Why do some cities create jobs, while others lose them?

Where is England's mystery boom town? Image: The Voice of Hassocks/Wikimedia Commons.

Which English city do you think has seen the biggest growth in its jobs market over last century or so? Is it London with its financial wizardry and exciting new tech industry? Manchester with its trams and its media? Cambridge with its science park?

We're being terrible unfair here, because you will quite literally never guess. (You really won’t.) Here’s the top 10:

Now Crawley, a mid-sized town in West Sussex, has two big factors working in its favour on this one. One is that it was tiny in 1911, with a population of just 5,000. It's now 20 times that size, thanks in large part to being a convenient 45 minute train ride from central London. And even though it’s mainly a dormitory town for the big city, when a town’s population grows by that much, its job market is inevitably going to grow by a fair bit, too.

The other advantage Crawley is sitting on is the presence of a rather big airport next door at Gatwick. Being next to an airport can do many horrible things to a town, but if considered from a purely employment perspective, they tend to be rather good.

You can spot the same phenomena at work in some of the other cities that make the top 10. Many of them have seen significant population growth over the last century; two more are conveniently placed for international airports.

But other factors seem to be in play, too. Being close to London clearly helps. So does the presence of a university, around which research-focused companies can cluster. There isn’t an obvious single factor.

Now consider the towns and cities which have going in the opposite direction. In 1911, Burnley, a market town in eastern Lancashire, had a population of more than 106,000. By 2011 it had fallen to 73,000, a fall of nearly a third.

But that's nothing compared to the collapse in the town's job numbers, which have fallen by half.

With this table it’s much, much easier to spot the pattern. Every one of these towns and cities is in the densely populated northern belt that stretches across England from the Mersey to the Humber. In 1911, this was Britain’s industrial heartland.  A century later, it wasn't anymore.


The importance of being southern

These tables both come from “A Century of Cities”, a report published early this month by the Centre for Cities think tank, which looks at a hundred years of economic data covering cities in England and Wales. For obvious reasons, the report is concerned in part with Britain’s north/south divide. But it also argues that we’ve been misdiagnosing that divide – or at least, that we’ve been coming up with the wrong treatment for it.

A century ago, the report says, the biggest driver of city growth was proximity to resources. That could mean coal, or other things you put into factories; then again, it might mean docks or transport links. Either way, it was fundamentally a matter of physical geography.

Now, though, the biggest driver of growth is proximity to “knowledge”: the cities that have thrived are those which have succeeded in attracting skilled workers and clusters of expertise. In other words, it's now human geography that drivers growth.

That means that the cause of the north/south divide is not the collapse in manufacturing in itself (after all, London lost plenty of manufacturing jobs, too). Rather, it’s the failure to develop or attract the skilled workforce you need to replace it with something else.

In other words, policies intended to revive the manufacturing sector, most recently chancellor George Osborne’s pledge to create “march of the makers”, are solving the wrong problem. Apart from anything else, modern manufacturing just isn’t as employment intensive as it once was.

Knowledge is power

It’s also overly simplistic to say that job growth has been an entirely southern affair. Here's a map of which cities have lost and gained jobs over the last century:

Click to expand

The south is clearly doing better; but in the north, the picture is mixed, rather than universally terrible.

There's a stronger correlation than the one between "southernness" and growth; that's the one between skills and growth. Here’s another map, showing the share of each city's jobs in private sector knowledge-intensive business (KIBs). The correlation with jobs growth is far from perfect, but it definitely seems to be there:

Click to expand

As to what drives the distribution of those exciting sounding KIBs jobs, one big factor is history. There is also a clear correlation between where knowledge-based jobs were in 1911, and where they were by 2013: if a city didn’t have many of them a century ago, it’s pretty unlikely to have that many of them now. 

That said, the impact history has isn't always a straightforward one, and an early industrial decline may work in a city’s favour when it comes to breaking into new types of industry. These graphs show the distribution of different types of jobs in Manchester over time:

The city’s manufacturing sector was already collapsing by the middle of the 20th century. But one side effect seems to have been that the number of knowledge-intensive jobs in the city began to grow early, too.

Now look at the same graphs for Birmingham:

Birmingham's industrial decline came later – but it’s been slower to build up its share of high-value service jobs, too.

So, how do you improve a struggling regional economy? The report makes three suggestions. You can improve the skill of the workforce. You can encourage “knowledge networks” – universities, research centres, clusters of business and so forth – to form, boosting the productivity of those workers.

Or you can deal with the scars left by industry – desolate factories and so on – and focus activity in the city centre to encourage that process. All of these suggestions should lead to more productive individuals, working in a more productive way.

But building an airport helps, too.

 
 
 
 

Budget 2017: Philip Hammond just showed that rejecting metro mayors was a terrible, terrible error

Sorry, Leeds, nothing here for you: Philip Hammond and his big red box. Image: Getty.

There were some in England’s cities, one sensed, who breathed a sigh of relief when George Osborne left the Treasury. Not only was he the architect of austerity, a policy which had seen council budgets slashed as never before: he’d also refused to countenance any serious devolution to city regions that refused to have a mayor, an innovation that several remained dead-set against.

So his political demise after the Brexit referendum was seen, in some quarters, as A Good Thing for devolution. The new regime, it was hoped, would be amenable to a variety of governance structures more sensitive to particular local needs.

Well, that theory just went out of the window. In his Budget statement today, in between producing some of the worst growth forecasts that anyone can remember and failing to solve the housing crisis, chancellor Philip Hammond outlined some of the things he was planning for Britain’s cities.

And, intentionally or otherwise, he made it very clear that it was those areas which had accepted Osborne’s terms which were going to win out. 

The big new announcement was a £1.7bn “Transforming Cities Fund”, which will

“target projects which drive productivity by improving connectivity, reducing congestion and utilising new mobility services and technology”.

To translate this into English, this is cash for better public transport.

And half of this money will go straight to the six city regions which last May elected their first metro mayor elections. The money is being allocated on a per capita basis which, in descending order of generosity, means:

  • £250m to West Midlands
  • £243 to Greater Manchester
  • £134 to Liverpool City Region
  • £80m to West of England
  • £74m to Cambridgeshire &d Peterborough
  • £59m to Tees Valley

That’s £840m accounted for. The rest will be available to other cities – but the difference is, they’ll have to bid for it.

So the Tees Valley, which accepted Osborne’s terms, will automatically get a chunk of cash to improve their transport system. Leeds, which didn’t, still has to go begging.

One city which doesn’t have to go begging is Newcastle. Hammond promised to replace the 40 year old trains on the Tyne & Wear metro at a cost of £337m. In what may or may not be a coincidence, he also confirmed a new devolution deal with the “North of Tyne” region (Newcastle, North Tyne, Northumberland). This is a faintly ridiculous geography for such a deal, since it excludes Sunderland and, worse, Gateshead, which is, to most intents and purposes, simply the southern bit of Newcastle. But it’s a start, and will bring £600m more investment to the region. A new mayor will be elected in 2018.

Hammond’s speech contained other goodies for cites too, of course. Here’s a quick rundown:

  • £123m for the regeneration of the Redcar Steelworks site: that looks like a sop to Ben Houchen, the Tory who unexpectedly won the Tees Valley mayoral election last May;
  • A second devolution deal for the West Midlands: tat includes more money for skills and housing (though the sums are dwarfed by the aforementioned transport money);
  • A new local industrial strategy for Greater Manchester, as well as exploring “options for the future beyond the Fund, including land value capture”;
  • £300m for rail improvements tied into HS2, which “will enable faster services between Liverpool and Manchester, Sheffeld, Leeds and York, as well as to Leicester and other places in the East Midlands and London”.

Hammond also made a few promises to cities beyond England: opening negotiations for a Belfast City Deal, and pointing to progress on city deals in Dundee and Stirling.


A city that doesn’t get any big promises out of this budget is – atypically – London. Hammond promised to “continue to work with TfL on the funding and financing of Crossrail 2”, but that’s a long way from promising to pay for it. He did mention plans to pilot 100 per cent business rate retention in the capital next year, however – which, given the value of property in London, is potentially quite a big deal.

So at least that’s something. And London, as has often been noted, has done very well for itself in most budgets down the year.

Many of the other big regional cities haven’t. Yet Leeds, Sheffield, Nottingham and Derby were all notable for their absence, both from Hammond’s speech and from the Treasury documents accompanying it.

And not one of them has a devolution deal or a metro mayor.

(If you came here looking for my thoughts on the housing element of the budget speech, then you can find them over at the New Statesman. Short version: oh, god.)

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason.

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