08 Feb 2023
By Stuart Patrick, Chief Executive of Glasgow Chamber of Commerce
With excellent timing, the Centre for Cities last week called for a step change in delivering Levelling Up. It came only a week after both Glasgow and Aberdeen had their Green Freeport bids rejected and Glasgow City itself missed out entirely on the second round of the UK Government’s Levelling Up funds.
Included in their recommendations was a 10-year, £14.5billion package centred on Birmingham, Glasgow and Manchester as the cities where underexploited potential was greatest. Funding would come from reallocating existing budgets to invest in research and development, local transport and city centres. To put that in perspective, the UK government support to the Glasgow City Region Deal was £500million, matched by the Scottish Government, and now more than eight years old. If the Centre’s recommended budget did indeed go solely to Birmingham, Glasgow and Manchester, it would be comparable to announcing a city-deal-scale investment in Glasgow every year for a decade. That would certainly replace the opportunities lost in the Green Freeport decision.
For those unaware, the Centre for Cities is a research organisation devoted to supporting the UK’s cities and towns to grow their economies. Every January it publishes the Cities Outlook report which provides an in-depth study of a UK urban issue and compares the performance data for the 63 biggest towns and cities.
This year, the Centre chose to investigate hidden unemployment, setting out the data not just for registered unemployment but also for working age adults who were neither employed nor officially unemployed. Described in labour economics as people who are economically inactive, hidden unemployment is currently topical because so many over 50s chose to retire early during the pandemic and the Chancellor is eager to see them return to work. For the UK’s biggest towns and cities, the Centre report shows hidden unemployment is up to four times higher than reported unemployment.
The Centre’s report shows that Glasgow has double the rate of involuntary hidden unemployment in comparison to Edinburgh, once you adjust for students, which is hardly surprising. It also shows that the Levelling Up challenge in Glasgow remains substantially greater here than in Edinburgh. Edinburgh is a relatively small, wealthy and fast-growing city with one of lowest unemployment benefit claimant counts in the country. That is why the private sector investors backing the Clyde Green Freeport were so baffled at its rejection in favour of the Edinburgh bid.
However, perhaps just as interesting are the statistics that show why investing in the city along the lines the Centre suggests would be worthwhile. Glasgow’s population has grown over the past decade in line with the UK average, ahead of most Northern English cities. Like all the Scottish cities included in the Centre’s review, Glasgow has a very highly skilled workforce with relatively high average workplace earnings. It has been able to develop and retain the talent that business is so desperately seeking.
But the Centre’s figures also show the weaknesses where sustained Levelling Up investment could help the city finally overcome the legacy of industrial decline. There are too many Glasgow residents with no qualifications whatsoever and a clear link between low skills and hidden unemployment. The city has set itself the target of reducing the number of unqualified workers in half by 2030 and the Centre for Cities advocates an increase in national skills funding from five per cent of the economy to seven per cent.
The city’s business stock is also far too low, and a city of this size needs more new economy firms. At least in this arena the UK Government has already begun to follow the Centre’s advice, having allocated £100m split evenly between Glasgow, Birmingham and Manchester to create local partnerships investing in the commercialisation of university research. An announcement on Glasgow’s share is imminent.
However, what remains clear from the Centre for Cities report is that this must only be the modest down-payment on a much more ambitious investment programme.
This article was first published in The Herald on Wednesday 8 February 2023
