Aberdeen’s slowdown shows the dangers of being a one-industry town

Another sunny day over Aberdeen. Image: Getty.

Aberdeen has long been one of the UK’s most economically buoyant cities. In the 11 years that  Centre for Cities has published Cities Outlook – our annual health-check on UK city economies – Aberdeen has ranked among the best performing cities when it comes to wages, skill-levels and innovation.

This year’s Cities Outlook shows that Aberdeen continues to be a strong performer, with impressive figures for number of skilled workers, patent applications published and average wages. However, the downturn in the city’s standing in a number of key areas in recent years suggests that all may not be well in the Granite City’s economy.

There are five different indicators that show that Aberdeen’s economy has struggled in the last few years:

  • In terms of population, Aberdeen is the only city in the UK to see a decline in its number of residents between 2015 and 2016 – a fall of 0.3 per cent. This was driven by a sharp decline in those aged 20-24.
  • Business closures per capita have increased by 76 per cent, while business start-up rates have decreased by 21 per cent per cent between 2013 and 2016.
  • The employment rate was 2.7 percentage points lower in 2016 than in 2014.
  • Gross value added data shows that the economy was 7 per cent smaller in 2016 than 2014. As this isn’t adjusted for inflation, the real terms fall will have been even larger.
  • House prices have fallen by 9 per cent since 2015.

While local data is not detailed enough to say conclusively, Aberdeen’s economy appears to have been in recession in recent years. And this is counter to the experiences of other UK cities. While Aberdeen’s reliance on oil and gas appeared to shelter the city from the worst of the global financial crisis, the oil sector’s recent turbulence has pulled the city into reverse at a time when other cities have been slowly improving.

When we consider these findings in light of research published last July by Centre for Cities and the Centre for Economic Performance – which suggested that Aberdeen’s economy would be hit harder than that of any other city by either a ‘hard’ or ‘soft’ Brexit – It all adds up to a worrying picture.

So what’s going on? Much of this is likely to be down to Aberdeen’s dependence on the oil industry, which has hitherto been the source of the city’s economic success. However, in recent years there has been a well-publicised global slump in oil prices, with prices dropping from a peak of $115 per barrel in June 2014 to a low of $26 per barrel in January 2016. Prices have increased more recently, but remain around $50 below their 2014 peak.


This large reliance on a particular sector in Aberdeen draws out three wider policy lessons which have implications in particular for the Government’s Industrial Strategy, and the local industrial strategies that places will develop as part of this initiative:

Having a diverse economic base will help cushion cities against changes in the fortunes of specific industries

Reliance on an individual sector means that your fortunes are hooked on the performance of that sector. And this is something that has been seen throughout the last century – a number of cities have struggled after they’ve seen a decline of a dominant industry, be that steel in Sheffield (which accounted for 24 per cent in 1911), mining in Wakefield (which provided one in three jobs in 1911) or textiles in Burnley (which accounted for over half of all jobs in 1911).

While cities tend to be much more diversified today than they did 100 years ago, cities such as Sunderland (Nissan) and Derby (Rolls Royce) continue to be reliant on individual businesses to generate a large bulk of their exports. Diversifying their economies now by attracting in a broader range of business investment would help offset any future troubles that these businesses may face.

A local industrial strategy should have a place-based approach rather than sectoral approach

Despite the risks that an over-reliance on a small number of industries poses for places, the government’s Industrial Strategy has a strong sectoral dimension to it. The worry here is that will encourage cities to focus their local industrial strategies on what they perceive to be their sector strengths, rather than setting out a plan to attract in business investment from a range of sources. To do this requires an understanding of what the barriers that a city faces to attracting business investment are, and a set of coherent policies to overcome this.

Aberdeen’s recent City Deal very much focused on oil and gas, with three quarters of the £250m deal dedicated to establishment of Oil & Gas Technology Centre (which opened in February 2017). This is likely to be a great asset for the city while the sector is located in the city – but it does little to help it broaden the activities based there.

Encouraging diversity isn’t only the responsibility of the public sector, and the private sector has a role to play

Aberdeen’s over reliance on oil and gas led to the creation in 2015 of Opportunity North East (ONE), a private sector economic development body established with the aim of diversifying the local economy.

While ONE’s identification of a handful of sectors (food, drink and agriculture, life sciences, tourism) runs the risk of being too focused on sectors and not the drivers of business investment, the formation of this organisation reflects that fact that it’s not just the job of the public sector to help places adapt to on-going change – and that private sector will also have an important role to play. The local industrial strategies should define exactly what that role is.

Sania Haider was an intern at Centre for Cities, on whose blog this article first appeared.

 
 
 
 

It’s not all cool bridges and very real concerns: In defence of Teesside

Just one of the many interesting bridges you’ll find in Teesside. Image: Stephen Jorgensen-Murray.

The latest entry in our ‘In Defence Of’ series...

I have to start this with a disclaimer: I’m not writing this from anywhere in Teesside. I’m writing this from Germany, where I live and work. Some of you may remember being told by Norman Tebbit, that instead of complaining that we can’t find jobs, we should get on our bikes (or, more recently, by IDS to get on a bus), and I did. I’m paid well here, to do a job that doesn’t really exist in Teesside. And yet, every time I go home to visit my family, I almost wish I’d stayed.

This isn’t going to be a very straightforward take – I’m hoping to pay my respects to Stockton, Middlesbrough and Hartlepool as well as my native Billingham – but Teesside isn’t a very straightforward place. What county is it in? Cleveland, Stockton-on-Tees, Durham or North Yorkshire depending on how old you are and where you’re standing. I always had great fun ordering online and trying to guess which of the unfamiliar options on the dropdown menu would get my parcel to me.

But regardless of where you draw the lines, Teesside is still there.

Our accent is similarly hard to pin down: Geordie, Mackem, Yorkshire, even Scouse, depending on who’s imitating us. I’ve been pegged as Irish, American and South African by determined people in the past. Our slang is stolen from Scotland, Northumberland, Newcastle and Yorkshire, and, not satisfied, some words are purely our own. Hoy, shan, howay, dinner nanny. We have as many words for classless people as the Romans did for murder.

But regardless of how it sounds to you, Teesside still talks.


On a map of the UK, Teesside sits as an isolated blob of civilisation between the Dales and the sea. Half-urban, half-rural, half-seaside, half-inland, half industrial estate and half nature reserve. A Labour heartland with a Tory mayor. Places that sprang up fully formed in the ICI rush of the 1950s, but that still have Viking place names.

We’ve been portrayed in fiction by Richard Milward, in song by Maximo Park, in statistics by Lady Florence Bell and in cinema by Sir Ridley Scott (our chemical works and power plants inspired the look of Blade Runner). More recently, we’re being portrayed in documentary in The Mighty Redcar, and in the media as an area of left-behind, white working class racists who all voted Leave. But while most of the area is whiter than the average, Middlesbrough mirrors the UK average for racial diversity and has been assigned to resettle more refugees than any other town in the UK – and more than its cut-back council can look after.

And when you look at the numbers, the proportion of the population of Teesside who voted to leave the EU is much less than many other areas. (And yes, of course I voted Remain from my now slightly more precarious home in Frankfurt, joining 100,000 other Teesside Remainers.)

We’re pitied for the loss of the Teesside steelworks and derided for blaming the EU for it (when of course it was our own government’s sabotaging of EU attempts to block Chinese steel dumping that drove that knife in). Even the people who profess to be on our side take our angry, uneducated racism as fact, baking it into the premises of their arguments, which consist of addressing our “racist but real concerns”, and how to reach us.

But whether you understand us or not, whether you miss the point or not, we’ll continue to exist, long after we’ve been forgotten again.

Billingham town centre. One of the first pedestrianised town centres in the UK. Image: Stephen Jorgensen-Murray.

Still, while we’re in the spotlight, why not see what we have to offer? Come to see our rather wonderful collection of interesting bridges. See where the first public steam train ran, from Stockton to Darlington. Visit Mima, the modern art gallery in Middlesbrough and the 1960s utopia of Billingham’s pedestrianised town centre. Feel slightly uncomfortable around all the things that are named for Captain Cook (though the replica of the Endeavour at Stockton riverside is impressive regardless on your thoughts on its captain – and it’s the best you’ll see until they work out whether they’ve found the real one yet). Wander Middlesbrough’s thriving student/hipster district on Linthorpe RoadD – despite being a punchline during my youth, Teesside University has become a respected institution. Visit Billingham’s Folklore Festival in August, where as schoolchildren we’d watch troupes of folk dancers from across the world open-mouthed, and get their autographs afterwards as though they were celebrities.

Fried chicken, white sauce and cheese make the Teesside parmo. Perfect. Image: Stephen Jorgensen-Murray.

Try a parmo. Try the Billingham Catholic Club’s real ale, and stay for the bingo, which is called by a man with the most acrobatic mental arithmetic skills I’ve ever seen. Try a lemon top ice cream from Pacitto’s in Redcar and wonder why no one else has ever done this before. Lemon sorbet and vanilla ice cream! Together at last!

While you’re at the beach, take a ride on the Saltburn Cliff Lift, the oldest operating water-balance cliff lift in the UK. Pretend Saltburn is sort of in Teesside while you’re enjoying the view. Look out on beaches black with sea coal, washed up from undersea seams and nearby coal mines. Visit the golf course by Seaton Carew to catch a glimpse of a curlew or two, and watch the young seagulls pick up golf balls to crack them open by dropping them from a great height. Visit Seal Sands, whose owners can be observed lazing on the estuary banks whenever the tide is out. Or visit Saltholme, the RSPB nature reserve, where you can see avocets, Britain’s weirdest-looking and most beloved seabird.

Nature coexists with industry on Teesside. Image: Stephen Jorgensen-Murray.

Go white water rafting, bell boating or paddleboarding at the Tees Barrage, where there are so many seals that they’ve had to put up guards to keep them out of the way. The Tees used to be too polluted even to support salmon and trout, and now we have too many of one of Britain’s largest native mammals. The return of the seals to the Tees was the first documented case of seals returning to an industrial area. You’d be surprised at how well nature can thrive in the shadow of industry, colonising the quiet fields and marshy ponds on private land that are never disturbed, haunted by sika deer and shelducks, redshanks, knots, stonechats.

Teesside has plenty to offer. What it doesn’t have is the jobs to keep its younger generations from having to get on their bikes and leave. We aren’t aliens, or Jacob Rees-Mogg’s army of goblin henchbrexiteers. We’re just like you, but with more seals and fewer employment opportunities.