds City Council has been presented here 3 Deloitte’s analysis of the current UK labour market, June 2014. 4 Replacement Demand = retirements + occupational mobility + migration resulting in a Net Requirement = expansion demand + replacement demand. Figures produced by University of Warwick and cover the period 2010 – 2020 for the Leeds City Region. 5 Disability-free life expectancy (DFLE) is the average number of years a person could expect to live without an illness or health problem that limits their daily activities. 6 Data is based on subtracting the average life expectancy of those living in the most deprived 10 per cent super output areas within a local authority district from that of those living in the least deprived 10 per cent super output areas. It is based on Index of Multiple Deprivation data for 2010. The time period for health data is 2006–10. 7 Centre for Economy and Business Research’s March 2013 report: ‘Productivity Matters: The impact of Apprenticeships on the UK economy’. 8 The Work Foundation and Joseph Rowntree Foundation, ‘Wage inequality and employment polarisation in British cities’ (May 2013). 9 Office for National Statistics, Annual Survey of Hours and Earnings, resident- based analysis, gross hourly earnings – median data and proportion of workers earnings by percentiles; latest data is for 2013. 10 Department for Work and Pensions, Households Below Average Income, 2012- 13 - figures refer to absolute low income (adjusted for inflation). 11 ILO unemployment is based on the International Labour Organisation definition of unemployment.

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12 Source of all unemployment data is Office for National Statistics, claimant count. Data for February 2014 is shown, with the exception of claimant count by ethnicity which is for January 2014. 13 Source: Office for National Statistics, Annual Population Survey, households by combined economic activity status. Data is Jan – Dec 2012. 14 Institute for Fiscal Studies, Living Standards, Poverty and Inequality in the UK, 2013. 15 The Work Foundation and Joseph Rowntree Foundation, ‘Wage inequality and employment polarisation in British cities’ (May 2013).

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