Portsmouth 2036: Forecasts & Strategic Advice
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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 Oxford Economics was founded in 1981 as a commercial venture with Oxford University’s business college to provide economic forecasting and modelling to UK companies and financial institutions expanding abroad. Since then, we have become one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on more than 200 countries, over 100 industrial sectors and 4,000 cities and locations. Our best-of-class global economic and industry models and analytical tools give us an unparalleled ability to forecast external market trends and assess their economic, social and business impact. Headquartered in Oxford, England, with regional centres in London, New York, and Singapore, Oxford Economics has offices across the globe in Belfast, Chicago, Dubai, Miami, Milan, Paris, Philadelphia, San Francisco, and Washington DC. We employ over 300 full-time people, including more than 200 professional economists, industry experts and business editors—one of the largest teams of macroeconomists and thought leadership specialists. Our global team is highly skilled in a full range of research techniques and thought leadership capabilities, from econometric modelling, scenario framing, and economic impact analysis to market surveys, case studies, expert panels, and web analytics. Underpinning our in-house expertise is a contributor network of over 500 economists, analysts and journalists around the world. Oxford Economics is a key adviser to corporate, financial and government decision-makers and thought leaders. Our worldwide client base now comprises over 1500 international organisations, including leading multinational companies and financial institutions; key government bodies and trade associations; and top universities, consultancies, and think tanks. September 2018 All data shown in tables and charts are Oxford Economics’ own data, except where otherwise stated and cited in footnotes, and are copyright © Oxford Economics Ltd. The modelling and results presented here are based on information provided by third parties, upon which Oxford Economics has relied in producing its report and forecasts in good faith. Any subsequent revision or update of these data will affect the assessments and projections shown. To discuss the report further please contact: Richard Holt: [email protected] Oxford Economics Broadwall House, 21 Broadwall, London, SE1 9PL, UK 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. 1 Portsmouth 2036: baseline forecasts & strategy advice 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