WEST OF ENGLAND LEP ECONOMIC ASSESSMENT 2015 WEST OF ENGLAND ECONOMIC ASSESSMENT

Transcription

1 WEST OF ENGLAND ECONOMIC ASSESSMENT 04 AUGUST 2015

2 CONTENTS EXECUTIVE SUMMARY 1 1. INTRODUCTION BUSINESS PEOPLE PLACE 117 GLOSSARY OF TERMS 133

3 EXECUTIVE SUMMARY Page 1

4 INTRODUCTION This report presents the findings and conclusions from an assessment of the economic characteristics and performance of the West of. The West of comprises of the unitary authority areas of Bath and North East Somerset, Bristol, North Somerset and South Gloucestershire. The assessment covers a full range of economic issues and themes, including overall economic performance and economic output, productivity, industrial trends, enterprise, innovation, employment, skills, housing, property and transport. In the next section, the overall assessment sets out the strengths, weaknesses, opportunities and threats facing the West of economy and emphasises the most striking points and conclusions for future economic strategies and decisions. ANALYSIS STRENGTHS The West of economy has higher rates of entrepreneurship, skills and qualifications than average. Rates of productivity are also higher. This is reflected in the product-market strategies of businesses, which tend to be more geared towards quality, innovation and design compared to nationally as well as the higher rates of employment in the knowledge economy and high- and medium- technology manufacturing. The West of has demonstrated a capability for growth in the past both in terms of economic output and jobs. And it has demonstrated resilience as the area was only one of five LEP areas which did not experience a nominal economic contraction during the recession. Another significant strength is the size and economic participation rates of the workforce; and the projected growth in the workforce. The West of does not face population ageing to the extent that the national economy, and other regional economies do. The West of is also a significant headquarters location for businesses and has a track record in attracting foreign direct investment. This track record will help in further increasing awareness of the area as a competitive business location, and will help make the case to future investors. WEAKNESSES A notable weakness has been the lower rates of economic growth and jobs growth since 2010, and the decline growth rate in productivity. Between 2010 and 2012 economic output decreased in many of the service sectors, including Information and Communications, Finance and Insurance and Business Service Activities. Historically, these have tended to be the sectors with growth potential in terms of jobs and output. Another observation is that high rates of jobs growth are not being reflected in GVA growth rates, and that high rates of workforce qualifications and skills offer no clear premium in terms of earnings (when compared to the national average). OPPORTUNITIES Manufacturing growth, in particularly high- and medium- technology manufacturing presents a significant future opportunity. The West of has a higher share of residents in scientific and technology professionals, which will help to potentially underpin further growth. The higher share of establishments competing on quality, innovation and design offers further advantages for market growth and export potential. As mentioned, the track record in foreign direct investment and presence of headquarters will help to attract further investment to the West of. Coupled with the current strengths in terms of skills and qualifications, the area has a compelling offer for business investment. THREATS The financial services sector has contracted sharply in the West of in terms of employment and economic output. It is unlikely that this sector will be the driver of growth in jobs and for the economy going forward. Page 2

5 If the productivity growth rate continues to fall relative to the national rate, then the West of s superior productivity performance will potentially erode and fall below the national average. There is some evidence of labour market tightening (where some employers face increasing recruitment difficulties) via the incidence of a higher rate of skills shortage vacancies; and high rates of economic participation. Of course, this may be partially offset by natural population change, and in particular an influx of young people into the labour market. However, labour demand does not always change in a smooth and gradual way, particularly in the aftermath of a recession there are usually periods of peak recruitment that are part of the business cycles in various industries. This may prove challenging for some local employers. One potential future threat is the deterioration in qualifications attainment of young people. Whereas the population projections paint a picture of strong future labour supply and young entrants to the labour market, the trends in qualifications attainments may suggest that there could be deficiencies in the qualifications of these young people. Whereas in many economies, the cohort effect means that many older members of the workforce with no qualifications are set to leave the workforce, this may be counteracted to some degree by young people entering the workforce with low or no qualifications. with stronger predisposition towards tradeable activities that compete on quality, design and innovation. High rates of skills and qualifications in the workforce; High rates of economic participation and a growing workforce. However, like many successful economies, the pressures of infrastructural and housing demand have often exceeded supply. In addition, the area s productivity advantages seem to be eroding. Despite high rates of job growth, the rate of GVA growth over recent years has been low. On balance, the strengths outweigh the weaknesses, and cannot be underestimated. Not many UK city regions (particularly those based around core cities) have such advantages, nor lie in such proximity to London and the South East of. They should mean that the West of will experience relatively strong rates of economic growth over the next decade. As with many local economies in the UK, the costs of housing have increased significantly over recent years, and there have been indications of increasing levels of traffic congestion. If left unaddressed, these will affect the ability to compete as an economy and as a place to attract and retain talent. OVERALL ASSESSMENT The West of economy has some outstanding strengths to set it in good stead for economic development and growth in future: Strong rates of entrepreneurship, presence of significant businesses, and track record in foreign direct investment Strong share of employment in high value added manufacturing and services activities; Page 3

6 ECONOMIC PERFORMANCE The West of has traditionally had a stronger economy than the rest of the country, and weathered the recession better than other areas. But in the last two years growth has slowed to below the national average. THE WEST OF ENGLAND HAS A 29.3 BILLION ECONOMY, REPRESENTING 2.3 PER CENT OF ENGLAND S ECONOMIC OUTPUT In 2013, businesses in the West of produced 29.3 billion worth of economic output (Gross Value Added, or GVA). THE WEST OF ENGLAND ECONOMY DEMONSTRATED RESILIENCE DURING THE RECESSION, BUT SINCE 2010 GROWTH RATES HAVE SLOWED Between 1997 and 2008, economic output in the West of grew by 76.6 per cent, or an average annual rate of 5.3 per cent. This was faster than growth across (73.7 per cent, an annual average of 5.1 per cent) and the sixth highest of all 39 LEP areas. In 2009, GVA grew by 0.3 per cent, compared with a 1.5 per cent fall across. Since 2010 the West of economy has recorded the third lowest rate of economic growth among the 39 LEP areas, with annual average growth of 1.8 per cent, against 3.0 per cent nationally. Of the core cities and comparator southern LEP areas, only Liverpool and Swindon & Wiltshire had lower growth rates. Since 2010, growth in Business Services, Financial & Insurance, and Information and Communication have not matched national rates. suggests a fall of 10,000 total jobs 1 between 2011 and 2012 has been partly offset by growth of 11,000 between 2012 and 2013.Productivity is high in the West of In 2011, each job in the West of produced an average of 47,100 in GVA. This was higher than the Great Britain average ( 44,700), and above all core cities and most comparator southern LEP areas apart from Oxfordshire. KEY FACTS: ECONOMIC PERFORMANCE 29.3 billion in economic output in 2013 (2.3 per cent of total) GVA per head: 26,800 in 2013 (= 24,100 ) Historic GVA growth rate (nominal) per annum : 5.3 per cent ( = 5.1 per cent) GVA growth (nominal) during recession year 2009: 0.3 per cent ( = -1.5 per cent) GVA growth rate post-recession (nominal) per annum : 1.8 per cent ( = 3.0 per cent) Growth in total jobs between 2000 and 2013: 9.4 per cent ( = 8.7 per cent) 616,000 jobs in 2013 (2.2 per cent of s jobs) Productivity rate 2011: 47,100 GVA per job (GB = 44,700) Productivity growth 1998 to 2011: GVA per job grew by 54.6 per cent (GB = 60.2 per cent). PRODUCTIVITY GROWTH IS BELOW THE NATIONAL AVERAGE Between 1998 and 2011, GVA per FTE job grew by 54.6 per cent in the West of, lower than the Great Britain average of 60.2 per cent, all core cities and two of the five southern LEP areas. GROWTH OF 3.1 PER CENT PER YEAR IS FORECAST BETWEEN 2013 AND 2023 The forecast annual rates of economic growth, at an average of 3.1 per cent between 2013 and 2023, are above the pre-recession average of 2.8 per cent between 1998 and Evidence 1 Workforce jobs, as provided by the Jobs Density data series from the Office for National Statistics. Workforce jobs are the sum of jobs including those supported by employers, self employment, government-supported trainees, and and Her Majesty's Forces. Page 4

7 THE WEST OF ENGLAND SUPPORTS 616,000 JOBS, WITH AN ABOVE-AVERAGE RATE OF JOBS GROWTH In 2013, there were 616,000 jobs in the West of. Between 2000 and 2013, the number grew by 58,000, or 9.4 per cent, outperforming the average of 8.7 per cent. BUSINESS The West of has a large and growing business base. Start-up rates are high, as are survival rates. The area has been very successful in attracting inward investment. This is expected to continue, helping to build the presence of foreign-owned businesses and global connections in the economy. THERE WERE 43,100 ACTIVE ENTERPRISES IN THE WEST OF ENGLAND IN 2013 Two-fifths of these businesses were located in Bristol (17,255). THE TOTAL BUSINESS POPULATION HAS GROWN YEAR ON YEAR SINCE 2004 Between 2004 and 2013, the number of businesses in the area grew by 6,120, or 16.5 per cent. Growth was stronger than across (13.6 per cent), all core city LEP areas and all but one comparator southern LEP areas (Thames Valley Berkshire). The number of businesses grew following the recession, bucking the national trend. In contrast to the 0.3 per cent decline in s business population, and a decline in all core city LEP areas, the West of experienced growth of 0.3 per cent. These growth rates reinforce other evidence which points to strong start-up rates and higher survival rates, particularly since THE NUMBER OF START-UP BUSINESSES HAS INCREASED YEAR ON YEAR SINCE 2009 In 2013, 5,885 new businesses registered for VAT or PAYE in the West of. This was the highest number of start-ups since data collection began in The rate of business start-ups in 2013 was 13.7 per 100 active enterprises. While this was lower than the average of 14.4, and below many core city LEP areas, it was higher than most comparator southern LEP areas. Within the West of, Bristol had an above-average rate of business start-ups, at 14.9 per 100 active enterprises. LONG-TERM BUSINESS SURVIVAL RATES ARE HIGHER THAN ACROSS ENGLAND The West of performed slightly better on two-year survival rates than for one-year survival. Of all businesses created in 2011, 76.9 per cent survived their second year. This was above the average (75.5 per cent) and higher than all core city LEP areas, but lower than all comparator southern LEP areas. The West of had higher rates of survival over three to five years than the national average and core city LEP areas, and surpassed some southern LEP areas. KEY FACTS: BUSINESS 43,100 active enterprises in 2013 Total growth of active business population between 2004 and 2013: 17 per cent ( = 14 per cent) 61 businesses per 1,000 working age residents ( = 62) 88.0 per cent of businesses have under 10 employees ( = 88.4 per cent) Rate of self-employment of 18.8 per cent in Bath and North East Somerset; 15.9 per cent in Bristol; 9.1 per cent in North Somerset; and 9.7 per cent in South Gloucestershire ( = 14.2 per cent) 5,885 new start-ups (registered for VAT/PAYE) in 2013 Start-up rate in 2013: 13.7 per cent ( = 14.4 per cent) One-year business survival rate in 2013: 91.0 per cent ( = 91.1 per cent) Two-year business survival rate in 2013: 76.9 per cent ( = 75.5 per cent) Share of businesses that are foreign-owned in 2010: 0.9 per cent ( = 1.3 per cent) Share of total employment in foreign-owned companies in 2010: 8.3 per cent ( = 14.3 per cent) Bristol and Bath ranked 14 th for FDI projects , total of 84 projects. Page 5

8 IN 2013 THERE WERE 61 BUSINESSES PER 1,000 WORKING-AGE RESIDENTS This total was slightly lower than the average of 62, but well above all core city LEP areas. The West of is home to a large number of small businesses. A total of 88.0 per cent of the area s firms employed fewer than ten people, in line with the national average of 88.4 per cent. 40 LARGE BUSINESSES HAVE THEIR HEADQUARTERS IN THE WEST OF ENGLAND Of the 40 businesses with 250 employees or more with headquarters in the West of, 13 were in the Professional, Scientific & Technical Activities industry. THE WEST OF ENGLAND HAS A SUCCESSFUL TRACK RECORD IN ATTRACTING INWARD INVESTMENT Although foreign-owned businesses contribute a lower share of jobs compared than is the case nationally, the West of has a successful track record in attracting inward investment. In 2010, 315 businesses in the West of were known to be foreign-owned. These represented 0.9 per cent of all businesses in the area below the average of 1.3 per cent. Foreign-owned businesses employed 45,800 people or 8.3 per cent of all employment in the area, below the national average of 14.3 per cent. With 84 foreign direct investment (FDI) projects secured over the last decade, Bristol and Bath ranked 14th in terms of UK locations between 2004 and Business services and software were the top two sectors generating FDI into Bristol and Bath over the last decade. INNOVATION AND KNOWLEDGE The West of enjoys high rates of patenting and employment in knowledgebased industries is strong. Although employment in knowledge economy industries has contracted by 3.2 per cent since 2009, there has been growth of 26.6 per cent in high- and mediumtechnology manufacturing. Employment in science and technology professional roles is also significantly higher than nationally. This high presence of jobs and skills in knowledge-based industries, and high rates of patenting, are reflected in the productmarket strategies of local businesses. In 2013 businesses in the West of were more likely to compete on quality, innovation and industry leadership, than nationally where cost was a more significant factor. RATES OF PATENTING PER CAPITA ARE HIGH The West of s rate of patenting, at an average of 127 patents per one million residents over the five years from 2007 to 2011, is higher than the average of 93. Out of the 39 LEP areas The West of ranked ninth, ahead of all other city-region LEPs. From 2007 to 2011 inventors in the West of originated an average of 136 patents per year. EMPLOYMENT IN THE KNOWLEDGE ECONOMY IS HIGH IN THE WEST OF ENGLAND In 2013, 119,400 workers in the West of were employed in Knowledge Economy industries (using the Work Foundation definition 2 ). This was equivalent to 21.8 per cent of all employment above the average (19.7 per cent), all core city LEP areas and three of the five southern LEP areas. 2 See /213_know_work_survey pdf Page 6

9 EMPLOYMENT IN HIGH AND MEDIUM TECHNOLOGY MANUFACTURING IS HIGHER THAN ACROSS ENGLAND With 21,400 workers, this was equivalent to 3.9 per cent of all employment in the area above the national average of 3.1 per cent, four of the seven core city LEP areas and two of the five southern LEP areas. Employment in the airspace industries is particularly strong. WHILE EMPLOYMENT IN THE KNOWLEDGE ECONOMY HAS DECLINED IN THE PAST FOUR YEARS, HIGH AND MEDIUM TECHNOLOGY MANUFACTURING EMPLOYMENT HAS INCREASED. Between 2009 and 2013, the number of Knowledge Economy workers in the West of declined by 3,900, or 3.2 per cent, while growth across averaged 6.0 per cent. By contrast, employment in High and Medium Technology Manufacturing rose sharply, by 4,600, or 26.6 per cent well ahead of the average increase of 3.6 per cent (Figure 2.24). Growing sub-sectors included Manufacture of Air and Spacecraft & Related Machinery (+1,200), Manufacture of Instruments and Appliances for Measuring, Testing and Navigation; Watches and Clocks (+800), Manufacture of Computers and Peripheral Equipment (+500) and Manufacture of Other Special-Purpose Machinery (+500). SCIENCE AND TECHNOLOGY PROFESSIONALS FORM A HIGH SHARE OF THE WORKFORCE At the time of the 2011 Census, 7.2 per cent of people working in the West of were science and technology professionals and associate professionals higher than the average of 5.8 per cent. THE WEST OF ENGLAND LEP HAS DEFINED FIVE PRIORITY SECTORS AND FIVE KEY SECTORS potential and are knowledge-based or high value added industries. Of these priority and key sectors, four recorded significant employment growth between 2009 and 2013: Advanced Engineering and Aerospace (+3.6 per cent); Creative Industries (+2.3 per cent); Low Carbon (+4.1 per cent); and Health and Life Sciences (+3.0 per cent). Distribution recorded modest employment growth (+0.9 per cent). Five sectors recorded a decline in employment, including: Construction (-2.2 per cent); Professional and Legal Services (-1.7 per cent); High Tech Industries (-1.8 per cent); and Retail (-2.1 per cent). BUSINESSES IN THE WEST OF ENGLAND ARE MORE LIKELY TO COMPETE ON DESIGN, QUALITY AND INNOVATION In the West of, 50 per cent of private sector businesses were defined as having a high or very high Product Market Strategies above the national average of 45 per cent. A lower share of businesses depend on price to compete compared with the national picture, while a higher proportion often lead on innovation. KEY FACTS: INNOVATION AND KNOWLEDGE Average inventor patents per one-million residents per year between 2007 and 2011: 127 ( = 93) Share of employment in knowledge-based industries: 21.8 per cent ( = 19.7 per cent) Share of employment in high-and-mediumtechnology manufacturing: 3.9 per cent ( = 3.1 per cent) Share of workers that are science and technology professionals/associate professionals: 7.2 per cent ( = 5.8 per cent) Share of businesses that have high/very high product market strategies: 50 per cent ( = 45 per cent) The West of LEP defined five priority sectors and five key sectors in the economy, several of which are major employers such as Tourism (106,000); Retail (79,200); Health and Life Sciences (79,100) and Professional and Legal Services (50,200). Others such as Advanced Engineering and Aerospace, Creative Industries and High Tech Industries are not as significant in employment terms, but offer high growth Page 7

10 POPULATION TRENDS The West of s workforce has grown significantly, and this is forecast to continue over the next 20 years. With high rates of population growth and a higher than average share of the population of working age, the area s population has aged at a slower rate than across. THE POPULATION IS 1.1 MILLION, WITH A HIGH SHARE OF WORKING AGE, AND IS GROWING QUICKLY The West of has a population of 1.1 million, of whom 712,300 are of wor1king age. Nearly two thirds (64.5 per cent) of the West of population are of working age, compared with 63.5 per cent across. The West of is ahead of all comparator areas. POPULATION GROWTH HAS BEEN ABOVE THE NATIONAL AVERAGE, PARTICULARLY IN BRISTOL Between 2000 and 2014, the West of s population grew by 11.4 per cent (+112,700 people) the 10 th highest growth rate of all 39 LEP areas and above the average (10.3 per cent), and all comparator areas apart from GCGP (Greater Cambridge Greater Peterborough) and Swindon & Wiltshire. Two-thirds of the population growth in the West of came from growth in the working-age population. Between 2000 and 2013, the working age population grew by 72,900, accounting for 64.7 per cent of total population growth in the area. This was higher than the average, and the sixth highest rate of all 39 LEP areas after Leicester and Leicestershire and GCGP. As a result, the area s population has aged less than nationally. KEY FACTS: POPULATION 1.1 million resident population in 2013 Working age residents: 64.5 per cent of total population (UK = 63.5 per cent) Population growth between 2000 and 2013: 11.4 per cent ( = 10.3 per cent) ECONOMIC PARTICIPATION AND UNEMPLOYMENT Complementing the large workforce and high rates of growth in working-age population, the West of has high rates of economic participation and low rates of unemployment. This is reflected in low levels of benefit claimants. THE WEST OF ENGLAND HAS HIGH RATES OF ECONOMIC PARTICIPATION Economic activity in the West of, measured by the share of working-age people either in work or actively seeking work, is above the national average at 79.5 per cent. Employment rates are higher (74.7 per cent); and unemployment is lower (6.0 per cent). Within the West of, Bristol has higher rates of unemployment (8.3 per cent) than the national average (6.4 per cent). Among adults aged 25 and over, workforce participation across both genders and all age groups is above the national average. THE WEST OF ENGLAND S LABOUR MARKET WAS HIT HARDER BY RECESSION THAN NATIONALLY, BUT RATES OF PARTICIPATION HAVE REMAINED ABOVE THE NATIONAL AVERAGE While the rate of economic activity remained higher than the national average during the recession ( ), it did fall at a faster rate. Rates are now returning to the 2010 peak of 80.0 per cent. The West of s unemployment rate has remained below the national rate every year since records beg an in However, the rate of increase was above the national level between 2008 and The recovery in employment has been slower than across, resulting in a pronounced narrowing of the gap between area-based and national unemployment rates. The West of s unemployment rate remains 2.5 percentage points above 2007 levels. Page 8

11 A SHRINKING OF THE RETAIL SECTOR DURING THE RECESSION HAD A SIGNIFICANT IMPACT ON OVERALL UNEMPLOYMENT RATES In March 2015, the numbers of unemployed claimants from sales and customer service occupations was 215 per cent higher than before the recession, driven by a strong rise in the number of unemployed sales and retail assistants. This was a bigger rise than across (+136 per cent). THE NUMBER OF EMPLOYED MEN HAS FALLEN SINCE THE RECESSION, LEADING TO AN OVERALL DECREASE IN EMPLOYMENT LEVELS The number of employed people across the West of has fallen since the recession (-5,800) against a national average rise (+600,300). This is due to a fall in the numbers of men in employment. Between 2008 and 2014, the numbers of employed men in the West of fell by 8,200, compared with a national rise of 196,700. The numbers of employed women in the area rose by 2,400. THE LABOUR MARKET FOR YOUNG PEOPLE HAS DETERIORATED SIGNIFICANTLY SINCE THE RECESSION Employment rates have fallen fastest for and year olds, and more sharply than across. Employment in the West of fell for year olds (-8,000) and year olds (-6,400). Economic inactivity in the West of rose by 3,800 between 2008 and All of this rise occurred among young people (16-24 year olds), with falls in inactivity across other age groups. Between March 2008 and March 2012, the claimant count rate rose most rapidly for those aged (+3.0), but this has since recovered. ONE QUARTER OF ECONOMICALLY INACTIVE PEOPLE WANT TO WORK In 2014, one quarter (24.8 per cent) of economically inactive people wanted to work, but were not technically classified as unemployed. THE RATE OF INVOLUNTARY WORKLESSNESS IS MORE THAN DOUBLE THE OFFICIAL UNEMPLOYMENT RATE In 2014, 35,500 economically inactive people wanted a job, while 33,500 people were officially classed as unemployed. This meant that a total of 69,000 people were classed as involuntarily workless representing 12.4 per cent of the economically active population, more than twice the official unemployment rate of 6.0 per cent. THE NUMBER OF WORKING-AGE PEOPLE CLAIMING OUT-OF-WORK BENEFITS IS LOWER THAN ACROSS ENGLAND In August 2014, 60,120 working age people in the West of were claiming out-of-work benefits. This was equivalent to 8.5 per cent of working-age people (Figure 3.47), below the average of 9.6 per cent and all core city LEP areas, but above all comparator southern LEP areas. Within the West of, rates ranged from 5.9 per cent in South Gloucestershire to 11.0 per cent in Bristol. COMMUTING On balance, the West of generates jobs for surrounding districts and areas, with more people commuting in than travelling out for work. Evidence suggests that the area provides many highly-skilled jobs for in-commuters. THE WEST OF ENGLAND IS AN AREA OF NET IN-COMMUTING At the time of the 2011 Census, 531,925 West of residents were in work. Of these, 445,740 worked (and lived) within the West of (86.9 per cent). The West of had a net in-commuting level of 24,065 (the difference between in-commuters and outcommuters). North Somerset is the only district with net levels of out-commuting (a net balance of -13,778 workers). KEY FACTS: ECONOMIC PARTICIPATION AND UNEMPLOYMENT Economic activity rate 2014: 79.5 per cent ( = 77.4 per cent) Employment rate 2014: 74.7 per cent ( = 72.5 per cent) Unemployment rate 2014: 6.0 per cent ( = 6.4 per cent ) Worklessness rate 2014: 12.4 per cent ( = 13.6 per cent) Share of working age population claiming benefits in 2014: 8.5 per cent ( = 9.6 per cent) Page 9

12 QUALIFICATIONS While the West of s workforce is very highly qualified, there may be cause for concern in that young people s attainments are, below the national average. Young people s participation in higher education is also below average. QUALIFICATION RATES ARE VERY HIGH AMONG WORKING-AGE PEOPLE LIVING IN THE WEST OF ENGLAND In 2014, 41.2 per cent of working-age people living in the West of were qualified to Level 4 and above (at least degree level). This was higher than the national average (35.7 per cent) and all comparator areas apart from Oxfordshire and Thames Valley Berkshire, and the seventh highest rate of all 39 LEP areas. Likewise, the percentage of people qualified to Level 2 and above (at least GCSE level) was above the national level, at 78.0 per cent compared with 73.2 per cent. The proportion was higher than all comparator areas apart from Oxfordshire and Thames Valley Berkshire, and sixth highest of all LEP areas in. IN-COMMUTERS TO THE WEST OF ENGLAND ARE MORE LIKELY TO BE HIGHLY QUALIFIED The qualification rates of people working in the West of are higher than those living in the West of, with the highest number of in-commuters being those with degree-level qualifications or above. BY CONTRAST, YOUNG PEOPLE S QUALIFICATION RATES ARE BELOW-AVERAGE IN THE WEST OF ENGLAND ALTHOUGH THEY CATCH UP BY AGE 19 In 2012/13, the percentage of pupils at the end of key stage 4 achieving at least 5 A*-C GCSEs was below the average in all four West of local authorities. Rates ranged from 77.1 per cent in North Somerset to 82.2 per cent in Bath & North East Somerset below the average of 83.1 per cent. Rates of GCSE improvement have also been low. In the same year, the percentage of pupils at the end of key stage 4 achieving at least 5 A*-C GCSEs including English and Maths was below the average of 60.8 per cent in Bristol, North Somerset and South Gloucestershire, but above average in Bath & North East Somerset (63.6 per cent). Attainment of a Level 2 qualification improves by age 19. In 2013, 85.5 per cent of 19 year olds in the West of had achieved a Level 2 qualification (5 A*-C GCSEs or equivalent). This was slightly above the average (84.9 per cent). Within the West of, rates ranged from a below-average 80 per cent in Bristol to 90 per cent in North Somerset. Attainment of a Level 3 qualification by age 19 is below average. As detailed in Figure 3.64, a total of 55.3 per cent of 19 year olds had achieved a Level 3 qualification in 2013 (A level and equivalent). This was slightly below the average of 56.2 per cent. Within the West of, rates ranged from a belowaverage 47 per cent in Bristol to 64 per cent in North Somerset. YOUNG PEOPLE S PARTICIPATION IN HIGHER EDUCATION IS ALSO BELOW AVERAGE Of the young people reaching the age of 18 in the West of between 2005 and 2009, 31.2 per cent entered higher education. This was lower than the average (34.2 per cent) and the 14 th lowest of the 39 LEP areas. SKILL LEVELS OF JOBS The West of has a significant and increasing demand for highly-skilled jobs, reflecting the presence of knowledge-based industries and the high qualifications of its workers, Earnings are higher than average. THE WEST OF ENGLAND HAS AN ABOVE- AVERAGE PERCENTAGE OF RESIDENTS WORKING IN THE MOST HIGHLY SKILLED OCCUPATIONS In 2014, over one third of employed residents in the West of (33.8 per cent) worked in Level 4 occupations 3 the most highly skilled 3 Level 4 occupations: managers & senior officials and professionals; Level 3 occupations: associate professional & technical occupations and skilled trades; Level 2 occupations: administrative & secretarial, caring, leisure & other services, Page 10

13 jobs, including managers and senior officials and professionals. This was higher than across (30.3 per cent) and joint third among comparator areas, after Oxfordshire and Thames Valley Berkshire. THE OCCUPATIONAL PROFILE OF WEST OF ENGLAND RESIDENTS HAS BECOME MORE HIGHLY SKILLED IN THE PAST TEN YEARS There has been a large increase in the number of people working as professionals and associate professionals over the past decade. Between 2004 and 2014, the number working as Level 4 professionals increased by 34.0 per cent (+32,700) while the number of people in Level 3 associate professional and technical occupations rose by 27.5 per cent (+18,500). THE EARNINGS OF PEOPLE LIVING OR WORKING IN THE WEST OF ENGLAND ARE ABOVE AVERAGE In 2014, the average earnings of West of residents working full-time totalled 27,980 slightly above the average of 27,500. People working full-time in the West of earned 27,892 on average, above the average ( 27,487) but 0.3 per cent lower than earnings for residents. However, workplace-based earnings in the West of grew below the national rate between 2002 and 2014 a rise of 29.7 per cent, compared with 32.7 per cent across and rose much more slowly than residence-based earnings. Share of 19-year-olds achieving a Level 2 attainment in 2012/13: 86 per cent ( = 86 per cent) Share of 18-year-olds participating in higher education 2005 to 2009: 31.2 per cent ( = 34.2 per cent) Share of workplace jobs in level 4 (the most highly skilled) occupations: 33.8 per cent ( = 30.3 per cent) Share of vacancies that were hard-to-fill in 2013: 34.0 per cent ( = 28.6 per cent) Share of hard-to-fill vacancies due to skills shortages in 2013: 84.2 per cent ( = 78.0 per cent) Average annual salary for residents in full-time employment: 27,980 ( = 27,500) Average annual salary (workplace-based) for workers in full-time employment: 27,892 ( = 27,487) Growth in earnings (workplace-based) for full-time workers between 2002 and 2014: 29.7 per cent ( = 32.7 per cent) EMPLOYER SKILLS The West of s labour market is showing signs of tightening. Employers have been reporting high demand for labour, and difficulties recruiting people with the right skills, with an impact on business performance. KEY FACTS: QUALIFICATIONS, SKILLS AND EARNINGS Share of working age population qualified to degree-level or above (NVQ4+) in 2014: 41.2 per cent ( = 35.7 per cent) Share of working age population qualified to at least 5 GCSEs at grades A*-C or equivalent (NVQ4+) in 2014: 78.0 per cent ( = 73.2 per cent) Share of pupils gaining at least 5 GCSEs grades A*C in 2012/2013: 77.1 per cent ( = 83.1 per cent) Share of pupils gaining at least 5 GCSEs grades A*C including English and Maths in 2012/2013: 60.8 per cent ( = 63.6 per cent) sales and customer service, and process, plant & machine operatives; Level 1 occupations: elementary occupations Page 11

14 THERE IS EVIDENCE OF HIGH DEMAND FOR LABOUR, AND ASSOCIATED RECRUITMENT DIFFICULTIES Businesses in the West of are more likely to report recruitment difficulties than nationally. The prevalence of hard-to-fill vacancies (H2FVs) and skills-shortage vacancies (SSVs) is above the national average, particularly in South Gloucestershire. A very large proportion of these vacancies are for professional jobs. Employers in the West of are no more likely to report skills deficiencies among existing staff than nationally, although an above-average percentage of employers report that skills gaps are having a major impact on their business, particularly in Bristol. Commitment to staff training among employers in the West of is similar to the national average. YOUNG PEOPLE LEAVING EDUCATION ARE WELL PREPARED FOR WORK Employers report that people employed straight from school, college or higher education are generally well prepared for work, and better prepared than nationally. HOUSING MARKET House prices are above the national average, and have risen markedly in the past 15 years, while affordability has declined rapidly. The supply of housing in the West of has increased at a higher rate than nationally, and the greatest rise has been in one- and two- person properties. HOUSE PRICES IN THE WEST OF ENGLAND VARY WIDELY In 2012, the average (median) house price across was 183,500. Within the West of, average house prices ranged from 5 per cent below average in Bristol ( 175,000) to 25 per cent above average in Bath & North East Somerset ( 230,000). Average house prices in North Somerset and South Gloucestershire were 1 per cent above average at 185,000. AVERAGE HOUSE PRICES HAVE RISEN RAPIDLY OVER THE PAST 15 YEARS Between 1997 and 2012, average house price growth ranged from 200 per cent in North Somerset (slightly below the average growth rate of 206 per cent) to 224 per cent in Bath & North East Somerset. THE HOUSING MARKET ACROSS THE WEST OF ENGLAND IS STILL BELOW ITS PRE- RECESSION PEAK Average house prices across the West of peaked in 2007 and fell for the next two years. By 2012, prices in Bath & North East Somerset and Bristol had returned to 2007 levels, but they remained 1 per cent and 3 per cent below their peak in South Gloucestershire and North Somerset. By comparison, the average house price across had recovered and risen to 3 per cent above the 2007 peak in the same period. Housing sales across the area are also well below their long-term average. Sales have fallen most sharply in South Gloucestershire, averaging 3,242 per year between 2008 and per cent below annual average sales. Sales also fell sharply in other West of districts, but below the average fall (46 per cent). This indicates a lack of confidence among consumers to take on large debts or major purchases, while potential buyers have suffered from stricter mortgage conditions. Lower quartile house prices have grown faster than the national average. Over the past 15 years, lower quartile house price growth ranged from 202 per cent in North Somerset to 225 per cent in Bristol above national average growth of 184 per cent. In most districts, apart from Bath & North East Somerset, lower quartile prices have risen faster than median prices. HOUSING AFFORDABILITY HAS DECLINED RAPIDLY OVER THE PAST 15 YEARS In 2013, average house prices in the West of ranged from 6.2 times average earnings in Bristol to 8.7 times average earnings in Bath & North East Somerset. Housing in Bristol was more affordable relative to the English average (6.7 times average earnings), but less affordable in other West of districts. Average house price to earnings ratios have increased sharply across the area since 1997, particularly in Bath & Page 12

15 North East Somerset (from 4.6 in 1997 to 8.7 in 2013). However, house price to earnings ratios in 2013 remained below their pre-recession 2007 peak. HOUSING IS LEAST AFFORDABLE FOR THOSE ON THE LOWEST INCOMES In all West of districts, the lower quartile house price to earnings ratio in 2013 was higher than the average house price to earnings ratio. It was therefore relatively more expensive for those on the lowest incomes to buy the cheapest housing than for those on average incomes to buy average-priced housing. This was not the case across. The difference was starkest in South Gloucestershire, where the lower quartile house price to earnings ratio was 7.8, compared with an average house price to earnings ratio of 7.0. HOUSING STOCK THERE HAS BEEN STRONG GROWTH IN THE WEST OF ENGLAND S DWELLING STOCK In 2014, there were 476,170 dwellings in the West of. At district level, the highest number was in Bristol, with 192,350 homes 40 per cent of all dwellings in the West of. Between 2004 and 2014, the number of homes in the area grew by 40,220, or 9.2 per cent, above the level of 7.8 per cent. HOUSING GROWTH HAS BEEN CONCENTRATED IN THE PRIVATE SECTOR Over the past decade, growth in the number of private sector dwellings (both owner occupied and rented) has accounted for much of the housing growth across the West of. There has also been strong growth in social housing owned by private registered providers, with a comparable fall in local authority owned and other public sector housing (largely due to stock transfers). A BELOW-AVERAGE PERCENTAGE OF NEW HOMES ARE AFFORDABLE IN THE WEST OF ENGLAND Between 2004/05 and 2013/14, there were 10,510 net new affordable homes across the West of (homes newly built or acquired, less those sold or demolished). Almost half of these (5,120) were in Bristol. Net new affordable homes represented 26 per cent of all net additional homes during this period. This was lower than the average (30 per cent). Within the West of 23 per cent of additional homes were affordable in North Somerset, while at the other end of the scale, 38 per cent were affordable in Bath & North East Somerset. The number of net new affordable homes has fallen sharply since 2008/09 with no sign of recovery. This trend has been driven by a fall in net new affordable homes in Bristol. KEY FACTS: HOUSING 476,170 dwellings in 2014 Growth in dwelling stock between 2004 and 2014: 9.2 per cent ( = 7.8 per cent) Average household (residents per household) size in 2011: 2.3 ( = 2.4) Average house prices in 2012: Bristol 175,000; Bath and North East Somerset 230,000; North Somerset and South Gloucestershire 188,000 ( = 183,500) Growth in house prices between 1997 and 2012: Bristol +221 per cent; Bath and North East Somerset +224 per cent; North Somerset and South Gloucestershire +200 per cent ( = +206 per cent) Average house price as a multiple of median income in 2012: Bristol 6.2; Bath and North East Somerset 8.7; North Somerset 7.0; and South Gloucestershire 7.0 ( = 6.7) THE NUMBER OF ONE AND TWO PERSON HOUSEHOLDS HAS INCREASED OVER THE PAST TEN YEARS Between 2001 and 2011, almost three-quarters (73.2 per cent) of the additional households in the West of were one and two person households much higher than across (66.7 per cent). Within the area, percentages ranged from a below-average 58.1 per cent in Bath & North East Somerset to 84.3 per cent in North Somerset. DESPITE THIS TREND, AVERAGE HOUSEHOLD SIZE HAS REMAINED STABLE OVER THE PAST TEN YEARS Between 2001 and 2011, average household size has remained at 2.3 people in three West of districts, while reducing slightly in South Gloucestershire. Page 13

16 COMMERCIAL AND INDUSTRIAL PROPERTY There is a significant volume of commercial and industrial floor space in the West of, and rateable values for retail floor space are above the national average. There were 10,523,000 square metres of retail floor space eligible for business rates in 2012; 2,016,000 sq. metres of office floor space; and 5,363,000 sq. metres of industrial floor space. Rateable floor space for all uses, apart from industrial, increased between 2002 and Rateable values were 166 per sq. metre for retail in 2012 (above the average of 150); 134 for offices (below the average of 155); and 38 for industrial (slightly above the average of 37). Rateable values per sq. metre for offices were only higher in the peer area of Thames Valley Berkshire ( 155). Retail floorspace values were generally high across the West of. Somerset (-3.1 per cent) but above average in South Gloucestershire (-4.0 per cent) and Bristol (-7.1 per cent). In contrast, average vehicle speeds in North Somerset increased by 2.6 per cent during this period. KEY FACTS: PROPERTY AND INFRASTRUCTURE Retail floor space in 2012: 10,253,000 m 2 Office floor space in 2012: 2,016,000 m 2 Industrial floor space in 2012: 5,363,000 m 2 Rental valuation of retail space in 2012: 166 per m 2 ( = 150) Rental valuation of office space in 2012: 134 per m 2 ( = 155) Rental valuation of industrial space in 2012: 38 per m 2 ( = 37) Average vehicle speeds on locally managed A roads in 2014: Bristol 14.8 mph; Bath and North East Somerset 21.8 mph; North Somerset 30.8 mph; South Gloucestershire 24.1 mph ( = 24.4 mph) South Gloucestershire experienced the largest growth in retail floor space (+15.1 per cent); North Somerset witnessed a 20.1 per cent increase in office floor space; and all districts apart from North Somerset saw a decline in industrial floor space. TRAFFIC CONGESTION Traffic congestion is an issue in the West of, with average vehicle speeds on locally managed A roads declining in every unitary authority area between 2012 and In 2014, average vehicle speeds on locallymanaged A roads during the weekday morning peak ranged from 14.6 miles per hour in Bristol to 30.8 miles per hour in North Somerset. Average vehicle speeds were below the average of 24.4 miles per hour in all districts apart from North Somerset. Average vehicle speeds declined in Bath & North East Somerset, Bristol and South Gloucestershire between 2012 and 2014, mirroring the national trend. This decline was below the average (-3.4 per cent) in Bath & North East Page 14

17 1. INTRODUCTION About this report Introducing the West of National and international economic context The West of s economic performance Economic outlook for the UK and West of Page 15

18 ABOUT THIS REPORT AN ASSESSMENT OF THE ECONOMIC CHARACTERISTICS AND PERFORMANCE OF THE WEST OF ENGLAND This report presents the findings and conclusions from an assessment of the economic characteristics and performance of the West of. Included is an analysis of the local authority areas that comprise the West of as well as analysis of how the area performs compared with the core city LEP areas (Greater Birmingham and Solihull; Leeds City Region; Liverpool City region; Greater Manchester; North East; D2N2; and Sheffield City Region) and a number of southern LEP areas including Gloucestershire, Greater Cambridge and Greater Peterborough, Oxford City Region, Swindon and Wiltshire, and Thames Valley Berkshire (the comparator areas). The assessment covers a full range of economic issues and themes, including overall economic performance and economic output, productivity, industrial trends, enterprise, innovation, employment, skills, housing, property and transport. The West of comprises of the unitary authority areas of Bath and North East Somerset, Bristol, North Somerset and South Gloucestershire. With a population of 1.09 million that is set to grow further, and an economy worth 29.3 billion, the West of has a highly skilled, knowledge-based economy combined with a high quality of life. With its high business start-up rates, and the headquarters location of 40 large businesses, the West of is a successful business location, with 84 Foreign Direct Investment projects secured over the past decade. The area also has four world class universities with 21 world leading academic departments that attract over 70,000 students and 227m of External Research Funds. There are four Further Education Colleges, with annual revenue of 200m, one sixth form college, plus other employer-focussed provision including an Enterprise and Technical College, a University Technical College and one Studio School (with three further set to open in 2015/16). The West of has been on the leading edge of innovation for centuries, and has world-class offers in design, culture, trade, shipping, engineering, aerospace, microelectronics, composites, robotics, green technologies, social enterprise, connectivity and digital creativity. Bristol and Bath Science Park is recognised as asset of national importance and home to the National Composites Centre. The region is home to the UK s only World Heritage City Bath. Bristol is the European Green Capital 2015 (Centre of Excellence in Green Technology). The West of includes the Mendips and parts of the Cotswolds, two of the countries areas of Outstanding Natural Beauty. The area also includes an extensive coast line that is visited by millions of visitors each year. Page 16

19 2007 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q1 NATIONAL ECONOMIC CONTEXT RECENT UK ECONOMIC PERFORMANCE Q MARKED THE NINTH QUARTER OF CONTINUOUS GDP GROWTH UK economic growth eased to 0.3 per cent in the first quarter (January to March) of 2015, reflecting slower growth in household spending and a sharp fall in the contribution of net trade. Quarterly output growth in the UK economy moderated from 0.6 per cent in Q to 0.3 per cent in Q1 2015, as indicated in Figure 1.1. Compared with the same period a year earlier, the annualised rate of GDP growth slowed from 3.0 per cent in the 12 months from Q to Q to 2.4 per cent in the year from Q to Q Q was the ninth quarter of continuous GDP growth and aggregate output is now estimated to be 10.7 per cent above its Q trough. Slower growth in production, services and construction led to lower overall growth in Q The moderation of GDP growth in Q reflected slower output growth in the production and services industries, as well as further falls in construction output. Production output grew by just 0.1 per cent in the first quarter of 2015, while construction output fell by 1.1 per cent over the same period. Aggregate services output growth fell from 0.9 per cent at the end of 2014 to 0.4 per cent in Q1 2015, reflecting weakening performance of the business services and finance industries in particular. INFLATION IN THE UK IS AT A RECORD LOW Despite the recent economic recovery, the Consumer Prices Index (CPI) annual inflation rate fell to -0.1 per cent in April the lowest rate on record. A measure of core inflation which excludes the volatile prices of food, drink and energy has also fallen in recent months. While there has been some slowdown in inflation for core services, much of this recent movement derives from lower price pressures from a set of core goods (products or items bought). FIGURE 1.1: QUARTERLY RATE OF UK ECONOMIC GROWTH Q TO Q Source: National Accounts, Office for National Statistics. STRONG LABOUR DEMAND AND SIGNS OF TIGHTENING LABOUR MARKETS Employment is up 202,000 compared with the previous quarter. Comparing January to March 2015 with October to December 2014, the number of people in employment increased by 202,000 to reach 31.1 million. The number of unemployed people fell by 35,000, to1.83 million, and the number of people aged 16 to 64 outside the labour force (economically inactive) fell by 69,000 to8.98 million. Participation in employment increases, while unemployment continues to fall. In January to March 2015, 73.5 per cent of people aged 16 to 64 were in work, up from 72.5 per cent a year earlier. The unemployment rate for January to March 2015 was 5.5 per cent, down from 6.8 per cent a year earlier. Firms are increasingly hiring new workers from other firms, a trend which is closely related to recruitment difficulties. INVESTMENT IS RETURNING TO PRE- DOWNTURN LEVELS Investment has recovered relatively strongly since the downturn but its composition has changed in a manner which suggests large capital outlays on buildings were the first to be cut back and have been the slowest to return. After a brief fall at the end of the year, investment by firms and government grew by 1.5 per cent in Q1 2015, returning the level of Gross Fixed Capital Formation (GFCF) broadly to its pre-downturn level. Page 17

20 annual rate of economic growth WEAK PRODUCTIVITY GROWTH IS NOW ENTRENCHED IN THE UK ECONOMY While total hours worked have increased strongly, growth in the quality of labour input has waned since 2012, turning negative in 2014, contributing to weak productivity growth. This may reflect a shift in the composition of the workforce towards lower-skilled roles. GROWTH OF 2.5 PER CENT IS PROJECTED IN 2015 AND 2016 The average of independent forecasters 4 suggests that the UK s growth rate will be 2.5 per cent in both 2015 and 2016 (Figure 1.2). The Office for Budget Responsibility s latest forecast (March 2015) projects slightly lower growth at 2.5 per cent and 2.3 per cent respectively. FIGURE 1.2: PROJECTED UK ANNUAL ECONOMIC GROWTH RATES IN 2015 AND 2016 Office for Budget Responsibility (Mar 15) Average of independent forecasters (May 15) Source: Office for Budget Responsibility; HM Treasury, Forecasts for the UK economy: a comparison of independent forecasts. 4 HM Treasury, Forecasts for the UK economy: a comparison of independent forecasts, May Page 18

21 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire annual GVA growth GVA millions THE ECONOMIC PERFORMANCE OF THE WEST OF ENGLAND ECONOMIC OUTPUT (GVA) THE WEST OF ENGLAND ECONOMY IS WORTH 29 BILLION In 2013, businesses in the West of produced 29.3 billion worth of economic output (Gross Value Added, or GVA). Over the past 15 years, economic output in the West of has represented 2.3 per cent of all output in. Bristol was the biggest contributor to the West of economy producing, in 2013, 43.1 per cent of the West of s GVA. FIGURE 1.3: GVA IN NUTS 3 AREAS ( MILLIONS) Bristol, City of Bath and North East Somerset, N Somerset and S Gloucestershire 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500 0 THE WEST OF ENGLAND ECONOMY GREW STRONGLY BEFORE THE RECESSION Between 1997 and 2008, economic output in the West of grew by 76.6 per cent (an annual average rate of 5.3 per cent as indicated in Figure 1.4). This was faster than growth across (73.7 per cent, an annual average of 5.1 per cent) and the sixth highest growth rate of all 39 LEP areas (after London, Cornwall and Isles of Scilly, Cheshire and Warrington, Greater Cambridge and Greater Peterborough, and Enterprise M3). During this period, growth in the West of was stronger than the national average in the Production, Financial & Insurance, Business Services, and Construction industries as represented in Figure 1.5. THE WEST OF ENGLAND WAS ONE OF ONLY FIVE LEP AREAS TO EXPERIENCE NOMINAL GVA GROWTH DURING THE RECESSION In 2009, GVA grew by 0.3 per cent, compared with a 1.5 per cent fall across as Figure 1.6 illustrates. A key factor behind the West of s resilience during the recession was the growth of the Distribution/ Transport/ Accommodation & Food sector (6.9 per cent growth in 2009, against a 3.0 per cent fall nationwide). Source: Regional Accounts, Office for National Statistics. FIGURE 1.4: GVA PER ANNUM GROWTH, Source: Regional Accounts, Office for National Statistics. Page 19

22 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire annual GVA growth Agriculture, forestry and fishing Production Construction Distribution; transport; accommodation & food Information and communication Financial and insurance activities Real estate activities Business service activities Public administration; education; health Other services and household activities total growth in GVA FIGURE 1.5: GVA GROWTH BY INDUSTRY, West of Source: Regional Accounts, Office for National Statistics. FIGURE 1.6: GVA GROWTH IN Source: Regional Accounts, Office for National Statistics. Page 20

23 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire rate of annual growth Bath & NE Somerset North Somerset South Gloucestershire Bristol Great Britain annual growth rate STRONG GROWTH IN SOUTH GLOUCESTERSHIRE Among the local authority areas in the West of, the strongest rate of GVA growth between 1998 and 2008 was recorded in South Gloucestershire (Figure 1.7). Estimates of district-level economic output from the RED Model 5 indicate that GVA grew most strongly in South Gloucestershire (7.1 per cent per year), slightly above the average rate in Bath & North East Somerset (5.2 per cent per year) and below average in North Somerset (4.3 per cent per year). In Bristol, economic growth was below the national average between 1997 and 2008, with GVA growing at an average rate of 4.2 per cent per year (or 4.0 per cent per year between 1998 and 2008 based on district-level estimates). Rates of economic growth during the recession in 2009 were mixed. In Bristol, economic output fell by 0.3 per cent, but it continued to grow in Bath and North East Somerset, North Somerset and South Gloucestershire (by 0.8 per cent). Alternatively, separate district-level estimates from the RED Model indicate that North Somerset and South Gloucestershire were resilient to the effects of recession in 2009, with economic growth of 4.2 per cent and 0.4 per cent respectively. In contrast to official data, the RED model suggests that GVA in Bath & North East Somerset fell by 0.3 per cent. THE RATE OF ECONOMIC GROWTH HAS NOT RECOVERED TO PRE-RECESSION LEVELS Since 2010, according to official estimates, the West of economy has grown at an annual average rate of 1.8 per cent as indicated in Figure 1.8. This is below the long-term annual average pre-recession growth rate of 5.3 per cent, and below the annual average rate of 3.0 per cent. Of the core cities and comparator southern LEP areas, only Liverpool and Swindon & Wiltshire had lower growth rates (Figure 1.11). During this period, economic growth was very low in 2011 and 2012 (0.9 per cent in both years), but accelerated in 2013 (3.5 per cent). FIGURE 1.7: GVA PER ANNUM GROWTH BY DISTRICT, Source: RED Model Within the LEP area, according to RED model data, the post-recession economy continued to grow more strongly in Bath and North East Somerset, North Somerset and South Gloucestershire (2.9 per cent per annum) than in Bristol (0.3 per cent per annum). In each area this was well below pre-recession rates Between 2010 and 2012, economic growth across the West of was lower than the national average across many industries, particularly Business Services, Financial & Insurance, and Information & Communication. Growth was much stronger than average in Real Estate Activities, as indicated in Figure 1.9. FIGURE 1.8: GVA PER ANNUM GROWTH, Source: Regional Accounts, Office for National Statistics. 5 Input-output model of the local economy built by the Regional Economic Development (RED) Group at the University of Plymouth Page 21

24 Agriculture, forestry and fishing Production Construction Distribution; transport; accommodation & food Information and communication Financial and insurance activities Real estate activities Business service activities Public administration; education; health Other services and household activities of total GVA growth FIGURE 1.9: ECONOMIC GROWTH BY INDUSTRY FROM 2010 TO West of Source: Regional Accounts, Office for National Statistics. ECONOMIC FORECASTS This section reports indicative economic forecasts for the West of, although it must be remembered that these are not facts waiting to happen, but estimates of future economic activity based on past trends and the outlook for the UK economy at one point in time. A range of economic forecasts for the West of were commissioned in The forecasts reported here represent policy neutral projections based on past performance, national economic forecasts and local industrial structure. Since 2013 there have been a number of development such as significant increases in employment land allocations in some of the unitary authority areas latest drafts of local plans (e.g. Bath and North East Somerset). ECONOMIC GROWTH IN THE WEST OF ENGLAND IS FORECAST TO EXCEED NATIONAL GROWTH RATES Rates of economic growth are forecast to reach 3.1 per cent per annum between 2013 and 2023 on average higher than the pre-recession average of 2.8 per cent per annum from 1998 to In the pre-recession period (1998 to 2008), the West of GVA grew at a rate of 2.8 per cent per annum (in 2010 prices). Between 2013 and 2023, annual GVA growth is expected to range from 2.5 per cent to 3.9 per cent, with a baseline forecast of 3.2 per cent per annum. This is expected to be slightly faster than UK average growth, where the baseline forecast is 3.1 per cent per annum (Figure 1.10). Growth could then slow in the following decade, with the latest forecasts suggesting an annual growth rate ranging from 1.8 per cent to 3.6 per cent between 2023 and 2033 with a baseline forecast of 2.6 per cent per annum. Again, this is expected to be slightly higher than average UK growth of 2.5 per cent per annum. FIGURE 1.10: FORECAST GVA GROWTH PER ANNUM, BASELINE FORECAST AND SCENARIOS Growth scenario Historic growth Forecast growth High growth scenario WoE UK WoE UK WoE UK WoE UK Medium-high growth scenario Baseline Medium-low growth scenario Low growth scenario Source: Source: Regional Accounts, Office for National Statistics; Oxford Economics Forecasts Page 22

25 FIGURE 1.11: GVA GROWTH RATE BY NUTS 3 AREA IN ENGLAND AND WALES Page 23

26 GVA per head ECONOMIC OUTPUT PER HEAD THE WEST OF ENGLAND PERFORMS ABOVE MANY PEER AREAS ON GVA PER HEAD The West of had a GVA per head of 26,800 in 2013, higher than the national average of 24,100 (Figure 1.12). For GVA per head, the West of ranked as the 7 th highest LEP area and only exceeded by the comparator LEP areas of Thames Valley Berkshire ( 39,280) and Oxfordshire ( 28,766). The West of s ranking was 3 rd out of 39 LEP areas in 2010, and 4 th in Within the West of, Bristol had the highest GVA per head - 28,900 in 2013 and had the 7 th highest GVA per head out of 99 of s NUTS3 areas. Bath and North East Somerset, North Somerset and South Gloucestershire had a GVA per head of 25,500 in 2013, with the 20 th highest GVA per head of 99 NUTS3 areas. FIGURE 1.13: GVA PER HEAD IN EACH YEAR FROM 1998 TO ,000 26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 West of Source: Regional Accounts, Office for National Statistics. As Figure 1.13 shows, the West of has consistently had a higher GVA per head than the national average since As Figure 1.15 illustrates, the West of had the highest rates of GVA per head amongst local economies in South West. FIGURE 1.12: GVA PER HEAD, West of 20,500 24,200 26,800 D2N2 14,100 17,500 19,300 Greater B ham and Solihull 15,800 18,600 19,800 Greater Manchester 15,600 19,300 20,700 Leeds City Region 16,000 19,500 20,500 Liverpool City Region 14,900 18,600 17,900 North East 12,900 16,300 17,400 Sheffield City Region 12,800 15,600 16,600 Gloucestershire 18,900 20,700 23,300 GCGP 19,400 24,800 26,200 Oxfordshire 21,900 24,500 28,800 Swindon and Wiltshire 18,300 23,400 23,200 Thames Valley Berkshire 31,600 35,600 38,900 18,100 22,200 24,100 Bristol, City of 23,500 28,000 28,900 Bath and NE Somerset, N Somerset and S Gloucestershire Source: Regional Accounts, Office for National Statistics. 18,700 22,500 25,500 Page 24

27 FIGURE 1.14: GVA PER HEAD BY NUTS 3 AREA IN ENGLAND AND WALES, 2013 Page 25

28 Agriculture, forestry and fishing Other services and household activities Information and communication Construction Financial and insurance activities Business service activities Production Real estate activities Distribution; transport; accommodation & food Public administration; education; health PUBLIC ADMINISTRATION, EDUCATION & HEALTH IS THE BIGGEST CONTRIBUTOR TO ECONOMIC OUTPUT In 2012 the largest sector in the West of in terms of economic output was Public Administration, Education & Health. Producing 6.1 billion of GVA, it represented 21 per cent of all economic output in the West of. The second and third largest sectors were Distribution, Transport, and Accommodation & Food (16 per cent of GVA), and Real Estate Activities (14 per cent) as indicated in Figure Compared with the average for, Public Administration, Education & Health and Real Estate Activities produced higher shares of total economic output in the West of, while Distribution, Transport, and Accommodation & Food were below the average. Throughout the forecast period ( ), GVA growth is expected to be fastest in Professional, Scientific & Technical Activities (5.0 per cent per annum), Real Estate Activities (4.1 per cent per annum) and Administrative & Support Services (4.0 per cent per annum) (Figure 1.16). FIGURE 1.16: FORECAST GVA GROWTH PER ANNUM ( ) COMPARED WITH PRE-RECESSION GROWTH ( ) BY INDUSTRY Industry A : Agriculture, forestry & fishing B : Mining & quarrying C : Manufacturing D : Electricity, gas, steam & air conditioning supply E : Water supply; sewerage, waste management & remediation activities F : Construction G : Wholesale & retail H : Transportation & storage I : Accommodation & food services J : Information & communication K : Financial & insurance L : Real estate M : Professional, scientific & technical N : Administrative & support services O : Public administration & defence P : Education Q : Human health & social work R : Arts, entertainment & recreation S : Other services Source: Regional Accounts, Office for National Statistics; Oxford Economics Forecasts FIGURE 1.15: SHARE OF TOTAL GVA BY INDUSTRY, West of Source: Regional Accounts, Office for National Statistics. Page 26

29 Real estate activities Construction Public administration; education; health Business service activities Other services and household activities Financial and insurance activities Information and communication Distribution; transport; accommodation & food Production Agriculture, forestry and fishing PROPERTY-RELATED SECTORS HAVE GROWN THE MOST STRONGLY OVER THE PAST 15 YEARS Between 1997 and 2012, the fastest growing sectors in terms of GVA produced have been Real Estate Activities (186.7 per cent) and Construction (131.2 per cent) as illustrated in Figure During the past 15 years, just one sector has declined: Agriculture Forestry & Fishing (-10.5 per cent). Compared with, the Production and Construction sectors grew more strongly than average. However many service-sector industries grew more slowly, particularly Financial & Insurance, Information & Communication, and Business Services. The Public Administration, Education & Health sectors have been the most significant contributors to overall GVA growth over the past 15 years. Between 1997 and 2012, 23.6 per cent of all GVA growth in the West of was due to growth in Public Administration, Education & Health GVA (Figure 1.18). This was followed by Real Estate Activities (19.4 per cent) and Business Services (13.1 per cent). GROWTH IN REAL ESTATE GVA HAS ACCELERATED SINCE THE RECESSION Since the recession, rates of economic growth declined across most sectors, particularly in Financial & Insurance and Business Services - as Figure 1.19 demonstrates. However, growth has increased sharply FIGURE 1.17: GVA GROWTH BY INDUSTRY, West of in the Real Estate sector and has also picked up in Agriculture, Forestry & Fishing. (Note: post-recession GVA data does not include the full recovery period: GVA by sector data is only available up to As above, GVA in the West of accelerated in 2013). FIGURE 1.18: CONTRIBUTIONS (PER CENT) TO TOTAL GVA GROWTH BY SECTOR IN THE WEST OF ENGLAND, Other services, 3.4 Public admin; education; health, 23.6 Business services, 13.1 Production, 7.0 Real estate, 19.4 Source: Regional Accounts, Office for National Statistics. Construction, 6.7 Distribution; transport; accommodation, food, 12.6 Information & communication, 5.5 Financial & insurance, Source: Regional Accounts, Office for National Statistics. Page 27

30 A : Agriculture, forestry and fishing B : Mining and quarrying C : Manufacturing D : Electricity, gas, steam and air conditioning supply E : Water supply; sewerage, waste management and remediation activities F : Construction G : Wholesale and retail trade; repair of motor vehicles and motorcycles H : Transportation and storage I : Accommodation and food service activities J : Information and communication K : Financial and insurance activities L : Real estate activities M : Professional, scientific and technical activities N : Administrative and support service activities O : Public administration and defence; compulsory social security P : Education Q : Human health and social work activities R : Arts, entertainment and recreation S : Other service activities contribution to tal GVA Agriculture, forestry and fishing Production Construction Distribution; transport; accommodation and food Information and communication Financial and insurance activities Real estate activities Business service activities Public administration; education; health Other services and household activities growth per annum Over the next 20 years, two thirds of all GVA growth in the West of is projected to come from Real Estate Activities, Professional, Scientific & Technical Activities, Financial & Insurance Activities, Wholesale & Retail, and Administrative and Support Service Activities (Figure 1.20). Contributions to overall GVA growth across the West of are expected to be highest from Real Estate Activities (19.7 per cent of total GVA growth), Professional, Scientific & Technical Activities (17.2 per cent), and Financial & Insurance (11.8 per cent), Wholesale & Retail (9.1 per cent), and Administrative & Support Services (9.0 per cent). Growth in these five sectors is expected to represent two-thirds of all GVA growth in the West of. FIGURE 1.19: GVA PER ANNUM GROWTH BY INDUSTRY, PRE-RECESSION ( ) AND POST-RECESSION ( ) Source: Regional Accounts, Office for National Statistics. FIGURE 1.20: FORECAST CONTRIBUTIONS TO GVA GROWTH BY SECTOR, Source: Oxford Economics Forecasts, Page 28

31 A : Agriculture, forestry & fishing B : Mining & quarrying C : Manufacturing D : Electricity, gas, steam & air conditioning supply E : Water supply; sewerage, waste management & F : Construction G : Wholesale & retail H : Transportation & storage I : Accommodation & food services J : Information & communication K : Financial & insurance L : Real estate M : Professional, scientific & technical N : Administrative & support services O : Public administration & defence P : Education Q : Human health & social work R : Arts, entertainment & recreation S : Other services Agriculture, forestry, fishing Production Construction Distribution; transport; accommodation, food Information & communication Financial & insurance Real estate Business services Public admin; education; health Other services The contribution to total GVA growth from Public Administration, Education & Health is expected to fall dramatically. Between 2013 and 2033, the Public Administration, Education & Health sectors are expected to represent just 5.5 per cent of total GVA growth in the West of compared with 23.6 per cent between 1997 and 2012, when they were the biggest contributors to growth (Figure 1.21). The share of GVA growth coming from Business Services sectors (Professional, Scientific & Technical Activities and Administrative & Support Services) is expected to rise dramatically, to 26.2 per cent of total GVA growth between 2013 and 2033, against 13.1 per cent between 1997 and Between 2013 and 2033, the fastest growing sectors in the West of are forecast to be Professional, Scientific and Technical Activities (5.0 per cent per annum), Real Estate Activities (4.1 per cent per annum) and Administrative and Support Services (4.0 per cent). The Mining & Quarrying industry is expected to be the only declining sector (-4.9 per cent per annum). Compared with the pre-recession period ( ), growth is expected to accelerate in Accommodation and Food Services (2.8 per cent per annum, from 1.4 per cent), Manufacturing (2.1 per cent per annum, from 1.0 per cent), and Arts, Entertainment and Recreation (2.3 per cent per annum, from 1.2 per cent). Growth is expected to slow across a number of sectors, including Financial & Insurance (3.0 per cent per annum, from 5.7 per cent), Health & Social Work (1.5 per cent per annum, from 3.5 per cent), and Information & Communication (3.5 per cent per annum, from 5.1 per cent). FIGURE 1.21: HISTORIC ( ) AND FORECAST ( ) CONTRIBUTIONS TO TOTAL GVA BY SECTOR Source: Regional Accounts, Office for National Statistics; Oxford Economics Forecasts, FIGURE 1.22: HISTORIC ( ) AND FORECAST ( ) PER ANNUM GVA GROWTH BY SECTOR Source: Regional Accounts, Office for National Statistics; Oxford Economics Forecasts, Page 29

32 PRODUCTIVITY PRODUCTIVITY IS HIGH IN THE WEST OF ENGLAND GVA per job and GVA per hour worked compare favourably with national averages in the West of, suggesting there is a large percentage of high-value jobs in the area. In 2011, each FTE job in the West of produced an average of 47,100 in GVA. This was higher than the Great Britain average ( 44,700), and above all core cities and most comparator southern LEP areas apart from Oxfordshire (Figure 1.23). Within the West of, GVA per FTE job was highest in South Gloucestershire ( 52,600) and Bristol ( 47,700) and lower than the national average in North Somerset ( 40,900) and Bath & North East Somerset ( 41,600). In 2013, jobs in the West of produced an average of in GVA per hour. This was the same as the average and higher than all core cities, but lower than most comparator southern LEP areas. Within the West of, GVA per hour worked was higher than average in Bath & North East Somerset, North Somerset and South Gloucestershire ( 31.90) but lower than average in Bristol ( 28.80). However, both ranked within the top third of NUTS 3 areas in, with the national average being skewed by very high productivity in Inner London and some South East areas. HOWEVER, PRODUCTIVITY GROWTH HAS BEEN LOWER THAN AVERAGE Between 1998 and 2011, GVA per job grew by 54.6 per cent in the West of lower than the Great Britain average (60.2 per cent), all core cities and two of the five southern LEP areas. Within the West of, productivity growth was very high in South Gloucestershire (71.0 per cent) but lower than average in Bath & North East Somerset (52.4 per cent), Bristol (50.3 per cent) and North Somerset (39.8 per cent). Between 2004 and 2013, GVA per hour increased by 27.2 per cent lower than the average (28.1 per cent), most core cities and three of the five southern LEP areas. Within the West of, productivity growth was much higher than average in the Bath and North East Somerset, North Somerset and South Gloucestershire NUTS 3 area (32.2 per cent) possibly boosted by South Gloucestershire, as above and much lower than average in Bristol (21.4 per cent). FIGURE 1.23: PRODUCTIVITY PERFORMANCE Area GVA per FTE job GVA per hour worked Growth in GVA per FTE job (per cent) Growth in GVA per hour worked (per cent) LEP AREAS West of 47, D2N2 39, Greater Birmingham & Solihull 42, Greater Manchester 40, Leeds City Region 41, Liverpool City Region 41, North Eastern 38, Sheffield City Region 37, Gloucestershire 41, GCGP 44, Oxfordshire 46, Swindon and Wiltshire 43, Thames Valley Berkshire 60, Great Britain 44, UNITARY/LOCAL AREAS Bath & NE Somerset 41, Bristol 47, North Somerset 40, South Gloucestershire 52, Bath & NE Somerset, N Somerset and S G'shire Source: Subregional Productivity, Office for National Statistics. Page 30

33 FIGURE 1.24: GVA PER HOUR WORKED BY NUTS 3 AREA IN ENGLAND AND WALES Page 31

34 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire JOBS THE WEST OF ENGLAND SUPPORTS 616,000 JOBS In 2012, there were 616,000 jobs 6 in the West of. Jobs in the West of, like economic output, have represented 2.2 per cent of the total fairly consistently since Within the LEP area, Bristol is the largest employment district with 270,000 jobs 45.1 per cent of all jobs in the area, similar to its share of GVA. (Figure 1.25). LONG-TERM JOB GROWTH HAS BEEN STRONG IN THE AREA, EXCEPT IN BRISTOL Between 2000 and 2013, the number of jobs in the West of grew by 58,000, or 9.4 per cent. As Figure 1.26 demonstrates, this was a higher growth rate than across (8.7 per cent), most of the other core cities and three of the five southern LEP areas. At district level, job growth has been particularly strong in South Gloucestershire (18.4 per cent) and Bath & North East Somerset (12.1 per cent). In Bristol, however, there has been a lower rate of growth than average since 2000 (3.6 per cent). REAL ESTATE AND BUSINESS SERVICES DROVE STRONG JOBS GROWTH BETWEEN 2000 AND 2008 The stronger-than-average job growth in the West of between 2000 and 2008 was driven by the rapid growth in Real Estate, Renting and Business Activities jobs (+49.6 per cent, compared to per cent across ). The West of also experienced much stronger job growth in the Utilities and Construction sectors (Figure 1.28). FIGURE 1.25: SHARE OF WEST OF ENGLAND JOBS BY DISTRICT, 2012 South Gloucestershire 24.7 North Somerset 14.1 Bath & NE Somerset 16.1 Source: Jobs Density, Office for National Statistics. Bristol 45.1 FIGURE 1.26: JOB GROWTH, Source: Jobs Density, Office for National Statistics. 6 Workforce jobs, as provided by the Jobs Density data series from the Office for National Statistics. Workforce jobs are the sum of including those supported by employers, government-supported trainees and Her Majesty's Forces. Page 32

35 FIGURE 1.27: RATE OF GROWTH IN TOTAL EMPLOYEES 7 BETWEEN 2012 AND 2013 IN UPPER TIER AUTHORITY AREAS IN ENGLAND 7 This refers to employee jobs, which are total jobs excluding the self-employed. Page 33

36 No. Jobs in No. Jobs in West of FIGURE 1.28: JOBS GROWTH BY INDUSTRY BETWEEN 2000 AND 2008 A : Agriculture, hunting and forestry B : Fishing C : Mining and quarrying D : Manufacturing E : Electricity, gas and water supply F : Construction G : Wholesale and retail trade; repair of motor vehicles, H : Hotels and restaurants I : Transport, storage and communication West of SINCE 2012, TOTAL JOBS HAVE RECOVERED Although the data on jobs for 2011 and 2012 shows a fall of 10,000 in total jobs in the West of over the year to 2012 (Figure 1.29), more recent evidence is more positive, with some recovery in jobs 2013 of +11,000. At district level, employee jobs increased by 10,000 across the LEP area between 2009 and 2013, with Bath and North East Somerset (+3,000) and Bristol (+11,000) experiencing increases and North Somerset (-2,000) and South Gloucestershire (-3,000) experiencing declines. The 1.7 per cent increase in jobs in the West of between 2009 and 2013 was exceeded by the national average performance, where jobs grew by 5.2 per cent. There was a sharp fall in jobs in neighbouring Swindon and Wiltshire during this period (-3.4 per cent). J : Financial intermediation K : Real estate, renting and business activities L : Public administration and defence; compulsory social security M : Education N : Health and social work O : Other community, social and personal service activities Source: Annual Business Inquiry, Office for National Statistics. FIGURE 1.29: GROWTH IN TOTAL JOBS, (left hand axis) West of (right hand axis) 28,000, ,000 27,500,000 27,000, , , ,000 26,500, ,000 26,000, , ,000 25,500, ,000 25,000, ,000 24,500, , ,000 24,000, ,000 Source: Jobs Density, Office for National Statistics. Page 34

37 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North East Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire FIGURE 1.30: CHANGE IN THE NUMBER OF JOBS 2009 TO Source: Jobs Density, Office for National Statistics. THERE HAVE BEEN SHARP DECLINES IN WHOLESALE AND RETAIL AND PUBLIC ADMINISTRATION JOBS Between 2009 and 2013, employee jobs 8 in the West of fell across a number of sectors, particularly Wholesale & Retail (-7,100), Public Administration & Defence (-5,600), Transportation & Storage (-3,600), Financial & Insurance (-3,200), and Administrative & Support Services (-3,200). While the fall in Public Administration & Defence jobs was in line in percentage terms with the average for, there were stronger declines in the Transportation & Storage and Financial & Insurance sectors, a decline in Wholesale & Retail jobs compared with no change across, and a decline in Administrative & Support Services jobs at a time when jobs were growing nationwide (Figure 1.31). The falls in jobs in these sectors have been partially offset by job growth in Human Health & Social Work (+8,900), Education (+4,900), Real Estate Activities (+3,000) and Accommodation & Food Services (+1,800). Job growth in Real Estate Activities, at 47 per cent, has continued to be much stronger than across (6 per cent). FIGURE 1.31: EMPLOYEE JOB CHANGE BY SECTOR, Other service activities Arts, entertainment and recreation Human health and social work Education Public administration and defence Administrative and support services Professional, scientific & technical Real estate activities Financial and insurance activities Information and communication Accommodation and food services Transportation and storage Wholesale and retail Construction Production West of Source: Business Register and Employment Survey, Office for National Statistics. Note: Job change in Agriculture has been excluded from the chart as, with very small employment numbers, the percentage change figures skew the chart 8 Employee jobs data is sourced from the Business Register and Employment Survey and does not include selfemployment. Page 35

38 JOB GROWTH IS FORECAST TO ACCELERATE BETWEEN 2012 AND 2022 BUT THEN TO SLOW CONSIDERABLY BETWEEN 2022 AND 2032, MIRRORING NATIONAL FORECASTS Despite the recession, historic data shows that jobs in the West of grew overall by 4.1 per cent between 2002 and 2012 (or 6.1 per cent based on West of forecasting model data) as Figure 1.32 illustrates. Baseline forecasts suggest that job growth will accelerate to 6.8 per cent between 2012 and 2022, stronger than the UK average growth of 6.5 per cent. Growth is then forecast to slow considerably between 2022 and 2032, to 2.1 per cent, below the UK average growth of 2.5 per cent. Between 2012 and 2022, job growth is expected to be strongest in Professional, Scientific & Technical Activities (30 per cent), Real Estate Activities (29 per cent), and Arts, Entertainment & Recreation (22 per cent) as detailed in Figure Jobs are expected to fall across a number of sectors: Agriculture, Forestry & Fishing, the Production sectors, Public Administration & Defence, and Education. Between 2022 and 2032, jobs are expected to continue to fall in Agriculture, Forestry & Fishing, the Production sectors, and Education, while jobs are forecast to start to fall in Wholesale & Retail, Transportation & Storage, and Information & Communication. Where job growth is expected, growth is expected to slow across most sectors, particularly Real Estate Activities and Professional, Scientific & Technical Activities. FIGURE 1.32: HISTORIC AND PROJECTED JOBS GROWTH (PER CENT) SCENARIO High growth scenario workforce jobs data West of model data forecast forecast West of West of UK West of Baseline UK Medium-high growth scenario Medium-low growth scenario Low growth scenario Source: Jobs Density/Workforce Jobs, Office for National Statistics; Oxford Economics Forecasts FIGURE 1.33: FORECAST JOBS GROWTH BY SECTOR, AND Sector No. No. No. A : Agriculture, forestry & fishing B : Mining & quarrying C : Manufacturing -14, , , D : Electricity, gas, steam & air conditioning supply -1, E : Water supply; sewerage, waste management & remediation activities 2, F : Construction -10, , , G : Wholesale & retail -3, , , H : Transportation & storage -2, , I : Accommodation & food services , J : Information & communication , K : Financial & insurance 2, , L : Real estate 4, , , M : Professional, scientific & technical 21, , , N : Administrative & support services 11, , , O : Public administration & defence 1, , P : Education 6, , , Q : Human health & social work 18, , R : Arts, entertainment & recreation , , S : Other services , Total 35, , , Oxford Economics Forecasts Page 36

39 2. BUSINESS Profile of the business population Foreign investment Entrepreneurial activity Knowledge economy and innovation Industrial specialisation Public and private employment Page 37

40 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire PROFILE OF BUSINESSES GROWTH IN THE ENTERPRISE BASE HAS BEEN STRONG IN THE WEST OF ENGLAND, PARTICULARLY IN BRISTOL FIGURE 2.1: NUMBER OF ACTIVE ENTERPRISES, 2013 In 2013, there were 43,100 active enterprises in the West of. Two-fifths of these were located in Bristol (17,255) as illustrated in Figure 2.1. Between 2004 and 2013, the number of businesses in the area grew by 6,120, or 16.5 per cent, as Figure 2.2 reveals. This was stronger than growth across (13.6 per cent), all core city LEP areas and all but one comparator southern LEP areas (Thames Valley Berkshire). Within the West of, growth in the number of enterprises has been particularly strong in Bristol (23.4 per cent) and above average in South Gloucestershire (15.6 per cent). Growth has been very low in Bath & North East Somerset (7.8 per cent) and slightly below average in North Somerset (13.3 per cent). South Gloucestershire 9,545 North Somerset 8,330 Bath & NE Somerset 7,970 Bristol 17,255 Source: Business Demography 2014, Office for National Statistics. FIGURE 2.2: GROWTH IN NUMBER OF ENTERPRISES, Source: Business Demography 2014, Office for National Statistics. Page 38

41 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire No. Businesses per 1,000 working age population THE NUMBER OF BUSINESSES IN THE WEST OF ENGLAND GREW AFTER THE RECESSION, BUCKING THE NATIONAL TREND In contrast to a fall in business population in and in all core city LEP areas in 2011 (the year following recession), the West of has experienced growth in 2011 and in every year during and since recession. In 2011, the business population in declined by 0.3 per cent, whereas it grew in the West of by 0.3 per cent (Figure 2.3). In contrast, all core city LEP areas experienced a fall in business numbers in at least two consecutive years, while all comparator southern LEP areas, apart from Thames Valley Berkshire, saw business numbers fall in at least one year. Within the West of the growth of the business population was uneven. Business numbers fell in South Gloucestershire (-0.8 per cent) and Bath & North East Somerset (-0.6 per cent) in 2011 while numbers continued to grow in Bristol (1.1 per cent) and North Somerset (0.9 per cent). In the two years of 2012 and 2013, enterprise growth in the West of accelerated faster than the average. Within the LEP area, growth was been very strong in Bristol but lower in Bath & North East Somerset. BUSINESS DENSITY IS SLIGHTLY LOWER THAN AVERAGE In 2013, there were 61 businesses in the West of per 1,000 working age people (Figure 2.4). This was slightly below the average of 62, but well above all core city LEP areas. The comparator southern LEP areas all had higher-thanaverage business densities. Within the West of, business densities were below average in South Gloucestershire (56) and Bristol (58) but very high in Bath & North East Somerset (69) and North Somerset (68). FIGURE 2.3: ANNUAL GROWTH IN THE NUMBER OF ENTERPRISES West of Source: Business Demography 2014, Office for National Statistics. FIGURE 2.4: NUMBER OF BUSINESSES PER 1,000 WORKING AGE PEOPLE, Source: Business Demography 2013, Office for National Statistics. Page 39

42 THE WEST OF ENGLAND HAS A BELOW- AVERAGE SHARE OF MICRO AND MEDIUM- SIZED BUSINESSES, BUT AN ABOVE- AVERAGE SHARE OF SMALL BUSINESSES The majority of businesses in the West of are micro businesses. In 2014, 88.0 per cent of businesses in the area employed fewer than ten people (Figure 2.5). This was slightly lower than the average (88.4 per cent) and below all comparator southern LEP areas, but higher than all core city LEP areas. Within the West of, Bristol had a below average rate of micro businesses (86.8 per cent) while the strongest presence of micro businesses was in North Somerset (88.9 per cent). The West of had a higher-than-average percentage of small businesses employing people (10.1 per cent, against an average of 9.5 per cent). While lower than all core city LEP areas, the percentage of small businesses was higher than all comparator southern LEP areas. Within the West of, the presence of small businesses was strongest in Bristol (10.9 per cent). The percentage of medium sized businesses, employing people, was slightly lower than average (1.5 per cent, compared with 1.7 per cent across ) and lower than all core city and southern LEP areas. Within the West of, rates of medium sized businesses ranged from 1.2 per cent in North Somerset to 1.9 per cent in Bristol. The percentage of large businesses, employing at least 250 people, was in line with the average (0.4 per cent). RURAL AREAS HAVE A HIGHER SHARE OF BUSINESSES WITH NO EMPLOYEES As Figure 2.6 shows from an analysis of Rural West of businesses (according to DEFRA s rural classification), there is a much stronger share of businesses with no employees than in urban areas and a lower proportion of businesses with over 10 employees. FIGURE 2.6: REGISTERED BUSINESSES BY EMPLOYEE SIZEBAND BY RURAL AND URBAN CLASSIFICATION IN THE WEST OF ENGLAND IN 2013 with no employees 1-9 employees employees employees 250 and more employees Source: Office for National Statistics (ONS), Inter-Departmental Business Register (IDBR) 2012/13, Enterprise level dataset Rural Urban FIGURE 2.5: SHARE OF BUSINESSS POPULATION BY EMPLOYMENT SIZEBAND, 2014 Micro (0 to 9) Small (10 to 49) Medium-sized (50 to 249) Large (250+) West of D2N Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire ENGLAND Bath and North East Somerset Bristol, City of North Somerset South Gloucestershire Source: Enterprises, Business Counts, Office for National Statistics. Page 40

43 40 LARGE BUSINESSES HAVE THEIR HEADQUARTERS IN THE WEST OF ENGLAND There are 40 large businesses (250+ employees) with headquarters in the West of. The majority are located in Bristol (20) and South Gloucestershire (14), with small numbers in North Somerset (5) and Bath & North East Somerset (1). These 40 businesses employ 139,300 people in the UK 9. Of the ten businesses with the most employees, five are located in Bristol, four in South Gloucestershire, and one in North Somerset. As indicated in Figure 2.7 Large numbers of these business are in the Professional, Scientific & Technical Activities sector (13) (mainly Activities of Head Offices ) and Manufacturing (10). Of the 13 Professional, Scientific & Technical Activities businesses, eight are located in Bristol Of the ten Manufacturing businesses, five are in South Gloucestershire Of the six Financial & Insurance Activities businesses, five are in Bristol Of the ten businesses with the most employees, six are in the Professional, Scientific & Technical Activities sector, three are in Manufacturing and one is in Education A selection of the largest employers with HQs in the West of is listed in Figure 2.8. FIGURE 2.7: NUMBER OF LARGE EMPLOYERS WITH HEADQUARTERS IN THE WEST OF ENGLAND BY SECTOR Education Wholesale and retail trade Administrative and support service activities Professional, scientific and technical activities Financial and insurance activities Information and communication Construction Water supply, sewerage, waste management and remediation activities Manufacturing Source: MINT, Bureau Van Dyke; Local Authority Intelligence This data is taken from a source based on Companies House data, which often reports total UK employment associated with a headquarters location. Page 41

44 FIGURE 2.8: LARGE BUSINESSES WITH THEIR HEADQUARTERS IN THE WEST OF ENGLAND LEP AREA Name of Company District UK Employees Sector Mitie Group PLC South Gloucestershire 62,930 Strategic outsourcing and energy services. Imperial Tobacco Group PLC Bristol 37,900 Sale of tobacco products. Airbus Operations Ltd South Gloucestershire 8,660 Aerospace design and manufacture. PPL WEM Holdings PLC Bristol 3,030 Distribution of electricity. Integral UK Holdings Ltd South Gloucestershire 2,610 Facilities services and maintenance. Kerry Ingredients (UK) Ltd South Gloucestershire 2,000 Manufacture and sale of food ingredient products. Tribal Group PLC Bristol 1,460 Software products. Yeo Valley Group Ltd North Somerset 1,400 Manufacture of dairy products. Matthew Clark (Holdings) Ltd Bristol 1,210 Wholesaler of wine and spirits WT Burden Ltd Bristol 1,210 Products and services to utilities, the civil engineering and construction industries. The Cheese Company Ltd Bath and North East Somerset 1,030 Manufacture and supply of cheese, butter and related dairy products. Future Publishing Plc Bath and North East 1,000 Media and publishing Somerset The Unite Group PLC Bristol 980 Development of student residential accommodation. Brandon Hire Group Holdings Bristol 960 Hire and sale of tools, equipment and accessories. Ltd Jelf Group PLC South Gloucestershire 960 Financial advisory services. Computershare Investor Services PLC Bristol 950 Registry services and employee share plan services. Brightside Group PLC South Gloucestershire 920 Insurance broker, premium finance provider, medical reporting agency and provider of IT services. Pfeiffer Holdings Ltd North Somerset 840 Contracted building maintenance and environmental services. Ian Williams (Holdings) Ltd South Gloucestershire 810 Building and property services. Nisbets PLC Bristol 720 Sale of catering equipment. Space Cooling Systems Holdings Ltd Bristol 700 Installation and maintenance of refrigeration, heating and ventilation and air conditioning systems. Hargreaves Lansdown PLC Bristol 650 Investment products, investment services, financial planning and advice. TLT LLP Bristol 570 Legal services. Unit4 Business Software Ltd North Somerset 570 Business information software systems. Bond Pearce LLP Bristol 540 Legal services. ISG Pearce Ltd South Gloucestershire 520 Construction and project management. Aardman Holdings Ltd Bristol 490 Film, broadcast and commercial producers and distributors, management services. Bristol Water PLC South Gloucestershire 450 Water and related services. D A S Legal Expenses Bristol 410 Legal expenses insurance. Insurance Company Ltd Baileys Caravans Bristol 400 Manufacturing of caravans and motorhomes. Elemis Ltd Bristol 390 Cosmetics and skincare products. Siniat Ltd North Somerset 380 Manufacture of plasterboard and accessories. Essilor Ltd South Gloucestershire 370 Manufacture of ophthalmic lenses and optical equipment. Mobile Windscreens Ltd Bristol 350 Sale and service of automotive glass and ancillary products. Nair & Co Ltd Bristol 350 Outsourcing and consultancy services. Tata Technologies Europe Ltd South Gloucestershire 340 Product lifecycle management engineering and design and the IT hardware and software. B T Q Ltd South Gloucestershire 330 Design, manufacture, supply and care of work garments and equipment. Butcombe Brewing Company Ltd North Somerset 300 Holding company, brewing and pub related activities. Bevan Brittan LLP Bristol 270 Legal services. ALD Automotive Ltd South Gloucestershire 270 Fleet management services. F & B Profiles (Holdings) Ltd South Gloucestershire 260 Steel cutting and component distribution Cowlin Construction Ltd Bristol 250 Construction. Source: MINT, Bureau Van Dyke; Local Authority Intelligence. Note: employment data represents total UK employment. Page 42

45 THE PRESENCE OF ESTABLISHED BUSINESSES IS SLIGHTLY STRONGER IN THE WEST OF ENGLAND THAN NATIONALLY FIGURE 2.9: PERCENTAGE OF BUSINESSES THAT ARE LESS THAN TWO YEARS OLD, 2013 South Gloucestershire UA 16.6 The age profile of businesses in the West of is slightly older than across. As presented in Figure 2.9, in 2013, the West of had a lower-than-average percentage of businesses under two years old (16.8 per cent, compared with 17.4 per cent across ) and a higher percentage of businesses that were 4-9 years old (27.2 per cent, compared with 26.6 across ). Within the area, Bath & North East Somerset, North Somerset and South Gloucestershire had higher-thanaverage percentages of businesses aged ten or more years. In contrast, Bristol had above-average percentages of young businesses, aged less than two years or aged 2-3 years. North Somerset UA Bristol Bath & NE Somerset UA Thames Valley Berkshire Swindon and Wiltshire Oxfordshire GCGP Gloucestershire Sheffield City Region Within the West of, employment by foreignowned businesses was very low in Bath & North East Somerset (2.1 per cent) and Bristol (6.3 per cent). The presence of foreign-owned businesses was most significant in South Gloucestershire. While the percentage of foreign-owned businesses was below the national average, at 0.8 per cent of all businesses, the share of all employment was higher than average (16.2 per cent), indicating that foreign-owned businesses in the district were large employers. North Eastern 17.1 Liverpool City Region 18.4 Leeds City Region 17.1 Greater Manchester 19.2 Greater Birmingham & Solihull 17.8 D2N West of Source: UK Business, Office for National Statistics. Page 43

46 FOREIGN INVESTMENT THE WEST OF ENGLAND HAS A SMALLER PROPORTION OF FOREIGN-OWNED BUSINESSES THAN ENGLAND AS A WHOLE In 2010, 315 businesses in the West of were known to be foreign-owned. These represented 0.9 per cent of all businesses in the area below the average of 1.3 per cent. Foreignowned businesses employed 35,415 people 8.3 per cent of all employment in the area (Figure 2.10). Again, this was lower than the national average of 14.3 per cent and below most comparator LEP areas for which data were available, apart from North Eastern (5.4 per cent). FIGURE 2.10: PERCENTAGE OF ALL EMPLOYMENT BY FOREIGN-OWNED ENTERPRISES, 2010 Share of total LEP Area employment (per cent) West of 8.3 D2N Greater Manchester 9.8 Greater Birmingham & Solihull 10.5 Liverpool City Region 10.3 North Eastern 5.4 Gloucestershire 9.5 GCGP 12.8 Oxfordshire 13.2 Swindon & Wiltshire 16.6 Thames Valley Berkshire 25.4 ENGLAND 14.3 Unitary authority area Bath & NE Somerset 2.1 Bristol 6.3 North Somerset 13.8 South Gloucestershire 16.2 Source: Employees by UK and foreign ownership, Inter-Departmental Business Register, Office for National Statistics. THE WEST OF ENGLAND IS POPULAR WITH INWARD INVESTORS INWARD INVESTMENT PERFORMANCE HAS IMPROVED SINCE 2009 On average, Bristol and Bath have secured 7.7 FDI projects per year since Performance has improved significantly since 2009, with an average of 11.8 FDI projects per year between 2009 and was the strongest year of performance for Bristol and Bath since records began, with the area ranked third of the English core cities. FIGURE 2.11: RANKING OF LOCAL AREAS AND CITY REGIONS BY NUMBER OF FDI PROJECTS BETWEEN 2004 AND 2013 Rank Area Number of FDI Projects 1 Greater London 2,722 2 Birmingham City Region Berkshire Greater Manchester Tyne and Wear Belfast City Region Cambridgeshire Glasgow City Region Edinburgh City Region Surrey Hampshire Cleveland West Yorkshire Bristol & Bath Oxfordshire Warwickshire Liverpool City Region Cheshire Buckinghamshire Hertfordshire 72 Source: Employees by UK and foreign ownership, Inter-Departmental Business Register, Office for National Statistics. Business services and software were the top two sectors for FDI into Bristol and Bath over the last decade (Figure 2.12) the same as for the UK as a whole. Machinery & equipment, other transport equipment and electronics are all prominent sectors for the area. Unlike the UK as a whole, Bristol and Bath has not secured high levels of financial services FDI. With 84 FDI projects secured over the last decade, Bristol and Bath ranked 14th in terms of UK locations securing Foreign Direct Investment (FDI) between 2004 and 2013 (Figure 2.11). This was in line with Cleveland, West Yorkshire, Oxfordshire and Warwickshire. Page 44

47 FIGURE 2.12: NUMBER OF FDI PROJECTS SECURED PER YEAR IN BRISTOL & BATH, Source: UK Trade and Industry. Page 45

48 Oct 2004-Sep 2005 Oct 2005-Sep 2006 Oct 2006-Sep 2007 Oct 2007-Sep 2008 Oct 2008-Sep 2009 Oct 2009-Sep 2010 Oct 2010-Sep 2011 Oct 2011-Sep 2012 Oct 2012-Sep 2013 Oct 2013-Sep 2014 ENTREPRENEURIAL ACTIVITY SELF-EMPLOYMENT RATES ARE LOWER IN THE WEST OF ENGLAND THAN NATIONALLY Self-employment is lower than across, but is increasing. In the year to September 2014, 13.5 per cent of working age employed people in the West of were self-employed (Figure 2.13). This was lower than the average (14.2 per cent), below most comparator southern LEP areas, but higher than all core city LEP areas. There were huge variations in self-employment rates between unitary authority areas in the West of. Rates were low in North Somerset (9.1 per cent) and South Gloucestershire (9.7 per cent) but above average in Bath & North East Somerset (18.8 per cent) and Bristol (15.9 per cent). SELF-EMPLOYMENT RATES HAVE INCREASED OVER THE PAST NINE YEARS Over the past nine years, self-employment has increased in the West of by 2.5 percentage points (Figure 2.14). This is due to large rises in Bath & North East Somerset (6.1 percentage points) and Bristol (5.6 percentage points), while selfemployment has fallen in North Somerset (-2.7 percentage points) and South Gloucestershire (-0.5 percentage points). FIGURE 2.13: PERCENTAGE OF WORKING-AGE EMPLOYED PEOPLE THAT ARE SELF-EMPLOYED, OCTOBER 2013 TO SEPTEMBER 2014 South Gloucestershire North Somerset Bristol Bath & NE Somerset Thames Valley Berkshire Swindon and Wiltshire Oxfordshire GCGP Gloucestershire Sheffield City Region North Eastern Liverpool City Region Leeds City Region Greater Manchester Greater Birmingham & Solihull D2N2 West of Source: Annual Population Survey Jan 2014-Dec 2014, Office for National Statistics. FIGURE 2.14: TRENDS IN SELF-EMPLOYMENT RATES Bath & NE Somerset Bristol North Somerset South Gloucestershire Source: Annual Population Survey, Office for National Statistics. Page 46

49 No. start up businesses per year Self-employment rates in the West of were highest in the Construction sector at the time of the 2011 Census (42 per cent). Compared with averages, rates in the West of were low in Agriculture, Forestry & Fishing (5 percentage points lower, i.e. 19 per cent, against 24 per cent across ), Transportation & Storage (-2 percentage points), Professional, Scientific & Technical Activities (-2 percentage points), Administrative & Support Services Activities (-2 percentage points) and Wholesale & Retail Trade Activities (-2 percentage points). Rates were above average in Arts, Entertainment, Recreation & Other Services (+2 percentage points). Self-employment is more prevalent in rural areas in the West of. In 2011, 20.8 per cent of the West of s economically active rural residents aged between 16 and 74 were selfemployed, compared to 14.6 per cent of urban residents. The share of self-employed with employees was also higher in rural areas, at 25.9 per cent compared to 19.3 per cent in urban areas. The West of was similar to the national () average for rural and urban areas in this regard. ACCORDING TO OFFICIAL STATISTICS, THE NUMBER OF START-UP BUSINESSES HAS INCREASED YEAR ON YEAR SINCE 2009 In 2013, 5,885 new VAT/PAYE registered businesses were created in the West of. This was the highest level since the earliest year of data (2004) (Figure 2.15). The rate of new business start-ups in 2013 was 13.7 per 100 active enterprises. As Figure 2.16 demonstrates, this was lower than the average of 14.4 and below many core city LEP areas, but higher than most comparator southern LEP areas. Within the West of, Bristol had an aboveaverage rate of business start-ups, at 14.9 per 100 active enterprises. The lowest rate was in Bath & North East Somerset (12.2). This appears at odds with the high and increasing self-employment rate in this district, although ONS business start-up rates do not include very small businesses not registered for VAT/PAYE. This dataset providing information on new VAT or PAYE registered businesses suggests that business start-up rates fell during the recession but have since risen to their highest rate since 2004, in line with national trends. FIGURE 2.16: BUSINESS START-UP RATES, 2013 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire Source: Business Demography 2014, Office for National Statistics FIGURE 2.15: NUMBER OF BUSINESS START-UPS 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Source: Business Demography 2014, Office for National Statistics. Page 47

50 FIGURE 2.17: BUSINESS START-UP RATES IN 2013 IN DISTRICT AND UNITARY AUTHORITY AREAS IN ENGLAND AND WALES Page 48

51 No. No. start-ups per 100 active enterprises No. DATA FROM BANKS SUGGESTS A DECLINE IN THE RATE OF BUSINESS START-UPS SINCE 2012 However, data from Banksearch suggests that the rate of business start-ups has been in decline since 2012 (Figure 2.18). Banksearch data measures the number of businesses opening first current accounts from a small business banking product range from the main high street banks, and suggests that there has been a decline in new business start-ups in the area since These are businesses that are either new to banking or previously operated through a personal account. Unlike the ONS dataset, this data includes very small businesses (i.e. those not registered for VAT/PAYE). In 2014, 8,010 businesses opened their first business current accounts in the West of a decline of 1,450 (or -15 per cent) on the 2011 peak (Figure 2.19). Using this measure, start-ups have declined across the area, particularly in South Gloucestershire (23 per cent) and Bath & North East Somerset (20 per cent). Again, this data appears at odds with the very high and increasing selfemployment rate in Bath & North East Somerset. This could be due to new self-employed people operating via personal bank accounts. FIGURE 2.18: START-UP RATE PER 100 ACTIVE ENTERPRISES, West of FIGURE 2.19: NUMBER OF NEW FIRST SMALL BUSINESS BANK ACCOUNTS 10,000 9,500 9,000 8,500 8,000 7,500 7,000 Source: Banksearch. THERE HAVE BEEN SHARP FALLS IN THE NUMBERS OF SOLE TRADERS AND ADMINISTRATIVE & SUPPORT SERVICES BUSINESSES OPENING FIRST CURRENT ACCOUNTS The decline in start-ups in recent years has been concentrated in urban areas (a decline of 1,229 startups between 2011 and 2014). The fall has also been driven by a 47 per cent fall in the number of sole traders opening business bank accounts since 2010 (Figure 2.20). The number of not-for-profit start-ups have also declined by 50 per cent since However, the number of limited company start-ups has increased dramatically, by 63 per cent since FIGURE 2.20: BUSINESS START-UPS BY TYPE 6,000 5,000 4,000 3,000 2,000 Sole Trader Partnership Not For Profit Limited Company Limited Liability Partnership Source: UK Business Demography, 2014 and Mid-year Population Estimates, Office for National Statistics. Based on the Banksearch data, North Somerset has the highest rate of business start-ups within the West of (13.7 per 1,000 working age people) while South Gloucestershire has the lowest (10.6). 1,000 0 Source: Banksearch. Page 49

52 THE MAJORITY OF BUSINESS STARTS IN THE WEST OF ENGLAND ARE IN THE SERVICES SECTOR In 2014, the largest number of business starts were in the following sectors: Professional, Scientific & Technical Activities (1,294), Personal & Community Services (800), Administrative & Support Services (745), Retail (656), Other Construction Activities (605), Health & Social Work (525), Accommodation & Food Services (481), and Information & Communication (462). Together, these eight sectors represented over two-thirds of all start-ups in the area. The fall in business start-ups in recent years has been driven by a fall in new businesses in the Administrative & Support Services, Construction, Personal & Community Services, Transport, Storage & Communication, and Buying, Selling & Renting of Own or Leased Real Estate sectors. The decline in start-ups in these sectors has been partially offset by an increase in business starts in the Professional, Scientific & Technical Activities, Other Construction Activities, Information & Communication, Transportation & Storage, and Health & Social Work sectors. LONG-TERM BUSINESS SURVIVAL RATES ARE HIGHER THAN ACROSS ENGLAND Short-term business survival rates in the West of are similar to the national average, while longer-term survival is higher than average. Of all new VAT/PAYE businesses created in the West of in 2012, 91.0 per cent survived their first year. This was similar to the average (91.1 per cent) but below all comparator areas. As Figure 2.21 charts, one year business survival rates fell in the area during and following the recession and have since started to increase, but remain below pre-recession levels. survival. Of all businesses created in 2011, 76.9 per cent survived their second year. This was above the average (75.5 per cent) and higher than all core city LEP areas, but below all comparator southern LEP areas. The West of had higher rates of survival over three to five years than the national average and core city LEP areas, and performed better than some southern LEP areas. FIGURE 2.22: ONE- TO FIVE-YEAR BUSINESS SURVIVAL RATES, West of year 2 year 3 year 4 year 5 year Source: UK Business Demography, 2014, Office for National Statistics. Within the West of, one- and two-year business survival rates are highest in South Gloucestershire but lowest and below-average in Bristol. Three-to-five year survival rates are above average in all four districts, with Bristol having the lowest rates (Figure 2.22). FIGURE 2.21: TREND IN ONE-YEAR BUSINESS SURVIVAL RATES West of Source: UK Business Demography, 2014, Office for National Statistics. The West of performed slightly better on two-year survival rates than for one-year Page 50

53 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire ENGLAND Bristol City of Bath and North East Somerset, North Somerset and South Gloucestershire INNOVATION & KNOWLEDGE ECONOMY PATENTS The West of s rate of patenting, at an average of 127 patents per million residents over the five years from 2007 to 2011, is well above the average of 93 (Figure 2.23). While this is a higher rate of patenting than all other city-region LEPs, the West of ranked ninth out of 39 LEP areas, with the top three being London (447), GCGP (277), and Oxfordshire (177). Over the five years from 2007 to 2011, West of inventors originated an average of 136 patents per year. Within the West of, Bristol had an annual average of 121 patents per million residents over five years, and Bath and North East Somerset, North Somerset and South Gloucestershire had an average of 208 (Figure 2.24). FIGURE 2.23: AVERAGE ANNUAL PATENTS PER 1 MILLION RESIDENTS OVER 5-YEAR PERIOD ( ) AND 10-YEAR PERIOD ( ) year per 1m 10 year per 1m Source: OECD (patents) and Office for National Statistics (NUTS3 Population). FIGURE 2.24: AVERAGE ANNUAL PATENTS OVER 5-YEAR PERIOD ( ) AND 10-YEAR PERIOD ( ) Area Annual averages Annual averages per 1 million residents 5-year 10-year 5-year 10-year West of D2N Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire ENGLAND 4,955 5, Bristol Bath and North East Somerset, North Somerset and South Gloucestershire Source: OECD (patents) and Office for National Statistics (NUTS3 Population). Page 51

54 KNOWLEDGE ECONOMY EMPLOYMENT IN THE KNOWLEDGE ECONOMY IS HIGH IN THE WEST OF ENGLAND In 2013, 119,400 workers in the West of were employed in Knowledge Economy industries, using the Work Foundation definition 10. This was equivalent to 21.8 per cent of all employment above the average (19.7 per cent), all core city LEP areas and three of the five southern LEP areas. Oxfordshire and Thames Valley Berkshire had much higher rates (Figure 2.25). This above-average Knowledge Economy employment was driven by high shares of employment in Higher Education (2.9 per cent of all employment compared with 1.6 per cent across ), Architectural & Engineering Activities & Related Technical Consultancy (2.2 per cent, against 1.4 per cent across ), and Activities Auxiliary to Insurance and Pension Funding (1.5 per cent, compared with 0.8 per cent across ). Knowledge Economy employment was very high in Bath & North East Somerset (22.9 per cent) and Bristol (25.6 per cent), slightly higher than average in South Gloucestershire (19.8 per cent) and very low in North Somerset (12.9 per cent). Service Activities Related to Printing (-1,800), Activities of Head Offices (-1,500), Insurance (-1,300), Management Consultancy Activities (-1,200), and Other Financial Service Activities, except Insurance and Pension Funding (-500). FIGURE 2.25: PERCENTAGE OF EMPLOYMENT IN KNOWLEDGE ECONOMY AND HIGH & MEDIUM TECHNOLOGY MANUFACTURING, 2013 Knowledge Economy High and medium technology manufacturing excluding sectors already accounted for in the knowledge economy definition West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Employment in High and Medium Technology Manufacturing is also higher than across. With 21,400 workers, this was equivalent to 3.9 per cent of all employment in the area above the national average of 3.1 per cent, four of the seven core city LEP areas and two of the five southern LEP areas. Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Within the West of, High and Medium Technology Manufacturing employment was very high in South Gloucestershire (8.0 per cent), higher than average in North Somerset (4.1 per cent) and low in Bath & North East Somerset (2.4 per cent) and Bristol (2.0 per cent). Higher-than-average employment in High and Medium Technology Manufacturing in the West of was due to a high share of jobs in Manufacture of Air and Spacecraft & Related Machinery (1.5 per cent of all employment, compared with 0.3 per cent across ). EMPLOYMENT IN THE KNOWLEDGE ECONOMY HAS DECLINED Between 2009 and 2013, the number of Knowledge Economy workers in the West of declined by 3,900 or by 3.2 per cent in contrast to growth of 6.0 per cent across. Sub-sectors with declining employment included Monetary Intermediation (-3,100), Other Telecommunications Activities (-2,900), Printing and Source: Business Register and Employment Survey, Office for National Statistics. BY CONTRAST, EMPLOYMENT IN HIGH AND MEDIUM TECHNOLOGY MANUFACTURING HAS INCREASED SIGNIFICANTLY SINCE 2009 Employment in High and Medium Technology Manufacturing rose sharply between 2009 and 2013, by 4,600, or 26.6 per cent much higher than the average increase of 3.6 per cent (Figure 2.26). Sub-sectors with increasing employment included Manufacture of Air and Spacecraft & Related Machinery (+1,200), Manufacture of Instruments and Appliances for Measuring, Testing and Navigation; Watches and Clocks (+800), Manufacture of Computers and Peripheral Equipment (+500) and Manufacture of Other Special-Purpose Machinery (+500). 10 See Page 52

55 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire FIGURE 2.26: PERCENTAGE CHANGE IN KNOWLEDGE ECONOMY AND HIGH AND MEDIUM TECHNOLOGY MANUFACTURING EMPLOYMENT, Knowledge Economy High and medium technology manufacturing change change West of 119, , ,400 16, D2N2 127, , ,700 40, Greater B'ham & Solihull 148, , ,000 35, Greater Manchester 237, , ,700 35, Leeds City Region 237, , ,300 40, Liverpool City Region 95,100 92, ,800 20, North Eastern 99, , ,400 40, Sheffield City Region 103,100 99, ,800 19, Gloucestershire 45,100 47, ,000 15, GCGP 123, , ,200 29, Oxfordshire 93,800 89, ,900 11, Swindon and Wiltshire 57,400 56, ,700 14, Thames Valley Berkshire 140, , ,600 12, ENGLAND 4,840,800 4,568, , , Bath and North East Somerset 19,500 20, ,000 1, Bristol, City of 61,600 63, ,800 4, North Somerset 10,300 10, ,300 2, South Gloucestershire 28,000 29, ,300 9, Source: Business Register and Employment Survey, Office for National Statistics. A HIGHER SHARE OF RESIDENTS ARE SCIENCE AND TECHNOLOGY PROFESSIONALS At the time of the 2011 Census, 7.2 per cent of people working in the West of were science and technology professionals and associate professionals higher than the average of 5.8 per cent (Figure 2.27). Overall employment was boosted by a high percentage of science and technology workers in South Gloucestershire (9.5 per cent), while North Somerset had a below average rate (5.3 per cent). Compared with other LEP areas, the West of had a higher percentage of science and technology workers than all core city LEP areas but a lower percentage than three of the five southern LEP areas. The percentage of science and technology professionals was particularly high relative to the national average for Engineering Professionals (2.0 per cent of all workers, against 1.3 per cent across ) and Information Technology and Telecommunications Professionals (3.7 per cent, against 2.2 per cent across ). Again, this was due to high rates in South Gloucestershire (3.2 per cent and 3.7 per cent respectively). FIGURE 2.27: NUMBER OF SCIENCE & TECHNOLOGY PROFESSIONALS AND ASSOCIATE PROFESSIONALS AS A PERCENTAGE OF ALL EMPLOYMENT, Source: 2011 Census, Office for National Statistics. Page 53

56 BUSINESSES IN THE WEST OF ENGLAND ARE MORE LIKELY TO COMPETE ON DESIGN, QUALITY AND INNOVATION Product Market Strategies provide a way of categorising the quality, sophistication and added value of a firm s products and services. Product Market Strategies are defined within the UK Employer Skills Survey 2013 by aggregating responses to a series of questions exploring pricing strategies, approaches to innovation and the nature of the product market (the extent to which the market attracts a premium and the extent of customisation of products and services in the market). Aggregating these responses classifies almost half of private sector employers in the UK as having a high or very high product market strategy, indicating that their competitive success is not dependent on price alone: they pursue innovation, compete on quality and/or offer customised goods or services. In the West of, 50 per cent of private sector businesses were defined as having a high or very high Product Market Strategies higher than the national average of 45 per cent, as Figure 2.28 demonstrates. Rates ranged from 47 per cent in South Gloucestershire to 55 per cent in Bath & North East Somerset. The West of also scored highly in individual aspects of pricing, innovation and quality: 33 per cent of businesses reported that demand for their goods/services were not at all price dependent or slightly price dependent, compared with the average of 28 per cent 39 per cent of businesses reported that they often/very often lead the way, against an average of 35 per cent 62 per cent of businesses reported they competed in a market for high/premium quality goods and services, against an average of 59 per cent Within the LEP area, Bath & North East Somerset scored well above average on all aspects of Product Market Strategies. Page 54

57 FIGURE 2.28: PRODUCT-MARKET STRATEGIES IN UPPER TIER AUTHORITIES IN ENGLAND AND WALES - PERCENTAGE OF ESTABLISHMENTS CLASSIFYING THEMSELVES AS COMPETING IN HIGH OR VERY HIGH QUALITY PRODUCT AND SERVICE MARKETS IN 2013 Page 55

58 INDUSTRIAL SPECIALISATION THE WEST OF ENGLAND HAS HIGH CONCENTRATIONS OF EMPLOYMENT IN A RANGE OF INDUSTRIAL SPECIALISMS BROAD INDUSTRIAL SPECIALISATION The largest employment sectors in the West of are Health (14.8 per cent of all employment), Education (9.9 per cent) and Retail (9.8 per cent). In 2013, Financial & Insurance, Public Administration & Defence, and Health were more significant for employment in the West of than nationally as detailed in Figure Compared with averages, the LEP area has a higher share of employment in Financial & Insurance (27,100 workers, or 4.9 per cent of all in employment), Public Administration & Defence (29,700 or 5.4 per cent) and Health (80,800 or 14.8 per cent). By contrast, the share of employment was lower than average in Wholesale (3.4 per cent of total employment) and Arts, Entertainment, Recreation & Other Services (3.9 per cent). Within the West of : Bath & North East Somerset had a much higher share of employment in Education (15.7 per cent, against 9.2 per cent across ) and Health (18.4 per cent, compared with 12.8 per cent) Bristol had a much higher share of employment in Financial & Insurance (6.8 per cent, compared with 3.7 per cent across ) North Somerset had a much higher share of employment in Health (16.2 per cent compared with 12.8 per cent across ) and Real Estate (3.3 per cent, compared to 1.9 per cent) South Gloucestershire had a much higher share of employment in Public Administration & Defence (8.6 per cent, compared with 4.4 per cent across ) and Manufacturing (12.2 per cent, compared with 8.2 per cent). FIGURE 2.29: PERCENTAGE OF TOTAL EMPLOYMENT BY INDUSTRY (SECTION), 2013 R : Arts, entertainment and recreation Q : Human health and social work activities P : Education O : Public administration and defence; compulsory social security N : Administrative and support service activities M : Professional, scientific and technical activities L : Real estate activities K : Financial and insurance activities J : Information and communication I : Accommodation and food service activities H : Transportation and storage G : Wholesale and retail trade; repair of motor vehicles and motorcycles F : Construction E : Water supply; sewerage, waste management and remediation activities D : Electricity, gas, steam and air conditioning supply C : Manufacturing B : Mining and quarrying A : Agriculture, forestry and fishing Source: Business Register and Employment Survey, Office for National Statistics West of In terms of the industries which rural residents work in, employment of residents in agriculture, forestry and fishing is more prevalent in rural areas in the West of (2.6 per cent of all employed residents) compared to urban areas (0.2 per cent). A larger share of rural residents (8.9 per cent) are employed in Construction compared to urban residents (7.3 per cent). A lower share of rural residents are employed in Wholesale and retail, Financial and insurance activities, and Human health and social work activities. Page 56

59 DETAILED INDUSTRIAL SPECIALISMS Industry employment quotients (EQs) quantify how concentrated an industry is in an area compared with the national average. EQs are calculated by comparing an industry s share of employment in a local area with its share of national employment. An EQ of 1.0 means that an industry s share of employment is the same in a local area as it is nationally. An EQ above 1.0 means that employment in an industry is more concentrated in a local area than nationally, while an EQ below 1.0 means that employment is less concentrated. At detailed sector level (2-digit Standard Industrial Classification (SIC) codes), Figure 2.30 lists sectors that had EQs of 1.5 or more (i.e. share of employment that is one and a half times the rate) and an employment share of 2.0 per cent or more. More detail is provided in Figure 2.31 with 4-digit Standard Industrial Classification (SIC) codes. For local authority areas, the table shows which sectors had EQs of 1.5 or more. Page 57

60 FIGURE 2.30: INDUSTRY CONCENTRATIONS BY 2-DIGIT STANDARD INDUSTRIAL CLASSIFICATIONS, WITH EMPLOYMENT QUOTIENTS CALCULATED AS DIFFERENCE BETWEEN LOCAL EMPLOYMENT SHARE VERSUS NATIONAL (ENGLAND) EMPLOYMENT SHARE Industry Number employed Employment Share () EQ West of 12 : Manufacture of tobacco products : Manufacture of other transport equipment 8, : Water collection, treatment and supply 1, : Insurance, reinsurance and pension funding, except compulsory social security 3, : Remediation activities and other waste management services : Manufacture of paper and paper products 1, : Information service activities 2, : Activities auxiliary to financial services and insurance activities 12, : Architectural and engineering activities; technical testing and analysis 12, : Creative, arts and entertainment activities 2, : Rental and leasing activities 3, : Human health activities 51, : Manufacture of computer, electronic and optical products 3, : Public administration and defence; compulsory social security 29, : Legal and accounting activities 14, Bath & North East Somerset 36 : Water collection, treatment and supply : Publishing activities 1, : Manufacture of electrical equipment : Printing and reproduction of recorded media : Creative, arts and entertainment activities : Human health activities 11, : Manufacture of paper and paper products : Veterinary activities : Education 13, : Sewerage : Libraries, archives, museums and other cultural activities : Architectural and engineering activities; technical testing and analysis 1, Bristol 12 : Manufacture of tobacco products : Remediation activities and other waste management services : Insurance, reinsurance and pension funding, except compulsory social security 2, : Legal and accounting activities 11, : Creative, arts and entertainment activities 1, : Activities auxiliary to financial services and insurance activities 6, : Financial service activities, except insurance and pension funding 7, : Motion picture, video and television programme production, sound recording and music publishing activities 1, : Human health activities 24, : Architectural and engineering activities; technical testing and analysis 5, : Employment activities 10, Page 58

61 FIGURE 2.30 (CONTINUED): INDUSTRY CONCENTRATIONS BY 2-DIGIT STANDARD INDUSTRIAL CLASSIFICATIONS IN 2013, WITH EMPLOYMENT QUOTIENTS CALCULATED AS DIFFERENCE BETWEEN LOCAL EMPLOYMENT SHARE VERSUS NATIONAL (ENGLAND) EMPLOYMENT SHARE Number employed Employment Share () Industry EQ North Somerset 51 : Air transport : Water collection, treatment and supply : Repair and installation of machinery and equipment : Manufacture of paper and paper products : Manufacture of basic pharmaceutical products and pharmaceutical preparations : Manufacture of other non-metallic mineral products : Manufacture of beverages : Manufacture of machinery and equipment n.e.c. 1, : Services to buildings and landscape activities 3, : Residential care activities 3, : Veterinary activities : Manufacture of computer, electronic and optical products : Warehousing and support activities for transportation 1, : Real estate activities 2, South Gloucestershire 30 : Manufacture of other transport equipment 8, : Information service activities 1, : Insurance, reinsurance and pension funding, except compulsory social security 1, : Manufacture of computer, electronic and optical products 1, : Rental and leasing activities 1, : Manufacture of paper and paper products : Public administration and defence; compulsory social security 12, : Architectural and engineering activities; technical testing and analysis 4, : Construction of buildings 2, : Scientific research and development 1, : Activities auxiliary to financial services and insurance activities 3, : Services to buildings and landscape activities 5, : Waste collection, treatment and disposal activities; materials recovery 1, : Security and investigation activities 1, : Manufacture of fabricated metal products, except machinery and equipment 2, : Postal and courier activities 1, Source: Business Register and Employment Survey, Office for National Statistics. Page 59

62 FIGURE 2.31: INDUSTRY CONCENTRATIONS BY 4-DIGIT STANDARD INDUSTRIAL CLASSIFICATIONS IN 2013, WITH EMPLOYMENT QUOTIENT (EQ) CALCULATED AS DIFFERENCE BETWEEN LOCAL EMPLOYMENT SHARE VERSUS NATIONAL (ENGLAND) EMPLOYMENT SHARE Industries with employment quotients at or above 2.5 and with at least 250 employees are listed Industry West of Number employed Employment Share () 2362 : Manufacture of plaster products for construction purposes : Defence activities 7, : Manufacture of air and spacecraft and related machinery 8, : Manufacture of computers and peripheral equipment : Manufacture of condiments and seasonings : Installation of industrial machinery and equipment 1, : Treatment and disposal of hazardous waste : Life insurance 1, : Other activities auxiliary to insurance and pension funding 4, : Water collection, treatment and supply 1, Bath & North East Somerset 3600 : Water collection, treatment and supply : Manufacture of electric motors, generators and transformers : Manufacture of loaded electronic boards : Publishing of journals and periodicals : Risk and damage evaluation : Tertiary education 5, : Other retail sale of food in specialised stores : Activities of religious organisations Bristol 4643 : Wholesale of electrical household appliances 1, : Wholesale of beverages 1, : Security and commodity contracts brokerage 1, : Installation of industrial machinery and equipment : Regulation of the activities of providing health care, education, cultural services and other social services, excluding social security EQ 2, : Other activities auxiliary to insurance and pension funding 2, : Legal activities 6, : Performing arts North Somerset 2362 : Manufacture of plaster products for construction purposes : Operation of dairies and cheese making : Manufacture of metal forming machinery : Manufacture of condiments and seasonings : Installation of industrial machinery and equipment : Service activities incidental to water transportation : Manufacture of machinery for mining, quarrying and construction : Other cleaning activities : Repair and maintenance of aircraft and spacecraft : Manufacture of corrugated paper and paperboard and of containers of paper and paperboard : Service activities incidental to air transportation : Passenger air transport : Support activities for animal production : Water collection, treatment and supply : Manufacture of pharmaceutical preparations : Post-secondary non-tertiary education : Public order and safety activities 2, : Collection of non-hazardous waste Page 60

63 FIGURE 2.31 (CONTINUED): INDUSTRY CONCENTRATIONS BY 4-DIGIT STANDARD INDUSTRIAL CLASSIFICATIONS Industry South Gloucestershire Number employed Employment Share () 8422 : Defence activities 7, : Manufacture of air and spacecraft and related machinery 7, : Manufacture of computers and peripheral equipment : Treatment and disposal of hazardous waste : Manufacture of weapons and ammunition : Life insurance 1, : Manufacture of electric domestic appliances : Trusts, funds and similar financial entities : Other activities auxiliary to insurance and pension funding 2, : Data processing, hosting and related activities 1, : Renting and leasing of cars and light motor vehicles : Manufacture of corrugated paper and paperboard and of containers of paper and paperboard EQ : Processing and preserving of meat : Combined facilities support activities 2, : Specialist medical practice activities : Service activities incidental to land transportation 1, : Manufacture of plastic packing goods Source: Business Register and Employment Survey, Office for National Statistics. Page 61

64 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region Sheffield City Region North Eastern Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire -12,000-10,000-8,000-6,000-4,000-2, ,000 4,000 6,000 PUBLIC AND PRIVATE SECTOR EMPLOYMENT THE WEST OF ENGLAND HAS A HIGHER- THAN-AVERAGE PERCENTAGE OF PUBLIC SECTOR EMPLOYMENT In 2013, 19.5 per cent of employed people worked in the public sector higher than the average (18.1 per cent) and all five comparator southern LEP areas, but lower than most core city LEP areas (Figure 2.32). Within the West of, the percentage of public sector workers was at or above the average in Bath & North East Somerset, Bristol and South Gloucestershire, but lower than average in North Somerset. There is some evidence of rebalancing from public to private sector jobs. Since 2010, the number of public sector workers in the West of has declined year-on-year by a total of 17,200, or 13.9 per cent. This was a sharper decline than across (10.8 per cent) and more pronounced than in all core city and southern LEP areas apart from Gloucestershire. THE RISE IN PRIVATE SECTOR EMPLOYMENT HAS NOT YET COMPENSATED FOR THE FALL IN PUBLIC SECTOR JOBS The increase of 11,600 private sector workers equated to a rise of 2.7 per cent lower than the average of 5.8 per cent and below all core city and southern LEP areas apart from Swindon and Wiltshire (Figure 2.34). Comparing the loss of public sector workers to the increase in private sector workers, the West of had a deficit of 5,600 workers in 2013 compared with Only three other comparator LEP areas had experienced a weaker rise in the number of private sector workers against the loss of public sector workers, and two of these were neighbouring LEP areas: Swindon & Wiltshire, Gloucestershire and Sheffield City Region. In Bristol, the increase in the number of private sector workers has compensated for only half the loss of public sector employment since 2010, and in South Gloucestershire, the number of both public and private sector workers has declined (Figure 2.33). In contrast, the increase in the number of private sector workers in Bath & North East Somerset has been almost equivalent to the loss of public sector workers, while in North Somerset, the increase in private sector workers has far exceeded the loss of public sector employment. FIGURE 2.33: CHANGES IN PUBLIC AND PRIVATE SECTOR EMPLOYMENT public sector Bath & NE Somerset Bristol North Somerset South Gloucestershire private sector Change in employees Source: Business Register and Employment Survey, Office for National Statistics. FIGURE 2.32: PERCENTAGE OF PEOPLE IN EMPLOYMENT WORKING IN THE PUBLIC SECTOR, Source: Business Register and Employment Survey, Office for National Statistics. Page 62

65 FIGURE 2.34: CHANGES IN PUBLIC AND PRIVATE SECTOR EMPLOYMENT BY LEP, public sector private sector West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire -60,000-40,000-20, ,000 40,000 60,000 80,000 Total change in number of employees Source: Business Register and Employment Survey, Office for National Statistics. Page 63

66 PRIORITY SECTORS The West of LEP has defined five priority sectors and another five key sectors, as set out in Figure 2.35 below. Estimated total employment in 2013 is somewhat different for most priority sectors compared with the report that used employment totals for 2012 due to revisions in the dataset (Business Register and Employment Survey). Each sector is profiled as follows. Advanced Engineering and Aerospace employed 26,200 in 2013 and generated 1.41 billion in economic output in Employment grew by +3,500 between 2009 and 2013, or by an average annual rate of growth of 3.6 per cent in contrast to the slight decline in employment experienced nationally (). Economic output has grown over the long term at a much higher rate in the West of (+4.1 per cent per annum between 1998 and 2001) than for as a whole (0.0 per cent). Employment in this priority sector is 1.5 times more important for the West of economy than it is nationally. Construction employed 23,700 in 2013 and generated 1.54 billion in economic output in Employment has contracted slightly between 2009 and 2013 (-2,200), but at a lower rate (-2.2 per cent per annum) than nationally (-3.0 per cent). Despite this, economic output has grown at 5.3 per cent per year on average at current prices that do not take into account inflation. Construction employment in the West of accounts for a similar share of total employment as found nationally. FIGURE 2.35: EMPLOYMENT IN PRIORITY AND KEY SECTORS IN 2009 AND 2013 West of PRIORITY SECTORS change Average annual change Employment Quotient change Average annual change Advanced Engineering and Aerospace 22,700 26,200 3, Construction 25,900 23,700-2, , Creative Industries 12,900 14,200 1, , Professional and Legal Services 53,800 50,200-3, , High Tech Industries 18,800 17,500-1, , KEY SECTORS Low Carbon 4,500 5, , Retail 86,400 79,200-7, , Tourism 107, ,000-1, , Distribution 8,200 8, , Health and life sciences 70,200 79,100 8, , Source: Business Register and Employment Survey, Sector definitions from West of LEP. FIGURE 2.36: GVA BY PRIORITY SECTOR IN SELECTED YEARS, AND ANNUAL GROWTH RATE BETWEEN 1998 AND 2011 GVA ( millions, current values) West of GB PRIORITY SECTORS annual growth * annual growth * Advanced Engineering and Aerospace , ,181 1, Construction 783 1,493 1,447 1,446 1,448 1, Creative Industries Professional and Legal Services 1,737 3,534 3,840 3,931 3,932 3, High Tech Industries KEY SECTORS Low Carbon Retail 1,509 2,108 1,941 2,193 2,409 2, Tourism Source: RED Model Sector definitions from West of LEP. * Note that this is calculated as the compound annual growth rate (CAGR) between 1998 and Page 64

67 West of Bath and North East Somerset Bristol, City of North Somerset South Gloucestershire Creative industries employed 14,200 in 2013 and generated 632 million in economic output in Employment grew by +1,200 or 0.9 per cent per annum between 2009 and Creative Industries, with its 14,200 employees in 2013 has experienced growth over recent years, with total employment increasing by +1,200 or 2.3 per cent per year between 2009 and This sector generated 632 million worth of economic output in 2011, with a modest level of growth (0.6 per cent per annum) since Professional and Legal Services employed 50,200 in 2013 and has experienced a decline of 3,600 employees since Unlikely positive growth for as a whole (1.7 per cent per annum), employment has contracted by 1.7 per cent per annum in the West of since The sector generated significant levels of economic output: 3.39 billion in Over recent years, and since the recession, the sector has had fairly stable levels of economic output despite reductions in employment. High Tech Industries employed 17,500 employees in 2013 and generated 216 million worth of economic output in In contrast to nationally (), which experienced positive annual rates of growth in employment (1.4 per cent), employment in this sector decreased by 1.8 per cent per annum between 2009 and KEY SECTORS The Low Carbon sector accounted for 5,200 employees in 2013 and 329 million worth of economic output in The Low Carbon sector has experience employment growth of 4.1 per cent per year since 2009 far higher than the national growth rate of 0.6 per cent. Retail employment totalled 79,200 in 2013, declining from 86,400 in The rate of decline, at 2.1 per cent per annum has been higher than nationally (0.1 per cent) Retail generated 2.28 billion worth of economic output in This total decreased between 2010 and 2011, but the long term growth rate between 1998 and 2011 is 3.2 per cent per annum ( = 3.8 per cent). Tourism was the largest priority sector in terms of employment, with 106,000 employees in Tourism has experienced a very slight decrease in employment since 2009 (-0.3 per cent per year) compared to a slight increase nationally (+0.6 per cent per year). Tourism generated 826 million worth of economic output in FIGURE 2.37: SHARE OF ENTERPRISES THAT ARE A NON-PROFIT BODY OR MUTUAL ASSOCIATION IN Source: Business Counts, Office for National Statistics. In 2013, there were 8,500 employees in the Distribution sector a slight increase from 8,200 employees in Health and life sciences had 79,100 employees in 2013, with significant growth since 2009 of +8,900 employees, or 3.0 per cent per annum (compared to 1.9 per cent nationally). It is estimated that there are 1,725 Social Enterprises in the West of (classified as a - profit body or mutual association) in 2014 representing 4.4 per cent of all enterprises (Figure 2.37). As a share of total enterprises, this is higher than the average of 3.3 per cent. Page 65

68 3. PEOPLE Population trends Workforce trends Economic participation and unemployment Labour market from recession to recovery Employment Unemployment and inactivity Benefit claimants Commuting and travel-to-work Qualifications Occupations Earnings Employer skills and training Page 66

69 Bath & NE Somerset Bristol North Somerset South Gloucestershi re POPULATION THE WEST OF ENGLAND HAS A TOTAL POPULATION OF 1.1 MILLION, OF WHOM 712,300 ARE OF WORKING AGE The West of has a population of 1.1 million. Bristol is the largest district, with 442,500 residents 40.0 per cent of the West of s total population (Figure 3.1). FIGURE 3.1: PERCENTAGE OF WEST OF ENGLAND S TOTAL POPULATION BY DISTRICT, 2013 South Gloucestershire 24.6 North Somerset 18.9 Bath & NE Somerset 16.5 Bristol 40.0 Source: Mid-year Population Estimates, Office for National Statistics. Almost two-thirds, or 712,300, of the West of s population are of working age (aged between 16 and 64). In 2014, as set out in Figure 3.2, the West of had a higher percentage of working age people (64.5 per cent of the total population) than as a whole (63.5 per cent) and all except for two (GCGP and Swindon and Wiltshire) of the comparator areas. This is due to the high percentage of working age people living in Bristol (68.0 per cent). In Bath and North East Somerset, 64.4 per cent of the population was of working age. In North Somerset and South Gloucestershire, the working-age population contributed 58.9 and 63.3 per cent of total population respectively. Young people (aged 0-15) contributed a 4.5 per cent share of total population in the West of in 2014 above the national average of 3.2 per cent. At 19.6 per cent, the share of total population that were of retirement age (65 and over) in the West of was slightly lower than the national average (22.5 per cent). According to DEFRA s classification of rural and urban areas, the rural population comprised 10.2 per cent of the total population in The most rural local authority areas were Bath and North East Somerset, with 21.1 per cent of the population classed as rural; followed by North Somerset (18.4 per cent). THE WEST OF ENGLAND IS LESS ETHNICALLY DIVERSE THAN ENGLAND AS A WHOLE The West of has a higher percentage of people classing themselves as White British/Northern Irish (86.4 per cent) than the national average (79.8 per cent) and lower percentages of people from most other ethnic groups, particularly Indian (1.0 per cent, against 2.6 per cent across ) and Pakistani (0.7 per cent, compared with 2.1 per cent). FIGURE 3.2: PERCENTAGE OF THE TOTAL POPULATION BY AGE GROUP, West of Source: Mid-year Population Estimates, Office for National Statistics. As Figure 3.3 details, the least ethnically diverse district within the LEP area is North Somerset, with 94.1 per cent of people classing themselves as White British/Northern Irish. South Gloucestershire and Bath & North East Somerset also had a very high White British/Northern Irish population (91.9 per cent and 90.1 per cent of the total). FIGURE 3.3: PERCENTAGE OF THE POPULATION CLASSING THEMSELVES AS WHITE BRITISH/NORTHERN IRISH, Source: 2011 Census, Office for National Statistics Aged 0-15 Aged Aged 65 and over Page 67

70 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire West of Bath & NE Somerset Bristol North Somerset South Gloucestershire In contrast, Bristol is more ethnically diverse than the national average, with a below-average percentage of White British/Northern Irish people (77.9 per cent). Of other ethnic groups, Bristol had above-average percentages of people classing themselves as Other White, Black/African/Caribbean/Black British and from Mixed/Multiple Ethnic Groups and below-average percentages of people classing themselves as Asian/Asian British or from Other Ethnic Groups. THE WEST OF ENGLAND HAS A HIGH PERCENTAGE OF UK-BORN CITIZENS At the time of the 2011 Census, 89.9 per cent of people living in the West of were born in the UK. This was higher than the average (86.2 per cent) as evident in Figure 3.4. Mirroring the ethnic classifications, the West of had much lower percentages of people born in the Middle East and Asia (2.7 per cent of the population compared with 4.8 per cent across ) and Africa (1.8 per cent, compared with 2.4 per cent). Within the West of, Bath & North East Somerset, North Somerset and South Gloucestershire had above-average numbers of people born in the UK. In Bristol, a slightly below-average percentage of people were UK-born (85.3 per cent) while aboveaverage percentages of residents were born in EU Member Countries, EU Accession Countries, Africa and the Americas & Caribbean. POPULATION GROWTH HAS BEEN STRONG, SURPASSING THE NATIONAL AVERAGE, PARTICULARLY IN BRISTOL Between 2000 and 2014, the West of s population grew by 11.4 per cent (+112,700 people) faster than the average (10.3 per cent), faster than all comparator areas apart from GCGP and Swindon & Wiltshire, and the 10 th highest growth rate of all 39 LEP areas (Figure 3.5). Population growth across the area was boosted by strong growth in Bristol (13.3 per cent). Growth in North Somerset and South Gloucestershire was slightly above average while growth in Bath & North East Somerset was well below average. FIGURE 3.4: PERCENTAGE OF THE TOTAL POPULATION BORN IN THE UK, Source: 2011 Census, Office for National Statistics FIGURE 3.5: RATE OF TOTAL POPULATION GROWTH, Source: Mid-year Population Estimates, Office for National Statistics. Page 68

71 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire FIGURE 3.6: RATE OF WORKING AGE (16-64) POPULATION GROWTH, Source: Mid-year Population Estimates, Office for National Statistics. Page 69

72 TWO-THIRDS OF POPULATION GROWTH IN THE WEST OF ENGLAND CAME FROM GROWTH IN THE WORKING-AGE POPULATION Between 2000 and 2014, the working age population grew by 72,900 accounting for 64.7 per cent of total population growth in the area (Figure 3.7). This was higher than the average (59.1 per cent of total population growth coming from the working age population), and the sixth highest rate of all 39 LEP areas after Liverpool and London. In the same period, the number of 0-15 year olds grew by 8,700 (accounting for 7.7 per cent of total population growth above the average of 7.0 per cent). People of retirement age formed a belowaverage proportion of total population growth. Between 2000 and 2014, the number of people aged 65 and over grew by 31,200 accounting for 27.7 per cent of total population growth in the West of, below the average of 34.5 per cent. Population growth amongst 0-15 year-olds was particularly strong in Bristol. In Bristol 0-15 year olds was higher than the West of and national averages growing by 10.7 per cent between 2000 and The 0-15 year-old age group accounting for 16.1 per cent of total population growth in Bristol. This was mainly due to the high number of births. FIGURE 3.7: SHARE OF TOTAL POPULATION GROWTH BY AGE GROUP, years years 65+ years West of Source: Mid-year Population Estimates, Office for National Statistics. THE WEST OF ENGLAND S POPULATION IS AGEING, ALTHOUGH AT A LOWER RATE THAN NATIONALLY Between 2000 and 2014, population growth was strongest among those aged 65 and over in the West of, at 19.6 per cent, against 11.4 per cent for those aged and 4.5 per cent among those aged As a result, the share of the total retirement-age population rose from 16.1 per cent of the total population in 2000 to 17.3 per cent in The share of the working-age population has changed little during this period while the share of young people has declined from 19.4 per cent of the total in 2000 to 18.2 per cent in However, within the West of, the dynamics of change are different. For example, Bristol s population growth was the strongest amongst the working-age population rather than those aged 65 and over. The West of s population has aged less than nationally. Comparing growth rates across, population growth has been stronger than average among young and working-age people and below average among those of retirement age (Figure 3.8). FIGURE 3.8: POPULATION GROWTH BY AGE GROUP, West of Source: Mid-year Population Estimates, Office for National Statistics. Population growth is expected to slow over the next 20 years but remain relatively strong compared to the national average and comparator areas During the next 20 years, population growth in the West of is forecast to slow. The total population is expected to grow by 8.6 per cent (93,200 people) between 2013 and 2023 and by 7.2 per cent (92,600 people) between 2023 and 2033, compared with growth of 9.0 per cent (90,500 people) between 2003 and 2013 (Figure 3.9). This mirrors national forecasts, with growth in the West of expected to continue to exceed the national average. Between 2013 and 2023, population growth in the West of is also expected to surpass all comparator areas apart from GCGP, and to exceed growth in all comparator areas between 2023 and At district level (Figure 3.10): 19.6 Population growth in and is expected to exceed national average growth in Bristol, North Somerset and South Gloucestershire; Population growth is expected to slow in Bath & North East Somerset and Bristol; Forecast population growth ( and ) is expected to exceed historic growth ( ) in North Somerset and South Gloucestershire Aged 0-15 Aged Aged 65 and over Page 70

73 FIGURE 3.9: POPULATION GROWTH FORECASTS, Area West of D2N Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire ENGLAND Bath & NE Somerset Bristol North Somerset South Gloucestershire Source: Subnational Population Projections, Office for National Statistics. GROWTH IN THE NUMBERS OF YOUNG AND WORKING AGE PEOPLE IS EXPECTED TO SLOW WHICH COULD AFFECT WORKFORCE AVAILABILITY Growth in the numbers of 0-15 year olds is expected to double over the next ten years but to slow significantly between 2023 and Between 2013 and 2023, the number of 0-15 year olds is forecast to grow by 12.5 per cent (24,900 people) more than double the rate between 2003 and 2013 (6.2 per cent, or 11,600 people). Growth is then expected to slow to 2.7 per cent (6,000 people) between 2023 and 2033 (Figure 3.11). However, growth in the number of 0-15 year olds in the West of is expected to be higher than the average and all comparator areas. Between 2023 and 2033, no growth in the number of young people is expected, while the numbers of young people across most comparator areas will fall. FIGURE 3.10: POPULATION GROWTH FORECASTS BY DISTRICT, Bath & NE Somerset Source: Subnational Population Projections, Office for National Statistics. Bristol North Somerset South Gloucestershire FIGURE 3.11: FORECAST GROWTH IN THE POPULATION BY AGE, West of ENGLAND Source: Mid-year Population Estimates, Subnational Population Projections, Office for National Statistics. Page 71

74 Between 2013 and 2023, the number of year olds is forecast to grow by 4.5 per cent (31,900 people) between 2013 and 2023 and by 3.8 per cent (28,400 people) between 2023 and 2033, compared with growth of 8.2 per cent (53,300 people) between 2003 and 2013 (Figure 3.12). But, as with 0-15 year olds, forecast growth is expected to be higher than the average and all comparator areas, with half of comparator areas expecting to see a fall in their working age populations between 2023 and POPULATION AGEING IS SET TO CONTINUE, WITH THE STRONGEST GROWTH AMONG PEOPLE OF RETIREMENT AGE Growth in the number of people aged 65 years and over is forecast to accelerate. Between 2013 and 2023, the number of people aged 65 years and over is expected to grow by 19.7 per cent (36,700 people) between 2013 and 2023 and 23.0 per cent (51,300 people) between 2023 and 2033, against growth of 16.0 per cent (27,900 people) between 2003 and However, growth rates are expected to be slower than the national average and most other comparator areas (Figure 3.12). Growth in the number of people aged 65 years and over is expected to continue to be stronger than growth in the number of young and working age people over the next 20 years, particularly between 2023 and ALMOST 60 PER CENT OF ALL POPULATION GROWTH IS EXPECTED TO COME FROM PEOPLE OF RETIREMENT AGE BETWEEN 2023 AND 2033 For the West of as a whole, the percentage of total population growth coming from people of retirement age is expected to rise considerably over the next 20 years. Between 2003 and 2013, 28.4 per cent of population growth was among people aged 65 years and over. This is expected to increase sharply to per cent between 2013 and 2023 and to per cent between 2023 and Again, within the West of, there are differences in these projected changes. Population growth in Bristol is projected to be strongest amongst the working age population of per cent between 2023 and 2033 compared to +38 per cent in older people. FIGURE 3.12: POPULATION GROWTH IN THE WEST OF ENGLAND BY AGE GROUP, year olds year olds 65+ year olds Source: Mid-year Population Estimates, Subnational Population Projections, Office for National Statistics. Page 72

75 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire CURRENT LABOUR MARKET PERFORMANCE HIGH ECONOMIC PARTICIPATION RATES In 2014, 79.5 per cent of working age people in the West of were economically active (either in work or looking for work). This was higher than the average of 77.4 per cent, and higher than all core city LEP areas, but lower than most comparator southern LEP areas (Figure 3.13). The strength of the labour market varied within the West of, with a very high rate of economic activity in South Gloucestershire (84.5 per cent), above-average rates in North Somerset (79.5 per cent) and Bath & North East Somerset (77.7 per cent) FIGURE 3.13: ECONOMIC ACTIVITY RATES, YEARS, and a slightly below-average rate in Bristol (77.3 per cent). In the same period, 74.7 per cent of working age people in the West of were in employment higher than the average (72.5 per cent) and all core city LEP areas but lower than all comparator southern LEP areas (Figure 3.14). Within the West of the employment rate was very high in South Gloucestershire, above average in North Somerset and Bath & North East Somerset and but below average in Bristol Source: Annual Population Survey, Jan 2014 to Dec 2014, Office for National Statistics. FIGURE 3.14: EMPLOYMENT RATES, YEARS, Source: Annual Population Survey, Jan 2014 to Dec 2014, Office for National Statistics. Page 73

76 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire Bath & NE Somerset Bristol North Somerset South Gloucestershire THE WEST OF ENGLAND S UNEMPLOYMENT RATE IS LOWER THAN AVERAGE In 2014, 6.0 per cent of economically active working age people in the West of were unemployed (i.e. out of work and looking for work). As Figure 3.15 reveals, this was lower than the average, lower than all core city LEP areas but higher than all comparator southern LEP areas. Within the West of, Bristol had a very high rate of unemployment (8.3 per cent), while other West of districts had below-average unemployment rates (Figure 3.16). The claimant count rate the percentage of workingage unemployed people claiming Jobseeker s Allowance is a further indicator of unemployment. Like other labour market indicators, the West of performs strongly with a claimant count rate of 1.4 per cent in March 2015 lower than the average of 1.9 per cent and rates in all core city LEP areas, but higher than rates in comparator southern LEP areas. Within the West of, Bath & North East Somerset had the lowest rate of unemployed claimants, at 0.7 per cent, while Bristol was the only area with an above average rate (2.0 per cent). The highest shares of employed, unemployed and economically inactive people were in Bristol; Bristol had disproportionate shares of the West of s unemployed and economically inactive people (i.e. higher shares than its share of the West of s population); North Somerset had a lower share of the West of s unemployed people than its share of the West of s population; South Gloucestershire had lower shares of the West of s unemployed and economically inactive people and a higher share of employed people than its share of the West of s population. FIGURE 3.16: SHARES OF THE WEST OF ENGLAND S WORKING AGE POPULATION AND EMPLOYED, UNEMPLOYED AND ECONOMICALLY INACTIVE PEOPLE BY DISTRICT, population employed unemployed inactive BRISTOL S UNEMPLOYMENT RATE IS HIGHER THAN THE WEST OF ENGLAND AVERAGE 0.0 In 2014, there were 520,900 employed working age people in the West of, 33,500 unemployed people and 143,000 economically inactive people. Within the West of : Source: Annual Population Survey, Jan 2014 to Dec 2014, Office for National Statistics. FIGURE 3.15: UNEMPLOYMENT RATES, YEARS, Source: Annual Population Survey, Jan 2014 to Dec 2014, Office for National Statistics. Page 74

77 FIGURE 3.17: RATE OF UNEMPLOYMENT IN UPPER TIER AUTHORITY AREAS IN ENGLAND AND WALES IN 2014 Page 75

78 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire LABOUR MARKET TRENDS FROM RECESSION TO RECOVERY THE WEST OF ENGLAND S LABOUR MARKET WAS HIT HARDER BY RECESSION, AND RECOVERED MORE SLOWLY - BUT FROM A STRONGER BASELINE ECONOMIC ACTIVITY RATE The economic activity rate during recession fell more sharply than across as indicated in Figure The West of s economic activity rate peaked in 2010 at 80.0 per cent well above the national average and fell until 2013, by 1.7 percentage points. Economic activity across fell for just one year and by just 0.5 percentage points. Economic activity began to increase again in 2014, rising from 78.3 per cent in 2013 to 79.5 per cent. Hence it is not yet back to its pre-recession peak. Across, the economic activity rate has risen since 2012 and now exceeds pre-recession levels, although the rate of increase in 2014 was faster in the West of. percentage points) than in The strength of recovery has varied within the West of : North Somerset, Bath & North East Somerset and South Gloucestershire have yet to recover to pre-recession activity rates while the current activity rate in Bristol is 1.4 percentage points higher than in 2008 (although Bristol s activity rate peaked in 2010, when it was 2.2 percentage points higher than it is now). In terms of differences between urban and rural areas in the West of, economic activity rates are slightly higher in rural areas, at 71.3 per cent of residents aged 16-74, compared to 68.1 per cent in urban areas. FIGURE 3.18: ECONOMIC ACTIVITY RATE, West of Economic activity rates have yet to achieve 75.0 national levels of recovery. Taking 2008 as the prerecession year, the economic activity rate in the West 74.0 of is currently 0.2 percentage points below its pre-recession level (Figure 3.19), while across, economic activity is now higher (+0.6 FIGURE 3.19: PERCENTAGE POINT CHANGE IN ECONOMIC ACTIVITY RATES, Source: Annual Population Survey, Office for National Statistics Source: Annual Population Survey, Office for National Statistics. Page 76

79 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire EMPLOYMENT RATE The employment rate also fell more sharply than the national average during the recession. The West of s employment rate peaked in 2008 at 76.8 per cent and declined until 2011, falling by 3.7 percentage points in this period (Figure 3.20). The employment rate across fell for four years but by just 2.6 percentage points, although it is still behind the West of. The West of s current employment rate is 2.1 percentage points below its pre-recession peak (2008) as detailed in Figure In contrast, the current employment rate across is 0.2 percentage points higher than in Within the West of, all four districts have yet to recover to pre-recession employment levels, particularly North Somerset (-3.7 percentage points lower than in 2008). UNEMPLOYMENT RATE FIGURE 3.20: EMPLOYMENT RATE, 2004 TO West of Source: Annual Population Survey, Office for National Statistics. The employment rate has also recovered more slowly. Between 2011 and 2014, the West of s employment rate rose by 1.6 percentage points, against 2.5 percentage points across. As a result, the gap between local and national employment rates has narrowed in the past three years. The unemployment rate rose more sharply during the recession in the West of than nationally. The West of s unemployment rate rose from 3.5 per cent in 2007 to 7.1 per cent in 2011 a total increase of 3.6 percentage points. During the same period, s unemployment rate rose by just 2.8 percentage points (Figure 3.22). FIGURE 3.22: UNEMPLOYMENT RATE, 2004 TO West of Source: Annual Population Survey, Office for National Statistics. FIGURE 3.21: CHANGE IN EMPLOYMENT RATES, Source: Annual Population Survey, Office for National Statistics. Page 77

80 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire No. The recovery in employment has been slower than across. In the West of, the unemployment rate has since fallen by 1.1 percentage points to 6.0 per cent in 2014 lower than the average fall of 1.7 percentage points. As a result, the gap between the West of s and s unemployment rate has narrowed considerably. The West of s unemployment rate remains 2.5 percentage points above 2007 levels, compared to a difference of +1.1 percentage points across, as shown in Figure While most comparator areas have yet to fully recover to pre-recession rates of unemployment, the difference between pre-recession and current unemployment rates is greater in the West of than in all other areas apart from Gloucestershire. Within the area, the difference between pre-recession and current unemployment rates is greatest in Bristol (+4.0 percentage points). A look at how numbers of economically inactive, employed and unemployed people have changed over the past six years, from just before the recession to now, highlights the slower recovery in the West of compared to nationally. As detailed in Figures 3.24 and 3.25, while unemployment is higher than six years ago in the West of and across, total employment in the West of remains lower than before the recession (-5,800), against a large rise in employment across (+600,300), and economic inactivity has increased (+3,800), compared with a national fall (-45,000). FIGURE 3.24: CHANGE IN NUMBERS OF ECONOMICALLY INACTIVE, EMPLOYED AND UNEMPLOYED PEOPLE IN THE WEST OF ENGLAND, ,000 10,000 5, ,000-10,000-5,800 13,600 Source: Annual Population Survey, Office for National Statistics. FIGURE 3.25: CHANGE IN NUMBERS OF ECONOMICALLY INACTIVE, EMPLOYED AND UNEMPLOYED PEOPLE IN ENGLAND, , , , , , , , ,000 Source: Annual Population Survey, Office for National Statistics. 3,800 Employment Unemployment Inactivity 600, ,200-45,000 Employment Unemployment Inactivity FIGURE 3.23: CHANGE IN UNEMPLOYMENT RATES, Source: Annual Population Survey, Office for National Statistics. Page 78

81 Within the West of (Figure 3.26): North Somerset (-8,400) and Bath & North East Somerset (-3,000) have driven the fall in employment, while numbers of employed people are higher than before the recession in Bristol (+3,900) and South Gloucestershire (+1,800); All areas have experienced a rise in unemployment but almost three-quarters (74 per cent) of the rise in unemployment has been concentrated in Bristol; In North Somerset, the rise in economic inactivity (+3,100) has far exceeded the rise in unemployment (+400) while unemployment has risen by more than inactivity in Bath & North East Somerset and South Gloucestershire; Economic inactivity has fallen in Bristol (-1,100). FIGURE 3.26: CHANGE IN NUMBERS OF ECONOMICALLY INACTIVE, EMPLOYED AND UNEMPLOYED PEOPLE IN WEST OF ENGLAND UNITARY AUTHORITY AREAS, BATH AND NORTH EAST SOMERSET 3,000 BRISTOL 12,000 2,000 1, ,000 1,000 10,000 8,000 6,000 10,100-1,000-2,000-3,000-4,000-3,000 Employment Unemployment Inactivity 4,000 2, ,000 3,900-1,100 Employment Unemployment Inactivity NORTH SOMERSET 4,000 2,000 3, ,000-4,000-6,000-8,000-8,400-10,000 Employment Unemployment Inactivity SOUTH GLOUCESTERSHIRE 2,000 1,800 1,800 1,600 1,400 1,200 1,000 1, Employment Unemployment Inactivity Source: Annual Population Survey, Office for National Statistics. Page 79

82 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 CLAIMANT COUNT RATE CLAIMANT UNEMPLOYMENT HAS RISEN SHARPLY DURING AND SINCE THE RECESSION Like other labour market indicators, the West of s claimant count rate rose more sharply during and since the recession than the average, and has recovered more slowly. Between March 2008 and March 2012, the percentage of working age people claiming Jobseeker s Allowance rose from a historic low of 1.2 per cent to 3.3 per cent a rise of 2.1 percentage points, against a rise of 1.9 percentage points across (Figure 3.27). This stronger-than-average rise was due to a sharp increase in the claimant count in Bristol (+2.7 percentage points). The claimant count has since fallen year-on-year, to 1.4 per cent in March 2015 a fall of 1.9 percentage points in three years, compared with -2.1 percentage points across. As Figure 3.28 indicates, the West of s claimant count remains 0.2 percentage points higher than before the recession, while s claimant count rate has now fallen to historically low levels and is 0.2 percentage points below the pre-recession rate. Within the area, only Bath & North East Somerset has recovered to below pre-recession claimant count levels. FIGURE 3.27: CLAIMANT COUNT RATE MARCH 1992 TO MARCH West of Source: Claimant Count, Office for National Statistics. THERE HAS BEEN A SHARP RISE IN CLAIMANTS FROM SALES AND CUSTOMER SERVICE AND PERSONAL SERVICE JOBS Between March 2008 and March 2012, there was a significant rise in the number of claimants previously working in sales and customer service occupations (384 per cent, with a strong rise in the number of unemployed sales and retail assistants) and personal service occupations (327 per cent, with a strong rise in the number of unemployed care assistants and home carers). This followed national trends, although there was a sharper-than-average rise in the number of unemployed claimants in all occupations apart from managers & senior officials. FIGURE 3.28: CHANGE IN CLAIMANT COUNT RATE, Source: Claimant Count, Office for National Statistics. Page 80

83 Managers and Senior Officials Professional Associate Professional & Technical Administrative & Secretarial Skilled Trades Personal Service Sales and Customer Service Process, Plant & Machine Operatives Elementary Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 THE RETAIL SECTOR DETERIORATED DURING THE RECESSION, WITH A SIGNIFICANT IMPACT ON OVERALL UNEMPLOYMENT RATES The deterioration in the West of s retail labour market has been a major cause of the sharper-thanaverage increase in unemployment during the recession and its slower recovery. Comparing current numbers of claimants (March 2015) with pre-recession levels (March 2008) total claimants have reduced in most occupational categories (Figure 3.29). However, in March 2015, total claimants were higher for sales and customer service occupations, managers and senior officials, and administrative and secretarial occupations, compared with March In March 2015, the numbers of claimants from sales and customer service occupations was 215 per cent higher than before the recession, driven by a strong rise in the number of unemployed sales and retail assistants. This was a bigger rise than across (+136 per cent). ALMOST TWO-THIRDS OF LONG-TERM UNEMPLOYED CLAIMANTS LIVE IN BRISTOL In March 2015, there were 3,465 people in the West of who had been claiming Jobseeker s Allowance for over six months. Of these, 62.3 per cent lived in Bristol. WHILE UNEMPLOYMENT ROSE MORE SHARPLY THAN NATIONALLY DURING THE RECESSION, LONG-TERM UNEMPLOYMENT INCREASED IN LINE WITH THE NATIONAL AVERAGE During and following the recession, the percentage of working age people claiming Jobseeker s Allowance for more than six months rose by 1.0 percentage point (from 0.3 per cent in March 2008 to 1.3 per cent in March 2012) a slightly lower rise than across (1.1 percentage points) as detailed in Figure By March 2015, the long-term claimant count rate had fallen to 0.5 per cent 0.2 percentage points above the pre-recession rate (the same as across ). FIGURE 3.30: PERCENTAGE OF WORKING AGE PEOPLE CLAIMING JOBSEEKER S ALLOWANCE FOR OVER SIX MONTHS, West of Source: Claimant Count, Office for National Statistics. FIGURE 3.29: PERCENTAGE CHANGE IN THE NUMBER OF CLAIMANTS BY USUAL OCCUPATION, West of Source: Claimant Count, Office for National Statistics. Page 81

84 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire ECONOMIC ACTIVITY BY GENDER MALE ECONOMIC ACTIVITY THE MALE ECONOMIC ACTIVITY RATE IS ABOVE AVERAGE BUT FALLING In 2014, 83.3 per cent of working age men in the West of were economically active slightly higher than the average (83.1 per cent), higher than all core city LEP areas but much lower than all comparator southern LEP areas. Within the West of, male economic activity was very high in South Gloucestershire (88.4 per cent) and above average in North Somerset (83.4 per cent) but below average in Bath & North East Somerset (81.7 per cent) and Bristol (81.0 per cent). Male economic activity in the West of has fallen over the past two years to its lowest level since 2004 (the earliest year of data) as Figure 3.31 indicates. Comparing the current male economic activity rate with the pre-recession rate (2008), the rate in the West of is 1.6 percentage points lower than before the recession, against a decline of FIGURE 3.31: MALE ECONOMIC ACTIVITY AND EMPLOYMENT RATES, Economic activity rate just 0.5 percentage points across. Within the area, male activity rates are much lower than before the recession in all districts, particularly North Somerset (-4.1 percentage points). THE MALE EMPLOYMENT RATE IS BELOW AVERAGE AND IN LONG-TERM DECLINE In 2014, 77.4 per cent of working age men in the West of were employed higher than all core city LEP areas but lower than the average (77.7 per cent) and much lower than all comparator southern LEP areas. Within the West of, male employment was very high in South Gloucestershire (85.4 per cent) and above average in North Somerset (79.5 per cent) but below average in Bath & North East Somerset (76.3 per cent) and Bristol (72.5 per cent). Where localities have an above-average rate of male economic activity but a below-average rate of male employment, this indicates that activity is high due to an above-average rate of male unemployment. Employment rate Source: Annual Population Survey, Jan 2014 to Dec 2014, Office for National Statistics. Page 82

85 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire Percentage points THE MALE EMPLOYMENT RATE IN THE WEST OF ENGLAND IS FALLING IN THE LONG TERM Male employment peaked in 2005, has since followed a downward trend and has not mirrored the post-recession recovery seen across over the past three years. As a result, the West of s male employment rate has fallen below the national average for the first time since the earliest year of data (2004). Comparing the current male employment rate with the pre-recession rate in 2007, the rate in the West of is 3.5 percentage points lower than before the recession, compared with just 1.2 percentage points lower across (Figure 3.32). Within the area, male employment rates are much lower than before the recession in North Somerset (-7.8 percentage points) and Bristol (- 4.0 percentage points). THE MALE CLAIMANT COUNT RATE IS BELOW AVERAGE AND HAS FALLEN BACK TO PRE- RECESSION LEVELS In March 2015, 1.8 per cent of working age men in the West of were claiming unemployment benefit lower than the average of 2.4 per cent, as detailed in Figure Within the West of, rates ranged from just 0.9 per cent in Bath & North East Somerset to an aboveaverage 2.7 per cent in Bristol. FIGURE 3.33: MALE CLAIMANT UNEMPLOYMENT RATES AND CHANGE 2008 TO 2015 Area Claimant count in March each year Percentage point change West of D2N Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon & Wiltshire Thames Valley Berkshire ENGLAND Bath & NE Somerset Bristol North Somerset South Gloucestershire Source: Annual Population Survey, Office for National Statistics. FIGURE 3.32: CHANGE IN MALE EMPLOYMENT RATES, Source: Annual Population Survey, Office for National Statistics. Page 83

86 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire FEMALE ECONOMIC ACTIVITY THE FEMALE ECONOMIC ACTIVITY RATE IS ABOVE AVERAGE, FELL MUCH MORE SHARPLY THAN AVERAGE FOLLOWING THE RECESSION BUT GREW RAPIDLY IN 2014 In 2014, 75.7 per cent of working age women in the West of were economically active higher than the average (71.8 per cent), all core city LEP areas and some comparator southern LEP areas (Figure 3.34). Within the West of, female economic activity was above average in all districts, particularly South Gloucestershire (80.7 per cent). The female economic activity rate fell sharply following the recession. Between 2010 and 2013, the West of s female activity rate fell by 2.4 percentage points. Nationally, the female activity rate fell in just one year and by just 0.6 percentage points. However, female activity in the West of rose sharply in 2014 and is now above its 2010 peak. Comparing the current female economic activity rate with the pre-recession rate (2008), the rate in the West of is 1.2 percentage points higher than before the recession, compared with 1.6 percentage points higher across. Within the area, female activity rates are higher than before the recession in three districts, particularly Bristol (+3.0 percentage points) but below the pre-recession rate in North Somerset (-2.5 percentage points). THE FEMALE EMPLOYMENT RATE IS ALSO ABOVE AVERAGE, FELL MUCH MORE SHARPLY THAN AVERAGE FOLLOWING THE RECESSION BUT ALSO GREW SHARPLY IN 2014 In 2014, 71.9 per cent of working age women in the West of were employed higher than the average (67.4 per cent), all core city LEP areas and some comparator southern LEP areas. Within the West of, female employment was above average in all districts, particularly South Gloucestershire (77.2 per cent). FIGURE 3.34: FEMALE ECONOMIC ACTIVITY AND EMPLOYMENT RATES, Economic activity rate Employment rate Source: Annual Population Survey, Jan 2014 to Dec 2014, Office for National Statistics. Page 84

87 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire Percentage points THE FEMALE EMPLOYMENT RATE FELL SHARPLY FOLLOWING THE RECESSION, REFLECTING NATIONAL TRENDS Between 2010 and 2013, the West of s female employment rate fell by 3.2 percentage points. Nationally, the female employment rate also fell for three years ( ) but by just 1.6 percentage points. Female employment rose sharply in 2014 but is slightly lower than before the recession. Comparing the current female employment rate with the pre-recession rate (2008), the rate in the West of is 0.3 percentage points lower, while across it is 1.0 percentage points higher (Figure 3.35). Within the area, the female employment rate was lower than six years ago in three districts, particularly North Somerset (-2.6 percentage points). THE FEMALE CLAIMANT COUNT RATE IS BELOW AVERAGE BUT REMAINS HIGHER THAN BEFORE THE RECESSION In March 2015, 1.0 per cent of working age women in the West of were claiming unemployment benefit, below the average of 1.4 per cent. As detailed in Figure 3.36, within the West of, female claimant count rates ranged from just 0.5 per cent in Bath & North East Somerset to an above-average 1.9 per cent in Bristol. FIGURE 3.36: FEMALE CLAIMANT UNEMPLOYMENT RATES AND CHANGE 2008 TO 2015 Area Claimant count in March each year Percentage point change West of D2N Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon & Wiltshire Thames Valley Berkshire ENGLAND Bath & NE Somerset Bristol North Somerset South Gloucestershire Source: Annual Population Survey, Office for National Statistics. FIGURE 3.35: CHANGE IN THE FEMALE EMPLOYMENT RATE 2008 TO Source: Annual Population Survey, Office for National Statistics. Page 85

88 THE CLAIMANT COUNT RATE FOR WOMEN ROSE LESS SHARPLY THAN FOR MEN DURING AND FOLLOWING THE RECESSION It also rose less sharply than across : by 1.4 percentage points between March 2008 and March 2012, against a national average increase of 1.5 percentage points. However, the female claimant count has recovered more slowly than for men and now remains 0.3 percentage points above pre-recession levels (the same as across ). This slower recovery means that women form a historically high share of all claimants: 35 per cent of all claimants in March 2015, compared with 26 per cent before the recession, and the highest level since records began in This mirrors the national trend. THE DECREASE IN EMPLOYED PEOPLE SINCE THE RECESSION HAS BEEN DUE TO A FALL IN THE NUMBER OF EMPLOYED MEN As above, the number of employed people across the West of has fallen since the recession (- 5,800) against a national average rise (+600,300). The fall in employment in the West of is due to a fall in the numbers of men in employment. Between 2008 and 2014, the numbers of employed men in the West of fell by 8,200, compared with a national average rise of 196,700. The numbers of employed women in the area rose by 2,400. Numbers of employed men fell in all districts apart from South Gloucestershire. The biggest fall was in North Somerset (-4,300), which accounted for more than half the fall in male employment in the West of ; The numbers of employed women fell in North Somerset (-4,200) and Bath & North East Somerset (-700) but rose in Bristol (+5,900) and South Gloucestershire (+1,300); The overall rise in employment in Bristol (+3,900) was therefore due to an increase in the number of female workers, while the rise in female employment accounted for almost three-quarters of the rise in employment in South Gloucestershire. FIGURE 3.37: Change in numbers of employed males and females, male female Bath & NE Somerset Bristol North Somerset South Gloucestershire No. Source: Annual Population Survey, Office for National Statistics. Within the West of (Figure 3.37): Page 86

89 ECONOMIC ACTIVITY BY AGE ECONOMIC PARTICIPATION RATES ARE HIGHER THAN THE NATIONAL AVERAGE ACROSS MOST AGE GROUPS In the West of in 2014: Employment rates were above average for all age groups apart from year olds(figure 3.38); Unemployment rates were below average for all age groups apart from year olds (Figure 3.39); Inactivity rates were below average for all age groups (Figure 3.40); year olds had the highest employment rates and lowest inactivity rates year olds had the lowest unemployment rates; year olds had the lowest employment rates, highest unemployment rates and highest inactivity rates. FIGURE 3.38: EMPLOYMENT RATES IN THE WEST OF ENGLAND BY AGE, years West of years years years Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. THE LABOUR MARKET FOR YOUNG PEOPLE HAS DETERIORATED SIGNIFICANTLY SINCE THE RECESSION Comparing the most recent statistics (2014) with before the recession (2008): years Employment rates have fallen for all age groups apart from year olds (Figure 3.41); Employment rates have fallen most sharply for and year olds, and more sharply than across (Figure 3.42); Employment rates for year olds have fallen against a national average rise; Unemployment rates have increased across all age groups, particularly year olds, and more sharply than across ; Inactivity rates have risen sharply among young people (16-19 and year olds). FIGURE 3.39: UNEMPLOYMENT RATES IN THE WEST OF ENGLAND BY AGE, years Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. In terms of numbers: West of years years years years Employment in the West of fell by 5,800 between 2008 and This fall came from year olds (-10,500), year olds (-8,000) and year olds (-6,400); Unemployment in the West of rose by 13,600 between 2008 and This increase was distributed across all age groups; Inactivity in the West of rose by 3,800 between 2008 and All of this rise occurred among young people (16-24 year olds), with falls in inactivity across other age groups. FIGURE 3.40: INACTIVITY RATES IN THE WEST OF ENGLAND BY AGE, years West of years years years years Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. Page 87

90 Percentage points Percentage points FIGURE 3.41: CHANGE IN ECONOMIC ACTIVITY IN WEST OF ENGLAND, 2008 TO years years years years years Source: Annual Population Survey, Office for National Statistics. FIGURE 3.42: CHANGE IN ECONOMIC ACTIVITY IN ENGLAND, 2008 TO Source: Annual Population Survey, Office for National Statistics. Unemployment Employment Inactivity Unemployment Employment Inactivity years years years years years Page 88

91 Mar-92 Mar-94 Mar-96 Mar-98 Mar-00 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 Mar-12 Mar-14 FIGURE 3.43: CLAIMANT COUNT RATE BY AGE IN THE WEST OF ENGLAND, TO year olds year olds year olds Source: Claimant Count, Office for National Statistics. CLAIMANT COUNT RATES ALSO HIGHLIGHT THAT THE RECESSION S GREATEST EFFECT WAS ON YOUTH UNEMPLOYMENT Between March 2008 and March 2012, claimant count rates rose for all age groups, and most sharply for those aged 16-24: +3.0 percentage points for year olds, +1.2 percentage points for those aged 25-49, and +1.2 percentage points for those aged (Figure 3.43). Across all age groups, claimant count rates rose more sharply in the West of than across. HOWEVER, THE CLAIMANT COUNT FOR YOUNG PEOPLE HAS NOW RECOVERED In March 2015, the claimant count rate for year olds, at 1.5 per cent, was below the pre-recession low of 1.9 per cent in March 2008, a 0.4 percentage point fall. However, the recovery across was much stronger with a 1.3 percentage point fall between March 2008 and March Claimant counts are still recovering across other age groups. In March 2015, claimant count rates for year olds and year olds were 0.2 and 0.4 percentage points above the pre-recession rate in March FULL- AND PART-TIME EMPLOYMENT THE PERCENTAGE OF PEOPLE WORKING FULL-TIME HAS DIMINISHED The percentage of people working full-time fell sharply between 2006 and 2010, from 74.6 per cent to 70.8 per cent (Figure 3.44). This was due both to a fall in the number of full-time workers and a rise in the number of part-time workers. Full-time employment then increased following the recession (between 2010 and 2013), to 73.2 per cent as more people took on full-time work and fewer worked parttime. However, the percentage of full-time workers then resumed its downward trend in 2014, falling to 71.0 per cent, as the number of full-time workers fell again and the number of part-time workers rose. During this period, the number of people working fulltime declined by 11,000 while the number of people working part-time rose by 3,700, highlighting that the recent fall in employment in the West of has come from fewer people working full-time. (As above, this is consistent with the fall in numbers of employed men more likely to work full-time and the rise in the number of employed women more likely to work part-time). FIGURE 3.44: PERCENTAGE OF WORKING-AGE PEOPLE IN FULL-TIME EMPLOYMENT, West of Source: Annual Population Survey, Office for National Statistics. The number of people working full-time fell by 2.9 per cent between 2008 and 2014, compared with a 0.9 per cent rise across (where the number of men in employment also rose), while the number working part-time increased by 2.5 per cent, compared with a 6.5 per cent rise across. THE PERCENTAGE OF PEOPLE WORKING FULL-TIME IS LOWER THAN THE NATIONAL AVERAGE In 2014, 71.0 per cent of working age people in employment worked full-time. This was lower than across (74.2 per cent) and all comparator areas. Within the West of, the percentage of full-time workers ranged from 69.1 per cent in South Gloucestershire to 72.6 per cent in Bristol. Page 89

92 student looking after family/ home long-term sick retired other Within the West of (Figure 3.45): the numbers of both full-time and part-time workers fell in Bath & North East Somerset and North Somerset; the numbers of full-time workers fell while the numbers of part-time workers increased in South Gloucestershire hence the recent rise in employment in South Gloucestershire was due to a rise in the number of part-time workers; the numbers of full-time workers rose while the numbers of part-time workers fell in Bristol contributing significantly to the recent rise in employment there. FIGURE 3.45: CHANGE IN NUMBER OF FULL-TIME AND PART-TIME WORKERS, Full-Time Part-Time Bath & NE Somerset Bristol North Somerset South Gloucestershire No. workers Source: Annual Population Survey, Office for National Statistics. REASONS FOR ECONOMIC INACTIVITY BEING A STUDENT IS THE MOST COMMON REASON FOR ECONOMIC INACTIVITY IN THE WEST OF ENGLAND In 2014, 143,000 working age people living in the West of were economically inactive, i.e. not in work nor looking for work (Figure 3.46). These represented one-fifth of the working age population (20.5 per cent lower than the average of 22.6 per cent). Almost half the inactive people in the West of lived in Bristol (47.1 per cent). There are a variety of reasons for being economically inactive. The most common reason in the West of is being a student. Representing almost a third (30.7 per cent) of all inactive people, this was a more common reason for inactivity than across and the second highest rate of all comparator LEP areas after Oxfordshire. In contrast, a lower percentage of inactive people were looking after the family/home or were long-term sick than nationally. FIGURE 3.46: PERCENTAGE SHARE OF WORKING-AGE INACTIVE POPULATION BY REASON, 2014 Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. The percentage of economically inactive people who are students has increased by 5.8 percentage points between 2004 and 2014, although this was lower than the average increase (+6.5 percentage points). This is unsurprising given that, as above, all of the recent increase in economic inactivity has been among year olds. At district level (Figure 3.47), the notable points about the nature of economic inactivity include: West of the number of students who are economically inactive is very high in Bath & North East Somerset and Bristol, above average in North Somerset, and very low in South Gloucestershire; inactivity due to looking after the family/home was above average in South Gloucestershire and very low in Bath & North East Somerset; inactivity due to being long-term sick was above average in Bristol and North Somerset; inactivity due to being retired was very high and the most common reason for inactivity in South Gloucestershire. FIGURE 3.47: PERCENTAGE OF WORKING AGE ECONOMICALLY ACTIVE PEOPLE BY REASON IN 2014 student long-term sick other Bath & NE Somerset Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. 9.5 looking after family/ home retired Bristol North Somerset South Gloucestershire Page 90

93 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire West of Bath & North East Somerset Bristol North Somerset South Gloucestershire WIDER DEFINITIONS OF WORKLESSNESS ONE-QUARTER OF ECONOMICALLY INACTIVE PEOPLE WANT TO WORK Some economically inactive people want to work. In 2014, one quarter (24.8 per cent) of economically active people wanted to work, but were not technically classified as unemployed as indicated in Figure This included those who wanted a job but had not been seeking work in the previous four weeks and those who wanted a job and were seeking work but were not available to start. This could have included those who were temporarily sick, discouraged workers and those who were planning to return to work in the near future. This was similar to the average (25.0 per cent). Within the West of, the percentage of inactive people who wanted to work was very high in North Somerset (32.0 per cent) and lowest in South Gloucestershire (19.9 per cent). THE RATE OF INVOLUNTARY WORKLESSNESS IS MORE THAN DOUBLE THE OFFICIAL RATE OF UNEMPLOYMENT The number of economically inactive people who want a job is greater than the number of unemployed people in the West of. In 2014, 35,500 economically inactive people wanted a job, while 33,500 people were officially classed as unemployed. This meant that a total of 69,000 people were involuntarily workless. The involuntary workless represented 12.4 per cent of the economically active population more than double the official unemployment rate (6.0 per cent), as detailed in Figure Within the West of, the highest worklessness rate was in Bristol (15.4 per cent), which is also the district with the highest unemployment rate. North Somerset has the highest proportion of hidden unemployed with the worklessness rate being almost triple the official unemployment rate. FIGURE 3.49: WORKLESSNESS AND UNEMPLOYMENT RATES, Worklessness Rate Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. 8.3 Unemployment Rate FIGURE 3.48: PERCENTAGE OF THE ECONOMICALLY INACTIVE WHO WANT A JOB, Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. Page 91

94 West of D2N2 Greater B'ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire West of Bath & North East Somerset Bristol North Somerset South Gloucestershire Between 2008 and 2014, changes in the rates of worklessness (+2.6 percentage points) and unemployment (+2.4 percentage points) were similar in the West of (Figure 3.46). Within the area, the change in the worklessness rate far exceeded the change in the unemployment rate in North Somerset: the rate of worklessness increased by 4.4 percentage points while the unemployment rate rose by just 0.7 percentage points. FIGURE 3.50: CHANGES IN THE RATES OF WORKLESSNESS AND UNEMPLOYMENT, worklessness rate unemployment rate BENEFIT CLAIMANTS Source: Annual Population Survey, Office for National Statistics. THE NUMBER OF WORKING AGE PEOPLE CLAIMING OUT-OF-WORK BENEFITS IS LOWER THAN ACROSS ENGLAND Out-of-work benefits claimants include recipients of Jobseeker s Allowance (JSA), Employment and Support Allowance (ESA), Incapacity Benefit (IB) and Severe Disablement Allowance (SDA), lone parents (recipients of Income Support with a child under qualifying age) and other recipients of Income Support and Pension Credit. In August 2014, 60,120 working age people in the West of were claiming out-of-work benefits. This was equivalent to 8.5 per cent of working age people (Figure 3.51) lower than the average (9.6 per cent) and all core city LEP areas but higher than all comparator southern LEP areas. Within the West of, rates ranged from 5.9 per cent in South Gloucestershire to an aboveaverage 11.0 per cent in Bristol. For all types of out-of-work benefits, the proportion of claimants in the West of is below the national average. Within the West of (Figure 3.52): North Somerset has an above-average proportion of ESA and Incapacity Benefit claimants; Bristol has above-average rates of ESA and Incapacity Benefit, Jobseeker s Allowance and Lone Parent benefit claimants. FIGURE 3.51: PERCENTAGE OF WORKING AGE PEOPLE CLAIMING OUT-OF-WORK BENEFITS, AUGUST Source: Department for Work and Pensions. Page 92

95 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Bath & NE Somerset Bristol North Somerset South Gloucestershire FIGURE 3.52: PERCENTAGE OF WORKING-AGE PEOPLE CLAIMING OUT-OF-WORK BENEFITS BY BENEFIT TYPE, AUGUST 2014 Source: Department for Work and Pensions. Two-thirds of all out-of-work benefit claimants in the West of are claiming ESA or Incapacity Benefit (66.4 per cent). This is a higher share than across (62.5 per cent of all claimants). In contrast, the West of has a lower share of all benefit claimants claiming Jobseeker s Allowance (18.1 per cent of all claimants, compared with 21.9 per cent across ). Within the West of, over half of all out-of-work benefit claimants live in Bristol (54.3 per cent). THE PERCENTAGE OF OUT-OF-WORK BENEFIT CLAIMANTS ROSE SHARPLY DURING THE RECESSION Between August 2008 and August 2009, the percentage of people in the West of claiming out-of-work benefits rose from 9.4 per cent to 10.9 per cent an increase of 1.5 percentage points following a long-term decline (Figure 3.53). This was similar to the average increase of 1.6 percentage points. The percentage of claimants rose most sharply in Bristol (+1.7 percentage points) as the number of Jobseeker s Allowance claimants rose sharply. The percentage of claimants has since : ESA & incapacity benefits Lone parents Job seekers Others on income-related benefit resumed its downward trend and has now fallen below pre-recession levels (0.9 percentage points lower in August 2014 than in August 2008, against a 1.2 percentage point fall across ). FIGURE 3.53: PERCENTAGE OF WORKING-AGE OUT- OF-WORK BENEFIT CLAIMANTS, West of Source: Department for Work and Pensions. THE NUMBER OF OUT-OF-WORK BENEFIT CLAIMANTS HAS FALLEN OVER THE PAST TEN YEARS, DRIVEN BY A FALL IN THE NUMBER OF LONE PARENT BENEFIT CLAIMANTS Between August 2004 and August 2014, the number of out-of-work benefit claimants living in the West of fell by 1,900. This was driven by a sharp fall in the number of Lone Parent benefit claimants (-4,630). The number of Other Income- Related Benefit Claimants also fell by 180. These falls were partially offset by a sharp rise in the number of Jobseeker s Allowance claimants (+2,370) and claimants of ESA and Incapacity Benefit (+540). While the rise in numbers of Jobseeker s Allowance claimants matched national trends, the number of ESA and Incapacity Benefit claimants rose while on average they fell at a national level. The rise in the number of ESA and Incapacity Benefit claimants was driven by a large increase in Bristol (+730). Page 93

96 COMMUTING AND TRAVEL TO WORK MORE PEOPLE COMMUTE INTO THE WEST OF ENGLAND THAN OUT OF IT Of all the residents in work in the West of, 86.9 per cent were also employed in the area. At the time of the 2011 Census, 531,925 West of residents were in work. Of these, 445,740 worked (and lived) within the area, including those who mainly work from home. This made up 86.9 per cent of the 512,650 people who worked in the West of. 42,845 West of residents commuted to work outside of the area; and 66,910 residents lived outside of the West of but commuted to work in the area. This means that there was a net incommuting level of 24,065 (the number of incoming commuters minus the number of out-commuters). or 14.5 per cent, commuted into the area to work (Figure 3.56). At district level, Bristol has the highest level of net in-commuting (+26,787), but when expressed in percentage terms, South Gloucestershire has the highest rates of out-commuting (39.0 per cent of residents in work commute out of the district to work, while 50.0 per cent of all workers in the district are in-commuters). FIGURE 3.55: BALANCE OF NET COMMUTING (IN- COMMUTERS LESS OUT-COMMUTERS) BY UNITARY AUTHORITY AREA, ,743 The levels of in- and out- commuting between localities are outlined in Figure 3.54 for the most popular sources and destinations. Further, Figures 3.57 and 3.58 map commuter flows by mid-layer super output areas. 5,274-13,778 5,826 FIGURE 3.54: OUT- AND IN-COMMUTING OUT-COMMUTERS: The most popular work locations for West of residents who commute out of the area to work District Number Wiltshire 6,789 Mendip (Somerset) 3,929 Sedgemoor (Somerset) 2,982 Stroud (Gloucestershire) 2,455 Swindon 2,261 Gloucester (Gloucestershire) 1,458 Westminster, City of London 1,266 Cardiff (Wales) 1,026 Tewkesbury (Gloucestershire) 912 Taunton Deane (Somerset) 907 IN-COMMUTERS: Districts containing the most people who commute into the West of to work District Number Wiltshire 14,500 Mendip (Somerset) 6,885 Sedgemoor (Somerset) 5,914 Stroud (Gloucestershire) 5,065 Monmouthshire (Wales) 3,016 Newport (Wales) 1,816 Cardiff (Wales) 1,741 Gloucester (Gloucestershire) 1,518 Swindon 1,396 Forest of Dean (Gloucestershire) 1,395 Source: 2011 Census, Office for National Statistics. Of the 531,601 West of residents in work, 42,521, or 8.0 per cent, commuted out of the area to work. Of those working in the West of 66,654, Bath & NE Somerset Bristol North Somerset South Gloucestershire Source: 2011 Census, Office for National Statistics. North Somerset is the only district area where out-commuters exceed the number of incommuters (with a net balance of -13,778 workers), as detailed in Figure Few workers (18,847) commute into the district, with the rate of outcommuting is high (32,625). While 33.2 per cent of residents travel outside the area to work (the second highest rate in the West of ) 29.3 per cent of all workers in the district travel into it, the lowest rate in the West of (Figure 3.56). FIGURE 3.56: IN-COMMUTING VS. OUT-COMMUTING out-commuting rate ( residents commuting out of the district to work) in-commuting rate ( workers from outside the district) Bath & NE Somerset Bristol 33.2 Source: 2011 Census, Office for National Statistics North Somerset South Gloucestershire Page 94

97 A HIGH PERCENTAGE OF PEOPLE TRAVEL SHORT DISTANCES TO WORK In 2011, 58 per cent of people living in the West of travelled less than 10km to work higher than the average of 52 per cent. A high proportion of people living in Bristol (69 per cent) travel short distances which is unsurprising given its low rate of out-commuting. The percentage of people travelling short distances was also above average in South Gloucestershire (57 per cent). The percentage of people travelling intermediate distances to work (10-29km) was above average in North Somerset (28 per cent, against 21 per cent nationally) where there is a high rate of outcommuting. Bath & North East Somerset also had an above-average rate of people travelling intermediate distances (24 per cent). The only district which had an average rate of people travelling long distances to work was North Somerset (8 per cent in the district, as across ). Rates were below average in other districts. In 2011, the most popular method of travelling to work in the West of was by car (56 per cent slightly higher than the average of 54 per cent). Comparing methods of travel with the average, an above-average percentage of employed residents travelled to work on foot (13 per cent, against 10 per cent nationally), while a belowaverage percentage travelled by train/underground/metro/light rail/tram (2 per cent, compared with 9 per cent nationally). At district level, very high percentages of working residents travelled to work by car/van in South Gloucestershire (66 per cent) and North Somerset (64 per cent) while above-average percentages of working residents travelled to work on foot or by bicycle in Bristol (26 per cent, against 13 per cent nationally). Travel on foot or by bicycle was also above average in Bath & North East Somerset (19 per cent). The percentage of working residents travelling to work by train was below average in all districts. Page 95

98 FIGURE 3.57: COMMUTER OUT-FLOWS IN THE WEST OF ENGLAND, 2011 NUMBER OF COMMUTERS TRAVELLING TO AND FROM MIDDLE-LAYER SUPER OUTPUT AREAS BY ALL MODES COMMUTER OUT-FLOWS Page 96

99 FIGURE 3.58: COMMUTER IN-FLOWS IN THE WEST OF ENGLAND, 2011 NUMBER OF COMMUTERS TRAVELLING TO AND FROM MIDDLE-LAYER SUPER OUTPUT AREAS BY ALL MODES COMMUTER IN-FLOWS Page 97

100 Bath & North East Somerset Bristol North Somerset South Gloucestershire West of 2002/ / / / / / / / / / / /2014 MIGRANT WORKERS NATIONAL INSURANCE NUMBER (NINO) REGISTRATIONS BY OVERSEAS NATIONALS ARE RELATIVELY LOW NINo registrations provide an indication of immigration into an area for work purposes. Between 2002/03 and 2013/14, over 100,700 overseas nationals registered for National Insurance numbers in the West of. Almost two-thirds of registrations were from foreign nationals living in Bristol (63 per cent). NINo registrations rose sharply between 2002/03 and 2006/07 and fell during the economic downturn (Figure 3.59). Registrations have since picked up but remain below their pre-recession peak. Between 2002/03 and 2013/14, NINo registrations in West of averaged 12 per 1,000 working age people living in the area lower than the average of 15 NINo registrations per 1,000 working age people. NINo registration rates varied significantly across West of districts (Figure 3.60). Rates were lowest in North Somerset and South Gloucestershire (6 and 7 per 1,000 working age people), below average in Bath & North East Somerset (11) and above average in Bristol (19). Most NINo registrations in the West of are by European nationals. In 2013/14, 38 per cent of registrations were from people from the EU Accession States while 37 per cent of registrations were from people from EU countries that were member states before Compared with averages, a higher percentage of NINo registrations were from EU countries that were member states before 2001 while a lower percentage were from the EU Accession States (Figure 3.61). Within the West of : FIGURE 3.59: NUMBERS OF NINO REGISTRATIONS, 2002/03 TO 2013/14 West of (left axis) (right axis) 14, ,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Source: Department for Work and Pensions. 600, , , , , ,000 FIGURE 3.60: NUMBER OF NINO REGISTRATIONS PER 1,000 WORKING AGE PEOPLE, 2002/ / Source: Department for Work and Pensions and Mid-year Population Estimates, Office for National Statistics Bath & North East Somerset had above-average percentages of NINo registrations from pre-2001 EU member states (38 per cent) and Asia and the Middle East (18 per cent); Bristol had an above-average percentage of NINo registrations from pre-2001 EU member states (41 per cent); North Somerset had an above-average percentage of NINo registrations from the EU Accession States (60 per cent); South Gloucestershire had an above-average percentage of NINo registrations from Asia and the Middle East (25 per cent). Page 98

101 Middle East and Asia EU Accession States Africa EU Countries (pre-2001) Americas & Caribbean Rest of Europe Antarctica & Oceania Ireland FIGURE 3.61: PERCENTAGE SHARE OF ALL NINO REGISTRATIONS BY WORLD REGION, 2013/ West of Source: Department for Work and Pensions. FOREIGN-BORN RESIDENTS People born in the EU Accession States and Antarctica & Oceania (including Australasia) have the strongest labour market positions in the West of, with the highest employment rates and lowest unemployment and inactivity rates among foreignborn residents. Labour market performance is weakest among people born in the Middle East and Asia, Rest of Europe, Africa and Americas and Caribbean. The unemployment rate is particularly high among people born in Africa, while the economic inactivity rate is highest among people born in the Middle East and Asia. At the time of the 2011 Census, 73,200 people aged living in the West of were born outside the UK. This represented 14.2 per cent of the total population aged lower than the average of 18.9 per cent. Within the West of, the proportion of foreign-born residents ranged from just 8.3 per cent in North Somerset to an above-average 19.2 per cent in Bristol. The following sections detail the employment, unemployment and inactivity rates of people born outside the UK and living in the West of. Employment rates Employment rates were highest (and above those for the UK-born population) among people from the EU Accession States and Antarctica and Oceania; Employment rates were lowest among people born in the Middle East and Asia, Rest of Europe and Africa; Employment rates for year olds in the West of were higher than national averages for the UK-born population and people born in the EU Accession States; Employment rates were lower than national averages for people born in other world regions, especially Africa, pre-2001 EU countries, and the Americas and Caribbean. Unemployment rates Unemployment rates were lowest for people born in the EU Accession Countries and Antarctica and Oceania; They were highest for people born in Africa and the Americas and Caribbean; Unemployment rates for year olds in the West of were lower than or comparable with national averages for people born in most other world regions. Economic inactivity rates Inactivity rates were lowest among people born in EU Accession States and Antarctica and Oceania; Inactivity rates were highest among people born in the Middle East and Asia and the Rest of Europe. Economic inactivity rates for year olds were lower than national averages for the UK-born population and people born in the EU Accession States; Inactivity rates were above national averages for people born in all other world regions, particularly those born in pre-2001 EU countries and Page 99

102 Bath & NE Somerset Bristol North Somerset South Gloucestershire West of Bath & NE Somerset Bristol North Somerset South Gloucestershire Bath & NE Somerset Bristol North Somerset South Gloucestershire YOUTH QUALIFICATIONS YOUNG PEOPLE S QUALIFICATION ATTAINMENT IN THE WEST OF ENGLAND IS BELOW THE NATIONAL AVERAGE GCSE attainment rates are below average, as Figure 3.69 illustrates. In 2012/13 11, the percentage of pupils at the end of key stage 4 achieving at least 5 A*-C GCSEs was below the average in all four West of local authorities. Rates ranged from 77.1 per cent in North Somerset to 82.2 per cent in Bath & North East Somerset, against an average of 83.1 per cent. In the same year, the percentage of pupils at the end of key stage 4 achieving at least 5 A*-C GCSEs including English and Maths was below the average of 60.8 per cent in Bristol, North Somerset and South Gloucestershire but above average in Bath & North East Somerset (63.6 per cent). FIGURE 3.69: GCSE ATTAINMENT RATES, 2012/ A*-C GCSEs 5 A*-C GCSEs incl Eng & Maths Source: Department for Education Rates of GCSE improvement have also been low, as indicated in Figure Between 2005/06 and 2012/13, the percentage of pupils achieving 5 A*-C GCSEs increased from 57.5 per cent to 83.1 per cent across an increase of 25.6 percentage points. The rate of increase was below average in Bath & North East Somerset, North Somerset and South Gloucestershire. In this seven-year period, slow improvements in GCSE attainment in Bath & North East Somerset and North Somerset meant that attainment rates fell from above average in 2005/06 to below average by 2007/08 in North Somerset, and by 2011/12 in Bath & North East Somerset. In Bristol, however, the percentage of pupils achieving 5 A*-C GCSEs increased at an above-average rate of 37.4 percentage points. Trends were similar for attainment of 5 A*-C GCSEs including English and Maths. FIGURE 3.70: PERCENTAGE POINT INCREASE IN THE PERCENTAGE OF PUPILS ACHIEVING 5 A*-C GCSES, 2005/06 TO 2012/ Source: Department for Education. Attainment of a Level 2 qualification improves by age 19 as detailed in Figure In 2013, 85.5 per cent of 19 year olds in the West of had achieved a Level 2 qualification (5 A*-C GCSEs or equivalent). This was slightly higher than the average (84.9 per cent). Within the West of, rates ranged from a below-average 80.0 per cent in Bristol to 90.0 per cent in North Somerset. FIGURE 3.71: ACHIEVEMENT OF LEVEL 2 AND LEVEL 3 QUALIFICATIONS BY 19 YEAR OLDS, A*-C GCSEs 5 A*-C GCSEs incl Eng & Maths Source: Department for Education Level 2 at 19 Level 3 at At the time of writing, data on GCSE results were available for 2013/14, but due to serious revisions to the methodology for data collation they are not comparable to previous years and are significantly different to 2012/13 (and years prior). The results for 2012/13 and prior years have therefore been the focus for this analysis. Page 100

103 West of D2N2 Greater Birmingham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire Attainment of a Level 3 qualification by age 19 is below average. Figure 3.71 shows that in 2013, 55.3 per cent of 19 year olds had achieved a Level 3 qualification (A level and equivalent). This was slightly below the average of 56.2 per cent. Within the West of, rates ranged from a belowaverage 47.0 per cent in Bristol to 64.0 per cent in North Somerset. YOUNG PEOPLE S PARTICIPATION IN HIGHER EDUCATION IS ALSO BELOW AVERAGE Of the young people reaching the age of 18 in the West of between 2005 and 2009, 31.2 per cent entered higher education (HE). This was lower than the average of 34.2 per cent and the 14 th lowest of 39 LEP areas (Figure 3.72). The West of had a lower HE participation rate than all southern LEP areas but a higher rate than most core city LEP areas. Within the West of, HE participation rates were below average in Bristol (25.2 per cent) and South Gloucestershire (31.1 per cent) and above average in North Somerset (35.9 per cent) and Bath & North East Somerset (39.2 per cent). Bristol also ranked within the bottom fifth of all local authority areas in. Figure 3.73 provides details of West of wards with the 10 lowest and 10 highest HE participation rates. It shows that there is huge variation within the West of, ranging from just 5.3 per cent in Filwood, Bristol (the second lowest rate of all 7,963 English wards for which data are available) to 92.7 per cent in Bathwick, Bath & North East Somerset (the 13 th highest rate of all English wards). FIGURE 3.73: PARTICIPATION RATES OF 18-YEAR OLDS IN HIGHER EDUCATION HIGHEST AND LOWEST WARDS 2005 TO 2009 LOWEST HE PARTICIPATION RATES Ward District Rate Filwood Bristol 5.3 Hartcliffe Bristol 8.5 Twerton Bath & NE Somerset 9.0 Southmead Bristol 9.0 Whitchurch Park Bristol 9.8 Weston-super-Mare South North Somerset 10.1 Dodington South Gloucestershire 10.6 Bishopsworth Bristol 12.0 Avonmouth Bristol 12.5 Lawrence Hill Bristol 13.9 HIGHEST HE PARTICIPATION RATES Ward District Rate Bathwick Bath & NE Somerset 92.7 Clifton Bristol 83.8 Clifton East Bristol 81.0 Lansdown Bath & NE Somerset 79.1 Stoke Bishop Bristol 76.5 Redland Bristol 71.0 Cotham Bristol 70.7 Easton-in-Gordano North Somerset 70.2 Bathavon South Bath & NE Somerset 67.1 Henleaze Bristol 65.5 Source: Higher Education Funding Council for. FIGURE 3.72: PARTICIPATION IN HIGHER EDUCATION BY INDIVIDUALS WHO WERE 18 YEARS-OLD BETWEEN 2005 AND Source: Higher Education Funding Council for. Page 101

104 QUALIFICATIONS QUALIFICATION RATES AMONG WORKING AGE PEOPLE LIVING IN THE WEST OF ENGLAND ARE VERY HIGH In 2014, 41.2 per cent of working age people living in the West of were qualified to Level 4 and above (at least degree level). This was higher than the national average (35.7 per cent) and all comparator areas apart from Oxfordshire and Thames Valley Berkshire, and the seventh highest rate of all 39 LEP areas (Figure 3.64). However, rates varied significantly within the West of. The percentage of people with at least a degree level qualification ranged from a below-average 34.0 per cent in North Somerset to 45.6 per cent in Bristol. Likewise, the percentage of people qualified to Level 2 and above (at least GCSE level) was well above the national average 78.0 per cent against 73.2 per cent across and was higher than all comparator areas apart from Oxfordshire and Thames Valley Berkshire, and the sixth highest of all LEP areas in. Within the West of, all districts had above-average rates of people qualified to Level 2 and above. However, as Figure 3.65 shows, in both North Somerset and Bristol there were strong variations in the proportions attaining qualifications at Level 2 and Level 4+. In North Somerset, the percentage of people qualified to at least GCSE level at 80.9 per cent was well above the national average. Hence, despite North Somerset s low rate of people with high level qualifications, it has high levels of people with intermediate qualification levels. In Bristol, the percentage of people qualified at Level 2 and above at 74.7 per cent was just slightly above the national average, while rates of high level qualifications are above the national average. Residents living in rural areas tend to be better qualified than residents living in urban areas. In 2011, 34.2 per cent of the West of s rural residents aged 16 to 74 were qualified to NVQ4 equivalent or above, compared to 30.1 per cent in urban areas. Similarly, a smaller share of rural residents have no qualifications, at 17.9 per cent compared to 19.3 per cent in urban areas. QUALIFICATION RATES HAVE IMPROVED, BUT NOT AS MUCH AS NATIONALLY Between 2004 and 2014, the percentages of people qualified to Level 4 and above and Level 2 and above have increased by 9.3 and 10.3 percentage points but by less than across (9.8 and 11.5 percentage points). Within the West of, Level 4+ improvement rates were belowaverage in all districts apart from Bristol. Level 2+ improvement rates were above average in Bath & North East Somerset and North Somerset but below average in Bristol and South Gloucestershire. Over the past decade, the percentage of people with no qualifications has fallen by 5.1 percentage points lower than the national average fall of 6.3 percentage points. Improvement rates were below average in all West of districts. FIGURE 3.64: SHARE OF WORKING-AGE RESIDENTS BY HIGHEST LEVEL OF QUALIFICATION HELD IN 2014 Area NVQ4+ NVQ2+ No quals West of D2N Greater B ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire ENGLAND Bath & NE Somerset Bristol North Somerset South Gloucestershire Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. FIGURE 3.65: PERCENTAGE POINT CHANGE IN QUALIFICATION RATES, 2004 TO 2014 West of Bristol South Gloucestershire Bath & NE Somerset North Somerset Level 4+ Level 2+ no qualifications Source: Annual Population Survey, Office for National Statistics. Page 102

105 figure 3.66: Share of working age residents qualified to level 4 (degree equivalent) or above in 2014 by unitary authority area in england and wales Page 103

106 Bath & NE Somerset Bristol North Somerset South Gloucestershire West of Bath & NE Somerset Bristol North Somerset South Gloucestershire West of No qualifications Other qualifications Level 1 Level 2 Apprenticeship Level 3 Level 4 and above IN-COMMUTERS TO THE WEST OF ENGLAND ARE MORE LIKELY TO BE HIGHLY QUALIFIED The qualification rates of people working in the West of are higher than those living in the West of, with the highest number of in-commuters being those with degree-level qualifications or above. The 2011 Census provides data on qualification rates of the workday population (people aged 16 and over who are working in the area regardless of where they live and people not in employment who live in the area) as well as the resident population (people aged 16 and over who live in the area). The qualification rates of the workday population are slightly higher than those of the resident population, as detailed in Figure In 2011, 31.1 per cent of the workday population were qualified to Level 4 and above, compared with 30.6 per cent of the resident population, while 64.0 per cent of the workday population were qualified to Level 2 and above, against 63.6 per cent of the resident population. The percentage of people with no qualifications was also lower among the workday population (18.9 per cent) than the resident population (19.2 per cent). There was net in-commuting to the West of at all qualification levels, but particularly at Level 4 and above, as noted in Figure With 11,400 more people qualified to Level 4 and above working in the area than living in the area, this represented half of all net in-commuting to the West of. Somerset, with the highest level of net incommuting among those qualified to Level 4 and above; the workday population was more highly qualified than the resident population in South Gloucestershire, with a high level of net incommuting among those qualified to Level 4 and above and net out-commuting among those qualified to Levels 1-3; the workday population was more highly qualified than the resident population in Bristol, with high levels of net in-commuting among those qualified to Levels 2,3 and 4; the workday population was not as well qualified as the resident population in North Somerset, with net out-commuting at all qualification levels, particularly Level 4 and above. FIGURE 3.68: DIFFERENCE BETWEEN THE NUMBERS OF PEOPLE WORKING IN THE WEST OF ENGLAND AND LIVING IN THE WEST OF ENGLAND BY QUALIFICATION LEVEL, ,000 12,000 11,353 10,000 8,000 6,000 3,596 4,000 2,446 2,544 2,000 1, Within the West of : the workday population was more highly qualified than the resident population in Bath & North East Source: 2011 Census, Office for National Statistics. FIGURE 3.67: QUALIFICATION RATES OF WORKDAY AND RESIDENT POPULATIONS AGED 16 AND OVER, 2011 HIGHEST QUALIFICATION AT LEVEL Workday Population Resident Population HIGHEST QUALIFICATION AT LEVEL Workday Population Resident Population Source: 2011 Census. Page 104

107 West of D2N2 Greater Birmingham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire OCCUPATIONS: THE TYPE AND SKILL LEVELS OF JOBS THE WEST OF ENGLAND HAS AN ABOVE- AVERAGE PERCENTAGE OF RESIDENTS WORKING IN THE MOST HIGHLY SKILLED OCCUPATIONS In 2014, over one third of employed residents in the West of (33.8 per cent) worked in Level 4 occupations 12 (the most highly skilled jobs, those of managers & senior officials and professionals). This was higher than across (30.3 per cent) and the joint third highest of all comparator areas, after Oxfordshire and Thames Valley Berkshire (Figure 3.74). Within the West of, rates ranged from a below-average 29.3 per cent in North Somerset to 37.1 per cent in Bristol. As Figure 3.75 suggests, the percentages of people working at all other occupational levels was lower than the national average, particularly at Level 2 (administrative and secretarial, caring, leisure and other services, sales and customer services, and process, plant and machine operatives). At detailed occupational level, the West of has above average rates of residents employed as Level 4 science, research, engineering and technology professionals (8.2 per cent, compared with 5.4 per cent nationally) and Level 3 business & public service associate professionals (8.8 per cent, against 7.5 per cent nationally). It has below-average rates of residents employed as Level 2 process, plant and machine operatives (1.2 per cent, compared with 2.6 per cent nationally) and Level 2 caring personal service occupations (6.0 per cent, against 7.1 per cent nationally). FIGURE 3.75: Percentage of employed residents working in occupations at levels 1-4, West of Level 4 Level 3 Level 2 Level 1 Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. FIGURE 3.74: PERCENTAGE OF EMPLOYED RESIDENTS WORKING IN LEVEL 4 OCCUPATIONS, Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. 12 Level 4 occupations: managers & senior officials and professionals; Level 3 occupations: associate professional & technical occupations and skilled trades; Level 2 occupations: administrative & secretarial, caring, leisure & other services, sales and customer service, and process, plant & machine operatives; Level 1 occupations: elementary occupations Page 105

108 FIGURE 3.76: SHARE OF WORKING-AGE RESIDENTS IN LEVEL 4 OCCUPATIONS IN 2014 BY UPPER TIER AUTHORITY IN ENGLAND AND WALES Page 106

109 managers & senior officials professionals associate prof & tech administrative & secretarial skilled trades caring, leisure & other services sales & customer services process, plant & machine operatives elementary THE OCCUPATIONAL PROFILE OF WEST OF ENGLAND RESIDENTS HAS BECOME MORE HIGHLY SKILLED OVER THE PAST TEN YEARS There has been a large increase in the number of people working as professionals and associate professionals over the past decade. As set out in Figure 3.77, between 2004 and 2014, the number of people working as Level 4 professionals increased by 34.0 per cent (+32,700) while the number of people working in Level 3 associate professional and technical occupations rose by 27.5 per cent (+18,500). There was also a large increase in the number of people working in Level 2 caring, leisure and other services (18.5 per cent, +6,700). In the same period, the number of people working in Level 3 skilled trades and Level 2 administrative & secretarial, sales and customer services, and process, plant & machine operative occupations fell. At detailed occupational level, the West of has above average rates of residents employed as Level 4 science, research, engineering and technology professionals (8.2 per cent, compared with 5.4 per cent nationally) and Level 3 business & public service associate professionals (8.8 per cent, against 7.5 per cent nationally). It has below-average rates of residents employed as Level 2 process, plant and machines operatives (1.2 per cent, compared to 2.6 per cent nationally) and Level 2 caring personal service occupations (6.0 per cent, compared to 7.1 per cent nationally). The occupational profile of West of residents has become more highly skilled over the past ten years. Between 2004 and 2014, the number of people working as Level 4 professionals increased by 34.0 per cent (+32,700) while the number of people working in Level 3 associate professional and technical occupations rose by 27.5 per cent (+18,500). There was also a large increase in the number of people working in Level 2 caring, leisure and other services (18.5 per cent, +6,700). In the same period, the number of people working in Level 3 skilled trades occupations and Level 2 administrative & secretarial, sales and customer services, and process, plant & machine operative occupations fell. The biggest falls in the numbers of workers were in the following occupations: Level 2 sales occupations (-7,700) Level 2 process, plant and machines operatives (- 6,400) Level 2 secretarial and related occupations (-5,400) FIGURE 3.77: PERCENTAGE CHANGE IN NUMBERS OF EMPLOYED RESIDENTS BY OCCUPATION, 2004 TO West of Source: Annual Population Survey, Office for National Statistics. Page 107

110 Rural residents are more likely to work in higherskill occupations than urban residents. Evidence presented in Figure 3.78 from the 2011 Census shows that 14.8 per cent of rural West of residents aged were Managers, directors and senior officials compared to 9.7 per cent of urban residents. A larger share of rural residents aged work in skilled trades occupations (13.1 per cent) compared to urban areas (10.6 per cent). A lower share of rural residents aged work in Sales and customer service occupations (6.0 per cent) than urban residents (9.0 per cent). FIGURE 3.78: OCCUPATION OF WEST OF ENGLAND RESIDENTS BY RURAL AND URBAN AREA CLASSIFICATION Rural Urban 1. Managers, directors and senior officials 2. Professional occupations 3. Associate professional and technical occupations 4. Administrative and secretarial occupations 5. Skilled trades occupations 6. Caring, leisure and other service occupations 7. Sales and customer service occupations 8. Process, plant and machine operatives 9. Elementary occupations IN-COMMUTERS HAVE HIGHER SKILLS LEVELS Source: 2011 Census, Office for National Statistics. The West of s occupational profile is more highly skilled among people working in the area than employed people living in the area, highlighting the higher skills levels of in-commuters. In 2014, the percentage of people working in the West of in Level 3 and 4 occupations was higher on a workplace basis than a residence basis, while the percentage of people working in Level 2 occupations was lower. The percentage of people working in Level 1 occupations was the same on a workplace and residence basis (Figure 3.79). Comparing types of occupations on a workplace and residence basis, Figure 3.80 shows that there is significant net in-commuting by people working in Level 4 professional (+13,000) and Level 3 associate professional and technical (+8,600) occupations. At detailed occupational level, the largest levels of net in-commuting were among Level 4 science, research, engineering and technology professionals (+4,800), Level 4 business, media and public service professionals (+4,300), Level 3 business & public service associate professionals (+3,800), Level 4 corporate managers and directors (+3,400) and Level 1 elementary administration & service occupations (+2,800). There was net out-commuting among people working in Level 2 secretarial and related occupations (-1,200), Level 3 textiles, printing and other skilled trades (-400) and Level 2 transport & mobile machine drivers/operatives (-400). FIGURE 3.79: PERCENTAGE OF WORKERS ON A RESIDENCE AND WORKPLACE BASIS BY OCCUPATIONAL IN THE WEST OF ENGLAND, residence workplace Level 4 Level 3 Level 2 Level 1 Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. Page 108

111 managers & senior officials professionals associate prof & tech administrative & secretarial skilled trades caring, leisure & other services sales & customer services process, plant & machine operatives elementary FIGURE 3.80: DIFFERENCE BETWEEN NUMBERS OF WORKERS AND EMPLOYED RESIDENTS BY OCCUPATION, ,000 14,000 13,000 12,000 10,000 8,600 8,000 6,000 4,000 3,600 4,000 1,300 1,500 1,800 2,000 2, Source: Annual Population Survey Jan 2014 to Dec 2014, Office for National Statistics. Page 109

112 Bath & NE Somerset Bristol North Somerset South Gloucestershire West of EARNINGS PEOPLE LIVING IN THE WEST OF ENGLAND AND THOSE WHO WORK IN THE AREA ENJOY ABOVE-AVERAGE EARNINGS In 2014, the average earnings of West of residents working full-time was 27,980. As illustrated in Figure 3.81, this was slightly above the average ( 27,500). The average earnings of people working full-time in the West of was 27,892 higher than the average ( 27,487) and but 0.3 per cent lower than earnings for residents. Workplace-based earnings were higher than residence-based earnings until 2010, when workplace-based earnings started to fall following the recession. Within the West of : Residence-based earnings are above average in all districts apart from Bristol; Workplace-based earnings are above average in all districts apart from Bath & North East Somerset; Workplace-based earnings are below residencebased earnings in all districts apart from Bristol; The biggest difference between workplace- and residence-based earnings is in Bath & North East Somerset, where workplace-based earnings are 7.9 per cent lower than those for residents. FIGURE 3.81: RESIDENCE AND WORKPLACE-BASED FULL-TIME AVERAGE EARNINGS, ,000 28,000 26,000 24,000 22,000 20,000 residence workplace Source: Annual Survey of Hours and Earnings, Office for National Statistics. Workplace-based earnings in the West of have grown more slowly than residencebased earnings. Between 2002 and 2014, residencebased earnings in the West of grew faster than the average rate (35.9 per cent, against 32.6 per cent across ). Earnings growth was above average in all districts except Bath & North East Somerset. Between 2002 and 2014, workplace-based earnings in the West of grew below the average rate 29.7 per cent, compared with 32.7 per cent across and much more slowly than residence-based earnings. Within the area, workplace earnings growth was above average in Bristol and North Somerset but below average in Bath & North East Somerset and South Gloucestershire. WORKPLACE-BASED EARNINGS FELL FOLLOWING THE RECESSION WHILE RESIDENCE-BASED EARNINGS CONTINUED TO GROW Between 2002 and 2010, workplace-based earnings in the West of grew faster, and were higher than, residence-based earnings. However, as Figure 3.82 suggests, between 2010 and 2012, following recession, the average earnings of workers in the West of fell by 1.9 per cent (driven by a fall in the average earnings of Bristol workers), while the average earnings of employed residents grew by 2.9 per cent. Since then, growth in workplace-based earnings has accelerated (5.9 per cent between 2012 and 2014, against residence-based growth of 3.8 per cent) but workplace-based earnings remain below those for residents. FIGURE 3.82: GROWTH IN WORKPLACE-BASED AND RESIDENCE-BASED AVERAGE FULL-TIME EARNINGS IN THE WEST OF ENGLAND, 2002 TO ,000 29,000 28,000 27,000 26,000 25,000 24,000 23,000 22,000 21,000 20,000 workplace residence Source: Annual Survey of Hours and Earnings, Office for National Statistics. Page 110

113 FIGURE 3.83: AVERAGE ANNUAL WORKPLACE EARNINGS FOR FULL-TIME EMPLOYEES IN 2014 BY UPPER TIER AUTHORITY AREA IN ENGLAND AND WALES Page 111

114 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon & Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire EMPLOYER SKILLS The UK Employer Skills Survey 2013 provides data to assess how skills deficiencies are affecting business performance. It measures the prevalence, nature and impact of skills challenges, and details the nature and extent of employer investment in skills. Key measures include: Hard to fill vacancies (H2FVs): the percentage of employers reporting that they have vacancies which are proving difficult to fill; Skills shortage vacancies (SSVs): Vacancies which are proving difficult to fill because the employer cannot find applicants with the appropriate skills, qualifications or experience; Skills gaps: where an employee is not fully proficient, i.e. is not able to do their job to the required level. The survey shows that in the West of : Establishments are more likely to report recruitment difficulties than nationally. The prevalence of H2FVs and SSVs is higher than the national average, particularly in South Gloucestershire, and a very large proportion of these are for professional jobs; Employers in the West of are no more likely to report skills gaps among existing staff than nationally, although a larger percentage of employers report that skills gaps have a major impact on their business than the average, particularly in Bristol; Employers report that people employed straight from school, college or higher education are generally well prepared for work, and better prepared than nationally; Commitment to staff training among employers in the West of is in line with the national average. HARD TO FILL VACANCIES THE PREVALENCE OF HARD TO FILL VACANCIES IN THE WEST OF ENGLAND IS HIGHER THAN THE NATIONAL AVERAGE In 2013, 7 per cent of all establishments in the West of reported difficulty in finding people to fill their vacancies. This was slightly higher than the average (5 per cent) and higher than all comparator areas apart from Oxfordshire. Figure 3.84 shows that employers in the West of reported that 34.0 per cent of all of their vacancies were hard to fill higher than the average (28.6 per cent of all vacancies) and all comparator areas apart from GCGP. This was due to a very high percentage of H2FVs in South Gloucestershire (69.9 per cent) with other districts having below average shares of H2FVs. FIGURE 3.84: H2FVS AS A PERCENTAGE OF ALL VACANCIES, Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. Page 112

115 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon & Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol South Gloucestershire Low number of applicants with the required skills Not enough people interested in doing this type of job Lack of work experience the company demands Low number of applicants with the required attitude, motivation or personality MOST HARD TO FILL VACANCIES WERE DUE TO A LACK OF SKILLS AND APPLICANTS An overwhelming proportion of all H2FVs were vacancies for professionals (60.6 per cent above the average share of just 17.2 per cent and a much higher share than in all comparator areas). This figure was boosted by a very high share of H2FVs for professionals in South Gloucestershire (89.8 per cent). Lack of skills and lack of applicants were the main reasons for H2FVs in the West of. As indicated in Figure 3.85, almost two-thirds of all establishments with H2FVs reported low numbers of applicants with the required skills (63 per cent, compared with 41 per cent across ) while half stated that there were not enough people interested in the types of jobs available (50 per cent, against 18 per cent across ). The majority of establishments with H2FVs reported that these had a negative impact on their business (88 per cent), although this was lower than across (94 per cent) and most comparator areas. The main implication was that H2FVs increased workloads for existing staff (75 per cent of establishments in the West of and 82 per cent across ), while 43 per cent stated that they lost business/orders to competitors (41 per cent across ). FIGURE 3.85: REASONS FOR H2FVS (PERCENTAGE OF ALL ESTABLISHMENTS WITH H2FVS), West of Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. SKILLS SHORTAGE VACANCIES (SSVS) Employers reported that the majority of their vacancies were hard to fill because applicants lacked the appropriate skills, qualifications or experience. In the West of, 84.2 per cent of all H2FVs were skills shortage vacancies (SSVs). As Figure 3.86 shows, this was higher than the average of 78.0 per cent and higher than most comparator areas. Within the West of, the percentage of SSVs that were hard to fill was very high in South Gloucestershire (96.4 per cent). 18 FIGURE 3.86: PERCENTAGE OF ALL H2FVS THAT ARE DUE TO SKILLS SHORTAGES, Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. 13 SSV data is unavailable for North Somerset Page 113

116 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon & Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire Professionals Skilled trades Associate professionals Managers Sales and customer services Elementary Machine operatives Caring, leisure & other services Administrative/ clerical SSVs were most common among professional job vacancies. With 70.8 per cent of all professional vacancies being SSVs, these were much more common than across (29.0 per cent of all professional vacancies) and all comparator areas (Figure 3.87). This figure was boosted by a high proportion of SSVs among professional vacancies in South Gloucestershire (90.1 per cent). In contrast, SSVs were less common than nationally among caring/leisure/other services vacancies, machine operative vacancies, and administrative/secretarial vacancies. The majority of skills lacking in job applicants in the West of were technical, practical or job specific skills (82 per cent of all SSVs, compared with 62 per cent nationally). In South Gloucestershire, almost all of the skills lacking in applicants were technical/practical/job specific (99 per cent). FIGURE 3.87: SSVS AS A PERCENTAGE OF ALL VACANCIES BY OCCUPATION, West of Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. FIGURE 3.88: PERCENTAGE OF ALL ESTABLISHMENTS WITH SKILLS GAPS AMONG EXISTING WORKFORCE, Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. Page 114

117 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon & Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire SKILLS GAPS Businesses in the West of were in line with national levels in reporting that existing staff were not fully proficient. As detailed in Figure 3.88, 15 per cent of West of establishments reported that they had skills gaps among their workforces, the same as across. Skills gaps were most prevalent among sales and customer services staff (23.6 per cent of all skills gaps), followed by elementary staff (17.8 per cent) and administrative & secretarial staff (12.0 per cent). The majority of skills gaps were due to staff being new to the role and/or training not being complete (71 per cent of skills gaps slightly lower than the average of 75 per cent). Other significant issues causing skills gaps were lack of staff motivation (34 per cent) and staff not receiving appropriate training (28 per cent). Employers reported that the following skills required most improvement: technical, practical or job specific skills (61 per cent of all skills gaps), customer handling skills (59 per cent) and planning and organisational skills (51 per cent). This was similar to the national average. Employers in the West of were more likely to report that skills gaps had a major impact on their business. As Figure 3.89 shows, 20 per cent of all establishments with skills gaps reported that skills gaps had a major impact on how their establishment performed, higher than across (16 per cent) and all comparator areas. The impacts were most severe in Bristol (28 per cent of all establishments with skills gaps) and above average in South Gloucestershire (20 per cent). Almost half of all establishments with skills gaps said they resulted in increased workloads for other staff (48 per cent) while almost one quarter reported losing business or orders to competitors and difficulties in meeting quality standards. The majority of employers said they were taking steps, or planned to take steps, to improve the proficiency or skills of staff with skills gaps (88 per cent in the West of and 85 per cent nationally). Key actions included increasing training activity or spend (70 per cent of all establishments with skills gaps), more supervision (55 per cent) and more staff appraisals and performance reviews (48 per cent). PROFICIENCY OF SCHOOL, COLLEGE AND UNIVERSITY LEAVERS THE WEST OF ENGLAND S EMPLOYERS REPORTED HIGHER SATSIFACTION WITH YOUNG PEOPLE THAN NATIONALLY The UK Employer Skills Survey 2013 also asked about the skills and suitability of people recruited straight from school, college and university. In the West of, almost one third of establishments had recruited someone to their first job on leaving education in the past two to three years (31 per cent, compared with 27 per cent across ). FIGURE 3.89: SHARE OF ESTABLISHMENTS WITH SKILLS GAPS WITH A MAJOR IMPACT ON PERFORMANCE Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. Page 115

118 West of D2N2 Greater B'ham & Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon & Wiltshire Thames Valley Berkshire Bath & NE Somerset Bristol North Somerset South Gloucestershire More than two thirds (68 per cent) reported that year olds recruited from school were well prepared for work, compared with 66 per cent across. This was higher than eight of the 12 comparator areas (Figure 3.90). Rates ranged from 64 per cent in Bristol to 78 per cent in North Somerset. FIGURE 3.90: PERCENTAGE OF RECRUITING ESTABLISHMENTS REPORTING THAT EDUCATION LEAVERS WERE WELL PREPARED FOR WORK, West of school leavers FE college leavers HE/university leavers Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. A total of 81 per cent reported that year olds recruited from further education colleges were well prepared for work, against 74 per cent nationally and the joint highest of all comparator areas along with Sheffield City Region. Within the West of, rates ranged from 75 per cent in South Gloucestershire to 90 per cent in North Somerset. Meanwhile, 88 per cent reported that university or higher education leavers were well prepared for work, compared with 83 per cent nationally and equal to or higher than all but one comparator (Liverpool City Region). Rates ranged from 82 per cent in North Somerset to 91 per cent in South Gloucestershire. Where education leavers were poorly prepared, the main reason was lack of working world/life experience or maturity. STAFF TRAINING Commitment to staff training among employers in the West of was similar to the national average. In 2013, as Figure 3.91 shows, 52 per cent of establishments had a training plan or budget slightly higher than across (49 per cent) and equal to or higher than eight of the 12 comparator areas. And 70 per cent of establishments had funded or arranged training for staff over the past 12 months slightly higher than across (66 per cent) and equal to or higher than ten of the 12 comparator areas. The main types of training provided were job specific (86 per cent of establishments providing training), health and safety/first aid (73 per cent), and induction (60 per cent). Employers reported that they were most likely to provide training for managers, directors and senior officials (68 per cent of all establishments providing training in the West of and 63 per cent across ). Of the establishments that did not provide any training, the majority stated that staff were fully proficient and did not need training (70 per cent of non-training establishments in the West of and 69 per cent across ). Lack of funds or the cost of training were the biggest barriers to providing more training among establishments that would have provided more training if they could. In the West of, 61 per cent of establishments said lack of funds was a barrier to providing more training (60 per cent across ) while 52 per cent said they could not spare staff time (47 per cent nationally). FIGURE 3.91: SHARE OF ESTABLISHMENTS WITH A TRAINING PLAN OR TRAINING BUDGET IN Source: 2013 UK Employer Skills Survey, UK Commission for Employment and Skills. Page 116

119 4. PLACE Housing market Housing demand Rateable properties Traffic congestion Page 117

120 No. sales in each year Bath & NE Somerset Bristol North Somerset South Gloucestershire Bath & NE Somerset Bristol North Somerset South Gloucestershire HOUSING MARKET HOUSE PRICES IN THE WEST OF ENGLAND VARY WIDELY In 2012 the average (median) house price across was 183,500. Within the West of, average house prices ranged from 5 per cent below the national average in Bristol ( 175,000) to 25 per cent above it in Bath & North East Somerset ( 230,000) as detailed in Figure 4.1. Average house prices in North Somerset and South Gloucestershire were 1 per cent above the national average at 185,000. FIGURE 4.1: MEDIAN HOUSE PRICES, , , , , ,000 50,000 0 Source: Land Registry. 230, , , , ,500 AVERAGE HOUSE PRICES HAVE GROWN RAPIDLY OVER THE PAST 15 YEARS As Figure 4.2 shows, between 1997 and 2012, average house price growth ranged from 200 per cent in North Somerset (slightly below the average growth rate of 206 per cent) to 224 per cent in Bath & North East Somerset. THE HOUSING MARKET ACROSS THE WEST OF ENGLAND HAS NOT RECOVERED FULLY FOLLOWING THE RECESSION Average house prices across the West of peaked in 2007 and fell for the following two years. By 2012, house prices in Bath & North East Somerset and Bristol had returned to 2007 levels while prices remained 1 per cent and 3 per cent below their peak in South Gloucestershire and North Somerset. By comparison, the average house price across had recovered and risen to 3 per cent above its 2007 peak. FIGURE 4.2: PERCENTAGE MEDIAN HOUSE PRICE GROWTH, Source: Land Registry. Housing sales across the area were also well below their long-term average in 2012, as detailed in Figure 4.3. Sales fell most sharply in South Gloucestershire: between 2008 and 2012, housing sales averaged 3,242 per year 47 per cent below annual averages. Housing sales also fell sharply, but below the average fall (46 per cent), in other West of districts. This suggests a lack of confidence among consumers to take on large debts or major purchases, while potential buyers have suffered from stricter mortgage conditions; when more recent figures are available, these may show greater market confidence. FIGURE 4.3: HOUSING SALES, ,000 8,000 6,000 4,000 2,000 0 Source: Land Registry. 221 Bath & NE Somerset North Somerset 12, Bristol South Gloucestershire Page 118

121 Bath & NE Somerset Bristol North Somerset South Gloucestershire Bath & NE Somerset Bristol North Somerset South Gloucestershire Bath & NE Somerset Bristol North Somerset South Gloucestershire In 2012, lower quartile house prices across the West of ranged from 8 per cent above the national average in Bristol ( 135,000) to 35 per cent above average in Bath & North East Somerset ( 169,250) as indicated in Figure 4.4. FIGURE 4.4: LOWER QUARTILE HOUSE PRICES, , , ,000 50, , , , , ,000 lowest incomes. In Bristol, the median house price had returned to its 2007 peak while the lower quartile house price remained 8 per cent lower (Figure 4.6). FIGURE 4.6: AVERAGE (MEDIAN) AND LOWER QUARTILE HOUSE PRICE GROWTH, Average House Prices Lower Quartile House Prices Source: Land Registry. Lower quartile house prices have also grown faster than the national average. Over the past 15 years, lower quartile house price growth ranged from 202 per cent in North Somerset to 225 per cent in Bristol above national average growth of 184 per cent. In most districts, apart from Bath & North East Somerset, lower quartile house prices have risen faster than median house prices (Figure 4.5). FIGURE 4.5: MEDIAN AND LOWER QUARTILE HOUSE PRICE GROWTH, Average House Prices Lower Quartile House Prices Source: Land Registry. HOUSING AFFORDABILITY HAS DECLINED RAPIDLY OVER THE PAST 15 YEARS In 2013, average house prices in the West of ranged from 6.2 times average earnings in Bristol to 8.7 times average earnings in Bath & North East Somerset. Housing in Bristol was relatively more affordable than the national average, where prices were 6.7 times average earnings, but less affordable in other West of districts. As Figure 4.7 shows, average house price to earnings ratios have increased sharply across the area since 1997, particularly in Bath & North East Somerset (from 4.6 in 1997 to 8.7 in 2013). However, house price to earnings ratios in 2013 remained below their pre-recession 2007 peak. FIGURE 4.7: MEDIAN HOUSE PRICE TO MEDIAN EARNINGS RATIO, Bath & NE Somerset North Somerset 10.0 Bristol South Gloucestershire Source: Land Registry. Lower quartile house prices fell for two years as a result of the credit crunch and economic downturn. In 2012, they also remained further from their 2007 peak level than median house prices, highlighting that economic conditions and mortgage availability have toughened most for those on the Source: Land Registry; Annual Survey of Hours and Earnings, Office for National Statistics. Page 119

122 Bath & NE Somerset Bristol North Somerset South Gloucestershire West of Bath & NE Somerset Bristol North Somerset South Gloucestershire HOUSING IS LEAST AFFORDABLE FOR THOSE ON THE LOWEST INCOMES FIGURE 4.9: NUMBER OF DWELLINGS IN THE WEST OF ENGLAND BY DISTRICT, 2014 In all West of districts, the lower quartile house price to earnings ratio in 2013 was higher than the average house price to earnings ratio, meaning that it was relatively more expensive for those on the lowest incomes to buy the cheapest housing than for those on average incomes to buy average-priced housing. This was not the case across. As Figure 4.8 indicates, the difference was most stark in South Gloucestershire where the lower quartile house price to earnings ratio was 7.8, against the average house price to earnings ratio of 7.0. FIGURE 4.8: MEDIAN AND LOWER QUARTILE HOUSE PRICE TO EARNINGS RATIOS, 2013 Source: Land Registry; Annual Survey of Hours and Earnings, Office for National Statistics. HOUSING STOCK In 2014, there were 476,170 dwellings in the West of 14. At district level, the highest number was in Bristol, which had 192,350 homes 40 per cent of all dwellings in the West of (Figure 4.9). Source: Department for Communities and Local Government. FIGURE 4.10: PERCENTAGE CHANGE IN THE DWELLING STOCK, Source: Department for Communities and Local Government. FIGURE 4.11: PERCENTAGE CHANGE IN THE DWELLING STOCK, TOTAL AND BY TYPE, change percentage change Area Average House Prices Lower Quartile House Prices Local Authority Private Registered Provider Other public sector Private sector Total Local Authority Private Registered Provider Other public sector Private sector Bath & NE Somerset ,640 3, Bristol -2,294 2, ,708 20, North Somerset -6,361 6, ,335 7, South Gloucestershire -8,009 9, ,617 8, West of -16,664 17, ,300 40, Source: Department for Communities and Local Government. South Gloucestershire 24 North Somerset Bath & NE Somerset 16 Bristol Total 14 Note that the DCLG dwelling stock figures as used here differ from local authorities own monitoring data. Page 120

123 Bath & NE Somerset Bristol North Somerset South Gloucestershire West of Growth in the West of s dwelling stock has been above average. As Figure 4.10 reveals, between 2004 and 2014, the number of dwellings in the area grew by 40,220, or 9.2 per cent above the average growth across of 7.8 per cent. This was boosted by strong growth in Bristol (11.9 per cent), which accounted for more than half of all growth in the housing stock across the area (+20,490). In other districts, growth was slightly above average in North Somerset (8.5 per cent, +7,310) and South Gloucestershire (8.5 per cent, +8,820) and below average in Bath & NE Somerset (4.9 per cent, +3,600). HOUSING GROWTH HAS BEEN CONCENTRATED IN THE PRIVATE SECTOR Over the past decade, growth in the number of private sector dwellings (both owner occupied and private rented) has accounted for mucah of the housing growth across the West of. There has also been strong growth in social housing owned by private registered providers, alongside a fall in local authority owned and other public sector housing (Figure 4.11). A major factor here is the large-scale transfer of stock from local authorities to housing associations in North Somerset and South Gloucestershire. NET ADDITIONS TO THE HOUSING STOCK FELL SHARPLY DURING AND FOLLOWING THE RECESSION BUT ARE STARTING TO RECOVER Net additions to the housing stock rose across the West of from 2004/05 to 2007/08 before falling sharply until 2012/13 (Figure 4.12). They then rose strongly in 2013/14 but remained well below their 2006/07 peak rate. FIGURE 4.12: NET ADDITIONS TO THE HOUSING STOCK, 2004/ /14 West of (left axis) (right axis) 6,000 5,000 4,000 3,000 2,000 1, , , , ,000 50,000 FIGURE 4.13: NET ADDITIONS TO THE HOUSING STOCK IN WEST OF ENGLAND DISTRICTS, 2004/ /14 Bath & NE Somerset North Somerset 3,500 3,000 2,500 2,000 1,500 1, Bristol South Gloucestershire Source: Department for Communities and Local Government. THE PERCENTAGE OF NEW HOMES THAT ARE AFFORDABLE IS BELOW AVERAGE IN THE WEST OF ENGLAND Between 2004/05 and 2013/14, there was a net total of 10,510 new affordable homes across the West of. Almost half of these (5,120) were in Bristol. Net new affordable homes (homes built or acquired, minus those sold or demolished, and defined in terms of price to earnings ratio) represented 26 per cent of all net additional homes during this period. This was lower than the average (30 per cent). Within the West of net new affordable homes as a percentage of net additional homes ranged from 23 per cent in North Somerset to 38 per cent in Bath & North East Somerset (Figure 4.14). FIGURE 4.14: NET NEW AFFORDABLE HOMES AS A PERCENTAGE OF NET ADDITIONAL HOMES, 2004/ / Source: Department for Communities and Local Government. Source: Department for Communities and Local Government. Bristol has accounted for much of the slowdown in housing growth in recent years (Figure 4.13), followed by North Somerset. In Bath & North East Somerset and South Gloucestershire, the growth rate in 2013/14 had recovered to its 2007/08 peak levels. Page 121

124 Bath & NE Somerset Bristol North Somerset South Gloucestershire West of No. FIGURE 4.15: NET NEW AFFORDABLE HOMES, 2004/ /14 Bath & NE Somerset North Somerset 1, Bristol South Gloucestershire Source: Department for Communities and Local Government. The net number of new affordable homes has also fallen sharply since 2008/09 with no sign of recovery. This trend has been driven by a fall in net new affordable homes in Bristol (Figure 4.15). THERE HAS BEEN A LARGE FALL IN THE NUMBER OF VACANT DWELLINGS IN THE WEST OF ENGLAND In 2014, there were 8,731 vacant dwellings in the West of, with the largest number in Bristol (3,773, 40 per cent of the total). Between 2004 and 2014, the number of vacant dwellings across the area fell by 2,925, or 25.1 per cent much higher than the average fall of 14.2 per cent. Much of this fall occurred in Bristol (-2,469). Elsewhere, the number of vacant dwellings in South Gloucestershire was higher in 2014 than in 2004 (+373, or per cent), although it has reduced since HOUSING TYPE, SIZE AND TENURE In 2011, there were 452,027 households in the West of. At the district level, the highest number of households was in Bristol (182,747, or 40 per cent of all households). Between 2001 and 2011, 39,800 new households were established in the West of. At district level, the highest number of new households was in Bristol (20,657, or 52 per cent of all new households). THE NUMBER OF ONE AND TWO PERSON HOUSEHOLDS HAVE INCREASED OVER THE PAST TEN YEARS The West of has an above-average proportion of one and two person households as a share of all households. In 2011, 66 per cent of households were one or two person households, slightly higher than the average of 64 per cent (Figure 4.16). Within the area, the proportion of one and two person households ranged from a belowaverage 63 per cent in South Gloucestershire to 68 per cent in North Somerset. AN INCREASE BOTH IN SMALLER HOUSEHOLDS AND SMALLER DWELLINGS Alongside the increase in the number of one and two-person households over the past ten years, there has been a large increase in the number of dwellings with 1-3 rooms, and a large increase in the number of flats/apartments. FIGURE 4.16: SHARE OF ALL HOUSEHOLDS BY NUMBER OF PEOPLE, person 2 people 3-4 people 5+ people Source: 2011 Census, Office for National Statistics. Page 122

125 1 person 2 people 3-4 people 5+ people Bath & NE Somerset Bristol North Somerset South Gloucestershire Between 2001 and 2011, almost three-quarters (73.2 per cent) of new households in the West of consisted of one or two people much higher than across (66.7 per cent). Within the area, the percentage of all new households formed of one or two people ranged from a below-average 58.1 per cent in Bath & North East Somerset to 84.3 per cent in North Somerset. DESPITE THIS TREND, AVERAGE HOUSEHOLD SIZE HAS REMAINED STABLE OVER THE PAST TEN YEARS Between 2001 and 2011, average household size has remained the same (at 2.3 people) in three West of districts, while reducing slightly in South Gloucestershire (Figure 4.17). FIGURE 4.17: AVERAGE HOUSEHOLD SIZE, 2001 AND Source: 2001 and 2011 Census, Office for National Statistics. The strong increase in the number of one-person households across the West of between 2001 and 2011 means that the percentage of all households with only one member has increased slightly (from 29.9 to 30.9 per cent) while the share of all households of other sizes has decreased slightly (Figure 4.18). FIGURE 4.18: PERCENTAGE OF ALL HOUSEHOLDS BY SIZE, 2001 AND Source: 2001 and 2011 Census, Office for National Statistics THERE HAS BEEN A LARGE INCREASE IN THE NUMBER OF SMALL DWELLINGS OVER THE LAST TEN YEARS In the West of, the majority of homes have at least 4 rooms. In 2011, 15 per cent of homes had 1-3 rooms (slightly above the average of 14 per cent), 41 per cent had 4-5 rooms (lower than the average of 44 per cent) and 45 per cent had six or more rooms (higher than the average of 42 per cent). Three West of districts had average or belowaverage percentages of small homes (1-3 rooms) and above-average percentages of large dwellings (6+ rooms). By contrast, accommodation in Bristol was smaller than average, with 20 per cent of homes having 1-3 rooms and 36 per cent having six rooms or more. Of the 39,800 new households formed in the West of between 2001 and 2011, almost half had homes with 1-3 rooms 49 per cent of the total, compared with 31 per cent nationally. In Bristol, two thirds (67 per cent) of new households had 1-3 rooms. In other districts, the largest increase was in the number of large households with six or more rooms. During this period, the total number of households in the West of living in small dwellings (1-3 rooms) rose by 42 per cent well above the average increase of 19 per cent while the number of households with 4-5 rooms and six rooms or more rose by just 2 per cent and 9 per cent respectively. SEMI-DETACHED AND TERRACED HOMES ARE THE MOST COMMON DWELLING TYPES IN THE WEST OF ENGLAND The most common property types in the West of are semi-detached houses (29 per cent of all dwellings) and terraced houses (28 per cent). At district level, the most common property types are: Semi-detached houses (28 per cent) and terraced houses (28 per cent) in Bath & North East Somerset; Flats/apartments (34 per cent) and terraced houses (33 per cent) in Bristol; Detached houses (33 per cent) and semi-detached houses (30 per cent) in North Somerset; Semi-detached houses (34 per cent) and terraced houses (27 per cent) in South Gloucestershire. Compared with averages, the West of had higher percentages of terraced houses and flats and lower percentages of detached and semi-detached houses. This was particularly evident in Bristol. Page 123

126 ALMOST TWO-THIRDS OF NEW DWELLINGS OVER THE PAST TEN YEARS HAVE BEEN FLATS/APARTMENTS Between 2001 and 2011, the number of dwellings (or household spaces ) in the West of increased by 44,094, or 10 per cent. This was slightly higher than the average increase of 8 per cent. At district level, the increase ranged from 4 per cent in Bath & North East Somerset to 14 per cent in Bristol. More than half of new dwellings in the West of were created in Bristol (51.2 per cent). Almost two-thirds of new dwellings over the past ten years have been flats/apartments (+27,606). Flats/apartments accounted for a large proportion of new dwellings in all districts, ranging from 40 per cent in North Somerset and South Gloucestershire to 82 per cent in Bristol. New flats/apartments in Bristol also accounted for 42 per cent of all new dwellings across the West of. OWNER-OCCUPATION IS THE MOST COMMON TENURE IN THE WEST OF ENGLAND In 2011, 34 per cent of homes were owned with a mortgage/loan/shared ownership, while 31 per cent were owned outright. This was the same as across. At district level: Bath & North East Somerset, North Somerset and South Gloucestershire had above-average percentages of housing that was owned outright; North Somerset and South Gloucestershire had above-average percentages of housing owned with a mortgage/loan/shared ownership; Bristol had an above-average percentage of private rented housing and social housing rented from a local authority; Bath & North East Somerset had an above-average percentage of other social rented housing; There has been a large increase in the private rented sector across the West of. Across the West of, the private rented sector has increased dramatically since 2001, mirroring national trends. Of the 39,800 new households created between 2001 and 2011, 37,290 were renting privately. There were also increases in the number of homes owned outright (+15,032) and other social rented housing (+14,782) - stock transfers from local authorities to other social landlords are likely to account for much of the latter figure. During the same period, the number of homes owned with a mortgage/loan/shared ownership declined sharply (-17,431) along with a decline in the number of social homes rented from a local authority (-9,874). These trends have been evident in all four West of districts. It is likely that the number of homes owned with a mortgage/loan/shared ownership has declined due to the inaccessibility of owner-occupation caused by both high house prices and unfavourable mortgage lending criteria; in addition, some owners will have paid off their loans while fewer new loans have been taken out. This, in turn, has led to an increase in the number of households renting their homes. HOUSEHOLD PROJECTIONS WIDER BRISTOL THE NUMBER OF HOUSEHOLDS IS FORECAST TO INCREASE BY 77,915 ACROSS THE WIDER BRISTOL HOUSING MARKET AREA BETWEEN 2016 AND 2036 The Wider Bristol Strategic Housing Market Assessment (SHMA 15 ) provides an assessment of housing needs in the Wider Bristol Housing Market Area. Within the SHMA, the projected household growth is an average of 3,790 households per year, yielding a housing need of 3,924 dwellings each year over The additional households increase the projected household growth to 77,915 households over the 20 year plan period The SHMA translates these figures into needs for new housing, which takes account of vacancies and second homes based on the proportion of dwellings without a usual resident household identified by the 2011 Census. Based on a comprehensive analysis, the SHMA identifies the Full Objectively Assessed Need for Housing in the Wider Bristol HMA to be 85,000 dwellings over the 20 year period , equivalent to an average of 4,250 dwellings per year. This includes the Objectively Assessed Need for Affordable Housing of 29,100 dwellings over the same period, equivalent to an average of 1,455 affordable dwellings per year. 15 Refers to the edition submitted on 26 June Page 124

127 HOUSEHOLD PROJECTIONS BATH AND NORTH EAST SOMERSET The Bath & North East Somerset Strategic Housing Market Assessment Update 2013 provides an assessment of housing needs in Bath & North East Somerset between 2011 and A range of scenarios was considered for household and dwelling need projections. Based on the mid-trend migration scenario, the number of households is forecast to increase by per cent between 2011 and Scenarios based on varying migration levels (Bath and North East Somerset) I. Net nil migration (assuming that there will be migration to and from Bath & North East Somerset, but that the number of immigrants will equal the number of emigrants) II. Low-trend migration III. Mid-trend migration IV. High-trend migration These scenarios (Figures 4.19 and 4.20) projected the following: I. Net nil migration: 94 new households per year (60.8 per cent lower than ) and 95 new dwellings per year (73.6 per cent lower than ); II. Low-trend migration: 403 new households per year (67.7 per cent higher than ) III. IV. and 415 new dwellings per year (15.3 per cent higher than ); Mid-trend migration: 513 new households per year (113.8 per cent higher than ) and 530 new dwellings per year (47.2 per cent higher than ); High-trend migration: 738 new households per year (207.5 per cent higher than ) and 765 new dwellings per year (112.5 per cent higher than ). FIGURE 4.19: SCENARIOS AND HOUSEHOLD PROJECTIONS HOUSEHOLDS total change average annual change I. Net nil migration 1, II. Low migration 8, III. Mid-trend migration 10, IV. High migration 14, Source: Bath and North East Somerset Strategic Housing Market Assessment Update, FIGURE 4.20: SCENARIOS AND DWELLINGS PROJECTIONS DWELLINGS total change average annual change I. Net nil migration 1, II. Low migration 8, III. Mid-trend migration 10, IV. High migration 15, Source: Bath and North East Somerset Strategic Housing Market Assessment Update, annual average change annual average change 360 Page 125

128 2. Employment-led scenarios (Bath and North East Somerset) Four employment-led scenarios linked future population and household growth to the economic baseline forecast, produced by the Oxford Economics Projections 2010 for West of Local Enterprise Partnership. These included projected growth trajectories for jobs in each district, with the scenarios for Bath & North East Somerset based on 9,000 or 11,000 additional jobs over the next 20 years. FIGURE 4.21: EMPLOYMENT-LED SCENARIOS AND HOUSEHOLD PROJECTIONS HOUSEHOLDS A. 9,000 additional jobs & static female retirement pattern B. 9,000 additional jobs & changed female retirement pattern C. 11,000 additional jobs & static female retirement pattern D. 11,000 additional jobs & changed female retirement pattern total change average annual change 5, , , , Source: Bath and North East Somerset Strategic Housing Market Assessment Update, annual average change 240 For each employment growth figure, two scenarios were produced. The first, labelled static, assumed labour market participation continued at current rates. The second, labelled change, assumed that the early retirement rate for women equalised with that for men by The second scenario would see fewer women currently resident in Bath & North East Somerset working to the age of 67, meaning that more jobs would need to be filled by migrants. new dwellings per year (11.1 per cent lower than ); C. 11,000 Jobs/static: 340 new households per year (41.7 per cent higher than ) and 350 new dwellings per year (2.8 per cent lower than ); D. 11,000 Jobs/change: 400 new households per year (66.7 per cent higher than ) and 415 new dwellings per year (15.3 per cent higher than ). FIGURE 4.22: EMPLOYMENT-LED SCENARIOS AND DWELLING PROJECTIONS DWELLINGS A. 9,000 additional jobs & static female retirement pattern B. 9,000 additional jobs & changed female retirement pattern C. 11,000 additional jobs & static female retirement pattern D. 11,000 additional jobs & changed female retirement pattern total change average annual change 5, , , , Source: Bath and North East Somerset Strategic Housing Market Assessment Update, annual average change 360 When the population and household projections are constrained to the employment forecasts, the projected growth rates are much lower than those obtained from migration-led scenarios. This is because most of the employment changes stem from the increase in pensionable age rather than from new employees moving to the district. These scenarios projected the following (Figure 4.21 and 4.22): A. 9,000 Jobs/static: 250 new households per year (4.2 per cent higher than ) and 255 new dwellings per year (29.2 per cent lower than ); B. 9,000 Jobs/change: 310 new households per year (29.2 per cent higher than ) and 320 Page 126

129 Net nil migration Low migration Mid-trend migration High migration 9,000 Jobs/Static 9,000 Jobs/Change 11,000 Jobs/Static 11,000 Jobs/Change No. households (annually) The SHMA also estimated the size mix of new housing required and shows that the market need is heavily focused on 3-bedroom properties as detailed in Figure The outputs below are based upon the mid-trend migration scenario, but all scenarios show a similar distribution. Based on the mid-trend migration scenario, there would need to be a large increase in the provision of 1-3 bedroom dwellings, based on past trends, and a reduction in 4 bedroom properties. FIGURE 4.23: DWELLING PROJECTIONS BY PROPERTY SIZE (BATH AND NORTH EAST SOMERSET) DWELLINGS total change average annual change annual average change 1 bedroom 2, bedrooms 3, bedrooms 3, bedrooms Source: Bath and North East Somerset Strategic Housing Market Assessment Update, As Figure 4.24 indicates, based on the mid-trend migration scenario, there would also be a large increase in private rental housing and an increase in social rented housing alongside a continued decline in owner occupied housing. The effects of all scenarios considered are summarised in Figure FIGURE 4.24: DWELLING PROJECTIONS BY TENURE (BATH AND NORTH EAST SOMERSET) DWELLINGS total change average annual change annual average change Owner occupied Private rented 9, Social/affordable rented 1, Source: Bath and North East Somerset Strategic Housing Market Assessment Update, FIGURE 4.25: ANNUAL AVERAGE HISTORIC AND PROJECTED CHANGE IN THE NUMBER OF HOUSEHOLDS BY SCENARIO IN BATH & NORTH EAST SOMERSET projection actual Source: Bath and North East Somerset Strategic Housing Market Assessment Update, Page 127

130 thousands of square metres COMMERCIAL AND INDUSTRIAL PROPERTY A total of 10,523,000 square metres of retail floor space were eligible for business rates in 2012, as well as 2,016,000 sq. metres of office floor space and 5,363,000 sq. metres of industrial floor 6space (Figure 4.26). The rateable floor space for all uses, apart from industrial, increased between 2002 and FIGURE 4.26: RATEABLE FLOOR SPACE IN THE WEST OF ENGLAND, THOUSANDS OF SQUARE METRES ,000 5,000 4,000 3,000 2,000 1, ,202 2,370 Source: Valuation Office Agency. 1,962 2,016 5,745 5, Retail Offices Industrial Other 687 As Figure 4.27 indicates, rateable values per sq. metre in 2012 were 166 for retail (above the average of 150); 134 for office (below the average of 155); and 38 for industrial (slightly above the average of 37). Rateable values per sq. metre for offices were only higher in the peer area of Thames Valley Berkshire ( 155). Retail floorspace values were generally high across the West of. Figure 4.28 details changes to rateable floor space between 2002 and South Gloucestershire experienced the largest growth in retail floor space (+15.1 per cent); North Somerset experienced a 20.1 per cent increase in office floor space; and all districts apart from North Somerset experienced a decline in industrial floor space. FIGURE 4.27: RATEABLE VALUES IN THE WEST OF ENGLAND PER SQUARE METRE Retail Offices Industrial Other Source: Valuation Office Agency. FIGURE 4.28: CHANGE IN RATEABLE FLOORSPACE AND VALUES BETWEEN 2002 AND 2012 Floorspace (thousands of square metres) percentage change Rateable value per m2 percentage change Total Retail Offices Industrial Other Retail Offices Industrial Other West of D2N Greater B ham and Solihull Greater Manchester Leeds City Region Liverpool City Region North Eastern Sheffield City Region Gloucestershire GCGP Oxfordshire Swindon and Wiltshire Thames Valley Berkshire ENGLAND Bath and NE Somerset Bristol North Somerset South Gloucestershire Source: Valuation Office Agency. Page 128

131 INFRASTRUCTURE FIGURE 4.30: TOTAL AIR PASSENGERS AT BRISTOL AIRPORT IN EACH YEAR 2004 TO ,000,000 AIR TRAFFIC BRISTOL AIRPORT HANDLED THE NINTH LARGEST PASSENGER NUMBERS IN 2014 In 2014 there were 6,339,805 passengers passing through Bristol Airport ranking 9 th amongst all UK airports for total passengers (Figure 4.29). With respect to comparator areas, Bristol Airport had a greater number of air passengers than East Midlands Airport, Leeds Bradford, and Newcastle. However total passengers were lower than Birmingham, Manchester and London airports. Number of passengers 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Source: Civil Aviation Authority PORTS As indicated in Figure 4.30, total passengers recently reached their peak in 2014, after recovering from a decline in Overall, over a 10- year period between 2004 and 2014, total passengers increased by 36.4 per cent a higher rate of growth than airports in all other comparator areas apart from Leeds Bradford Airport. FIGURE 4.29: TOTAL PASSENGER NUMBERS AND CHANGE IN 2004 AND 2014 AIRPORT CHANGE Bristol 4,647,266 6,339, East Midlands Int l 4,381,108 4,510, Birmingham 8,862,388 9,705, Manchester 21,249,841 21,989, Leeds Bradford 2,368,604 3,274, Liverpool (John Lennon) 3,353,350 3,986, Newcastle 4,724,263 4,516, Doncaster Sheffield 724,885 - Gloucestershire 15,172 - Stansted 20,910,842 19,965, Heathrow 67,342,743 73,405, Gatwick 31,466,770 38,103, London city 1,674,807 3,647, Luton 7,535,614 10,484, Source: Civil Aviation Authority The Port of Bristol comprises the Avonmouth and Royal Portbury Docks, and the 13 th largest port in the UK in terms of total Tonnage handled in 2013, where 10.6 million tonnes were handled representing 2.1 of total UK tonnage. The bulk of tonnage handled is inward tonnage (9.6 million tonnes) compared to outward tonnage (1.0 million tonnes) Other comparator cities with ports included Liverpool, which handled 31.1 million tonnes in 2013; Port of Tyne, which handled 8.1 million tonnes; and Manchester with 7.5 million tonnes. BROADBAND INFRASTRUCTURE BROADBAND AVAILABILITY AND USE VARIES WIDELY ACROSS THE WEST OF ENGLAND Bristol performs very well in terms of broadband speeds, ranking 4 th out of 200 local areas in the UK for average sync speed (Figure 4.31); and for having the second lowest share of households not receiving broadband at 2Mbit/s (3.4 per cent). By contrast, North Somerset ranks 148 th for average sync speed, and 142 nd for superfast broadband availability. Take up of superfast broadband is high across all local authority areas in the West of perhaps suggesting that where it is available, it is taken up. FIGURE 4.31: BROADBAND SPEEDS IN 2013 Average sync speed (Mbit/s) Local Authority Value Rank out of 200 areas (1= highest, best performing) Percentage not receiving 2Mbit/s Value Rank out of 200 areas (1= highest, best performing) Superfast broadband availability Value Rank out of 200 areas (1= highest, best performing) Take-up (including superfast broadband) Value Rank out of 200 areas (1= highest, best performing) Bath and NE Somerset City of Bristol North Somerset South Gloucestershire Source: OFCOM. Page 129

132 A363 N A363 S A368 W A368 E A39 S A37 S A37 N A39 N A362 E A367 S A362 W A4 E A4175 E A4 W A367 N A3062 S A3062 N A4175 W A36 N A36 S A3039 S mph mph TRANSPORT TRAFFIC CONGESTION AVERAGE VEHICLE SPEEDS ON A ROADS ACROSS MUCH OF THE AREA HAVE DECLINED OVER THE PAST TWO YEARS In 2014, average vehicle speeds on locally-managed A roads during the weekday morning peak in West of districts ranged from 14.6 miles per hour in Bristol to 30.8 miles per hour in North Somerset. Average vehicle speeds were below the average (24.4 miles per hour) in all districts apart from North Somerset. Whilst lower traffic speeds can be indicative of lower speed limits and safer roads, they are also an indicator of congestion. FIGURE 4.32: AVERAGE VEHICLE SPEEDS ON LOCALLY MANAGED A ROADS DURING THE WEEKDAY MORNING PEAK (ANNUAL AVERAGES), Bath & NE Somerset North Somerset Source: Department for Transport. Bristol South Gloucestershire As Figure 4.32 shows, average vehicle speeds declined in Bath & North East Somerset, Bristol and South Gloucestershire between 2012 and 2014, mirroring the national trend. The decline in vehicle speeds was lower than the average (-3.4 per cent) in Bath & North East Somerset (-3.1 per cent) but above average in South Gloucestershire (-4.0 per cent) and Bristol (-7.1 per cent). In contrast, average vehicle speeds increased in North Somerset by 2.6 per cent. The Department for Transport provides data on average speeds during the weekday morning peak for A roads in each West of district. Information on roads within these districts is below. Traffic congestion: Bath and North East Somerset For A roads for which data are available, the fastest average speeds in the district in 2014 were on the A363 and A368 while the slowest routes were the A3039 and A36 (Figure 4.33) Average road speeds increased most on the A4 and A3062: A4 Eastbound: per cent (from 15.3 miles per hour to 20.9 miles per hour); A3062 Southbound: per cent (from 14.1 miles per hour to 19.2 miles per hour); A4 Westbound: per cent (from 16.9 miles per hour to 22.9 miles per hour); A3062 Northbound: per cent (from 14.5 miles per hour to 17.4 miles per hour). Average road speeds declined most on the A37: A37 Northbound: per cent (from 29.6 miles per hour to 25.5 miles per hour); A37 Southbound: -9.3 per cent (from 28.4 miles per hour to 25.8 miles per hour). FIGURE 4.33: AVERAGE ROAD SPEEDS IN BATH & NORTH EAST SOMERSET, Source: Department for Transport. Page 130

133 A38 W A38 E A370 W A369 W A368 E A370 E A371 W A368 W A369 E A371 E A3033 S A3033 N A403 N A403 S A369 N A4162 W A431 E A4032 N A4320 S A3029 N A4162 E A4176 N A4320 N A4 E A3029 S A4018 N A4 W A420 E A4176 S A431 W A4044 S A4018 S A37 S A370 W A38 S A4044 N A432 W A369 S A420 W A4032 S A38 N A37 N A370 E mph Traffic congestion: Bristol For A roads for which data are available, the fastest average speeds in the district in 2014 were on the A403 while the slowest routes were the A370 Eastbound, A37 Northbound and A38 Northbound (Figure 4.34). In terms of the percentage change in average speeds between 2008 and 2014 on roads for which data is available, average speeds increased most on: A37 Northbound: per cent (from 8.4 miles per hour to 10.0 miles per hour); A431 Eastbound: per cent (from 18.2 miles per hour to 20.4 miles per hour); A420 Westbound: per cent (from 9.8 miles per hour to 10.9 miles per hour); A4320 Southbound: per cent (from 16.2 miles per hour to 17.9 miles per hour). Average road speeds declined most on: A403 Southbound: per cent (from 30.1 miles per hour to 23.8 miles per hour); A370 Eastbound: per cent (from 11.0 miles per hour to 8.7 miles per hour); A403 Northbound: per cent (from 31.5 miles per hour to 26.0 miles per hour). Traffic congestion: North Somerset The fastest average speeds in the district in 2014 were on the A38 while the slowest route was the A3033 (Figure 4.35). In terms of the percentage change in average speeds between 2008 and 2014 on roads for which data is available, average speeds increased most on: A370 Eastbound: +9.8 per cent (from 26.1 miles per hour to 28.7 miles per hour); A369 Westbound: +9.5 per cent (from 27.8 miles per hour to 30.4 miles per hour); A369 Eastbound: +8.9 per cent (from 23.8 miles per hour to 26.0 miles per hour). Average road speeds declined most on the A371 Westbound: -5.4 per cent (from 29.2miles per hour to 27.7 miles per hour). FIGURE 4.34: AVERAGE ROAD SPEEDS IN BRISTOL, Source: Department for Transport. FIGURE 4.35: AVERAGE ROAD SPEEDS IN NORTH SOMERSET, Source: Department for Transport. Page 131

134 A433 E A433 W A403 S A403 N A46 S A46 N A4018 S A4018 N A420 W A432 E A38 N A4174 N A4175 S A420 E A38 S A432 W A4175 N A431 E A4174 S A4017 S mph Traffic congestion: South Gloucestershire The fastest average speeds in the district in 2014 were on the A433 and A403 while the slowest route was the A4017 Southbound (Figure 4.36). In terms of the percentage change in average speeds between 2008 and 2014 on roads for which data is available, average speeds increased most on: A420 Westbound: +5.2 per cent (from 26.1 miles per hour to 27.5 miles per hour); A4018 Northbound: +4.1 per cent (from 30.2 miles per hour to 31.4 miles per hour). Average speeds declined most on: A4174 Northbound: per cent (from 28.6 miles per hour to 25.2 miles per hour); A403 Southbound: per cent (from 47.0 miles per hour to 42.2 miles per hour). BUS USE AND CAR OWNERSHIP THERE IS A LOWER RATE OF BUS USE IN THE WEST OF ENGLAND, AND A HIGHER PROPENSITY FOR CAR OWNERSHIP Bus use is generally lower in the West of than compared to the national average. In 2014, Bristol had the highest bus use with 68.1 passenger journeys per head in 2013/14, behind the national average of Bus use was 66.6 journeys per head in 2013/14 in Bath and North East Somerset; and lower in North Somerset (24.3) and South Gloucestershire (25.6). Car ownership is higher in the West of than the national average, with 78.3 per cent of households in 2011 owning at least one car or van, compared to 74.2 per cent nationally (). FIGURE 4.36: AVERAGE ROAD SPEEDS IN SOUTH GLOUCESTERSHIRE, Source: Department for Transport. Page 132

135 GLOSSARY OF TERMS ANNUAL POPULATION SURVEY The Annual Population Survey (APS) is a combined statistical survey of households in Great Britain which is conducted quarterly by the Office for National Statistics (ONS). It combines results from the Labour Force Survey (LFS) and the English, Welsh and Scottish Labour Force Survey boosts which are funded by the Department for Education and Skills (DfES), the Department for Work and Pensions (DWP), the National Assembly for Wales and the Scottish Executive. The APS is mainly concerned with workforce and labour market characteristics of adults including economic status, type of job undertaken, pay and remuneration, previous jobs, qualifications, area of work and residence, and other socio-economic characteristics. AVERAGE An average is a number or value used to indicate the generally prevailing amount or the ordinary standard. For example if we have 100 people who earn various amounts of money per week, we may want to gauge what is the typical amount of earnings or the earnings norm. There are several common ways of calculating an average: Mean: the sum of a series of individual cases, divided by the number of cases (also known as the arithmetic mean). For example, if we have 10 people who earn a total cumulative weekly wage of 4,000, then the mean weekly wage would be 4,000 divided by ten which equals 400. Calculating the average on this basis is useful, but can be problematic if there is a wide variation in values or there are a few values which are significantly different to the rest. For example, if 9 people earned 400 per week and one earned 4000 per week then the mean would be 760. However, we can calculate the standard deviation of values around the mean to indicate the range of values in the sample. Median: the middle observation, for example if we have 21 people in employment and we want to calculate the average working hours per week, we would firstly rank everyone in order of lowest to highest total weekly working hours and then we would take the value of the 11 th person in that rank as the median average weekly working hours. Conversely to the mean, the median ignores extreme values or outlier statistics, and gives no picture of the range of values. Mode: the most frequently appearing number, for example if we have 50 people and we wanted to calculate the average modal age, if the most amount of people of one single age was four individuals of 30 years of age, then the mode would be 30. A drawback of using the modal average is that it can be difficult to measure if values are not round BUSINESSES In the local economic assessment this refers to any legal organisation which can pay either one or more of corporation tax, national insurance, or manages a payroll (PAYE). It can include public sector organisations as well as private sector and charities. CENSUS An official enquiry concerning the number and characteristics of the population of a given area. Censuses are usually carried out by official bodies, by means of questionnaires, reply to which is usually compulsory. In the UK, the principal Census is the Census of Population, undertaken every 10 years, last in It covers a wide range of demographic, educational and economic topics and provides accurate outputs even for small groups because unlike many other surveys, which are conducted on a sample basis every household is required to respond to the Census of Population. Page 133

136 CHURN RATE The churn rate refers to the sum of openings (or births) and closures (or deaths) of enterprises. It indicates how frequently new firms are created and how often existing enterprises close down. In fact, the number of openings and closures of enterprises accounts for a sizeable proportion of the total number of firms in most economies. The indicator reflects an area s degree of creative destruction, and it is of high interest for analysing, for example, the contribution of firm churning to aggregate productivity growth. CLAIMANT COUNT, CLAIMANT COUNT RATE, CLAIMANT COUNT PROPORTION The claimant count records the number of people claiming Jobseeker s Allowance (JSA) and National Insurance credits, at Jobcentre Plus ( local offices. People claiming JSA must declare that they are out of work but capable of, available for, and actively seeking work during the week in which the claim is made. Claimant count data are provided by Jobcentre Plus. Jobseeker s Allowance (which replaced both Unemployment Benefit and unemployment-related Income Support in 1996) claimant figures are announced five weeks after the date to which they refer. Claimant count rate: the number of claimants resident in an area expressed as a percentage of the sum of claimants and workforce jobs in the area. Published only at national or regional level. Claimant count proportion: the number of claimants resident in an area as a percentage of the working-age population resident in that area. These rates are published for local areas. The claimant count is not the same as the number unemployed: for more information on this topic, see unemployment. CONSTANT PRICES Constant prices are used to compare the value of outputs produced at different times. They are needed because a price rise that occurs over time does not reflect the true change in value of an item. For example, if a packet of biscuits cost 50 pence in 1991 and in 2001 cost 1, but the average wage increased by 50 during this period, then we could say that a packet of biscuits took up a higher proportion of someone s pay in 2001 than it did in That is, the real cost of a packet of biscuits rose, but not by 100 as we would think. Because wages rose by 50, then to some extent extra pay offsets the higher price. Overall, prices don t always indicate the relative values of items. This is especially true in eras of high inflation when both prices, incomes and money supply can increase. Thus the Office for National Statistics may use constant 1995 prices to show the change in the total value of the UK economy, or in a particular sector, with the effects of price inflation removed for example. Therefore, if a sector is growing, its total output will be worth more now than in 1995, even if 1995 prices still applied. Such growth may be due to increased output, or to the production of better quality or higher value added output that would have commanded a premium in 1995, as well as at the current time. DECILE Another name for "one-tenth" or 10. Statistical cases are sometimes divided into "deciles", e.g. to highlight the earnings of the best-paid 10 of workers or the least well paid. DEMAND (IN LABOUR MARKET TERMS) Demand is the quantity of a good or service that people wish to buy. Labour demand refers to the total number of workers or even working hours required by employers, and is usually measured by the number of jobs plus vacancies. Demand is influenced by the customer's (employer's) purchasing power, the price of the good or service (the wages and other costs of employing someone) and the availability of alternatives (e.g. machines). "Effective demand" is the desire to purchase a good or service backed by the actual means to do so. Page 134

137 DEMOGRAPHY/DEMOGRAPHICS Demography refers to the scientific discipline that deals with aspects of population including change, births, deaths, and migration. It often involves making projections of future populations levels and structural compositions. When we talk about the demographics of an area we are usually referring to the nature of the population there in terms of age structure, gender, fertility, birth rates and so on. DEPRIVATION Deprivation is a term which, from a dictionary definition literally means "dispossessed". In social and economic development, the term is also often used in the sense of "having little", usually relative to others, not just in comparison to an individual's previous (less deprived) state. Deprivation is a term often used in connection with concerns that a proportion of the population have a significantly lower standard and quality of life compared to the average. However, the exact definition of who is deprived and how to measure this varies amongst different commentators, agencies and governments. EARNINGS A measure of gross remuneration people receive in return for work done. It includes salaries and bonuses but does not include non-monetary perks such as benefits in kind. This differs from income, which is the amount of money received from all sources, e.g. interest from building society and bank accounts, dividends from shares, benefit receipts, trust funds, etc. ECONOMIC ACTIVITY, ECONOMIC ACTIVITY RATE Economically active people are those adults who are actively engaged in the economy and are in, or are seeking work. In strict terms we include people of working age who are either in employment, or are unemployed but actively seeking work and are available for work. The activity rate is the proportion of a population engaged in economic activity. It is conventionally measured by dividing the labour force by the population of working age. Activity rates can also be calculated for specific groups such as males or females or for age groups. ECONOMIC INACTIVITY, ECONOMIC INACTIVITY RATE Economically inactive people are those adults who are not actively engaged in the economy they are not employed nor are seeking work. In strict terms, the economically inactive includes those not in employment, not classified as unemployed (by the ILO measure), or not either actively seeking work or available for work. The economic inactivity rate is the number of economically inactive people as a percentage of the total population aged 16 and over however, official measures sometimes calculate the rate for the working age population only. It can be calculated for any population group. EMPLOYEE, EMPLOYEE JOBS Someone who works for a person or organisation other than themselves. The relationship between employee and employer is usually defined by a contract of employment, which sets out the obligations of each party. An employee job is one held by an employee, or which is vacant, waiting to be filled. An employee may hold more than one employee job (e.g. two part-time jobs). EMPLOYMENT, EMPLOYMENT RATE There are two ways of looking at employment: the number of people in employment or the number of jobs. These two concepts represent different things, as one person can have more than one job. People aged 16 or over are classed as employed by the Annual Population Survey, if they have done at least one hour of work in the reference week surveyed or are temporarily away from a job (e.g. on holiday). Employed people can be classified into one of four categories: employees, self-employed, unpaid family worker (doing unpaid work for a family-run business) or participating in a government supported training programme. Employment rates can be presented for any population group as the proportion of that group who are in employment. The main presentation of employment rates is the proportion of the population of working age (16-59 for females and for males) who are in employment. Page 135

138 ESTABLISHMENTS This usually means business units, and includes multiple counts of multiple units of the same business e.g. branches or offices. Establishments are the unit of employers often used in the National Employer Skills Survey conducted by the UK Commission for Employment and Skills. FORECASTING Forecasting is concerned with production of estimates of future events. They can be based on the output of econometric models, based on previous performance and patterns, assumed to be a guide to the future, or they can be based on individuals' (e.g. employers, analysts) views on what is likely to happen. Forecasts should always be used with care, increasingly so as they become more detailed or localised, or try to look further into the future. It is never possible to predict the future with absolute certainty: there are many uncertainties, as well as gaps in our knowledge and understanding of past and present performance as a guide to future events. Sudden shocks or changes are also by their nature unpredictable. FULL TIME (FT) In employment terms, this usually refers to a job requiring more than 30 paid hours per week. In some surveys such as the Annual Population Survey respondent are allowed to decide whether they consider themselves to be full-or-part-time. GROSS DOMESTIC PRODUCT (GDP) Gross Domestic Product (GDP) is one of the most important measures of economic activity, in simple terms the value of all output in an area. "Gross" indicates that it does not account for any capital consumption (e.g. ongoing wear and tear), whilst "domestic" means that it includes all activity in the area, regardless of ownership (overseas owned firms may repatriate profits, whilst domestic firms' overseas earnings are not counted). A monetary value is usually applied to GDP, and it is often divided by the total population GDP per capita to provide a more meaningful measure of wealth. GROSS VALUE ADDED (GVA) Gross Value Added (GVA) is an estimate of the value of the economic output of a local area, region or nation. Gross Value Added (GVA) per head or per capita is an estimation of the value of economic output produced per resident, and is a useful method of comparing economic performance between local areas. GVA is one of three methods available to estimate the economic output or Gross Domestic Product (GDP) of an area. Although available to relatively local levels, care must be exercised in using GVA as a local indicator of wealth. GVA creation is concentrated where high value creating employment is prevalent. Thus cities and areas of high value manufacturing tend to have high GVA per head, partly due to the value of the goods and services produced but also because they tend to be where net in-commuting is found. This means that although wealth is created in one place, it may be created by in-commuters. Conversely, suburban or net out-commuting areas may have low GDP per head since data is calculated on a workplace, rather than a residence basis. Where larger areas are used (thus in-and-out commuting is minimised), GVA is a more valid indicator with which to compare areas. Calculating on a per job basis reduces some of these problems. INNOVATION Innovation is the successful exploitation of new ideas. Innovation plays a critical role in economic development and growth. Innovation can create new markets, provide new or adapted goods and services and lead to new organisational forms and processes. Innovation can help build market leadership and can improve efficiency and productivity. Many firms adopt innovations rather than create them, yet still realise the advantages in terms of productivity and competitive advantage. KNOWLEDGE WORK AND KNOWLEDGE WORKERS Knowledge-intensive work can be most easily thought of as activities which depend on the use of the high-level, tacit knowledge that resides in people s minds. This tacit knowledge takes the form of expertise and/or Page 136

139 experience, rather than being written down (or codified) in manuals, guides, lists and procedures. Examples of knowledge-intensive tasks include bespoke statistical analysis, system maintenance, graphic design or software design (sourced from The Work Foundation). EMPLOYEE JOBS (FROM THE BUSINESS REGISTER AND EMPLOYMENT SURVEY) An employee is defined as anyone aged 16 years or over that is paid directly from the payroll, in return for carrying out a full-time or part-time job or being on a training scheme. Employment includes employees plus the number of working owners who receive drawings or a share of the profits. This measure (from the Business Register Employment Survey) does not include estimates for self-employee jobs, HM Forces, Government sponsored trainee jobs and unpaid family workers EMPLOYMENT QUOTIENT The Employment Quotient Technique is the most commonly utilized economic base analysis method. Simply stated, the employment quotient method compares Local Employment to National Employment. The employment quotient technique is based upon a calculated ratio between the local economy and the economy of some reference unit. This ratio, called an industry "employment quotient" gives this technique its name. For example if 2 per cent of local employment is in computer manufacturing, and 1 per cent of national employment is in computer manufacturing, then the Location Quotient (with reference to national) is 2. Locally, this sector is twice as important in employment terms than nationally. EQ < 1.0 = All Employment is Non-Basic A EQ that is less than zero suggests that local employment is less than was expected for a given industry. Therefore, that industry is not even meeting local demand for a given good or service. Therefore all of this employment is considered non-basic by definition. A EQ = 1.0 = All Employment is Non-Basic A EQ that is equal to zero suggests that the local employment is exactly sufficient to meet the local demand for a given good or service. Therefore, all of this employment is also considered non-basic because none of these goods or services are exported to non-local areas. A EQ > 1.0 = Some Employment is Basic A EQ that is greater than zero provides evidence of basic employment for a given industry. When an LQ > 1.0, the analyst concludes that local employment is greater than expected and it is therefore assumed that this "extra" employment is basic. These extra jobs then must export their goods and services to non-local areas which, by definition, makes them Basic sector employment. HARD-TO-FILL VACANCY This is a vacancy that an employer struggles to fill. There may be a number of reasons relating to both supply (e.g. availability of labour, availability of skills) to demand (e.g. wage offered, location of employer). NOMINAL / UNADJUSTED This means that no account has been taken for inflation. For example, real growth takes into account inflation e.g. if the monetary value of production has increased by 5 per cent between 2010 and 2011; then we would factor in inflation, at say, 3 per cent which would reveal real growth of 2 per cent. In reality, price inflation varies according to types of goods and services; and also local cost. It is very complicated to calculate real rates of economic growth at a local level because there are too many factors to consider and too little data therefore nominal growth tends to be reported. NUTS (NOMENCLATURE OF TERRITORIAL UNITS FOR STATISTICS) NUTS (Nomenclature of territorial units for statistics) areas aim to provide a single and coherent territorial breakdown for the compilation of EU regional statistics. The current version of NUTS (2008) subdivides the territory of the European Union and its 28 Member States into 98 NUTS 1 regions, 272 NUTS 2 regions and 1315 NUTS 3 regions. NUTS 2 regions generally consist of traditional county-based geographies and metropolitan Page 137

140 counties. NUTS 3 regions generally consist of large districts, boroughs or unitary authorities; or groupings of smaller authorities. PATENTS A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention. For a patent application to be granted, it must be capable of being made or used in some kind of industry. Therefore rates of patenting are a good measure of the levels of innovation in local areas. Patents tend to be taken out for scientific, engineering, physical and process technologies and software. They are much less likely to be taken out for business models and creative design. There is also a number of other legal mechanisms to protect intellectual property, such as trademarks, designs and university licences. Therefore, it is often the case that local areas with a high level of employment and activity in engineering, manufacturing, technology, life sciences and software tend to have higher rates of patenting, but that patent data will not always reflect innovation in services, business models and creative industries. PER CAPITA This means a value that is calculated per resident. PUBLIC-SECTOR EMPLOYMENT Public-sector employment as defined here encompasses employment in central government (including HM Forces, courts and the NHS), local government (including police forces, schools) and public corporations (including Royal Mail, London Underground Ltd, Royal Bank of Scotland and Lloyds Banking Group). Public-sector employment does not include university employees or employees of private-sector companies providing contracted out services to the public sector. QUALIFICATIONS Qualifications are endowments or achievements (often formally certified) that demonstrate an individual's competence and proficiency in a specified area of activity. Vocational Qualification Levels or VQs refer to a categorisation of broad levels of qualification equivalency as follows: NVQ 1 = foundation GNVQ, three to four GCSEs at grades D E, Business & Technology Education Council (BTEC) first certificate NVQ 2 = five GCSEs at grades A* C, BTEC first diploma NVQ 3 = two or more A levels, BTEC Ordinary National Diploma (OND), City & Guilds Advanced Craft NVQ 4 = Degree and sub degree qualifications, including honours and ordinary degrees, BTEC Higher National Certificate (HNC) or Higher National Diploma (HND), or City & Guilds Full Technological Certificate / Diploma NVQ 5 = Higher degree (postgraduate degree or doctorate). NVQ4+ is often used as a category to denote graduate or postgraduate degree level qualifications or their equivalent Trade Apprenticeship refers to a traditional form of apprenticeship undertaken before formal accreditation was instituted. Other qualifications refer to qualifications which cannot be made equivalent to full NVQ levels or have not been accredited (e.g. may have been gained as part-units of courses or overseas) RECESSION A recession is a period of time when the value of economic output of a nation or area declines. An official recession is when economic output declines for two or more quarters (a quarter is a three month period) in a row. Page 138

141 RESIDENTS / RESIDENT - BASED This refers to a calculation being made on the basis of area of residence. E.g. in the case of resident average earnings it calculates the average earnings of residents living at an address within the specified area. SKILLS Skill(s) is a broad concept that covers the wide range of aptitudes and abilities that are necessary to make a worker competent to undertake their job. Skills can be obtained through a formal course of study leading to qualifications, work experience or simply be a function of personal characteristics. In the UK government s Standard Occupational Classification, they define the concept of skill in two ways: 1) skill level - the complexity of the tasks and duties to be performed; and 2) skill specialisation the field of knowledge required for competent, thorough and efficient conduct of the tasks. Skills can be difficult to measure qualifications are sometimes used to indicate types and levels of skill, but the two concepts are not the same. An individual can have a skill without it being represented by a qualification. Some skills are hard to accredit to qualifications, especially personal characteristics or attributes. SKILL DEFICIENCIES Skill shortages and skill gaps are both examples of skill deficiencies. SKILL GAPS A skill gap exists when an employer thinks a worker doesn't have enough skills to perform their job with full proficiency. Skill gaps apply to existing employees. SKILLS SHORTAGE A skill shortage vacancy is a specific type of hard-to-fill vacancy that occurs when an employer can't find applicants with the skills, qualifications or experience to do the job. Skill shortages occur when an employer is having difficulty recruiting new staff. Vacancies can also be hard-to-fill because of a lack of applicants, or because the applicants are considered by employers to lack the appropriate motivation or attitude. These are not skill shortages. UNEMPLOYMENT Unemployment, as officially classified in the UK and consistent with the internationally-agreed International Labour Organisation, is where anyone aged 16 years and over is without a job, wants a job, has actively sought work in the last four weeks and is available to start work in the next two weeks, or is out of work, has found a job and is waiting to start it in the next two weeks. The unemployment rate is the share of economically-active adults (those in work or actively seeking work) that are unemployed. Claimant unemployed refers to individuals claiming Jobseekers Allowance and National Insurance Credits. These benefits are paid to those who are registered as unemployed at a Job Centre and are actively seeking work. Claimants must be capable of work; available for work; actively seeking work; under statutory retirement age; and not working, or working on average less than 16 hours a week. Not everyone who is unemployed claims these benefits. WORKFORCE JOBS Workforce jobs are the sum of jobs including those supported by employers, self-employment, governmentsupported trainees, and Her Majesty's Forces. Statistics on workforce jobs can be accessed from the Jobs Density data series or Workforce Jobs series from the Office for National Statistics. WORKPLACE / WORKPLACE - BASED This refers to a calculation being made on the basis of area of work. E.g. in the case of workplace-based average earnings it calculates the average earnings of workers working at an address within the specified area. Page 139

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