Portsmouth 2036: forecasts & strategic advice
PORTSMOUTH 2036: A GREAT WATERFRONT CITY
BASELINE FORECASTS & STRATEGY ADVICE FOR PORTSMOUTH CITY COUNCIL
SEPTEMBER 2018 Portsmouth 2036: baseline forecasts & strategy advice
Oxford Economics
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September 2018
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Tel: +44 203 910 8080 Portsmouth 2036: baseline forecasts & strategy advice
TABLE OF CONTENTS
1. Executive summary ...... 1
2. Context: strategic challenges ...... 5
3. baseline forecasts ...... 8
4. Targets & objectives ...... 16
5. Strategy: Our advice ...... 23
Annex 1 – Charts ...... 43
Annex 2 - Tables ...... 57
Annex 3 – Notes & definitions ...... 69 Portsmouth 2036: baseline forecasts & strategy advice
1. EXECUTIVE SUMMARY
Portsmouth like all cities faces strategic challenges, from Brexit to robotics to climate change and demographics. Portsmouth City Council is therefore developing an Economic Development & Regeneration Strategy, and this document is intended to inform that.
Our starting point is that Portsmouth has for some years been a slow-growing city, compared with not just the UK and the South East, but compared with other similar cities. In our baseline forecast that pattern looks set to continue, with only 2.5% employment growth across the whole 2017-36 period, compared with 6.1% over the period for both Brighton and Newcastle and double-digit increases for Salford and Southampton. (Plymouth though, sees a decline.)
The 2.5% translates into another 3,000 jobs, whether for residents or on a workplace basis. Our suggestion is that a reasonable aspiration would be to push this increase up to 7,000, and to associate it with stronger productivity growth. If productivity in Portsmouth rises by one third, then that will close half the gap between our forecast for the city in 2036 and our forecast for Solent in the same year. Portsmouth’s productivity would then be £60,000 per person (at today’s prices) compared with £45,000 in 2017.
That will create the opportunity for higher wages. If we assume that half the productivity gains feed through to wages, then in 2036 average earnings paid by Portsmouth employers will be £1,000 a week compared with just over £900 in our baseline and just over £500 today—though inflation will account for at least some of that.
We suggest that these aspirations for the Portsmouth workforce should be matched by an aim of an extra 7,000 Portsmouth residents in work. That would be a 7% increase over the 2017 level, which is the same rate of an increase as for Solent as a whole. And it compares with a rise of only 4% or 4,000 in our baseline forecast.
Helping to make that possible, we suggest an aspiration of reducing from 7.5% to 5% the proportion of the population of working age who have no qualifications, and raising from just under 35% to 40% the proportion who are educated to at least NVQ level 4.
All of this should be consistent with GDP rising by 45% in real terms over the period to 2036 instead of the 30% in our baseline forecast. That is clearly a major step-up in performance. But how to make it happen?
Our over-arching piece of advice is to be bold. By 2036 the world will have changed. It is better to have an ambitious strategy that cannot be delivered all at once than to be over-cautious and always on the back foot.
To make that happen, working collaboratively with partners across Solent will be essential. But it will also be essential to fight Portsmouth’s corner, and to show what the city can contribute to the Solent and indeed to the nation via the National Industrial Strategy.
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That means that Portsmouth should be more like Portsmouth, by which we mean a densely-packed city with a rare combination of high value-added engineering skills, heritage and tourism, in a unique marine and maritime setting including both commercial and environmental assets to cherish and enhance.
To that end, we have 10 pieces of advice:
1. Invest in the Great Waterfront City branding, to attract not just visitors but businesses and new residents. Branding is a legitimate, indeed essential, part of strategy. Portsmouth has been made by and is literally defined by the sea—don’t abandon or ignore that. There should be a real aim to make Portsmouth more like Portsmouth.
2. In support of that, gradually enhance the entire waterfront, making it more accessible and more attractive. This would extend what has already been successfully started. There are countless examples from around the world of using waterfronts, whether seasides, harbours, rivers or canals as a focus of regeneration. For Portsmouth this might include some land reclamation (perhaps at the Hard as well as at tipner west firing range) and a focus on the harbour, ferries and boating, including an emphasis on the joint Portsmouth-Gosport offer.
3. Embrace Portsmouth’s wildlife habitats. From an economic perspective the wetlands to the west and east of the city might look like liabilities. Instead they should be seen as unique assets, that can be used to help define Portsmouth as a genuinely interesting and different type of city— water-fronting, connected to the natural world, multi-faceted.
4. Create a Marine & Maritime Engineering Innovation Quarter, ideally in the heart of the city. Portsmouth is an advanced engineering city, and that should be built on. An Innovation Quarter is a way to get companies to cluster together, to their mutual benefit. Some of those companies will be small-scale manufacturers, while others will be advanced service sector companies such as engineering consultancies. Think of this as ‘Shoreditch- on-Sea’. In that context we are pleased that a new Masterplan is being prepared for the city centre, but we question whether the work being undertaken on this topic is, as we understand it, ambitious enough. We advise a bold approach. All cities need to imagine a likely future without big city-centre shopping centres. The future is more likely to involve more office work, and potentially some small-scale high-value manufacturing, closely alongside housing and leisure as well as retail. Our Innovation Quarter idea is a step in that direction.
5. Similarly, create a Marine & Maritime Clean-Growth Innovation Quarter. Clean-growth is an important growth sector nationally, featuring in the National Industrial Strategy. But most of the focus is currently on land- based aspects, such as autonomous electric road vehicles. Yet the maritime aspects of clean growth are just as important. As a waterfront city, Portsmouth is literally well-placed to exploit the opportunity.
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6. Strengthen the overnight and weekend visitor economy. It is important to strengthen manufacturing and related high-value services in Portsmouth, building on the city’s heritage. But that alone will not be enough, especially where job creation is concerned. The visitor economy is another strength to really build-on. Portsmouth’s current focus is on day-visitors, thanks to the extraordinary heritage of the Historic Dockyard. But Southsea is a great place and a real asset, and means that with a bit of investment, the city should be able to attract many more high-value staying visitors. But don’t imagine this will happen by taking small steps. It can only be done by being bold, so that perceptions are shifted. Leadership from the city council or its partners, together with investment in the public realm, is essential to that.
7. Promote Solent-wide business networks. More generally, success is all about linkages—between businesses and also between places. And innovation is the driver of growth. Experience from around the world suggests that business networks can, in turn, be the drivers of innovation. But networks do not just happen. They need to be nurtured. This is a low- cost high-win opportunity, and Portsmouth should have the courage to take the lead within the broader Solent economy. This is about what Portsmouth can do for Solent and not just what Solent can do for Portsmouth.
8. Push for new transport links. As far a public transport is concerned, Portsmouth is isolated. That is a genuine constraint. Portsmouth needs to feature in proposals for rapid mass transit. The business case for that needs to be made, as part of a strategy in which Portsmouth becomes a driver of and not a drag on Solent’s overall growth rate. Also, faster trains to London would help with all of the above.
9. Develop a skills strategy, and specifically a qualifications-progression strategy. Everything rests on the skills of the local population and workforce. This is not currently a strength. We suggest that the city should take an holistic approach to investing in people, which focuses on learning progress, rather than on specific qualifications or targets, and which looks at the pathways that people follow, rather than particular institutions in isolation from (and competition with) one another. 1
10. Improve the city’s housing offer. Up-skilling the existing population will not be enough. Portsmouth also needs to attract more highly-qualified people. Our advice is to have an aim of making the city a place that people desire to live in. That means ensuring that there are more neighbourhoods in Portsmouth where people really want to live. The city’s urban density should become a selling-point not a problem, and its waterfront nature should be what really draws people in, along with interesting jobs and a real sense of civic identity.
1 In this report we deliberately do not major on ‘Inclusive growth’ as a separate issue, but focus instead on promoting higher employment, participation and wages, improving skills, transport, housing and the quality of the local built environment. We believe that this captures the dimensions of inclusive growth in a more direct and practical way.
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2. CONTEXT: STRATEGIC CHALLENGES
2.1 A CHANGING & CHALLENGING WORLD
The economic outlook is always subject to uncertainty, but now more so than usual. Portsmouth faces a range of external challenges—but also in many cases opportunities.
Amongst the disruptors are:
Brexit. Leaving the European Union (EU) may eventually create new opportunities, but in the short-term it will increase costs, reduce market access, damage the supply of skills, and put pressure on public finances. In addition, no deal has yet been agreed between the UK and the European Union, and none between the UK and other nations. This creates challenges and uncertainties for businesses and residents in Portsmouth as of course elsewhere.
Globalisation & trade wars. Many Portsmouth residents and employers face growing competition for jobs and sales from others around the world. But globalisation cuts both ways, and with the right assets and support, they should also be able to sell to new customers from across the globe—providing that trade disputes do not get in the way. Currently, the US, Chinese and EU authorities are engaged in raising tariffs against one another, with adverse implications for the whole world.
Austerity. Meanwhile, the cost of responding to the 2008 Global Financial Crisis is still impacting on public sector budgets, a decade later, with no immediate relief in sight. That applies to Portsmouth as much as anywhere— more so, perhaps, given the importance of the naval and defence sectors to the city’s economy.
New digital technologies. From a longer-term perspective, big data and artificial intelligence are hugely significant. Many current occupations will decline or disappear as the new technologies spread, but there will be opportunities for people and companies to provide new products and services, or to provide existing ones more efficiently and effectively. What matters is who gains from the new opportunities: where will the new jobs be, and who will be able to access them.
Environmental damage and climate change. This growing problem imposes a new requirement that economic development should be as sustainable as realistically possible: ‘clean growth or green growth’. For waterfront cities such as Portsmouth, this is a vital issue, and perhaps an opportunity.
Demographics. An older population will mean more people not working, and dependent on those who are, requiring gains in productivity for those in work as well as social adaptations, if everybody is to benefit from growth. That may mean new markets and new ways of working and living. So here too: opportunities and threats, both at once.
2.2 THE EVOLVING POLICY RESPONSE
To help local residents and businesses flourish in challenging economic times, Portsmouth City Council is preparing a new Economic Development &
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Regeneration Strategy (2019-36). As well as directly impacting on the local business environment, that strategy is intended to inform the City Council’s forthcoming Local Plan for the city, and it will also feed into the updated Strategic Economic Plan for Solent that is being prepared by the Local Enterprise Partnership (LEP).
The LEP is also planning to produce a Local Industrial Strategy for Solent, and the Portsmouth Economic Development & Regeneration Strategy will feed into that too. the Local Industrial Strategy is being produced in direct response to the request by the Department for Business, Energy & Industrial Strategy (BEIS) that all LEPs and/or Combined Authorities should produce such documents, in alignment with the National Industrial Strategy that was published in 2017.2
The national strategy sets out what BEIS believes to be the five foundations of productivity, and it then sets out four challenges, meeting which BEIS believes will put the UK at the forefront of the industries of the future. The strategy also provides for a number of ‘sector deals’—arrangements under which sector bodies and central government agree a range of state-funded or supported interventions to improve the performance of the sector in question, and thereby help deliver on the National Industrial Strategy. Six sector deals have so-far been announced. In addition, several other sector bodies, including those for maritime and tourism (both clearly very relevant to Portsmouth) have lobbied for similar treatment.3
These various elements of the National Industrial Strategy are shown in Figure 1, below.
Fig. 1. The National Industrial Strategy: Key Elements
Five foundations of productivity Four grand challenges Ideas AI & data economy People Future of mobility Infrastructure Clean growth Business environment Ageing society Places Six sector deals Artificial Intelligence Creative Industries Automotive Life sciences Construction Nuclear
Source: Based on BEIS
2.3 NEXT STEPS & THE PURPOSE OF THIS REPORT
Against that background, the purpose of this report is to help Portsmouth City Council draft the Economic Development & Regeneration Strategy, and hence inform the drafting of the various other documents: the Local
2 See https://www.gov.uk/government/publications/industrial-strategy-building-a-britain-fit-for-the-future 3 See https://www.maritimeuk.org/programmes/industrial-strategy/ and https://www.visitbritain.org/sector-deal-uk- tourism
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Plan, the Strategic Economic Plan and especially perhaps the Local Industrial Strategy.
In this report we therefore offer some strategic advice on ways in which the economic performance of Portsmouth might be improved over the period to 2036. Our advice is:
• Fully consistent with the ideas contained in the National Industrial Strategy, but applied specifically to what we believe is special about Portsmouth, and informed by the evidence base on what works elsewhere.
• Informed by analysis that we have undertaken to consider what might be reasonable targets or aspirations for the city to achieve by 2036, moving Portsmouth closer into line with key comparators.
• Also informed by our baseline forecasts of what, in the absence of bold new thinking, we expect will happen to the Portsmouth economy over that period. Our baseline is based on a combination of past trends locally, macroeconomic changes that we expect nationally and globally, and our judgement about the way in which those interact with one another.
These matters therefore provide the topics for subsequent chapters of this report.
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3. BASELINE FORECASTS
In Annex 1 and Annex 2 of this paper we provide detailed baseline forecasts of the Portsmouth economy, together with additional details on some indicators that we do not forecast (such as qualifications, and business starts) and comparisons with other locations.4 There are several key messages.
First, between 2010 and 2017, the Portsmouth economy grew by just 0.5% a year.5 That was well below the averages for the South East and the UK, which were 1.9% and 2.0% respectively. More disturbingly perhaps, it was also below the growth of Solent, and of several cities that Portsmouth can reasonably be compared with (Brighton, Newcastle, Plymouth, Salford and Southampton).
A similar story applies going forward, although the variations are less extreme. In our baseline we forecast 1.4% a year growth for Portsmouth over the 2017- 36 period, with Solent achieving 1.6% and the UK 1.7%. In this period, Plymouth underperforms Portsmouth, achieving only 1.0% annual growth.6
There is also a similar story for employment growth. Workplace employment increased 0.5% a year in Portsmouth in the 2010-17 period and we forecast just 0.1% going forward to 2036.7 The city underperforms all five comparator cities with the exception of Plymouth, and also Solent, the South East and UK.
Fig. 2. Workplace employment, Portsmouth & broader comparators, 2010- 2036
Index 2010=100 130 Forecast 125
120
115
110
105
100
95
90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Solent South East UK Source: ONS, Oxford Economics
4 See Annex 3 for an explanation of our choice of comparators. 5 See Figures 16-17. 6 Our forecasts make middle-of-the-road assumptions about the impact of Brexit on the UK economy. Given present uncertainties we think that is the best basis for planning. Compared with many economies Portsmouth has a lower than average exposure to Brexit, and we think it important not to let this high-profile topic distract the city from other major structural issues. 7 See Figures 2 & 18-19.
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Part of the issue for Portsmouth is its recent history, mentioned above and apparent in Figure 2. Job losses at the Naval Base were announced in 2013. In total, around 1800 jobs were cut over the period to 2015, and there were of course knock-on impacts on the rest of the city economy. Our baseline forecast shows slow growth in the economy going forward, and a decline in workplace employment towards the end of our forecast period, most notably in the Manufacturing and Public administration & defence sectors.8
Fig. 3. Workplace employment, Portsmouth & comparators, 2010-2036
Employment (000s) Growth (% y/y) 2010- 2017- 2023- 2030- 2017- 2017 2018 2030 2036 2017 2023 2030 2036 2036 Portsmouth 126 129 130 129 0.5% 0.4% 0.1% -0.1% 0.1% Brighton 169 173 177 179 2.6% 0.4% 0.3% 0.2% 0.3% Newcastle 196 204 207 208 1.2% 0.7% 0.2% 0.1% 0.3% Plymouth 127 127 126 124 0.5% -0.1% -0.1% -0.3% -0.1% Salford 132 138 143 146 0.4% 0.8% 0.5% 0.3% 0.5% Southampton 131 138 143 146 1.1% 0.8% 0.5% 0.3% 0.6% Solent 632 655 666 669 0.9% 0.6% 0.2% 0.1% 0.3% South East 4,978 5,170 5,301 5,361 1.6% 0.6% 0.4% 0.2% 0.4% UK 35,075 36,265 37,018 37,329 1.5% 0.6% 0.3% 0.1% 0.3%
Source: ONS, Oxford Economics
It is noticeable that with the exception of Plymouth, other comparator areas do not experience the same workplace employment falls in the long-term as Portsmouth. Of the ones shown in the table, Salford and Southampton do relatively well, as they have tended to do in recent years, reflecting favourable sectoral mixes, with Brighton and Newcastle in intermediate positions.
Slow past growth in Portsmouth employment of just 0.5% a year in the 2010-17 period fed through to slow GDP growth. However, the city was doubly burdened because As Figure 4 shows, and unlike most other places, productivity did not grow in the city.9 This combination of slow employment and slow productivity growth therefore resulted in particularly weak GDP performance.
8 It appears that the ONS allocates some Naval Base employment to the manufacturing sector and some to the Public administration and defence sector. It is important to remember here that media reports of the Portsmouth dockyard ‘closing’ are not correct. While naval ships are no longer built in their entirety in Portsmouth, the fitting- out still occurs in the Naval Base, and accounts for much of the value of the ships concerned. And the Naval Base also maintains and supports a large part of the fleet, which involves a substantial level of economic activity. 9 See also Figures 20-22, 45-49.
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Fig. 4. GDP growth split into employment & productivity, 2010-17
Grow th Components, % y/y GVA Employment Productivity Brighton 2.6% -0.3% 2.3% Southampton 1.1% 1.1% 2.1% UK 1.5% 0.5% 2.0% South East 1.6% 0.3% 1.9% Salford 0.4% 1.3% 1.6% New castle 1.2% 0.2% 1.4% Solent 0.9% 0.4% 1.4% Plymouth 0.5% 0.2% 0.7% Portsmouth 0.5% 0.0% 0.5%
Source: ONS, Oxford Economics Going forward we expect productivity growth to broadly match growth elsewhere, but unfortunately since the Portsmouth starting point is lower, that just means that the gap between Portsmouth and its comparators is set to widen.10 This productivity shortfall is a major challenge for the city.
However, as with all cities, a lot hinges on the sectors that Portsmouth specialises in. As figure 5 shows, compared with the South East, the city has a heavy reliance on the Public administration and defence sector, reflecting the importance of the Naval Base.11
Fig. 5. Sectoral employment concentration, Portsmouth, 2017
Percentage point difference Public admin & defence Manufacturing Human health Accom & food Electricity, gas, steam Information & comms Arts, entertainment Admin & support Education Mining Small relative to Large relative to Water supply South East South East Real estate Other services Agriculture Financial & insurance Transport & storage Wholesale & retail Construction Professional services -8% -6% -4% -2% 0% 2% 4% 6% 8% Source: ONS, Oxford Economics
10 See Figure 21. 11 Also see Figures 23, 43-44, 50-51.
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However, Portsmouth is also manufacturing intensive.12 This too is largely accounted for by the Naval Base; indeed, it is an important point about the city that the Naval Base is substantially an engineering facility. And although the base mainly serves just one ‘customer’, as a manufacturing facility it is in other respects akin to, but much larger than, advanced manufacturing operations in other cities in other parts of the UK.13
The sector in which the city is weakest compared with the South East is Professional services. However, this sector includes scientific and technical services, and hence there is potentially a cross-over to be exploited with the city’s advanced manufacturing operations. Indeed, building on its defence and manufacturing strengths while increasing its presence in the corresponding high-value service sector activities is a potentially very interesting way forward for Portsmouth to adopt.
One area in which Portsmouth does do reasonably well is business starts, which in 2016 were higher, relative to the number of existing businesses, than at either the UK or South East levels, and also higher than in comparator cities.14 Unfortunately that is partly offset by a lower business survival rate than nationally or for the South East.15
In terms of qualifications Portsmouth presents a mixed picture.16 7.5% of Portsmouth residents of working age lack any qualifications. This is much lower than in Newcastle and Salford, on a par with Southampton and the UK, but high compared with Solent and the South East.
Fig. 6. Residents’ qualifications, Portsmouth & comparators, 2017
Highest qualification level (% of population aged 16-64 years) No qualifications NVQ 3 NVQ 4+ Portsmouth 7.5 23.3 34.5 Brighton 2.6 20.7 54.1 Newcastle 9.0 23.7 37.3 Plymouth 5.3 23.1 31.6 Salford 10.4 20.2 30.9 Southampton 7.4 24.2 36.0 Solent 5.6 23.8 34.4 South East 5.2 19.7 41.4 UK 8.0 18.6 38.4
Source: ONS
12 Figures 50 and 51 provide greater details for Portsmouth’s main specialisms, compared to the South East average. 13 Other companies include Airbus, Boeing and a wide range of smaller high technology companies. 14 See Figures 24 and 52. 15 See Figures 25 and 53. Our observations here come with a note of caution. A high rate of business starts can reflect large numbers of people looking for casual work, while a high survival rate may indicate that people are clinging onto ventures that are not really viable, for want of better alternatives. These are arguable signs of lack of alternative opportunities, rather than signs of strong economic performance. 16 See Figures 6, 29-31, 55.
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Portsmouth does have more people qualified to NVQ level 3 than nationally, but it also has fewer people educated to level 4 and above. The two are closely connected and reflect the historical employment practices of the Naval Base (and before it the Dockyard), which in the past tended to mainly require middle- level craft skills, offer high job security, and pay reasonably high wages, all of which reduced the incentive to seek higher qualifications. Going forward, however, it is degree-level qualifications that are likely to matter most in terms of economic productivity, average earnings and security of employment. Unfortunately, Newcastle, Southampton and especially Brighton all out-perform Portsmouth in this regard.
It is an important part of any local economy that weak productivity growth almost invariably feeds through into weak earnings growth. Average earnings of people working in Portsmouth (although not necessarily living in the city) were £509 a week in 2017.17 That was above Brighton and Plymouth but lower than in all our other comparators. It was also below the 2010 level. We do, however, expect earnings to track other locations going forward.18
Fig. 7. Average annual earnings, Portsmouth & comparators, 2017
Southampton
South East
Salford
UK
Newcastle
Solent
Portsmouth
Brighton
Plymouth
£0 £5,000 £10,000 £15,000 £20,000 £25,000 £30,000 £35,000 Workplace based Residence based Source: ONS For those who live in the city (but do not necessarily work in it) the average weekly earnings in 2017 were £461. Residents therefore typically get paid less than local employers typically pay, implying a mix of residents commuting out to lower-paid jobs elsewhere and outsiders commuting in to undertake the better paid local jobs. That means that many of the best paid jobs in Portsmouth do not go to people who live in the city—perhaps because local residents lack the skills or experience, or perhaps because those able to earn the most choose not to live in Portsmouth. The obvious conclusions are that raising the quality of local jobs needs to be associated with raising the qualifications and skills of
17 See Figures 7, 32-34. 18 See Figure 57.
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local people, and with efforts to attract more of the most highly qualified to choose Portsmouth as a place in which they want to live.
That raises the question of how many local people there are. In 2017 the population of Portsmouth was 215,000 people.19 By 2036 we forecast that it will be 229,000—and it could be much more, depending on birth, death and of course migration rates.20
Of course, at 144,000 the working age population in 2017 was a lot lower than the total population (including those above and below wage working age). And we forecast that by 2036 the working age population will be below its 2017 level, at 141,000.21 So the total population rises but the working age population falls. This implies that there are likely to be increases in healthcare and social care needs, the cost of which will fall partly on the city. This is a key reason why improving the growth of the economy is important, going forward.22
Another significant challenge for Portsmouth is that, on the basis of 2017 data, just over a quarter (25.7%) of the population of working age are inactive.23 Of our comparators, only Newcastle had a higher 2017 figure. Similarly, the Portsmouth unemployment rate in 2017 was high, at 4.8%.24 Again, only Newcastle was higher. Combined with low average earnings, this generates low average household incomes, overall.
Fig. 8. Unemployment rate, Portsmouth & broad comparators, 2010-2036
% of 16 to 64-year olds 10
Forecast 8
6
4
2
0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Solent South East UK
Source: ONS, Oxford Economics
19 See Figures 38 & 60. 20 Our understanding is that Hampshire county council’s projections are very similar at 232,000. 21 See Figures 40 & 61. 22 It is true that many people carry on working beyond the normal retirement age. However, a great deal here depends on opportunities and people’s accumulated savings. Since Portsmouth has a low participation rate for those of working age, it seems unwise to assume that people working longer will be a strong source of additional workers. 23 See Figures 28 & 54. 24 See Figures 8 & 26-27.
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Disturbingly, in our baseline forecast the unemployment rate in Portsmouth is initially stable but drifts up gradually over the longer term. This reflects the slow workplace employment growth that the city achieves, compared with elsewhere, and the fact that unless residents’ qualifications rise faster than in other places, Portsmouth residents are unlikely to share fully in new job opportunities being created elsewhere in Solent.
Against that, houses are relatively affordable in Portsmouth.25 The ratio of prices to residents’ earnings was 8.4 in 2017, so close to the UK average and below both Solent and the South East. While data is not available, the same is likely to be the case for private sector rents. However, this comparison is clearly affected by the size and desirability of the housing. So, while affordability is a potential opportunity for the city, the quality of the housing supply may also be an issue.
Figure 9 provides a summary of economic indicators and our baseline forecasts, and Annexes 1 and 2 provide much greater detail.
25 See Figures 35-37 and 58-59.
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Fig. 9. Summary of indicators & baseline forecast, Portsmouth, 2010-2036
Change (% change Y/Y except for Net migration, Indicator Level House prices and Prices to earnings)
2010- 2017- 2023- 2030- 2017- 2010 2017 2023 2030 2036 17 23 30 36 36 GVA (£m, 5,500 5,691 6,298 7,019 7,409 0.5% 1.7% 1.6% 0.9% 1.4% 2015 prices) Workplace 122 126 127 130 130 0.5% 0.2% 0.3% 0.0% 0.2% jobs (000s) Resident 95 102 105 106 106 1.0% 0.5% 0.1% 0.0% 0.2% employ. (000s) Productivity 45.0 45.1 48.8 53.4 57.3 0.0% 1.3% 1.3% 1.2% 1.3% (£000) Total population 203 215 223 227 229 0.8% 0.6% 0.3% 0.1% 0.3% (000s) 16-64 pop 138 144 146 144 141 0.6% 0.2% -0.2% -0.4% -0.1% (000s) Net migration 2,592 795 306 242 226 -1,797 -489 -64 -17 -569 Workplace 27.2 26.4 31.6 39.2 47.3 -0.4% 3.0% 3.1% 3.2% 3.1% wages (£000s) Resident 21.5 24.0 28.6 35.5 42.7 1.5% 3.0% 3.1% 3.1% 3.1% wages (£000s) Unemployment 7.8 5.2 5.2 5.9 6.3 -5.7% 0.0% 1.9% 1.3% 1.1% ILO (000s) Unemployment 7.5 4.8 4.7 4.8 5.2 -6.2% -0.2% 0.2% 1.4% 0.5% rate (%) Employment 57.6 58.3 58.2 56.6 55.9 0.2% 0.0% -0.4% -0.2% -0.2% rate (%) House price 151.7 201.4 229.8 286.8 343.4 49.7 28.4 57.0 56.6 142.0 (000s) House price/ 7.0 8.4 8.0 8.1 8.0 1.4 -0.4 0.0 -0.0 -0.4 earnings ratio % of 16-64s: 11.4 7.5 - - - -5.8% - - - - no qualification % of 16-64s: 19.1 23.3 - - - 2.9% NVQ 3 % of 16-64s: 29.4 34.5 - - - 2.3% - - - - NVQ4+ Economic inactivity rate 22.5 23.7 - - - 0.7% - - - - (%) 2011 2012 2013 2014 2015 2016 Active 5,450 5,410 5,610 5,900 6,115 6,550 businesses Business 640 640 905 940 970 1,110 births Business 625 650 590 660 715 795 deaths
% survival of business - 92.2 72.7 55.5 44.5 39.1 started in 2011
Source: ONS, Oxford Economics
15 Portsmouth 2036: baseline forecasts & strategy advice
4. TARGETS & OBJECTIVES
4.1 IMPROVING ON THE BASELINE
In the previous chapter we set out our baseline forecasts for how the Portsmouth economy is likely to develop over the period to 2036. It is not a bad outlook, but nor is a particularly good one either.
Our advice is that, at the very least, Portsmouth City Council and its partners should therefore ensure that they do not do anything that inadvertently makes the outturn worse than the one that we are forecasting.
But there must surely be opportunities to do better than that, and to help generate outturns that are better than our baseline forecasts. The questions that raises are: what does ‘better’ mean, and ‘how much better can plausibly be achieved?’
Our answer is that a realistic aspiration is for the individuals and companies located in Portsmouth to have opportunities that are at least similar to those in comparable places elsewhere. We suggest that should be the minimal aspiration for the city council and its partners. And if it is possible to do better than that, then so much the better.
4.2 ASPIRATIONS
More specifically we suggest that when measured in the following way, Portsmouth by 2036 should be at least comparable with many of the places we mentioned in the previous chapter:
• The wages that Portsmouth residents earn;
• The wages that Portsmouth employers pay;
• The qualifications of Portsmouth people;
• The proportion of working-age Portsmouth people who are in work;
• The growth of employment in Portsmouth, and the career opportunities that the city generates.
To achieve that, many factors will need to come right. For example:
• Any aspirations for higher wages paid by Portsmouth employers need to be consistent with, and indeed achieved by, improved productivity;
• And aspirations to raise employment within the city must also be consistent with the expected combination of productivity and economic growth;
• These in turn need to be linked to what happens to the business base, via new starts, business survival and the arrival of new businesses from outside;
• That requires the availability of suitable premises and skills;
16 Portsmouth 2036: baseline forecasts & strategy advice
• Which needs to be consistent with what happens to housing and educational provision, which in turn needs to be consistent with expectations for future population growth and commuting patterns;
• Which needs to be consistent with developments in the wider Solent economy, including public transport provision, and the opportunities which those developments offer to Portsmouth residents;
• And so on.
In the next Chapter we provide a list of actions intended to help bring about such changes. But first we need to get a sense of what scale of ambition would be appropriate.
4.3 SCALE OF AMBITION
Our baseline forecast is that over the entire period 2017 to 2036 workplace employment in Portsmouth will rise by only 2.5%. In contrast, and as Figure 10 shows, we forecast that it will rise by 7.7% in the South East and 6.4% at the UK level. In Southampton the forecast increase is a substantial 11.4%, while in Plymouth, workplace employment falls 2.8% over the period.
Fig. 10. Baseline workplace employment, 2017-2036
Workplace employment (000s) Change
2017 2023 2030 2036 fc % ch
Portsmouth 126 129 130 129 1.03 Brighton 169 173 177 179 1.06 New castle 196 204 207 208 1.06 Plymouth 127 127 126 124 0.97 Salford 132 138 143 146 1.10 Southampton 131 138 143 146 1.11 Solent 632 655 666 669 1.06 South East 4,978 5,170 5,301 5,361 1.08 UK 35,075 36,265 37,018 37,329 1.06
Source: ONS, Oxford Economics So what rate of increase in workplace employment might Portsmouth reasonably aspire to? Our suggestion is the Solent average increase of 5.8%. That is less than the South East and UK averages, and a lot less than for Southampton, but it is close to the gains that we forecast for both Newcastle and Plymouth.26
If that were to happen, then in 2036 Portsmouth would have workplace employment of 133,000, compared with our baseline forecast for that year of
26 Strictly speaking, unless the extra jobs came at the expense of other parts of Solent, the average for Solent itself would rise slightly as a result. However, to maintain simplicity we have ignored that.
17 Portsmouth 2036: baseline forecasts & strategy advice
129,000, or the current level of 126,000. In other words, an extra 7,000 jobs over time, instead of an extra 3,000.
We also think it desirable to aspire to higher productivity. In 2017, output per person employed in Portsmouth was just over £45,000, which was better than in Brighton, Newcastle or Plymouth but below the UK average of £49,000 and well below the South East average of just over £52,000.27
Fig. 11. Baseline productivity, 2017-2036
Output per person employed (£000s) Change 2017 2023 2030 2036 Portsmouth 45.1 48.8 53.4 57.3 1.27 Brighton 43.4 46.7 51.4 55.5 1.28 Newcastle 40.1 43.2 47.1 50.3 1.25 Plymouth 38.4 41.1 44.7 47.8 1.24 Salford 47.5 51.4 56.6 61.1 1.29 Southampton 48.1 52.3 57.0 61.0 1.27 Solent 48.7 52.8 58.0 62.4 1.28 South East 52.1 56.6 62.5 67.6 1.30 UK 49.3 53.6 59.2 64.0 1.30
Source: ONS, Oxford Economics Furthermore, in our baseline we forecast that both the South East and the UK will see faster productivity growth to 2036 than does Portsmouth. The numbers are 30% for both the South East and the UK, compared with just 27% for Portsmouth.
So, the gap looks set to widen. Can it be closed? Realistically, not completely. To get to the South East level would require nearly a 50% productivity gain. Given that in many large sectors of the economy it is difficult to grow productivity at all, that is not feasible.
However, if productivity in Portsmouth were to rise by one third, then that would close half the gap between our forecast for the city in 2036 and our forecast for Solent in the same year. Portsmouth’s productivity would be £60,000 per person (at today’s prices) compared with £45,000 in 2017, £57,000 in our baseline forecast and a Solent average of £62,000.28
This has implications for wages. There is no one-for-one relationship between productivity and wages, but the two are linked. If productivity rises by 33% over time instead of 26% over time, then there is the potential for a similar uplift to wages—depending on what happens to the distribution of income between profits and wages.
27 Ideally productivity should be measured in terms of output per hour. However there is not sufficient information available on typical hours worked for us to forecast that measure. We therefore use annual data. 28 The same remark as before applies to the Solent average: for simplicity we have ignored how the Portsmouth increase will affect the overall Solent average.
18 Portsmouth 2036: baseline forecasts & strategy advice
In our baseline, average earnings in Portsmouth rise in nominal terms from £509 a week in 2017 to £909 a week in 2036. That’s an increase of 80%, although a lot of that will be eroded by inflation. If we assume that half the increase in productivity described above is used to increase wages and the other half is used to increase investment and dividends, then average earnings in 2036 will be £1,180 a week. For simplicity, we suggest rounding that down to £1,000 a week.29
Fig. 12. Baseline wages, 2017-2036
Workforce earnings (£ per week) Change
2017 2018 2030 2036
Portsmouth £509 £607 £754 £909 1.79 Brighton £486 £583 £729 £883 1.82 New castle £534 £634 £794 £962 1.80 Plymouth £464 £549 £679 £816 1.76 Salford £547 £662 £828 £1,004 1.84 Southampton £593 £709 £884 £1,067 1.80 Solent £526 £630 £785 £949 1.81 South East £552 £663 £829 £1,003 1.82 UK £535 £645 £810 £984 1.84
Source: ONS, Oxford Economics The 7,000 extra people working in Portsmouth in 2036 compared with 2017 would not, of course, necessarily mean 7,000 more Portsmouth people working. It would depend on who got the extra jobs, taking into account commuting, and on any ‘reshuffling’ of people between jobs.
However, an appropriate aspiration must surely be that overall, Portsmouth people gain at least in line with the extra jobs. Another 7,000 Portsmouth residents in work would imply a 7% increase over the 2017 level, which is the same as our forecast for Solent as a whole. It compares with a rise of only 4% in our baseline forecast: the same as in Newcastle, but below all other comparators except Plymouth (which we forecast will see a decline in resident employment). This 7% rise therefore seems a minimum increase for Portsmouth to aspire to. It translates into 109,000 residents having work in 2036, instead of the 106,000 in our baseline forecast.
29 We emphasise that this number is intended to be indicative—the actual outcome will depend on differences in employment trends by sector, and the wages element of income growth in different sectors. The point here is to give a sense of what the 2036 Portsmouth economy might look like.
19 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 13. Baseline resident employment, 2017-2036
Resident employment level (000s) Change
2017 2023 2030 2036
Portsmouth 102 105 106 106 1.04 Brighton 156 161 164 166 1.07 New castle 137 141 143 142 1.04 Plymouth 127 128 128 126 0.99 Salford 126 132 136 138 1.10 Southampton 129 135 139 141 1.09 Solent 808 843 860 866 1.07 South East 4,649 4,864 5,003 5,074 1.09 UK 32,571 33,858 34,560 34,850 1.07
Source: ONS, Oxford Economics As we noted in Chapter 3, higher productivity and higher qualifications are closely connected. We recommend that there should be an aspiration for a more highly qualified workforce. For reasons that we set out in Chapter 5, there should be two foci: increasing the share of the workforce with at least some qualifications, to raise overall employment levels; and increasing the share of the workforce who are highly qualified, to support the growth of high value- added businesses.
However, the level of qualifications in any period is the result of a huge range of factors including demographics, migration, the success of the educational system, in-work training, and so on. It is not possible to offer a baseline forecast for qualifications in 2036. What we do know is that in 2017 7.5% of Portsmouth working-age residents, or 11,000 people, were without qualifications. For Solent the figure was 5.6%. We suggest an aspiration of bringing the Portsmouth figure down to the Solent figure. In reality the Solent number will almost certainly be lower by 2036. So our advice is to treat 5.6%, as a maximum – or better-still a rounded-down figure of 5%. That implies 7,000 people, after allowing for the forecast decline in the working-age population.
Similarly, in 2017 34.5% of Portsmouth residents of working age were qualified to NVQ4 or above. That was actually marginally higher than the Solent number, which is not therefore a useful benchmark. The South East figure was much higher at 41.4%, while the UK figure was 38.4%. We suggest splitting the difference and aiming at 40%. In this case, that should be a minimum. It implies 56,000 people in 2036 compared with 50,000 in 2017.
20 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 14. Qualifications
Qualifications (% of w orking age population)
No quals NVQ 3 NVQ 4+
Portsmouth 7.5 23.3 34.5 Brighton 2.6 20.7 54.1 New castle 9.0 23.7 37.3 Plymouth 5.3 23.1 31.6 Salford 10.4 20.2 30.9 Southampton 7.4 24.2 36.0 Solent 5.6 23.8 34.4 South East 5.2 19.7 41.4 UK 8.0 18.6 38.4
Source: ONS, Oxford Economics However, increasing the supply of better-qualified people is of no value unless there is also an increase in the demand for better-qualified people. That means increasing the number of new starts; increasing business survival rates; and securing inward investment. As noted above, the rate of new starts in Portsmouth is already reasonably high, but the survival rate is low. This suggests that quantitative targets are likely to be less meaningful than qualitative ones. Similarly, it is probably not realistic to set targets for inward investment until after the sectoral/clustering initiatives that we suggest in Chapter 5 (or other similar initiatives that might be developed) have been worked-up. So at this stage we suggest that these are issues to be returned to, once the strategy has emerged in detail and action-planning starts.
What we can say, however, is what the implications for total GDP are, given our suggested aspirations for productivity and employment (since GDP is just the multiple of the other two.
In our baseline forecast the Portsmouth economy in 2036 will be 30% larger in real terms, measured by GDP, than in 2017. Our productivity and workplace employment suggestions instead imply an increase in GDP of 46% in real terms. We suggest rounding that down to 45%.
21 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 15. GDP
GVA (£m) Change
2017 2023 2030 2036
Portsmouth 5,691 6,298 6,937 7,409 1.30 Brighton 7,316 8,088 9,110 9,927 1.36 New castle 7,873 8,812 9,760 10,465 1.33 Plymouth 4,890 5,215 5,630 5,920 1.21 Salford 6,268 7,112 8,101 8,891 1.42 Southampton 6,316 7,208 8,168 8,916 1.41 Solent 30,759 34,590 38,634 41,744 1.36 South East 259,129 292,679 331,406 362,208 1.40 UK 1,727,810 1,942,877 2,191,741 2,390,262 1.38
Source: ONS, Oxford Economics In summary, therefore, we suggest that:
• There should be an aim to increase workplace employment in Portsmouth at the same rate as across the whole of the Solent. That means 7,000 more jobs in 2036 than in 2017, instead of the 3,000 that we forecast is likely to occur on unchanged policies.
• That should be matched by an aim of an extra 7,000 Portsmouth residents in work. That would be a 7% increase over the 2017 level, which is the same rate of an increase as for Solent as a whole. And it compares with a rise of only 4% or 4,000 in our baseline forecast.
• The higher workplace employment should be associated with improved productivity. If productivity in Portsmouth rises by one third, then that will close half the gap between our forecast for the city in 2036 and our forecast for Solent in the same year. Portsmouth’s productivity would then be £60,000 per person (at today’s prices) compared with £45,000 in 2017, £57,000 in our baseline forecast and a Solent average of £62,000.
• That will create the opportunity for higher wages. If we assume that half the productivity gains feed through to wages, then in 2036 average earnings paid by Portsmouth employers will be £1,000 a week compared with just over £900 in our baseline and just over £500 today—though inflation will account for at least some of that.
• Helping to make that possible, we suggest an aspiration of reducing from 7.5% to 5% the proportion of the population of working age who have no qualifications, and raising from just under 35% to 40% the proportion who are educated to at least NVQ level 4.
• All of this should be consistent with GDP rising by 45% in real terms over the period to 2036 instead of the 30% in our baseline forecast. That is a major step-up in performance. But as we explain in the next Chapter, there are many potential interventions that, properly coordinated, could help to make that happen.
22 Portsmouth 2036: baseline forecasts & strategy advice
5. STRATEGY: OUR ADVICE
The question remains whether the aspirations that we suggest in the previous chapter can actually be achieved. The answer here depends on
• External circumstances: the context and challenges that we summarised in Chapter 2.
• The scale of response that the city is able to mount, given the resources at its disposal.
In the past, many local partnerships, councils and other agencies across the UK have set themselves targets that were far above their ability to deliver. Doing so is counter-productive. At the same time, a period of nearly two decades (to 2036) is long enough for a city to change radically for the better.
In this document we are not setting out to produce a completely worked- through economic development & regeneration strategy for Portsmouth. That is a much larger task than we have been asked to undertake.
But we do have a set of ten strategic ideas that, based on our understanding of what has worked elsewhere, and in sympathy with the broader national and regional policy frameworks identified in Chapter 2, we think deserve consideration.
Before looking at this list of 10, an over-arching piece of advice is that it is essential that the City Council works closely with partners across Solent in drafting, and then implementing, the forthcoming Solent Local Industrial Strategy (LIS). As part of that, the city council should ensure that the LIS reflects and actively contributes to the National Industrial Strategy, while also addressing the particular issues that Portsmouth faces.
It is welcome that the National Industrial Strategy emphasises that competitiveness of place is important to economic growth, and it is also welcome that it argues for both housing and employment growth to be concentrated in places that are already urbanised—that is to say, towns and especially (because of the advantages of scale) cities.
But for Portsmouth this raises a large challenge. Portsmouth is an extremely dense city and is tightly bounded. There are few brownfield sites in Portsmouth, the seafront is a natural barrier to growth, and the wetlands on either side of the city are mostly protected for wildlife. So, Portsmouth is land-constrained. But it is also labour constrained—a larger-than normal proportion of the working-age population neither works nor is looking for work (see Figure 54 and the discussion in Chapter 4). Also, relatively few residents are highly qualified (Figure 55 and Chapter 4), and although there are some high-tech companies in the city, much of the work undertaken at the Naval Base does not lend itself to easy commercialisation.
In addition, anecdotal evidence suggests that Portsmouth is not perceived by outsiders as an attractive or exciting place to move to.
23 Portsmouth 2036: baseline forecasts & strategy advice
The danger for Portsmouth is that stakeholders, from residents to businesses to public sector partners, take all of this as unalterable. So long as that is what people believe, it will indeed be the case.
In these circumstances it is therefore vital that the City Council works with the LEP and other partners to identify the special contributions that Portsmouth can and does make to Solent, as well as the advantages that Solent offers Portsmouth, and how these in turn can both help to support the National Industrial Strategy.
It is also important to recognize that the national strategy (and its successors) will inform the allocation of government funds, implying that partners need to present a strong and united case for Portsmouth as a vibrant part of Solent, and for Solent as a distinctive part of the UK. A ‘poor Portsmouth’ pitch will not work.
But a larger reason is that private sector investors, and potential new residents, are more likely to come to Portsmouth if the city presents the right face—and being part of a broader successful whole is part of that. So being fully involved in making the Local Industrial Strategy a dynamic, ambitious and nationally- significant document is important.
For that to work, the city needs to build on its deep structural strengths, and overcome its weaknesses, and not just attend to short-term issues. The box below sets out what we believe these to be. We explain each of them in the sections below, which set-out our 10 recommendations for addressing them.
PORTSMOUTH: FUNDAMENTAL STRENGTHS TO BUILD-ON & WEAKNESSES TO TACKLE
Strengths Weaknesses
A waterfront city with a vibrant Perceptions—an old and congested harbour and attractive seafront, industrial/naval town without room to which lends itself to regeneration & grow place-making The overnight/weekend visitor Advanced engineering, comparable economy is under-developed in scale to anywhere in the UK An absence of other leading sectors World-class & popular heritage with strong 21st century growth attractions potential
Rare natural assets in the form of Lack of business networks that might internationally-important bird-resting foster innovation & collaboration places, that can help to define Weak transport links to rest of Solent Portsmouth’s unique waterfront & London, despite proximity character Low qualifications of the workforce Located in the Solent, and in the prosperous South East, with Perceived (and perhaps actual) lack proximity to London of attractive housing/neighbourhoods
24 Portsmouth 2036: baseline forecasts & strategy advice
An over-arching point, however, is that we believe that Portsmouth should be ambitious. A common error that we have seen is for partners to set very high numerical targets for jobs being created, but then offer a range of modest interventions unlikely to achieve those targets. The result is a large credibility problem. We suggest the opposite: be moderate in terms of any numerical numbers, but bold in terms of proposed on-the-ground changes.
5.1 BUILD THE BRAND: A GREAT WATERFRONT CITY
Our first recommendation is to strengthen Portsmouth’s branding as a ‘Great Waterfront City’ and use it to attract not just visitors, but vibrant new businesses and residents to the city, and to change the way in which existing businesses and residents think about Portsmouth.
In economic development as in commercial businesses, branding is a tool of strategy, and in particular a tool for corporate or city revival or refocusing. The most widely quoted example in the UK of using branding as a key part of an economic development & regeneration strategy is Manchester. 30 But positive branding is also important for other cities such as Brighton, while negative images have held back many UK cities.
Fundamentally the best strategy is always to be good at what you do, and to build on what you really are, and to be widely recognised for that.31 It follows that the best branding for Portsmouth will reflect the city’s true nature, and what makes it different. And the fact that Portsmouth is mainly an island, with a waterfront the length of which is second to none within the UK, is what gives Portsmouth much of its character. The waterfront literally shapes the city, and makes Portsmouth different to most of the UK’s cities.
Most obviously, the waterfront means that Portsmouth is an important marine and maritime city, home to one of the UK’s three main naval bases, plus a thriving commercial port. The naval base anchors the city and provides an important degree of stability, as well as being the reason why Portsmouth has strength in sectors such as aerospace and engineering. Attracting businesses in sectors that also have marine and maritime associations is a logical way forward. We return to this, below.32
Second, because of its waterfront, including the Historic Dockyard, Gunwharf Quays, various marinas and the Southsea seafront, Portsmouth is a visitor destination. There is significant scope for growing this part of the economy. Again, we discuss this below.
Portsmouth as a Waterfront City is also rich in wetlands that provide resting grounds for migrating birds. These places are strictly protected and mostly unavailable for development, but they are potentially important assets for the
30 See for example http://www.creativebrief.com/blog/2012/05/17/city-brand-leaders-%E2%80%93-manchester/ 31 For a discussion of this in the context of corporate strategy see John Kay Foundations of Corporate Success, Oxford, 1993. 32 For a pan-European discussion of marine and maritime cities see http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/593500/EPRS_BRI(2016)593500_EN.pdf
25 Portsmouth 2036: baseline forecasts & strategy advice
city, if they can be used to demonstrate a particular ‘Portsmouth-take’ on the challenge of achieving environmental sustainability. We return to this thought.
It is true that because it is bounded by water, there is very little geographical room in which Portsmouth can grow. Portsmouth is indeed amongst the most densely populated places in the UK. But density can make a city both more exciting and easier to live in, with a strong urban character. And the Waterfront, if it is carefully nurtured, can shape that character and make it more distinctive. In any case, within a timescale stretching to 2036, some of the land that is currently occupied within Portsmouth will surely become available, as occupiers’ requirements change. In particular, the city centre may need radical redevelopment, and some sites that currently house low value-added operations may offer potential for significant change of use and character. Indeed, where regeneration is concerned, density and lack of ‘virgin’ land can be an asset and not a constraint, if it fosters a combination of ingenuity and substantial increases in land values. The trick for Portsmouth will be to use such opportunities, as they emerge, to make Portsmouth more like Portsmouth.
But it is also clear that the city’s unusual waterside geography does reduce connectivity, so that both inward and outward commuting numbers are low. Business links are probably low too. This does need to be tackled. But it too has a positive side: greater scope for developing a distinctive civic identity for Portsmouth than in a city without clear boundaries.
5.2 GRADUALLY ENHANCE THE CITY’S ENTIRE WATERFRONT
This recommendation follows from the first. Branding alone is not enough— there needs to be substance. The city needs to embrace, celebrate and continue to improve its waterfront.
The evidence from elsewhere on the likely effectiveness of this is very encouraging. There are countless examples around the world of how economic regeneration has been boosted by investment in waterfronts, whether they be canals, rivers, docks or seaside promenades. In Portsmouth a lot has already been done in this respect, with evident success. But there is a lot more to do.
Cities such as London and New York at one end and Norwich and Bristol on a smaller scale have used their waterfronts to stimulate their local economies and benefit local communities, renovating former industrial sites and removing obstacles, reclaiming empty land and investing in waterside housing, studios and offices.33 In 2015 in work for the Port of London Authority we identified that a location near the river raised the value of a London home by 13%, and that the riverside generated a wide range of other benefits, from employment to sporting opportunities and enhanced health.34
To be fair, in Portsmouth the waterfront is sometimes inevitably blocked-off. But there is considerable scope for progressively opening-up much of the city’s
33 See for example https://www1.nyc.gov/site/planning/plans/vision-2020-cwp/vision-2020-cwp.page ; https://www.leicester.gov.uk/your-council/city-mayor-peter-soulsby/my-vision/transforming-the-waterside/ ; http://en.hamburg-invest.com/press/3748126/0113-pm-mipim-en/ 34 https://www.oxfordeconomics.com/publication/download/259142
26 Portsmouth 2036: baseline forecasts & strategy advice
waterfront, and turning it into a valuable resource. And some of the parts that cannot be walked or cycled-along may well be traversable by boat (which links to our remarks below about the case for promoting boating in and around the harbour).
If more can be done in Portsmouth to really link up and enhance the city’s waterfronts into an accessible and coherent whole, then our suggestions on creating Innovation Quarters (see below) will be more likely to succeed, by making those districts part of a larger waterfront regeneration effort. And the case for an enhanced visitor economy (again, see below) will clearly be much stronger if, for example, the pedestrian route from Gunwharf Quay to Southsea can become more vibrant and attractive than it currently is.
Similarly, if the eastern side of Portsea Island, with its important wildlife habitats, can be made more accessible to visitors, in a way which avoids disruption to those habitats, then Portsmouth will have a unique asset among British cities.
As part of this it would be particularly helpful to examine the scope for reclaiming land, with the Hard between the harbour station and the Historic Dockyard an obvious candidate. That could be a potential site for one or more of our other proposals, or for other ideas: an Innovation Quarter, housing, a new cultural attraction, or simply an open space where people can relax and where outdoor festivals and events can be held.
Associated with that is the possibility of corresponding changes happening on the Gosport side of the harbour. Our understanding is that there are more development opportunities available there, and seeing the two sides of the harbour as a single opportunity, possibly augmented by an improved ferry service, could create greater opportunities than either location offers individually.
Indeed, from a 2036 perspective, ferry services, and boating generally, may merit more attention than they have traditionally been given. The ability to travel by boat from one part of the city to another, and to the nature reserves, as well as to Gosport and the Isle of Wight, could really add to the distinctiveness of Portsmouth as a place to visit, live and work. As transport technologies evolve, that could become a real possibility.
5.3 EMBRACE PORTSMOUTH’S WILDLIFE HABITATS
Our third recommendation is an unusual one for an economic strategy. Half of Portsmouth’s overall footprint comprises wetlands that are unavailable for development. But rather than regarding this as a problem, it should be treated as an opportunity, helping to position Portsmouth as an unusual city, and one with a close and positive relationship to the natural (maritime) world.
At the moment the fact that Portsmouth provides a hugely important resting place for migrating birds is little known about. It does not add to the reputation of the city—if anything the abundance of seemingly neglected space has a negative impact. But that does not need to be the case.
We recognize that there is an absolute and over-riding need to safeguard the habitat and not disturb the birds and indeed the other wildlife. But properly managed and presented, these restrictions themselves can be used to
27 Portsmouth 2036: baseline forecasts & strategy advice
demonstrate the importance of these places, and make them part of Portsmouth’s identity, as their host and protector. There may be scope for organized visits by boat, and that could itself be part of the larger project for encouraging boat use that we mention above.
We therefore suggest working with Natural England and others to understand how similar sensitive habitats are managed in other places, and then draw up a strategy to make the bird habitats an important part of Portsmouth’s identity.
5.4 CREATE A MARINE & MARITIME ENGINEERING INNOVATION QUARTER
Our fourth recommendation addresses the central issue of Portsmouth’s major sectoral strengths, and weaknesses. We note in Chapter 4 that Portsmouth tends to be regarded as an old industrial/naval town, whose best days are behind it. It is vital, not just to reject that thinking, but to take steps to put it to rest.
Portsmouth is an advanced engineering city, and needs to be portrayed as such. Companies such as Airbus, QinetiQ and DSTL within or adjacent to the city are small locally but still significant, while the Naval Base is one of the UK’s premier advanced engineering establishments, comparable in employment terms with, for example, Rolls Royce in Derby or both of Airbus’s two site (Filton near Bristol and Broughton in North Wales) put together.
Importantly, the Naval Base is a commercial operation, largely managed by BAE Systems on behalf of the UK government. In addition, and as we noted earlier, a wide range of other advanced engineering companies also operate in Portsmouth— mostly on a very small scale, but hopefully with potential for growth.
At the same time, and as we noted in Chapter 2, Portsmouth is very short of Professional, Technical and Scientific services companies. This broad category includes lawyers, accountants and advertising and marketing companies, and attracting those specialisms in large numbers will not be easy when other cities have already established strong clusters.
But Technical and Scientific Services companies also come under this heading, and these can be attracted to Portsmouth, alongside advanced engineering manufacturers, if the right conditions can be created. So attracting both of these—manufacturers and service-sector companies specialising in advanced scientific and technical fields—is an obvious way forward and should be explored.
Realistically, the manufacturing element of advanced marine engineering is unlikely to directly create large numbers of jobs in the city. But it does have the capacity to significantly raise productivity in the city, and at least some wages, and many people’s aspirations, and to create global sales and networks, and hence improve long-term sustainability and other opportunities. And advanced engineering consultancy services do provide more scope for increasing employment at both the highly-qualified and middle-qualified levels.
Attracting new businesses and helping local companies to grow in this sector is also important for defensive reasons. The large companies that are already located in Portsmouth mostly have operations elsewhere. Given that there is
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always pressure on companies to consolidate, these businesses should be given reasons to stay in Portsmouth. And having other similar companies located nearby—a cluster—is helpful to that, because for example it provides a skills base on which each individual company can draw.
But a crucial point here is that while any cluster will clearly have a Solent-wide aspect, and even a South East aspect, it is increasingly clear that clustering at a very local level also has a role to play. Evidence from the United States suggests that the concept of an Innovation Quarter or District can be very powerful here.35
This refers to a local city neighbourhood in which a number of innovative businesses are located close to one another; with low rents and a flexible property market appealing to entrepreneurs and start-ups; with local networks and events where professionals can meet-up, and also opportunities for chance encounters in bars and cafes in a way that never happens in out-of-town business parks; and ideally with an anchor institution such as a university research centre to provide critical mass and external networking and collaboration. A degree of ‘urban grit’ is acceptable, even desirable in an Innovation Quarter, since it helps to keep the costs down—something that is positively helpful for Portsmouth, where the quality of the urban realm is not always the highest (but see below for the potential importance of the waterfront), and where property costs are below South East norms.
Shoreditch in London is a classic example of an Innovation Quarter; the challenge is to create, as one local business leader put it ‘Shoreditch-on-Sea’ within Portsmouth.
Importantly, a large part of the success of Shoreditch comes from the fact that the businesses that have located there are mostly in closely-related sectors, or use similar (digital) technologies, or sell into similar markets, or use similar skillsets. For something similar to emerge in Portsmouth, there needs to be a corresponding focus.
It is beyond our scope to say definitively what this should be, and we recommend that you deliberate further, but an obvious niche is Portsmouth’s existing strength in Marine & Maritime engineering, but possibly with a focus on Artificial Intelligence (AI) and ‘big data’ businesses and applications, since that will allow the city to lever-in resources that central government plans to provide as part of its National Industrial Strategy Grand Challenge: Artificial Intelligence (AI) and ‘big data’. 36 Also, there are already companies in Portsmouth and Solent generally with an interest in this ‘cross-over’ area.
The point here is that while much of the UK-level focus has been devoted to applying AI to autonomous road vehicles, there is a similar application of that technology to sea transport, to maintenance, security and marine taxi
35 See https://hbr.org/2014/11/the-rise-of-urban-innovation-districts; https://www.pps.org/article/eight- placemaking-principles-for-innovation-districts; https://www.citylab.com/equity/2017/07/how-mayors-can-drive- inclusive-growth/532569/; http://www.okcinnovation.com/what-is-an-innovation-district; https://www.eship.ox.ac.uk/innovation-districts-creating-caffeine-fuelled-spaces-think 36 See https://www.gov.uk/government/publications/industrial-strategy-building-a-britain-fit-for-the-future and https://solentlep.org.uk/the-solent/marine-and-maritime-economy/
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vehicles, and to many other Marine & Maritime applications. For example, AI and robotics are potentially hugely important to seabed exploration and to mining the sea (a massive market); to defence (clearly relevant to Portsmouth); to the security and maintenance of many different facilities, to energy generation (wave and tidal, both of which are highly relevant to Solent); to coastal sea defences and river management (likely to be a rapidly increasing market due to global warming) and to internet communications, which generally rely on vulnerable under-water cables. The scale of the opportunity is, therefore, huge.
Our advice is therefore to examine the possibility of making a major contribution to the Artificial Intelligence Sector Deal and to the National Industrial Strategy (and hence, lever-in national resources) as well as to the Solent marine and maritime economy by creating an Innovation Quarter in Portsmouth, centred on advanced Marine & Maritime engineering applications of AI and Big Data, including Autonomous systems.
That would involve a collaborative effort between the City Council, one or more private developers, probably a university research centre, and possibly a major advanced engineering or data-analytics company, to create a local neighbourhood in which a range of relevant companies and research bodies would co-locate in close proximity to one another, within a clearly recognizable Innovation Quarter.
Related to this, our understanding is that many Portsmouth businesses identify the city’s university as a key asset. We support this, but it needs to be recognized that there are many hundreds of universities and other university- level institutions in the UK, and while the University of Portsmouth scores highly for the quality of its teaching, its research ratings do not distinguish it from many of its rivals.
This may change over the period to 2036: we understand that the university is currently developing a long-term strategy that will partly address the issue. Alongside that, however, there are many other universities and other research establishments that could probably be persuaded to also locate a research centre in Portsmouth, if the appropriate synergies and opportunities are there. Our advice is to include both the University of Portsmouth and other potential partners in discussions going forward.
It should also be noted that many of the companies concerned will be ones that exist on the borderlines between manufacturing and services. Already, companies such as Rolls Royce generate half their income from services rather than from pure manufacturing. The manufacturing versus services boundary is becoming increasingly porous. Furthermore, manufacturing itself is in the process of becoming much smaller-scale than in the past, thanks to Additive Manufacturing including ‘3-D printing’, and also as a result much cleaner, and
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hence more appropriate for dense urban areas.37 That lends itself to Portsmouth’s constrained geography.
Our proposals therefore relate both to future office-based employment and to (small) factory employment. A small but important consequence of that is that we suggest that in the development of the forthcoming City Plan there should be explicit recognition that land use should no longer be segregated in traditional ways.
Of course, an Innovation Quarter can only develop if there is a place for it to develop on. Portsmouth has very few large sites currently available, and we acknowledge that, notwithstanding the point made above, this could be a stumbling block. But we think it can probably be overcome.
One possibility may be that an Innovation Quarter could be developed at the strategic sites in Tipner and Horsea Island and Port Solent, which are all in receipt of City Deal funding, and also perhaps nearby Lakeside. These are, however, essentially traditional 1980s-style out-of-town locations alongside a motorway, rather than part of the main urban fabric of the city. So they do not really offer the characteristics of an Innovation Quarter as described above. This would not be our preferred option. Indeed, our perception is that creating jobs in the north of the city near the M27 will be very useful, but will probably not have the necessary transformational impact on the core city itself.
A second possibility is that at some point in the future there will be surplus space in the Naval Base that could be hived-off to create the sort of Innovation Quarter that we are advocating. Issues here to consider are whether security requirements would prevent the area from developing the openness to new companies, and the throughflow of people, that are characteristics of Innovation Quarters. But if the option of making more intensive use of the Naval Base has not been explored already, then it should be, possibly as part of the drafting of the new city Plan.
The third possibility (perhaps combined with the other two) is to place an Innovation Quarter at the heart of the planned reconfiguration of the city centre. This might involve raising the scale of the current ambition, which we understand focuses on some small sites to the north of Cascades and the Commercial Rd, including the site of the Tricorn Centre. While a more ambitious redevelopment may seem unrealistic, given the way in which Portsmouth has in the past struggled to attract developers, there is an argument that a large-scale redevelopment that completely changes the character and reputation of the city centre can offer better and less-risky financial returns than a more cautious redevelopment, that leaves the city centre less appealing to tenants than others in the region.
Furthermore, if it was possible to reuse existing properties, and focus on getting young dynamic businesses into them, particularly in the early years, then the cost might not be too demanding. The experience of London and
37 See https://www.technologyreview.com/s/513716/additive- and manufacturing/https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/ 283903/ep29-factory-of-the-future.pdf.
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Manchester suggests that new businesses in old properties is often an economically stronger proposition than old businesses in new properties.
Finally, from a 2036 perspective, there must be a good chance that the Cascades shopping centre will no longer be viable in its present form, and will need to be reconfigured or replaced. That is not a reflection on the Cascades itself: the same is true for large shopping centres in towns and cities across the UK. A thriving twenty-first century city centre may be one with a substantially reduced or remodelled retail element. A radical, not an incremental, rethink of the city centre may therefore be called for—and would provide the opportunity to really invest in Portsmouth’s distinct characteristic as an advanced engineering city.
5.5 DEVELOP A MARITIME & MARINE CLEAN-GROWTH INNOVATION QUARTER
To really have an impact, we propose that consideration be given to not just one but two Innovation Quarters.
The National Industrial Strategy identifies Clean Growth as one of the four Grand Challenges. Again, much of the national focus here is land-based: cleaner road vehicles, improved recycling of domestic and industrial waste, reducing energy consumption in buildings, reducing packaging and the use of plastics in the home, and so on. But the same issues apply to shipping and the sea itself: raising energy efficiency, reducing waste from ships, reducing shipping emissions, improving the ecology of the sea, and protecting habitats.
As a city with strengths in ship-building, in port management and sea transport, and with an extensive shoreline and internationally-important birdlife habitats, Portsmouth is well-placed to make a distinctive contribution to the national response to this Grand Challenge.38
Indeed, advancing that agenda is itself essential to the future of Portsmouth. If the port is to grow, and if the city is to be an increasingly appealing visitor destination, then the city’s growth needs to be cleaner than in the past. So turning this from a problem to an opportunity, and making Portsmouth a recognized centre of expertise and action in the area of Clean Marine/Maritime Growth, seems a positive way forward.
Again, we suggest that the approach should be to encourage the emergence of a small neighbourhood or Innovation Quarter in which companies (both industrial and advanced services) and research institutes cluster together, with a clear common identity, and hence a growing reputation that goes far beyond the city, but which also rubs-off on the city more generally. The impact of MediaCity in Salford on perceptions of Greater Manchester, and hence investment in that city, illustrates that mechanism at work.
One issue is that in contrast to advanced engineering, Portsmouth does not have particular specialisms in energy or in waste management, either from a commercial/sectoral perspective or from an academic research perspective.
38 There are other possibilities, such as focusing on cyber-security, or on addressing the health needs of an older population. The issue is the extent to which Portsmouth has something distinctive to offer in these areas. Our advice is not to focus on sectors or markets unless they play to Portsmouth’s strengths.
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There may therefore be a need to market Portsmouth as a place to relevant companies or research institutes, as part of the wider rebranding/promotion of Portsmouth that we advocate here.
In that respect the National Oceanography Centre in Southampton could be regarded as a rival, but it is also a potential partner. The opportunities are large enough for both to prosper.
In terms of land availability, as well as the locations discussed above it is possible that the St James’s Hospital and Langstone Campus strategic site might be particularly relevant to this sectoral/clustering opportunity. One of the challenges of that site is the proximity of Langstone Harbour, containing as it does a nationally important nature conservation area, plus other nearby open spaces (notably Milton Common) and waterfronts. But that seems to be all the more reason to locate a Clean Marine & Maritime Growth Innovation Quarter there, in preference to other possible sites in Portsmouth or elsewhere.
From a longer-term perspective, the light industrial estates to the north of Great Salterns may also provide an opportunity for enhanced higher value-added land use. This can come about either incrementally or radically; the key point is that from a 2036 perspective, current uses may at some point become less appropriate than new ones.
5.6 INVEST IN AND STRENGTHEN THE VISITOR ECONOMY
By increasing the amount of value-added in the city, and by improving perceptions of the city, the two Innovation Quarters that we are suggesting would be likely to indirectly lead to widespread job-creation, in a range of support services from cleaning and facilities management to retail and hospitality. And the transport and networking initiatives that we suggest would hugely increase the likelihood of success.
Nevertheless, we are not suggesting that the Innovation Quarters would directly create large numbers of jobs in Portsmouth. And nor are we suggesting that all of those jobs that would be directly created would be accessible to Portsmouth residents, many of whom have limited qualifications.39
This matters because, although unemployment in Portsmouth is currently low, over the period to 2036 some sectors such as retail are likely to shed jobs.40 Furthermore, participation rates in the city are low, and that impacts on the city’s prosperity in many ways. And the ability of the City Council to fund services will to some extent depend on the wider prosperity of the city.
We therefore think it is also essential to boost the visitor economy, as a way of increasing overall employment, raising the participation rate of Portsmouth residents, and hence fostering Inclusive Growth. This is because of all sectors nationally, hospitality is not only likely to one of the strongest sustained growth rates, but also because it is one of the few that in
39 See Figure 55 40 See Figure 43
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which the growth is likely to be labour-intensive growth. Since this sector is clearly a Portsmouth strength, it is vital to build on it.
A stronger visitor economy would also have wider benefits. It would be associated with a broadening in the city’s culture, and with the opening-up of opportunities in ways that cannot be precisely predicted. Brighton is a good example of a city which has a strong visitor economy, which supports a strong cultural and hospitality offer, which attracts highly qualified professionals and entrepreneurial people, which in turn helps to generate more visitors. And although there can be downsides associated with too many visitors, Portsmouth is a long way away from that becoming a problem.
Our view is that the big step to take is to attract more overnight and particularly weekend visitors, in addition to the day-trippers and those at the value-end of the holiday market who currently dominate. However, that cannot be done just by better marketing of the city’s large visitor attractions such as the Historic Dockyard. The overnight/weekend market is also reliant on there being interesting and attractive local neighbourhoods, that are appealing in themselves, and that offer a wide variety of hotels, bars and interesting shops.
In that context, much of Portsmouth does not currently make the grade. However, Southsea has huge potential. The quality of the seafront and of the local streets is comparable with better-known seaside towns and cities, while the broader Portsmouth and indeed Solent offers give additional advantages that other destinations cannot match. With leadership and investment, a lot more can be achieved.
So, while we recognize that it is important not to disturb the quality of life of local residents, the possibility exists to gradually develop Southsea into a destination that appeals to the city-break market, and by doing so bring significant spending power and vitality to the city.
We cannot provide a detailed Tourism Strategy for the city. But we believe that three elements are important.
The first is the importance of the City Council and/or its partners taking a strong leadership role in raising the visitor offer to a higher level. This reflects the fact that as a general rule, visitors choose a town or city to visit on the basis of its overall reputation, and only then choose a specific hotel or restaurant. That means that it is very hard for any single establishment acting alone to draw-in a new type of visitor, when the reputation of the overall town or city is not strong enough. Which means in turn that if (for example) most establishments in a tourist location are three-star, that then tends to discourage four-star establishments from opening-up. That is Portsmouth’s current problem. Market-positioning is self-reinforcing, and any change needs to come on a co-ordinated basis.
Which means that if Portsmouth is to develop into a popular overnight/weekend visitor destination, then the City Council (and/or its partners) must play a big coordination-role in making that happen, pulling together private sector players, while also making its own catalytic changes. Once success occurs, it will then become cumulative, and market forces will become helpful, and at that point the role of the council or partners will become supportive rather than one of leadership.
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An example of such an intervention might be a scheme that provided time- limited grants to help businesses upgrade their offers, by for example switching from three- to four-star ratings. The aim here would be to get many establishments to upgrade simultaneously, since this would be to their mutual benefit. This might require central government/EU funding, but it is an approach that would satisfy most assessment criteria such as showing additionality. It would be an example where local government was responding to a market failure with a targeted intervention specific to that failure and hence would be in accordance with best practice.
More generally, we suggest that small business support in Portsmouth should be particularly geared at the visitor economy, and should be focused on those businesses that wish to upgrade.
In saying this we of course recognise that small business support is also important in other sectors, and is clearly relevant to our suggestions for Innovation Quarters. However, the more advanced high-value sectors are ones where access to funds, and to ideas and skills, ought to be relatively easy to obtain. In the hospitality sector, in contrast, small business support from central and local government can be particularly useful in providing reassurance to bankers and investors, if it can be shown that the business support is part of a larger strategy for raising the sector’s local competitiveness. And such support is likely to be especially successful with regard to improving the business survival rate—something that in Section 2 we identified as more of an issue for Portsmouth than is the business start-up rate.
The second is the importance of improving the public realm in Portsmouth. The visitor’s experience in arriving in a town or city, and then travelling around it, is very important. Walking routes, bus routes and taxi availability all have a big impact on the visitor experience. Attending to this sort of micro-level detail has to be part of any visitor economy strategy, which in turn should sit within an over-arching economic development or industrial strategy.
In Southsea much of the public realm is pretty good, and the existing Seafront Masterplan is currently under review, to establish what more needs to be done.41 But the streets behind the seafront are also important, and so too are the arrival points in the city (the main train stations) and the walking/bus/taxi routes between them and Southsea. These could be a lot more attractive and visitor-friendly. And it is possible that parts of the ‘chain walk’ between the Historic Dockyard and Southsea, where it skirts away from the sea, could be made more appealing to visitors with high spending potential by encouraging outdoor cafes, street markets, niche shops, and other visitor-friendly experiences. It is important to attend to these small considerations, if Portsmouth is to develop a higher valued-added visitor economy.
Third, there is scope for improving the city’s cultural and/or sporting offer. There are different paths to this, including a prestigious museum, gallery, theatre, music venue or similar offer; or a festival, or outdoor arts or sporting event of various sorts. A harbour-based weekend-long sporting event might be particularly appealing, and would be a strong way to build on the Waterfront
41 See https://www.portsmouth.gov.uk/ext/documents-external/dev-seafront-masterplan-spd-review-consultation- doc.pdf
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City branding. The presence of the America’s Cup team is clearly a potential element, while the university with its large student population is another important asset. And the university itself would clearly be a potentially large beneficiary, if Portsmouth’s image with potential students was enhanced.
5.7 PROMOTE SOLENT-WIDE BUSINESS NETWORKS
Our first six recommendations are mainly concerned with Portsmouth taken largely on its own. But the city’s links with the rest of Solent are very important. In that regard, we have two proposals.
First, significant efforts should be made to increase business-to-business relationships both within Portsmouth and across Solent. Central to that is the development of much richer and tighter business networks than currently prevail.
Networking features strongly in most analyses of successful regions.42 Networks help businesses to find customers, suppliers and collaborators. They enable the sharing of knowledge, and also the sharing of facilities. They provide an opportunity for businesses to challenge one another by example, and to identify common problems that can then be raised with local governments and other agencies.
Examples of networking include university-business links, meeting places, online support provided by local & national government agencies, and just chance-encounters at events or shared spaces. In Portsmouth, Shaping Portsmouth is playing a potentially important role in fostering networking, with the potential to achieve much more.43
Indeed, business associations are vital —ideally with individuals belonging to more than one (for example, within their sector; their local area, and perhaps with past colleagues or university associates). Work that we have undertaken in city regions elsewhere in the UK suggests that successful businesses do indeed typically use networks, typically to help identify business opportunities, or just to exchange ideas, while a significant minority use them to facilitate collaborative working.
But networking can also be fostered by particular types of businesses, such as advisory firms (important in financial services and some parts of manufacturing), agents (important in the media sector) or venture capitalists (essential for tech companies), and not only by specialist organisations.
The variety of linkages is important, while research in the United States suggests that informal networking and chance encounters are as important in these respects as formal networking.44 Such interactions are often productive in terms of exchanging ideas among individuals and businesses, and the same is true when people from businesses have the opportunity to network with those
42 See for example Michael Storper et al The Rise and Fall of Urban Economies: Lessons from San Francisco and Los Angeles, Stanford University Press, 2015. 43 http://shapingportsmouth.co.uk/ 44 See https://www.inc.com/john-rampton/10-places-to-network-with-startup-founders-in-silicon-valley.html
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from universities. Companies also benefit from the exchange of ideas with customers, suppliers and those with whom they have joint ventures.
The big challenge is for companies to use networking to broaden their horizons and improve their capacity for doing business. ‘Open innovation’, involving more than one business, is increasingly the norm, with firms finding that it delivers returns faster than innovation that occurs only within their own business.45
But open innovation can also be hard to set-up. Again, our work elsewhere suggests that when collaboration is low it is typically not because the desire is absent, but because the opportunities are missing – or more often, are just not known about. Networking is the way to address that.
In the defence sector there are obvious security-related constraints where collaborative working is concerned. Of course, trade associations do exist, and are potentially very important, but the need for confidentiality in the defence sector makes it important that companies are able to access opportunities across related sectors. This is a key challenge for Portsmouth, and it is an illustration of why Solent-wide thinking is important.
Something that also helps where networking is concerned is the use of shared space—offices obviously, but also sometimes laboratories or testing facilities. This is important for start-ups, and younger firms are generally much more likely to share space than older ones. There is a clear role for the city council or its partners to help in terms of providing incubator and start-up spaces. Indeed, the provision of such spaces is essential to the Innovation Quarter concept.
Going on from that, networks seldom emerge without a catalyst—a place, or an event or an organization or ideally all three. Acting as the catalyst to put new Solent-wide networks in place, and strengthen existing ones, is therefore an appropriate task for a public-sector partner. Portsmouth City Council should encourage Solent LEP to play such a role, and should commit some of its own resources to help make it happen. But it should also work directly with local businesses and others such as the university to encourage them to become more involved.
A note of warning, however. Networking is not the same as marketing, or membership-building, or stake-holder consultation. Events and newsletters which primarily just promote the organisations that are organising or despatching them, or which mainly address the issues that matter to those organisations, are perfectly reasonable activities. But they are not networking unless their main impact is to generate subsequent business-to-business relationships that continue and flourish, independently of the original organiser.
In the UK a wide range of organisations such as TECs and Business Links and some LEPs have struggled to make the transition that is needed here.
Again, it is not our role to suggest detailed implementation. But by way of an example, one of many ways forward might be the time-limited appointment of a single person or a team charged specifically with building and energising
45 See http://www.openinnovation.eu/open-innovation/
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business networks, working alongside partners, and making network-building central and not incidental to other activities.
5.8 PUSH FOR NEW PUBLIC TRANSPORT LINKS
The issue here is not just about networks. It is more basic. Improving the performance of Portsmouth cannot be done in isolation from the rest of Solent. And yet Portsmouth is isolated, certainly as far as public transport is concerned. Travel times on the trains are poor, and the services are infrequent and unmodernised. And there is no Solent-wide electronic ticketing. Solent LEP has published research suggesting that road congestion costs the region £0.4 billion a year.46 Despite plans for M27 improvements including the Smart Motorway initiative, this is a problem that is likely to get worse, not better.
Portsmouth therefore needs better public transport links with the rest of Solent. Research demonstrates that amongst businesses, physical proximity is an important influence on collaboration, that proximity is about travel-time rather than distance, and that collaboration increases in importance over time, as relationships become deeper.47
The same point arises with respect to other Solent-wide resources such as the universities, shopping centres and especially the airport—accessibility matters. Most of these are hard to access by public transport from Portsmouth.
Geography is a big reason for this relative isolation, and so is history: businesses locate where they can get the labour they need, and public transport demand is driven partly by existing business locations. So, linkages or their absence are self-reinforcing.
We understand that proposals are currently being developed (again) for a Solent transit network, but with no prospect for Portsmouth to be included.48 Phase one of the proposed network comprises ‘Tram-trains’ that will run south from Eastleigh into various parts of Southampton. A subsequent phase would then link Southampton to Fareham, Botley and Romsey. As we understand it, Portsmouth (and Gosport) would not be included.
It is vital to argue that this omission should be corrected, and that Portsmouth should be properly connected to its own hinterland, to Southampton, and to the airport.
We are of course sympathetic to concerns that such an ambition would involve a larger cost, much of it to be borne by central government, and that there would be a resultant need to satisfy the investment criteria of the Department for Travel and others, at a time when budgets are very slim. Doubtless this is why Portsmouth does not feature in current plans.
However, arguments of this sort are circular. An economically stronger Portsmouth would imply much enhanced use of any transport improvements, and those improvements would help to make the Portsmouth economy
46 https://solentlep.org.uk/media/1514/tip-final-web-version.pdf 47 ‘Do inventors talk to strangers? On proximity and collaborative knowledge creation, Crescenzi R, Nathan M, Rodriguez-Pose A, SERC Discussion Paper 153, 2014 48 Reference Solent transport strategy
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stronger. Thus, the viability needs to be assessed not against a ‘do nothing’ scenario but against a ‘policy on’ scenario, where the policies themselves look likely to deliver. This is another reason why we think Portsmouth should be ambitious.
A final point under this heading is that Portsmouth’s links to the broader South East are also important, and even more so its links to London. Our recommendations on Innovation Quarters are predicated on the expectation that many of the businesses involved will have strong links to London. The same is true for our suggestion of seeking to build an overnight/weekend-break visitor economy. London would be a major catchment area for that market. However, train times from London to Portsmouth (100km apart) are the same as times from London to Manchester (250 km apart), and with inferior rolling- stock. This needs to be addressed, and the City Council should therefore seek to have an influence, directly or via the LEP, on the national rail-infrastructure debate.
5.9 DEVELOP A QUALIFICATIONS-PROGRESSION STRATEGY
Many of our suggestions essentially relate to sectors or clusters, but with strong geographical elements to them. Some relate to branding, and to making better use of Portsmouth’s marine and maritime waterfront assets.
But the most basic asset for any city is its people. As we noted in Chapter 2, a basic way in which Portsmouth falls behind comparators is in terms of the qualifications of the workforce.49 This matters for productivity, for wages, and especially for the ability of Portsmouth to thrive in the face of the challenges listed in Chapter 2. So addressing this is critical.
Portsmouth needs a more qualified workforce than it currently has. Some of this will hopefully come from people moving into the city from elsewhere, and encouraging this is our final recommendation, below. However, the scale of the gap relative to other comparable cities argues against relying on that as the only mechanism. In any case, although inward migration of highly qualified people does indirectly benefit existing residents, raising their qualifications clearly benefits them directly—so long as the jobs are there.
So, putting in place a skills strategy has to be part of any economic development & regeneration strategy for Portsmouth. We understand that work on this is just starting. The issue here is what type of strategy the city should adopt. Some skills strategies target particular levels of qualifications, such as NVQ3, or particular vocations such as engineering, or softer employability skill-sets such as ‘team working’ or ‘literacy’. And if an evidence-base exists for Portsmouth that justifies doing any one of these in preference to the others, then it is a possible approach.
But usually the quality of evidence regarding which particular skills or qualifications are needed now, let alone in the future, is not great. The evidence can even be misleading. For example, employers may say that there is a particular skill shortage, when the difficulty they are facing really relates to the
49 See Figures 29-31
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persistence of vacancies that are hard-to-fill for other reasons, such as working conditions, or pay.
Similarly, individuals may feel that they do not need to invest in higher qualifications because work is currently available at relatively high wages for people with low qualifications (a classic problem in a city such as Portsmouth which has historically had a single large employer offering stable high-paid work). But those individuals may lack knowledge of how employment demand will shift in the future.
Our advice is to develop a strategy that is couched in terms of skills progression, or better-still qualifications progression. This therefore involves not just a focus on inputs or outputs (how many places are offered on a particular course or how many students achieve a certain qualification) but on outcomes (how many people move onto the next qualification, including those who enter work but continue to learn). It involves working with individual learners to keep them progressing up the ladder—from school to college, from pre-apprenticeship to apprenticeship, from foundation-degree to honours- degree and then onto post-graduate study, thereby challenging the psychology of stopping at the lowest level of achievement that an individual can get away with.
A second key feature of such a strategy is that it focuses on the relationships that exist between different teaching institutions, and on the development of learning paths that cross institutional boundaries. It needs to include community learning provision, and where possible the training that is provided by employers. And it should involve working with employers to encourage them to help both new and existing employees raise their qualifications. Furthermore, any progression strategy needs to feature strong ‘all-ages’ careers information and guidance—probably going beyond what the National Careers Service currently offers, perhaps through expanding the current externally- provided service.
A Qualifications Progression Strategy is therefore an essentially ‘holistic’ approach, which does not impose targets that distort behaviour, and does not favour one type of institution, or subject area, or qualification type, over others. It is appropriate for a city such as Portsmouth where there is a corresponding need to address a wide rather than a narrow range of skill issues.
5.10 IMPROVE THE CITY’S HOUSING OFFER
If the average qualifications of the workforce are to rise, increasing the levels attained by local young people and the existing workforce will not be enough. There is also a need for highly qualified people to move to the city from elsewhere. Currently, too few of them do so.
As an illustration of why high-level skills and qualifications matter, in 2014 the then Department for Business Innovation & Skills published a study which examined whether highly innovative firms have characteristics that distinguish them from low innovation firms.50 They concluded that the age of the company does not matter much: that younger and smaller firms are only slightly more
50 A Coad et. al. Innovative Firms & Growth, BIS March 2014
40 Portsmouth 2036: baseline forecasts & strategy advice
likely to be innovative; and that the sector does not matter much: that innovative firms are only slightly more likely to be found in engineering-related sectors than others.
The researchers did show evidence that highly innovative firms tend to be more internationally focused than others, and also that they tend to remain highly innovative through time. But the major distinguishing characteristic was the share of employment taken by STEM graduates. This was associated with a range of positive performance indicators, including amount of R&D spent, the number of new products brought to market, and use of external collaboration and information.
So, attracting the highly qualified to live in Portsmouth is the counterpart to attracting innovative firms to locate in Portsmouth. The two will reinforce one another.
How then to do it? As we noted in Chapter 3, housing is cheaper in Portsmouth than in most other parts of the South East.51 That is certainly something that can be used to draw new residents to the city—and new residents mean new skills, and improved opportunities for local businesses. However, price alone is not enough. The quality of local neighbourhoods must also help to attract people to the city. Portsmouth is not currently a place where people aspire to live. But it includes large areas of traditional terraced housing, of the sort that command high prices in many other cities. And it has a variety of other advantages – a Waterfront City, an engineering city, a tourist city. So Portsmouth certainly has the potential to become a place to which people want to move for reasons other than cost (though that certainly helps).
Improving existing local neighbourhoods is therefore a genuine part of an economic development & regeneration strategy for Portsmouth. This includes everything from street cleaning to bus timetables to place-making to ensuring that there are shops, cafes and pubs.
In addition, any new housing developments need to help define rather than dilute the character of Portsmouth as a city—a character that we understand to involve the unifying importance of the waterfront, together with strength in advanced engineering alongside a vibrant visitor economy. In this context the new opportunities for housing at Tipner and Horsea Island are clearly helpful in terms of numbers, but it is important that they also really take advantage of their waterfront locations, and that they offer distinctive living experiences that most cities cannot provide.
It is also very welcome that the proposed Masterplan for the regeneration of the city centre includes significant residential investment alongside office developments and public realm improvements. There is nothing inconsistent between this and our suggestion of an Innovation Quarter—indeed it is part of the concept of an Innovation Quarter that it is a place where people live as well as work.
But again, it is essentially not to have a ‘copycat’ strategy. Given that we see the waterfront as so important, it is essential to consider the relationship
51 See figure 58.
41 Portsmouth 2036: baseline forecasts & strategy advice
between the centre and the waterfront—the harbour, Southsea, and perhaps other parts too. This means that walking and bus routes need to be examined and probably improved, so that people living and working in the city centre feel themselves to be linked to the waterfront, and hence feel that they are in a distinctive city called Portsmouth, and not an anonymous city with nothing to differentiate it from other places.52
There may also be long-term opportunities to change the designation of some of the land on the east of the city which is currently occupied by light industrial, logistics or large-shed retail users, to create small new urban communities. We have mentioned these areas in the context of Innovation Quarters, but again, there may be scope for mixing that with residential. Whereas most of Portsmouth is very dense, this part of the city contains large open spaces such as Great Salterns and Milton Common. Close proximity to those natural areas, plus the wetlands beyond them, means that such neighbourhoods are potentially very appealing, both to businesses and to current and future residents. Few cities have such assets: Portsmouth could usefully take advantage of them.
52 As in many other cities, the opportunities offered by trams may need to be re-examined. But foot traffic and bus journeys are likely to be the first priorities. Sheffield and Birmingham are two cities that have successfully addressed the question of making it easier for people to move on foot from one part to another, and this subject features prominently in many of the developments taking place in London. It is vital that Portsmouth’s city centre Masterplan focuses on improving the experience of the pedestrian, the cyclist, and the bus passenger, to make Portsmouth an easy city to get around in.
42 Portsmouth 2036: baseline forecasts & strategy advice
ANNEX 1 – CHARTS
ECONOMIC GROWTH
Fig. 16. GVA, Portsmouth & broader comparators, 2010-2036
Index 2010=100 170 Forecast 160
150
140
130
120
110
100
90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036
Portsmouth Solent South East UK Source: ONS, Oxford Economics
Fig. 17. GVA, Portsmouth & city comparators, 2010-2036
Index 2010=100 170 Forecast 160 150 140 130 120 110 100 90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Brighton Newcastle Plymouth Salford Southampton
Source: ONS, Oxford Economics
43 Portsmouth 2036: baseline forecasts & strategy advice
EMPLOYMENT GROWTH
Fig. 18. Workplace employment, Portsmouth & broader comparators, 2010-2036
Index 2010=100 130 Forecast 125
120
115
110
105
100
95
90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Solent South East UK Source: ONS, Oxford Economics
Fig. 19. Workplace employment, Portsmouth & city comparators, 2010- 2036
Index 2010=100 130 Forecast 125 120 115 110 105 100 95 90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Brighton Newcastle Plymouth Salford Southampton Source: ONS, Oxford Economics
44 Portsmouth 2036: baseline forecasts & strategy advice
5.11 PRODUCTIVITY
Fig. 20. Productivity levels, Portsmouth & comparators, 2017
GVA per job (£000, 2015 prices)
South East
UK
Solent
Southampton
Salford
Portsmouth
Brighton
Newcastle
Plymouth
0 10 20 30 40 50 60 Source: Oxford Economics
Fig. 21. Productivity, Portsmouth & broader comparators, 2010-2036
Index 2010=100 140 Forecast 135 130 125 120 115 110 105 100 95 90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036
Portsmouth Solent South East UK Source: ONS, Oxford Economics
45 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 22. Productivity, Portsmouth & city comparators, 2010-2036
Index 2010=100 150 Forecast 140
130
120
110
100
90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Brighton Newcastle Plymouth Salford Southampton Source: ONS, Oxford Economics
SECTORS
Fig. 23. Sectoral employment concentration, Portsmouth, 2017
Percentage point difference Public admin & defence Manufacturing Human health Accom & food Electricity, gas, steam Information & comms Arts, entertainment Admin & support Education Mining Small relative to Large relative to Water supply South East South East Real estate Other services Agriculture Financial & insurance Transport & storage Wholesale & retail Construction Professional services -8% -6% -4% -2% 0% 2% 4% 6% 8% Source: ONS, Oxford Economics
46 Portsmouth 2036: baseline forecasts & strategy advice
BUSINESS STARTS
Fig. 24. New businesses as a share of the total, Portsmouth & city comparators, 2010-2016
% 20
18
16
14
12
10
8 2010 2011 2012 2013 2014 2015 2016
Portsmouth Brighton Newcastle Plymouth Salford Southampton
Source: ONS
Fig. 25. Survival of businesses started in 2011, Portsmouth & city comparators, 2016
% Still in business, 2018 South East
Brighton
UK
Newcastle
Plymouth
Salford
Portsmouth
Southampton
34 36 38 40 42 44 46 48 Source: ONS
47 Portsmouth 2036: baseline forecasts & strategy advice
UNEMPLOYMENT & INACTIVITY
Fig. 26. Unemployment rate, Portsmouth & comparators, 2017
% of 16 to 64-year olds Newcastle
Portsmouth
Plymouth
Brighton
UK
Southampton
Salford
Solent
South East
0 1 2 3 4 5 6 7 Source: ONS, Oxford Economics
Fig. 27. Unemployment rate, Portsmouth & broad comparators, 2010-2036
% of 16 to 64-year olds 12 Forecast 10
8
6
4
2
0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Solent South East UK Source: ONS, Oxford Economics
48 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 28. Economic inactivity rate, Portsmouth & comparators, 2017
% of 16 to 64-year olds
Newcastle
Portsmouth
Southampton
Salford
Brighton
UK
Plymouth
Solent
South East
0 5 10 15 20 25 30 Source: ONS
QUALIFICATIONS
Fig. 29. People with no qualifications, Portsmouth & comparators, 2017
% Share of 16 to 64-year olds Salford
Newcastle
UK
Portsmouth
Southampton
Solent
Plymouth
South East
Brighton
0 2 4 6 8 10 12
Source: ONS
49 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 30. People with their highest qualification at NVQ level 3, Portsmouth & comparators, 2017
%Share of 16 to 64-year olds Southampton
Solent
Newcastle
Portsmouth
Plymouth
Brighton
Salford
South East
UK
0 5 10 15 20 25 30
Source: ONS
Fig. 31. People with their highest qualification at NVQ level 4+, Portsmouth & comparators, 2017
% Share of 16 to 64-year olds Brighton
South East
UK
Newcastle
Southampton
Portsmouth
Solent
Plymouth
Salford
0 10 20 30 40 50 60
Source: ONS
50 Portsmouth 2036: baseline forecasts & strategy advice
EARNINGS
Fig. 32. Average annual earnings, Portsmouth & comparators, 2017
Southampton
South East
Salford
UK
Newcastle
Solent
Portsmouth
Brighton
Plymouth
£0 £5,000 £10,000 £15,000 £20,000 £25,000 £30,000 £35,000 Workplace based Residence based Source: ONS
Fig. 33. Workplace based annual earnings, Portsmouth & broad comparators, 2010-2036
Index 2010=100 220 Forecast 200
180
160
140
120
100
80 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Solent South East UK Source: ONS, Oxford Economics
51 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 34. Workplace based annual earnings, Portsmouth & city comparators, 2010-2036
Index 2010=100 240 Forecast 220 200 180 160 140 120 100 80 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Brighton Newcastle Plymouth Salford Southampton Source: ONS, Oxford Economics
HOUSING AFFORDABILITY
Fig. 35. Median house prices, Portsmouth & broad comparators, 2010- 2036
£600,000 Forecast £500,000
£400,000
£300,000
£200,000
£100,000
£0 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034
Portsmouth Solent South East UK Source: MHCLG, Oxford Economics
52 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 36. Housing affordability, Portsmouth & comparators, 2017
Ratio of median house prices to average annual earnings
Salford Newcastle Plymouth UK Portsmouth Southampton Solent South East Brighton
0 2 4 6 8 10 12 14
Source: MHCLG, ONS
Fig. 37. Housing affordability, Portsmouth & broad comparators, 2010- 2036
Ratio of median house prices to average annual earnings 12 Forecast
10
8
6
4 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Solent South East UK Source: MHCLG, ONS, Oxford Economics
53 Portsmouth 2036: baseline forecasts & strategy advice
POPULATION GROWTH
Fig. 38. Total population levels, Portsmouth & city comparators, 2017
Newcastle
Brighton
Plymouth
Southampton
Salford
Portsmouth
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Source: ONS, Oxford Economics
Fig. 39. Working age population, Portsmouth & broad comparators, 2010- 2036
Index 2010=100 108 Forecast 106
104
102
100
98
96 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Solent South East UK
Source: ONS, Oxford Economics
54 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 40. Working age population, Portsmouth & city comparators, 2010- 2036
Index 2010=100 120 Forecast 115
110
105
100
95
90 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Brighton Newcastle Plymouth Salford Southampton Source: ONS, Oxford Economics
Fig. 41. Cumulative net inward migration, Portsmouth & city comparators, 2010-2017
Brighton
Newcastle
Salford
Southampton
Portsmouth
Plymouth
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000
Source: ONS, Oxford Economics
55 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 42. Net migration, Portsmouth & city comparators, 2010-2036
3,500 Forecast 3,000 2,500 2,000 1,500 1,000 500 0 -500 -1,000 -1,500 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Portsmouth Brighton Newcastle Plymouth Salford Southampton Source: ONS, Oxford Economics
56 Portsmouth 2036: baseline forecasts & strategy advice
ANNEX 2 - TABLES
Fig. 43. Sectoral employment totals and shares, 2017
Brighton Newcastle Plymouth Salford Southampton Portsmouth Solent South East UK
000s % 000s % 000s % 000s % 000s % 000s % 000s % 000s % 000s %
Agriculture 0.2 0.1% 0.2 0.1% 0.2 0.2% 0.3 0.2% 0.2 0.1% 0.3 0.2% 4.3 0.7% 55 1.1% 450 1.3%
Mining 0.0 0.0% 0.0 0.0% 0.0 0.0% 0.1 0.0% 0.1 0.1% 0.0 0.0% 0.3 0.0% 4 0.1% 63 0.2%
Manufacturing 2.9 1.7% 8.3 4.2% 13.7 10.7% 7.9 6.0% 4.0 3.0% 10.8 8.6% 48.9 7.7% 296 5.9% 2,674 7.6%
Electricity, gas 1.1 0.7% 0.1 0.1% 0.6 0.5% 0.7 0.5% 0.0 0.0% 1.2 1.0% 1.6 0.3% 21 0.4% 141 0.4%
Water supply 0.6 0.4% 0.1 0.0% 0.4 0.3% 1.5 1.1% 0.5 0.4% 0.5 0.4% 3.1 0.5% 28 0.6% 211 0.6%
Construction 9.1 5.4% 6.3 3.2% 6.9 5.4% 9.0 6.9% 5.5 4.2% 6.0 4.8% 43.5 6.9% 357 7.2% 2,301 6.6%
Wholesale & retail 21.1 12.5% 21.9 11.2% 16.3 12.8% 18.2 13.8% 17.2 13.1% 15.9 12.6% 90.7 14.3% 734 14.7% 4,984 14.2%
Transport & storage 5.1 3.0% 7.1 3.6% 6.6 5.2% 3.9 2.9% 8.8 6.7% 4.4 3.5% 33.4 5.3% 235 4.7% 1,795 5.1%
Accommodation & food 13.9 8.3% 18.8 9.6% 8.3 6.5% 8.3 6.3% 8.7 6.6% 8.6 6.8% 41.0 6.5% 309 6.2% 2,407 6.9%
Info & comms 9.9 5.9% 11.4 5.8% 2.0 1.6% 9.9 7.5% 8.0 6.1% 8.0 6.3% 33.1 5.2% 296 6.0% 1,464 4.2%
Financial & insurance 10.5 6.3% 5.5 2.8% 1.7 1.4% 5.5 4.2% 3.9 3.0% 2.1 1.6% 15.5 2.5% 134 2.7% 1,130 3.2%
Real estate 3.2 1.9% 4.0 2.0% 2.2 1.7% 2.5 1.9% 1.8 1.4% 1.5 1.2% 8.7 1.4% 86 1.7% 565 1.6%
Professional serv. 12.5 7.4% 15.8 8.1% 5.5 4.3% 10.9 8.3% 7.0 5.3% 4.8 3.8% 41.5 6.6% 449 9.0% 3,048 8.7%
Admin & support 14.2 8.5% 15.0 7.6% 7.4 5.8% 12.0 9.1% 15.1 11.5% 11.2 8.8% 55.6 8.8% 428 8.6% 3,042 8.7%
Public admin & defence 5.5 3.2% 15.9 8.1% 11.7 9.2% 7.6 5.8% 5.3 4.1% 14.1 11.2% 35.2 5.6% 179 3.6% 1,475 4.2%
Education 20.4 12.1% 20.8 10.6% 14.4 11.3% 11.8 9.0% 16.5 12.6% 12.8 10.2% 64.0 10.1% 502 10.1% 2,925 8.3%
Human health 24.6 14.6% 30.2 15.4% 22.6 17.8% 17.2 13.1% 22.4 17.0% 16.3 12.9% 78.1 12.4% 553 11.1% 4,378 12.5%
Arts, entertainment 7.4 4.4% 6.5 3.3% 3.8 3.0% 2.0 1.5% 2.7 2.0% 4.3 3.4% 17.4 2.8% 154 3.1% 1,007 2.9%
Other services 6.4 3.8% 8.2 4.2% 2.8 2.2% 2.6 2.0% 3.6 2.7% 3.3 2.6% 16.2 2.6% 160 3.2% 1,016 2.9%
Total 169 196 127 132 131 126 632 4,978 35,075
Source: Oxford Economics
57 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 44. Sectoral GVA totals (2015 prices) and shares, 2017
Brighton Newcastle Plymouth Salford Southampton Portsmouth Solent South East UK
£m % £m % £m % £m % £m % £m % £m % £m % £m %
Agriculture 1.0 0.0% 0.9 0.0% 5.6 0.1% 4.7 0.1% 0.6 0.0% 0.0 0.0% 71.6 0.2% 1,106 0.4% 10,530 0.6%
Mining 3.0 0.0% 0.0 0.0% 4.1 0.1% 0.0 0.0% 2.3 0.0% 0.0 0.0% 5.3 0.0% 346 0.1% 4,674 0.3%
Manufacturing 184.5 2.5% 514.0 6.5% 824.5 16.9% 491.4 7.8% 284.8 4.5% 819.2 14.4% 3,320.8 10.8% 20,270 7.8% 175,233 10.1%
Electricity, gas 188.7 2.6% 71.5 0.9% 117.8 2.4% 223.3 3.6% 128.8 2.0% 250.6 4.4% 779.9 2.5% 4,657 1.8% 28,790 1.7%
Water supply 48.9 0.7% 31.9 0.4% 26.2 0.5% 31.2 0.5% 3.4 0.1% 20.3 0.4% 315.7 1.0% 3,314 1.3% 18,246 1.1%
Construction 362.1 4.9% 362.5 4.6% 303.6 6.2% 395.5 6.3% 349.0 5.5% 362.4 6.4% 2,251.3 7.3% 18,374 7.1% 112,051 6.5%
Wholesale & retail 656.7 9.0% 779.5 9.9% 438.8 9.0% 879.0 14.0% 866.8 13.7% 558.1 9.8% 4,104.3 13.3% 33,044 12.8% 194,114 11.2%
Transport & storage 254.4 3.5% 362.2 4.6% 174.8 3.6% 142.7 2.3% 505.2 8.0% 217.8 3.8% 1,694.8 5.5% 11,663 4.5% 76,495 4.4%
Accommodation & food 215.4 2.9% 266.1 3.4% 122.2 2.5% 122.5 2.0% 183.3 2.9% 137.1 2.4% 867.9 2.8% 6,795 2.6% 52,108 3.0%
Info & comms 498.0 6.8% 532.8 6.8% 112.7 2.3% 498.4 8.0% 295.2 4.7% 524.3 9.2% 2,103.7 6.8% 24,262 9.4% 113,975 6.6%
Financial & insurance 657.5 9.0% 534.5 6.8% 123.1 2.5% 404.5 6.5% 365.5 5.8% 125.7 2.2% 1,224.6 4.0% 10,693 4.1% 114,667 6.6%
Real estate 1315.3 18.0% 850.5 10.8% 622.9 12.7% 742.2 11.8% 712.5 11.3% 641.6 11.3% 4,138.6 13.5% 39,694 15.3% 238,231 13.8%
Professional serv. 444.9 6.1% 502.9 6.4% 157.1 3.2% 410.8 6.6% 346.4 5.5% 221.3 3.9% 2,054.9 6.7% 22,144 8.5% 141,197 8.2%
Admin & support 432.4 5.9% 331.7 4.2% 170.5 3.5% 384.4 6.1% 447.6 7.1% 306.9 5.4% 1,503.3 4.9% 12,623 4.9% 82,874 4.8%
Public admin & defence 261.2 3.6% 941.3 12.0% 541.5 11.1% 349.7 5.6% 292.6 4.6% 613.5 10.8% 1,537.7 5.0% 9,126 3.5% 77,508 4.5%
Education 712.6 9.7% 512.7 6.5% 499.2 10.2% 449.0 7.2% 690.7 10.9% 369.9 6.5% 1,955.0 6.4% 16,295 6.3% 104,106 6.0%
Human health 704.5 9.6% 863.2 11.0% 520.0 10.6% 568.9 9.1% 674.8 10.7% 349.9 6.1% 1,926.2 6.3% 15,476 6.0% 127,298 7.4%
Arts, entertainment 126.4 1.7% 163.9 2.1% 70.6 1.4% 89.3 1.4% 67.6 1.1% 95.3 1.7% 402.4 1.3% 3,617 1.4% 25,389 1.5%
Other services 305.8 4.2% 284.2 3.6% 85.5 1.7% 115.0 1.8% 149.2 2.4% 132.0 2.3% 699.2 2.3% 7,319 2.8% 41,425 2.4%
Total 7,316 7,873 4,890 6,268 6,316 5,691 30,759 259,129 1,727,810
Source: Oxford Economics
58 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 45. Sectoral productivity (2015 prices), 2017
Brighton Newcastle Plymouth Salford Southampton Portsmouth Solent South East UK
£000s £000s £000s £000s £000s £000s £000s £000s £000s
Agriculture 4.6 6.0 22.7 16.8 3.6 0.1 16.6 20.2 23.4
Mining 275.9 0.0 140.4 0.0 27.2 0.0 18.3 88.9 74.6
Manufacturing 63.4 62.2 60.3 61.9 71.2 75.5 68.0 68.5 65.5
Electricity, gas 167.0 620.6 182.5 339.5 26,713 208.8 473.5 225.4 203.9
Water supply 75.7 346.2 63.7 21.0 6.4 38.3 101.5 117.1 86.3
Construction 39.9 57.5 44.0 43.8 63.0 60.0 51.8 51.4 48.7
Wholesale & retail 31.1 35.5 27.0 48.4 50.5 35.0 45.2 45.0 39.0
Transport & storage 49.7 50.8 26.6 36.8 57.2 50.0 50.8 49.7 42.6
Accommodation & food 15.5 14.2 14.8 14.7 21.1 16.0 21.2 22.0 21.7
Info & comms 50.4 46.7 56.6 50.5 36.8 65.8 63.5 81.9 77.8
Financial & insurance 62.3 96.7 70.6 73.3 93.6 60.8 79.0 80.0 101.5
Real estate 416.8 213.5 281.3 293.7 390.5 433.0 473.1 463.0 421.6
Professional serv. 35.7 31.8 28.4 37.7 49.5 46.2 49.5 49.4 46.3
Admin & support 30.4 22.1 23.0 32.1 29.7 27.5 27.0 29.5 27.2
Public admin & defence 47.9 59.4 46.4 45.8 54.8 43.4 43.7 51.0 52.6
Education 35.0 24.6 34.6 37.9 41.8 28.8 30.5 32.5 35.6
Human health 28.7 28.6 23.0 33.0 30.2 21.5 24.7 28.0 29.1
Arts, entertainment 17.1 25.2 18.7 45.3 25.2 22.2 23.1 23.4 25.2
Other services 48.1 34.5 30.2 44.5 41.9 40.2 43.2 45.8 40.8
Total 43.4 40.1 38.4 47.5 48.1 45.1 48.7 52.1 49.3
Source: Oxford Economics
59 Portsmouth 2036: forecasts & strategic advice
ECONOMIC GROWTH
Fig. 46. GVA, Portsmouth & comparators, 2010-2036
GVA (£m, 2015 prices) Growth (% y/y) 2010- 2017- 2023- 2030- 2017- 2017 2018 2030 2036 2017 2023 2030 2036 2036 Portsmouth 5,691 6,298 6,937 7,409 0.5% 1.7% 1.4% 1.1% 1.4% Brighton 7,316 8,088 9,110 9,927 2.3% 1.7% 1.7% 1.4% 1.6% Newcastle 7,873 8,812 9,760 10,465 1.4% 1.9% 1.5% 1.2% 1.5% Plymouth 4,890 5,215 5,630 5,920 0.7% 1.1% 1.1% 0.8% 1.0% Salford 6,268 7,112 8,101 8,891 1.6% 2.1% 1.9% 1.6% 1.9% Southampton 6,316 7,208 8,168 8,916 2.1% 2.2% 1.8% 1.5% 1.8% Solent 30,759 34,590 38,634 41,744 1.4% 2.0% 1.6% 1.3% 1.6% South East 259,129 292,679 331,406 362,208 1.9% 2.0% 1.8% 1.5% 1.8% UK 1,727,810 1,942,877 2,191,741 2,390,262 2.0% 2.0% 1.7% 1.5% 1.7%
Source: ONS, Oxford Economics
Fig. 47. Workplace employment, Portsmouth & comparators, 2010-2036
Employment (000s) Growth (% y/y) 2010- 2017- 2023- 2030- 2017- 2017 2018 2030 2036 2017 2023 2030 2036 2036 Portsmouth 126 129 130 129 0.5% 0.4% 0.1% -0.1% 0.1% Brighton 169 173 177 179 2.6% 0.4% 0.3% 0.2% 0.3% Newcastle 196 204 207 208 1.2% 0.7% 0.2% 0.1% 0.3% Plymouth 127 127 126 124 0.5% -0.1% -0.1% -0.3% -0.1% Salford 132 138 143 146 0.4% 0.8% 0.5% 0.3% 0.5% Southampton 131 138 143 146 1.1% 0.8% 0.5% 0.3% 0.6% Solent 632 655 666 669 0.9% 0.6% 0.2% 0.1% 0.3% South East 4,978 5,170 5,301 5,361 1.6% 0.6% 0.4% 0.2% 0.4% UK 35,075 36,265 37,018 37,329 1.5% 0.6% 0.3% 0.1% 0.3%
Source: ONS, Oxford Economics
60 Portsmouth 2036: baseline forecasts & strategy advice
PRODUCTIVITY
Fig. 48. Productivity, Portsmouth & comparators, 2010-2036
GVA per worker (2015 prices) Growth (% y/y) 2010- 2017- 2023- 2030- 2017- 2017 2023 2030 2036 2017 2023 2030 2036 2036 Portsmouth 45.1 48.8 53.4 57.3 0.0% 1.3% 1.3% 1.2% 1.3% Brighton 43.4 46.7 51.4 55.5 -0.3% 1.2% 1.4% 1.3% 1.3% Newcastle 40.1 43.2 47.1 50.3 0.2% 1.2% 1.2% 1.1% 1.2% Plymouth 38.4 41.1 44.7 47.8 0.2% 1.1% 1.2% 1.1% 1.2% Salford 47.5 51.4 56.6 61.1 1.3% 1.3% 1.4% 1.3% 1.3% Southampton 48.1 52.3 57.0 61.0 1.1% 1.4% 1.3% 1.1% 1.3% Solent 48.7 52.8 58.0 62.4 0.4% 1.4% 1.4% 1.2% 1.3% South East 52.1 56.6 62.5 67.6 0.3% 1.4% 1.4% 1.3% 1.4% UK 49.3 53.6 59.2 64.0 0.5% 1.4% 1.4% 1.3% 1.4%
Source: ONS, Oxford Economics
Fig. 49. Growth components, 2010-17
Growth Components, % y/y GVA Employment Productivity Brighton 2.6% -0.3% 2.3% Southampton 1.1% 1.1% 2.1% UK 1.5% 0.5% 2.0% South East 1.6% 0.3% 1.9% Salford 0.4% 1.3% 1.6% Newcastle 1.2% 0.2% 1.4% Solent 0.9% 0.4% 1.4% Plymouth 0.5% 0.2% 0.7% Portsmouth 0.5% 0.0% 0.5%
Source, ONS, Oxford Economics
61 Portsmouth 2036: baseline forecasts & strategy advice
SECTORS
Fig. 50. Top 15 employment specialisms broad 2-digit sectors, Portsmouth, 201653
Location Employment Rank Sector Quotient Repair and installation of machinery and 1 5.3 3,000 equipment 2 Manufacture of other transport equipment 4.8 1,300 3 Gambling and betting activities 3.1 700 Electricity, gas, steam and air conditioning 4 2.3 1,300 supply Public administration and defence; compulsory 5 2.1 7,000 social security 6 Water transport 2.1 200 7 Information service activities 2.0 500 8 Manufacture of machinery and equipment. 1.9 1,000 9 Employment activities 1.7 5,000 Manufacture of fabricated metal products, 10 1.6 1,400 except machinery and equipment 11 Creative, arts and entertainment activities 1.6 600 12 Human health activities 1.6 11,500 Manufacture of motor vehicles, trailers and 13 1.5 600 semi-trailers 14 Manufacture of rubber and plastic products 1.5 500 15 Rental and leasing activities 1.4 700
Source: ONS
53 Includes sectors with a minimum of 200 people employed. A location quotient measures an economy’s degree of specialisation relative to the south east average, providing a way of demonstrating where an area’s specialisations lie. A value of greater than 1 indicates that the district is more specialised in a particular sector than in the South East as a whole.
62 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 51. Top 15 employment specialisms narrow 4-digit sectors, Portsmouth, 201653
Location Employment QuotientError! B Rank Sector ookmark not defined. 1 Repair and maintenance of ships and boats 24.9 2,500 2 Other information service activities 8.4 500 Wholesale of sugar and chocolate and sugar 3 8.0 300 confectionery Manufacture of non-domestic cooling and 4 8.0 900 ventilation equipment 5 Defence activities 7.0 1,500 Manufacture of air and spacecraft and related 6 6.2 1,300 machinery 7 Operation of arts facilities 6.2 400 8 Compulsory social security activities 5.6 400 9 Distribution of electricity 5.1 900 10 Distribution of gaseous fuels through mains 4.6 400 Service activities incidental to water 11 4.5 500 transportation Other information technology and computer 12 4.5 3,800 service activities Manufacture of other parts and accessories for 13 4.3 600 motor vehicles Repair and maintenance of aircraft and 14 4.0 400 spacecraft Activities of professional membership 15 3.2 300 organisations Source: ONS
BUSINESS STARTS
Fig. 52. Business birth rates, Portsmouth & comparators, 2010-2016
New businesses as a share of total businesses (%) 2011 2012 2013 2014 2015 2016 Portsmouth 10.6 11.7 11.8 16.1 15.9 15.9 Brighton 11.4 12.1 12.5 14.6 14.6 14.3 Newcastle 9.6 11.7 12.3 15.0 14.5 14.5 Plymouth 9.4 11.7 12.0 17.3 13.8 13.5 Salford 11.2 12.4 13.5 16.8 16.2 16.5 Southampton 10.6 12.3 12.0 15.1 15.3 18.8 Solent 9.2 10.0 10.2 12.9 12.5 13.3 South East 9.8 10.8 10.8 13.1 12.7 13.2 UK 10.0 11.2 11.4 14.1 13.7 14.3
Source: ONS
63 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 53. Survival of businesses started in 2011, Portsmouth & city comparators, 2011-2016
Business survival rates (%) Births 2011 1-year 2-year 3-year 4-year 5-year (2012) (2013) (2014) (2015) (2016) Brighton 1,525 95 78 63 53 46 Newcastle 895 92 73 58 48 42 Plymouth 685 93 73 58 47 41 Salford 915 89 69 54 46 40 Southampton 750 94 73 57 47 39 Portsmouth 640 92 73 56 45 39 South East 40,775 94 77 62 53 46 UK 261,370 93 76 61 51 44
Source: ONS
UNEMPLOYMENT & INACTIVITY
Fig. 54. Unemployment and inactivity rates, Portsmouth & comparators, 2010-2036
Economic inactivity rate (% of working age Unemployment rate (% of 16+ population) population) 2017 2023 2030 2036 2017 2023 2030 2036 Portsmouth 4.8 4.7 5.2 5.6 25.7 23.9 23.3 22.4 Brighton 4.5 4.3 4.4 4.5 19.8 16.7 16.3 14.1 Newcastle 6.5 5.9 5.9 5.8 27.3 24.6 24.5 24.4 Plymouth 4.5 4.6 5.1 5.5 21.5 19.7 19.2 18.3 Salford 4.0 3.4 3.3 3.2 20.2 17.0 17.1 17.5 Southampton 4.2 3.8 4.0 4.2 22.1 18.4 18.1 17.9 Solent 3.6 3.2 3.5 3.7 15.9 11.6 11.1 9.4 South East 3.2 2.9 3.0 3.0 14.5 9.7 9.5 7.7 UK 4.4 4.0 4.0 4.0 18.0 14.2 14.0 12.8
Source: ONS, Oxford Economics
64 Portsmouth 2036: baseline forecasts & strategy advice
QUALIFICATIONS
Fig. 55. Share of 16 to 64-year olds by highest qualification level, Portsmouth & comparators, 2017
Highest qualification level (%) No qualifications NVQ 3 NVQ 4+ Portsmouth 7.5 23.3 34.5 Brighton 2.6 20.7 54.1 Newcastle 9.0 23.7 37.3 Plymouth 5.3 23.1 31.6 Salford 10.4 20.2 30.9 Southampton 7.4 24.2 36.0 Solent 5.6 23.8 34.4 South East 5.2 19.7 41.4 UK 8.0 18.6 38.4
Source: ONS
EARNINGS
Fig. 56. Workforce based earnings, Portsmouth & comparators, 2010-2036
Average weekly workplace earnings (£) Growth (% y/y) (2015 prices) 2010- 2017- 2023- 2030- 2017- 2017 2023 2030 2036 2017 2023 2030 2036 2036 Portsmouth £509 £607 £754 £909 -0.4% 3.0% 3.1% 3.2% 3.1% Brighton £486 £583 £729 £883 1.7% 3.1% 3.2% 3.2% 3.2% Newcastle £534 £634 £794 £962 2.3% 2.9% 3.3% 3.3% 3.1% Plymouth £464 £549 £679 £816 0.8% 2.9% 3.1% 3.1% 3.0% Salford £547 £662 £828 £1,004 1.9% 3.2% 3.2% 3.3% 3.2% Southampton £593 £709 £884 £1,067 3.5% 3.0% 3.2% 3.2% 3.1% Solent £526 £630 £785 £949 2.0% 3.1% 3.2% 3.2% 3.2% South East £552 £663 £829 £1,003 1.4% 3.1% 3.2% 3.2% 3.2% UK £535 £645 £810 £984 1.3% 3.2% 3.3% 3.3% 3.3%
Source: ONS, Oxford Economics
65 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 57. Resident based earnings, Portsmouth & comparators, 2010-2036
Average weekly resident earnings (£) Growth (% y/y) (2015 prices) 2010- 2017- 2023- 2030- 2017- 2017 2023 2030 2036 2017 2023 2030 2036 2036 Portsmouth £461 £550 £682 £822 1.5% 3.0% 3.1% 3.1% 3.1% Brighton £535 £642 £801 £969 1.0% 3.1% 3.2% 3.2% 3.2% Newcastle £495 £588 £734 £888 2.2% 2.9% 3.2% 3.2% 3.1% Plymouth £439 £519 £640 £767 0.9% 2.8% 3.1% 3.1% 3.0% Salford £469 £568 £709 £858 1.7% 3.2% 3.2% 3.2% 3.2% Southampton £457 £547 £682 £824 1.2% 3.1% 3.2% 3.2% 3.2% Solent £545 £653 £814 £984 1.9% 3.1% 3.2% 3.2% 3.2% South East £587 £706 £883 £1,069 1.2% 3.1% 3.2% 3.2% 3.2% UK £535 £643 £805 £975 1.3% 3.1% 3.3% 3.3% 3.2%
Source: ONS, Oxford Economics
HOUSING AFFORDABILITY
Fig. 58. Median house prices, Portsmouth & comparators, 2010-2036
Median house prices (£) Growth (% y/y) 2010- 2017- 2023- 2030- 2017- 2017 2023 2030 2036 2017 2023 2030 2036 2036 Portsmouth £201,400 £229,800 £286,800 £343,400 4.1% 2.2% 3.2% 3.0% 2.8% Brighton £354,500 £422,400 £562,500 £710,700 5.6% 3.0% 4.2% 4.0% 3.7% Newcastle £157,000 £176,400 £224,600 £278,900 1.2% 2.0% 3.5% 3.7% 3.1% Plymouth £170,000 £189,400 £229,700 £270,100 2.4% 1.8% 2.8% 2.7% 2.5% Salford £152,300 £176,300 £246,100 £320,900 4.5% 2.5% 4.9% 4.5% 4.0% Southampton £204,200 £238,500 £304,000 £370,300 3.9% 2.6% 3.5% 3.3% 3.2% Solent £270,050 £313,653 £402,320 £491,391 4.4% 2.5% 3.6% 3.4% 3.2% South East £318,700 £373,900 £488,100 £605,800 5.4% 2.7% 3.9% 3.7% 3.4% UK £221,600 £259,500 £334,800 £412,800 3.8% 2.7% 3.7% 3.6% 3.3%
Source: ONS, Oxford Economics
66 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 59. Housing affordability, Portsmouth & comparators, 2010-2036
Ratio of median house prices to average annual Growth (% y/y) resident earnings 2010- 2017- 2023- 2030- 2017- 2017 2023 2030 2036 2017 2023 2030 2036 2036 Portsmouth 8.4 8.0 8.1 8.0 2.6% -0.7% 0.1% -0.1% -0.2% Brighton 12.7 12.7 13.5 14.1 4.6% -0.1% 0.9% 0.7% 0.5% Newcastle 6.1 5.8 5.9 6.0 -1.0% -0.9% 0.3% 0.4% 0.0% Plymouth 7.5 7.0 6.9 6.8 1.5% -1.0% -0.3% -0.3% -0.5% Salford 6.2 6.0 6.7 7.2 2.7% -0.7% 1.6% 1.3% 0.8% Southampton 8.6 8.4 8.6 8.6 2.7% -0.4% 0.3% 0.1% 0.0% Solent 9.5 9.2 9.5 9.6 2.4% -0.5% 0.4% 0.2% 0.0% South East 10.4 10.2 10.6 10.9 4.2% -0.4% 0.6% 0.4% 0.2% UK 8.0 7.8 8.0 8.1 2.5% -0.4% 0.4% 0.3% 0.1%
Source: ONS, Oxford Economics
POPULATION GROWTH
Fig. 60. Population, Portsmouth & comparators, 2010-2036
Population (000s) Growth (% y/y) 2010- 2017- 2023- 2030- 2017- 2017 2023 2030 2036 2017 2023 2030 2036 2036 Portsmouth 215 223 227 229 0.8% 0.6% 0.3% 0.1% 0.3% Brighton 289 297 301 303 1.0% 0.5% 0.2% 0.1% 0.3% Newcastle 296 305 311 315 1.0% 0.5% 0.3% 0.2% 0.3% Plymouth 264 269 272 273 0.5% 0.3% 0.2% 0.1% 0.2% Salford 250 261 270 275 1.1% 0.7% 0.5% 0.3% 0.5% Southampton 252 265 274 281 1.2% 0.8% 0.5% 0.4% 0.6% Solent 1,614 1,671 1,714 1,740 0.7% 0.6% 0.4% 0.2% 0.4% South East 9,094 9,434 9,708 9,879 0.8% 0.6% 0.4% 0.3% 0.4% UK 66,035 67,987 69,542 70,536 0.7% 0.5% 0.3% 0.2% 0.3%
Source: ONS, Oxford Economics
67 Portsmouth 2036: baseline forecasts & strategy advice
Fig. 61. Working age population, Portsmouth & comparators, 2010-2036
Working age population (000s) Growth (% y/y) 2010- 2017- 2023- 2030- 2017- 2017 2023 2030 2036 2017 2023 2030 2036 2036 Portsmouth 144 146 144 141 0.6% 0.2% -0.2% -0.4% -0.1% Brighton 203 206 203 197 1.0% 0.2% -0.2% -0.4% -0.2% Newcastle 201 200 200 198 0.8% 0.0% -0.1% -0.1% -0.1% Plymouth 169 167 164 159 0.1% -0.2% -0.3% -0.5% -0.3% Salford 164 169 173 174 0.9% 0.5% 0.3% 0.1% 0.3% Southampton 173 176 179 179 0.9% 0.4% 0.2% 0.0% 0.2% Solent 996 1,002 992 976 0.2% 0.1% -0.2% -0.3% -0.1% South East 5,618 5,686 5,665 5,588 0.3% 0.2% -0.1% -0.2% 0.0% UK 41,549 41,785 41,570 41,107 0.3% 0.1% -0.1% -0.2% -0.1%
Source: ONS, Oxford Economics
Fig. 62. Net migration, Portsmouth & comparators, 2010-2036
Net migration (000s) Share of population (%) 2017 2023 2030 2036 2017 2023 2030 2036 Portsmouth 0.8 0.3 0.2 0.2 0.4% 0.1% 0.1% 0.1% Brighton 1.0 0.3 0.1 0.1 0.4% 0.1% 0.0% 0.0% Newcastle 1.4 0.8 0.8 0.8 0.5% 0.2% 0.3% 0.2% Plymouth 0.6 -0.1 -0.1 -0.1 0.2% 0.0% 0.0% 0.0% Salford 1.0 0.4 0.1 0.0 0.4% 0.1% 0.0% 0.0% Southampton 1.1 0.4 0.2 0.2 0.4% 0.1% 0.1% 0.1% Solent 9.9 6.3 5.9 5.7 0.6% 0.4% 0.3% 0.3% South East 46.7 28.7 27.6 26.8 0.5% 0.3% 0.3% 0.3% UK 230 90 90 90 0.3% 0.1% 0.1% 0.1%
Source: ONS, Oxford Economics
68 Portsmouth 2036: baseline forecasts & strategy advice
ANNEX 3 – NOTES & DEFINITIONS
NOTES & DEFINITIONS
In this report Portsmouth is defined by the local authority geography. Solent is the area covered by the Local Enterprise Partnership, which comprises a mix of entire local authority districts and selected wards within local authorities. Since the Office for National Statistics (ONS) does not publish much of the necessary information at ward level we have computed our own estimates by using such ward-level information as is available to adjust the district level information, and then reaggregating the results to the Solent level.
We have also compared Portsmouth with five other cities drawn from the wider CIPFA Nearest Statistical Neighbour grouping. The five are Brighton (chosen because it is also a south coast visitor-city, facing some similar challenges but with a more positive public image than Portsmouth); Newcastle (also with a strong ship-building heritage and part of a broader city- region that has opted for a combined authority); Plymouth (the UK’s other main naval town but challenged by its remote location); Salford (a city with a difficult industrial heritage but which has seen substantial investment in the media sector, and which has therefore played a leading role in the broader Greater Manchester revival); and Southampton (Portsmouth’s neighbour and partner, with a larger commercial port than Portsmouth and a larger business services sector, but lacking Portsmouth’s strong leisure economy and distinct cultural heritage).
All our measures of economic performance follow standard ONS definitions, as set out on https://www.ons.gov.uk/. However, for consistency when referring to local data we use GDP (gross domestic product) and GVA (gross value added) to mean the same thing; the difference is not significant, particularly where growth rates are concerned.
Our baseline forecasts are fully consistent with our latest Oxford Economics projections for the UK and global economies, and take account of a vast wealth of information on drivers such as trade, competitiveness, macro-economic policy, trends in innovation and productivity, demographics, and so on.
Our views on local economic strategy reflect our reading of the research literature and our experience working with private- and public-sector clients across the UK and globally. Where we cite reports and websites, these are by way of example.
69 Portsmouth 2036: forecasts & strategic advice
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