News & views

12 November 2019

Leicester has maintained its position as a top-performing UK city for the third year running, remaining as the tenth highest performing city this year, in PwC’s Good Growth for Cities 2019 index.

Article first published by Business Link East Midlands, published 12 November 2019

The annual Good Growth for Cities 2019 sets out to show there’s more to economic well-being than just measuring GDP.

The index measures the performance of 42 of the UK’s largest cities, England’s Local Enterprise Partnerships (LEPs) and ten Combined Authorities, against a basket of 10 factors which the public think are most important when it comes to economic well being. These include jobs, health, income and skills, as well as work-life balance, house-affordability, travel-to-work times, income equality, environment and business start-ups.

When measured against the priorities chosen by the public, four out of eight cities in the Midlands achieve scores above the UK average, with Leicester and Milton Keynes being the two cities in the top 10 of this year’s index.

Jane Cowley, Chair of Leicestershire Business Voice said: “This ranking is particularly interesting, given that this area still receives the lowest level of investment in infrastructure nationally. Clearly, investing in this region has the potential to produce a greater level of return and realise even more opportunities.”

Leicester scores well for its unemployment rate, new businesses per head, skills and income distribution, but below average on variables such as work-life balance and environment. The city saw the biggest increase in score since 2015-17 in the work-life balance measure, and the largest decrease in score over the same period was in house price to earnings.

However, Leicester was one of 11 cities to see a decline in their overall scores relative to the previous index, driven partially by the improvement, especially for top performers like Leicester, hitting a relative ceiling.

Elsewhere in the region, Derby scored well for jobs but below average on health, work-life balance and environment. Derby saw the biggest increase in its score for jobs since the 2015-17 index, and the biggest decrease in its health score.

Nottingham performed well in work-life balance and skills, but performed below average in areas such as new businesses per head and income distribution. The city saw its biggest increase since the 2015-17 index in its skills score, and the biggest decrease was in transport.

This year’s index sees nine in ten cities in 2016-2018 having scores higher than the average for all cities in the index’s base year of 2011-2013, highlighting the rate of recovery since the financial crisis. There is strong employment growth, which reflects the continued decline in unemployment, as well as improvements in work-life balance, perhaps as a result of more flexible working patterns becoming more acceptable.

The long term data suggests that performance over time on the index is not driven by a city’s starting position, but rather by a combination of local and national improvements in the economy and wellbeing factors. The figure below shows the change in average good growth index scores by variable across all cities since 2005-07 and 2016 – 18. Skills amongst the population of 16-64 year olds, alongside the number of new businesses created have seen the largest improvements in average scores over the period, however housing affordability and owner occupation have deteriorated over the period, alongside rising average commuting times.

The short term data tells a different story, as 11 cities in the index have witnessed a decline in their score relative to the 2018 index – this is partly driven by the fact that improvement (especially for top performers) has hit a relative ceiling. However, the price of success has become increasingly evident, with declines in transport and housing highlighting the ongoing infrastructure challenges faced by UK cities. There has also been a decline in skills among young people (16-24) and a decline in overall health.

Office senior partner for PwC in the East Midlands, Paul Norbury, said: “Leicester continues to be one of the UK’s top performing cities, whilst we continue to see Nottingham and Derby performing above the UK average in areas such as house price to earnings, jobs and work-life balance. This is testament to the region continuing to position itself as a great place to do business.

“Despite a backdrop of uncertainty local leaders have had significant success in delivering good growth in the East Midlands. Our research shows the need to take a comprehensive approach to growth, focusing on improving productivity to compete on a global stage, but also on ensuring fairness and inclusive growth so that people and places don’t feel left behind.

“Over the past 10 years Nottingham has seen an increase in its index score. This has primarily been driven by an improvement in the skills of 24-64 year olds, which is due in part to the increase we have seen in new businesses, strong jobs growth and improved work-life balance. It is great to see the region’s diverse and resilient economy enable it to be a great place to live and work.”

All Local Enterprise Partnerships (LEPs) have seen absolute increases in environment scores but absolute decreases in owner occupation scores since 2015-17. Skills amongst people aged 25+ was the variable that saw the largest improvement compared to the 2015-17 index, whilst house price to earnings measure saw the largest decline. The Leicester and Leicestershire LEP was ranked 16th out of 37 LEP areas, and saw the biggest increase in its skills for people aged 25+ score, and the largest decrease in house price to earnings. The Derby, Derbyshire, Nottingham and Nottinghamshire LEP (D2N2LEP) saw the biggest increase in its skills for people aged 16-24 score, and the largest decrease in health.

PwC partner and local government leader Jonathan House, said: “In an era of political, technological and environmental disruption, cities and regions that want to get ahead, need to do things differently. Even with the uncertainty of Brexit, over the last year, local leaders have had significant success in delivering good growth in their cities and regions.

“Local leaders need to take a broad view on what economic success means, focusing on the outcomes they want to achieve in terms of inclusive growth, community resilience and improved experience, and crucially, having a plan to translate those ambitions into reality.

“Skills amongst the working age population, alongside the number of new businesses created, have seen the largest improvements; this is a result of leaders focusing on building new opportunities and investing in the talent of their city and region.

“The UK’s cities are known globally for their skills, innovation and entrepreneurial spirit. Our most successful cities don’t compete against other UK cities, they compete against cities across Europe, the Middle East and the US. As the UK’s position on the world stage shifts, cities and regions will need to reposition themselves too, and consider how they can stand out and compete globally, improve productivity and support innovation, while also creating places that are fair and inclusive.”