API STR Jsna Sec Emp Econ Area Ax2012

Portsmouth Local Economic Assessment January 2012
This document has been produced for Portsmouth City Council by the University of Portsmouths Centre for Economic Analysis and Policy (CEAP) For further information please contact: Prof. Shabbar Jaffry, Centre for Economic Analysis and Policy, Department of Economics, Portsmouth Business School, University of Portsmouth, Richmond Building, Portland Street, Portsmouth, United Kingdom PO1 3DE, Telephone 44 (0)23 9284 4125, E-mail shabbar.jaffry@port.ac.uk
Portsmouths Local Economic Assessment
Contents
1. Introduction ....................................................................................................................................... 3 Defining the Portsmouth Economic Area...................................................................................... 3 Structure of the Portsmouth Economic Assessment .................................................................. 4 2. Key economic flows ......................................................................................................................... 5 Commuting flows in and out of Portsmouth ................................................................................. 5 Residents of Portsmouth by location of work (out-flows) ............................................... 5 Workforce in Portsmouth by location of residence (in-flows) ........................................ 6 Self Containment .................................................................................................................. 7 Portsmouths commuting flows by occupation and industry .................................................. 8 Median residence-based earnings versus workplace-based earnings .................................... 9 Other types of economic flows ....................................................................................................... 9 3. Broad sectors ................................................................................................................................. 14 Broad sectors profile ...................................................................................................................... 14 Priority sectors ................................................................................................................................ 16 Major employers ............................................................................................................................. 16 Voluntary and Community Sector ................................................................................................ 18 Creative, cultural and leisure sector ............................................................................................ 19 4. Economic competitiveness ........................................................................................................... 24 Gross Value Added (GVA) ............................................................................................................ 24 Drivers of productivity .................................................................................................................... 25 Skills ..................................................................................................................................... 25 Innovation ............................................................................................................................ 27 Competition ......................................................................................................................... 29 Entrepreneurship ................................................................................................................ 31 5. Labour market participation .......................................................................................................... 34 Employment and activity rates ..................................................................................................... 34 Unemployment................................................................................................................................ 36 Benefit claimants ............................................................................................................................ 39 Young people not in employment, education or training (NEET) ........................................... 40 Deprivation and poverty ................................................................................................................ 40 6. Environmental considerations, sustainability and infrastructure............................................. 42 Sustainability of economic life ...................................................................................................... 42 Infrastructure ................................................................................................................................... 45 Transport ............................................................................................................................. 45 Travel to work ..................................................................................................................... 46 Broadband ........................................................................................................................... 47 Housing provision ............................................................................................................... 47 Green spaces...................................................................................................................... 48 Employment land ................................................................................................................ 48 7. Future vision ................................................................................................................................... 51 Population changes ....................................................................................................................... 51 Labour force changes .................................................................................................................... 52 Employment changes .................................................................................................................... 53 Economic growth forecasts........................................................................................................... 54 Sources of economic growth ............................................................................................ 54 Public Sector Cuts.......................................................................................................................... 54 8. Findings and conclusion ............................................................................................................... 59 Appendix
1. Introduction
This document has been produced for Portsmouth City Council by the University of Portsmouths Centre for Economic Analysis and Policy (CEAP). The requirement for Local Economic Assessments was set out in the Local Democracy, Economic Development and Construction Act (2009), and statutory guidance relating to them was published at the end of March 2010. This required that five key themes; economic geography, business and enterprise, people and communities, sustainable economic growth and economic competitiveness should be included. The new coalition government has revoked the initial guidance, but the duty remains in place. This initial guidance has been taken into account and improved upon for the structure and contents of the Portsmouth Economic Assessment. The structure is deliberately similar to that of the Local Economic Assessment produced by Hampshire County Council (including Portsmouth as part of the South Hampshire sub-area) to allow ease of comparison and for readers to easily place Portsmouth in the context of the wider region. This document builds on and updates the Evidence Base to Support Portsmouth LEA produced by DTZ. Defining the Portsmouth Economic Area The administrative area of the unitary authority of Portsmouth City Council has been used to define 1 the Portsmouth Economic Area in this report. Where a different definition has been used, such as the Travel to Work Area by the Centre for Cities, then this has been mentioned in the document. Portsmouth is a compact city covering 15.5 square miles, with an estimated population of 207,100 in 2010. The City is the most densely populated local authority outside London (51.45 people per hectare), with 79% of the population living on Portsea Island. Portsmouth is the UKs only island city and is extremely flat and low lying. The city is characterised by terraced housing. The western side of the city is more commercial with the city centre, dockyard, continental ferry port and the motorway. The eastern side has a different feel with large open spaces, residential areas and industrial estates. The southern part of the city is defined by its seafront, historic fortifications and Victorian residential areas. The northern part of the city lies on the mainland and is characterised by more recently developed residential areas, dating from the 1930s, with larger semi 2 detached housing. A group of similar/comparator cities have been used throughout the report where comparable information was available. This group includes Southampton, Brighton and Hove and Bournemouth. The performance and trends of Portsmouth have also been compared to the wider areas of; Hampshire (referring to the county council administrative area surrounding Portsmouth and Southampton, but not including Portsmouth and Southampton unless stated otherwise); the South East region (often referred to as the regional average, within which Hampshire, Portsmouth, Southampton and Brighton and Hove are situated); and the Solent Local Economic Partnership area where this information is available. The term national average has also been used, referring to either England, Great Britain or the United Kingdom depending on the context and the availability of the 3 data.
There was some potential to broaden the boundary to include Havant, Gosport and Fareham due to the large commuting flows and shared borders, but the potential benefits from combining the authorities did not outweigh the costs of aggregating the data (where it was available to do so). The possibility of using the ONS Travel to Work Area for Portsmouth to define the economic boundary was also considered. The fundamental criterion for ONS Travel to work areas (defined in 2007 and based on 2001 census data) are that at least 75% of the resident economically ac tive population actually work in the area, and also, that at least 75% of those working in the area, actually live in the area. The Portsmouth Travel to Work Area covers a large are a (853sq km) from Fareham and Gosport in the West to Havant in the East and then a wide corridor North to Alton and Liphook. Based on the 2001 census this includes 276,201 employed residents. While this area is useful for regional planning, it was deemed that this area was too broad to meaningfully define the economic geography of Portsmouth for this Local Economic Assessment. 2 Portsmouth Plan 3 The exact meaning in each instance can be found by referring to the relevant table of data
Structure of the Portsmouth Economic Assessment The following chapters each follo w a similar pattern, with a key findings box preceding each chapter. Technical notes referring to the data sources used can be found in italicised footnotes and can be skipped by the general reader. An Executive Summary is available. Portsmouths Local Economic Assessment takes the following form: 2. Key economic flows. This section examines the economic flows that make-up the Portsmouth economy, from commuting flows to the international flow of goods and people. 3. Sectors. This section presents the sectoral composition of the economy with a breakdown of the Gross Value Added by sector. The distinction between which sectors are located in Portsmouth and which sectors Portsmouth residents are employed in is investigated. This section will incorporate the voluntary and community sector as well as the impact of the creative, cultural and leisure sector in Portsmouth. 4. Economic competitiveness. This section examines the overall economic competitiveness of the Portsmouth economic area and goes into the detail of each of the drivers of productivity using skills profiles, the incidence of knowledge based activity, business density and entrepreneurship. 5. People and communities. This section presents the key issues relating to labour market participation, worklessness and a detailed analysis of deprivation in Portsmouth. This will use the most up to date information available and draw on the analysis and recommendations presented in the Portsmouth Worklessness Study and Portsmouths Tackling Poverty Strategy. 6. Environmental considerations, sustainability and infrastructure. This section will assess the environmental considerations and sustainability of economic activity by focusing on the current and future infrastructure in Portsmouth. This section will draw from a number of sources such as the LDF and the latest Strategic Housing Market Assessment. 7. Future vision. This section presents a future vision for Portsmouths economy based on forecasts of population change and economic growth, with explanations of what this could mean for the labour force. The forecasts of economic growth will compare the status quo with the potential of achieving local strategies. This section also examines and calculates the specific effect on Portsmouths economy of potential public sector cuts. 8. Findings and conclusion
2. Key economic flows. This section examines the economic flows that make-up the Portsmouth economy, from commuting flows to the international flow of goods and people.
Picture: Commercial Road, Portsmouth
Commuting flows in and out of Portsmouth Residents of Portsmouth by location of work (out-flows) The chart below shows the proportions of people living in Portsmouth that have jobs in the local authority area shown.
Source: Local Labour Force Survey, 2001. Annual Population Survey, 2008.
According to these two surveys, the commuting patterns of Portsmouth residents have remained fairly consistent since 2001, with the only statistically significant increase (at the 5% level) in commuting being to Southampton, which now accounts for 6.3% of Portsmouth residents jobs. Havant remains the most common place for Portsmouth residents to commute out to. It is worth noting that although jobs in Havant account for 8.7% of Portsmouth residents employment, these jobs account for 20.7% of the workplace jobs available in Havant. There is a similar pattern with commuting flows to Gosport, where employment in Gosport only accounts for a small proportion of
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Comparison of the LFS 2001 to the Census 2001 finds no incorrect coding (as was found between Southampton and Eastleigh). E.g. where respondents stated they worked in Portsmouth when it was in fact in Havant or Fareham.
jobs for Portsmouth residents (1.9%); these jobs account for at least three times this proportion of workplace jobs available in Gosport (7.8%). A similar, although not as strong, pattern is also observed with commuting flows to East Hampshire and Chichester. This implies that Portsmouth has a strong influence and inter-dependence with the surrounding area, and most notably on the economies of Havant and Gosport. Outside of Portsmouth, Havant is the most popular destination for Portsmouth residents to commute to, accounting for 25% of residents that commute out of Portsmouth. Southampton is the second most common (18%) and Fareham follows closely behind as the third most common (15%). The figures in the APS 2008 are too low to accurately predict the level of commuting to London, however the more reliable 2001 census shows that 1,081 Portsmouth residents (1.3% of employed residents) commuted to London of which the most common areas were Westminster (227, 21%), Hillingdon (121, 11%) and City of London (81, 7%). Aggregating the commuting patterns of Portsmouth residents to unitary and county level does not reveal anything new. It emphasises that, after Portsmouth, areas within Hampshire County are the most common areas to commute to (accounting for a fifth of residents employment), followed by Southampton at 6% and West Sussex (mostly Chichester) at 2%. Workforce in Portsmouth by location of residence (in-flows) The chart to the right shows the proportion of jobs in Portsmouth that are filled by people who live in the local authority shown. As with the commuting patterns of Portsmouth residents, there have been no significant changes to the commuting patterns of Portsmouths workforce since 2001.
Source: Local Labour Force Survey, 2001. Annual Population Survey, 2008.
Collectively, residents from the neighbouring authorities of Havant, Fareham and Gosport constitute 24.1% of Portsmouths workforce. Portsmouth is the second largest employment area for Havant, Fareham and Chichester residents. Although only 1.5% of residents from the Isle of Wight are rd employed in Portsmouth, it is still their 3 largest employment area. One quarter (25%) of Havants employed residents are working in Portsmouth. Aggregating commuting patterns to unitary and county level does not reveal anything new. After Portsmouth, areas within Hampshire County are the most common residence, accounting for 28% of Portsmouths workforce (with the majority of these coming from Havant, Fareham and Gosport). Almost the same proportion (2.8%) of Portsmouths workforce are from West Sussex (mostly Chichester) as are from Southampton.
In-commuters are over represented in the workplace in the mainland wards (Paulsgrove, Cosham and Drayton and Farlington). More detailed information on commuting flows at Portsmouth ward level is available in the Appendix. It is clear that the economy of Portsmouth is very important to surrounding areas (Havant, Fareham, Gosport and Chichester in particular) and the wider region as a provider of employment. Self Containment Set out below is a table comparing the level of self containment in Portsmouth with other benchmark towns and cities. Whilst this gives some insight into the dynamics of the city the reader should be mindful of the range of factors that can influence this data including the tightness of the administrative boundaries for which data is collected, the proximity of other significant employment centres and the quality of transport connectivity. The share of Portsmouth residents who are working in Portsmouth (resident self containment) is similar to Bournemouth, Brighton and Hove, and Southampton. The workplace self containment in Portsmouth is broadly in the middle of the range of comparator cities, with Southampton the most reliant on labour migrating into the city and Brighton and Hove the least reliant. The data suggests 5 nothing out of the ordinary for Portsmouth.
Resident and Workplace Self Resident Self Containment Workplace Self Containment Containment (residents work in the area they live) (jobs within the area filled by residents) Portsmouth 66% 63% Bournemouth 67% 68% Brighton and Hove 72% 74% Southampton 69% 57% Source: ONS, A study of commuting patterns in Great Britain based on the Annual Population Survey 2008
The importance of Portsmouth in providing employment for the sub-region of SE Hampshire is shown in the table below. Portsmouth is home to just over 40% of the working age population of the SE Hampshire area but provides nearly 50% of its jobs. The second most significant employment centre is Fareham, with a number of key employment locations along the M27 which have proved very 6 successful in recent years, including attracting key employers from Portsmouth such as Zurich.
Population (aged 16-64) Portsmouth Fareham Gosport Havant Total for SE Hampshire 145,000 69,700 50,800 70,700 191,200 % of SE Hampshire population 43% 21% 15% 21% Employment 105,000 49,700 21,200 41,200 112,100 % of SE Hampshire employment 48% 23% 10% 19%
Source: BRES employment 2010, ONS mid year population estimates 2010
It is worth noting from Hampshires Economic Assessment that the majority of districts in Hampshire (with the exception of Southampton, Winchester, Rushmoor and Basingstoke and Deane) had a higher number of resident workers than workplace workers, implying greater out-commuting. Portsmouth had the largest absolute difference between the number of workplace and resident workers, implying the greatest reliance on in-commuting in Hampshire. When the absolute number of those in-commuting, out-commuting and the balance between them are analysed for other Hampshire districts, it is clear that Portsmouth has one of the smallest absolute 7 number of residents out-commuting, and the highest balance of in-commuting over out-commuting. Travel to work distances and method of travel are discussed under Chapter 6: Environmental considerations, sustainability and infrastructure .
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DTZ DTZ updated by CEAP Hampshire Economic Assessment 2011
Portsmouths commuting flows by occupation and industry
Difference Occupation group Workplace Resident (in-flows) 1: Managers and senior officials 15,400 12,733 2,667 2: Professional 15,933 13,400 2,533 3: Associate professional and technical 20,333 16,233 4,100 4: Administrative and secretarial 14,400 11,667 2,733 5: Skilled trades 9,600 8,700 900 6: Personal service 8,467 8,233 233 7: Sales and customer service 9,467 9,433 33 8: Process, plant and machine operatives 6,867 6,333 533 9: Elementary 12,800 12,767 33 Total 113,267 99,500 13,767 Source: Annual Population Survey, average for 2008/9 to 2010/11 of all employed Industry Difference (in flows) 0 -300 933 367 -33 733 167 11,267 33 13,167
Workplace
Resident
A: Agriculture and fishing 0 0 B,D,E: Energy and water 1,467 1,767 C: Manufacturing 11,233 10,300 F: Construction 8,033 7,667 G,I: Distribution, hotels and restaurants 19,667 19,700 H,J: Transport and communications 8,033 7,300 K-N: Banking, finance and insurance 12,167 12,000 O-Q: Public admin. education and health 45,900 34,633 R-U: Other services 5,967 5,933 Total 112,467 99,300 Source: Annual Population Survey, average for 2008/9 to 2010/11 of all employed
Associate professional and technical occupations is the largest occupation by number employed and also has the largest commuting in-flow, both in absolute terms (4,100) and as a proportion of the resident workforce in that occupation. This occupational group of commuters accounts for 30% of all in-flows. There are three occupation groups with roughly equal sized commuting in-flows (2500-2750), each accounting for just under 20% of all in-flows: administrative and secretarial, professional occupations, and managers and senior officials. However, when the in-flow is expressed as a proportion of the workplace based occupations, administrative and secretarial commuters account for almost the same proportion (close to 20%) as the much larger group of associate professional and technical occupations. 'Energy and water' is the only industry type that shows a sizeable net out commute of 300 residents, accounting for close to 17% of the residents that are employed in this industry. This out commuting can perhaps be explained by the location of SSEs regional headquarters and Portsmouth Water Ltd.s head office in the neighbouring local authority of Havant. Transport and communications , as well as Manufacturing, have commuting in-flows equivalent to about 10% of the resident workforce. However, the largest in-flow by far is 'Public admin, education and health' which is equivalent to a third of the resident workforce, or a quarter of the workplace based employees. In fact, this industry type is responsible for 86% of all net in-flows. Looking at the relationships between industry and occupations it is clear that the largest absolute numbers of in-flow commuters are for Associate professional and technical occupations in Public admin, education and health (4,433). However, this occupation group only accounted for a third of the workplace jobs whereas the in-flow of Managers and senior officials accounted for 41% of Public admin, education and health workplace jobs. There were a few out-flows, but none of these were for more than 500 employees so should be treated with caution. These out-flows were mostly in Occupations 7-9 in Manufacturing, Construction and Banking. However, the exception to this was for the Transport & Communications industry which estimated commuting out-flows (though small, at approximately 300) for Managers and Associate Professionals.
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As the Annual Population Survey is survey based, an average of the last three years 2008/9 to 2010/11 has been used to alleviate some of the sampling error. The rationale for counting the difference between workplace based and residence based employees as commuting flows is to help identify the gaps that the resident population does not currently have the potential to fill, and therefore estimate the reliance on in-commuting to fulfil the occupation and industry need. 9 Some caution should be taken with the interpretation of these numbers as occupations/industries with less than 500 employees in one year were excluded from the analysis for that year, and the figures quoted are for an average of three years 2008 to 2011.
This implies that Portsmouth is importing a large proportion of its more senior occupations, which could be described as the best jobs, from outside of Portsmouth. This could go some way to explaining the disparity between workplace wages and resident wages discussed below. Median residence-based earnings versus workplace-based earnings
Resident earnings median weekly gross pay for full-time workers () over time Year Portsmouth Southampton Brighton and Hove Bournemouth 2002 380.4 387.6 410.5 354.1 2005 396.5 394.4 421.6 376.2 2008 432.2 439.0 514.3 440.3 2011 469.5 465.5 526.9 472.3 Source: ASHE 2011 South East 435.1 468.9 524.8 554.4 Great Britain 392.7 432.8 480.0 503.1
The weekly median gross pay for full-time workers resident in Portsmouth is very similar to Southampton and Bournemouth, but well below the South East and national averages. Despite some large increases to Portsmouths weekly median gross pay in 2008 and 2009, Portsmouth has experienced one of the slowest rates of growth (23%) over the last ten years. Although both males and females are earning less than most of the comparator areas, the South East and the national average, the male to female earnings ratio in Portsmouth (1.22) reflects the national average and is not as skewed towards inequality as the Bournemouth (1.32) and South East (1.28) ratios.
Workplace earnings median weekly gross pay for full-time workers () over time Brighton Year Portsmouth Southampton Bournemouth and Hove 2002 397.9 420.6 378.3 321.6 2005 426.4 445.4 388.4 348.1 2008 498.5 509.4 484.1 509.5 2011 492.6 525.7 459.7 442.1 Source: ASHE 2011 South East 419.9 450.4 500.9 528.1 England 396.5 436.0 483.9 507.2 GB 392.2 431.7 479.1 502.6
The table above shows the median weekly gross pay for full-time workers based on the location of their workplace rather than where they are resident. Large reductions from the levels seen in 2009 and 2010 mean that Portsmouth no longer has the highest weekly wage of its comparator cities, having been overtaken by Southampton. Portsmouth is also lower than the South East average but is close to the national average. After strong growth rates seen in previous years, the rate of growth is now negative. In terms of equality, Portsmouth performs poorly as a workplace with the highest male to female earnings ratio (1.28) of all comparator cities and greater than the national average (1.22) but broadly in line with the regional average. Portsmouth is in a similar position to Southampton, with workplace earnings in Portsmouth being higher (5%, 23) than resident earnings. This strongly implies that non-Portsmouth residents are commuting into the higher paid jobs in Portsmouth. The effect of an over reliance on commuting and an imbalance of workplace and resident earnings can manifest themselves through the local economy and be experienced through the affordability of local housing or via congestion leading to extended commuting times. These issues are addressed in more detail in Chapter 6: Environmental considerations, sustainability and infrastructure. Other types of economic flows There are other types of economic flows, both physical and intangible, that can have an important impact and shape a local economy. The flows through Portsmouth Harbour, the International Port and other transport networks are outlined below alongside the flows of international labour and the flow of knowledge through the University of Portsmouth. Portsmouth Harbour As well as being a site of international environmental importance, a local beauty spot and home to the th Royal Navy since the 17 Century, Portsmouth Harbour is also a busy international gateway for goods and people flowing to and from Portsmouth and the rest of the UK. During the height of the summer some 15 to 20 pleasure craft a day secure to the Quay walls, at the North Eastern end of Portsmouth Harbour some 25,500 vessels, mostly luxury pleasure craft use the 808 berth Marina at Port Solent, and Gunwharf Quays, with over 500m of berth space and the capability of accommodating boats of 75 metres in length, is available to tall ships, corporate events and visiting
boats. During 2010, 11 cruise ships called into Portsmouth; five of these visits were tourist calls with 10 the remaining six being disembark / embarking calls, with over 30 cruise ship calls booked for 2011. Portsmouth International Port is at the centre of all this activity. Portsmouth International Port is known as Britains most successful municipal port as well as a naval dockyard. It is forecast to generate a trading surplus of almost 7m in 2011/12 on an area of less than 64 acres, and having just embarked on a 16.8m new terminal building capital scheme that opened in May 2011, Portsmouth 11 International Port is prepared to meet increased demand. The ferry port deals with over 2 million passengers and 600,000 vehicles a year while the commercial quay serves over 300 ships a year handling over one million tonnes of imports and exports including 12 70% of the UKs banana trade via MMD (Shipping Services) Limited. Three quarters (76%) of trade 13 was with foreign countries, mostly the West Indies and Central and South America. An Economic Impact Analysis commissioned from Portsmouth University has shown that the Port is responsible for the direct employment of 805 Full Time Equivalent (FTE) jobs and the injection of 38.7M of income into the greater Portsmouth area. Indirectly, these figures rise to 1,595 FTE jobs supported by Port activity and a total estimated 71.3m output throughout the Greater Portsmouth area economy. Portsmouth International Port consists of nine commercial berths; five of them roll on-roll off, serving France, Spain and the Channel Islands. Two large conventional berths serve deepsea world-wide refrigerated cargo and short-sea container vessels and two berths serve dedicated Isle of Wight car ferries. The Old Camber Dock also forms part of the Port and is regularly used as a 14 fishing dock and leisure marina. Portsmouth is the only UK ferry port where a motorway, the M275, runs right to the port entrance. The importance of Portsmouth to the national economy, in particular through the international gateways, has been recognised through the designation of the South Coast Ports to the Midlands 15 route, as part of the Strategic National Route Network. Local ferries make it easy to travel to the neighbouring destinations of Gosport, Hayling Island and Isle of Wight. The following table gives an idea of the destinations and number of people flowing through the Port and around the Harbour, in 2010.
Operator and destination Isle of Wight Car Ferry: Wightlink, Isle of Wight Ferries provides Portsmouths only car and passenger service to the Isle of Wight from Gunwharf terminal. Isle of Wight Passenger Ferry: Wightlinks foot passenger catamaran between Portsmouth Harbour Station and Ryde Pier Head. Isle of Wight Hovercraft Service: Hovertravel, regular passenger only hovercraft to Ryde from the seafront at Southsea Gosport Ferry Passenger Service: Gosport to Portsmouth - almost 100 crossings every day Continental and Channel Island Services Condor Ferries Portsmouth to Channel Islands of Jersey Commodore Clipper Portsmouth to Cherbourg Brittany Ferries Portsmouth to Caen, St Malo, Cherbourg, Bilbao, Santander P&O Portsmouth to Bilbao. LD lines Portsmouth to Le Harve. Source: Portsmouth International Port, Port Statistics 2010 Passengers in 2010 948,572 vehicle units, 2,446,901 passengers 1,378,370 passengers 849,150 passengers (2009) 3,392,471 passengers 692,848 vehicle units, 256,842 freight units, 2,288,363 passengers
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Port Statistics 2010 Port Master Plan Hampshire Economic Assessment 2011 13 Port Statistics 2010 14 Port Master Plan 15 Local Transport Plan Portsmouth
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Road Portsmouth has a direct link with London via the A3 and with Southampton via the M27. The recent completion of Hindhead Tunnel will significantly reduce the travel time to London. National Express coaches operate frequently between Portsmouth and other major destinations in the UK and greyhound buses run between Portsmouth and London with a journey time of under 2 hours. Road congestion, sustainable travel and transport plans for Portsmouth and South Hampshire are discussed in more detail in Chapter 6: Environmental considerations.
Picture: Portsmouths transport links
Rail Portsmouth has five mainline stations with direct rail connections to London Waterloo and Victoria, as well as Bristol and Wales. The busiest station, Portsmouth and Southsea, has close to 2.3 million passengers entering and exiting it every year
Station Portsmouth Harbour Portsmouth and Southsea Average entries and exits 1,835,800 2,280,900 Source: Office of Rail Regulation / Delta Rail Station Usage Data 2009/10 Fratton 1,485,800 Hilsea 264,900 Cosham 821,600
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Airports Southampton International Airport serves a wide area of the south coast and is only 22 miles (35 km) from Portsmouth. Southampton International airport serves nearly 2 million passengers a year, through 13 airlines flying to 48 destinations nationally and across Europe with a notable 39% of trips through the airport being for business reasons. The proximity of Southampton Airport Parkway railway station to the airport means that Southampton has one of the best train-to-plane connections in 16,17,18 Europe. Farnborough Airport in north Hampshire provides one of the most modern and efficient specialist business aviation airports in Europe, providing executive terminal services with a business centre for 19 passengers. Both London Heathrow Airport and Gatwick Airport are within 70 miles (112 km) of Portsmouth and are in easy reach via rail and bus services. Universities The University of Portsmouth provides a key network of international connections through its staff, students and research studies with close to 22,500 students (including 3,000 from over 100 countries) and over 2,500 staff. The University of Portsmouth has a long tradition of helping UK business succeed and in the process enabling those businesses to create new jobs, wealth and prosperity for all. The University takes this role very seriously and has created a one-stop shop for business services from the University. This makes it easy for businesses to gain access to the best that the University has to offer: from their research expertise, the knowledge and knowhow of their staff, helping to test and develop prototypes and build new solutions, to providing a graduate who will add real value to their business. In the last twelve months the University has worked with over 600 businesses of all sizes from large blue chip companies right through to start-up companies. The University worked with the business sector on collaborative research projects worth over 4.2 million and in the process helped businesses create over 200 new jobs. The University is increasingly seen by businesses as their preferred supplier for outsourced research and development. Over the past twelve months the University has offered business advice and support to over 400 small and medium sized companies, as well as providing employers with over 7.5 million worth of professional development courses, ensuring that the workforce is equipped to meet the needs of the future. The University has a strong track record in the delivery of Knowledge Transfer Partnerships, working with business to win over 4.1 million in funding in recent years and in the process picking up a national award in 2010 from the Technology Strategy Board for the Best Knowledge Transfer 20 Partnership in the South East of England. International migration The table below shows the number of adult overseas nationals entering the UK and allocated a National Insurance Number (NINo) that were resident in Portsmouth at the time of their registration. While allocation of a NINo can be for a number of reasons, such as to benefit/tax credit recipients as well as workers, the trends can help identify general patterns in Portsmouths economy. The number of NINos increased steadily from 2002/03, peaking in 2008/09 at 2430. Having dipped in 2009/10 the number of NINos returned to almost peak levels in 2010/11. This trend was also seen across the comparator cities and nationally. There are roughly an equal number of NINos allocated to those from EU Accession States and to those from Asia and the Middle East, each representing just over a third of all NINos. However, in recent years there have been slightly more NINos allocated to those from EU accession states. Those from the European Union and Africa each consistently represent between 12-15% of NINo allocations. This reflects the split seen nationally, although allocations from Africa as a proportion of all allocations are higher in Portsmouth than the national average (8%).
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Southampton Airport, www.southampton-airport.com Hampshire Economic Assessment 2011 Southampton Airport Masterplan 19 Hampshire Economic Assessment 2011 20 University of Portsmouth, http://www.port.ac.uk/aboutus/economicimpact/
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National Insurance Number (NINo) registrations from international migrants EU Asia and European Other Year Total Accession Africa Middle Union European States East 2010/11 2,400 320 780 40 350 820 2009/10 1,870 220 610 40 290 620 2008/09 2,430 360 900 70 340 650 2007/08 2,100 310 890 40 250 490 2006/07 1,760 260 670 50 220 450 2005/06 1,840 330 560 20 210 590 2004/05 1,530 270 250 40 280 590 2003/04 1,330 280 40 50 290 560 2002/03 1,160 260 30 40 210 530 Source: National Insurance Recording System, Department for Work Pensions21
The Americas 60 60 60 60 70 60 60 50 40
Australasia and Oceania 30 40 50 50 50 60 40 50 40
Looking in more detail at the specific countries receiving NINo allocations shows that Poland has been the most common country of origin for the last three years (230 in 2010/11), although the numbers have begun to decrease. Adults from India, the Peoples Republic of China and Nigeria have consistently been the next three most common areas with between 140 and 190 NINo allocations a year. In 2010/11 the number of allocations to adults from the Republic of Lithuania and Romania tripled to 130-140 allocations a year. Information from the Worker Registration Scheme , collected by the UK Border Agency (between May 2004 and December 2010) also reflects this distribution of migrant workers with 65% of approved 23 applications from Poland and 9% from Lithuania.
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Findings and conclusions Key Economic Flows Portsmouth is an employment hub for the wider region, attracting more commuters in, than sending out particularly from Havant. However, Portsmouth residents still contribute a significant amount to other local economies, with Portsmouth residents holding 21% of Havants workplace jobs. These in-commuters tend to enter the better/higher level jobs . This goes some way to explain the disparity between higher workplace wages to lower resident wages. The importance of other economic flows cannot be under estimated. In particular the impact of Portsmouth Harbour and Portsmouth International Port which handles over one million tonnes of imports and exports and over two million passengers a year. The University of Portsmouth also offers a key network of international connections through its staff, students and research activities.
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Caveats: The numbers of NINos allocated in a local authority area should equate to the number of overseas nationals arriving to work or claim during the financial year, but there will be some discrepancy because of people not obtaining permanent NINos and delay in applying for a NINo, while a small number of overseas nationals (aged 16-19 yrs) who had been allocated a child NINo automatically through the Juvenile Registration scheme will not be included and some people who have obtained a NINo in a specific geographical area will have returned home within the year. A NINo does not terminate when a person leaves the UK, therefore the scheme yields no data on out-migration. The figures reflect adult overseas nationals allocated a NINo through the adult registration scheme. 22 Worker Registration Scheme: Shows registered workers rather than the number of applications made. The figures are for initial applications only (not multiple applications, where an individual is doing more than one job simultaneously, nor re-registrations, where an individual has changed employers). 23 Information from Portsmouths Joint Strategic Needs Assessment (JSNA) 24 For example, commuting in-flows of managers and senior officials in the public administration, education and health industry were over -represented in the workforce.
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3. Broad sectors. This section presents the sectoral composition of the economy with a breakdown of the Gross Value Added by sector. The distinction between which sectors are located in Portsmouth and which sectors Portsmouth residents are employed in is investigated. This section will incorporate the voluntary and community sector as well as the impact of the creative, cultural and leisure sector on Portsmouths economy. Broad sectors profile The size of different sectors in Portsmouth have been proxied through employee numbers, as measured by the Annual Business Inquiry 2008. It is worth noting that the creative, cultural and leisure sector does not appear as a Broad Industrial Group, and is therefore not covered by the following tables. This important element of the economy tends to get lost within these broad industrial groups, most commonly being adopted into the retail and information and communication broad industrial groups. Therefore, this assessment attempts to shed light on the importance of this area in a separate section towards the end of this chapter. The following table shows the number of employees (rounded to the nearest 100), and the proportion of all employment they represent in Portsmouth, by their Broad Industrial Groups. The table goes on to express this proportion for Portsmouth, and its comparator areas, as a location quotient compared to a Great Britain average of 1. This is a way of assessing the concentration of employees in a sector, compared to the national average. A location quotient of 1 indicates that there are the same proportion of employees in that sector as can be found nationally, a value of 0.5 means there are half as many and a value of 2 would indicate twice as many.
Portsmouth Location quotients to Great Britain=1 Bournemouth Southampton Portsmouth Solent LEP South East 0.9 0.9 1.0 0.8 1.1 1.0 1.0 1.5 1.0 1.0 1.1 1.2 0.9 1.2 0.9 0.8 0.5 14
Broad industrial groups
Number % 1.2 Health 15,000 15.1 1.3 1.2 1.2 1.0 1.4 Public administration and other 14,400 14.4 0.9 1.0 1.0 1.0 1.0 Retail 10,800 10.9 1.0 1.1 1.4 1.1 1.0 Manufacturing 9,600 9.6 0.5 0.2 0.3 1.0 1.0 Education 9,000 9.1 1.3 1.3 0.9 1.0 1.0 Business administration & support services 8,100 8.1 1.4 1.2 0.9 1.1 1.2 Accommodation and food services 8,000 8 0.8 1.4 1.6 1.0 1.5 Information and communication 5,600 5.6 0.5 1.2 0.8 0.9 0.8 Transport and storage 3,700 3.7 1.4 0.6 0.6 0.9 0.7 Construction 3,600 3.6 0.5 0.6 0.7 0.9 0.5 Professional, scientific and technical 3,300 3.3 1 0.9 0.7 0.9 0.6 Wholesale 2,600 2.6 0.6 0.5 0.5 1.0 0.6 Finance and insurance 2,400 2.4 1.5 1.8 3.1 0.8 1.1 Motor trades 2,000 2 1.1 0.6 0.7 1.1 0.6 Property 900 0.9 0.7 1.1 1.0 1.0 0.5 Mining, quarrying and utilities 600 0.6 0.6 1.5 ~ 0.8 Agriculture, forestry and fishing ~ ~ ~ ~ 0.0 ~ 1.0 Source: Annual Business Inquiry 2008. Notes: ~ figures suppressed, number rounded to the nearest 100.
Health (15.1%, 15,000 employees) and Public administration and other (14.4%, 14,400 employees) sectors represent the largest proportion of employment in Portsmouth. The Health sector is of a similar size to that found in the comparator cities but is still above the regional and national average. Public admin. is far more over represented in the Portsmouth economy than in any of the comparator cities, regionally or nationally, with a location quotient of 1.4. Therefore, Portsmouth could be deemed to be at greater risk to the potential consequences of public cuts an area which is discussed in more detail in Chapter 7: Future Vision. Retail, Manufacturing and Education represent the next largest proportion of employment (approx 10% each). Although the relative size of these three industries are almost exactly in line with the national average, the Retail and Education sectors are smaller than some comparator cities and Manufacturing is a lot larger in Portsmouth; at least twice the size of comparator areas. Portsmouth has a higher concentration of the Information and communication sector than the national average and comparator cities, but this is in line with the South East concentration. However, it is known that Portsmouth is home to several world famous developers from the computer game industries. For example, independent games company Climax Group have worked on many big titles, including racing game MotoGP, and are currently developing games for major international company
Brighton
Konami. Critically acclaimed PC games company Vulcan Software produces the successful Valhalla 25 adventure game series. One of the main differences between Portsmouths economy and the comparator cities is the lower concentration of the Finance and insurance sector, which accounts for just 2.4% (2,400) of Portsmouths workplace employment, which is close to half the national average . Comparator cities have concentrations between 1.5 and 3 times as high as the national average. The following analysis looks at these sectors contribution to Portsmouths economys Gross Value 26 Added (GVA).
Headline Gross Value Added by 10 industries at current basic prices, 2009 Portsmouth LQ of GVA by industry (UK=1) Bournemouth 0.1 0.7 0.8 1.0 0.6 2.1 1.2 0.6 1.0 1.0 Southampton 0.0 0.6 0.8 1.0 0.5 1.3 1.0 1.1 1.3 0.9 Portsmouth
Percent of total GVA
Agriculture, forestry and fishing Production Construction Distribution; transport; accommodation and food Information and communication Financial and insurance activities Real estate activities Business service activities Public administration; education; health Other services and household activities Total GVA Source: ONS
3 579 253 715 587 165 256 369 1,116 106 4,149
0.1% 14.0% 6.1% 17.2% 14.1% 4.0% 6.2% 8.9% 26.9% 2.6% 100.0%
0.1 0.9 0.9 0.9 2.3 0.4 0.9 0.8 1.3 0.8
The Public administration; education; health sector is the largest contributor to Portsmouths total GVA (27%) and there is a higher concentration (1.3) than the UK average, but the same as Southampton. The Distribution; transport; accommodation and food sector is the second largest contributor to GVA (17%) and is consistent with Portsmouths comparator areas. Portsmouth has a much higher proportion of total GVA contributed by the Information and communication sector; more than twice the UK average, while comparator areas are all below the UK average. This industrys share of GVA has increased year on year since 2000 in Portsmouth and was one of the few industries in Portsmouth to increase on last year. There is a much lower contribution from the financial and insurance activities sector; less than half the UK average, while comparator areas are consistently higher, contributing at least three times Portsmouths share. The Financial and insurance activities sector has increased for the majority of comparator areas while remaining at only about 4% of Portsmouths GVA.
25
PUSH 2011: http://www.invest-in-portsmouth.co.uk/index.php?id=51
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Gross Value Added (GVA) is the value generated by any unit engaged in a production activity. It is measured at basic prices, excluding taxes (less subsidies) on products. Regional GVA is measured using the income approach, by adding up the income generated by resident individuals or corporations in the production of goods and services. It is calculated gross of deductions for consumption of fixed capital, which is the amount of fixed assets used up in the process of production in any period.
Brighton and Hove 0.1 0.5 0.8 0.8 0.9 1.3 1.8 1.0 1.2 1.5
million
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Priority sectors Various strategies and plans at the national, regional and sub-area levels have identified the following 27 priority sectors, generally because of their growth potential. The following table reflects these priority 28 sectors, identified using the same criterion as the Hampshire Economic Assessment.
Portsmouth Location quotients to GB Bournemouth Southampton Brighton and Hove Portsmouth Solent LEP South East
Percent of all Priority sector Number employees 1.7 Advanced engineering 2,700 3% 0.9 0.2 0.4 1.6 1.0 4.0 Aerospace and defence ~ ~ 0.0 0.0 1.3 2.5 0.8 Environmental technologies 800 1% 0.8 0.9 0.7 0.5 1.1 1.0 Professional services 18,700 19% 0.8 1.2 1.2 1.2 1.0 1.1 Life sciences and healthcare technologies ~ ~ 0.4 1.1 0.6 0.1 1.0 1.9 Knowledge economy 17,000 17% 0.9 1.2 1.2 1.3 1.0 1.2 Marine (Solent Waterfront 1.9 Strategy definition) 7,000 7% 1.9 0.6 0.4 1.5 1.1 ICT and digital media 1,900 2% 1.0 0.6 0.8 0.6 0.9 1.2 Tourism 9,400 9% 1.2 0.8 1.4 1.5 1.1 1.0 Source: Annual Business Inquiry 2008. Notes: ~ confidential figures. Total of all priority sectors not calculated to avoid double-counting.
Figures for the priority sectors of Aerospace and defence and Life Sciences and healthcare technologies have been suppressed to avoid sharing confidential information. However, it is worth noting that the location quotient for Aerospace and defence shows that this sector is responsible for four times the national average share of employment in Portsmouth. The priority sectors responsible for the largest share of employment; Professional services (19%) and the Knowledge economy (17%), are in line with the national average but slightly below the comparator cities and the South East. Unsurprisingly, the Marine sector in Portsmouth is responsible for a disproportionate amount of employment compared to the national average, and has the same proportion as Southampton. Although the Advanced engineering sector is relatively small, it is responsible for a much larger proportion of employment than for Portsmouths comparator cities, regionally or nationally. Major employers Hampshire County Councils Economic Development Team has compiled a list of major employers in the Hampshire Economic Area. Although the list is not comprehensive it does provide a useful 29 insight. The following two tables list the major public and private employers in Hampshire that are either based in Portsmouth, or have the potential to cover the Portsmouth area. Major public employers:
250 6,611 Hampshire Constabulary (3793 Police Officers, 2818 Police Staff) Hampshire County Council (including schools) 38,900 Hampshire Fire & Rescue 1,840 Highbury College 650 Ministry Of Defence (MOD) 22,600 NHS Hants PCT 34,408 Nuffield Health 220 Portsmouth City Council 10,000 Portsmouth College 250 University of Portsmouth 3,500 Source: Hampshire County Councils Economic Development Team Public employer Hampshire & Isle of Wight Strategic Health Authority Number of employees in Hampshire Headquarters
Winchester Winchester Eastleigh Portsmouth Southampton Portsmouth Portsmouth Portsmouth
Further analysis of the MOD employment numbers finds that it was responsible for 9,320 jobs in Portsmouth (7,620 military and 1,710 civilians) in October 2011, the majority of which are for the
27 28 29
New Industry, New Jobs, HM Govt 2009; Regional Economic Strategy for the South East England, 2006 -16; and Economic Development Strategy, PUSH) Details of the SIC codes used can be found in the Technical Annex of Hampshires Economic Assessment 2011. Hampshire County Council, Economic Development Team http://www3.hants.gov.uk/factsandfigures/figures-economics/business-2.htm#section386179-4
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Royal Navy. Portsmouth had the highest number of MOD jobs of any local authority area in the South 30 East. Major private employers:
Organisation in Portsmouth Affinion International Aker Solutions Ltd (now Jacobs (take over) Astrium Ltd BDML Connect Bvt Surface Fleet Support Ltd. City Technology Gas Detection Dalkia European Metal Recycling Ltd GKN Aerospace Services Limited (Trading as FPT Industries) H & S Aviation Ltd IBM United Kingdom Ltd Mainland Market Deliveries Ltd N-Viro Ltd. Pall Europe Ltd Portsmouth Publishing & Printing Ltd Raymarine UK Ltd SMR - Samvardhana Motherson Reflectec Warings Construction Group Number of employees in Hampshire 251+ 400 unknown 251+ 3,842 260 251+ 100-200 200 18,384 251+ 40 at the main office 1,744 251+ 280 5,026 251+ Activity Credit cards insurance and non-financial banking. Engineering and construction services, technology products and integrated solutions. Insurance Gas sensors Energy and technical management services to industry, commerce and community facilities. Scrap metal merchants. Technology and engineering for vehicles and aircraft Aircraft Engine Overhaulers IT Services, Products Road haulage, distribution and stevedoring. Cleaning services Filter Manufacture Newspaper publishers and printers. Marine Leisure Navigation Equipment Manufacture Auto and Truck Manufacturers Design and construction of major building projects throughout Southern England. Ferry Services
Wightlink Ltd 600 + Source: Hampshire County Councils Economic Development Team
Picture: Raymarine offices

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Defence Analytical Services and Advice, TSP 10 - UK Regular Forces Stationed Location, October 2011. http://www.dasa.mod.uk/applications/newWeb/www/apps/publications/pubViewFile.php?content=100.201&date=2011-11-17&type=html&PublishTime=09:30:00
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Voluntary and Community Sector The Office of the Third Sector defines organisations in this sector as sharing the common characteristic of being non-governmental organisations which are driven by their values... it encompasses voluntary and community organisations, charities, social enterprises, co-operatives and mutuals both large and small. Portsmouth has been given national recognition as a government 'pathfinder' for voluntary sector public service delivery. Within Portsmouth, the voluntary and community sector provide invaluable links to local people and communities and are well placed to influence decisions and services through their understanding of local issues and commitment to strong values. This sector is vital to the prosperity and well being of Portsmouth. It has a long tradition of providing services directly to the community and specific client groups and has built a reputation for diversity and innovation. It makes 31 a valuable contribution to the economic and social regeneration of the city. The Voluntary and Community Sector Framework identifies that this sector plays a key role in: Building social capital, both by promoting self -organised community and collective action and by encouraging volunteering and active citizenship Providing services to local people and to particular groups in the community, thereby meeting social and individual needs Advocacy on behalf of communities and the individuals they serve and represent, for example through campaigning and lobbying activities or formal representation in decision-making forums Contributing expertise and experience to policy formulation, through dialogue with the council and the wider statutory sector Providing employment and income, thereby contributing to overall economic output Delivering public and publicly-funded services and offering greater customer/consumer choice Hampshire School for Social Entrepreneurs, acting as a support mechanism for voluntary sector businesses, provides a challenging programme that brings together people who want to make a difference through enterprise. The following information is taken from the Hidden Asset 2009 report prepared by Regional Action and Involvement South East (RAISE) and commissioned by SEEDA. The South East (SE) region is home to the largest number of voluntary and community organisations in England, estimated at 41,450 organisations. The average number of beneficiaries per organisation was 750, although this varied massively depending on the organisation. The organisations in this well established sector (over half of organisations have existed for more than 25 years) are described as diverse with a strong local focus, covering important social sections of the economy, such as education, welfare/social care and health. The main services provided by the voluntary and community sector cover information, advice and guidance, followed by advocacy, education and emotional/physical support. In the SE, this sector employed 303,200 (97,690 FTEs, equivalent to 7% of the SE workforce) the majority of which are female (71%) and part-time (66%). Additionally, there were 657,780 volunteers (accounting for 1 in 10 of the SE population). The contribution of these employees and volunteers has been assessed as contributing 4,964 million to the economy of the region. Accurate estimates of the size of the voluntary sector in Portsmouth are currently unavailable. If it was assumed that Portsmouths contribution to this sector, as measured by the Hidden Asset report, was 32 proportionate to its population size , then we can estimate that there are approximately: 1000 voluntary and community organisations, employing 7,000 people (2,000 FTEs) with an additional 15,000 volunteers, contributing 119 million to the economy of Portsmouth. However, it should be emphasised that these figures are rough estimates. It is anticipated that the newly appointed (from July 2012) provider of support to Portsmouths voluntary and community organisations and groups, Community Action in Portsmouth, will be able to provide a much clearer picture of this sector in Portsmouth in the near future. While there are likely to be many opportunities for this sector, as public services are increasingly contracted out, there are also many pressures, such as growing demand for services from people experiencing different forms of hardship and threats to funding, donations and grants.
31 32
Voluntary and Community Sector Framework, Portsmouth City Council. http://www.portsmouth.gov.uk/media/Voluntary_sector_framework_v4_final.pdf Using ONS mid-2009 population estimates
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Creative, cultural and leisure sector The creative, cultural and leisure sector play an important role in creating and nurturing successful cities and acts as tool for urban regeneration in a number of ways: Supporting entrepreneurial activity though the growth and development of the creative sector Increasing visitor/resident spend Increasing corporate involvement in cultural activity Raising city profile regionally and nationally Providing economic drawing power, e.g. attracting business and employees Supporting job creation and employment benefits and as opportunities for professional 33 development. Protecting and celebrating Portsmouths heritage and built environment, utilising the historic buildings in a different way to support the visitor economy, for example Southsea Castle 34 the Artches project , and thereby develop job opportunities.
Picture: Portsmouth Dockyards
Portsmouths cultural sector, and in particular tourism, provides significant direct and indirect employment and acts as a catalyst for enhancing employment prospects and investment in the city. Portsmouths cultural life is one of the key factors in drawing people to live in and visit the city. There are also strong links with the voluntary and community sector. Recent research on the creative industries, commissioned by the Arts Council and local authorities in the region, shows that Portsmouth (and Southampton) accounts for a healthy share of the regions cultural employment and suggests strong potential for a stronger urban creative economy. However, while Portsmouth and Southampton both do well in terms of cultural employment, it was noted that 35 they do not dominate. Portsmouth and the sub-region are home to a wide range of creative industries, particularly in audiovisual employment and books and press, but there is also strong growth in performance and visual arts.
33 34
Cultural Services Business Plan 2011-2014, Portsmouth City Council The Artches development project seeks to transform the area between the Square and Round Tower in Old Portsmouth into a creatives/artists quarter to create future employment. 35 Arts Council England, (2008) Creative Returns. The Economic and Social Impact of Cultural Investments in Hampshire and the Isle of Wight
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Local creative industries are also well supported by the Creative Industries Business Advisory Service (CIBAS), Business Link, ARC a resource centre for creative practitioners based at the Aspex gallery in Portsmouth, the Chamber of Commerce, and the University of Portsmouths internationally renowned creative industries profile and Cultural and Creative Industries faculty. This was demonstrated by the widespread support across the region for Portsmouths 2009 bid to become UK City of Culture in partnership with Southampton. Local authority cultural services have been disproportionately impacted by the national cuts programme, losing resources and staff. As this report goes to press, the Cultural Services have been realigned with other services including Planning, Strategic Property, Inward Investment and Economic Development under a new service group: City Development and Cultural Services, within the broader Regeneration Strategic Directorate of the local authority. This new grouping aims to maximise the crucial role that culture, urban planning and design and the visitor economy play in broader agendas including economic growth, skills development and learning and place-shaping. This new service group will also be central to the local authoritys plans for Portsmouth as a bil lion pound city a plan to secure 1 billion in overall investment in the city for projects including Tipner Regeneration, the City Centre Masterplan and the Seafront Masterplan. The role of culture within regeneration and economic development is expanding at the exact same time as the resources available to these services within the local authority (and beyond) are contracting. As well as having a clear impact on the delivery and reach of local authority cultural services, the broader economic downturn is having a clear impact on the citys independent cultural sector, and on the independent support available to it. For example, as this report goes to press, Portsmouths unique Creative Industries Business Advice and Skills (Cibas) service is reporting jo b losses and its long term future looks uncertain. The local authority Cultural Services continue to explore a range of alternative models for the longterm delivery and development of individual sites and services, for example, the Natural History Museum, as well as for the service group, such as partnership working, community ownership, and income generation. Partnership with local independent cultural organisations and entrepreneurs are strong such as the opening of the Square Tower and investment in the Round Tower as a new exhibition with local entrepreneurs. Culture and the visitor economy is also an identified priority for the Shaping the Future of Portsmouth group, bringing together the local private, public and voluntary sector. Portsmouth is blessed with a strong and growing political understanding of the potential contribution of the cultural sector to the local economy, particularly in support of the visitor economy and the local authoritys stated ambition for the city to be known as the great waterfront city. Portsmouth is almost unique thus far in its refusal to close cultural service points. To date the city has not only kept open its libraries and museums, but has succeeded in securing investment in a new Southsea Library, which has enjoyed, and continues to enjoy, unprecedented user numbers for a branch library. There are current projects underway in Portsmouths cultural sector including a new museum for the Mary Rose, the planned refurbishment of the New Theatre Royal, and the future legacy linked with 36 London 2012 Olympic and Paralympic Games. In addition, the city is exploring the development of a new visitor attraction building on the incredible potential held by the citys unique international collection the Conan Doyle Collection, Lancelyn Green Bequest. This attraction would build on Portsmouths to-date unexploited profile as the (literal) birthplace of Sherlock Holmes the most famous and most enduring literary consulting detective in the world. How the city continues to maximise its investment in culture, creative industries, leisure and sport in the current difficult climate remains to be seen, but the new service group (within Portsmouth City Council) aligning these services with the regeneration and economic development agenda is a highly positive start.
36
Cultural Services Business Plan 2011-2014, Portsmouth City Council
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What Portsmouth offers The city has two theatres: the New Theatre Royal in Guildhall Walk near to the City Centre, specialises in classical, modern and avant-garde drama and the newly-restored Kings Theatre in Southsea's Albert Road has many amateur musicals as well an increasing number of national tours. Other venues include the Third Floor Arts Venue in the Central Library and South Parade Pier, as well as the Portsmouth Guildhall itself, which is on the national touring circuit of well known musicians and entertainers. The city also has a number of other established music venues such as the Wedgewood Rooms and The Pyramids, and a countless number of bars, cafes and small venues supporting arts, music and cultural events. Many of Portsmouth's tourist attractions are related to its naval history; the D-Day museum (which holds the Overlord embroidery), the Royal Marines Museum and the Royal Naval Museum. Portsmouth Historic Dockyard is a unique attraction showcasing 800 years of naval history within working docks and historic buildings. The Dockyard houses some famous historical ships: HMS Victory, the remains of Henry VIII's flagship, the Mary Rose (raised from the seabed in 1982), HMS Warrior (Britain's first iron-hulled warship). Other attractions include; the 170 metre tall Spinnaker Tower at Gunwharf Quays which features viewing decks from sea level to 110 metres; Southsea Castle and the seafront defences up to the Round Tower which are open to the public; and the birthplace of Charles Dickens. Portsmouth has also self-identified as a city of museums and has a growing reputation in promoting its considerable literary heritage and contemporary life under the banner of the Portsmouth, Home of great writing. A year of events under this banner are planned for 2013.
Picture: Portsmouth Museum
Portsmouth has a rich natural environment with internationally protected harbours and other nationally and locally protected sites. With its extensive maritime heritage the city boasts 18 Scheduled Ancient Monuments, 445 entries in the statutory list of buildings of architectural or historic interest, 25 Conservation Areas and 3 areas listed in the Register of Parks and Gardens of Special 37 Historic Interest in England. Further information can be found on the Visit Portsmouth website. http://www.visitportsmouth.co.uk/ Sport The Solent offers some of the best and most challenging sailing in the world. Companies such as Sunsail and Synergy Sailing offer yacht charters, whilst Tall Ships Adventures offer voyages out of Portsmouth too. The newly revamped Mountbatten Leisure Centre has been accredited by the London Organising Committee for the Olympic and Paralympic Games as a pre-games training camp for the 2012 Olympics. One of the UKs top sporting facilities, the Mountbatten Centre offers swimming, fitness classes, squash, athletics, a health suite, a state-of-the-art gym and a cycling velodrome. The Great South Run is Europes leading ten-mile road race and it comes to Portsmouth every October. Portsmouth also boasts two 18-hole golf courses. Portsmouth is also home to Portsmouth Football Club at Fratton Park. As at 2003/4, Portsmouth Football Club employed 571 staff, equivalent to 249 full time equivalents. 3m turnover a season. It was estimated that just over 3m a year flows into the city economy in the form of spending by the 38 club and its employees. Portsmouth Football Club remains a strong symbol for Portsmouth residents, and continues to contribute to the local area. The club provides a range of programmes that
37 38
Portsmouth Plan Economic Impact and Employment Generation Study of the Proposed Re-Development of Portsmouth Football Stadium and Pompey Village, Dec 2003, Jeff Grainger, CLREA.
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complement the voluntary and community sector, such as the Pompey Study Centre, Respect Programme, apprenticeship schemes and supporting a range of charities. The sports sector faces strong challenges as a result of the national policy developments and cuts programme, particularly in the area of contracts management and procurement.
Picture: Port Solent Marina
Tourism According to Tourism South Easts Economic Impact of Tourism Portsmouth 2010 assessment, direct expenditure generated by tourism in the City is estimated to be in the region of 386,916,000 in 2010. This direct expenditure is translated to 550,498,000 worth of income for local businesses through additional indirect and induced effects (163,582,000). Compared to 2008, this represents an increase of 5.9% in total tourism value. This tourism-related expenditure is estimated to have supported 7,913 full-time equivalent jobs in Portsmouth, or 10,713 Actual jobs once part-time and seasonal employment is added. The Tourism South East 2010/11 analysis recognised areas of weakness in the local visitor economy, including a lack of high quality hotels and the need to further develop Portsmouths current sh opping 39 areas. The seafront is an important tourist attraction that brings visitors and their money into the city. The results from the Solent Disturbance and Mitigation Project (2010) household survey identify Portsmouth seafront (from South Parade Pier to Fort Cumberland) as the most heavily visited section of the Solent Coast, receiving some 3.2 million annual visits. More detailed information about the importance of Portsmouths seafront, its contribution to the local economy and plans for the future, can be found in the Seafront Master Plan. The local visitor economy is of great importance to the city, and this is embedded in the Portsmouth Plan. Co-ordinating the promotion of Portsmouth as a visitor destination has recently been the focus of a significant amount of partnership work with Shaping the Future of Portsmouth. The Government has pledged to support the creative industry and visitor economy sectors as part of their plans to develop enterprise in the UK. The Tourism Strategy pledges to build on the anticipated success of the 2012 programme to create the most ambitious marketing campaign to draw new visitors to the UK. It pledges to increase both domestic and international tourism markets and to devolve more power to the tourism industry and away from central government. Significantly for Portsmouth, the strategy also acknowledges the importance of the South East region as the centrepoint of the UK visitor economy. Destination marketing, with the city brand as a visitor destination, is likely to be an important future development. Although in its infancy, the vision is to raise the profile of the city and to understand what sets Portsmouth apart from other cities as a destination and to market this profile of the city on a national and international stage. Simply put, destination marketing requires a city to present and promote its key assets in a compelling and coherent way. The Portsmouth Destination Management Plan is under ongoing development but has established a number of main objectives:
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- Marketing and promotion of the city as a destination. - Supporting regeneration and development agendas, particularly in attracting inward investment and supporting the commercial sector. - Develop a strong and sustainable, efficient and effective, private and public sector partnership. - Facilitate a unified and strong marketing message for Portsmouth as a national, European and 40 global destination.
Picture: Mary Rose Museum
Findings and conclusions - Broad sectors Looking at the size of industry sectors in Portsmouth, the most noticeable difference to its comparator cities is a specialisation in information and communication and much less of a reliance on the finance and insurance sector. This is strongly reflected in the contributions these tw o sectors make to the cities Gross Value Added. Portsmouth also has a disproportionately large manufacturing sector compared to comparator cities, although it is in line with the national average. The health sector remains the largest employer in Port smouth, accounting for 15% of employment, although this is broadly in line with the comparator cities. More interestingly, a disproportionately large public administration and other sector is also present, making Portsmouth more vulnerable to the impact of public sector cuts. In terms of priority sectors, Portsmouth has a small but massively over represented aerospace and defence industry. The same is also true to a certain extent for the advanced engineering and marine sector. The voluntary and community sector is vital to the prosperity and well being of Portsmouth, making a valuable contribution to the economic and social regeneration of the city. While there are likely to be many opportunities for this sector, as public services are increasingly contracted out, there are also many pressures, such as growing demand for services and threats to funding. The creative, cultural and leisure sector plays an important role in creating and nurturing successful cities and acts as tool for urban regeneration. Although Portsmouth evidently has a strong visitor economy, some weaknesses have been identified, including a lack of high quality hotels and the need to further develop Portsmouths current shopping areas.
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4. Economic competitiveness. This section examines the overall economic competitiveness of the Portsmouth economic area and goes into the detail of each of the drivers of productivity using skills profiles, the incidence of knowledge based activity, business density and entrepreneurship. Gross Value Added (GVA) Gross Value Added (GVA) per head is a useful way of comparing regions of different sizes and is an 41 important indicator for both domestic and European policy purposes. The South East is one of the few regions with a GVA per head above the UK average and is responsible for one of the largest shares of UK total GVA in 2010 (14.3%). Portsmouth has consistently contributed a 2.3% share of the South East region GVA. Portsmouth has also consistently contributed approximately 11% of the Hampshire and Isle of Wight area GVA. These proportions are almost exactly in line with Portsmouths share of the South East and Hampshire and Isle of Wight population. The following table shows the measure of GVA for Portsmouth and its comparator areas as the total for the area (million), per head () and as an index against the UK per head average (where the UK=100).
Headline GVA Headline GVA Headline GVA per head index, 2009 (million) per head () UK = 100 Portsmouth 4,149 20,390 102.0 Southampton 4,727 19,972 99.9 Brighton and Hove 5,283 20,611 103.1 Bournemouth and Poole 6,473 21,142 105.7 South East 179,317 21,257 106.3 England 1,061,973 20,498 102.5 United Kingdom 1,256,932 20,341 Source: ONS. Notes: The headline GVA series for this publication have been calculated using a five-period moving average. Estimates of workplace based GVA allocate income to the region in which the economic activity takes place.
Portsmouths GVA per head is slightly above Southampton and in line with the national average, but it is still considerably below other comparator cities, such as Bournemouth, and the South East region. After a long period of increasing year on year, total GVA and GVA per head actually decreased on 2008 levels in 2009 across all comparator areas, regionally and nationally as well as in Portsmouth. GVA per head decreased by between 2-3% (except in the South East where it only decreased by 0.4%).
GVA per filled job index at current prices Index (UK less Extra-Region = 100) Portsmouth Southampton Brighton and Hove Bournemouth and Poole South East England Source: ONS 2004 88.1 100 98.7 89.3 104.3 101.8 2005 89.2 99.7 96.2 89.9 104.4 101.8 2006 90.5 98.7 94.2 91.6 104.3 101.9 2007 91.4 98 93.3 93 104 101.9 2008 91.7 97.4 92.6 93.9 103.8 101.8
The table above shows that the level of GVA created per filled job in Portsmouth is 8.3% below the UK average. While Portsmouth has a lower GVA per filled job value than its comparator cities, and particularly compared to the South East region which is above the national average, Portsmouth has been catching up over the last 5 years. Portsmouth was 11.9% below the national average in 2004, this gap has decreased year on year while Southampton and Brighton and Hove have diverged further from the national average.
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It is not, however, a measure of regional productivity, as the population estimates used to calculate it include the economically inactive population. It is also worth noting that GVA is calculated from the workplace population whereas the denominator of GVA per head uses the resident population.
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Drivers of productivity The UK policy framework for productivity has previously focused on five drivers: competition, 42 investment, entrepreneurship, innovation and skills. Investment is covered within Chapter 6: Environmental considerations, sustainability and infrastructure; the key indicators for the remaining four drivers are addressed below. Skills The following table shows the percentage of 16-64 year old population with qualification levels.
Qualifications Three year average 2008-201043 NVQ4+ NVQ3+ NVQ2+ NVQ1+ Portsmouth 27.5% 49.8% 65.7% 80.4% (2010 Number) (41,200) (70,400) (92,900) (113,000) Southampton 28.7% 51.6% 65.5% 80.4% Brighton and Hove 43.1% 64.9% 76.6% 85.4% Bournemouth 26.2% 50.4% 66.5% 80.4% South East 32.5% 52.7% 69.2% 83.1% England 29.7% 49.0% 65.2% 78.9% Great Britain 29.9% 49.5% 65.5% 78.9% Source: ONS Annual Population Survey (Jan-Dec 2008, 2009 and 2010) Other 7.5% (11,200) 9.7% 6.9% 10.6% 7.7% 8.9% 8.7% None 12.1% (16,000) 9.9% 7.7% 8.9% 9.1% 12.2% 12.4%
The proportion of Portsmouth residents with at least an NVQ4 (equivalent to at least a foundation degree) is falling behind the national average, and particularly behind Brighton and Hove (which is known for its extraordinarily high proportion of highly qualified workers). The proportion of Portsmouth residents with at least NVQ3 (equivalent to at least two A-levels) is on a par with the national average and only slightly behind the majority of comparator cities. The proportion of residents with at least NVQ2 (equivalent to at least five GCSEs at A*-C) is in line with the majority of comparator cities (except Brighton) and the national average, but below the South East average. Although the proportion of 16-64 year olds with no qualifications is in line with the national average and has been showing a downward trend, it is still much higher than the regional average and other comparator cities. There are 35 primary schools and 14 secondary schools in Portsmouth. There are two Further Education colleges and a University within Portsmouth. Residents also have access to Further and 44 Higher Education in the surrounding area including Havant, Fareham, and St Vincent Colleges. Highbury College is now considered the top performing general Further Education college in the South East. It opened its new City of Portsmouth Centre in 2008, with real life work environments for catering, travel, retail, health and childcare training. The following year saw the completion of the new 35m Highbury Campus building, with facilities for sports, hair and beauty, science, media studies and motor engineering. The college is also developing a Marine Training Centre at Trafalgar Gate. Portsmouth College, placed in the top 10% of sixth form colleges in the country for value added, concentrates on progression towards higher education and careers of pupils from Portsmouth 45 secondary schools. The most recently released data from 2010 shows that 43% of Portsmouth pupils achieved five A*-C GCSEs (including Maths and English) compared to 53% in England and 57.5% in the South East. However, this rate has been steadily increasing in Portsmouth; by 15 percentage points over the last 46 five years. Regardless of this upward trend, which is encouraging, it is recognised as part of Portsmouths School Strategy that performance in these areas is significantly below average. The average point score per pupil at A/AS level and equivalent was 665 compared to 745 for 47 England and 742 in the South East. However, this masks the fact that certain institutions scored much higher than the average, noticeably Portsmouth Grammar School (a private fee-paying school)
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HM Treasury (2001) Productivity in the UK: 3 the Regional Dimension Three year averages, 2008-2010, have been used as the ONS Annual Population Surveys are based on samples. It is important to note that this analysis refers to the skills set of residents of Portsmouth and not the workforce of Portsmouth. 44 DTZ 45 Shaping the Future of Portsmouth, Portsmouths Regeneration Strategy 46 Department for Education, www.education.gov.uk 47 DTZ
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with 1,021 points per pupil. It is worth noting that these scores relate to pupils attending these schools 48 in Portsmouth, who may not necessarily be Portsmouth residents. The table below shows the proportion of state school pupils going into higher education. Portsmouth has a much lower rate than its comparator cities and while this is not necessarily a bad thing in itself, 49 if those leaving school are going into the appropriate training or employment, it does help to paint a picture of Portsmouth residents current skills set and some prediction of the changes expected in the future.
Proportion of state school pupils going into higher education by local authority Number % Portsmouth 374 40.2 Southampton 984 45.7 Brighton and Hove 1702 58.9 Bournemouth 1062 53.3 Source: Degrees of Success, The Sutton Trust July 2011
The University of Portsmouth had 4,900 graduates in 2010 from a potential of more than 450 different degree programmes (244 undergraduate, 162 postgraduate and 63 research degrees). 89% of these 2010 graduates went into employment or further study and training. According to the 2010 Index of Multiple Deprivation domain covering Education, Skills and Training Portsmouth has some of the most deprived areas nationally, with 23 out of Portsmouths 123 lower super output areas being ranked in the bottom 10% of England. These poor performing areas are disproportionately located within the Charles Dickens and Paulsgrove ward areas. Portsmouth City Council has recently conducted a review into whether the resident workforce in Portsmouth has the requisite skills to satisfy the current and future needs of the city, its residents and 50 local employers that summarised the following findings from The National Strategic Skills Audit for England 2010, UKCES: Expansion in the number of jobs is most likely in the higher skilled occupations of managers, professionals and associate professional/technical. This currently accounts for 43% of jobs in Portsmouth and is expected to rise in line with UK trends. Personal / customer service occupations are also expected to create additional jobs in the future. A contraction of jobs is anticipated in administrative / secretarial, skilled manual trades and operative occupational groups. This currently accounts for 21% of jobs in the City Replacement demand as people retire is expected in managerial; teaching / research professionals; business and public service associate professionals; administrative roles; caring; personal services and elementary occupations. Sector specific skill needs are predicted in ICT/digital economy, health and social work, STEM related, associate and para professionals and frontline personal service occupations - especially in the care sector. The Solent Local Economic Partnership Initial Business Consultation in July 2011 found that 54.4% of organisations felt that Getting people with the right skills was an important enabler for economic growth. From the same consultation 64% of respondents felt labour market issues and skill shortages were a serious barrier to economic growth.
48 49 50
Department for Education, www.education.gov.uk See figures on young people Not in Education, Employment or Training (NEET) in Chapter 5: Labour market participation For the Economic Development, Culture and Leisure Scrutiny Panel.
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Innovation Cities dont innovate but they provide the support environment for firms, entrepreneurs and institutions within them to innovate. Cities are vital for innovation by fostering the creation of knowledge and bringing businesses, people and institutions together to create an innovation ecosystem. They help the flow of ideas, facilitate localised knowledge spillovers and enable 51 innovation. The incidence of knowledge based activity can be used as a proxy measure for innovation in Portsmouths local economy. The following table uses the Eurostat definition of Knowledge Intensive 52 Services and 'high-technology and medium-high-technology manufacturing industries. It shows the number and proportion of employees and businesses in knowledge based activity.
Employees Knowledge based activity in: number percent Portsmouth 55,300 55.5 Southampton 67,000 61.1 Brighton and Hove 68,600 57.5 Bournemouth 42,700 56.2 Solent LEP 338,500 51.1 South East 1,953,200 52.0 England 11,869,200 51.4 Great Britain 13,692,600 51.3 Source: Annual Business Inquiry 2008 (2 digit, SIC 2007) Businesses number 2,200 2,800 6,000 2,600 23,800 161,700 827,700 926,400 percent 32.8 37.2 45.0 35.9 37.1 40.9 38.3 37.9
Portsmouth has a larger share of its workforce employed in knowledge intensive businesses than the regional and national averages. However, this is still below, although not too dis-similar, to Portsmouths comparator cities. Portsmouth also has the lowest proportion of businesses - just under a third - in knowledge intensive businesses. Although this may, at least in part, simply be a reflection of the already identified concentration of larger enterprises in Portsmouth. Further analysis, by indexing the proportion of employees identified in specific services against the average for Great Britain highlights a number of knowledge intensive services where Portsmouth has a relative over-representation, or specialisation. These include: Manufacturing of other transport equipment employment was 3.75 times the national average (although only responsible for 1.5% of employees in Portsmouth) a further breakdown finds this to be mostly due to the Building of ships and floating structures. Computer programming, consultancy and retail activities employment (4%) was more than twice as common (2.22) in Portsmouth than the national average, and more than in comparator cities. Public administration and defence; compulsory social security accounted for 9.8% of employees and was twice as high as most comparator cities. Although only responsible for a small number of employees in Portsmouth (<300), Water Transport is more than three times as common as it is nationally. However, when compared to its comparator cities, Portsmouth is overshadowed by Southampton which is more than twenty five times the national average. The importance of universities and colleges is also important to innovation. The 2 digit SIC 2007 definitions used to identify knowledge based activity masks the contribution that Higher education makes to Portsmouths economy. Higher education is responsible for 2.8% of employees, this is 1.6 times greater than the national average, and apart from Bournemouth is the largest of its comparator cities. The University of Portsmouth worked with over 600 businesses of all sizes in the last twelve months, including large blue chip companies right through to start-up companies. The University is increasingly seen by businesses as their preferred supplier for outsourced research and development. The University is a centre for international excellence in research including biomedical sciences, applied mathematics and materials engineering. Over the last year, it has undertaken over 4m worth of collaborative research projects that have helped businesses generate over 200 new high-tech jobs,
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Streets Ahead: what makes a city innovative? The work foundation. Lizzie Crowley, November 2011. http://www.theworkfoundation.com/DownloadPublication/Report/306_streets_ahead3.pdf 52 EuroStat, http://epp.eurostat.ec.europa.eu/cache/ITY_SDDS/Annexes/htec_esms_an3.pdf 53 Using the SIC 2007 2-digit level
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and over 400 creative businesses (see Creative, cultural and leisure section) have benefited from 54 specialist advice and guidance. The strong naval influence in Portsmouth has also contributed to many knowledge-intensive defence related spin-off companies. There are more people employed in the space sector in Portsmouth than anywhere else in the UK.
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The plans for a new business park at Dunsbury Hill Farm in Havant will further enhance Portsmouth businesses innovative abilities and the share of knowledge based industries. A recent report by the Work Foundation, Streets Ahead: what makes a city innovative? , categorises UK cities (based on 2001 Travel to Work Areas) into five typologies, these are: high performing innovative cities, service sector innovators, technological innovators, innovative potential and low innovation cities. Portsmouth is categorised as an innovation potential city, described as possibly having some strong niches, but does not yet have strong innovation ecosystems in place. It is categorised as a place where some strengths have been identified but it has challenges to overcome before it becomes successful. The possible policy responses recommended for innovation potential citie s such as Portsmouth are to identify strengths and build on what is already there, while removing barriers to innovative firms looking to expand. Southampton is categorised as a high performing innovative city that is highly productive, specialised in a range of knowledge intensive innovative sectors, and benefits from a concentration of skilled labour. Bournemouth and Brighton are categorised as service sector innovators with highly productive economies but are specialised in high tech services and business services activities.
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Picture: Purple Door Careers and Recruitment, University of Portsmouth
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Shaping the future of Portsmouth, PCC Regeneration Strategy Portsmouth Plan Streets Ahead: what makes a city innovative? The work foundation. Lizzie Crowley, November 2011. http://www.theworkfoundation.com/DownloadPublication/Report/306_streets_ahead3.pdf
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Competition The business density (stock of businesses per head of population) in the local area is used as a proxy for the level of competition. The assumption is that the higher the business density, the higher the degree of local competition is.
Active enterprises Active enterprises per (2009) 10,000 (16+) residents Portsmouth 5,730 337.9 Southampton 6,255 315.0 Brighton and Hove 12,360 574.6 Bournemouth 6,530 469.1 South East 375,595 549.2 England 2,040,150 484.5 Great Britain 2,282,200 467.3 Source: ONS Business Demography 200957 and ONS mid-yr population estimates 2009 All VAT and/or PAYE Enterprises per 10,000 Based Enterprises (16+) residents March 2010 Portsmouth 4,685 276.2 Southampton 5,130 258.3 Brighton and Hove 10,355 481.4 Bournemouth 5,370 385.8 South East 330,375 483.0 England 1,797,910 427.0 Source: UK Business IDBR 2009 and ONS mid-yr population estimates 2009
A similar pattern is seen for both measures, with Portsmouths business stock per 10,000 residents aged 16+ being slightly higher than Southamptons, but well below the South East and national average and other comparator areas, particularly Brighton and Hove. The analysis on business density can be put in context by commenting on the size of businesses, and the proportion of employment they represent, in Portsmouth.
Size of firm by number of employees 1-10 11-49 50-199 200+ Portsmouth 82.3% 13% 3.6% 0.9% (number) (5,548) (892) (242) (58) Southampton 80.6% 15% 3.5% 0.9% Brighton and Hove 86% 11% 2.1% 0.5% Bournemouth 86% 11% 2.6% 0.6% Solent LEP 85% 12% 2.6% 0.6% South East 87% 10% 2.48% 0.54% England 85% 11% 3% 0.6% Great Britain 85% 12% 3% 0.7% Source: Annual Business Inquiry 2008. Note: This dataset excludes farm based agriculture data contained in SIC class 0100. Size of firm by number of employees 1-10 11-49 50-199 200+ Portsmouth 16% 21% 23% 41% (number) (16,200) (20,600) (22,400) (40,400) Southampton 16% 23% 22% 39% Brighton and Hove 25% 27% 20% 29% Bournemouth 22% 24% 24% 30% Solent LEP 22% 25% 23% 30% South East 24% 25% 24% 28% England 21% 24% 24% 31% Great Britain 21% 24% 24% 32% Source: Annual Business Inquiry 2008. Note: This dataset excludes farm based agriculture data contained in SIC class 0100. Number of employees rounded to the nearest hundred Number of employees Number of businesses
It is clear that the 58 largest businesses (200+ employees) account for less than 1% of all businesses but employ just over 40% of Portsmouths workforce. Although similar to Southampton, this is about a third more than other comparator cities and the regional and national average of just over 30%. Portsmouth has a bigger proportion of large businesses compared to the national average, and particularly compared to the South East. Although similar to Southampton, Portsmouth also has a higher proportion of large businesses than the other comparator cities and the Solent LEP.
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ONS Business Demography (2008) includes PAYE-registered and VAT-registered records. Estimates from ONS Business Demography differ from (and are lower than) estimates from UK Business/IDBR because the latter is a snapshot measure whereas ONS Business Demography takes into account business that were active at any point during the relevant year. [Hampshire Economic Assessment 2011]
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Further analysis shows that not only does Portsmouth have more large businesses, but that these large businesses are, on average, larger than those found in the comparator areas. According to the Annual Business Inquiry 2008, each large business in Portsmouth employs close to 700 workers on average, compared to 520 nationally and just fewer than 600 for the most similar area, Southampton. 58 Although this is likely to be skewed by a few extremely large businesses. This is also implied by the ONS snapshot of IDBR in 2011 shown in the table below, which uses a different range of employee numbers to classify the size of a business, and shows that the largest businesses (250+ employees) represented a higher proportion of all VAT and/or PAYE based enterprises in Portsmouth than comparator areas. While small firms (with fewer than 11 employees) still make up the majority of businesses in Portsmouth (82.3%), they represent a smaller proportion than is found nationally and in the majority of comparator cities (where they typically represent 86-87% of businesses). Southampton is the exception, as it shows an even smaller proportion (80.6%) of small businesses than Portsmouth. Smaller businesses employ a smaller proportion of all employees (16%) in Portsmouth than comparator cities (except Southampton which is very similar) and nationally (21%). The representation of medium sized businesses is broadly similar to other cities and the national average. This analysis is confirmed in the following ONS snapshot of IDBR taken in March 2011.
Size of firm by number of enterprises % of VAT and/or PAYE based enterprises in 2011 0-4 5-9 10 - 19 20 - 49 50 - 99 100 - 249 Portsmouth 73.4% 14.2% 6.7% 3.4% 1.2% 0.6% Southampton 71.7% 15.2% 6.8% 4.0% 1.0% 0.8% Brighton and Hove 79.3% 11.5% 5.2% 2.8% 0.7% 0.4% Bournemouth 76.0% 12.6% 5.9% 3.4% 1.0% 0.7% SOUTH EAST 77.7% 12.0% 5.5% 3.0% 0.9% 0.5% ENGLAND 76.2% 12.7% 5.9% 3.2% 1.0% 0.6% GREAT BRITAIN 75.9% 12.9% 6.0% 3.2% 1.0% 0.6% Source: ONS Snapshot of IDBR taken on 28 March 2011. 250 + 0.6% 0.5% 0.2% 0.5% 0.4% 0.4% 0.4% TOTAL 4,510 4,935 10,465 5,285 328,015 1,780,825 2,012,905
A national measure of competitiveness is available in the form of the UK Competitiveness Index produced annually by the Centre for International Competitiveness, University of Cardiff. This is an integrated measure of competitiveness focusing on both the development and sustainability of businesses and the economic welfare of individuals. Therefore it considers competitiveness to consist of the capability of an economy to attract and maintain firms with stable or rising market shares in an 59 activity, whilst maintaining stable or increasing standards of living for those who participate in it. Portsmouth was ranked 23 of the 43 cities included in the UK Competitiveness Index (with populations of more than one hundred thousand, excluding London). Portsmouth was ranked one th place behind Southampton but well below Brighton and Hove (10 ). In terms of the index, where UK=100, Portsmouth scores 95.6 (Southampton 96 and Brighton and Hove 104.9). Therefore, Portsmouth is slightly below the national average but is ranked at the median level of other cities. Only 14 of the 43 cities included were above the national average. Compared to all local authority areas, Portsmouth was ranked 188 out of 379. Portsmouths th comparator areas fared much better, with Brighton and Hove ranked 86 with an index score of 104.9 th indicating that it was above the UK average. Bournemouth was placed 157 but it was still below the UK average. Southampton had a very similar index score of 96 and was only ranked five places higher than Portsmouth. However, the study also compares its findings on competitiveness to the happiness index developed 60 th by Ballas and Tranmer. Portsmouth was ranked 10 out of the 43 cities, only just beaten by Brighton th and Hove (8 ), which had a much higher ranking in the Competiveness Index of cities, and well above th Southampton which had a much lower rank (38 ) in the Happiness Index, despite being ranked one place higher than Portsmouth in the Competitiveness Index of cities.
th rd
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See the Major employees section of Chapter 3: Sectors UK Competition Index 2010 R. Huggins & P. Thompson, Centre for International Competitiveness, Cardiff School of Management, University of Wales Institute, Cardiff. http://www.cforic.org/pages/ukci2010.php 60 Ballas, D. And Tranmer, M (2008) Happy places, happy households or happy people? Building a multi -level model of happiness and well-being, Centre for Health and Wellbeing
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Entrepreneurship Entrepreneurship has gained additional attention in the current economic crisis, as it is widely viewed as a key aspect of economic dynamism. Economic crises are historically times of industrial renewal, or creative destruction, as less efficient firms fail while more efficient ones emerge and expand. New business models and technologies, particularly those leading to cost reductions, often emerge in 61 downturns. Entrepreneurship is a difficult concept to measure, so the following measures should be viewed as proxies to the current level/potential of entrepreneurship in Portsmouth with no single measure 62 painting the full picture. New business births: The absolute number of new business births has been decreasing since 2007 across the board. When looking at new enterprises as a proportion of active enterprises then Portsmouth appears to have had the highest rate of its comparators since 2005. However, the number of new business births per 1,000 16+ residents is much lower than the majority of comparator areas, particularly Brighton and Hove. This may reflect the fact that Portsmouth's economy is more dominated by a few large employers, with a resulting smaller stock of businesses. Business deaths: Business deaths have increased across the board; nationally they went up by 25% on last year and by as much as 34% in Portsmouth and other cities. As with business births, the business death rate in Portsmouth represents a higher proportion of enterprises than was found in other areas - but it is likely that this too reflects the make-up of Portsmouths economy, with fewer, but larger, businesses resulting in a smaller stock of businesses. Business births and deaths in Portmsouth over time
Number of business births and deaths
1,000 800 600 400 200 0 2004 2005 2006 2007 2008 2009
Portsmouth (births) Portsmouth (deaths)
Source: ONS Business Demography 2009
A very similar pattern, where there were more business deaths than births, was also seen in all the comparator cities, the South East and nationally in 2009.
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OECD, Measuring Entrepreneurship, A Collection of Indicators 2009 Edition. OECD Eurostat Entrepreneurship Indicators Programme. It is worth mentioning that micro enterprises can function quite effectively before reaching the VAT threshold and so would not necessarily be captured in much of the following analysis based on the ONS Business Demography 2009. Self employment figures in Portsmouth have also been included to help counter this limitation.
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Survival: Portsmouth businesses are exhibiting lower survival rates than comparator areas (except Southampton, where survival rates tend to mirror those in Portsmouth) in every one of the first five years monitored. However, the divergence in new businesses survival rates in Portsmouth compared to the majority of its comparator cities and national average is most noticeable from the third year onward.
Business survival rate of new enterprises (2004 base year) One Year Two Year Portsmouth 93.5% 77.1% Southampton 93.3% 76.4% Brighton and Hove 94.4% 78.7% Bournemouth 94.5% 82.5% South East 94.5% 80.2% England 94.2% 78.7% Great Britain 94.2% 78.7% Source: ONS Business Demography 2009 Three Year 62.1% 61.2% 66.1% 67.2% 66.9% 65.2% 65.2% Four Year 51.0% 50.3% 57.1% 55.2% 56.4% 54.5% 54.6% Five Year 42.5% 43.0% 49.6% 47.0% 48.7% 46.6% 46.7%
Analysis of more recent trends, and the survival rate averaged over a number of years, indicates that Portsmouth is seeing an improvement, particularly in the one year survival rate which was 94.8% on average over the five years 2004 to 2008. Self-employment: Just over 10% of those in employment (aged 16+) in Portsmouth were self-employed. This is marginally more than Southampton but below the other comparator cities, South East, Solent LEP area and national average which all expressed rates of more than 13%. Brighton and Hove are most noticeably higher with 16% of their 16+ population self employed.
In employment who are self-employed (16+) number Portsmouth 10,000 Southampton 11,100 Brighton and Hove 20,500 Bournemouth 10,000 Solent LEP 99,400 South East 599,900 England 3,360,100 Great Britain 3,799,000 Source: APS 2010/11 percent 10.1 9.5 16.0 13.0 13.5 14.4 13.8 13.5
A breakdown of the self employment figures by gender shows that while Portsmouth follows the trend for a higher proportion of self employed males than females, both genders were still below all comparator areas (except Southampton). Numerous grassroots firms are often nurtured in the City Councils enterprise centres and other managed workspace developments, including the Portsmouth Enterprise Centre on Quartermaine Road, the Victory Business Centre on Somers Road North and the Challenge Enterprise Centre on Sharps Close. The Portsmouth Centre for Enterprise based at the University of Portsmouth aims to help its students and graduates develop their enterprising skills and set up their own businesses and ventures. They offer free and confidential personal support, an on-line resource centre, a range of events, programmes and workshops, the Understudy Programme providing work experience opportunities in local entrepreneurial companies, a support scheme for students looking to start their own business during their year out in industry and business development units (low cost office space for graduates wanting to establish and develop their business).
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Findings and conclusions - Economic competitiveness Portsmouth is not as prosperous as other similar areas (as measured by Gross Value Added per head), but is still at a satisfactory level. Portsmouth is also home to pockets of extreme deprivation, which are likely to be exacerbated by the impact of cuts and welfare reforms. Portsmouths productivity (as measured by Gross Value Added per job filled) has been slowly catching up with similar cities and the national average for a number of years, but still remains low. Detailed analysis of the drivers of productivity found a number of possible reasons for this, including: Portsmouths resident population continue to have low skill levels despite the location of the University of Portsmouth and a number of top quality schools within the City. A number of measures show that this concern is not restricted to the already established working age population, but is being exasperated by the low skill levels of those entering the workforce. Low business density, implying a lack of competitiveness, due to the higher proportion and greater size of large firms in Portsmouth. The over-representation of large firms also negatively skewed measures of entrepreneurial activity and potential, although there were some rays of light with regards to improving survival rates of 63 new businesses. Portsmouth has been defined as having potential for innovativeness. The policy recommendations include: building on what is already there, while removing barriers to innovative firms looking to expand. Some strong niches of knowledge based industry in Portsmouth include: Manufacturing of other transport, in particular the building of ships and floating structures; Computer programming, consulting and retail; Public administration and defence; Water transport; and Higher education. Portsmouth is found to be very similar to Southampton and facing many of the same issues across a 64 wide range of measures and descriptions. Close working and sharing of best practice in addressing these similar issues would be mutually beneficial. One notable difference is Southamptons categorisation as a high performing innovative city and there would be value in exploring what makes Southampton different in this respect and seeing whether it can be applied to Portsmouth.
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Portsmouths concentration of employment within a few large employers tends to skew other measures of competitiveness and entrepreneurship, making Portsmouth appear less competitive than comparator cities. Whether this is a genuine concern or just a statistical anomaly requires further analysis. 64 For example, the disparity between workforce and resident wages, low skills, the dominance of large businesses/low business density, low self employment rates, low survival rates and high NEET.
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5. Labour market participation. This section presents the key issues relating to labour market participation, worklessness and a detailed analysis of deprivation in Portsmouth. This will use the most up to date information available and draw on the analysis and recommendations presented in the Portsmouth Worklessness Study and Portsmouths Anti-Poverty Strategy. The following analysis draws from and builds on the analysis presented in the Statistical Analysis of Worklessness in Portsmouth, August 2011, conducted by the Centre for Economic Analysis and Policy (CEAP), Portsmouth Business School, University of Portsmouth. The worklessness study investigated the extent of and trends in worklessness in Portsmouth over the 6 year period from 2005 to 2010. The study provides: Detailed quantitative analysis of the workless population in Portsmouth over the period 2005 to 2010 - disaggregated both in terms of geography and demography. Quantitative analysis of the stock of claimants and claimant flows. Detailed analysis of the nature of Incapacity Benefit / Employment and Support Allowance (ESA) claimants in the city and the changes seen since the introduction of ESA. Geographic analysis of the location of benefit claimants within the city to Lower Super Output Area level. Analysis of the wider group of economically inactive residents in the city. With conclusions arising from the analysis to support local policy and actions. It focused on ten Lower Super Output Areas (LSOAs) in Portsmouth with the highest incidence of working age benefits claimants, which were between two and three times greater than the national and local averages and almost four times the regional average. This sample included a LSOA that ranked within the worst performing 1.3% of all LSOAs within England & Wales (in terms of benefit claimant density). The report successfully demonstrates that the small area working age benefits data is able to pinpoint particular claimant characteristics and trends which, if used effectively, could inform policy to help alleviate the significant issue of worklessness currently evident in a number of LSOAs within Portsmouth. Employment and activity rates
Percent of working age population 16-64 Bournemouth Southampton Brighton and Hove Portsmouth Portsmouth (numbers aged 16-64) Economically active - Economically active males - Economically active females In employment - Self employed 106,400 55,000 51,400 97,600 9,500 8,700 Great Britain 76.2% 82.5% 69.9% 70.3% 9.0% 7.6% 34 South East 79.3% 85.6% 73.1% 74.6% 10.2% 5.8%
75.7% 78.0% 73.3% 69.4% 6.8%
73.3% 79.6% 66.7% 68.6% 6.4%
75.3% 78.2% 72.3% 69.8% 10.6%
76.4% 82.4% 70.3% 70.7% 8.8% 7.6%
Unemployed (model based) Source: ONS APS Apr 2010 Mar 2011.
Percent of the economically active 8.1% 7.2% 7.7%
106,400 working age (16-64) Portsmouth residents were defined as economically active in 2010/11. The proportion of 16-64 year olds that are economically active in Portsmouth (75.7%) is broadly in line with comparator cities, and the national average but lower than the South East average (79.3%). This reflects the higher number of full-time students resident in Portsmouth and comparator cities compared to the wider region. What is interesting about Portsmouths economically active population is that the proportion of economically active males (78% of working age males) is lower than most comparator cities and the regional and national average, whereas the economically active female population (73.3% of working age females) accounts for a larger proportion than all comparators. While the proportion of the working age population in employment (69.4%) was only slightly lower than Brighton and Hove (69.8%), Bournemouth (70.7%) and the national average (70.3%) it was markedly lower than the South East average (74.6%).
The composition of this employment also differed to comparator areas with a much lower proportion of the working age population in Portsmouth being self employed in comparison to the majority of the comparator cities (with the exception of Southampton which had a lower rate) and the regional and national average.
Percent of working age population 16-64 Bournemouth Southampton Brighton and Hove Portsmouth (%) Great Britain 23.8% 5.7% 18.1% South East 20.7% 5.6% 15.1%
Portsmouth (numbers)
34,200 Economically inactive 9,700 Wanting a job 24,500 Not wanting a job Source: ONS APS Apr 2010 Mar 2011
24.3% 6.9% 17.5%
26.7% 8.1% 18.6%
24.7% 7.1% 17.6%
23.6% 3.9% 19.7%
The proportion of Portsmouths working age population that are economically inactive (24.3%) is higher than the regional average and broadly in line with the national average and comparator cities. There was a higher proportion of the working age population in Portsmouth defined as economically inactive and wanting a job (6.9%) than the regional and national average, but this is less than Southampton (8.1%), about the same as Brighton and Hove (7.1%) and more than Bournemouth (3.9%). The proportion of residents in Portsmouth who are economically inactive and not wanting a job (17.5%) although noticeably higher than the South East average (15%) is in line with the GB average and actually lower than for Southampton (18.6%) and Bournemouth (19.7%). Economically active and inactive working age population in Portsmouth Economically Inactive: not wanting a job, 24,500 Economically Inactive: wanting a job, 9,700 Economically Active: unemployed, 8,700
Economically Active: in employment, 97,600
Source: ONS APS Apr 2010 Mar 2011
Reasons given for why the economically inactive are unable to start work The table to the right shows that the majority of the economically inactive population (over one-third) in Portsmouth were full-time students, accounting for 11,300 individuals. The proportion of students has risen over the last few years from 31 per cent in 2008 65 to 36 per cent in 2010.
Source: ONS APS Jan Dec 2010
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Worklessness study, CEAP, University of Portsmouth
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Unemployment The rate of unemployment, as measured by those claiming Job Seekers Allowance, was 3.5% (5,069) of the working age population in November 2011. This was slightly lower than the national average and broadly in line with the comparator cities, although above the South East average.
All people claiming Job Seekers Allowance (November 2011) Portsmouth Southampton Brighton and Hove Bournemouth South East Great Britain Source: ONS Claimant count Rate 3.5% 3.4% 3.6% 3.3% 2.6% 3.8% Total Number 5,069 5,722 6,465 3,682
As can be seen in the graph below, the unemployment rate in Portsmouth appears to have plateaued over the last 12 months at around the 3.5% level. This is slightly lower than the initial high levels seen throughout 2009, and below the peak rate of 4% experienced in April 2010. While the trend in Portsmouth broadly follows that of the South East and Great Britain, Portsmouths JSA claimant rate remains approximately one percentage point above the South East rate but has remained below the national average since July 2010.
Source: ONS
The latest available unemployment figures (November 2011) show the average claimant count unemployment rate was 3.5% in Portsmouth. However, there were pockets of extremely high unemployment, reaching rates as high as 6.8% in Charles Dickens ward and 4.7% in Nelson ward. Unemployment rates for males were particularly high for those resident in the Charles Dickens (9.4%) ward compared to the city average of 4.8% for males, but there were other wards where the unemployment rate for males was still high such as Nelson (6.1%) and Fratton (6.0%). The unemployment rate for females was 2.3% on average across the City, but this too peaked in Charles 66 Dickens (4.4%) and Nelson (3.3%).
66
Source: Office for National Statistics. Rates are calculated from the resident working age population
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Claimant count by age group and duration Portsmouth (November 2011) % of unemployed % of 18-69 population Number Duration: <6 months % of age range Number 6-12 months % of age range Number 12+ months % of age range 3% 16% 21% 269,089 69 5.6 Great Britain 37 South East 39,469 72 3.5 Number 35 475 165 Bournemouth 775 70 4
Age range
18-24 1,345 27% 23% 1,115 83% 25-49 2,920 58% 51% 1,730 59% 50-69 790 16% 26% 440 56% Total 5,055 Source: ONS Claimant count, ONS mid year population estimates 2010.
195 715 185
14% 24% 23%
The youngest age group (18-24) is disproportionately over represented (27% of unemployed) compared to its share of the population (23%). Unemployment lasting less than six months was the most common duration for all age ranges. However, this was disproportionately so for the younger age range (18-24) where 83% of claimants had been claiming for under six months. The duration of unemployment tends to increase as the age range increases.
Southampton Jobcentre plus vacancies (December 2011) Brighton and Hove 1,014 56 6.4 Portsmouth 1,115 77 4.7
Unfilled jobcentre vacancies Unfilled jobcentre vacancies per 10,000 working age population JSA claimants per unfilled jobcentre vacancy Source: Jobcentre Plus vacancies - summary analysis
1,423 84 4.0
This shows that the number of unfilled jobcentre vacancies, as a proportion of the working age population, is the same in Portsmouth as is being experienced in the South East and nationally. However, Portsmouth has a larger number of JSA claimants per unfilled jobcentre vacancy than the South East average. This could indicate a greater mismatch between the unemployed workforce in Portsmouth and the job vacancies available. The following graph shows the absolute number of new residents claiming JSA (on flows) and leaving JSA (off flows) each month from January 2006 to November 2011. 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 September 2006 September 2007 September 2008 September 2009 September 2010 September 2011 May 2006 May 2007 May 2008 May 2009 May 2010 January 2006 January 2007 January 2008 January 2009 January 2010 January 2011 May 2011
Portsmouth (Off flows) Portsmouth (On flows)
Source: ONS Claimant Count
The number of both on-flows and off-flows have increased almost in line with each other over time. This indicates a greater churn in employment and unemployment than previously experienced. This is another indication of jobs becoming less secure.
The graph below shows that there were in fact more on-flows than off-flows on average, leading to the higher unemployment rate expressed earlier.
Difference (On flows less Off flows)

800 600 400 200 Difference (On - Off) 0 September 2006 September 2007 September 2008 September 2009 September 2010 September 2011
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May 2006
May 2007
May 2008
May 2009
May 2010
January 2006
January 2007
January 2008
January 2009
January 2010
-200
-400 -600
Source: ONS Claimant Count
The following table shows the usual occupation of those who have entered unemployment and claimed Job Seekers Allowance in the previous twelve months to November, and the usual occupation of those who have left.
Claimant count on-flows Claimant count off-flows 2011 2011 Usual occupation 2009 2010 2009 2010 (number) (number) (SOC 2000 major group) Occupation unknown 0% 2% 2% 345 0% 1% 2% 255 Managers and Senior Officials 5% 4% 3% 415 5% 4% 3% 440 Professional 3% 3% 3% 375 3% 3% 3% 375 Associate Professional and Technical 6% 5% 4% 625 6% 5% 4% 615 Administrative and Secretarial 9% 8% 9% 1,270 10% 8% 8% 1,165 Skilled Trades 15% 12% 10% 1,520 15% 13% 11% 1,580 Personal Service 5% 5% 5% 770 5% 5% 5% 740 Sales and Customer Service 17% 22% 26% 3,865 16% 20% 25% 3,485 Process, Plant and Machine Operatives 11% 10% 9% 1,325 11% 10% 10% 1,340 Elementary 30% 30% 28% 4,170 30% 31% 29% 4,005 Total number 14,660 13,810 14,695 12,890 14,515 14,000 Source: ONS Claimant Count. Note: Year refers to the twelve months to November. i.e. 2011 = Dec 2010 to Nov 2011
While Elementary Occupations remain the most common (28%) occupation for on-flows of the claimant count, those from Sales and Customer Service occupations have shown th e largest increase, from 17% of on-flows in the year to November 2009 to 26% in the year to November 2011. 68 The proportion from Skilled trades occupations has decreased slightly, but still represents 10% of the on-flows. An almost identical pattern emerges for the usual occupation of the off-flows, with a concentration of Elementary and Sales and Customer Service occupations. Compared to the occupation structure of Portsmouths economy, Elementary and Sales and Customer Service occupations are massively over represented in the claimant on and off-flow figures, accounting for only 11% and 8% of Portsmouth occupations. Skilled Trades and Process, Plant and Machine Operatives occupations are also slightly over represented . Personal Service, Associate Professional and Technical, Professional and Managers and Senior Officials occupations are the most under-represented in claimant count on and off-flows compared to their share of Portsmouths workforce. In summary, there is greater churn for those employed, or previously employed, in Elementary and Sales and Customer Service occupations.
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67 68 69
Elementary occupations includes elementary construction workers, admin, cleaners, bar staff, waiters, porters, etc. Skilled trades occupations includes sheet metal, welding, vehicle transport workers, etc. Based on the ONS Annual Population Survey, average for 2008/9 to 2010/11 of all employed, workplace based
January 2011
May 2011
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Benefit claimants The total number of people claiming out-of work benefits (as a proportion of the working age population) has been on a steadily increasing path between 2005 and 2008. Between 2008 and 2009, there was a substantial increase in the proportion of the working age population claiming out-of-work benefits of 1.2 per cent in absolute terms. This impact was mainly due to the recession dramatically raising Jobseekers Allowance figures, as depicted in the graph below. The proportion of people claiming out-of-work benefits in Portsmouth has fallen slightly on average between 2009 and May 2011, indicating the beginnings of a recovery. However, numbers are yet to return to previous levels and more recent data has shown further fluctuations Income Support figures declined over the same period, which is likely to be due to both new entitlement ruling relating to the reduced age of the youngest child, alongside the introduction of Employment and Support Allowance which replaced Incapacity Benefits and therefore those claiming 70 for Incapacity Benefit under Income Support.
Average number of claimants in Portsmouth as a proportion of the working age population Employment and Support Out-of-work Job Seekers Allowance & Incapacity 71 72 benefits Allowance Benefits73 May 2011 11.1% 3.1% 5.7% 11.7% 2010 3.3% 5.6% 11.9% 2009 3.5% 5.7% 10.7% 2008 2.2% 5.6% 10.6% 2007 2.0% 5.7% 10.6% 2006 2.1% 5.8% 10.1% 2005 1.8% 5.7% Source: Worklessness Study, originally DwP.
Year to November
Income Support74 4.7% 5.2% 5.6% 5.6% 5.5% 5.4%
Trends in out-of-work benefits in Portsmouth (2005-2010)
Source: Worklessness Study, originally DwP.
70 71 72
Worklessness study, CEAP, University of Portsmouth Data from this column is subject to a hierarchy in order to avoid double counting whereas the following three columns are not. Jobseekers Allowance (JSA) is for people of working age who are unemployed/work less than an average of sixteen hours a week . Claimants must be available to work at least 40 hours a week, be actively seeking work and be able to provide evidence of this at regular intervals. Other conditions also apply, for instance, claimants must not have more than 16,000 in savings and should generally be over eighteen years of age to qualify. 73 Incapacity Benefit (IB) is provided to individuals who cannot work due to a health condition or disability. From October 2008, IB was replaced with Employment and Support Allowance (ESA) for all new claimants, with the intention that current claimants of IB will be transferred over to ESA between 2010 and 2013. ESA draws attention to the benefits of working and aims to focus more on assisting claimants in returning to work, where possible. ESA claimant figures began from the November 2008 quarter. These claimant figures were combined with Incapacity Benefit claims from then onwards. 74 Income Support (IS) is an alternative benefit for individuals on a low income, aimed at individuals who are unemployed/work l ess than sixteen hours a week and not on JSA. As with JSA this benefit is means tested. IS claimants are paid on various grounds: Incapacity, Lone Parents, Carers and an Other category (e.g. for those on paternity leave, students or for those whose statutory sick pay is too low). The introduction of ESA replacing IS paid on incapacity grounds may also have affected the level of IS. The entitlement ruling for IS for lone parents has also been changing, the effects of which are evident across data from the past year or two. Previously, lone parents could receive IS until their youngest child reached the age of sixteen. From November 2008, IS was discontinued for lone parents whose youngest child had reached the age of twelve or over; from October 2009, to ten years old, and was reduced even further to seven years old from October 2010. Claimants being moved off IS may be eligible to claim alternative benefits such as JSA. These changes only apply to those individuals claiming IS solely for being a lone parent, and may not apply to those individuals who are also eligible to claim the benefit for other reasons.
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Young people not in employment, education or training (NEET) Of the 3,887 16-18 year olds known in Portsmouth, 440 were estimated to be NEET. Portsmouth consistently has a higher proportion of its 16-18 population not in employment, education or training than any of its comparators. Given the skills challenges that Portsmouth already faces, identified in Chapter 4: Economic Competitiveness, this will only exacerbate the problem.
NEET 16-1875 Portsmouth Southampton Brighton Bournemouth South East England Source: Department for Education 2009 11.1% 9.7% 8.8% 6.7% 5.8% 2010 11.3% 9.8% 7.5% 4.3% 5.4% 7.3%
A recent report by the Work Foundation, Off the map? The geography of NEETs, describes Portsmouth (using the 2001 Travel to Work Area definition) as one of a small number of big cities also have relatively low levels of young people NEET , with a NEET level for 16-24 year olds of between 10 to 14%. However, it was still emphasised that the levels of young people NEET in 76 Portsmouth is still higher than it should be and needs to continue its efforts to address the problem. Deprivation and poverty According to the Index of Multiple Deprivation 2010, Portsmouth is ranked 76 of 326 local authorities rd in England, compared with 93 of 354 authorities in 2007 (where 1 is the most deprived). When compared to local authorities with similar socio-environmental profiles (including Southampton, Brighton and Hove and Bournemouth), Portsmouth is generally ranked mid-table on average score, rank and concentration of deprivation. However, compared to just the comparator cities then Portsmouth has a relatively higher concentration of deprivation. The most deprived areas in Portsmouth continue to be in the Charles Dickens (six of the 10 worst areas in Portsmouth), Paulsgrove, Cosham and St Thomas wards. The most income deprived and employment deprived areas are in Charles Dickens ward with seven out of the 10 worst areas (up from six in 2007), St Thomas, Nelson, and Cosham wards. The estimated number of people suffering income deprivation in Portsmouth has risen slightly up to 30,000 in 2010 from 29,600 in 2007. There were an estimated 11,300 people in Portsmouth suffering 77 employment deprivation in 2010, up from 10,500 in 2007. The revised local child poverty measure defines child poverty as the proportion of children living in families in receipt of out of work benefits or tax credits where their reported income is less than 60% median income. In 2009, just over a fifth (21.2%) of all children in the UK lived in poverty. The South East had the lowest child poverty rate (15.4%) compared to all other regions in England, whilst Portsmouth had a notably higher rate (25.2%) of child poverty. Southampton had a slightly higher rate 78 (27.5%), while the other comparator cities were broadly in line with the UK average. However, there are significant pockets of deprivation in the city which are significantly above the national average. According to the Index of Multiple Deprivation 2010, the worst areas for Income Deprivation Affecting Children in Portsmouth are in the Charles Dickens (seven of the worst 10 areas), St Thomas (two of the worst 10 areas) and Milton wards. In one area of Charles Dickens, 67% of children are affected by income deprivation. Tackling Poverty in Portsmouth A strategy for the city addresses this issue by targeting children, families and adults, identified as most vulnerable to poverty in Portsmouth through eight objectives ranging from providing financial education for residents of Portsmouth to maximise their income and life opportunities, to achieving greater employability for Portsmouth residents . These objectives are very much in line with the broad drive to improve Portsmouths economic outlook.
th
75
2010 data are an average at the end of November 2010, December 2010 and January 2011. They include all young people known to the local authority who were aged 16, 17 or 18 at that time. 76 Off the map? The geography of NEETs A snapsho t analysis for the Private Equity Foundation produced by the Work Foundation. Neil Lee and Jonathan Wright, November 2011. (source APS 2009/10) 77 Joint Strategic Needs Assessment (JSNA) briefing note on Deprivation 78 http://www.hmrc.gov.uk/stats/personal-tax-credits/child_poverty.htm
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Findings and conclusions - Labour market participation Although a reasonable proportion of Portsmouths working age population are defined as economically active, a higher proportion of these are unemployed than elsewhere. The rate of unemployment (3.5% Nov 2011), as measured by the number of people claiming Jobseekers Allowance, was slightly lower than the national average and broadly in line with comparator cities. The rate of unemployment levelled off over the last year to a rate that remains higher than before the recession, but below the peaks initially seen. However, there should be serious concern over the incidence of unemployment and the longer term impact this may have on Portsmouths economy. In particular, the over -representation of unemployed young people (18-24), the potential mismatch between job centre vacancies and claimants and the increased churn of those in elementary and sales and customer service occupations.
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6. Environmental considerations, sustainability and infrastructure. This section will assess the environmental considerations and sustainability of economic activity by focusing on the current and future infrastructure in Portsmouth. This section will draw from a number of sources such as the Portsmouth Plan, Portsmouths Sustainability Strategy and the latest Strategic Housing Market Assessment. Sustainability of economic life The Brundtland Report of 1987 Our Common Future defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. As well as Portsmouths urban and waterfront environments the natural environment, habitats and biodiversity are also increasingly important. The city is some 30% covered by statutory nature conservation designations protected from new development. There are Sites of Special Scientific Interest at Portsdown Hill, Langstone and Portsmouth Harbours, of which the latter two are also Ramsar Sites and Special Protection Areas. Langstone Harbour also forms part of the Solent 79 Maritime Special Area of Conservation. Carbon emissions
Per capita carbon emissions (tonnes) Per capita (tonnes) Industry and LA Region Name Year Commercial 2005 2.8 2006 2.8 Portsmouth 2007 2.6 2008 2.6 2009 2.3
Domestic 2.1 2.0 2.0 1.9 1.7
Road Transport 1.2 1.2 1.2 1.1 1.0
Total 6.1 6.0 5.7 5.7 5.1 4.8 4.8 5.0 5.9 6.1 6.4
2009 Southampton 2.1 1.7 1.0 Brighton and Hove 1.6 2.0 1.2 Bournemouth 1.8 2.2 1.1 South East 2.2 2.2 1.6 England 2.5 2.1 1.5 United Kingdom 2.6 2.2 1.6 Source: Department of Energy and Climate Change, 2009 local authority carbon dioxide figures80
A decrease in emissions has been seen in Portsmouth, as with the majority of local authorities in the UK. Portsmouths absolute tonnage per capita and the distribution of this across industry, domestic and road emissions is very similar to Southampton. Portsmouth has a lower absolute tonnage per capita than the South East and national averages, but slightly more than its comparator cities. Domestic carbon emissions were a lot lower than all comparators, and this could be attributed to the higher density of dwellings and number of flats in Portsmouth. However, when domestic emissions are expressed as a proportion of all emissions then Portsmouth is very similar to the South East and national average. Carbon emissions from road transport are also lower in Portsmouth, even as a proportion of all carbon emissions per capita. Industrial and commercial carbon emissions are higher than comparator areas, but in line with the South East and national average. However, industrial emissions in Portsmouth appear even higher when expressed as a proportion of all emissions (46%, compared to only 33% in Brighton and Hove and 41% for the rest of the UK). Energy consumption
High level energy indicators (2007) Total final energy Total domestic energy Total industrial and consumption/Capita consumption/Capita commercial energy (kWh) (kWh) consumption/employee (kWh) Portsmouth 19,700 7,280 14,100 Southampton 18,800 7,190 14,400 Source: Sub-national energy consumption statistics (Department of Energy and Climate Change)
79 80
Total vehicle consumption/capita (tonnes of fuel) 0.4 0.3
Local Transport Plan 3 Portsmouth CO2 emissions within the scope of influence of Local Authorities (previously called National Indicator 186) http://www.decc.gov.uk/en/content/cms/statistics/climate_stats/gg_emissions/uk_emissions/2009_laco2/2009_laco2.aspx
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Electricity Consumption (2009) Domestic Total sales Area (GWh) Portsmouth 331.3 Southampton 425.1 Brighton and Hove 476.7 Bournemouth 343.6 South East 16,441.8 England 95,267.4 GB average 112,023.9 Gas Consumption (2009)
Average consumption per customer (kWh) 3,748 4,131 3,824 3,983 4,477 4,163 4,152
Commercial and industrial Total sales Average consumption (GWh) (kWh) 664.5 92,110 658.7 76,632 576.8 41,078 419.3 47,829 23,305.4 70,434 152,077.5 67,226 178,107.7 68,487
Domestic Commercial and industrial Total sales Average consumption Total sales Average consumption Area (GWh) (kWh) (GWh) (kWh) Portsmouth 948.4 12,171 470.1 558,291 Southampton 1,025.5 12,772 621.4 680,647 Brighton and Hove 1,446.3 13,424 466.2 364,752 Bournemouth 977.6 13,789 313.4 323,761 South East 48,311.2 15,536 19,167 450,448 England 299,804.2 15,307 158,547 631,373 Great Britain average 347,120.8 15,384 189,328 656,294 Source: Sub-national energy consumption statistics (Department of Energy and Climate Change)
Portsmouths domestic consumption (per meter) of both electricity and gas is lower than both its comparator areas and the South East and national average. Commercial and industrial use (per meter) of electricity is much higher than both its comparator areas as well as the South East and Great Britain average. While gas consumption used by the commercial and industrial sectors (per meter) is not as high as the Great Britain average, it is much higher than Brighton and Hove, Bournemouth and the South East.
Household waste recycling (2010) Residual household waste per household (kg/household) Portsmouth City Council 661.9 Southampton City Council 677.8 Brighton and Hove Council 602.4 Bournemouth Borough Council 333.9 South East England Source: Department for Environment, Food & Rural Affairs Percentage of household waste sent for reuse, recycling or composting 24% 25% 28% 64% 41% 41%
Although this measure can be influenced by the recycling options/schemes available to residents in different areas, Portsmouths recycling rate is still well below the South East and national average. Air quality The Portsmouth City Council 2010 Air Quality Action Plan has a set of priorities to improve air quality. Localised air quality issues in Portsmouth are improving, as evidenced through the revocation of 8 of 81 the 13 Air Quality Management Areas identified in the 2006 Local Transport Plan 2. Portsmouth City Councils Sustainability Strategy As part of Portsmouth City Councils Sustainability Strategy 2010, Portsmouth City Council is committed through its Carbon Management Plan to reducing CO 2 emissions from Council Operations (operational buildings, transport and waste) by 30% from 2007 levels by 2016/7. It has already successfully completed the Carbon Trusts Carbon Management Programme. The Sustainability Strategy also addresses Portsmouths economy through the principle of: Promoting economic and social sustainability by supporting local markets, local businesses and local employment. Climate change impacts The 2009 Climate Change Predictions show that, by 2080, summers in Portsmouth will be between 2C and 7C warmer than they were in 1990, with winters between 2C and 5C warmer. Portsmouth, 82 along with the rest of South Hampshire, has also been declared an area of serious water stress
81 82
Local Transport Plan 3 Portsmouth Department for Environment, Food and Rural Affairs, http://www.defra.gov.uk/environment/quality/water/strategy/pdf/future-water.pdf
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and without measures to address the issue, there is the potential for a deficit in the supply of fresh 83 water in the Portsmouth area. The PUSH Strategic Flood Risk Assessment notes that climate change poses a significant risk to the sub-region. Predicted sea-level rise over the coming century will reduce the level of protection provided by most of the sub-regions flood defences and result in the inundation of larger areas by 84 extreme tidal floods. According to Portsmouths Climate Change Strategy, some of the potential impacts of climate change on the economy could include price rises for fuel, food and domestic energy for residents. Businesses will also see these price rises along with potentially seeing their insurance premiums rise due to flood 85 risks. They may also struggle to maintain acceptable working conditions for staff. However, there will be opportunities for companies providing energy efficient or green products. The environmental goods and services sector constitutes a major opportunity for the Hampshire Economic 86 Area. The global market for this sector is already estimated to be worth 3 trillion and to generate 87 high levels of GVA per worker . There is an opportunity for Portsmouth and surrounding areas to build on its own existing strengths and inter-relationships with advanced manufacturing, aerospace and marine sectors to harness the demand for renewable, green energy and environmental 88 services. The low carbon economy sectors exhibit very high levels of GVA per worker and also relate well to expertise within Higher Education Institutions. They have good growth prospects as the demand for renewable energy and green energy increases as well as a very high degree of public 89 policy support. Water A number of Water companies have identified in their W etlands Regional Monitoring Programs, major capacity requirement schemes that will be required to meet the demands of growth. These include a number of significant schemes in the Portsmouth Water area including the implementation of universal metering between 2015-2030, further reductions in leakage, development of a washwater recovery plant at Farlington Treatment Works and the building of a Winter Storage Reservoir at 90 Havant Thicket between 2025-2034. Managing flood risk In partnership with PUSH, there is a sub-regional Strategic Flood Risk Assessment (SFRA) covering the Portsmouth area. It identifies that the PUSH sub-region is exposed to flood risk from a number of sources, flooding from the sea, due to extreme tides, is the predominant source of flood risk to the sub-regions most populated areas on low lying coastlines and that the coastal frontages of Portsea have experienced flooding caused by wave overtopping. However, it also recognises that Portsea 91 Island is generally defended to a higher level than other frontages in the sub-region. An increased flood risk may however impose additional costs on businesses, through developer 92 contributions towards flood prevention measures and/or higher insurance premiums. Being a city by the sea also means that development in Portsmouth is constrained by flood risk, with around a third of the land area being in the tidal floodplain, a figure which will only increase with sea level rise. In addition, the city is dependent on a combined sewer system that can become overwhelmed during severe storms and is at risk from surface water flooding in many areas. The city council has developed a 100 year coastal defence strategy for Portsea Island, and is supporting the Environment Agency in the production of a strategy covering Portsmouths coast north of Port Creek (The Portchester Castle to Emsworth Coastal Flood and Erosion Risk Management 93 Strategy). More detailed information on flood risk is available in the PUSH SFRA and the Coastal Defence Strategies for the City.
83 84 85
Portsmouth Plan PUSH Strategic Flood Risk Assessment (SFRA) Portsmouths Climate Change Strategy 86 Figure from Committee on Climate Change Independent advisors to the UK Government on tackling and preparing for climate change www.theccc.org.uk/topics/economics-and-society/social-impacts] 87 Environmental Technologies PUSH Economic Strategy Evidence Base http://www.push.gov.uk/pos-100608-r01-kta-appendix.pdf 88 Hampshire Economic Assessment 2011 89 Hampshire Economic Assessment 2011, Extended evidence Theme 5 90 Hampshire Economic Assessment 2011, Extended evidence, Theme 5 91 PUSH SFRA 92 Hampshire Economic Assessment 2011 93 Portsmouth Plan
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Picture: Aerial view of Portsmouth seafront
Infrastructure The following elements of infrastructure are fundamentally important with regard to the geography 94 and sustainability of economic activity, both now and in the future. The government spending review will have an impact on the delivery of infrastructure, therefore the authority will need to have a 95 contingency plan for delivery if funding is not forthcoming. Transport The Local Transport Plan 3 for South Hampshire defines transport as an enabler of activity, allowing 96 people to access a wealth of opportunities for work, education and leisure. Portsea Island only has three roads linking to the mainland, the M275 and A2030 connecting to the wider strategic road network, and the A3. There is therefore significant potential for congestion, with pockets of severe congestion at peak times, leaving the network vulnerable when unexpected 97 incidents occur. The key congestion hot spots within the city are detailed on page 24 of the Local Transport Plan 3 for Portsmouth but the majority of traffic entering the city in the morning peak is 98 concentrated on the M275, carrying just under half (46%) of all inbound traffic. Congestion and poor journey time reliability has a negative impact on the economy, due to increased levels of uncertainty and lost time with a consequent reduction in productivity. The Business Reaction Survey for the Hampshire Economic Partnership 2010 found tackling road congestion is a key issue for Hampshire businesses. The Local Transport Plan 3 for Portsmouth identifies that to meet t he needs and ambition of businesses, residents and tourism in the city in terms of regeneration, key transport links and services which are accessible, sustainable and efficient are a must. The vision of the Transport for South Hampshire authorities is t o create: A resilient, cost effective, fully-integrated sub-regional transport network, enabling economic growth whilst protecting and enhancing health, quality of life and environment". The transport network plays a vital role in supporting the economic prosperity of South Hampshire by ensuring people can go about their day to day activities of journeys to work, training, shopping, leisure and recreation. A well-functioning transport system enables people and goods to be moved sustainably, efficiently and reliably.
94 95 96
Hampshire Economic Assessment 2011 Portsmouth Plan Annual Monitoring Report 2010 Local Transport Plan 3 - Strategy for South Hampshire 97 Local Transport Plan 3 Portsmouth 98 Portsmouth Plan
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Actions under the policy to develop transport improvements that support sustainable economic growth and development within South Hampshire include the Transport for South Hampshire authorities developing closer partnerships and dialogue with businesses to ensure that transport improvements are geared towards improving economic prosperity and helping to unlock planned 99 development sites. Transport for South Hampshire will be working with PUSH in order to help deliver the PUSH South Hampshire vision through the reduction in the need to travel, improved public transport options, optimisation of the road and rail network through improved management and targeted investment in road capacity particularly on the strategic road network. Specific actions include working in partnership with the Highways Agency, congestion on the M3, M27 and roads providing access to Southampton airport and port will be addressed along with further congestion points across the sub-region and traffic management measures introduced. Public transport improvement in the sub-region is central to PUSHs transport strategy and Transport for South Hampshire will be developing the bus rapid transit system linking Fareham, Gosport, Portsmouth (including Port Solent and Queen Alexandra Hospital). Sites are also being considered for park and ride around Portsmouth and Southampton. Funding for these projects is secured in some cases; however PUSH is seeking further funding from alternative private and public sector 100 sources. The Portsmouth Plan and Local Transport Plan 3 will need to manage developments to encourage a 101 lifestyle change away from using the private car to other forms of transport. Portsmouth has five rail stations and direct rail connections with London Waterloo and Victoria, as well as Bristol and Wales. There are regular ferry services to Gosport, Hayling Island and the Isle of Wight as well as cross-channel services to Europe. With its compact and flat nature Portsmouth is 102 ideal for walking and cycling. Travel to work Apart from Brighton and Hove, Portsmouth has the highest proportion of resident commuters that use 103 a sustainable form of transport, out of its comparator areas.
Proportion of resident commuters using sustainable transport Portsmouth Southampton Brighton and Hove Bournemouth 41% 39% 51% 35% Source: Census 2001 South East 34% England 38%
Although the use of a car or van is the most common mode of travel for Portsmouth resident commuters (50%), this is still a lower rate than most comparators. Portsmouth had the highest proportion of commuters that were most likely to use a bike and the second highest proportion who commute on foot. Short journeys to work of less than 2km were the most common for Portsmouth resident commuters (28%); a much higher proportion than for all comparator areas that had longer commuting distances. The single most common commuting distance and mode of travel was driving for 2-5km, accounting for 16% of Portsmouth residents journeys to work. This was closely followed by 13% commuting on foot for less than 2km. Workplace based employees (those who work in Portsmouth but are not necessarily resident) use less sustainable transport options (37%) than residents, and more than the South East average but this is in line with the England average. Although driving is more common (55%), this is still less common than for the majority of comparator areas. The use of a bicycle and commuting on foot are still relatively popular. The journeys of those working in Portsmouth are not as short as for those resident in Portsmouth that work, but are still lower than the South East and England average. Resident and workplace self containment were discussed in Chapter 2 under Key economic flows, and found that Portsmouth was broadly in the middle of the range of comparator cities, with 66% of residents working in Portsmouth and 63% of jobs in the area filled by residents.
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Local Transport Plan 3 Strategy for South Hampshire Local Transport Plan 3 Portsmouth Portsmouth Plan 102 Local Transport Plan 3 Portsmouth p8 103 Sustainable travel: working mainly at home, underground, metro or light rail, tram, train, bus, minibus, coach, motor cycle, scooter, moped, bicycle and on foot.
100 101
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Broadband The availability and speed of broadband access have become essential to most businesses regardless of whether they are small or large, and regardless of whether they are traditionally technology based or not. Broadband access can be essential for businesses to both communicate with their customers and also with other businesses, such as their suppliers. The following information relating to broadband lines is from Gavurin 2009. According to this source, Portsmouth has close to 69,000 broadband lines, of which 6.1% (4,210) are solely for business use.
Portsmouth Broadband lines 68,974 Portsmouth 4,210 77.76% 34.8% Of which consumer 64,764 Southampton 5,077 61.6% 28.5% Of which business 4,210 Brighton 8,101 74.4% 37.5% South East 64% 29%
Business lines Household take-up rate Population take-up rate104 Source: Gauvrin 2009
This indicates that Portsmouth has a sound broadband infrastructure for both business and resident use. However, Portsmouth authorities need to continue investing and planning for the future to make the most of and retain this competitive edge. According to Gavurin (2009) 100% of Portsmouth lines could achieve the peak rate of 8Mbps+ (as could Southampton). However, the table below shows the actual speeds achieved in 2009.
Broadband Speed (mb per sec) 0 to 1.9 2 to 4.9 5 to 7.9 8 to 13.9 Portsmouth 33.4% 21.1% 13.4% 23.1% Southampton 20.6% 29.8% 16.5% 25.8% Source: Point Topic, Hampshire County Council Economic Development Office105 14 to 21 9.0% 7.4%
Housing provision As discussed in the Key Economic Flows section, an over reliance on commuting and an imbalance of workplace and resident earnings (median workplace earnings in Portsmouth are 5% higher than resident earnings) can manifest themselves through the local economy and be negatively experienced through the affordability of local housing. The following table shows the multiple of median earnings to house prices as a measure of affordability. While the relatively low ratio suggests Portsmouth is more affordable than its comparator areas, the high absolute value of the ratio implies that it is still a struggle for many people to afford accommodation in Portsmouth.
Housing market ratio of median house price to median earnings and Social housing rent as an indicator of affordability House price to earnings ratio (2010) Portsmouth 5.31 Southampton 6.11 Brighton and Hove 9.60 Bournemouth 8.84 South East 8.23 England 7.01 Source: CLG, ASHE, Land Registry Social housing rent per week (2011) Registered Provider () Local Authority () 83.32 72.07 89.16 69.71 80.11 70.76 85.73 69.85 89.94 78.70 78.28 72.30
The measure of social housing rent per week suggests that social rented housing is relatively affordable in Portsmouth compared to the South East region and to a number of the comparator cities. However, this measure only shows that those able to obtain social housing will find it more affordable, and does not take account whether social housing demand outstrips supply. The table below shows that the proportion of households on local authorities housing waiting lists is a lot lower in Portsmouth than the comparator areas, especially compared to the other cities. However, this low housing register figure should not be misinterpreted as a lack of need for affordable homes. In Portsmouth this low level has, at least in part, been achieved by a pragmatic approach of consulting with those on the housing register about individual level of need and the likelihood of them being accommodated within the short to medium term.
104 105
Population take-up rate means the number of lines as a proportion of the population not the proportion of the population who have access. These data cover the ADSL network only. The percentages apply to postcodes in the district. The data are for 2009, and may not total 100 percent due to rounding.
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Number of households on local authorities' housing waiting lists Percentage of all 2011 households in 2011 Portsmouth 2,597 3.0% Southampton 16,258 15.9% Brighton and Hove 10,852 9.3% Bournemouth 8,047 10.9% South East 225,250 6.3% England 1,837,042 8.2% Source: CLG
The Annual Market Monitoring Report 2011 for South Hampshire, prepared by PUSH, shows the affordability gap continues to widen while forecasting that the outlook for the rest of 2012 on a number of (housing) indicators is gloomy, as it is for the UK overall, although less so than for many regions. Aside from raising Portsmouth residents earnings, affordability can be addressed by increasing the supply of available housing.
Net dwelling completions Total dwelling stock Net completions (from 2000(2000-2011) (2011) 2011) as % of 2011 stock 7,255 87,900 8.3% 9,725 102,110 9.5% Source: Hampshire County Council Land Availability Monitoring System and CLG.106
Portsmouth Southampton
The Portsmouth Plan, based on an assessment of housing need and capacity (Strategic Housing Land Availability Assessment 2010), shows that between 2010 to 2027 Portsmouth should aim to provide approximately 7,100 to 8,387 new homes, depending upon the provision of infrastructure. It is intended that these will be delivered broadly in line with the following distribution: Port Solent: 500; Horsea Island: 0-500; Tipner: 480-1250; Somerstown and North Southsea: 539; City centre: 1600; Other town centres: 602 and the rest of the city: 1674. However, according to the Portsmouth Plan Annual Monitoring Report 2010 the five-year housing land supply target is not on schedule to be met. A deficit of 1,162 dwellings compared to the South 107 East Plan Target is predicted for the five year period 2011/12 to 2015/16. In summary, although housing in Portsmouth appears relatively affordable compared to other similar cities, it should still be noted that there are significant housing affordability problems for Portsmouth residents. These issues are likely to be exasperated further if the supply of new housing remains low. Green spaces It is important that economic activity does not limit the many advantages of Portsmouths wide range of parks, gardens, open spaces and seafront, but rather builds on the benefits they provide to the city. Good quality parks and open spaces contribute a clear economic benefit to Portsmouth. As cities compete to attract investment, public open spaces play an important role in marketing Portsmouth as a place to invest. Companies are drawn to places with good quality open spaces as they in turn attract customers, employees, and services. Well-managed, high quality open spaces have a significant positive impact on commercial property prices and domestic house prices. More information can be found in Portsmouth City Councils Parks and open 108 spaces strategy 2012-2022. Employment land The following draws heavily from the Portsmouth Plan and the relevant supporting documents, mostly the Employment Land Review 2010. Portsmouth faces many constraints on its land from flood risk, contaminated land and nature conservation designations, and is tightly constrained by its boundaries of the sea on three sides and
106 107
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Hampshire County Council, http://www3.hants.gov.uk/factsandfigures/land-supply.htm Portsmouth Plan - Annual Monitoring Report 2010
http://www.portsmouth.gov.uk/living/20574.html
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Portsdown Hill to the north. Set within this context there are no opportunities for urban extensions 109 and there are very few large sites available for development. The main aim is to ensure that there are enough sites and premises for employment to facilitate growth. This will be achieved in Portsmouth through the regeneration of the strategic sites all providing housing, employment, retail and tourism opportunities, identifying other appropriate sites for office development in the city and protecting existing industrial estates in order to retain employment and create opportunities for redevelopment within these estates. Spatially, the employment sites are concentrated in the city centre, the district centres, and in the citys industrial estates and business parks such as those to the west of Eastern Road and on the M27 corridor. Further clusters exist in the Dockyard, the Port, on Portsdown Hill and in Fratton. Individual sites are also scattered across the city, often in areas of housing, with concentrations of some smaller scale office uses in the smaller town 110 centres.
Picture: Zurich House
Business floorspace [B1 = Office, B2 = Manufacturing, B8 = Warehouse] The PUSH sub regional strategy is for 2 million square metres of new business floorspace to be provided between 2006 and 2026. For Portsmouth this target to 2026 is 287,500m2 of employment floorspace. Some employment development has already taken place since 2006 leaving a target for Portsmouth of 243,000m2 employment floorspace (166,000m2 B1 and 77,000m2 B2 and B8). If all sites were to come forward for development there would be a surplus of employment land. However, this surplus is needed to provide flexibility and a choice of sites and to account for the fact that all sites may not be developed. The latest Portsmouth Plan Annual Monitoring Report 2010 identified that there has been a substantial net gain of employment floorspace for B1 (a) office of 8136m2, B2 general industry (6207m2) and mixed industrial uses (936m2). This results in a net gain of 11471m2. This is a significant increase on the previous years monitoring report which showed a net gain of 695m2. This is despite also reporting that m ajor regeneration projects in the city have stalled, largely as a result of the ongoing recession. All employment floorspace (gross) was completed on previously developed land during the monitoring period 2009/2010. This has been the trend for the previous 6 monitoring years (since 111 2004/2005).
109 110 111
Portsmouth Plan Employment Land Review 2010 Portsmouth Plan Annual Monitoring Report 2010
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The city centre will consolidate its position as the economic, social and cultural focus of southeast Hampshire. As well as retail, leisure, culture and residential uses, B1 office is particularly encouraged here. The Station Square and Guildhall Square areas are particularly suitable for this use. Station Square is expected to accommodate a minimum of 10,500m2 of office floorspace. The city council has completed a Supplementary Planning Document on Station Square and Station Street where a minimum of 10,500m2 of office floorspace is expected to come forward. This development is considered to be central to the achievement of the city councils strategy for the city centre and its office market. A City Centre Masterplan will be produced to identify development opportunities 112 2 throughout the city centre. Lakeside Business Park (IBM East) will provide around 69,000m of new B1 office floorspace.
Picture: 1000 Lakeside Portsmouth is open for business presentation o o o o o

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The 270m Northern Quarter scheme for a new city centre shopping area. New proposals for this are expected from the developer in January, with a planned opening in 2018. 20m proposal to build a bridge from Tipner to Horsea Island, opening up land for new homes and creating access to a planned country park. 30m proposed new road layout in the city centre. 12m plan to develop infrastructure on council land at Dunsbury Hill Farm, Havant, in preparation for a business park with hundreds of jobs. 100m strategy to bring in more visitors to the seafront and to make the city a European city break destination, to be unveiled next year.
Findings and conclusions - Environmental considerations, sustainability and infrastructure Looking to the future, Portsmouth appears to be relatively sustainable, with low carbon emissions, low domestic gas and electricity consumption and residents choosing some of the most sustainable modes of travel to work. Portsmouth is exposed to flood risk from a number of sources; from the sea due to extreme tides as well as from a combined sewer system at risk from surface water flooding. However, it is recognised that Portsea Island is generally defended to a higher level than other frontages in the sub-system. Portsmouth, along with the rest of South Hampshire, is declared an area of serious water stress and without measures to address this, there is the potential for a deficit in the supply of fresh water. Infrastructure is broadly sound with actions in place to address the potential for problems of serious road congestion. Despite facing many constraints on its limited land use, Portsmouth will ensure there is enough employment land through the regeneration of the strategic sites, identifying other appropriate sites for office development in the City and protecting existing industrial estates. Affordability of housing remains a key concern for Portsmouth residents.
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Portsmouth Plan Portsmouth is open for business, http://www.portsmouth.gov.uk/yourcouncil/20694_23317.html
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7. Future vision. This section presents a future vision for Portsmouths economy based on forecasts of population change and economic growth, with explanations of what this could mean for the labour force. The forecasts of economic growth will compare the status quo with the potential of achieving local strategies. This section also examines and calculates the specific effect on Po rtsmouths economy of potential public sector cuts. Current population: According to the ONS mid-year population estimates, Portsmouth had an 114 estimated population of 207,100 in 2010.
Resident Population, by gender and 5 year age bands.
90 and over 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4
Males England & Wales Females England & Wales Males Portsmouth Females Portsmouth
15
10
0 % total population
10
15
Source: ONS Mid-2010 population
The graph above clearly shows that Portsmouth has a disproportionately large number of younger adults, particularly those aged 20-24 and 25-29 (representing 12.7% and 10.2% of Portsmouths population), than the national average (6.9% and 6.8% respectively). It is thought that this is in part due to the University of Portsmouth. Population changes Two different population projection estimates have been used in this report to allow a range of projections. Hampshire County Council (HCC) projections to 2026 are based on the main assumption that the number of dwellings built to 2026 will be consistent with the numbers in the South East Plan. Therefore, Hampshire County Council changes its population projections as the South East Plan and other known developments change. The Office for National Statistics (ONS) long term sub-national population projections are based on the assumption that recent trends in fertility, mortality and migration at local authority level will continue; taking no account of local development policy, economic factors or the capacity of areas to accommodate population. Therefore the HCC estimates can be thought of as a responsive projection that can be changed by actions taken, whereas the ONS projection is based on a more laissez faire approach where there is no intervention or action taken.
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It is also worth noting that the two long-term projections gave varying estimates of the current population in 2011 as 198,423 (HCC) and 207,600 (ONS)
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The following table shows projected population estimates to 2026 for Portsmouth and some comparator areas. Where available, both the HCC and ONS projections have been used.
2011 2016 2021 2026 Number Change from 2011-2026 % per % year 8,747 30,000 7,094 30,600 95,244 144,900 1,036,600 5,757,000 4.4% 14.5% 3% 13% 7% 11 % 12% 11% 0.3% 1.0% 0.2% 0.8% 0.5% 0.7% 0.8% 0.7%
HCC Portsmouth ONS Southampton
198,423 207,600
199,686 218,600 230,561 254,100 1,333,336 1,352,300 8,896,000 54,471,600
203,024 228,000 232,682 263,400 1,363,984 1,402,300 9,248,300 56,432,500
207,170 237,600 235,629 273,800 1,393,214 1,452,700 9,600,600 58,334,100
HCC 228,535 ONS 243,200 HCC 1,297,970 115 Hampshire ONS 1,307,800 South East ONS 8,564,000 England ONS 52,577,100 Source: ONS and Hampshire County Council
According to the ONS measure, Portsmouth has the highest rate of population increase for every 5 year period projected, as well as the highest rate of growth overall when compared to Southampton, the rest of Hampshire, the region and England. However, the HCC estimates paint a slightly different picture, with projected growth consistently higher in the rest of Hampshire. According to the HCC estimates, Portsmouths relatively slow growth from 2011 to 2026, in comparison to the rest of Hampshire, is at least in part due to negative net migration (more people leaving Portsmouth than new people entering). Labour force changes Projections of the number of children (aged 0-15), the working age population (16-64) and the older 116 population (65+) to 2016, using both the HCC plan based model and ONS population based model are presented below.
HCC plan based model Children Portsmouth (HCC) Working age Older Children Southampton (HCC) Working age Older Children Hampshire (HCC) Working age Older Source: Hampshire County Council 2011 Number (% of total) 33,941 (17.1%) 134,526 (67.8%) 29,956 (15.1%) 38,601 (17%) 157,144 (69%) 32,790 (14%) 238,405 (18%) 820,818 (63%) 238747 (18%) 2016 Number (% of total) 34,483 (17.3%) 132,600 (66.4%) 32,603 (16.3%) 39,301 (17%) 155,440 (67%) 35820 (16%) 240,697 (18%) 819,327 (61%) 273,312 (20%) 2021 Number (% of total) 35,505 (17.5%) 132,813 (65.4%) 34,706 (17.1%) 39,888 (17%) 154,404 (66%) 38,390 (16%) 247,781 (18%) 818,732 (60%) 297,471 (22%) 2026 Number (% of total) 35,661 (17.2%) 133,234 (64.3%) 38,275 (18.5%) 39,369 (17%) 154,691 (66%) 41,569 (18%) 249,182 (18%) 818,184 (59%) 325,848 (23%) Change from 2011-2026 % per Number % year +1,720 -1292 +8,319 +768 -2,453 +8,779 +10,777 -2,634 +87,101 5% -1% 28% 2% -2% 27% 5% 0% 36% 0.3% -0.1% 1.9% 0.1% -0.1% 1.8% 0.3% 0.0% 2.4%
The HCC model estimates a slight shrinkage of the working age population in Portsmouth of 1% (1,292) in absolute terms, coupled with a large increase in the older population of 28% (8,319). This results in the relative fall of working age residents as a share of Portsmouths population, from 67.8% to 64.3%, and an increase in older residents from 15.1% to 18.5% with the share of younger residents remaining relatively stable. This trend is seen more keenly in Southampton and the rest of Hampshire.
115 116
Hampshire excluding Portsmouth and Southampton. The age range of 16-64 for both males and females, has been used as a constant proxy throughout the projections for the working age group rather than adjusting for the current retirement age which is different for males (65) and females (60) and is expected to change over the forecast period.
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ONS 2008 population based model
Children Portsmouth (ONS) Working age Older Children Southampton (ONS) Working age Older Children Hampshire (ONS) Working age Older Children South East (ONS) Working age Older Children England (ONS) Working age Older Source: ONS
2011 Number (% of total) 34,400 (16.6%) 150,100 (72.3%) 23,100 (11.1%) 38,400 (16%) 178,600 (73%) 26,200 (11%) 242,500 (19%) 862,900 (66%) 202,400 (15%) 1,603,500 (19%) 5,459,900 (64%) 1,500,600 (18%) 9,783,800 (19%) 34,037,000 (65%) 8,756,300 (17%)
2016 Number (% of total) 37,100 (17.0%) 155,900 (71.3%) 25,600 (11.7%) 41,400 (16%) 183,800 (72%) 29,000 (11%) 245,700 (18%) 858,600 (63%) 248,000 (18%) 1,650,400 (19%) 5,528,400 (62%) 1,717,200 (19%) 10,121,300 (19%) 34,454,800 (63%) 9,895,500 (18%)
2021 Number (% of total) 40,600 (17.8%) 160,600 (70.4%) 26,800 (11.8%) 44,900 (17%) 188,000 (71%) 30,500 (12%) 256,100 (18%) 872,700 (62%) 273,500 (20%) 1,729,300 (19%) 5,637,900 (61%) 1,881,100 (20%) 10,627,500 (19%) 35,048,500 (62%) 10,756,600 (19%)
2026 Number (% of total) 42,600 (17.9%) 165,400 (69.6%) 29,500 (12.4%) 46,500 (17%) 194,400 (71%) 32,900 (12%) 260,300 (18%) 887,700 (61%) 304,700 (21%) 1,758,700 (18%) 5,751,400 (60%) 2,090,600 (22%) 10,791,800 (19%) 35,681,400 (61%) 11,860,800 (20%)
Change from 2011-2026 Number +8,200 +15,300 +6,400 +8,100 +15,800 +6,700 +17,800 +24,800 +102,300 +155,200 +291,500 +590,000 +1,008,000 +1,644,400 +3,104,500 % 24% 10% 28% 21% 9% 26% 7% 3% 51% 10% 5% 39% 10% 5% 35% % per year 1.6% 0.7% 1.8% 1.4% 0.6% 1.7% 0.5% 0.2% 3.4% 0.6% 0.4% 2.6% 0.7% 0.3% 2.4%
The ONS measure also projects that working age residents will make up a slightly smaller share of Portsmouth population, falling from 72.3% to 69.6%, with a simultaneous sight rise in the share of the older population and children. However, these relative shifts are smaller than projected by the HCC measure, as the ONS actually projects a 10% (15,300) increase in the absolute number of working age residents by 2026 and the same absolute increase in the older population (28%) as projected by the HCC. An extremely similar pattern is projected for Southampton, but the projections are more extreme for the rest of Hampshire where the older population increases by just over 50% by 2026 and accounts for over a fifth of the population. A smaller working age population relative to an older population is also projected for the South East and England. This may give Portsmouths economy a competitive edge. Employment changes Hampshire County Council have projected the potential increase in the number of jobs (51,200) and two possible scenarios for the increase in the economically active population over the period 2006 117 2026 for the South Hampshire sub-area (of which Portsmouth is one of the largest constituents). The first scenario assumes the long-term trend continues, leading to an increase of the economically active population of 31,100 by 2026. The other scenario assumes a modest increase in activity rates above trend, post 2016, resulting in an increase in the economically active population of 58,700. Comparison of the changes in the number of jobs and the economically active population leads to the following conclusions for South Hampshire: Surplus demand for workers is projected. This could be remedied by a further modest increase in activity rates. Moreover, improving the skills base of the economically active population would also make a difference, currently it is some way adrift of the other two sub areas and a more skilled workforce ought to be a more productive one. There is some risk that jobs growth in Central
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This is based on various baselines and alternative scenarios drawn from both the LEFM and Oxford Economics (PUSH) models. Further details can be found in the Hampshire Economic Assessment 2011.
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Hampshire/New Forest attracts increasing numbers of South Hampshires resident workers. Indeed DTZs recent work for PUSH provides evidence consistent with this pattern. However this is all the more reason why Southampton and Portsmouth need to be encouraged to function more effectively as genuine employment hubs, as envisaged by the recently refreshed PUSH Economic Development Strategy The implication is that demand for labour may well outstrip supply without some addition to the trend increase in economic activity rates. Moreover, these findings suggest that any short term slackening in the labour market in the context of recession is likely to prove to be a relatively short term phenomenon. Over the medium term, the challenges experienced during the middle part of the last 118 decade are likely to reappear. Economic growth forecasts According to Hampshire County Councils projections of GVA annual growth, the South Hampshire area (of which Portsmouth is a major contributor) begins with a slightly slower rate of growth than the wider region, although slightly greater than the UK average. Despite increasing in line with the wider region over the later period 2016-2026, the relative growth rate remains lower.
Projected annual growth rates in GVA and GVA/Employment GVA 2006-2016 2016-2026 2006-2026 South Hampshire 1.5% 2.6% 2.0% Hampshire 1.6% 2.7% 2.2% South East 1.7% 2.8% 2.2% UK 1.4% 2.4% 1.9% Source: LEFM, data provided by Hampshire County Council
The projected annual growth rate of GVA/Employment (productivity) for South Hampshire is consistently lower than the wider region and the UK average. This productivity shortfall is projected to continue over the forecast period.
GVA/Employment (Productivity) South Hampshire 1.2% 1.9% 1.5% Hampshire 1.3% 2.0% 1.7% South East 1.5% 2.2% 1.9% UK 1.5% 2.1% 1.8% Source: LEFM, data provided by Hampshire County Council
Sources of economic growth From the LEFM projections, it is possible to make some more disaggregated sectoral observations: o o o Economic growth (GVA) is expected to be led by growth in professional services, computing services and communications. Smaller but still important contributions are projected from distribution, retail, banking and finance, health and social work and other business services. Employment growth is expected to be led by sectors such as hotels and catering, computing services, professional services, other business services, health and social work and miscellaneous services are projected to contribute most. Productivity improvements are projected in the following sectors in particular: manufacturing of fuels, pharmaceuticals, electronics, motor vehicles, electricity, gas supply and 119 communications.
The sustainable technologies (86.7%), tourism (75%) and the aerospace/defence (77.8%) sectors express the highest degree of business confidence among business sectors in Hampshire. On the other hand, building and construction (23.3%), retail (35%) and marine/maritime (26.5%) are the 120 sectors with the lowest reported confidence. Public Sector Cuts The public sector in the UK economy is undergoing massive cutbacks and reforms. The context of these cuts is best understood in a public sector environment which over the previous decade has witnessed substantial growth.
118 119 120
Hampshire Economic Assessment 2011 Hampshire Economic Assessment 2011 Hampshire Business Monitor Survey, Informing Our Future.
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To understand the effects of the public sector cuts on the Hampshire economy it is important to be aware that the public sector makes up a large component of total demand in the economy and an 121 equally large component of total income earned in the economy. Total direct public sector employment is around 35,000 workers (public administration and defence is approximately 9,000, education is around 9,500 and human health and social work is around 122 16,700). The Budget of June 2010 [confirmed in the 2011 Budget] set out to achieve 77% of the planned consolidation through budget cuts by 2015-16. This leaves 23% of the consolidation to be achieved through increases in revenue. Hence the effects on business will be more acutely felt through cuts in 123 expenditure rather than tax increases. As a result of the Coalition Governments strategy to reduce the spending deficit there are due to be reductions in annual public spending of 81bn by 2014/15. This will inevitably lead to decreases in 124 public sector employment. In November 2011 the Office of Budget Responsibility (OBR) estimated a total reduction in general government employment of around 710,000 between the first quarter of 2011 and the first of 2017 compared to the previously forecast 400,000 between the first quarter of 2011 and the first of 2016 in their March 2011 forecast. This is following the Governments decision to pencil in further spending 125 cuts in 2015-16 and 2016-17. The latest ONS outturn data suggest that general government employment fell by 80,000 in the second quarter of 2011, implying an average decline of around 30,000 per quarter [until 2017]. Anecdotal evidence suggests that a number of public sector employers are attempting to front-load their intended workforce reductions, so it would not be surprising if general government employment 126 continues to fall more rapidly per quarter than this average rate for some time. The following analysis conducted by DTZ, Pricewaterhouse Cooper (PwC), Couttie, the South East Economic Development Agency (SEEDA) and the Centre for Cities is based on the initial and lower estimates of 400,000 public sector job losses between 2011 and 2016, so should be viewed as under estimates. Vulnerability to cuts Analysis by Coutts estimates that Portsmouth is amongst the 20 most vulnerable towns and cities in Britain. This is assessed on the basis of having a relatively high proportion of jobs in the public sector and relatively high proportion of jobs in sectors most dependent on public spending.
% jobs in public sector % jobs in the 10 most dependent sectors Overall dependency rates
Portsmouth (ranked 19th most 30.3 10.9 41.2 vulnerable British City/Town) South East 25.6 10.9 36.5 Source: Coutts. Using RBS, ONS ABI survey for Great Britain (excluding cities with less than 85,000 total employment)
The South East region had one of the lowest rates, despite having the highest percent of jobs in the 10 most dependent sectors it had a relatively low percent of jobs in the public sector. However, Portsmouth was ranked the 19 most vulnerable British city/town. This was mostly due to the high percent of jobs in the 10 most dependent sectors, the third highest rate of the top 20 most 127 vulnerable cities identified, coupled with an above average proportion of jobs in the public sector. The South East England Development Agency identified Hampshire as having a high potential exposure to public sector cuts relative to other counties in the South East of England. They estimated 128 job losses of approximately 2% of the Hampshire workforce by 2015/16. This is less than the PwC 129 estimate of 3.1% job losses in the South East region as a result of the spending cuts. Both
th
121 122 123
Informing Our Future: The Impact of Public Sector Cuts and Reform on Business and Economic Conditions in Hampshire DTZ Informing Our Future: The Impact of Public Sector Cuts and Reform on Business and Economic Conditions in Hampshire 124 DTZ 125 Office for Budget Responsibility: Economic and fiscal outlook, November 2011, p95 Our projection of general government employment is based on projections of the growth of total government paybill and paybill per head. Our latest projections incorporate updated expenditure projections and new data on public sector average earnings and workforce reductions so far in 2011-12 126 Office for Budget Responsibility: Economic and fiscal outlook, November 2011 127 Coutts. UK spending cuts: impact on regions and cities. 8 April 2010. 128 South East Economy Review, December 2010. Potential Impact of Public Sector Cuts in the South East Update, http://www.seeda.co.uk/_publications/686-685-489486-SEEDA_EconRev_Dec10F.pdf 129 PwC (2010) Sectoral and regional impact of the fiscal squeeze.
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estimates include the knock on multiplier effects of private business and consumer spending. The 130 majority of these cuts are expected over the period 2013-16. Job losses in Portsmouth Assuming that the impact of public sector budget reductions in Portsmouth are in proportion with the PwC national estimates then private sector job losses as a result of public sector spending cuts could be around 1,400 workers by 2014/15. Research by PwC using Input-Output models has identified the key sectors in the UK economy which rely on public sector expenditure and are therefore the most exposed to any reductions in spending. Portsmouth may be more vulnerable than average, due to several key sectors such as defence being particularly exposed to public sector expenditure reductions. Centre for Cities has estimated how these job losses could be spread on a city by city basis. Portsmouth is estimated to be amongst the top 10 most affected cities when job losses are considered as a proportion of total job losses. It estimates that around 4,400 jobs could be lost in the city. Combining these two approaches leads to a potential cut of nearly 6,000 job losses by 2014/15 as a result of public sector spending reductions, 131 almost 6% of current employment levels.
Potential job losses by 2014/15 due to Public Sector Reductions Public sector Private sector Estimated job losses by 2014/15 4,400 1,400 Source: PwC and DTZ Total 5,800
Effect on private sector From a business perspective different business sectors and firms will be affected differently by these public sector cuts depending on how they interact with the public sector. For the economy overall an excessively large public sector crowds out the opportunities for private sector economic activities and imposes a greater tax burden on the economy. Reducing the size of the public sector will leave a gap in the provision of some goods and services which will open opportunities for private firms and a reduction of the tax burden is always going to be beneficial to business. However for those businesses dependent on the public sector, either directly through public funding or indirectly through supplying goods and services, the cuts will have a detrimental effect on their trading conditions. The current reduction in public spending at a time when the economy is fragile is risky if the private sector is not in a position to expand to take up the slack. Continuing difficulties in accessing credit will 132 make it difficult for private business to fill that gap. Coutts identified that IT equipment, weapons and ammunition, shipbuilding and repair, aerospace and rail sectors as the most vulnerable to government spending cuts. This is because of the importance of government demand as a proportion of total demand for their products, combined with dependency 133 on capital spending, which is likely to be cut substantially over the course of the next parliame nt.
Sectoral Impact on the Public Sector Spending Reductions Estimated Gross Output Loss Loss as % of gross Implied employment Sectors output in sector reductions (bn at 2007 prices) Business services 11.9 3.9% 186,000 Construction 10.6 5.1% 104,000 Manufacturing 9.3 2.0% 51,000 Transport and communications 3.2 1.9% 47,000 Distribution, hotels and catering 1.1 0.4% 25,000 Financial services 2.0 1.1% 11,000 Other services 8.3 1.5% 44,000 Total Private Sector 46.4 2.1% 468,000 Source: Sectoral and regional impact of the fiscal squeeze, PwC, 2010. Notes: PwC analysis assuming employment declines proportionately in each sector
PwC estimate that business services will be the sector with the largest level of jobs losses, in part by virtue of being the largest sector. Spending cuts could lead to 186,000 job losses in this sector nationally, although given the broad range of sub-sectors it is difficult to estimate where the jobs losses are likely to occur. The construction sector is also forecast to have large employment losses with more than 104,000 jobs lost in that sector. Some manufacturing sectors such as defence and suppliers of office machinery could also be affected. Globally focus sectors such as aerospace,
130 131 132
Informing Our Future: The Impact of Public Sector Cuts and Reform on Business and Economic Conditions in Hampshire DTZ Informing Our Future: The Impact of Public Sector Cuts and Reform on Business and Economic Conditions in Hampshire 133 Coutts. UK spending cuts: impact on regions and cities. 8 April 2010.
56
medical and pharmaceuticals could also look to export markets to replace any shortfall from UK demand. Analysis at a more detailed sub-sector level has identified that Office Machinery and Computers is the most affected, not unsurprising given the close correlation between jobs and related office requirements. Weapons and Ammunitions, and the Aerospace sectors are also identified as heavily 134 affected based upon these sectors reliance on public sector defence contracts. The business services sector faces the largest impacts in absolute terms with potential output losses of around 4% and over 180,000 job cuts due to reduced public sector demand in current areas of operations. On the other hand this may also be the sector that, based on historic trends, will create the greatest number of new private sector jobs to offset the squeeze on the public sector. In addition, there are signs that the Coalition government may move the boundary between the public and private sectors in certain areas thereby opening up new opportunities for business services companies, in some cases working with voluntary sector organisations. A sector likely to continue to see growth opportunities from spending cuts is outsourcing, and not only in back office services as government and public sector organisations look to reduce their noncore, fixed cost operations, and increase the use of private and voluntary sector organisations in 135 the delivery of front-line public services.
Hampshire Business Monitor Survey Effect of public sector cuts on business Positive 15.7% Neutral / unaffected 23.5% Negative 60.2%
Tourism, building and construction and retail sectors were the business sectors in Hampshire that reported the highest negative effect from public sector cuts. Representatives from the pharmaceutical and bio-tech sector were by a long margin the ones being more positive about the impact and effect 136 of public sector cuts over the next couple of years. Other effects of public sector cuts Separate analysis by Centre for Cities has id entified and ranked 64 cities across the UK and considered how they perform against a number of indicators. It found that consumer spending is most likely to be affected in cities which are most vulnerable to welfare reforms. Cities in the South East, including Portsmouth are amongst the 10 least affected cities in the UK. It is estimated that there could be a reduction in welfare spending of 112 per capita. As a comparison the city estimated to be the most affected is Birkenhead, with welfare reductions of 197 per capita. Southamptons welfare reduction is estimated to be 120 per capita, with Bournemouth and Brighton at 114 and 157 per capita respectively. This implies that businesses in Portsmouth who rely on consumer spending could 137 be less affected than in other cities. However, the welfare reforms and subsequent reduced income for residents are still likely to impact upon the city, not just in terms of reduced spending within the local economy, but also in terms of increased levels of money difficulties and debt for residents and the resulting increase in demand for relevant advice and support services across the city. The loss of jobs in the public sector will reduce services delivered by local councils, Jobcentres, housing services, health services, education and training services or social services. Spending reductions will reduce funding for third sector and voluntary sector organisations. This comes at a time when services delivered through the likes of Citizens Advice Bureaux, debt counselli ng services 138 and mental health charities as well as public sector support services will see increases in demand. Any reduction in capital spending will most immediately be felt by the construction sector, however reduced capital spend will have broader long run economic implications. Reduced public capital investment will reduce the overall growth potential of the economy and that of Hampshire firms. Public infrastructure projects like the recently opened Hindhead tunnel on the A3 road which reduces journey times from Hampshire to London bring obvious benefits to the local economy. Road projects such as this as well as other public infrastructure such as investment in ports and sewer systems are vitally important for economic growth and in determining the productivity of Hampshire firms. Additionally cuts in spending on the development of skills and knowledge will be particularly detrimental to firms
134 135 136
DTZ Pricewaterhouse Coopers. Sectoral and regional impact of the fiscal squeeze: An economic analysis of the impact of spending cuts and tax rises. Hampshire Business Monitor Survey, Informing Our Future. 137 DTZ 138 The Impact of Welfare Reform and Public Sector Spending Reductions on Low Income Households in Hampshire, April 2011. Produced for Bill Sargent Trust by Centre for Regional Economic and Social Research, Sheffield Hallam University.
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who operate in the knowledge economy and depend on public sector spending in these areas to facilitate their growth. Although a few years off for the majority of public sector employees the expectation of these cuts in employment and the uncertainty that they create for many public sector employees is likely to create an immediate reduction in consumer spending. Public sector employees facing uncertain futures are unlikely to invest in new homes and more likely to postpone the purchase of consumer durables such as white goods and new cars. Although the cuts will have an impact on demand conditions in the Hamp shire economy and the cuts in public investment will impact the long run growth potential of the local economy there are potential supply side benefits to the public sector cuts and reforms. The reduction in the role of the public sector will allow greater opportunities for productive private enterprise in the economy. Whether this occurs or not is a matter of some controversy among economists and concerns the impact of these reforms on the broad economy. The confidence effects of budgetary discipline are unlikely to be large enough to offset the demand side effects however when these effects are coupled with low interest rates they can create the conditions for private industry to fill the gap left by the retreating public sector. Other supply side benefits to the Hampshire economy as a result of the public sector reform include a likely increase in labour market efficiency as a result of reform of the welfare system. The welfare cuts and reforms are designed to encourage the work shy to take up employ ment. This additional labour supply ought to have an impact of the availability of workers especially at the lower skill levels. Certainly there will be a reduction in demand and incomes in the economy and those firms that rely on publicly funded business will be hardest hit. However, for business to fill the gap in economic activity left by a retreating state sector there must be confidence in the future of the British 139 economy.
Findings and conclusions Future Vision Population estimates provide a mixed projection of the potential growth of the working age population. However, all projections are consistent in predicting that the rest of Hampshire and the South East will experience more severe issues regarding a shrinking working age population compared to the growing older population. This could lead to a relative competitive advantage for Portsmouth. Surplus demand for workers is projected for the South Hampshire area by 2026, although this could be remedied by modest increases in the activity rate or improvements in the skills of residents. Economic and productivity growth projections to 2026 show the South Hampshire area following the national trends, picking up in the latter period of 2016-2026, but remaining short of the wider region. Economic growth is expected to be led by growth in professional services, computing services and communications. Smaller but still important contributions are projected from distribution, retail, banking and finance, health and social work and other business services. Employment growth is expected to be led by sectors such as hotels and catering, computing services, professional services, other business services, health and social work. Productivity improvements are projected in the following sectors in particular: manufacturing of fuels, pharmaceuticals, electronics, motor vehicles, electricity, gas supply and communications. Portsmouth is potentially more vulnerable to public sector cuts than a lot of other cities, with a combination of high public sector employment and a sizeable proportion of industry directly and indirectly dependent on the public sector.
139
Informing Our Future: The Impact of Public Sector Cuts and Reform on Business and Economic Conditions in Hampshire
58
8. Findings and conclusion. Portsmouth is an employment hub for the wider region, attracting more commuters in, than sending out particularly from Havant. However, Portsmouth residents still contribute a significant amount to other local economies, with Portsmouth residents holding 21% of Havants workplace jobs. These in-commuters tend to enter the better/higher level jobs. This goes some way to explain the disparity between higher workplace wages to lower resident wages. The importance of other economic flows cannot be under estimated. In particular the impact of Portsmouth Harbour and Portsmouth International Port which handles over one million tonnes of imports and exports and over two million passengers a year. The University of Portsmouth also offers a key network of international connections through its staff, students and research activities. Looking at the size of industry sectors in Portsmouth, the most noticeable difference to its comparator cities is a specialisation in information and communication and much less of a reliance on the finance and insurance sector. This is strongly reflected in the contributions these two sectors make to the cities Gross Value Added. Portsmouth also has a disproportionately large manufacturing sector compared to comparator cities, although it is in line with the national average. The health sector remains the largest employer in Portsmouth, accounting for 15% of employment, although this is broadly in line with the comparator cities. More interestingly, a disproportionately large public administration and other sector is also present, making Portsmouth more vulnerable to the impact of public sector cuts. In terms of priority sectors, Portsmouth has a small but massively over represented aerospace and defence industry. The same is also true to a certain extent for the advanced engineering and marine sector. The voluntary and community sector is vital to the prosperity and well being of Portsmouth, making a valuable contribution to the economic and social regeneration of the city. While there are likely to be many opportunities for this sector, as public services are increasingly contracted out, there are also many pressures, such as growing demand for services and threats to funding. The creative, cultural and leisure sector plays an important role in creating and nurturing successful cities and acts as tool for urban regeneration. Although Portsmouth evidently has a strong visitor economy, some weaknesses have been identified, including a lack of high quality hotels and the need to further develop Portsmouths current shopping areas. Portsmouth is not as prosperous as other similar areas (as measured by Gross Value Added per head), but is still at a satisfactory level. Portsmouth is also home to pockets of extreme deprivation, which are likely to be exacerbated by the impact of cuts and welfare reforms. Portsmouths productivity (as measured by Gross Value Added per job filled) has been slowly catching up with similar cities and the national average for a number of years, but still remains low. Detailed analysis of the drivers of productivity found a number of possible reasons for this, including: Portsmouths resident population continue to have low skill levels despite the location of the University of Portsmouth and a number of top quality schools within the City. A number of measures show that this concern is not restricted to the already established working age population, but is being exasperated by the low skill levels of those entering the workforce. Low business density, implying a lack of competitiveness, due to the higher proportion and greater size of large firms in Portsmouth. The over-representation of large firms also negatively skewed measures of entrepreneurial activity and potential, although there were some rays of light with regards to improving survival rates of 141 new businesses. Portsmouth has been defined as having potential for innovativeness. The policy recommendations include: building on what is already there, while removing barriers to innovative firms looking to expand. Some strong niches of knowledge based industry in Portsmouth include:
140
140 141
For example, commuting in-flows of managers and senior officials in the public administration, education and health industry were over -represented in the workforce. Portsmouths concentration of employment within a few large employers tends to skew other measures of competitiveness and ent repreneurship, making Portsmouth appear less competitive than comparator cities. Whether this is a genuine concern or just a statistical anomaly requires further analysis.
59
Manufacturing of other transport equipment (in particular the building of ships and floating structures); Computer programming, consulting and retail; Public administration and defence; Water transport and Higher education. Portsmouth is found to be very similar to Southampton and facing many of the same issues across a 142 wide range of measures and descriptions. Close working and sharing of best practice in addressing these similar issues would be mutually beneficial. One notable difference is Southamptons categorisation as a high performing innovative city and there would be value in exploring what makes Southampton different in this respect and seeing whether it can be applied to Portsmouth. Although a reasonable proportion of Portsmouths working age population are defined as economically active, a higher proportion of these are unemployed than elsewhere. The rate of unemployment (3.5% Nov 2011), as measured by the number of people claiming Jobseekers Allowance, was slightly lower than the national average and broadly in line with comparator cities. The rate of unemployment levelled off over the last year to a rate that remains higher than before the recession, but below the peaks initially seen. However, there should be serious concern over the incidence of unemployment and the longer term impact this may have on Portsmouths economy. In particular, the over -representation of unemployed young people (18-24), the potential mismatch between job centre vacancies and claimants and the increased churn of those in elementary and sales and customer service occupations. Looking to the future, Portsmouth appears to be relatively sustainable, with low carbon emissions, low domestic gas and electricity consumption and residents choosing some of the most sustainable modes of travel to work. Portsmouth is exposed to flood risk from a number of sources; from the sea due to extreme tides as well as from a combined sewer system at risk from surface water flooding. However, it is recognised that Portsea Island is generally defended to a higher level than other frontages in the sub-system. Portsmouth, along with the rest of South Hampshire, is declared an area of serious water stress and without measures to address this, there is the potential for a deficit in the supply of fresh water. Infrastructure is broadly sound with actions in place to address the potential for problems of serious road congestion. Despite facing many constraints on its limited land use, Portsmouth will ensure there is enough employment land through the regeneration of the strategic sites, identifying other appropriate sites for office development in the City and protecting existing industrial estates. Affordability of housing remains a key concern for Portsmouth residents. Population estimates provide a mixed projection of the potential growth of the working age population. However, all projections are consistent in predicting that the rest of Hampshire and the South East will experience more severe issues regarding a shrinking working age population compared to the growing older population. This could lead to a relative competitive advantage for Portsmouth. Surplus demand for workers is projected for the South Hampshire area by 2026, although this could be remedied by modest increases in the activity rate or improvements in the skills of residents. Economic and productivity growth projections to 2026 show the South Hampshire area following the national trends, picking up in the latter period of 2016-2026, but remaining short of the wider region. Economic growth is expected to be led by growth in professional services, computing services and communications. Smaller but still important contributions are projected from distribution, retail, banking and finance, health and social work and other business services. Employment growth is expected to be led by sectors such as hotels and catering, computing services, professional services, other business services, health and social work. Productivity improvements are projected in the following sectors in particular: manufacturing of fuels, pharmaceuticals, electronics, motor vehicles, electricity, gas supply and communications. Portsmouth is potentially more vulnerable to public sector cuts than a lot of other cities, with a combination of high public sector employment and a sizeable proportion of industry directly and indirectly dependent on the public sector.
142
For example, the disparity between workforce and resident wages, low skills, the dominance of large businesses/low business density, low self employment rates, low survival rates and high NEET.
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Appendix
143
Breakdown by wards
Out-commuting (ward level) Across all wards in Portsmouth, Portsmouth was the most common local authority for employed residents to work. However, this measure of resident self containment ranged from as high as 82.3% of the resident workforce in Charles Dickens ward to only 67% in Drayton and Farlington and 65.5% in Paulsgrove in the north of the City. Havant was the most popular destination to commute out of Portsmouth for the working residents of 144 all wards (except Paulsgrove ), but particularly for those in Drayton and Farlington (10.9% of resident workforce), Cosham (8.8%) and Paulsgrove (8.1%). As mentioned above, commuting to Havant accounted for 25% (5,886) of all commuting out of the city. Fareham was the second most popular commute out of Portsmouth for the majority of wards, particularly for Paulsgrove (8.8% of resident workforce) and Cosham (5.2%). Looking at the absolute number of commuters, residents from Drayton and Farlington that commute to Havant are the largest single group of commuters (accounting for 2.7% of all Portsmouth resident workforce that commute out of Portsmouth), followed by Paulsgrove residents commuting to Fareham (2.3%) and both Cosham and Copnor commuting to Havant (2.2%). In-commuting (ward level) The wards responsible for the most workplace based employment were Charles Dickens (24% of Portsmouths workplace based employment), Cosham (16%), Copnor (10%) and Drayton and Farlington (8%). These wards accounted for a similar proportion of the total number of in-commuters (those working in Portsmouth that are not resident in Portsmouth): Charles Dickens (26.5%), Cosham (21.5%), Copnor (10%) and Drayton and Farlington (9.7%). However, this masks the fact that Cosham has the largest proportion of its workplace based workforce commuting in from outside Portsmouth (53.2%), followed by Paulsgrove (48.6%), Drayton and Farlington (46.4%) and Charles Dickens (43.9%). Looking at this same information from a different angle shows that wards in the south of the city have a higher proportion of their workforce that are also resident in Portsmouth; Central Southsea (87%), Eastney and Craneswater (86%), St Jude, Fratton and Baffins (~79%). Non-Portsmouth residents in-commuting For the majority of wards, Havant residents are the most common in-commuters; making up 30% on average of each wards in-commuters, but noticeably higher for Drayton and Farlington (47%) and Baffins (44%). Commuters from Fareham tend to be the second largest for all wards (average 20% of commuters). The main exceptions to this are for Paulsgrove where Fareham commuters are the most common (29%), and for Charles Dickens which has an almost equal split (~20%) from Havant, Fareham and Gosport. Havant commuters to Cosham account for the single largest number and proportion of commuters from a specific authority to a particular ward (6.5%, 2,741). This is closely followed by Havant commuters to Charles Dickens, Drayton and Farlington and Copnor; Fareham commuters to Charles Dickens and Cosham; and Gosport commuters to Charles Dickens which each account for at least 4.6% (approx 2,000) of all commuters into Portsmouth. The picture of commuting into Portsmouth can be simplified by splitting Portsmouth into two areas; one comprised of all wards located on Portsea Island, and the other, the three wards (Paulsgrove, Cosham and Drayton and Farlington) that are located on the mainland. While the mainland wards are responsible for 29% of the workplace jobs in Portsmouth, they account for 36% of all commuters. In fact, 51% of workforce jobs in the mainland wards are filled by incommuters in comparison to only 36% on average on Portsea Island.
143 144
Using only Census 2001 data for UK travel flows A slightly larger proportion of Paulsgrove residents commuted to Fareham (8.8%) rather than Havant (8.1%)
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Those commuting in from the Isle of Wight and Gosport are more likely to only commute to Portsea Island (85% and 74% respectively), and then Gosport residents are more likely to just commute to Charles Dickens ward. Those commuting in from Winchester, Test Valley and Eastleigh are more likely to only go to the mainland wards. While more Havant and Fareham commuters commute to Portsea Island in absolute terms, they make up a greater proportion of those commuting to the mainland wards. In particular, Havant commuters are more likely to commute to Cosham and Fareham commuters to Paulsgrove. Commuting between Portsmouth wards (those both employed and resident within Portsmouth). Charles Dickens ward provides the most workplace jobs for those living in the city (22.6%) followed by Cosham (12.6%). However, the wards with the largest resident populations that also choose to work in the City are Nelson, Copnor, Baffins and Fratton (each accounting for over 8% of Portsmouth residents that work in the City). For residents that work in the City across almost all wards , the ward of residence is also the most common ward for employment usually accounting for between a third and a quarter of those who work within the city. This is particularly the case for Charles Dickens (63%) and to a lesser extent Cosham (47%). After their ward of residence, Charles Dickens is the most popular ward for the majority of residents that work in the city. The exception being those from Paulsgrove and Drayton and Farlington where Cosham is more popular. This once again shows the split of the city, with different commuting patterns for those on the mainland to those located on Portsea island. Looking at workplace based employment in a ward, Eastney and Craneswater and Central Southsea had the highest rates of workplace self containment in a ward (52% and 50% respectively). It was much lower in Charles Dickens and Cosham at only 11% of workplace jobs, which ties in with the commuting characteristics identified for these wards above.
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The exception being Central Southsea, where only 22% of residents working in the city work in that ward, but 23% work in Charles Dickens.
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Portsmouth Local Economic Assessment January 2012

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Picture: Commercial Road, Portsmouth

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

DTZ DTZ updated by CEAP Hampshire Economic Assessment 2011

Portsmouths Local Economic Assessment

Portsmouths commuting flows by occupation and industry

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Picture: Portsmouths transport links

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Australasia and Oceania 30 40 50 50 50 60 40 50 40

Portsmouths Local Economic Assessment

Broad industrial groups

Portsmouths Local Economic Assessment

Percent of total GVA

PUSH 2011: http://www.invest-in-portsmouth.co.uk/index.php?id=51

Portsmouths Local Economic Assessment

Winchester Winchester Eastleigh Portsmouth Southampton Portsmouth Portsmouth Portsmouth

Portsmouths Local Economic Assessment

Picture: Raymarine offices

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Picture: Portsmouth Dockyards

Portsmouths Local Economic Assessment

Cultural Services Business Plan 2011-2014, Portsmouth City Council

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Cultural Services Business Plan 2012-2015, Portsmouth City Council

Portsmouths Local Economic Assessment

Cultural Services Business Plan 2012-2015, Portsmouth City Council

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Picture: Purple Door Careers and Recruitment, University of Portsmouth

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Source: ONS Business Demography 2009

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

Portsmouths Local Economic Assessment

75.7% 78.0% 73.3% 69.4% 6.8%

73.3% 79.6% 66.7% 68.6% 6.4%

75.3% 78.2% 72.3% 69.8% 10.6%

76.4% 82.4% 70.3% 70.7% 8.8% 7.6%

Percent of the economically active 8.1% 7.2% 7.7%

Portsmouths Local Economic Assessment

24.3% 6.9% 17.5%

26.7% 8.1% 18.6%

24.7% 7.1% 17.6%

23.6% 3.9% 19.7%

Economically Active: in employment, 97,600

Source: ONS APS Apr 2010 Mar 2011