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Tees Valley Economic Assessment Is the Core Statistical Document Related to Economic Development in Tees Valley

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Tees Valley Economic Assessment Is the Core Statistical Document Related to Economic Development in Tees Valley rbb 1 Contents 1. Introduction 3 2. Executive Summary 4 3. Area Profile 12 4. High Streets 31 5. Economic Growth and Productivity 43 6. Business Growth 70 7. Education, Employment & Skills 83 8. Research & Development, Innovation & Energy 131 9. Transport & Digital Infrastructure 141 10. Place and Culture 153 11. Performance Gaps and Baselines 180 12. Bibliography 184 2 Section 1: Introduction The Tees Valley Economic Assessment is the core statistical document related to economic development in Tees Valley. It is based upon data and analysis for key areas that contribute towards growth in our economy including: o Economy and Productivity (economic conditions, innovation activity, the business base and key sectors); o Skills and Labour Market (education attainment, employment and future demand); and o Growth Enablers (infrastructure, transport, physical connectivity, digital connectivity, education, place and culture). The Economic Assessment is updated annually. It reflects the priorities in the Tees Valley Strategic Economic Plan, the Local Industrial Strategy (locally agreed) and the Investment Plan. It is also focused on supporting the development of business cases, as well as helping to inform local authority assessments and other policy and strategy documents. Data is presented for Tees Valley wherever possible, and sometimes at Local Authority level. When available, performance is benchmarked against the wider region and nationally. Coronavirus and EU Exit This year has seen the greatest shock to the world economy in a century. Data presented in the Economic Assessment reflects as far as possible Coronavirus impact, to inform recovery planning and economic interventions for 2021 and beyond. However, due to the rapidly changing path of the pandemic and the consequential but necessary health-related restrictions on people and business, any economic forecasts or projections should be viewed as point-in-time predictions and strongly dependent on changing circumstances. At the time of publication for this assessment, Tees Valley has experienced varying degrees of restrictions necessitated by Coronavirus for over 10 months, with an unprecedented economic impact. Although the ongoing vaccine rollout offers optimism for a potential return to normalcy by the second half of 2021, the duration of current restrictions and approaches to re-opening the economy remain unknown. Impact is likely to be felt for a considerable period of time. This assessment has attempted to contextualise and detail the economic impact of the pandemic, but it must be highlighted that considerable economic uncertainty remains. On 31 December 2020, the UK left the European Union. Whilst different forecasts predict varying levels of economic impact, there is a consensus view that the value of the UK economy will be smaller in the short-medium term, with a particular impact on the North East of England. Whilst this document is retrospective in data analysis, it reflects impacts of EU Exit where practical and possible to do so, and baseline data that will be critical for responding to economic needs post-EU Exit. 3 Section 2: Executive Summary Coronavirus has impacted the world economy to an unprecedented degree. As an outward-facing, globally interconnected country, the UK has been one of the most badly affected in both health and economic terms. Whilst the pandemic itself leads to reduced economic activity, the necessary government restrictions aimed at protecting the nation’s health play perhaps an even greater role. Given that the prevalence of the virus amongst the population determines the level of government restrictions, the prevalence of the virus therefore determines economic activity. Coronavirus is an entirely new virus but scientists have remarkably produced a vaccine in under a year. It is likely the world will have to live with the virus for the foreseeable future and therefore it is usage of the vaccine that will enable government to gradually reduce its restrictions which in turn will allow the economy to recover. Because of the extreme degree of uncertainty and ever-changing level of restrictions, economic forecasts should be viewed with even greater caution than usual. In addition, in such rapidly changing times, point-in-time data can quickly become dated. Whilst Coronavirus has led to identifiable outcomes at the national level, data constraints (largely around sample sizes) have meant identifying local outcomes has been more challenging. To build an understanding of impact of the pandemic on the Tees Valley economy, national datasets have been analysed alongside local intelligence. Key Tees Valley findings are summarised below. • Government support schemes have mitigated against many of the negative impacts flowing from the necessary restrictions designed to protect the nation’s health. A notable example is the Coronavirus Job Retention Scheme (CJRS) which has prevented a great proportion of the job losses that would have otherwise occurred. This scheme, alongside the Self- Employment Income Support Scheme (SEISS), has received similar take-up rates across the country and has meant that unemployment increase has been limited and of a broadly similar scale across the country, including for Tees Valley. At its peak in the summer, over 100,000 Tees Valley workers were receiving support from these two schemes, over one third of the working population. However, and despite this support, by November 2020 the Tees Valley Universal Credit claimant rate had risen to 6.9% compared to 4.3% in February. • At the time of publication1, the above schemes are due to end in April 2021 and it is then the full extent of the impact of Coronavirus will start to be felt on the labour market and unemployment. However, the full extent of the impact will not become evident immediately, unwinding through the remainder of 2021 and continuing into subsequent years. • The Coronavirus pandemic has created unprecedented levels of uncertainty and unemployment both nationally and locally, unemployment has risen significantly as a result of Coronavirus, particularly amongst men, the young and those working in certain industry sectors such as accommodation and food, manufacturing, retail, tourism and culture. This 1 January 2021 4 exacerbates a situation in which unemployment levels in the Tees Valley were already much higher than national. • The closure of schools during lockdown has been linked to a negative impact on disadvantaged children, in particular those without the digital infrastructure and equipment in place to support home-schooling. The Tees Valley contains some of the most deprived areas in the country according to the Index of Multiple Deprivation with a large percentage of students on Free School Meals. • However, there will also be opportunities to be made from the Coronavirus pandemic. The rise in health issues, both physical and mental, could provide an opportunity to expand the already sizable Tees Valley health and social care sector, meeting local and national needs through the local skillset. Digitalisation, both within businesses and households, may create new opportunities and a shift to ecommerce has also resulted in an increased demand for logistics. There could be significant opportunities if the workforce is able to meet these demands. • After falling sharply in April and only recovering slowly through the Summer, September saw a notable uplift in Tees Valley vacancies and rates are now running at or above pre- pandemic levels. There is particularly strong demand across health-related occupations. 2.1. Coronavirus and Tees Valley recovery planning Directly following the outbreak of the pandemic, Tees Valley Combined Authority (TVCA) commissioned independent support and analysis to inform Coronavirus Economic Recovery Planning. The point-in-time commission was therefore completed before the full extent and persistent nature of Coronavirus became clear and before the start of the second wave of the virus beginning in the Autumn. It does however provide a robust and informed analysis based upon projected impacts of the pandemic for key sectors and residents in Tees Valley. This work identified economic support needs for Tees Valley, that can enable our economy to recover, be resilient to future economic shocks and chart a path to sustainable economic growth. Economic support sits within a wider context of the response across Tees Valley, including that led by Local Authorities and other partners focused around communities and health. The analysis found three main trends impacting Tees Valley’s economy as a result of Coronavirus: • Lockdown and Social-Distancing: limiting capacity to supply goods and services, and demand for face-to-face consumption; • Recession: A global, likely severe, recession, reducing both national and international demand for goods and services; and • Structural Change: Acceleration of digitalisation of economy and emphasis on local supply chain resilience. Sectors within the region were broadly categorised into three groups: • Severe and immediate impact: Retail, arts and leisure services required immediate support, as many struggled to survive, with significant impacts on unemployment; 5 • Rebound with support: Construction and manufacturing were identified as suffering most from lost investment and a recession-based hit to demand. Without support, this risks the loss of strategic sectors for Tees Valley and many thousands of skilled jobs; and • Recovery and growth: Health and parts of the Education sector were
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