England's Regions in 2030 Office of the Deputy Prime Minister; Department for Transport Executive Summary
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Regional Futures: England’s Regions in 2030 Final Report January 2005 English Regions Network RDA Planning Leads Group Office of the Deputy Prime Minister Department for Transport % population change 1992-2002 -8.8 2 5 6.7 20.8 Project Team Nick Banks – Project Director Tom Bridges – Project Manager Dr Graham Gudgin – Regional Forecasts Alan Wilson – Oxford Economic Forecasting Lynne Miles – Arup Neil Gibson – Regional Forecasts Advisors Corinne Swain OBE Sir Peter Hall, Bartlett School of Planning, UCL Prof. Daniel Dorling, University of Sheffield John Hollis, GLA Dr. Andrew Jones, Birkbeck College Steering Group The project Steering Group comprised representatives from England’s Regional Assemblies, Regional Development Agencies, the Office of the Deputy Prime Minister and the Department for Transport. The project was coordinated and the Steering Group led by Andrew Pritchard, Director of Planning and Transport, East Midlands Regional Assembly. English Regions Network RDA Planning Leads Group Office of the Deputy Prime Minister Department for Transport Regional Futures: England’s Regions in 2030 Final Report January 2005 Job number 116176-00 Ove Arup & Partners Ltd 13 Fitzroy Street, London W1T 4BQ Tel +44 (0)20 7755 2779 Fax +44 (0)20 775 2451 [email protected] Regional Forecasts Ltd 23 Donegall Road, Belfast, BT12 5JJ Tel +44 (0)28 9043 4824 Fax +44 (0)28 9031 4134 [email protected] Oxford Economic Forecasting Ltd Abbey House, 121 St Aldates, Oxford OX1 1HB Tel +44 (0)1865 268900 Fax +44 (0)1865 268906 [email protected] CONTENTS Page EXECUTIVE SUMMARY ES1 1 INTRODUCTION 1 1.1 Background 1 1.2 Aims of the Study 1 1.3 Audiences for the Study 1 1.4 Study Approach 2 1.5 Project Steering Group 2 2 CONTEXT 3 2.1 Changes to the National Economy in Past Two Decades 3 2.2 Development of Regional Policy and Regional Institutions in Past Decade 3 2.3 National Policy Objectives 5 2.4 The European Dimension 7 PART ONE: TRENDS AND FORECASTS 9 3 REGIONAL ECONOMIC TRENDS AND FORECASTS 10 3.1 Introduction 10 3.2 Economic Trends 11 3.3 Productivity 11 3.4 Economic Growth 13 3.5 Prosperity 14 3.6 Sectoral Trends 14 3.7 Regional Competitiveness 18 3.8 Quality of Life and Urban Environments 22 3.9 Unemployment 23 4 DEMOGRAPHIC TRENDS AND FORECASTS 25 4.1 Introduction 25 4.2 Population Forecasts 25 4.3 The Influence of London 27 4.4 Regional Patterns of Natural Increase 29 4.5 Internal Migration Between Regions 29 4.6 International Migration 31 4.7 Households and House Building 33 4.8 Urban-Rural Shift and Signs of Urban Revival 38 5 TREND-BASED PROGNOSIS: ENGLAND IN 2030 40 5.1 Introduction 40 5.2 Headline Predictions 41 5.3 Breaking the Trends and the “Next Big Thing” 44 PART TWO: ISSUES, INTERVENTIONS AND SCENARIOS 45 6 ISSUES 46 6.1 Introduction 46 6.2 Spatial Development Issues 47 6.3 Off-shoring 52 6.4 Economic Development Issues 54 6.5 Spheres of Influence, Working Practices and Transport 57 7 INTERVENTIONS 60 7.1 Introduction 60 7.2 Spatial Planning 61 7.3 Economic Development 63 7.4 Transport 64 7.5 Differential Public Spending 67 7.6 Public Sector Location and Activity 69 7.7 Conclusions on Interventions 73 8 SCENARIOS 76 8.1 Introduction 76 8.2 Scenario 1: Constraining Growth in the South 76 8.3 Scenario 2: Planning for Further Growth in the South 79 8.4 Scenario 3: City Region Renaissance 80 9 CONCLUSION 83 APPENDICES APPENDIX A The Regional Forecasts Model APPENDIX B Consultees English Regions Network; RDA Planning Leads Group; Regional Futures: England's Regions in 2030 Office of the Deputy Prime Minister; Department for Transport Executive Summary Executive Sum m ary The Government has set the objectives of raising the rate of economic growth in all regions and, in the long term, of reducing the persistent gaps in growth rates between regions. These objectives must be pursued in the context of the underlying changes in the economy. This study attempts to provide a clearer economic and demographic context for regional planning for the next 25 years. Its purpose is to develop a national perspective on how England’s regions (including London) relate to each other and to underlying forces in the economy, and how these relationships have been changing and will change in the future. Trends and forecasts Econom y England’s economy is undergoing a fundamental structural change as it adjusts to a post industrial world. It is forecast that, in terms of GVA/head, the economy will continue to grow at 2.5% to 3% p.a. nationally and, if so, the average citizen can expect to be twice as rich in 2030 compared with today. There is a large differential in productivity (GVA/employed person) between the South, the Midlands and the North1, and there are no signs that this differential is reducing. Figure ES1: GVA per employed person (relative to UK) 130 London 125 South 120 Midlands 0 0 115 North 1 = 110 K 105 U 100 95 90 1 4 7 0 3 6 9 2 5 8 1 4 7 0 3 7 7 7 8 8 8 8 9 9 9 0 0 0 1 1 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 The root cause of the higher productivity in the South is the higher proportion of private sector services in the economy, as private services are higher paid and generally employ a higher skilled workforce. Figure ES2: Employment in private sector services and per capita GVA in UK regions 75 % s a 70 LO s e c i 65 v r e S 60 l e a t SE t a o v 55 t i EE r f SW N W P o Y H n 50 N E SC i W M t n EM e 45 W W m y o 40 l N I p m 35 E 30 10 11 12 13 14 15 16 17 18 19 20 Total GVA per Head of Population (£000's) 1 Unless otherwise stated the South comprises London, the East of England, the South East and the South West; the Midlands comprises the East and West Midlands; and the North comprises Yorkshire and the Humber, the North East and the North West. Ove Arup & Partners Ltd, Page ES1 January 2005 Regional Forecasts Ltd, 116176/3-05 Oxford Economic Forecasting Ltd English Regions Network; RDA Planning Leads Group; Regional Futures: England's Regions in 2030 Office of the Deputy Prime Minister; Department for Transport Executive Summary In many parts of the Midlands and the North, and in parts of the South West, the prospect is for continuing decline in manufacturing employment, with growth sectors unable to provide jobs on the same scale and in the same locations. The exceptions are in some of the main cities and surrounding hotspots, which have been experiencing faster economic growth, particularly in business services, than their surrounding regions. In the South, London has been growing within its boundaries and has been expanding into a “mega-city region”, a phenomenon that has been driven by rapid growth in business services, much of it related to the world city economy of advanced national and international services. West Yorkshire and Manchester also benefit from established clusters of financial and business services. Figure ES3: Percentage employed in Financial and Business Services in England Differential growth in private services has been partially compensated by Government investment in public services in the Midlands and the North, both through relocation and by providing additional services. Until around 1990, these regions were catching up with the South, but employment in public services has now grown faster in Midlands and the North than their population change alone would warrant, particularly since 1997. Figure ES4: Share of Employment in Public Services t 28 London n e 26 South m y o 24 Midlands l p 22 North m e l 20 a t o 18 t f o 16 % 14 71 74 77 80 83 86 89 92 95 98 01 04 07 10 13 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 The overall effect has nevertheless been a much higher rate of employment growth in the South. Ove Arup & Partners Ltd, Page ES2 January 2005 Regional Forecasts Ltd, 116176/3-05 Oxford Economic Forecasting Ltd English Regions Network; RDA Planning Leads Group; Regional Futures: England's Regions in 2030 Office of the Deputy Prime Minister; Department for Transport Executive Summary Table ES5: Job Creation 1971 – 2004 Average Annual Net Job Creation Total Net Job Creation 1971-2004 1971-2004 North 306 10,100 Midlands 18,748 618,700 South 82,830 2,733,400 These trends are unlikely to be reversed in the next 25 years, as advanced private services both require and generate a much more competitive economy. Graduate employment, Research & Development, new business formation, and other competitiveness indicators are all much higher in London, the South East and the East of England. Figure ES6: Graduate/Earnings Relationship all Travel to Work Areas (inc. London) 650 y = 8.3647x + 292.28 London R2 = 0.5372 600 3 0 0 2 Basingstoke Guildford and ) £ ( Aldershot 550 e g Craw ley a Derby W Peterborough Southampton & Cambridge e Aberdeen 500 Winchester m Loughborough i Dudley & Walsall & T GB Oxford l Wolverhampton Bristol l Sandw ell Manchester u Birmingham F Glasgow Cardiff Brighton Edinburgh y 450 l Leeds k e W York e Barnsley Doncaster W Plymouth e 400 g Hull Tyneside a r Carlisle Exeter e Stoke Belfast v Sw ansea A 350 Liverpool Middlesborough & Stockton 300 10 12 14 16 18 20 22 24 26 28 30 % Graduates (2001) Figure ES7: VAT Registrations per 10,000 employees Ove Arup & Partners Ltd, Page ES3 January 2005 Regional Forecasts Ltd, 116176/3-05 Oxford Economic Forecasting Ltd English Regions Network; RDA Planning Leads Group; Regional Futures: England's Regions in 2030 Office of the Deputy Prime Minister; Department for Transport Executive Summary Population In terms of population change, London is by far most dynamic English region.