The State of Britain

EM

Significant regional job losses at Rolls Royce, EM’s income growth the UK’s slowest with Nottingham and Leicester average incomes at just over £13,000

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Rolls Royce has confirmed the locations of the job losses it is to make this year. Last month the Derby-based firm said 9,000 jobs were to be cut, mostly in its Civil Aerospace division as a result of air travel being hit by the pandemic. Around 1,500 roles will be lost in Derby and the East Midlands with voluntary redundancies also available to all employees.

Wicksteed Park in Kettering has gone into administration. A new company will be formed with the aim of raising funds to re-open the 99-year-old theme park but until then 48 permanent staff and 67 part-time and other jobs have been lost.

Two other regional attractions have secured National Lottery grants to cover losses incurred by the lockdown. Creswell Crags, a series of caves used during prehistoric times and Cromford Mills have been awarded £250,000 from the Heritage Emergency Fund.

Intu – the owner of some of Britain’s most high-profile shopping malls – has called in administrators. The firm ran the half-demolished Broadmarsh Centre in Nottingham which has received £17m of public money. In 2018 the city council committed to spending c£50m on the project.

The Stats

This month the ONS published regional household disposal income figures for 2018. Total gross disposable household income (GDHI) in the UK in 2018 was £1.4bn. Of that, 86.3% was in England, 7.6% was in Scotland, 3.8% was in Wales and 2.3% was in Northern Ireland.

The average UK income per head after direct and indirect taxes were taken off was £21,109.  England was the only country above the UK average at £21,609 but growth in incomes was best in Scotland and Northern Ireland at 5.1% and 4.7%. England’s growth was the same as the UK at 4.6%; Wales grew by 4.4%.

At a regional level, London had the highest GDHI per head where, on average, each person had £29,362 available to spend or save; the North East had the lowest at £16,995 which compares with a UK average of £21,109. The EM beat the WM by £5 at £18,277.

At a local level, Kensington and Chelsea and Hammersmith and Fulham district had the highest GDHI per head at £63,286 with Nottingham the lowest at £13,138. All the top 10 local areas were in London or the South East with the bottom 10 within the North West, Yorkshire and The Humber, East Midlands, West Midlands, and Northern Ireland regions.

The wealthiest part of the EM was West Northamptonshire with incomes of £21,774. This ranked the area 50th out of 179 districts of the UK. The poorest areas of the region and the UK were Nottingham at £13,138, beating Leicester at £13,269.

In terms of regional growth, the largest increase was in London at 5.2% with the smallest in the East Midlands at 3.6%.

At the local level, Kensington & Chelsea and Hammersmith & Fulham was again best in the UK with growth of 7.6% whereas Luton was the worst and only grew by 0.9%.

In the EM, income growth in North Nottinghamshire was top at 5.0% with East Derbyshire second at 4.4%. Leicester was the worst regional performer with growth of 1.1%, a ranking of 178th and beating only Luton.

Labour

More data from the ONS showed unemployment in the region was 6,000 lower at 91,000 between February and April; the drop of 0.3% took the rate to 3.7%. Despite narrowing the gap with the West Midlands (4.8%), at 5.2% the North East was still the highest; Northern Ireland had the lowest rate of 2.3%, with the UK rate at 3.9%.

The South East had the highest employment rate at 79.5% which compared with 78.1% in the EM where 2.4m are employed; the UK rate was 76.4%.

Public sector employment in the EM increased by 2.1% in March to 355.000, which was 15.6% of the workforce. At 25.2% Northern Ireland had the highest level of public sector employment which compared to 13.9% in London which was the lowest.

In March, average earnings in the EM increased by £11 to £591 per week. London had the highest average earnings of £847 and the lowest average earnings of £537 were recorded in Northern Ireland.

Earnings in the NE increased the most in the UK by £60 per week whereas the biggest drop in wages was £37 in Scotland.

In the UK overall, average earnings grew by 1.7% or by 0.4% after inflation. If bonuses are included real pay fell by 0.4%.

The public sector saw the highest estimated growth, at 3.2% for regular pay, while negative growth was seen in the construction sector, estimated at negative 1.8%. Both the wholesaling, retailing, hotels and restaurants sector and the manufacturing sector saw very weak growth at 0.1% for regular pay.

Housing

Estimates of private sector rents for the year to March 2020 were published by the ONS this month.

The median monthly rent was an all time high of £700 in England between 1 April 2019 and 31 March 2020. London had the highest median monthly rent at £1,425 with the North East the lowest at £495. Within local authorities the difference in monthly rental price between the most and least expensive was nearly £2,100.

In the EM rental prices ranged from £495 to £725 with £600 the median.

Data for the 12 months to May 2020 showed private rental prices paid by tenants in the UK rose by 1.5%, unchanged from the previous month. Rental prices grew by 1.5% in England, 1.2% in Wales and 0.6% in Scotland.

Rental prices increased the most in the South West, up by 2.5%, with the lowest price growth in the North East at 0.8%, the EM recorded 2.5%.

According to the ONS the South West is also projected to have the highest regional rate of growth in households over the next ten years, at 9%. This compares with 8.7% in the EM and 4.3% in the NE (the lowest).

Overall the number of households in England is projected to increase by 1.6m (7.1%) from 23.2m in 2018 to 24.8m in 2028. The EM is forecast to have 2.2m households by 2028.

Given the closure of the housing market following lockdown the ONS has suspended its property price index until further notice.

At -1% the East Midlands economy shrinks the slowest in the UK following lockdown but pre-pandemic data also shows an earlier contraction

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A quarterly nowcast for the EM for the 3 months ended March 2020 which captures the start of lockdown, published by the Economic Statistic Centre of Excellence (‘ESCoE’), has estimated that the EM economy contracted by 1%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the EM first and suggests the regional economy has coped better with the pandemic relative to the other eleven ‘regions’ of the UK. Over the same period London fell by 2.2% with Northern Ireland’s 3.9% contraction the ‘worst’; the UK decline was 2%.

For the 12 months ended March 2020 on a rolling 4 quarter basis, ESCoE has estimated that EM growth has dropped from 0.1% to -0.6%.

This ranked the EM last (previous ranking also twelfth) and suggests the region has not improved its position relative to the other eleven parts of the UK although the gap has narrowed. Over the same period UK growth was 0.5%; growth in London (ranked first) was 1.8%; and growth in Wales (ranked eleventh) was -0.5%.

ONS GDP to September 2019

Official ONS figures for an earlier period which reflects Brexit uncertainty rather than Covid 19 turmoil, show the region’s relative dip compared with other parts of the UK.  Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its fourth estimate for the EM, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before ESCoE’s estimates shown above and compare GDP in the quarter ended September 2019 with the same quarter a year earlier. These showed the EM grew by 0.7%, down from 1.9% the previous quarter. This placed the EM sixth (previous ranking fourth) out of the twelve UK ‘regions’.

London topped the table with growth of 5% whilst UK growth over the same period was 1.2%. The West Midlands was the worst performer and contracted by 1.5%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures also highlighted that the standalone quarter to September 2019 was poor for the EM and much worse than the previous quarter. The EM economy fell by 0.3% in July to September 2019, following growth of 0.6% in April to June 2019.

This placed the EM last (previous ranking second) out of the twelve UK ‘regions’. The EM was one of four regions of the UK that saw their economies contract but overall the UK grew by 0.5%.

Again London was top with quarterly growth of 1.4% whilst the North West, South East and Northern Ireland all contracted by 0.2%.

In this period, the EM’s best sector was arts/entertainment/recreation with growth of 6.9% but professional/scientific/technical activities fell by 4.6%. Overall services grew by 0.1% and construction by 0.6% but production fell by 2.2% and agriculture by 0.2%.

Labour

More largely pre-pandemic data from the ONS showed unemployment in the region was 4,000 higher at 94,000 between January and March; the uplift of 0.2% took the rate to 3.8%. At 5.4% the North East was the highest; Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80.2% which compared with 78.2% in the EM where 2.4m are employed; the UK rate was 76.6%.

Housing

The EM’s average property price decreased over the month by 0.4% to £194,664. The drop took the annual increase to 2.1%. In comparison, UK prices dropped by 0.2% to £231,855 during March, also an annual growth rate of 2.1%.

The ONS data is based on completed housing transactions. Typically, a house purchase can take 6 to 8 weeks to reach completion so the price data in the March figures will therefore reflect those completions that occurred before lockdown.

Given the closure of the housing market following lockdown the ONS has suspended its index until further notice.

EM’s export performance the second best in the UK with the USA the region’s largest market and the region builds 30% more houses

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HMRC has published the latest regional trade figures which show exports and imports for 2019. Given the time period this data reflects Brexit uncertainty rather than Covid 19 turmoil. 

In the year to December 2019, the overall value of UK trade in goods exports increased by 2.1% to £346bn compared with the same period in 2018. The overall value of imports increased by 0.3% to £483bn.

There was an increase in the annual export value in the EM along with five of the 12 UK ‘regions’. The EM’s exports increased by an impressive 9.7% or £2.2bn to £24bn which was 7% of the UK total.  

The leading regional exporter was the SE of England at £46.5bn and Northern Ireland was the smallest at £9bn. The best performer in percentage terms was London which added 17% with EM second; this compared with Yorkshire & the Humber which dropped by 6%.

There was an increase in the annual import value in the EM along with five of the 12 UK ‘regions’. The EM’s imports increased by 4.6% or 1.3bn to £29bn which was 6% of the UK total.

The leading regional importer was the SE at £98bn and Northern Ireland was the smallest at £8bn. In percentage terms London added 12% compared with Scotland which reduced imports by 7%.

The USA was the EM’s largest export marke t with machinery & transport equipment the best export. Most of the EM’s imported goods came from Germany with machinery and transport equipment the biggest import.

Services

This month the ONS published data on regional services imports for 2017. The largest component of services imported into the UK was £51bn of travel. This was 28% of the £181bn UK total imports of services.

The EM’s imported £8bn of services value in 2017 of which £3bn was travel. The biggest importer of services was London at £60bn with Northern Ireland importing £1.6bn.

At a local level, the largest importer of non-travel services into the UK was Camden and City of London at £14.5bn, almost double the next largest importer which was Westminster at £7.9bn. Of the 167 local areas, The Western Isles of Scotland imported the least amount, £21m, with Anglesey next at £31m.

In the EM, Leicestershire CC and Rutland imported £834m of non-travel services compared with £190m in East Derbyshire.

The data on services exports was released by the ONS last year which showed the EM exporting £7.6bn of services which compared with London at £117bn and Northern Ireland at £2.9bn.

Other data

The ONS has also published the latest regional construction sector data to December 2019 which again reflects Brexit uncertainty rather than Covid 19 turmoil. Compared with the previous quarter all parts of the UK recorded a decline with the EM posting a 1.8% drop to £3.2bn. The biggest decrease in the UK was 4.6% in the West Midlands; the SE was best with a 0.9% fall. Within this though 4980 new houses were completed in the EM, an increase of 30% on the previous quarter, the biggest uplift in the UK.

More pre-pandemic data from the ONS showed unemployment in the region was 4,000 higher at 100,000 between December and February; the uplift of 0.2% took the rate to 4.0%. Northern Ireland had the lowest rate of 2.5%, the NE the highest at 5.6% with the UK rate at 4%.

The South East had the highest employment rate at 80.1% which compared with 77.7% in the EM’s where 2.4m are employed; the UK rate was 76.6%.

The EM’s average property price decreased over the month by 1.5% to £192,244. The drop took the annual increase to 0.7%. In comparison, UK prices dropped by 0.6% to £230,332 during February, an annual growth rate of 1.1%.leading

Mickleover in Derby the wealthiest area in England but Highfield North in Leicester the poorest, all of the region’s LEPs see productivity growth

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes shown are after tax and housing costs are taken off.  The analysis has shown that 87% of local areas had an average household income of between £22,500 and £39,200; within this over a third were between £28,000 and £33,600.

Of the 50 areas with the highest total incomes, 41 were in London, with the lowest incomes more widely spread geographically across England and Wales. The North East, East England, London, and the South East had no local areas in the bottom 50.

The wealthiest area in England and Wales was Mickleover in Derby with incomes of £52,200 and the poorest was Highfield North in Leicester with £12,500. The two areas are 30 miles from each other and ranked 7200 places apart.

Four other areas of the region also made the wealthiest top ten; Allestree in Derby, Lady Bay in Nottingham and parts of South Northamptonshire.

Like most regions of the UK, output per hour in the EM is below the UK average. Productivity per hour in the region was 13.5% below the UK average which ranked the region eighth nationally for 2018. One reason for this is the high levels of hours worked and high productivity in London and South East which pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into EM’s performance.

Perhaps the most useful is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the Black Country LEP at 24% below was the worst.

All of the region’s LEPs recorded productivity below the UK average. The best was SEMLEP ranked 13th at 4% below, the rest all performed poorly and ranged from 10% to 18% below the UK average. Leicestershire LEP, Derbyshire and Nottinghamshire LEP and Greater Lincolnshire LEP were ranked 24th, 28th and 36th.

In terms of productivity growth between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

The EM’s results for productivity growth were better. With growth of 7% SEMLEP was ranked 6th in the UK. Greater Lincolnshire LEP was ranked 18th nationally with growth of 3% just beating Derbyshire and Nottinghamshire LEP. Leicestershire LEP was ranked 29th with 1% growth which meant none of the region’s LEPs recorded productivity levels lower in 2018 than 2010.

Despite this, all of the EM’s three subregions recorded productivity below the UK average. Leicestershire, Rutland and Northamptonshire -12%, Derbyshire and Nottinghamshire -14% and Lincolnshire -18%.

At a county level, with the exception of South Nottinghamshire (+0.2%) all of the EM’s economic regions recorded productivity below the UK average. North Northamptonshire had the lowest productivity, 24% below the UK average.

The growth in hours worked between 2010 and 2018 in Leicestershire, Rutland and Northamptonshire was 11%, beating Derbyshire and Nottinghamshire which recorded 9%. In UK terms this level of growth was in the top half of the country’s 40 subregions. Lincolnshire grew 5% which ranked 38th.

If the increase in economic output is also factored in then the sub regional performances are also good, mirroring the region’s LEPs. Lincolnshire was ranked 8th in the UK with growth of 8%, Leicestershire, Rutland and Northamptonshire was placed 15th with 4% and Derbyshire and Nottinghamshire 17th with 3%. 

More data from the ONS showed unemployment in the region was 8,000 higher at 98,000 between November and January; the uplift of 0.3% took the overall rate to 3.9%. Northern Ireland had the lowest rate of 2.4%, the North East the highest with 6.2%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80% which compared with 78% in the EM where 2.4m are employed; the UK rate was 76.5%.

The EM’s average property price decreased by 0.4% to £195,707, which took the annual increase to 2.3%. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

EM’s economic growth volatile, depending on the period the region ranked second or last, productivity growth the second best in the UK and a big drop in unemployment

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that EM’s growth has dropped from 0.7% to 0.1%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked the EM last (previous ranking eleventh) and suggests the region has worsened relative to the other eleven parts of the UK. Over the same period UK growth was 1.4% and growth in London (ranked first) was 3.3%.

The latest official ONS figures for an earlier period are better. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for the EM, the other eight English regions, and Wales.  GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before the ESCoE estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures showed the EM economy grew by 1.8%, down from 2% growth the previous quarter. This placed the EM second (previous ranking fifth) out of the twelve UK ‘regions.’

London topped the table with growth of 4.5% whilst UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ (including the WM) in the UK to suffer a decline.

In the same report, the ONS’s figures also highlighted that the standalone quarter to June 2019 was also better for the region than the previous quarter. The EM economy grew by 0.6% in April to June 2019, following growth of 0.1% in January to March 2019.

This placed the EM third (previous ranking ninth) out of the twelve UK ‘regions’. Six regions of the UK saw their economies contract as did the UK overall by 0.2%.

In this period, regional sectors, electricity/gas/steam/air conditioning supply and manufacturing grew by 8.0% and 1.0%. Also finance and wholesale/retail trade grew by 9.4% and 1.9% but EM’s professional scientific and technical activities fell by 3.7%.

In general all sectors in the region grew, with production, services, construction and agriculture expanding by 1.6%, 0.3%, 0.2% and 0.1% respectively. Construction has been the best performer relative to 2017 with agriculture, production and services moderately flat since Quarter 3 (July to Sept) 2018 although production saw an uplift in Quarter 2 2019.

Productivity

Like most regions of the UK, output per hour in the EM was below the UK average. Productivity in the EM was 13.5% under the norm which ranked the region eighth in the UK.

Two regions had productivity above the UK average in 2018, London +31.6% and the South East +9.1%. These regions record high levels of hours worked and their high productivity pulls up the UK average so much that all other regions fall below it. Wales was furthest off the average at -17.2%.

The EM moved down the rankings slightly to ninth in terms of output per job. This means that on average workers in the EM worked shorter hours for each job compared with the UK average. The region’s 14.5% below the UK average compared with London at 40.5% above.

In terms of growth in output per hour, six regions of the UK expanded. The EM was ranked second as output per hour grew by 2.1%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK growth was 0.5%.

In terms of sectors, productivity in arts/entertainment/recreation was better than expected but finance and insurance disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the region decreased by 21,000 to 89,000 between October and December; the big drop of 0.9% took the rate to 3.6%. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.1% which compared with 78.4% in the EM, where 2.5m are employed; the UK rate was 76.5%.

In December, average earnings in the EM fell by £3 to £580 per week. London had the highest average earnings of £805 and the lowest average earnings of £530 were recorded in the NE. The EM was ranked eighth (previous ranking also eighth).

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

The EM’s average property price increased by 0.5% over the month to £197,048, the uplift took the annual increase to 2.8%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

The gap between the EM’s tax take and public spending shrinks, the region sees the biggest drop in unemployment in Britain and £3m is spent on finding a missing £10m loan

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, the EM had a deficit of £6.3bn, a smaller shortfall than the £7.5bn recorded in 2018. This compared with London, which had the highest surplus of £38.9bn.

On a per person basis, the EM’s deficit was £1,303, lower than the £1,578 recorded in 2018. London had the highest surplus of £4,369 per person whereas Northern Ireland had the biggest shortfall at £4,978.

The only areas of the UK to run surpluses were London, the SE of England and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; all the other regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in the EM was £56.6bn or £11,784 per head, an increase on the 2018 figure of £55.7bn. London had the biggest spend of £123.9bn or £13,826 per head whereas Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

The EM collected £50.8bn in taxes in 2019. London contributed the most to the Exchequer at £161.9bn, compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes, an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in the EM fell by 16,000 to 95,000 between September and November 2019; the decrease of 0.6%, the biggest drop in Britain, took the overall rate to 3.9%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%.

The South West had the highest employment rate at 79.8% which compared with 77.2% in the EM. UK employment was estimated at 76.3%.

EM’s average property prices increased by 1.1% during November 2019, the uplift to £197,792, increased annual growth to 2.5%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

Regional governance was again in the spotlight this month after it emerged a law company set up by Northamptonshire county council and two other local authorities has recorded a £1.2m loss. The firm, LGSS Law, is owned by the three councils and offers public sector legal services. A £1m overdraft offered by Northamptonshire County Council has been largely drawn down as has £375,000 of a Cambridgeshire Council overdraft.

Northamptonshire County Council suffered its own cash flow problems in 2018 which led to a scheme to abolish it and seven other district and borough councils. The mismanagement led to roads not being gritted, libraries being taken over by the community and the government giving the council permission to raise council tax by 5%.

The estimated cost of setting up the new authorities is £44m but annual savings of £85m could be achieved. Existing councils will be scrapped and replaced by two unitary authorities, West and North Northamptonshire, under which will sit Northampton Town Council, England’s largest town council.

One of the scrapped councils will be Northampton Borough Council, whose £10.25m loan to Northampton Town Football Club in 2013/2014 to redevelop Sixfields stadium, is still being investigated by the police. The council has already apologised following a report by PwC in 2016 which said the loan was rushed through without sufficient checks.

So far more than £3m has been spent on an inquiry into the missing money. The council has paid out £2.3m and Northamptonshire Police has spent £974,000 investigating allegations including theft and fraud. Most of the council’s spend has gone on external lawyers and accountants.

On HS2, the Department for Transport and HS2 Ltd did not allow for all uncertainties when estimating initial costs, the National Audit Office (NAO) has said. In 2015, HS2 was due to cost £56bn but a leaked government report suggests the total could reach £106bn. At this cost the decision whether to proceed or not will be taken at Prime Ministerial level next month.

Leicestershire based Norton Motorcycles has gone into administration. The iconic British motorcycle brand was struggling to pay a tax bill and faced a winding-up order; 100 jobs at its Castle Donington factory are at risk.

The East Midlands posts average 2018 growth, Derby has the third fastest growing local economy in the UK but South and West Derbyshire underperforms, a big drop in EM’s unemployment

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the EM economy grew by 1.1% in 2018, down from the 2017 growth rate of 1.6%. This placed EM seventh (2017 ranking eighth) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Growth in Wales was 1.3%, Scotland grew by 0.9% and the Northern Ireland economy shrank by 0.5%.

London topped the 2018 table with growth of 2.0% whilst Northern Ireland was at the bottom.

Within the region, the Derby economy grew the fastest at 6.9%, followed by North Nottinghamshire at 2.7% and South Nottinghamshire at 2.5%. Across the UK, the highest annual growth of the 179 local areas was in Falkirk at 10.5%, Derby was third.

Two areas of the region saw their GDP decline in 2018. The worst performer was South and West Derbyshire at -5.1% followed by Nottingham at -0.6%. In UK terms, the lowest annual growth of sub national areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 6.8% to £30,610 was seen in Derby but Nottingham was still top in the region at £34,472. GDP per head fell by 5.7% in South and West Derbyshire to £21,480 but despite growing by 2.2%, North Nottinghamshire posted the lowest GDP per head in the region at £21,284.

In terms of UK extremes, GDP per head was £395,309 in Camden and the City of London and £15,034 in Ards and North Down. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the EM economy were information/communication at 10% and arts/entertainment and transport both at 4%. Those areas that did not perform well were mining which dropped by 3%, agriculture down by 2% and public administration/defence fell by 1%. Overall the services sector grew by 1.8% and construction by 0.5% but production fell by 1.2%.

The 2018 performance of the region’s enterprise partnerships was also highlighted by the ONS. Of the UK’s 45 development bodies, South East Midlands (Northamptonshire) was ranked 8th in the UK (2017 ranking 30th) with growth of 2.1%, with Leicestershire moving up the rankings from 32nd to 16th with growth of 1.7% and Derby, Derbyshire, Nottingham, Nottinghamshire moving up five places to 29th. With -0.3% growth, the region’s other LEP, Greater Lincolnshire, fell from 15th to 37th.

More data from the ONS showed unemployment in the EM fell by a whopping 25,000 to 90,000 between August and October 2019; the decrease of 1.0% was the best in the UK and took the overall rate to 3.7%. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.8% which compared with 77.3% in the EM. UK employment was estimated at 76.2%.

EM average property prices fell by 0.7% during October 2019 to £194,134, which took annual growth to 1.3%. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

ONS and ESCoe regional growth figures suggest the EM plummets down the UK rankings over nine months, the economy contracts in Q1, but a good increase in regional pay

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The mechanism by which councils will have the opportunity to bid for funding of up to £25m as part of the government’s £3.6bn Towns Fund  has been unveiled by Midlands Minister, Robert Jenrick. The Towns Fund prospectus provides information to councils in 100 places chosen to pioneer Town Deals and councils will receive a share of £16.4m funding to shape up their plans.

The funding could be used to redevelop vacant buildings and land, support small businesses, boost transport links and increase access to high-speed broadband.

Lead councils in each place will now bring together a Town Deal Board, including representatives from across the public, private and voluntary sectors, to develop bespoke Town Investment Plans by summer 2020.

Thirty towns are in the Midlands Engine area. EM towns include Corby, Mansfield Northampton, and Staveley amongst others.

The region did well on infrastructure investment this month.  Of the £255m Housing Infrastructure Fund spend announced by the Chancellor, £43m was earmarked for the EM.

A bid from Rutland County Council to deliver a new school and infrastructure at St George’s Barracks, North Luffenham, secured £29m. Also Leicestershire County Council was awarded £15m for the Melton Mowbray Southern Distributor Road.

Legislation to create two unitary authorities in Northamptonshire to replace the troubled county council and the district and borough councils has been parked.

The government had already approved the plan, and Parliament was expected to pass it before the election, but it was put on hold after Labour called for a third unitary council in the county, to serve Northampton only.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its next estimates for the East Midlands, the other eight English regions, and Wales, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The latest available figures showed the EM’s economy annually grew by 2.0%, down from 3.4% growth the previous quarter. This placed the EM fifth (previous ranking first) out of the twelve UK ‘regions.’

London topped the table with growth of 4.2%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures also showed that the region’s economy was one of three in the UK to contract in the quarter to March 2019, the others were Y&H and Wales. The EM economy declined by 0.2% in January to March 2019, following growth of 0.3% in October to December 2018.

In this period, the education industry grew by 5.6% and made the largest positive contribution to growth whereas administrative and support service activities fell by 6.9% and made the largest negative contribution.

Overall, the services sector was the only positive contributor to GDP, while agriculture and production went into reverse and construction made no contribution either way.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked the EM eleventh (previous rank ninth) with growth of 0.7%, which suggests the region has had a poor summer relative to other parts of the UK and has slipped from first to eleventh in nine months.

Using this metric, UK growth was 1.45%. Growth in London (ranked first) was 2.32%, which compared with the South West of England (bottom) at 0.41%

More data from the ONS showed unemployment in the region increased by 6,000 to 101,000 between July and September; the uplift of 0.2% took the overall rate to 4.5%. Northern Ireland had the lowest rate at 2.5% with the UK rate at 3.8%. The highest rate was 5.9% which was recorded in the North East.

The South West had the highest employment rate at 81.0% which compared with 76.7% in the region. UK employment was estimated at 76.0%.

In September, average earnings in the EM were up by £30 to £584 per week, the second highest uplift in the UK. London had the highest average earnings of £830. The lowest average earnings of £527 were recorded in Wales. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

EM’s average property prices fell by 1.2% over the month to £194,219, which took annual growth to a meagre 0.1%. In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%.

The first new development corporation at Toton and the governance of Northamptonshire councils in the spotlight again

Reading Time: 3 minutes

Unemployment in the EM increased by 7,000 to 111,000 between June and August, which took the overall rate to 4.5%.

The South West continued to record the lowest unemployment rate at 2.4% with the UK rate at 3.9%. The highest rate was 5.8% which was recorded in the North East.

The South West also had the highest employment rate at 81.0% which compared with 76.6% in the EM. UK employment was estimated at 75.9%.

EM’s average property prices increased by 1.8% to £197,682, which took annual growth to 2.6%. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

The ONS’s Personal Well-being (or Happiness) Index has ranked the EM fifth out of the 12 UK ‘regions’ in terms of an improvement in life satisfaction since the last survey. The Northern Irish were the happiest folk in the UK with Londoners the most miserable.

Development

Robert Jenrick, the Minister for the Midlands, has announced £10m of funding targeted at new development corporations which will enable councils to progress proposals to deliver more new towns and economic growth opportunities on the scale of Canary Wharf or Milton Keynes,

The first project, a new Development Corporation at Toton, will be led by the Midlands Engine chairman, Sir John Peace. Toton is located close to the M1, East Midlands Airport and the proposed HS2 rail hub.

Historically development corporations have helped established over 20 new towns including Milton Keynes and Telford, as well as delivering urban regeneration projects such as Canary Wharf.

Many of the laws needed to set up and run development corporations date from the early 1980s and a review is being undertaken to see whether they need to be updated.

Flooding affected economic development across the East Midlands as heavy rains hit the region.

As well as drivers stuck in floodwaters, events including the Matlock Bath Illuminations had to be called off. Last year Derbyshire Dales District Council spent £163K staging the event but this investment was more than recouped by c60K paying visitors.

A new £20m museum dedicated to motorsport has opened in Northamptonshire. The Silverstone Experience is housed in a World War Two hangar on the former aerodrome site and is expected to attract about 500,000 visitors a year.

The private sector funds for the project were more than matched by a £3m loan from South Northamptonshire Council and a £9.1m grant from the Heritage Lottery Fund.

Regional governance was again in the spotlight this month. A public interest report, undertaken by KPMG at a cost of c£100K, will investigate how Northamptonshire County Council collapsed after an overspend by £35m of its £416m 2017/18 budget.

Public interest reports are part of the Audit Commission Act 1998 and are issued when auditors believe they should highlight significant matters to the public.

The mismanagement led to roads not being gritted, libraries being taken over by the community and the government giving the council permission to raise council tax by 5%. The county council will cease to exist from spring 2021 with two new unitary authorities planned to replace the county and district councils at a cost of £60m.

Meanwhile, Northampton Borough Council’s £10.25m loan to Northampton Town in 2013/2014 to redevelop Sixfields stadium is being investigated by the police. The council has already apologised following a report by PwC in 2016 which said the loan was rushed through without sufficient checks.

Regional landmark, Cottam coal-fired power station, was turned off this month. Commissioned in 1968, the plant originally had an anticipated operational life of 30 years and was capable of generating enough electricity for 3.7m homes.

Work to decommission the power station has begun and is likely to involve levelling the buildings. The closure leaves six major coal-fired stations working in the UK.

Transport

CBI East Midlands, West Midlands, Yorkshire and Humber, London, the North East and North West regional directors have urged the government to build the HS2 rail project in full.

However, a paper by the Adam Smith Institute, also released this month, claims that HS2 will deliver limited benefits and that some Northern cities could lose direct trains to London.

It recommends instead, upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, building new sections of railway and targeting bottlenecks at key junctions.

Phase 2 of the project, (Birmingham to York via the East Midlands) is due to open at the end of 2033. Once the new Phase 1 line from Birmingham is completed, the line will head northeast and form the proposed East Midlands Hub located at Toton, which will serve Derby, Leicester and Nottingham.

The line would then connect with the northbound East Coast Mainline south of York. A parallel spur to the northbound HS2 track will use the Midland Main Line before rejoining the HS2 track east of Grimethorpe. Chesterfield and Sheffield will be served by HS2 classic compatible trains on this spur.

On the buses, Yourbus, which served routes in Derbyshire and Nottinghamshire, has ceased trading.

A refreshed Midland’s Engine strategy promised by the autumn and new regional GDP figures from the ONS ranks the East Midlands first

Reading Time: 4 minutesThe Ministry of Housing, Communities and Local Government has published its deprivation index which looks at an area’s levels of income, employment, education, health and crime as well as housing services and living environment. Jaywick in Essex, near Clacton-on-Sea, was previously found to be the most deprived in the last two reports in 2010 and 2015 and it has won this unwelcome accolade again. Jaywick is followed by nine areas of the North West as the most deprived in England, part of Gainsborough is the first EM entry ranked 24th. The Ministry divides England up into 32,844 neighbourhoods averaging about 1,500 residents or 650 households each.

In terms of local authorities, 31% of Nottingham was classified as deprived which ranked the city 15th worst in the UK but no other EM local authority made the top 32. In terms of performance since 2015, one area of the EM has seen deprivation accelerate the fastest in the UK. Mansfield was ranked fourth and saw deprivation increase by c6%.

Mansfield is one of the EM towns invited to apply for regeneration funding as part of the £3.6bn Towns Fund which is targeted at 100 English towns. Towns must submit economic growth plans with a focus on improved transport, broadband connectivity, skills and culture. The Midlands were also awarded £21.1m as part of a £95m pot to revive historic high streets, with Leicester, Newark and Grantham some of the half dozen or so EM towns that will benefit.

During a tour of Bombardier in Derby, Midlands Minister Robert Jenrick, announced the government’s commitment to further devolution deals across the region. He also undertook to deliver a new Midlands Engine Strategy this autumn which will be written in partnership with the region.

Transport
Construction work continues while the HS2 review is ongoing but if HS2 does goes ahead, the first phase between London and Birmingham will be delayed by up to five years, Transport Secretary, Grant Shapps, has confirmed. That section of the line was due to open at the end of 2026, but it could now be between 2028 and 2031 before the first trains run on the route. Undeterred, regional transport body Midlands Connect, has submitted proposals to the Department for Transport (DfT) for a 33-minute service between Birmingham and Nottingham and a 90-minute connection from Leeds and Bedford via Leicester. Trains between Birmingham and Nottingham currently take c70 minutes, whilst Leeds and Leicester takes two hours plus. The DfT said an independent review will consider Midlands Connect’s submission; HS2’s total cost has risen from £62bn to between £81bn and £88bn.

In the air, services from the East Midlands to Brussels have restarted after the route was lost when Flybmi went into administration. Loganair will operate the route six days a week after Burnaston-based Toyota offered assurances it would use it regularly. Loganair will also fly to and from Inverness.

Development
A Jaguar Land Rover distribution centre in Appleby Magna will go ahead on a 238-acre site at junction 11 of the M42. The new facility will service 80 countries, create 1,200 immediate jobs with 3,000 forecast by 2030. JLR said it would consolidate work of 10 sites, cut their vehicle movements, and improve efficiency. Work on the site could start in 2020 and be completed in 2023. When fully operational, developers say the project will contribute an additional £139m pa to the region.

Jobs
Car dealer Pendragon is to cut c300 jobs and close more than 20 showrooms. The firm confirmed it will shut nearly two thirds of the Car Store chain, with just 12 of its 34 branches surviving. The firm also trades under the Evans Halshaw and Stratstone brands and is one of Nottinghamshire’s largest companies.

A labelling error which resulted in a firm recalling several brands and flavours of popcorn because they may have contained milk, led to significant losses which has consequently led to its administration. Nottinghamshire-based Thomas Tucker supplied snacks and sweets to cinemas and supermarkets across the UK. The underlying cause was disputed but the company agreed a voluntary product recall following an investigation by the Food Standards Agency. The administrator hopes to sell the firm as a going concern but of the 116 headcount, 64 staff have so far lost their jobs.

The Stats
For the first time, the ONS has published quarterly GDP estimates for the East Midlands, the eight other English regions and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013. The latest available figures, which are for the year ended 2018, showed the EM economy grew by 3.4%. This ranked the EM top out of the twelve UK ‘regions.’ At the bottom of the league the South West economy declined by 1.1%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed the professional, scientific and technical industry grew by 6.5% and made the largest positive contribution to growth but education fell by 7.9% and made the largest negative contribution. Each of the three main sectors (production, construction and services) all grew but construction was the main driver with production and services virtually at a standstill. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked the EM ninth with growth of 1.2%, which suggests the March ‘Brexit’ slowdown has hit the region harder relative to other parts of the UK.

More data from the ONS showed unemployment in the EM increased by 10,000 to 115,000 between May and July, the uplift of 0.3% took the overall rate to 4.6%. The South West had the lowest rate at 2.4% with the UK rate at 3.8%. The highest rate was 5.0% which was recorded in the North East. The South West also had the highest employment rate at 80.8% which compared with 76.9% in the EM. UK employment was estimated at 76.1%.

EM average property prices increased by 0.3% to £194,798, which took annual growth to 1.9%. In comparison, UK prices grew by 0.5% to £232,710 during July, an annual growth rate of 0.7%.