Tag Archives: growth

‘Culture towns’: how small towns are leading the way

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Image Copyright Billy McCrorie via Creative Commons

There has been no shortage of headlines sounding the death knell for our town centres over recent years as they continue to suffer from the effects of growth in online shopping, government policy and now the pandemic. But while concerns over the future of town centres is nothing new, neither are the changes that town centres are experiencing.

Changes that affect industries, technologies and the way land is used – which in turn impact on the economy – have impacted communities for decades, particularly in smaller towns. From the loss of manufacturing to new industries and ways of working, towns have had to adapt to survive. And some small towns have been leading the way in reinventing their economic bases by using other assets to spur on their local economies.

Culture as a catalyst

One such example is Wigtown, Scotland’s National Book Town. Following the loss of a distillery and a creamery in the 80s and 90s respectively, Wigtown secured its designation as National Book Town in 1998. This acted as a catalyst for regeneration and inspired the creation of the annual Wigtown Book Festival which now attracts more than 20,000 visitors to the area and brings more than £4 million to the local economy.

Other Scottish towns have also been bestowed with cultural accolades. West Kilbride in Ayrshire, a once thriving mill town, is Scotland’s first accredited Craft Town and winner of a Creative Place Award in 2012. Dumfries recently became home to a new National Centre for Children’s Literature and Storytelling which aims to “establish itself as an international visitor attraction contributing to the regeneration of the town and region and providing Scotland with a world class tourism resource”. And Huntly in Aberdeenshire has attracted artists from all over the world for residents thanks to the Deveron Projects initiative set up in 1995 to connect artists, communities and places.

In England, Farnham recently became the country’s first World Craft Town and only the third region in Europe to receive World Craft City status. Recent research estimates that the value of craft to Farnham and the surrounding area is already in excess of £50 million.

With the aim of building on Wigtown’s success, plans are being drawn up for an open competition to create further National Towns of Culture across Scotland as proposed in the SNP’s manifesto. Suggestions include Scotland’s National Live Music Town, Folk and Trad Town, or Scotland’s Visual Art Town.

Numerous towns could be in the running to become a musical town. It has been suggested that Ullapool could be a frontrunner, after playing host to the Loopallu festival for 15 years, as could Stornoway, the host of the international Hebridean Celtic Festival (HebCelt). And of course, being home to Jimmy Shand and The Proclaimers, Auchtermuchty could equally be in with a shout.

Making the most of local assets

Now may be the ideal time for small towns to make the most of their local assets, whether that is cultural or otherwise.  Research has shown that some smaller towns have actually fared much better than larger cities during the pandemic as the importance of local has been emphasised. They have experienced fewer reductions in overall footfall and there has been an increase in footfall in some small towns as consumers look to stay local and avoid using public transport.

A report from Sustrans has recommended capitalising on the increased use of smaller high streets as a way to economic recovery. It highlights that this presents an opportunity to invest in other elements unique to these areas, arguing that “re-establishing the role of a high street as a hub for social connection and reinforcing and celebrating its roots and unique character could go a long way to encourage people to stay local and spend their money where they live.”

Lessons from the US

Research from the US has also shown how small towns can succeed by reinventing themselves through emphasising their existing assets and distinctive resources. Following the loss of various industries, these communities have moved away from trying to attract major employers as a way of attracting talent. Many have moved towards investment in creative infrastructure rather than physical infrastructure to make their communities more attractive to residents and businesses.  

Following increased suburbanisation and growth in out of town retail, Paducah in Kentucky, for example, changed its approach to economic development by focusing on developing and retaining the historic integrity of the Renaissance Area, which includes the LowerTown Arts District, the historic downtown, and the riverfront. Paducah’s approach aimed to develop a cohesive identity around its core assets: art, the Ohio River, and history. In 2013, the United Nations Educational, Scientific and Cultural Organization (UNESCO) designated Paducah the world’s seventh City of Crafts and Folk Art.

While all the case study towns in this research drew on different assets, several successful tactics were identified that other communities can use:

  • Identify and build on existing assets
  • Engage all members of the community to plan for the future
  • Take advantage of outside funding
  • Create incentives for redevelopment, and encourage investment in the community
  • Encourage cooperation within the community and across the region
  • Support a clean and healthy environment.

Small towns leading the way?

All these small towns are exemplars of community-led regeneration and illustrate how drawing on unique local assets can be a real catalyst for growth. Perhaps the bigger towns and cities should be looking to their smaller counterparts for lessons on how to succeed in an ever changing world.

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Are ‘dark stores’ bringing some much needed light to the high street?

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As we pass the first anniversary of the initial lockdown and look towards opening things up again, will we see a change in footfall trends in favour of the high street as people yearn to get out again, or will it continue to experience a downward trend?

Judging by pre-pandemic trends, it would seem that high street businesses will need to do more than just open back up to entice people back to the high street. Indeed, there were signs of diversification on the high street before the pandemic in response to declining footfall. And the pandemic has led to many more innovating to survive the current challenges, such as creating pop-up ecommerce centres. Perhaps such moves could help save the high street, albeit not as we know it.

A downward trajectory

The recent news of permanent closures of big-named high street stores such as Debenhams, Laura Ashley, Top Shop and Dorothy Perkins after the collapse of Arcadia Group, and the closures of more John Lewis outlets, suggest a bleak outlook for the high street. And the pandemic has spurred the worst decline on record.

Recent figures from PwC reveal that an average of 48 stores, restaurants and other leisure and hospitality venues closed every day in 2020 – a total of more than 17,500 outlets.

This may be the worst decline on record but it is also a continuation of the downward trajectory that the traditional high street was already on. And it has been argued that this is actually a reflection of things that happened pre-pandemic, with its full impact ‘yet to be felt’.

In its quarterly footfall monitor, the British Retail Consortium highlighted in May 2019 that high street footfall had fallen by 1% year-on-year and that vacancy rates on local high-streets had risen to 10.2%, equivalent to one in ten shops having succumbed to the high street crisis. This was the highest vacancy rate in four years and it continued to increase in the next quarter.

Support through a crisis

It has become clear that trends before the pandemic have just been accelerated by it. The continued growth in online shopping and the impact of government policy costs such as business rates are just a couple of the causes of the decline in high streets over the years that see little sign of abating. But the urgency of the current situation has seen a huge increase in government support across the board which has helped many businesses stay afloat as they try and wait out the storm.

In December 2020, the UK government announced it would invest up to £830 million from the Future High Streets Fund in local high streets across England to help them recover from the pandemic and drive long-term growth.

In September 2020, funding was secured for England’s historic high streets through the £95 million government-funded High Streets Heritage Action Zone (HSHAZ) programme, which is delivered by Historic England. The aim of this is to help transform and restore disused and dilapidated buildings into new homes, shops, work places and community spaces, restoring local historic character and improving public realm.

And just this month, the government has announced a series of new measures to support a safe and successful reopening of high streets and seaside resorts, including a £56 million Welcome Back Fund to help councils boost tourism, improve green spaces and provide more outdoor seating areas, markets and food stall pop-ups. This builds on the £50 million Reopening High Streets Safely Fund announced in May 2020. Similar support schemes have been introduced by the devolved administrations in Scotland, Wales and Northern Ireland.

Of course, this hasn’t been enough to save the high street stores that have announced closures. But it brings to the fore once more that high streets are about more than just shops as each funding programme highlights the aim of transforming high streets into vibrant mixed-use places where consumers can enjoy social experiences.

Adapting to survive – dark stores bringing light to the high street

As the PwC study suggests, it is really about keeping up with consumer behaviours that is the challenge for retail, perhaps even more so in times of crisis. And there have been many examples of high street retailers adapting to survive.

With the huge increase in online shopping during the pandemic, many manufacturing and distribution centres were operating at maximum capacity which led to some retailers unlocking the potential of their local high street stores to provide local distribution hubs, known as ‘dark stores’.

Lush is one company that changed the way they used their retail space so they could continue to use it while their stores were closed. It created Lush Local, a pop-up e-commerce centre which used the shop as a local distribution centre so they could fulfil local orders and not let their current stock go to waste.

Some businesses have also partnered with others to make use of local unused space such as Crosstown Doughnuts which have been trialling the use of dark stores in Cambridge and Walthamstow, partnering with independent operators so it can provide on-demand deliveries and collections to customers.

As ‘bricks and mortar’ retailers try to adapt to support their online capability, providing efficient local deliveries, at the same time as utilising their physical retail space, the ‘dark store’ trend may be here to stay. Pre-pandemic, it was reported that using dark stores and offering click and collect can reduce delivery costs and increase profit margins. Analysis showed that if deliveries from dark stores increase by 50%, profit margins could grow by 7% as a result of lower delivery costs and higher delivery throughput compared to conventional stores (while also not affecting store operations).

And it has been suggested that this model can be further adapted to provide ‘hybrid stores’ as shops re-open. These hybrid stores enable local stores to combine space for their fulfilment centre with their physical shop so consumers can still benefit from the tangible experience offered in store that can’t be replicated online.

Final thoughts

Only time will tell if recent innovations will have the desired effect. What is clear is that the rate of change cannot continue at the pace it was before the pandemic if high streets are to have a fighting chance. Dark and hybrid stores could be part of the answer. But much more is needed.

The most successful high streets, it is argued, will offer a mix of retail, entertainment, culture and wellbeing as they focus on the experiential side of things, because, in the words of retail guru Mary Portas, “vibrant, innovative, socially dynamic high streets will help this country not just heal, but thrive.”

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Guest post: How working from home could revitalise rust belt cities

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Michel Serafinelli, University of Essex

For years, we have been promised a work-from-home revolution, and it seems that the pandemic has finally brought it to pass. In April this year, at the height of the first wave of coronavirus, 47% of people in the UK were working from home, the vast majority of them doing so because of the pandemic. In a sense this is overdue: the work-from-home potential for UK employees is 32%; in France, Germany and Italy between 24% and 28%.

This structural transformation has the potential to at least partially undo another transformation from the previous century. With the decline of manufacturing in the United Kingdom after the 1970s, some cities – incuding Hull, Sheffield, Bradford and Stoke-on-Trent – entered a spiral of high unemployment and out-migration that has lasted to this day. This trend is echoed in other “rust belt” cities such as Saint-Etienne in France, Wuppertal in Germany and the American city of Detroit.

The rise of teleworking could end that spiral – if the right conditions are met.

The changing workplace

It’s unlikely that telework will end when the pandemic does – we will instead probably see workplaces encouraging a mix of in-office and home working. Some organisations may start asking workers to be in the office for only two to three days per week, while others may opt for a “conference model” (that is, a few consecutive days or a week per month for all employees).

This does not mean the death of big cities. London will probably stay attractive and innovative thanks to its very strong initial advantage. San Francisco and Seattle in US, Munich in Germany and Amsterdam in the Netherlands will all remain hubs for knowledge workers. Scholars believe face-to-face still rules when it comes to creativity, and such cities provide an environment that is conducive to innovation.

But rust belt areas are cheaper and can attract skilled workers to regularly spend more time there once the pandemic is over.

A busy street in Soho, London.
London will not lose its appeal. christo mitkov christov/Shutterstock

The job multiplier effect

How can formerly deprived cities thrive after the pandemic? To understand the potential for revitalisation of rust belt cities, we can invoke the job multiplier effect. This is where the presence of skilled workers helps create other jobs through increased demand for local goods and services. For example, after their day on Zoom (at home or in a local co-working space), skilled workers will want to go out. In this way they support a barista, a waiter, a chef and perhaps a taxi driver. Some will decide to renovate the house they live in, and ask a local architect. Once or twice a week they go for yoga. They may need a dogsitter when they travel.

This is not the only mechanism that could help with local revitalisation. Some of the people regularly spending more time in rust belt areas would be entrepreneurs, and we may see new business creation, as they seize new opportunities in industries such as culture, renewable energies, tourism, quality agro-food or handicraft.

In principle, therefore, our increased ability to work from home could lead to new growth opportunities.

Will it work?

But there are important caveats. Not all rust belt cities will be able take advantage of the post-pandemic world. After all, there were large differences in labour market performance after the 1970s, when the aggregate number of manufacturing jobs started to decline.

In the UK, both Middlesborough and Slough had 44% manufacturing employment in 1970. But their experience was vastly different in the three following decades, with Middlesborough employment declining by 13% per decade and Slough employment growing by 12% per decade. Places such as Norwich and Preston in the UK, Bergamo in Italy, and San Jose in the US were traditional manufacturing hubs that nonetheless performed well in the decades that followed the start of manufacturing decline in their countries.

To understand why we may see large differences across different cities again with the rise of working from home, we first have to think about differences in what economists call human capital endowments – this relates to the skills of the workforce in a particular place. For example, if locality A has a greater share of the workforce with a university degree than locality B, it has a higher human capital endowment and is more likely to recover from industrial decline.

The skill level of the workforce is important for the task of local reinvention – in our research team’s analysis of the reinvention potential for cities, we used the share of the workforce with a university degree as a proxy for this. To distribute these advantages across the board, scholars studying declining areas have called for measures aimed at boosting training and facilitating the assimilation of knowledge and innovation.

Another important challenge is the digital divide – the gap in speeds between areas with privileged access to the internet and the rest of the country. In the UK this is more than just a gap between urban and rural parts of the country – inner-city areas in London, Manchester, Liverpool and Birmingham are also left behind. A large reduction of this gap was important for job creation before COVID-19 – it should be a top priority now.

An overhead shot of a woman typing on a laptop at a table.
The UK’s digital divide affects cities too. marvent/Shutterstock

Local amenities also play a role. For skilled workers with family ties in a specific area, once they decide to regularly spend more time outside London, the choice of location is often pretty clear. For skilled workers without such ties, factors such as the cultural and recreational activities on offer in a new city become important, especially since they are used to a vibrant selection in London.

Overall, rust belt areas in Western economies face some opportunities for regeneration with teleworking, but there are also several important challenges. To maximise the potential for success, governments should consider measures that boost training, investment in high-speed broadband and improve transportation links between these cities and London.

These kinds of investments would help smaller cities such as Middlesborough, Hull and Stoke-on-Trent take advantage of the new opportunities presented by telework. Otherwise Manchester and, to some extent, other larger cities such as Birmingham and Liverpool could be the winners, among the rust belt, in the post-coronavirus work-from-home economy.

Michel Serafinelli, Lecturer in Economics, University of Essex

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Open access is rapidly rising but is it succeeding?

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Image by PLoS via Creative Commons

In an increasingly digital world where accessibility is a common goal, it is no surprise that open access (OA) publishing is increasing at a rapid pace. For UK research, there has been particularly notable growth in OA adoption. In 2016, 37% of UK outputs (25% globally) were freely available immediately on publication, up from 20% in 2014. This figure reached 54% within 12 months of publication – the first time the 50% OA barrier has been breached for UK articles in the Scopus database (Elsevier’s peer-reviewed abstract and citation database).

These are among the findings of a recent report from Universities UK (UUK), Monitoring the transition to open access, which illustrates the growth in OA and its implications. While the advancement of OA is generally seen as a positive outcome, this transition is not without its challenges.

What is open access?

OA is fundamentally about making research outputs freely accessible to all with limited restrictions with regard to reuse.

There are two main routes to OA, as highlighted in the UUK report:

  • Gold or immediate OA – this refers to articles published in an OA form in a journal, allowing immediate access to everyone electronically and free of charge. Publishers can recoup their costs in various ways, including through payments from authors called article processing charges (APCs), or through advertising, donations or other subsidies.
  • Green OA – this refers to the posting of a version of the published article so that it is accessible via a website, institutional or subject repository, scholarly collaboration network or other service. Access to the publication can either be granted immediately or after an agreed embargo period.

OA articles can also be published in hybrid journals which are subscription-based but provide some articles as OA, usually for a fee. According to the UUK report, more than half of UK articles in 2016 were published in hybrid journals, the proportion of which were published on immediate Gold OA terms was 28% – up from just 6% in 2012.

Growth

The numbers and proportions of both OA and hybrid journals have continued to rise, while the proportion of subscription-only journals has fallen. The number of articles published on immediate Gold OA terms is also rising, with a high level of take-up in the UK of hybrid OA options. Particularly notable findings from the report include:

  • the proportion of titles published globally offering immediate OA rose from under 50% in 2012 to just over 60% in 2016; and to nearly 70% for journals in which UK authors have published;
  • the proportion of UK-authored articles published on immediate Gold OA terms rose from 12% in 2012 to 30% in 2016, an annual growth rate of over 30% sustained throughout the period;
  • the global proportion of subscription-based articles accessible in some version, on Green OA terms, within 24 months of publication via a non-publisher website, repository or elsewhere, rose from 19% in 2014 to 38% in 2016, while the UK proportion rose from 23% to 48%;
  • OA articles are downloaded on average between twice and four times as much as non-OA articles; and in the UK, where the numbers of full-text articles in UK repositories increased by more than 60% between 2014 and 2016, the number of article downloads more than doubled from 6 to 12 million.

The rapid rate of growth in the UK appears to demonstrate the effects of policies to promote and support OA. The government has long been committed to the transition to OA, particularly since the Finch Report, and these figures show that the UK is world leading in “a significant global movement which is fundamentally changing the way that research is conceived, conducted, disseminated and rewarded.” (UUK)

Rising costs

Most would argue such growth is a positive outcome but the rise in OA has also contributed to other issues, such as the transitional costs to universities and research funders. The findings show that costs are also rising, and at a rate significantly above inflation. The mean average APC payment rose by 16% between 2013 and 2016, compared with a rise of 5% in the Consumer Price Index (CPI).

And the number of APCs paid has grown rapidly, with the ratio between subscription and hybrid APC expenditure falling from roughly 19:1 in 2013 to 6:1 by 2016. There is evidence of various offsetting deals, although these vary significantly and can be complex. The majority of known funding for APCs has however been provided by UK funders. Therefore tools that help universities identify and manage funding, such as RESEARCHconnect, could become even more important.

Concerns have also been raised around the financial implications for learned societies that publish academic journals. Although the findings show that publishing revenues have risen steadily over the period (18%), publishing expenditure has risen by 27%, resulting in falling margins.

A mixed picture is highlighted in terms of societies’ overall financial health, with a sharp rise in the number reporting a loss, although some of the most recent losses arose from strategic decisions or exceptional items. Of course, OA is not the only factor and the wider economic and political uncertainties are recognised as particular risks.

To mitigate the financial risks, societies are diversifying their income streams which could strengthen their role. But despite publishing margins being under increasing pressure, the report identified no evidence of systemic risk to UK learned societies or their broader financial sustainability from OA.

Final thoughts

In terms of the aim of policy in the UK to achieve a shift towards OA, the fast-paced growth can be considered a success. However, as the UUK report shows, there are still a number of challenges that need to be addressed.

According to the Chair of the UUK Open Access Coordination Group, the continued engagement of all stakeholders will be important “to ensure that the transition to open access is maintained, is financially sustainable, and that the benefits to research and to society are maximised.”

RESEARCHconnect is Idox’s latest funding service which provides information on thousands of funding opportunities dedicated to the UK research community. It supports universities, research institutions and research-intensive companies across Europe in identifying and disseminating R&D funding. In the current economic climate, there is increasing pressure to exploit alternative funding sources and RESEARCHconnect ensures that global funding opportunities will not be missed. Find out more.

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‘The great training robbery’ – one year on, is the apprenticeship levy having the desired effect?

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It’s now been a full year in operation, but will the apprenticeship levy “incentivise more employers to provide quality apprenticeships” and “transform the lives of young people who secure them”, as the government hopes?

A new report from Reform, which has reviewed the available evidence, suggests that “significant reforms are needed”.

Purpose of the levy

Unveiled in 2015 as part of the government’s commitment to deliver three million apprenticeship starts by 2020, the apprenticeship levy aims to encourage employers to invest in apprenticeship programmes and raise additional funds to improve the quality and quantity of apprenticeships.

The levy mandates that employers in England with annual wage bills of over £3 million pay a tax of 0.5%, which can then be spent on apprenticeship training. Employers pay their levy contributions via the PAYE system into a digital account held by HM Revenue and Customs (HMRC). Smaller employers can also access the funds generated through the levy, but they must pay a ‘co-investment’ of 10% towards the cost of the training.

According to the 2015 Spending review and Autumn statement, the levy was expected to raise £3 billion per annum by 2019/20. However, the evidence reviewed by Reform suggests the levy is instead leading to unintended consequences.

Lower quality apprenticeships and bureaucratic burden?

The number of apprenticeship starts following the introduction of the levy has continued to fall. Reform highlights that the number of people starting an apprenticeship in the six months after it was introduced was over 40% lower than the same period the previous year. The most recent figures are little improved – in December 2017 there were 16,700 apprenticeship starts compared to 21,600 in December 2016.

Reform also found that younger and less experienced people have been particularly badly affected with the focus now being towards Higher and Degree level apprenticeships. And many apprenticeships are now for low-skilled, low-wage jobs or for re-labelled management programmes and do not meet the original definition of an apprenticeship, thus diminishing the quality.

The OCED recently highlighted the importance of maintaining skilled roles in apprenticeships, noting that:

“In the long run, even just a small proportion of low-quality apprenticeships can damage the overall reputation and “brand” of apprenticeships.”

Skills, Knowledge, Abilities

The use of the levy to re-badge existing training courses as a way to shift the costs onto government is a particular concern. A CIPD survey of more than 1000 organisations in January 2018 found that:

  • 46% of levy-paying employers think the it will encourage their organisation to rebadge current training in order to claim back their allowance
  • 40% of levy-paying employers said it will make little or no difference to the amount of training they offer
  • 35% of employers will be more likely to offer apprenticeships to existing employees instead of new recruits

Commenting on the findings, skills adviser at the CIPD, Lizzie Crowley, said “this is not adding any additional value and is creating a lot of additional bureaucracy and cost.”

Reform argues that the impact on the public finances of allowing employers to re-label courses in this way should not be underestimated. It is estimated that inappropriately labelled ‘apprenticeships’ represent 37% of the people training towards any apprenticeship standard – a figure that could become even higher if employers are allowed to continue to rebadge training as they see fit.

If current trends continue, the government could be spending almost £600 million per annum by 2019-20 on training courses that have been incorrectly labelled ‘apprenticeships’.

stacked pounds shutterstock_66808108

Concerns have also consistently been raised over the complexity of the levy for employers. It has been claimed that the slump in apprenticeship starts could be blamed on “a combination of confusion surrounding the Apprenticeship Levy and the ‘increased administrative burden’ it placed on employers”. The Reform report highlights that the substantial increase in bureaucracy, among other issues, has led business groups to brand the levy ‘disastrous’, ‘confusing’ and ‘broken’.

Despite this, however, there is still support for the levy. A recent survey by the Chartered Management Institute (CMI) of over 1,500 managers found that two-thirds (63%) agree that it is needed to increase employer investment in skills. It has been suggested that employers have ‘fundamentally failed’ to prepare for the levy as the scale of the challenge was not recognised. And a lack of clarity from the government has also been attributed some blame.

Way forward

The evidence would suggest there is potential for the levy but not in its current form.

The Reform report recommends six significant changes if the objectives for funding apprenticeships are to be realised:

  • there should be a renewed focus on quality over quantity
  • a new internationally-benchmarked definition of an ‘apprenticeship’ should be introduced
  • the 10% employer co-investment requirement should be removed
  • a simpler ‘apprenticeship voucher’ model should replace the existing HMRC digital payment system
  • all apprenticeship standards and end-point assessments should be assigned a fixed cost
  • Ofqual should be made the only option for quality assuring the end-point assessments to maintain standards

If the necessary changes are made, the Reform report concludes that “apprentices, taxpayers and employers across the country stand to benefit for many years to come.”

If you enjoyed reading this, you may be interested in our other posts on diversity in apprenticeships and higher apprenticeships.

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A Scottish National Investment Bank: the solution to growing Scotland’s economy?

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By Steven McGinty

On 28 February, the Scottish Government’s ambition to establish a Scottish National Investment Bank (SNIB) moved one step closer, following the publication of an implementation plan.

Welcoming the plan, First Minister Nicola Sturgeon (who announced the policy last September) set out why she believed the time was right for a Scottish National investment bank. She explained:

“To realise our ambitions for Scotland’s economy, innovative companies need access to strategic, patient finance to grow and thrive, while the business environment must encourage our young people to be the entrepreneurs of the future.”

What does the plan say?

The plan – developed by Benny Higgins, CEO of Tesco Bank – provides recommendations for the governance, operating model, and financing of the new bank. It proposes that the new financial institution should:

  • be publicly-owned and focused on creating inclusive growth
  • operate in an ethical and transparent way
  • be supported by £2 billion of capital over the first 10 years
  • work with private investors, not crowd them out
  • help creative new markets for private investment
  • provide investment for smaller and larger projects
  • become self-sufficient in the long-term, including raising its own capital to fund investments

Why a publicly owned bank?

The idea has circulated in British politics for a number of years, particularly since the 2008 financial crisis. In 2010, Lord Mandelson – then Secretary of State – seemed keen on the idea, even going so far as having fact finding lunches with representatives from the KfW banking group, Germany’s state-owned bank. In 2017, the UK Labour party manifesto included a proposal to establish a National Investment Bank and a network of regional development banks.

In Scotland, environmental campaigners Friends of the Earth have been working with New Economics Foundation and Common Weal to build a case for a national investment bank. In their 2016 report ‘Banking for the Common Good’, the group argued that the UK banking system is not fit for purpose, highlighting that over two million people in the UK don’t have a bank account and that 1,500 communities have no access to banking services. They also noted that small businesses struggled to access finance, particularly in Scotland.

The plan has also been influenced by the work of University College London professor Marian Mazzucato – a member of the Scottish Government’s council of economic advisers. At the launch, she explained:

“Innovation requires patient strategic finance, and there is simply not much of that in the UK. Yet around the world state investment banks are taking centre stage in providing such finance for key social and environmental challenges of the 21st century.”

The International Monetary Fund (IMF) have also published research on the rationale for publicly owned banks. This includes work by Nobel Prize winning Economist Joseph Stiglitz, who suggests state banks can help overcome market failures by promoting investments which lead to important social benefits. In addition, the report notes that state banks have the ability to invest resources in strategically important areas which the private sector has been unwilling to invest in. Providing this capital can be crucial for developing innovative technologies, helping them to emerge as profitable industries, and eventually creating economic growth.

Opposition to a Scottish National Investment Bank

In the Scottish Parliament, Ruth Davidson, leader of the Scottish Conservative Party, claimed that the bank was just a re-announcement of previous policies, highlighting that there is already a Scottish Investment Bank, which sits within Scottish Enterprise.

However, this was robustly refuted by the First Minister, who argued that the new Scottish National Investment Bank was on a different scale and of a different nature to previous programmes.

National investment banks in practice

Germany – Kreditanstalt für Wiederaufbau (KfW)

The KfW is owned jointly by the German government (80%) and German states (20%). The bank raises about €60-70 billion each year through issuing bonds and due to its’ public status is able to provide loans at better rates than commercial banks. It has interests in a wide range of areas, from funding small and medium sized enterprises looking to export abroad, to cities looking to invest in new road infrastructure.

The bank has won a number of awards including ‘World’s Safest Bank 2016’ and ‘Best Responsible Investor 2016’.

Nordic Investment Bank (NIB)

The NIB was formed in the mid-1970s by five Nordic countries: Denmark, Finland, Iceland, Norway and Sweden. By 2015 the bank had grown to include three new members: Estonia, Latvia and Lithuania.

Based in Helsinki, its mission is to create a ‘prosperous and competitive Nordic-Baltic region’. This is achieved through funding projects that improve infrastructure, increase market efficiency, and support the development of new technologies.

In 2016, €3,373 million was disbursed in loans, with the largest share of lending going to local governments to fund wastewater systems, electricity transmission, and heat generation projects.

Final thoughts

Since the 2008 financial collapse, a number of political leaders have supported a national investment bank. However, what really matters is that any new bank – whether public or shareholder owned – is able to meet key economic goals, including increasing finance for small and medium sized businesses and supporting the technologies of the future.

The Knowledge Exchange provides information services to local authorities, public agencies, research consultancies and commercial organisations across the UK. Follow us on Twitter to see what developments in policy and practice are interesting our research team. 

Opportunity or necessity… what’s fuelling the growth in self-employment?

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With unemployment reaching its lowest level since 1975, it may seem like the state of the labour market has improved in recent years. However, a closer look at the statistics suggests that this is not necessarily the case.

The strong performance in the labour market in part reflects the growth in self-employment, which has been a distinguishing feature of the labour market’s recovery since the last recession.

Growth in self-employment

There were almost 750,000 more self-employed in the UK workforce at the end of 2014 than at the start of the global financial crisis in 2008, representing a high proportion of the total net growth in jobs over this period. Self-employment accounts for over 15% of those in work in the UK – 4.8 million of a workforce of around 32 million. Between March 2008 and March 2017, self-employment accounted for almost a third of total employment growth.

The significance of the contribution of self-employment is highlighted in a recent article published in Regional Studies, which notes that of the 920,000 net new jobs created between quarter 1 of 2008 and quarter 2 of 2014, 693,000 were in self-employment.

There has also been a rise in the share of female self-employed and those that work part-time, in addition to growth in a broader range of industries and occupations among the self-employed.

Recent ONS figures also show that the growth in self-employment between 2001 and 2016 has been driven mainly by those who have a degree (or equivalent), leading to the share of the self-employed with a degree or equivalent increasing from 19.3% in 2001 to 32.6% in 2016 as a share of total self-employed. As a share of total employment (self-employed and employed), the figures show that relatively highly-qualified individuals are becoming more concentrated in the self-employed.

Earnings growth?

The reasons for this growth has been the subject of much debate, particularly as research suggests “many fail to earn a decent living”. This recent analysis by the New Economics Foundation found that 54% of all self-employed people are not earning a decent living. It also found that the percentage of the labour force in ‘good jobs’ had decreased from 63% in 2011 to 61% in 2016, suggesting that the quality of jobs is perhaps declining.

Similarly, the ONS figures suggest that the self-employment labour market remains financially insecure for its workers. They show that the distribution of self-employed income appears centred around £240 a week, much lower than that for employees, which is centred around £400 a week.

And, according to a recent report from CIPD, their real incomes have fallen more since 2008 than those of employees.

Perhaps, then, the self-employment growth has been driven by necessity rather than choice due to a lack of opportunity in the full-time labour market.

However, the evidence suggests it is not this simple.

Despite the widening gap in earnings between the self-employed and employed, the self-employed continue to have higher levels of job satisfaction than employees. The ONS figures also indicate that self-employed workers were more likely to supplement their income from elsewhere.

This would suggest that choice probably plays a large part in self-employment.

‘Push’ or ‘pull’ effect

There has been much discussion over whether the growth in self-employment is predominantly a result of choice or necessity.

It is often seen as a sign of labour market weakness, with self-employment perceived as a ‘last resort’ where a regular job can’t be found. The evidence suggests that this motivation accounts for just a small proportion of the change, however, with most of the rise in self-employment appearing to be out of choice rather than necessity.

Indeed, the recent analysis in the Regional Studies article, which examined the extent to which self-employment was associated with local ‘push’ or ‘pull’ effects, found little or no suggestion of any net ‘recession-push’ effect on self-employment. It suggests that:

  • ‘pull’ factors are more significant in driving transitions into self-employment;
  • self-employed business ownership appears not to function as a significant alternative to unemployment where paid employment demand is weak; and
  • entrepreneurial activity prospers where local wages are higher and unemployment lower.

The uncertainty surrounding Brexit could also be having an effect as declining employer confidence has contributed to a growing number of short-term contracts – potentially making self-employment appear the better choice.

Final thoughts

As the CIPD report highlights, there are probably more opportunities for self-employment now than there were a decade ago. And the self-employed are more likely to value highly aspects of the work, such as its variety, and choice over their working hours and pay.

Across the range of job-related characteristics, it is shown that the self-employed are as satisfied or more satisfied with their working life than employees, resulting in higher levels of overall job satisfaction – a finding that is consistent both over time and from different data sources.

In a time where work-life balance is of increasing importance, it is perhaps no surprise that self-employment is the path of choice.

If you enjoyed reading this, you may also be interested in our previous blogs on the gig economy, ‘the self-employment boom’ and ‘olderpreneurs‘.

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The rise in youth markets – “transforming town and city centres with the creativity of young people”

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Credit: National Market Traders Federation (NMTF)

By Heather Cameron

As we recently reported, despite being around for centuries, and following a decline during the recession, traditional retail markets have experienced something of a revival in recent years, with a new generation of innovative young traders coming to the fore.

Latest figures indicate the sector has a collective turnover of £2.7 billion a year from around 32,000 market traders – a gradual increase of around £200 million year on year since 2013.

The last five years has also witnessed the emergence of youth markets and ‘The Teenage Market’ initiative, which are generating income for young people and teaching them valuable entrepreneurial lessons, as well as transforming town and city centres.

Specialist market boom

But this revival is not wholly in the traditional sense of the market sector. Young people entering the sector tend to trade at festivals, fairs and shows rather than traditional markets, contributing to a specialist market boom.

According to a recent survey of the sector by the National Association of British Market Authorities (NABMA), new trends in the most successful product lines – hot and cold food and drink, baked goods, handmade crafts, fruit and vegetables and mobile phone accessories – have fuelled this growth.

Festivals and shows, which are popular with a younger demographic, are increasing in both size and frequency across the UK. Many of these events also take place out of the traditional season.

Such new trends do not come without their challenges, however, as NABMA’s survey also highlighted. Traders reported escalating pitch fees, poor pitch locations and never-ending paperwork. But despite these drawbacks, traders have reported huge returns at such events, where they can turn over tens of thousands of pounds.

Both NABMA and the National Market Traders Federation (NMTF) agree that the sector needs to embrace these new trends and act to engage this new generation of entrepreneurs.

Youth markets

Indeed, national initiatives in support of youth markets have emerged in recent years to do just that.

This September will see the fifth National Youth Market take place in Manchester, an annual event run by the NMTF in partnership with Manchester Markets. Young people between the age of 16 and 30 from all over the UK trade at this event, showcasing their entrepreneurial talent.

The NMTF also supports traditional market organisers to run specialist markets aimed specifically at young people. Many towns and cities from across the UK have launched their own youth markets, such as those in Manchester and Cambridge, with over 100 such events taking place every year.

Also in its fifth year, is The Teenage Market – “a fast-growing national initiative that’s transforming town and city centres with the creativity of young people”. This initiative provides a free platform for young people to trade at specially organised events. In addition to the retail offer, it also provides a platform for young performers to showcase their talents

Created by two teenage brothers from Stockport to support their town’s large population of young people, The Teenage Market initiative has quickly expanded across the country with thousands of young people taking part in events. Following the success of the first event, it was quickly recognised that the initiative could play an important role in the town’s regeneration strategy; a role which was highlighted by Mary Portas in her 2011 review of high streets.

Revitalising town centres

According to Portas, “Markets are a fantastic way to bring a town to life… I believe markets can serve as fundamental traffic drivers back to our high streets.” And one of her recommendations was to build upon current successful initiatives “to help attract young entrepreneurs to markets and really start building the innovative markets of the future.”

Indeed, the positive benefits for the towns and cities running The Teenage Market events include a rise in footfall, an increase in spend in the local area and a rise in the number of visitors to their local market.

Not only this, but the fusion of retail and live performances has succeeded in attracting a new generation of shoppers and visitors to local markets, helping to breathe new life into town and city centres.

Final thoughts

In an era of online shopping and declining high streets, the fact that local markets led by a new generation of traders are flourishing can only be a good thing.

And with an ageing population of traders, it is arguably now more important than ever to encourage young traders in order to secure the future prosperity of the markets industry.

If you enjoyed this blog post, you may also like our previous post on street markets.

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Scotland’s space sector: a launchpad for economic growth

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Discovery space shuttle on launchpad

By Steven McGinty

In March, the UK Space Agency announced it had awarded £50,000 to the University of Strathclyde’s Scottish Centre for Satellite Applications (SoXSA) for its work with Glasgow City Council to attract entrepreneurs and start-ups to Glasgow’s innovation hub, Tontine.

Six companies will benefit from the support, which includes space industry specific business support, dedicated workshops and expertise, and administration and accommodation costs for two years.

The award is another sign of faith in Scotland’s burgeoning space industry, which has seen it become a global leader in the ‘New Space’ economy.

The development of New Space

The space industry, like many other technology fields, has been traditionally dominated by nation states, often in terms of national security.

But now, a new space industry is emerging, where private companies and entrepreneurs are developing innovative products and services in or for space. Reasons for this include reductions in funding to national space agencies, such as Donald Trump’s recent cuts to NASA, as well as the private sector’s success in innovation. For example, the company Space X has managed to launch rockets that had previously been into space – a practice which has been estimated to reduce the first stage of space flight from $60 million to $500,000.

Scotland’s role

Within a few miles of Glasgow’s city centre, a small number of research groups and private companies have gained international reputations for their work on space technologies.

For instance, Glasgow – a city more known for its heavy industries and shipbuilding – has found a niche in manufacturing low cost nanosatellites. This has led to Glasgow being crowned ‘Europe’s Satellite City’.

Glasgow’s first satellite company, Clydespace, has been tremendously successful over the past decade by developing CubeSats (a satellite the size of a wine bottle). These have been used in a range of missions, including UKube-1, the first mission to be commissioned by the UK Space Agency as a demonstrator for space technologies.

The city has also seen investment from Spire Global – a satellite powered data company headquartered in San Francisco. Spire’s satellites, which are used to gather data on weather, maritime, and aviation, were built by Clydespace. Peter Platzer, CEO of Spire, explains that:

“We have up there about 20 satellites, all exclusively built here in Glasgow.”

Mr Platzer highlights that Scotland’s confidence in Spire was one of the reasons that they opened their European office in Glasgow’s Skypark. The company received a £1.5m Scottish government grant through the agency Scottish Development International (SDI).

Scotland’s low cost base and universities with strong interests in engineering and space technologies were also highlighted as key selling points.

Young innovators have also sought to get involved in Scotland’s space sector. For example, Tom Walkinshaw, founded Alba Orbital from his bedroom when he was unable to secure a job in the space industry. His company provides PocketQube satellites (based on a design of one or more 5cm cubes) and now employs 10 skilled employees. Alba Orbital’s first satellite, Unicorn-1, is backed by the European Space Agency and is due for launch later in the year.

In academia, the University of Glasgow’s LISA Pathfinder team won the 2016 Sir Arthur Clarke Award for “Space Achievement in Academic Research or Study”. The award was given for the team’s work on developing the Optical Bench Interferometer (OBI) for the European Space Agency’s LISA Pathfinder spacecraft – a demonstrator aimed at measuring gravitational waves in space.

The future of Scotland’s space economy

A report by London Economics investigated the potential benefits of a spaceport in Scotland.

Prestwick Airport in South Ayrshire and Machrihanish, near Campbeltown, are currently competing to win a licence from the UK Government.

London Economics have set out three main advantages to having a local spaceport:

  • Spaceport operations – The activities associated with a spaceport will lead to the direct creation of jobs in commercial spaceflight or providing satellite launches, as well as indirect benefits for local suppliers.
  • Space tourism – Tourists visiting space stations or taken part in space travel are also likely to spend money in the surrounding areas and on other attractions.
  • Space-related education – Spending will increase on research and development due to the creation of a spaceport.

Tom Millar, managing director of DiscoverSpace UK, has also stated that sending small satellites into space would be a ‘viable revenue stream’. A local spaceport would reduce the costs for Scottish satellite companies as at the moment they currently have to ‘piggyback’ onto launches with larger satellites.

The report concludes by finding that a spaceport in Scotland would increase growth from 9% to 10% of the UK’s space economy in 2030.

The implications of Brexit

The results of the 2016 EU Referendum has caused uncertainty for the Scottish space sector. For example, many companies will be concerned for the rights of EU national employees, as well as their ability to recruit from this workforce in the future.

The Financial Times has also reported that changes in terms could keep UK companies out of lucrative European space contracts, such as the €10bn Galileo satellite navigation system. The European Commission are looking to change the terms of the Galileo project so that contracts can be cancelled if a company is not based in a member state. They also require companies to pay the costs of finding a replacement. If these terms are approved, it would effectively rule out UK-based companies bidding for EU projects, which would have a negative impact on the sector’s growth.

Final thoughts

Scotland’s space sector is estimated to be worth £134 million and accounts for 18% of all UK space industry jobs. Its success has been built on a combination of government support, talented entrepreneurs, and a supply of skilled engineers.

As the industry continues to grow, there will still be an important role for government, particularly in supporting innovation centres and granting licences for UK spaceports. The promotion of STEM (science, technology, engineering and maths) subjects will also be crucial, as we look to develop a new generation of space entrepreneurs to keep us ahead of this new industrial space race.

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If you found this article interesting, you may also like to read some of our other articles:

Graduate ‘brain drain’ – is regional economic growth the solution?

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college graduates groupBy Heather Cameron

With the economic performance of cities and regions increasingly reliant on the skills of their workforce, the longstanding issue of graduate ‘brain drain’ to London and the south is something that needs to be addressed.

Although students attend many of the universities spread across the country, a significant number of graduates flock towards the capital at the end of their studies. According to a recent report from Centre for Cities, this deprives other cities of skilled workers and essentially damages the overall economy.

The evidence

A quarter of all new graduates in 2014 and 2015 were found to have moved to work in London within the six months of finishing their degree. And the highest achievers make up a significant proportion. While London accounts for around 19% of all jobs, of the graduates that moved city six months after graduation London employed 22% of all working new graduates, and 38% of those with a first or upper second class degree from a Russell Group university.

Although most cities experience an overall graduate gain, cities outside London don’t retain the majority of students that move to their city to study – the ‘bouncers’ that drive the brain drain overall, overshadowing any gain:

  • Manchester lost 67% of these students upon graduation;
  • Birmingham lost 76%; and
  • Southampton lost 86%.

Other figures show that 310,000 graduates have left the north in the past decade, contributing to a net average deficit of 7,500 highly qualified workers leaving annually, or 75,500 over a decade.

Northern regions have to some extent offset the effect of local brain drain by attracting enough highly qualified foreign workers to fill the gap. But with reductions in immigration, these regions could be left lacking.

Given the UK’s current position regarding the EU, concerns have also been raised over whether Britain faces a further brain drain of academics to Europe, following Brexit. A recent survey highlighted that 42% of academics said they are more likely to consider leaving Britain after the vote to leave.

Why?

While it may seem plausible to assume that higher salaries are the reason for this brain drain, it appears that the main pull for graduates is the availability of jobs and career progression, which London’s vast labour market offers.

However, as recent research from Homes for the North has identified, these are not the only reasons. It highlights the importance of additional non-work drivers of graduate location decisions, including the cost and quality of housing, quality of local amenities and the prospect of home ownership.

Of the graduates polled, 80% said the quality of housing was important, while more than 60% said the cost of housing was important. The quality of green spaces and local amenities was also deemed important by over 60% of graduates.

What can be done to redress the balance?

There have been numerous graduate retention initiatives at the local and regional level aimed at tackling the uneven distribution of graduates, such as graduate wage subsidies and local graduate job matching.  But it seems little has improved. The Centre for Cities research argues that these alone will not tackle the root cause of the graduate brain drain.

It suggests that cities themselves have a vital role to play in ensuring the local job market offers an appropriate number of graduate job opportunities that will allow them to both retain graduates and attract graduates from elsewhere. Policy should therefore broaden its focus to improve local economies by investing in transport, housing and enterprise, rather than focusing solely on graduate retention and attraction policies.

The chief executive of the Centre for Cities commented that the government’s new economic and industrial strategy should be used to strengthen existing devolution deals for city-regions such as Greater Manchester, extending their scope to grow.

Indeed, the industrial strategy green paper, published in January, clearly places emphasis on addressing the economic imbalances across the UK through a number of measures, such as working with local areas to close the skills gap, including new schemes to support the retention and attraction of graduates. However, the strategy has been criticised for providing little clarity on how regional rebalancing and sectoral deals will work in practice.

Final thoughts

While it appears clear that cities outside London need to improve their graduate offer with better job prospects, the evidence on graduate migration suggests it is more complex than this.

As has been argued, the provision of good quality affordable housing could play a role alongside high-skilled job creation and opportunities. With the cost of living in London so expensive, this would make sense, particularly as the average graduate salary in London is not that much higher than the average across other UK cities.

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