Scale and Extent of Economic Links between Leeds and London Leeds City Council May 2018 2 Contents Introduction 3 Business Connections 6 Academic Collaboration 36 Transport Connections 45 Population & Labour Market Connections 49 Investment Flows 54 Positioning Leeds 59 Opportunity Mapping 66 Note: Images used in this report may be subject to Copyright Introduction Introduction 4 Study Context Leeds is already a vibrant, successful and This study comes at an important time for both cities, international city full of innovation and enterprise, with with the Leeds Inclusive Growth Strategy (2017-23) strong economic prospects for its future. The city’s having recently been launched at a similar time to strong growth is partly the result of its highly skilled London’s Economic Development Strategy. It is workforce, innovation made by its universities and important for Leeds to understand how its economy businesses, and its strong underpinning infrastructure. can both complement and compete against London’s, Leeds cannot be complacent, and it should continue and where the biggest opportunities lie in the future. its efforts to attract more high-calibre of firms to the city. There are already a number of future developments will further help to strengthen the connections This research has been commissioned to better between the two cities. When HS2 is completed, understand the current economic connections journey times between Leeds and the capital will be between Leeds and London, and future opportunities shortened from 2hrs 20mins to 1hr 20mins, and further for growth in these links between the two cities. The improvements to the office stock within Leeds will key connections which have been assessed between continue to make the city an attractive place for the two cities are: inward investment. This, combined with Leeds’ current • Business Connections sector strengths, creates a promising future for both cities. • Academic Collaboration • Transport Connections • Population & Labour Market Connections • Investment Flows Summary Infographic 5 Business Connections Population & Labour Market Connections 21% of Leeds employers want improved connections to 39,000 new graduates in the city region each year London to help improve their business 54% of office space in Leeds is owned by London-based 1,000 of whom move to London after graduation businesses, alongside 62% of retail space & 33% Strong net inflow of people into Leeds of industrial space Migration in 2016 • Leeds from London aged 18-20, heading for Strongest potential for sector collaboration across some of local universities Leeds’ targeted growth sectors: 4,300 • Net loss of people from Leeds aged Creative & Finance & 3,400 Health between 20 and 30 of around 3,000 Digital Professional people each year Future employment growth is expected to be across similar • Net inflow of people returning to Leeds sectors: Accommodation, food and recreation; professional and London over 30, seeking a better quality of life real estate; public services; and finance & insurance sectors Transport Connections Academic Collaboration trains per day between Leeds and Leeds City Region has the highest concentration of higher 48 London, taking an average of 2hrs 12mins education institutions in the UK outside of London. train journeys between Leeds and 9 universities across the city region, with 4 located in Leeds 8,500 London each day increase in business train travel Similar distribution of courses being taught in Leeds and London +19% over the last five years Investment Flows passengers flying between Leeds and 3,100 London each week Leeds and London are natural trade and investment partners, +35% increase in passenger numbers over with a dynamic flow of two-way expansions. the last five years In the last two years more than 30 ambitious businesses have Most popular destinations for those travelling from Leeds to London for moved between the two cities and established a new facility in work are Westminster, Camden, Heathrow Airport & Canary Wharf Leeds or London. Business Connections Business Connections 7 Business Views & Growth Sectors Many businesses operating in Leeds already have close relationships with London. The Leeds City Region Business Survey (2017) found that 21% of Leeds employers thought better connections with London would be beneficial to their business, the joint highest city in the country – equal to those citing Manchester (21%). Across the City Region, only 12% cited that closer connections to London would be beneficial, showing the strong relationship Leeds has to London. Despite this, many of Leeds’ businesses are not directly owned from London, with the same survey finding that 86% of Leeds businesses being the headquarters of the business, and only 14% saying it was just a branch/subsidiary. LEEDS’ GROWTH SECTORS Businesses in Leeds operate across a broad range of sectors, and so to further highlight business links between Leeds and London, we have assessed each of Leeds’ Growth Sectors in turn, identifying the connections between Leeds and London, and potential opportunities for collaboration in the future. The sectors analysed are: HEALTH, MEDICAL FINANCIAL AND PROFESSIONAL CREATIVE AND & THE AGEING CONSTRUCTION POPULATION SERVICES DIGITAL Growth sectors that will help deliver Leeds’ SOCIAL big ideas... RETAIL AND THE ENTERPRISE & THE MANUFACTURING VISITOR ECONOMY THIRD SECTOR Business Connections Growth Sectors Leeds has ambitions to drive its economic growth through seven key sectors. These are set out in the Leeds Inclusive Growth Strategy, which aims to fulfil the city’s economic potential, enhance its competitiveness and become more resilient. These sectors cover a large part of the Leeds economy and provide large numbers of jobs at all levels. Many of Leeds’ priority sectors already have a strong presence in London. The Mayor of London’s recently launched Economic Development Strategy for London also aims to create ‘a fairer, more inclusive economy’ and it prioritises a number of similar sectors to Leeds. Employment and Sector Specialisation (LQ) across Leeds’ Growth Sectors Leeds Leeds City Region London Leeds Growth Sectors % Employ LQ % Employ LQ % Employ LQ Construction 5% 1.0 5% 1.0 4% 0.8 Creative & Digital 4% 1.1 3% 0.7 6% 1.4 Financial & Professional Services 19% 1.3 14% 1.0 23% 1.6 Health, Medical & the Ageing Pop. 13% 1.0 15% 1.1 11% 0.8 Manufacturing 7% 0.7 11% 1.2 2% 0.3 Retail & the Visitor Economy 12% 0.7 13% 0.9 16% 1.0 Source: BRES, ONS, 2017 Business Connections 9 Strategic Alignment Strategically, Leeds and London are closely connected, with both cities having very similar aspirations for their respective economies. Financial & Construction Professional The Mayor of London has already set out (Business) Services aspirations to improve collaboration Advanced between London and the rest of the UK, Urban with the Mayor keen to build stronger Services partnerships, in particular with Social Creative & Digital Retail & authorities which are keen to explore Enterprise & (Tech & Digital) The Visitor mutual benefits arising from strategic The Third Economy (Tourism) growth opportunities and the realisation Sector of corresponding employment Low Carbon opportunities. Goods & The Mayor of London has already set out Health, Medical & The Services Ageing Population ambitions to look further afield to the Manufacturing (Life Sciences) Northern Powerhouse so that London and the UK can grow successfully together. The Mayor will take the lead in bringing together UK cities, business leaders and institutions to maximise opportunities for innovation, business Leeds’ Growth London’s Growth growth and market expansion. Sectors Sectors Leeds Inclusive Growth The Mayor’s Economic Strategy Development Strategy for London Business Connections 10 Future Growth Trends Employment forecasts for both Leeds and London suggest that both cities are likely to experience growth in similar sectors. The visitor economy; professional and real estate; public services; and finance & insurance sectors are all set to expand in both cities. The main differences between the two is the faster rate of deindustrialisation taking place in London, with declines in employment expected in the manufacturing and transport & storage sectors over the next ten years. The complementary growth patterns across the two cities reflect the similar growth aspirations set out by Leeds City Council and the GLA in their respective Economic Development Strategies. This close alignment means that there will be opportunities in the future for both economies to collaborate. Future Employment Growth Projections by sector, 2017-27 19% 20% Leeds London 16% 14% 15% 13% 12% 11% 12% 10% 10% 9% 10% 8% 8% 6% 7% 6% 4% 5% 1% 0% -5% -2% -5% -10% -14% -15% Visitor Economy Professional & Public Services Finance & Admin & Construction Transport & ICT & Digital Wholesale & Manufacturing Real Estate insurance support services Storage Retail Source: GLA Long Term Labour Market Projections, 2017 & REM employment forecasts for Leeds, 2017 Business Connections 11 Focus on...Health, Medical & the Ageing Population CURRENT OVERVIEW SECTOR TRENDS Forecast strong growth globally Numbers in 000s Leeds Leeds CR London • • Growing impact of an ageing population and wider reforms Employment, 2016 50 165 466 to healthcare provision Businesses, 2017 3 10 34 • Mid-tier, SME and speciality companies are driving change • Clustering around niche activities Recent Employ growth 11% 8% 21% • Healthcare informatics (2010-16) • High skill requirements to support R&D, manufacturing and Employ. Specialisation 1.0 1.1 0.8 supply LEEDS POSITION Half of all research in Leeds is in health and care • One of the leading digital health sectors nationally, fostered by the Digital Health Enterprise Zone • Home to two market leading health/IT systems EMIS and TPP Centre for the largest data • Centre for the largest healthcare data platform in the platform in the world world NHS Spine and NHS Social Care Information Centre • Wide ranging R&D activities across the region led by centres of excellence for medical research including the University of Leeds. Half of all academic research in the city is in health and care.