UNIVERSITY OF WALES INSTITUTE, CARDIFF ATHROFA PRIFYSGOL CYMRU, CAERDYDD. UK Competitiveness INDEX Robert Huggins Piers Thompson

UNIVERSITY OF WALES INSTITUTE, CARDIFF ATHROFA PRIFYSGOL CYMRU, CAERDYDD UK Competitiveness INDEX 2010 Robert Huggins Piers Thompson

UK Competitiveness Index 2010 Robert Huggins and Piers Thompson Centre for International Competitiveness Cardiff School of Management University of Wales Institute, Cardiff Published by: Centre for International Competitiveness Cardiff School of Management University of Wales Institute, Cardiff Colchester Avenue Cardiff CF23 9XR Wales United Kingdom Telephone: +44 (0) 29 2041 6470 http://www.cforic.org Robert Huggins and Piers Thompson ISBN: 1-902829-07-7

Contents Executive Summary... 3 Chapter 1 Introduction... 4 Chapter 2 Methodology... 5 Chapter 3 Regional UK Competitiveness Index 2010 Rankings... 9 Chapter 4 City UK Competitiveness Index 2010 Rankings...14 Chapter 5 Local UK Competitiveness Index 2010 Rankings... 18 Chapter 6 UK Competitiveness Index 2010 and Population Density... 23 Chapter 7 UK Competitiveness Index 2010, Sustainability and Wellbeing... 25 Chapter 8 UK Competitiveness Index 2010 and Creativity... 32 Chapter 9 Concluding Remarks... 35 Appendix... 36 1

List of Tables Table 2.01: UK Regions and their Populations... 8 Table 3.01: Regional UK Competitiveness Index 2010 (UK = 100)... 9 Table 3.02: Regional UK Competitiveness Index 1997 and 2010 (UK = 100)... 10 Table 3.03: Regional UK Competitive Index 2010 Index of Input Factors... 10 Table 3.04: Regional UK Competitive Index 1997 to 2010 Index of Input Factors...11 Table 3.05: Regional UK Competitiveness Index 2010 Index of Output Factors...11 Table 3.06: Regional UK Competitiveness Index 1997 to 2010 Index of Output Factors...12 Table 3.07: Regional UK Competitiveness Index 2010 Index of Outcome Factors...12 Table 3.08: Regional UK Competitiveness Index 1997 to 2010 Index of Outcome Factors...13 Table 4.01: City UK Competitiveness Index 2010 (UK=100)... 15 Table 4.02: Top 5 Most Improved Cities on UK Cities Competitiveness Index 1997-2010...16 Table 4.03: Biggest Fallers on UK Cities Competitiveness Index 1997-2010... 16 Table 4.04: Extended Core City UK Competitiveness Index 2010 (UK=100)...17 Table 5.01: Top 25 Localities on the UK Competitiveness Index 2010 (UK=100)... 18 Table 5.02: Top 25 Localities on the UK Competitiveness Index 1997 (UK=100)... 19 Table 5.03: Top 25 Most Improved Localities on the UK Competitiveness Index 2009-2010... 20 Table 5.04: Bottom 25 Localities on the UK Competitiveness Index 2010 (UK=100)... 21 Table 5.05: Biggest Fallers on the UK Competitiveness Index 2009-2010... 22 Table 6.01: Correlation of UK Competitiveness Index and Population Density... 24 Table 6.02: Average UK Competitiveness Index 2010 Score and Rank in Urban and Rural Areas... 24 Table 7.01: Correlation of UK Competitivness Index with Carbon Dioxide Emissions per capita... 26 Table 7.02: Distribution of Region s Localities by CO 2 Emissions per capita and the UK Competitiveness Index... 27 Table 7.03: Correlation of UK Competitivness Index with Average Weekly Hours Worked... 29 Table 7.04: Correlation of UK Competitiveness Index 2010 with Proportion of Population in Poor Health... 30 Table 7.05: Regression of Proportion of Population with Poor Health on UK Competitiveness Index 2010... 30 Table 7.06: City UK Competitiveness Index and Happiness Index... 31 Table 8.01: Correlation of UK Competitivness Index 2010 with Occupational Location Quotients... 34 List of Figures Figure 2.01: The 3 Factor Model Underlying the UK Regional Competitiveness Index... 6 Figure 2.02: The 3 Factor Model Underlying the UK Local Competitiveness Index... 7 Figure 6.01: UK Competitiveness Index and Population Density... 23 Figure 7.01: UK Competitiveness Index 2010 and CO 2 production per capita... 25 Figure 7.02: Typology of Localities by CO 2 Emissions and the UK Competitiveness Index... 26 Figure 7.03: UK Competitiveness Index 2010 and Average Weekly Hours Worked by Men... 27 Figure 7.04: UK Competitiveness Index 2010 and Average Weekly Hours Worked by Women... 28 Figure 7.05: UK Competitiveness Index 2010 and Proportion of Population in Poor Health... 29 Figure 8.01: UK Competitiveness Index 2010 and Employment of Science, Technology, Education and Research Professionals... 32 Figure 8.02: UK Competitiveness Index 2010 and Employment within the Entertainment Occupations... 33 2

Executive Summary 1. This 2010 edition of the UK Competitiveness Index (UKCI) represents a benchmarking of the competitiveness of the UK s regions and localities. 2. For the first time since the UKCI s inception London is no longer the UK s most competitive regional economy, and is displaced by South East England. 3. The East of England displays increasing competitiveness compared to the UK average, consolidating its position as the third most competitive region in the UK. 4. Wales is now the least competitive economy having fallen behind the North East of England. 5. Since 1997 North West England is the region which has shown the greatest improvement in competitiveness. 6. Since 1997 the region to experience the largest fall in relative competitiveness is Scotland. 7. The most competitive large city in the UK is Edinburgh, followed by Bristol and Manchester. 8. The least competitive large city in the UK is Liverpool, followed by Birmingham and Sheffield. 9. The most competitive city in the UK (excluding London) is Guildford, followed by St Albans and Winchester. 10. The city which has seen the greatest improvement in competitiveness in recent years is Exeter, followed by Norwich. 11. The least competitive city in the UK is Kingston upon Hull, followed by Stoke-on-Trent and Sunderland. 12. With a mix of high and low competitiveness boroughs, London s development is becoming increasingly marred as a result of its dual economy. 13. There appears to be continuing evidence of the positive impact of urban regeneration programmes on city competitiveness, but rural areas appear to be performing less well. 14. Comparing the UKCI with emissions of carbon dioxide suggests that there are both high and low carbon intensity paths to competitiveness. 15. South East England and the East of England regions have the greatest proportion of low carbon-intensive competitive localities. 16. Women based in more competitive localities tend to work longer hours. 17. A lower number of people in competitive economies report poor health. 18. The number of creative workers is strongly related to the competitiveness of a locality. 19. Every regional and local economy has a role to play in improving the UK s global competitiveness. However, far too many appear to be slipping through the competitiveness net. 3

Chapter 1 - Introduction This report represents the 2010 edition of the UK Competitiveness Index (UKCI), which was first introduced and published in 2000. It represents a benchmarking of the competitiveness of the UK s regions and localities. The UK Competitiveness Index has been designed as an integrated measure of competitiveness focusing on both the development and sustainability of businesses and the economic welfare of individuals. In this respect, we consider competitiveness to consist of the capability of an economy to attract and maintain firms with stable or rising market shares in an activity, while maintaining stable or increasing standards of living for those who participate in it. This makes clear that competitiveness is not a zero-sum game, and does not rely on the shifting of a finite amount of resources from one place to another. Competitiveness involves the upgrading and economic development of all places together, rather than the improvement of one place at the expense of another. However, competitiveness does involve balancing the different types of advantages that one place may hold over another, i.e. the range of differing strengths that the socio-economic environment affords to a particular place compared to elsewhere. Since the UK Competitiveness Index was first introduced, the number of indicators and variables constituting the Regional and Local UK Competitiveness Indices has expanded. However, the fundamental methodology underlying them has remained the same. In this report, we publish indices for 2010 (incorporating the most up-to-date data available), as well as those presented in the 2008 report (where comparable) as a means of comparison and examining the UK s changing competitiveness landscape. In this election year, comparisons are also made with the 1997 version of the UK Competitiveness Index. Due to space constraints it has proved impossible to list in full all the regional and local indicators prepared within the report. Therefore, a spreadsheet of the complete datasets is available in conjunction with this report for those interested in obtaining more detailed benchmarking or carrying out further analysis of their own. The structure of the report is as follows. Chapter 2 reviews the methodology underlying the UK Competitiveness Index, with Chapters 3, 4 and 5 presenting an overview of the main results from the Regional, City and Local Indices respectively. Chapter 6 examines the relationship between population density and the UK Competitiveness Index in more detail. Chapter 7 explores the relationship between competitiveness and a range of factors relating to sustainability and wellbeing. Chapter 8 considers one potential source of competitiveness - the human capital held by creative workers, and the importance of retaining such workers in a locality in order to remain competitive. Chapter 9 presents some final concluding remarks on the findings for UKCI 2010. 4

Chapter 2 - Methodology Methodological Design of the UK Competitiveness Index CONTEXT The aim of the UK Competitiveness Index is to assess the relative economic competitiveness of regions and localities in the UK by constructing a single index that reflects, as fully as possible, the measurable criteria constituting place competitiveness. We consider that the competitiveness of localities/regions and the competitiveness of firms are interdependent concepts. Measuring such competitiveness, however, is no easy matter and, as indicators of national competitiveness have shown, cannot be reduced solely to notions of Gross Domestic Product (GDP) and productivity. Similarly, place competitiveness cannot be measured by ranking any one variable in isolation, since it is the result of a complex interaction between input, output, and outcome factors. Clearly, not all of these factors are readily measurable, given that as well as consisting of economic variables, they also include political, social and cultural parameters. However, since our focus is on relative competitive performance within the UK, the assumption can be made that these factors will have an identifiable effect on key economic measures. For example, the cultural differences between a traditional manufacturing economy and a knowledge-based economy should have an obvious bearing on their relative economic performance. Also, factors such as the impact of the current UK political regime will be common to areas, despite the existence of devolved governance in parts of the UK. DESIGN The key concern with the design process of the UK Competitiveness Index is to develop a series of indices incorporating data that are available and comparable at the local and regional level, and that go some way towards reflecting the link between macro-economic performance and innovative business behaviour. Consideration also has to be given to the overall value of indicators, and their relative effectiveness as performance measures. In particular, the interrelationships between the measure-chain of inputs, outputs and outcomes, and the underlying ability of the index to be updated as frequently as possible, are of major significance. Given the methodological parameters, a number of different modes of creating the index, and the variables to be included, have been considered. After testing, the 3-Factor model for measuring competitiveness as shown in Figures 2.01 (Regional UK Competitiveness Index) and Figure 2.02 (Local UK Competitiveness Index) is adopted. The 3-Factor model consists of a linear framework for analysing competitiveness based on: (1) input; (2) output; and (3) outcome factors. In order to achieve a valid balance between each of the indicators, in terms of their overall significance to the composite index, each of the three measures - Measure 1: Inputs; Measure 2: Output; and Measure 3: Outcomes - are given an equal weighting, since it is hypothesised that each will be interrelated and economically bound by the other. 1 For each measure an index was calculated with a UK average base of 100, and the distribution range for each measure calculated (in the case of unemployment rates these values are inverted). As expected, it is found that some of the ranges have both a skewed and a long distribution range, the result being that these variables have an overly strong influence on the composite index. Therefore, each datum is transformed into its logarithmic form to produce distributions that are closer to the normal curve, and that dampen out extreme values so that no single variable distorts the final composite score. 1. Huggins, R. (2003) Creating a UK Competitiveness Index: Regional and Local Benchmarking, Regional Studies, Vol. 37.1, pp. 89-96. 5

Figure 2.01: The 3 Factor Model Underlying the UK Regional Competitiveness Index Input factors Input factors R&D Expenditure Economic Activity Rates Business Start-up Rates per 1,000 inhabitants Number of Business per 1,000 inhabitants GCSE Results - 5 or more grades A* to C Proportion of Working Age Population with NVQ Level 4 or Higher Proportion of Knowledge-Based Business Output factors Gross Value Added per Head at Current Basic Prices Exports per Head of Population Imports per Head of Population Proportion of Exporting Companies Productivity - Output per Hour Worked Employment Rates Outcome factors Gross Weekly Pay Unemployment Rates It is the case that the untransformed values are no more real or natural than the transformed ones. However, in order to reflect as far as possible the scale of difference in area competitiveness, the composite scores were finally anti-logged through exponential transformation. This is achieved by calculating the exponential difference between the mean logged and un-logged index of the fifty localities nearest the overall UK mean of 100. This resulted in a mean exponential difference slightly less than the cubed-mean of the logged index. For example, a logged index of 104 produced an unlogged index of approximately 112.5 (104 3 divided by 100 3 ) and a logged index of 90 an unlogged index of approximately 73 (90 3 divided by 100 3 ). Therefore, bearing in mind the aim of producing a frequently repeatable index, the exponential cube transformation approach is adopted. Given the above criteria and methodology, a composite Competitiveness Index was calculated for regions and localities of the UK. 6

Figure 2.02: The 3 Factor Model Underlying the UK Local Competitiveness Index Input factors Economic Activity Rates Business Start-up Rates per 1,000 Inhabitants Number of Business per 1,000 Inhabitants Proportion of Working Age Population with NVQ Level 4 or Higher Proportion of Knowledge-Based Business Output factors Gross Value Added per Head at Current Basic Prices Productivity - Output per Hour Worked Employment Rates Outcome factors Gross Weekly Pay Unemployment Rates CALCULATING LOCAL GROSS VALUED ADDED (GVA) ESTIMATES Local district and authority area level GVA estimates are produced by assuming that the productivity within the corresponding NUTS 3 areas (within which they are situated and for which there is published GVA data) is the same as that for the smaller local areas. The estimates were calculated by multiplying NUTS 3 productivity (expressed as output per worker) by the number of workers within an area. This produces a total output figure from which output per head is calculated by dividing total output by total population. Output per head = (NUTS 3 productivity*district Employment) /District Population. 7

BENCHMARKED PLACES The benchmarking consists of two datasets: UK regions; and UK localities (including cities, boroughs and districts, but excluding localities of Northern Ireland). The 12 UK regions and their populations are shown in Table 2.01. In total, 379 local areas are benchmarked. 2 The Appendix lists these localities along with their populations and regional designation. Table 2.01: UK Regions and their Populations Region Population 2008 East Midlands 4,433,000 East of England 5,728,700 London 7,619,800 North East England 2,575,500 North West England 6,875,700 Northern Ireland 1,775,000 Scotland 5,168,500 South East England 8,380,100 South West England 5,209,200 Wales 2,993,400 West Midlands 5,411,100 Yorkshire and The Humber 5,213,200 UK 61,383,200 2 Since the 2008 UK Competitiveness Index was published a local government reorganisation led to number of local authorities districts becoming combined into nine new unitary authorities as follows: Country Durham UA comprises the former districts of Chester-le-Street, Derwentside, Durham, Easington, Sedgefield, Teesdale and Wear Valley. Northumberland UA comprises the former districts of Alnwick, Berwick-upon-Tweed, Blyth Valley, Castle Morpeth, Tynedale and Wansbeck. Cheshire East UA comprises the former districts of Congleton, Crewe and Nantwich and Macclesfield. Cheshire West and Chester UA comprises the former districts of Chester, Ellesmere Port & Neston and Vale Royal. Shropshire UA comprises the former districts of Bridgnorth, North Shropshire, Oswestry, Shrewsbury and Atcham and South Shropshire. Bedford UA comprises the former district of Bedford. Central Bedfordshire UA comprises of the former districts of Mid Bedford and South Bedfordshire. Cornwall UA comprises the former districts of Caradon, Carrick, Kerrier, North Cornwall, Penwith and Restormel. The Isles of Scilly were recoded on 1 April 2009. Wiltshire UA comprises the former districts of Kennet, North Wiltshire, Salisbury and West Wiltshire. 8

Chapter 3 - Regional UK Competitiveness Index 2010 Rankings Table 3.01 presents the Regional UK Competitiveness Index for 2010. For the first time since the inception of the UK Competitiveness Index the most competitive region of the UK is not London. Since the 2008 edition of the UK Competitiveness Index, South East England has overhauled London, which has dropped to second position. The East of England remains in third position. As in previous years, these three regions are the only regions to perform above the UK average. The largest improvement in ranking was for the North West, which rose to fourth position. This means that the North West has moved from eighth position in 2006 to being the most competitive outside of the big three regions in 2010. As well as London, other regions that have fallen down the rankings since 2008 are the East Midlands, South West, Yorkshire and the Humber, and Wales. The North East has improved its performance relative to the UK average, and is now no longer the least competitive region; a position now occupied by Wales. Table 3.01: Regional UK Competitiveness Index 2010 (UK = 100) Rank Region 2010 2008 Rank Change in Change in 2008 Index score Rank 2008-2010 2008-2010 1 South East 110.5 109.7 2 0.8 1 2 London 109.6 112.5 1-2.8-1 3 East of England 108.9 105.6 3 3.3 0 4 North West 93.8 94.5 6-0.7 2 5 East Midlands 93.5 97.7 4-4.2-1 6 South West 91.8 95.0 5-3.2-1 7 West Midlands 90.3 94.4 7-4.0 0 8 Scotland 89.4 94.3 8-4.8 0 9 Northern Ireland 89.0 88.8 10 0.2 1 10 Yorkshire and the Humber 87.3 89.6 9-2.3-1 11 North East 86.5 83.1 12 3.4 1 12 Wales 83.9 86.8 11-2.8-1 Given that 2010 is an election year in the UK, it is interesting to examine the change in the competiveness of regions since 1997 when Labour came to power and the present situation in 2010. Table 3.02 presents both the 2010 and 1997 Regional UK Competitiveness Indices, and the change in rank. The largest movers during this period were the North West climbing, as noted above, from eighth to fourth in the listing, but this is matched by a move in the opposite direction by Scotland, which has slid from fourth to eighth during this period. Other regions have seen little change in their ranking only rising or falling by a single position. There have been considerable changes in the levels of relative competitiveness as measured by the Regional UK Competitiveness index itself. The period has seen a closing of the relative competitiveness gap between regions, so that by 2010 London and the South East are no longer as far above the UK average as they were in 1997. The bottom four regions have all seen their positions improve compared to the UK average over the period, and while this change has been relatively small for Wales and Yorkshire and the Humber, for the North East and Northern Ireland the improvement relative to the UK average has been considerable. Overall, this suggests there has been a closing of the North-South Competitiveness Divide since 1997. 9

Table 3.02 - Regional UK Competitiveness Index 1997 and 2010 (UK = 100) Rank Region 2010 1997 Rank 1997 Change in Change in Index score Rank 1997-2010 1997-2010 1 South East 110.5 115.1 2-4.6 1 2 London 109.6 119.2 1-9.5-1 3 East of England 108.9 106.4 3 2.5 0 4 North West 93.8 89.9 8 4.0 4 5 East Midlands 93.5 94.1 5-0.6 0 6 South West 91.8 91.1 7 0.8 1 7 West Midlands 90.3 94.0 6-3.7-1 8 Scotland 89.4 94.1 4-4.7-4 9 Northern Ireland 89.0 81.8 10 7.2 1 10 Yorkshire and the Humber 87.3 85.6 9 1.7-1 11 North East 86.5 79.2 12 7.3 1 12 Wales 83.9 81.5 11 2.4-1 Considering each of the three individual factors that make up the Regional UK Competitiveness Index provides more detail about the changes that have occurred since the 2008 UKCI. The Index of Input Factors presented in Table 3.03 is an index of the following factors: (1) R&D expenditure; (2) Economic Activity Rates; (3) Business Start-up Rates per 1,000 Inhabitants; (4) Number of Businesses per 1,000 Inhabitants; (5) GCSE Results 5 or more grades A* to C; (6) Proportion of the Working Age Population with NVQ Level 4 or Higher; and (7) Proportion of Knowledge-Based Businesses. These input factors are influential in determining not only the present competitiveness of the regions, but also future competitiveness and therefore can be utilised as an indicator of competitiveness sustainability. East of England tops the rankings in terms of the region with the highest level of input factors. The East of England has seen a substantial rise in the Index of Input Factors between 2008 and 2010, which is likely to in part reflect the continuing development of knowledge-based enterprises around Cambridge. This means that the South East is now ranked second although there was little change in its score between 2008 and 2010. London remains in third, but with a significant fall in its index score. Substantial gains are also observed for the North West and Northern Ireland. The North West climbed two positions to become the fourth strongest region in terms of input factors. The North East enjoyed an even greater rise relative to the UK average, which although only moving the North East up one position, did so by closing a considerable gap between itself and the other regions. Table 3.03: Regional UK Competitiveness Index 2010 Index of Input Factors Rank Region 2010 2008 Rank 2008 Change Change in Rank 2008-2010 1 East of England 119.4 112.1 2 7.3 1 2 South East 113.7 114.7 1-1.0-1 3 London 107.7 111.8 3-4.1 0 4 North West 97.6 90.7 6 6.9 2 5 South West 93.8 102.0 4-8.1-1 6 Scotland 93.2 95.9 5-2.7-1 7 East Midlands 92.1 90.6 7 1.5 0 8 West Midlands 85.7 88.2 8-2.5 0 9 Northern Ireland 84.9 88.0 9-3.1 0 10 Yorkshire and the Humber 82.9 83.0 10-0.1 0 11 North East 82.0 66.7 12 15.3 1 12 Wales 80.0 82.2 11-2.3-1 10

Over the last 13 years the regions which have most improved their ranking in the Index of Input Factors are the North West and East of England. The North West has climbed four places over the period, and although still lagging the UK average, can be viewed as the best of the rest in 2010. Another region improving its position substantially compared to the UK average is the North East, although this has only seen the region move up one position from the bottom of the table in 2010, as was shown by Table 3.04. Table 3.04: Regional UK Competitiveness Index 1997 to 2010 - Index of Input Factors Rank Region 2010 1997 Rank 1997 Change Change in Rank 1997-2010 1 East of England 119.4 113.0 3 6.4 2 2 South East 113.7 121.7 1-8.0-1 3 London 107.7 115.5 2-7.8-1 4 North West 97.6 84.7 8 12.9 4 5 South West 93.8 102.4 4-8.6-1 6 Scotland 93.2 93.6 5-0.4-1 7 East Midlands 92.1 89.2 6 2.9-1 8 West Midlands 85.7 87.2 7-1.5-1 9 Northern Ireland 84.9 82.2 9 2.7 0 10 Yorkshire and the Humber 82.9 79.0 10 3.9 0 11 North East 82.0 65.4 12 16.6 1 12 Wales 80.0 78.0 11 2.0-1 A sub-composite index of the following output factors of the UK Competitiveness Index is shown by Table 3.05: (1) Gross Value Added per head at current prices; (2) Exports per Head of Population; (3) Imports per Head of Population; (4) Proportion of Exporting Companies; (5) Productivity- Output per Hour Worked; and (6) Employment Rates. These measures represent the ability of the region to utilise the input factors at its disposal effectively, and therefore can be viewed as a measure of the productive capabilities of the region. The East of England also progressed in the Index of Output Factors and is one of only three regions above the UK average. London remains at the top of the table in terms of output factors, although only recording a slightly higher index value than the South East. Regions displaying considerable falls relative to the UK average include: the East and West Midlands; Yorkshire and the Humber; and Scotland. This means that although not improving relative to the UK average, both the South West and Northern Ireland move three places up the rankings. Table 3.05: Regional UK Competitiveness Index 2010 - Index of Output Factors Rank Region 2010 2008 Rank 2008 Change Change in Rank 2008-2010 1 London 115.0 113.5 1 1.6 0 2 South East 114.8 111.5 2 3.4 0 3 East of England 107.6 104.9 4 2.7 1 4 East Midlands 90.2 105.6 3-15.4-1 5 West Midlands 88.8 98.8 5-10.0 0 6 North West 86.4 95.8 6-9.4 0 7 South West 82.8 86.1 10-3.3 3 8 North East 82.7 90.6 7-7.8-1 9 Northern Ireland 82.5 83.2 12-0.7 3 10 Yorkshire and the Humber 82.3 90.2 8-7.9-2 11 Scotland 77.3 88.7 9-11.4-2 12 Wales 76.1 83.4 11-7.3-1 11

Comparing the situation at the beginning of Labour s period in power with that currently, Table 3.06 indicates that at the start of the period London and the South East were alone in being clearly ahead of the UK average, with three further regions, the East of England, East Midlands and West Midlands performing approximately at the UK average. However, by the end of the period the top regions have become a triad with the East of England closing its relative position to London and the South East, whilst the gap with the other regions has expanded. At the other end of the scale, the South West and Northern Ireland have improved their ranking whilst Yorkshire and the Humber, and even more so Scotland, have fallen back. Table 3.06: Regional UK Competitiveness Index 1997 to 2010 - Index of Output Factors Rank Region 2010 1997 Rank 1997 Change Change in Rank 1997-2010 1 London 115.0 118.1 1-3.0 0 2 South East 114.8 110.5 2 4.3 0 3 East of England 107.6 102.0 3 5.6 0 4 East Midlands 90.2 101.5 5-11.4 1 5 West Midlands 88.8 101.7 4-12.9-1 6 North West 86.4 94.8 7-8.4 1 7 South West 82.8 81.6 10 1.2 3 8 North East 82.7 88.7 9-6.0 1 9 Northern Ireland 82.5 76.2 12 6.2 3 10 Yorkshire and the Humber 82.3 89.6 8-7.3-2 11 Scotland 77.3 97.3 6-20.0-5 12 Wales 76.1 81.1 11-5.0-1 For regions to be competitive it can be argued that it is a necessary, but not a sufficient condition that productivity rises; as this can be achieved through labour shedding, which is likely to lead to a short lived unsustainable competitive advantage. For sustainable increases in competitiveness it is also necessary that a population enjoys increasing standards of living. Table 3.07 presents the sub-composite index of outcome factors, which is formed from measures of gross weekly pay and unemployment rates. This index, therefore, reflects the standard of living aspect of competitiveness adopted within the UK Competitiveness Index. The top three regions, London, the South East and the East of England, remain the same as in 2008, although London is no longer as far above the UK average. This may reflect the particularly strong influence of the recession on standards of living in the capital. The largest improver is Northern Ireland, where the strong economic performance of the region over the last two years have helped it climb from tenth to fourth, with an index score roughly equal to the UK average. Scotland and the West Midlands displayed the greatest falls in rank from 2008, both dropping two positions. Table 3.07: Regional UK Competitiveness Index 2010 - Index of Outcome Factors Rank Region 2010 2008 Rank 2008 Change Change in Rank 2008-2010 1 London 106.2 112.1 1-5.9 0 2 South East 103.3 103.1 2 0.2 0 3 East of England 100.4 100.1 3 0.4 0 4 Northern Ireland 100.2 95.5 10 4.7 6 5 South West 99.3 97.5 5 1.9 0 6 Scotland 98.8 98.4 4 0.4-2 7 East Midlands 98.2 97.2 6 1.0-1 8 North West 97.8 97.1 7 0.7-1 9 Yorkshire and the Humber 97.3 96.0 9 1.3 0 10 West Midlands 96.8 96.4 8 0.4-2 11 Wales 96.6 95.0 11 1.6 0 12 North East 95.2 93.8 12 1.4 0 12

Table 3.08 presents the Index of Outcome Factors for 1997 and 2010. Three regions standout as having experienced considerable changes to their rankings during the period, in particular Northern Ireland has improved its position greatly thanks to the end of the troubles and rapid growth in the regional economy has led to increases in standard of living measures. Over the period, the North West and West Midlands have seen their rankings fall. London has also experienced a large drop in its Index of Outcome Factors over the period. Table 3.08: Regional UK Competitiveness Index 1997 to 2010 - Index of Outcome Factors Rank Region 2010 1997 Rank 1997 Change Change in Rank 1997-2010 1 London 106.2 113.5 1-7.3 0 2 South East 103.3 104.0 2-0.7 0 3 East of England 100.4 100.2 3 0.2 0 4 Northern Ireland 100.2 92.1 12 8.1 8 5 South West 99.3 96.4 6 3.0 1 6 Scotland 98.8 95.7 8 3.1 2 7 East Midlands 98.2 95.9 7 2.2 0 8 North West 97.8 96.6 5 1.2-3 9 Yorkshire and the Humber 97.3 94.7 9 2.6 0 10 West Midlands 96.8 97.0 4-0.2-6 11 Wales 96.6 93.7 10 2.9-1 12 North East 95.2 92.3 11 2.8-1 The fall of London from the top of the UK Competitiveness Index may be surprising to some. The sub-composite measures indicate that this fall originates from the Input and Outcome Factors. It might be argued that the recession will have greater effects on the outcome factors in London compared with other regions given the specialisation of the regional economy in financial services; however, it may also recover more quickly. The fall in the Index of Input factors on the other hand appears to be part of a longer term pattern, as this measure might be interpreted as an indicator of the sustainability of competitiveness. Therefore, it is by not means certain that London will return to its dominant position in due course. 13

Chapter 4 - Cities UK Competitiveness Index 2010 Rankings In 2010 there remain large discrepancies in the competitiveness of different regions, with the big three regions of London, the South East and East of England displaying much higher levels of competitiveness relative to more peripheral regions, in particular Wales and the North East. Previous UK Competitiveness Index reports have shown that there is also further intra-regional variance, so that local areas even within the same region often display quite large differences in competitiveness. Table 4.01 ranks those larger localities (populations of more than one hundred thousand people) of the UK designated as cities (excluding London, which is included in the Regional UK Competitiveness Index). 3 As in the 2006 and 2008 editions of the UKCI, the top two cities are Guildford and St Albans; two areas housing significant numbers of hightechnology firms. The third ranked city is Winchester, which was not included in previous City UK Competitiveness Indices, but as the table shows would have been third in 2008 as well. Aberdeen has climbed two places to overtake Cambridge and move into fourth spot. Norwich, Exeter and Newcastle upon Tyne have seen relative improvements in the last two years, all climbing five or more places. At the bottom of the table are those cities historically reliant on heavy industry. Kingston upon Hull, Stoke on Trent, and Sunderland remain in the last three places. These cities also have made little impression over the last year in the local UK Competitiveness Index, all three being included within the least competitive 50 local areas. 3. Also excluded are Belfast and Londonderry for which data is unavailable at the local level for all components of the UK Competitiveness Index, so cannot be calculated. Chester is also not included given its absorption into the larger Unitary Authority area of West Cheshire and Chester. 14

Table 4.01: City UK Competitiveness Index 2010 (UK=100) Rank Locality 2010 Local Rank 2008 City Rank Change Change in (379) 2008 in Score City Rank 1 Guildford 120.4 17 121.2 1-0.8 0 2 St Albans 118.0 25 120.8 2-2.8 0 3 Winchester 116.6 29 117.7 3-1.1 0 4 Aberdeen City 115.9 31 113.7 6 2.3 2 5 Cambridge 115.9 32 115.3 4 0.6-1 6 Edinburgh 114.3 38 114.2 5 0.1-1 7 Oxford 110.2 54 104.8 9 5.3 2 8 Bristol 107.5 68 109.0 7-1.5-1 9 Chichester 105.6 78 108.0 8-2.4-1 10 Brighton and Hove 104.9 86 104.7 10 0.2 0 11 Norwich 102.2 111 99.4 16 2.8 5 12 Exeter 102.0 113 98.1 18 3.9 6 13 Manchester 100.4 127 104.6 11-4.2-2 14 Cardiff 100.2 130 100.5 13-0.4-1 15 Derby 99.4 143 99.1 17 0.3 2 16 York 99.0 145 101.0 12-2.0-4 17 Peterborough 97.6 159 98.1 19-0.4 2 18 Glasgow City 97.4 162 97.3 20 0.1 2 19 Leeds 97.2 164 99.5 15-2.3-4 20 Preston 97.2 165 96.9 21 0.3 1 21 Gloucester 96.3 176 99.6 14-3.3-7 22 Southampton 96.0 183 96.6 22-0.6 0 23 Portsmouth 95.6 188 95.3 24 0.3 1 24 Newcastle upon Tyne 94.9 195 94.3 30 0.6 6 25 Salford 93.5 214 95.1 25-1.6 0 26 Nottingham 93.5 216 93.9 28-0.4 2 27 Coventry 92.7 228 96.2 23-3.5-4 28 Newport 91.8 238 91.9 27-0.1-1 29 Sheffield 91.7 241 89.6 32 2.1 3 30 Dundee City 91.6 245 89.9 31 1.8 1 31 Lancaster 91.3 253 87.8 35 3.5 4 32 Birmingham 90.6 257 92.2 29-1.6-3 33 Leicester 90.3 263 94.6 26-4.3-7 34 Carlisle 88.5 283 88.5 34 0.0 0 35 Liverpool 87.1 298 87.8 36-0.6 1 36 Plymouth 87.0 300 85.7 39 1.3 3 37 Bradford 86.4 309 86.6 38-0.1 1 38 Swansea 86.2 310 84.8 40 1.3 2 39 Wakefield 85.4 324 89.0 33-3.6-6 40 Wolverhampton 85.3 327 87.3 37-2.0-3 41 Sunderland 84.2 334 82.1 41 2.1 0 42 Stoke-on-Trent 80.4 367 81.4 42-1.0 0 43 Kingston upon Hull 78.8 373 81.1 43-2.3 0 15

Considering the period of the Labour government s administration, the ranking of cities has remained relatively constant, although some cities have made some headway in improving their position as shown in Table 4.02. A Spearman rank correlation considers the correlation of the rankings of the Cities in 1997 and 2010. As expected a positive and significant result is found, with a coefficient of 0.931 (p-value 0.000) indicating a strong relationship between the rankings in 1997 and 2010. 4 Those cities which have improved their position relative to other cities over the last 13 years include Newport in Wales, which has gained eight places, followed by Glasgow and Peterborough. Although Liverpool is only ranked 35th out of the 41 cities considered in 2010, this is also a substantial improvement compared to 1997, when the city was ranked 40th. This reflects the steps made by Liverpool and the North West region in general over recent years in improving competitiveness. Table 4.02: Top 5 Most Improved Cities on UK Cities Competitiveness Index 1997-2010 Rank Locality 2010 1997 Rank in Change Change in Rank 1997 in Score 28 Newport 91.8 88.6 36 3.2 8 18 Glasgow City 97.4 93.8 24 3.6 6 17 Peterborough 97.6 94.0 23 3.6 6 30 Dundee City 91.6 89.1 35 2.5 5 35 Liverpool 87.1 83.8 40 3.4 5 Gloucester is the city which has the largest fall in competitiveness over the period of the Labour government. Birmingham and Wolverhampton in the West Midlands have also seen a decline in competitiveness during this period, perhaps reflecting the decline of industries such as the motor industry in the area. In all cases these cities have seen a fall in their UK Competitiveness Index score, with a worsening of their positions relative to the UK average as well as other urban areas. Table 4.03: Biggest Fallers on UK Cities Competitiveness Index 1997-2010 Rank Locality 2010 1997 Rank in Change Change in Rank 1997 in Score 21 Gloucester 96.3 103.6 10-7.2-11 32 Birmingham 90.6 94.1 22-3.4-10 20 Preston 97.2 102.4 12-5.2-8 40 Wolverhampton 85.3 89.3 33-4.1-7 33 Leicester 90.3 92.0 27-1.7-6 The top of the City UK Competitiveness Index has consistently been filled by smaller UK cities that represent the locations of the fast growing knowledge-intensive and high-technology clusters in the UK. However, the performance of the UK s largest cities is of considerable importance and interest with regard to UK prosperity, due to their prominent share of UK production. Table 4.04 contains the eight English Core Cities: Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham, and Sheffield, along with the Welsh capital, Cardiff, and the two large Scottish agglomerations, Edinburgh and Glasgow. 4. A coefficient of 1 would have been achieved if the rankings been identical at the start and end of the 13 year period. A coefficient of 0 would have represented no link between the starting and finishing City ranks. 16

In 2010 only four of the UK s largest cities achieve a UK Competitiveness Index score above the UK average. Topping the table is Edinburgh, which despite recent problems has been developing a strong presence in the financial sector. Bristol remains in second position, and Manchester in third (which is further evidence of the renaissance of the North West region in recent years). Cardiff is the fourth of the larger cities which achieves a level of competitiveness equivalent to the UK average or better. With Glasgow in fifth, the larger cities in Scotland and Wales make a strong showing, taking up three of the top five positions. Liverpool remains the least competitive of the UK s largest cities. Table 4.04: Extended Core City UK Competitiveness Index 2010 (UK=100) Rank City 2010 Local Rank 2008 City Rank Change Change in (379) 2008 in Score City Rank 1 Edinburgh 114.3 38 114.2 1 0.1 0 2 Bristol 107.5 68 109.0 2-1.5 0 3 Manchester 100.4 127 104.6 3-4.2 0 4 Cardiff 100.2 130 100.5 4-0.4 0 5 Glasgow City 97.4 162 97.3 6 0.1 1 6 Leeds 97.2 164 99.5 5-2.3-1 7 Newcastle upon Tyne 94.9 195 94.3 9 0.6 2 8 Nottingham 93.5 216 93.9 7-0.4-1 9 Sheffield 91.7 241 89.6 10 2.1 1 10 Birmingham 90.6 257 92.2 8-1.6-2 11 Liverpool 87.1 298 87.8 11-0.6 0 17

Chapter 5 - Local UK Competitiveness Index 2010 Rankings Table 5.01 presents the top ranked localities on the UK Competitiveness Index in 2010. The top five localities remain the same as in 2008 and 2006, although Islington and Hammersmith and Fulham switch places, so that they are now fourth and fifth respectively. 5 London boroughs now account for the top eight positions in the UK. Southwark in eleventh has also improved five places in the last year, further consolidating the capital s grip on the top positions in the table of most competitive localities. Mole Valley in ninth and Windsor and Maidenhead in tenth, both in the South East, are the most competitive areas outside of London. Big climbers in the top 25 localities over the last year are Waverley (South East) and South Cambridgeshire (East of England). As in previous years, London, the South East and the East of England account for all the localities in the top 25, with London and the South East dominating. Table 5.01: Top 25 Localities on the UK Competitiveness Index 2010 (UK=100) Rank Locality Region 2010 2009 Rank Change Change in (379) (379) in Score Rank 1 City of London London 603.9 613.1 1-9.2 0 2 Westminster London 192.6 192.3 2 0.2 0 3 Camden London 161.9 160.1 3 1.7 0 4 Islington London 141.9 140.6 5 1.3 1 5 Hammersmith and Fulham London 141.5 141.3 4 0.2-1 6 Tower Hamlets London 135.4 133.3 6 2.1 0 7 Kensington and Chelsea London 132.7 132.3 7 0.4 0 8 Wandsworth London 130.1 128.7 8 1.4 0 9 Mole Valley South East 126.6 124.6 10 2.0 1 10 Windsor and Maidenhead South East 125.9 126.8 9-0.8-1 11 Southwark London 125.8 123.0 16 2.8 5 12 South Bucks South East 124.5 124.2 12 0.4 0 13 Richmond upon Thames London 123.4 123.9 13-0.5 0 14 West Berkshire South East 123.1 123.2 14-0.1 0 15 Bracknell Forest South East 122.3 124.3 11-2.0-4 16 Wokingham South East 121.8 123.1 15-1.3-1 17 Guildford South East 120.4 122.0 17-1.6 0 18 Runnymede South East 120.2 119.8 20 0.5 2 19 Elmbridge South East 120.0 120.4 19-0.4 0 20 Surrey Heath South East 119.4 120.8 18-1.5-2 21 Lambeth London 119.3 118.6 23 0.8 2 22 Waverley South East 119.3 116.7 29 2.6 7 23 Reading South East 118.5 117.6 27 1.0 4 24 South Cambridgeshire East of England 118.3 115.4 32 2.9 8 25 St Albans East of England 118.0 118.0 25-0.1 0 Contrasting the localities at the top of the UK Competitiveness Index in 2010 with those in 1997 shows how many of the most competitive areas in 1997 have retained their position (Table 5.02). As in 2010, the City of London, City of Westminster, and Camden are the top three areas. Their scores indicate that they are perhaps not as far above the UK average currently as they were at the start of the Labour administration. 5. It is not possible to make direct comparisons with the rankings of localities in 2010 and 2008 for most regions due to the local government reorganisation, which has combined a number of districts independently reported in previous years. 18

Comparison of those localities at the top of the UK Competitiveness Index in 1997 and 2010 indicates an overall degree of stability. All but five of the localities in the top 25 in 1997 are still in the top 25 in 2010. 6 Of those localities dropping out of the top 25, Woking, Aberdeen and Winchester saw a small drop in competitiveness between 1997 and 2010, which meant that they now lie just outside the top 25 localities. However, in the case of Spelthorne and Barnet competitiveness fell further, and in both cases the areas are no longer in the top 50 areas (although both remain above the UK average). This does mean that whilst the top of the competiveness table appears relatively stable there is precedent for areas to experience considerable falls in a relatively short period of time. Similarly considering those localities that have entered the top 25 since 1997, Tower Hamlets and Wandsworth were both just outside the top 25 in 1997, and relatively large increases in their competitiveness has seen them enter the top ten localities. Southwark, South Cambridgeshire, and, in particular, Lambeth have climbed into the top 25 from much lower positions. Table 5.02: Top 25 Localities on the UK Competitiveness Index 1997 (UK=100) Rank Locality Region 1997 2010 Rank Change in 1997 2010 (379) Score (434) 1 City of London London 744.2 603.9 1-140.3 2 Westminster, City of London 215.8 192.6 2-23.2 3 Camden London 175.0 161.9 3-13.2 4 Islington London 141.2 141.9 4 0.7 5 Kensington and Chelsea London 139.7 132.7 7-7.0 6 Hammersmith and Fulham London 130.3 141.5 5 11.1 7 Windsor and Maidenhead South East 128.9 125.9 10-3.0 8 Richmond-upon-Thames London 128.1 123.4 13-4.6 9 Mole Valley South East 127.8 126.6 9-1.2 10 Surrey Heath South East 127.6 119.4 20-8.2 11 Elmbridge South East 125.4 120.0 19-5.4 12 South Buckinghamshire South East 125.0 124.5 12-0.5 13 St Albans Eastern 124.9 118.0 25-6.9 14 Bracknell Forest South East 124.7 122.3 15-2.4 15 Reading South East 123.4 118.5 23-4.9 16 Spelthorne South East 123.1 106.4 72-16.7 17 West Berkshire South East 123.0 123.1 14 0.0 18 Guildford South East 122.9 120.4 17-2.5 19 Runnymede South East 122.7 120.2 18-2.4 20 Wokingham South East 121.8 121.8 16 0.0 21 Woking South East 120.2 117.0 28-3.2 22 Waverley South East 120.2 119.3 22-0.9 23 Aberdeen City Scotland 120.1 115.9 31-4.1 24 Barnet London 120.1 109.6 58-10.5 25 Winchester South East 119.7 116.6 29-3.1 Rank Localities entering the Region 1997 2010 Rank 2010 Change in 1997 top 25 between 1997 (379) Score (434) and 2010 32 Tower Hamlets London 117.8 135.4 6 17.6 30 Wandsworth London 118.1 130.1 8 12.0 46 Southwark London 112.8 125.8 11 12.9 64 Lambeth London 110.1 119.3 21 9.3 41 South Cambridgeshire East of England 114.1 118.3 24 4.2 Note: Highlighted localities are those which have fallen out of the top 25 localities in terms of the UK Competitiveness Index between 1997 and 2010. 6. The changes in the local government organisation over the period has meant that not all areas are comparable between 1997 and 2010. This does not directly affect any of those localities in the top 25 either in 1997 or 2010, although when comparing rankings between the two years it is worth bearing in mind that some changes may in part reflect changes to other areas. 19

Table 5.03 presents those localities that have seen the biggest improvement in competitiveness over the last year. The biggest climber is West Somerset in the South West which climbed 65 places from 283rd to 218th place, followed by Newham in London (rising 57 places from 250th to 193rd) and Clackmannanshire (rising 55 places from 350th to 295th). Unlike in previous years there is less evidence of traditional industrial areas in the North of England improving their competitiveness. This may reflect the asymmetric impact that the recession has had upon different areas of the UK. One of the exceptions to this is Stockton-on-Tees which climbs 30 places from 286th to 256th. The improvement of the East of England in the Regional Competitiveness Index is reaffirmed here with the region accounting for the greatest number of improving localities, with 6 localities appearing in the top 25. Positively, those localities in the East of England displaying improvements are not just those surrounding the high-technology cluster in Cambridge, and near London, but also include localities such as King s Lynn and West Norfolk (rising 36 places from 326th to 290th), and Norwich (rising 27 places from 138th to 111th). Table 5.03: Top 25 Most Improved Localities on the UK Competitiveness Index 2009-2010 Rank Locality Region 2010 2009 Rank Change Change in (379) (379) in Score Rank 218 West Somerset South West 93.4 88.5 283 4.9 65 193 Newham London 95.0 91.3 250 3.7 57 295 Clackmannanshire Scotland 87.5 83.1 350 4.4 55 269 Gosport South East 89.7 86.0 313 3.8 44 115 Craven Yorkshire and the Humber 101.8 98.3 156 3.5 41 168 Maldon East of England 97.0 94.3 205 2.8 37 224 Chesterfield East Midlands 92.9 90.4 261 2.5 37 187 Havant South East 95.7 92.9 223 2.8 36 203 South Staffordshire West Midlands 94.4 91.8 239 2.6 36 211 West Devon South West 93.7 91.5 247 2.1 36 290 King`s Lynn and West Norfolk East of England 87.7 85.4 326 2.3 36 131 Redbridge London 100.1 97.9 166 2.2 35 196 Eastbourne South East 94.9 92.6 227 2.3 31 120 Epping Forest East of England 101.2 98.8 150 2.4 30 256 Stockton-on-Tees North East 90.6 88.4 286 2.2 30 217 Broadland East of England 93.5 91.6 246 1.9 29 154 Wychavon West Midlands 98.0 96.8 182 1.2 28 212 Mid Devon South West 93.7 91.7 240 1.9 28 111 Norwich East of England 102.2 99.5 138 2.7 27 161 Ryedale Yorkshire and the Humber 97.4 96.3 188 1.1 27 171 Enfield London 96.7 95.0 198 1.7 27 179 Christchurch South West 96.3 94.3 206 2.0 27 301 Waveney East of England 86.9 85.4 327 1.6 26 152 High Peak East Midlands 98.4 97.0 177 1.3 25 113 Exeter South West 102.0 99.7 137 2.4 24 20

Table 5.04 shows that in 2010 the four least competitive localities all lie in the South Wales Valleys area. 7 As in 2008, Blaenau Gwent is the UK s least competitive locality, followed by Merthyr Tydfil, Caerphilly and Rhondda, Cynon, Taff. In all four cases, there is little evidence that this will change in the future with the competitiveness scores worsening relative to the UK average for Blaenau Gwent and Rhondda, Cynon, Taff in the last year, and only improving marginally for Merthyr Tydfil and Caerphilly. Areas in the UK s traditional northern heartland and a smattering of seaside resorts make up the majority of the areas outside Wales ranked among the 25 least competitive regions. Although fewer localities from the North East appear in the bottom 25 localities in 2010, this should not be entirely attributed to the improvement in competitiveness seen by the North East as a whole, but in part reflects the combining of a number of less competitive localities with more competitive areas under local government reorganisation. Although the North West has seen considerable improvement in relative competitiveness as a region in recent years, it is clear that some areas are being left behind. Knowsley does not appear to have benefited from improvements in the competiveness of the neighbouring city of Liverpool, and is now the least competitive locality outside of Wales, with a considerable fall in competitiveness over the last year, leading to a drop of 13 places. Burnley has also seen a fall in relative competitiveness over the last year, dropping 18 places from 339th to 357th in 2010. This can be compared with relatively nearby Manchester which is the 3rd most competitive large city in the UK. Table 5.04: Bottom 25 Localities on the UK Competitiveness Index 2010 (UK=100) Rank Locality Region 2010 2009 Rank Change Change in (379) (379) in Score Rank 379 Blaenau Gwent Wales 70.2 70.9 379-0.6 0 378 Merthyr Tydfil Wales 75.3 74.9 378 0.3 0 377 Caerphilly Wales 75.9 75.7 377 0.2 0 376 Rhondda, Cynon, Taff Wales 76.9 78.3 374-1.4-2 375 Knowsley North West 76.9 81.4 362-4.4-13 374 South Tyneside North East 78.6 80.5 367-1.8-7 373 Kingston upon Hull, City of Yorkshire and the Humber 78.8 79.9 371-1.1-2 372 Blackpool North West 79.0 76.9 376 2.2 4 371 Sandwell West Midlands 79.1 80.2 370-1.1-1 370 Torfaen Wales 79.4 78.9 373 0.5 3 369 Hyndburn North West 79.8 77.3 375 2.5 6 368 Hartlepool North East 80.4 79.4 372 1.0 4 367 Stoke-on-Trent West Midlands 80.4 80.3 369 0.1 2 366 Torbay South West 80.7 82.3 357-1.6-9 365 Tendring East of England 80.7 80.4 368 0.4 3 364 Weymouth and Portland South West 80.9 80.7 366 0.2 2 363 Oldham North West 81.2 82.0 358-0.8-5 362 Barnsley Yorkshire and the Humber 81.2 81.1 364 0.1 2 361 Thanet South East 81.3 83.1 351-1.8-10 360 Walsall West Midlands 81.4 81.8 361-0.3 1 359 Redcar and Cleveland North East 81.5 83.1 349-1.6-10 358 Neath Port Talbot Wales 81.5 81.0 365 0.5 7 357 Burnley North West 81.6 84.4 339-2.8-18 356 Sefton North West 81.7 81.1 363 0.5 7 355 Doncaster Yorkshire and the Humber 81.8 81.9 360-0.1 5 7. Comparisons with previous years may be slightly misleading as a number of less competitive localities in the North East of England have been combined under the local government reorganisation with more competitive areas, so no longer appear at the bottom of the table in terms of the UK Competitiveness Index. 21

Table 5.05 shows localities which have seen the largest decline in competitiveness over the last year. Many of these localities are more rural in nature, as was found to be the case in 2008. Thus, while many of the cities have benefitted from urban renewal programmes, there have been fewer resources allocated to maintaining the competitiveness of more rural areas. The biggest faller is the Ribble Valley in the North West, which fell 62 places from 84th to 146th position, followed by Wyre, also in the North West (falling 58 places from 284th to 342nd), Oadby and Wigston in the East Midlands (falling 56 places from 219th to 275th), and Amber Valley also in the East Midlands (falling 50 places from 179th to 229th). Even localities in the South East, found to be most competitive UK region, appear in the list of regions displaying the greatest falls in relative competitiveness. Arun experiences the fifth largest fall - 49 places from 201st to 250th, and Rother also sees a fall from 209th to 248th - a drop of 39 places. Table 5.05: Biggest Fallers on the UK Competitiveness Index 2009-2010 Rank Locality Region 2010 2009 Rank Change Change in (379) (379) in Score Rank 146 Ribble Valley North West 98.9 105.7 84-6.8-62 342 Wyre North West 83.7 88.5 284-4.8-58 275 Oadby and Wigston East Midlands 89.5 93.3 219-3.8-56 229 Amber Valley East Midlands 92.6 96.9 179-4.2-50 250 Arun South East 91.4 95.0 201-3.6-49 208 Ipswich East of England 93.9 97.8 167-3.9-41 148 West Dorset South West 98.6 102.1 108-3.4-40 339 Castle Point East of England 83.9 86.7 299-2.9-40 191 Mid Suffolk East of England 95.4 98.7 152-3.3-39 248 Rother South East 91.5 93.9 209-2.4-39 202 Mendip South West 94.4 97.9 165-3.5-37 349 Cannock Chase West Midlands 82.5 86.0 312-3.5-37 147 Broxbourne East of England 98.8 101.8 112-3.0-35 246 East Lothian Scotland 91.6 93.7 212-2.1-34 190 Eden North West 95.4 98.3 157-2.8-33 288 East Devon South West 87.9 91.2 255-3.2-33 144 Ashford South East 99.3 101.7 113-2.4-31 206 South Derbyshire East Midlands 94.1 97.3 175-3.2-31 230 Redditch West Midlands 92.6 95.0 199-2.4-31 333 South Holland East Midlands 84.4 86.5 302-2.1-31 334 Sunderland North East 84.2 86.3 303-2.1-31 139 Malvern Hills West Midlands 99.8 102.0 109-2.2-30 303 Tamworth West Midlands 86.7 89.2 273-2.5-30 243 East Renfrewshire Scotland 91.6 93.7 214-2.0-29 321 Newcastle-under-Lyme West Midlands 85.6 87.1 293-1.5-28 22

Chapter 6 - UK Competitiveness Index 2010 and Population Density The Local UK Competitiveness Index 2010 details reported in the preceding chapter show that a large proportion of the UK s most competitive localities lie in the densely populated capital city of London. In 2010 - as well as 2008 - there is some evidence that rural and less densely populated areas may be losing competitiveness relative to other localities, and falling down the UK Competitiveness Index. However, chapter 4 indicated that when concentrating on the UK s biggest cities outside of London, only Edinburgh and Bristol are found in the top 100 of all UK localities. This means that the relationship between the UK Competitiveness Index and population density is not simple. Figure 6.01 suggests a positive relationship between population density and a locality s UK Competitiveness Index score in 2010. 8 Figure 6.01: UK Competitiveness Index and Population Density The correlation statistics presented in Table 6.01 confirm the presence of a positive relationship between UK Competitiveness Index score and population density. The relationship is much stronger when using the Pearson correlation statistics which consider the relationship between the UK Competitiveness Index score and population density, and is therefore heavily influenced by the unusually high density and highly competitive London boroughs. The Spearman rank correlation statistics, which consider the ranking of regions by UK Competitiveness Index score and population density, still find a positive correlation, but this is only significant at the 10 per cent level. 8. The City of London is excluded from the figures in Chapters 6, 7 and 8 due to its atypical property of largely lacking a residential population and its outlying score in the UK Competitiveness Index. 23

Table 6.01: Correlation of UK Competitiveness Index and Population Density Including the City of London Excluding the City of London Pearson Correlation Coefficient 0.208 0.405 p-value (0.000) (0.000) N 379 378 Spearman Rank Correlation Coefficient 0.096 0.091 p-value (0.061) (0.076) N 379 378 The average UK Competitiveness Index scores and ranks in 2010 for rural and urban areas confirm that no simple relationship exists between population density and competitiveness. 9 For instance, removing the City of London reduces the average score for urban areas to a level much closer to the rural localities. None of the differences in the average scores or ranks are statistically significant in 2010. Considering the changes in UK Competitiveness Index score and rank over the last year, there is further evidence that rural areas are losing competitiveness relative to urban areas, with the average change reflecting a reduction in competitiveness index scores for rural areas. On average, rural areas have dropped one place in the table over the last year. When the City of London is excluded, the difference between rural and urban area average change is weakly significant. This slightly weaker performance by rural areas is also found when considering the proportion of localities improving their competitiveness score. In total, 50.3 per cent of urban localities improved their competitiveness Index score between 2009 and 2010, but only 47.3 per cent of rural localities display an improvement, although this is not statistically significant. Table 6.02: Average UK Competitiveness Index 2010 Score and Rank in Urban and Rural Areas Including the City of London Excluding the City of London Rural Urban Rural Urban Average UKCI 2010 score 97.2 100.1 97.2 97.5 Average UKCI 2010 rank 183.4 196.3 183.4 197.3 Average change in UKCI score 2009-10 -0.23 0.03-0.23* 0.08 Average change in UKCI rank 2009-10 -0.94 0.91-0.94 0.91 Notes: * Significantly different from urban average change at 10% level (t = 1.756, p-value = 0.080) 9. The definition of rural and urban areas used here is based upon the Department for Environment Food and Rural Affairs (DEFRA) six-fold classification, where rural areas have more than a quarter of their populations living in rural settlements or larger market towns. (DEFRA, 2005. Productivity in Rural England, London: Department for Environment and Rural Affairs). 24

Chapter 7 UK Competitiveness Index 2010, Sustainability and Wellbeing Economics tells us that market failures occur where externalities are present. One such externality is the production of pollution and other damage to the environment. These additional costs to society are not taken into account in the private costs and benefits of producers and consumers. This can lead to over production which is not sustainable. Equally not all rewards or costs felt by a population due to improved competitiveness, in terms of their quality of life, are captured by financial measures. This has led to the development of sustainable development strategies in many countries, including the UK, which consider the need for all people throughout the world to enjoy a better quality of life, but without compromising that of future generations. Figure 7.01 below indicates the relationship between competitiveness and one of the measures associated with the UK s 20 key indicators of stability - the release of greenhouse gases, in particular the carbon dioxide emissions per capita. 10 It is interesting to note that no clear relationship exists between carbon dioxide emissions per capita and position in the UK Competitiveness Index. Localities displaying below average competitiveness scores appear to display both high and low levels of emissions per capita. More competitive regions appear to more frequently have lower emissions levels per capita, although there are number of outliers representing the most competitive localities which also have high emissions per capita. Figure 7.01: UK Competitiveness Index 2010 and CO 2 emissions per capita The corrleation statistics in Table 7.01 initially indicate that there is a positive relationship between carbon dioxide emissions and the UK Competitiveness Index when measured through the Pearson correlation coefficient, but not the ordinal Spearman rank correlation which considers the ranking of localities under each measure rather than the actual value obtained. This suggests that the relationship is driven by outliers in particular the City of London, which distorts the figures due to its neglible population leading to extreme values of both carbon emissions per capita and also its position as by far the most competitive locality on the UK Competitiveness Index. Exclusion of the City of London results in both the Pearson and Spearman rank correlation coefficients becoming insignificant. 10. Data drawn from AEA (2009) Local and Regional CO2 Emissions Estimates for 2005-2007, Didcot: AEA. 25

Table 7.01: Correlation of UK Competitivness Index with Carbon Dioxide Emissions per capita Including the City of London Excluding the City of London Pearson Correlation Coefficient 0.885 0.065 p-value (0.000) (0.205) N 379 378 Spearman Rank Correlation Coefficient 0.044 0.036 p-value (0.393) (0.481) N 379 378 This confirms that there are a number of paths to competitiveness, and that lower carbon emissions intensity does not necessarily limit a locality s position in the UK Competitiveness Index. Equally some regions display greater carbon emissions intensity and also score relatively poorly on the UK Competitiveness Index. This means that localities in the UK could be split into four groups along the two dimensions of carbon emissions intensity and competitiveness as shown in Figure 7.02. Whilst it would be most desirable to operate within the bottom right quadrant where regions are competitive, and also display greater sustainability, this is not necessarily possible as competition between different localities means it is unlikely that all localities can follow the same routes to improved competitiveness. The upper left quadrant is the least desirable group for a locality to be present in. Figure 7.02: Typology of Localities by CO 2 Emissions and the UK Competitiveness Index UK Competitiveness Index Below Average Above Average ( 100) (>100) CO 2 Emissions Above Average Low Competitiveness High Competitiveness Per Capita (>7.01) and High Carbon and High Carbon Intensity Intensity Below Average Low Competitiveness High Competitiveness ( 7.01) and Low Carbon Intensity and Low Carbon Intensity Table 7.02 shows the proportion of each region s localities falling into each dimension using the above typology. Those regions at the top of the UK Competitiveness Index have a greater proportion of competitive-lower carbon emissions intensity localities. Interestingly, however, London has a large proportion of competitive-high carbon emissions localities. The South East, which knocked London off the top spot of the Regional UK Competitiveness Index this year, has a much greater proportion of localities with above average scores on the UK Competitiveness Index but below average carbon dioxide emissions per capita. The East of England, which has also shown an improvement relative to the UK average, has the second highest proportion of its localities in this more desirable group. Scotland, Wales and the North East are the three regions with the greatest proportion of their localities falling into the least desirable group of less competitive and more carbon intensive areas. In each case well over half their localities fall into this group; legacies of specialisation in heavy industry which has in many cases become unable to compete with international competition. While these regions are likely to desire more of their localities to move out of this group, it may not be in their interest to target the more competitive-less carbon intensive group, as this is not necessarily where the region s competitive advantage lies. 26

Table 7.02: Distribution of Regions Localities by CO 2 Emissions per capita and the UK Competitiveness Index Less Less Competitive Competitive Competitive Competitive - Carbon - Carbon - Carbon - Carbon Number of Region Non-intensive Intensive Non-intensive Intensive Localities South East 25.8% 39.4% 27.3% 7.6% 66 East of England 18.8% 29.2% 27.1% 25.0% 48 London 18.2% 60.6% 21.2% 0.0% 33 West Midlands 16.7% 3.3% 46.7% 33.3% 30 East Midlands 15.0% 5.0% 37.5% 42.5% 40 Yorkshire & Humber 14.3% 0.0% 52.4% 33.3% 21 South West 13.9% 16.7% 36.1% 33.3% 36 North West 12.8% 5.1% 51.3% 30.8% 39 Scotland 12.5% 3.1% 21.9% 62.5% 32 Wales 4.5% 0.0% 36.4% 59.1% 22 North East 0.0% 0.0% 41.7% 58.3% 12 UK 16.1% 19.0% 34.6% 30.3% 379 The UK Competitiveness Index accounts for quality of life through its outcomes factors. This means that short-term gains in productivity driven by reducing labour inputs, which is likely to only increase a locality s ability to compete over a limited period, are accounted for. However, there are other elements of quality of life that may not be completely captured by income and employment based measures. One such factor is the length of time worked by individuals. Longer working hours may increase the productivity of a locality in terms of output per worker, but the increased income may be offset by the disutility of these longer working hours. Figure 7.03 shows that there is a link between hours worked by men and a locality s competitiveness. 11 A line of best fit indicates that there is evidence that those localities with higher competitiveness scores are also those where men on average work longer hours. Figure 7.03: UK Competitiveness Index 2010 and Average Weekly Hours Worked by Men 11. Data on hours worked is drawn from the UK census in 2001. 27

Figure 7.04 shows the distribution of localities according to their UK Competitiveness Index score and the average number of hours worked in a week by women. In contrast to Figure 7.03 which showed the relationship with male working hours, there is a clear positive relationship between competitiveness and the average number of hours worked by women. Although this might be in part influenced by a relatively small number of more competitive localities, the line of best fit in this case still explains over 40 per cent of the variation. The stronger apparent correlation between average hours worked by women could be due to a number of factors, some cultural and others more demand driven, especially the need for greater participation in the workforce within competitive regions. Alternatively, the relationship could run in the other direction with longer female working hours representing a greater use of resource i.e. human capital - allowing for the locality to climb to a higher position on the UK Competitiveness Index. However, these longer working hours for women whilst leading to higher income levels may not necessarily increase the overall quality of life for those living in the locality. Figure 7.04: UK Competitiveness Index 2010 and Average Weekly Hours Worked by Women Table 7.03 presents the correlation coefficients between male and female working hours and the local competitiveness scores. Interestingly for both male and female working hours a significiant relationship is found between the length of working hours and the UK Competitiveness Index, both when considered using the Pearson correlation coefficients and the Spearman rank correlation coefficients. As Figures 7.03 and 7.04 suggest, the relationship is much stronger for women s working hours. 28

Table 7.03: Correlation of UK Competitivness Index with Average Weekly Hours Worked Including the City of London Excluding the City of London Male Average Weekly Hours Pearson Correlation Coefficient 0.193 0.145 p-value (0.000) (0.005) N 379 378 Female Average Weekly Hours Pearson Correlation Coefficient 0.568 0.640 p-value (0.000) (0.000) N 379 378 Male Average Weekly Hours Spearman Rank Correlation Coefficient 0.177 0.170 p-value (0.001) (0.001) N 379 378 Female Average Weekly Hours Spearman Rank Correlation Coefficient 0.456 0.452 p-value (0.000) (0.000) N 379 378 If there are hidden costs to achieving higher levels of competitiveness, in terms of the stress created by working longer hours, it might be that this results in poorer health. However, higher levels of competitiveness and associated higher levels of income, may also have positive influences on health through a variety of different mechanisms. Figure 7.05 shows that there is generally a negative correlation between a locality s UK Competitiveness Index score and the proportion of the population reporting themselves to be in poor health. 12 This may also reflect the greater proportion of population in less competitive localities reporting poor health due to the heavy industries they previously worked in. However, the relationship appears to be non-linear with the reduction in poor health slowing at higher levels of competitiveness score. This means a curved line of best fit explains a much greater percentage of variation than a straight line of best fit, and whilst it may be stretching the case to predict that poor health will rise again beyond a threshold level of competitiveness, it does seem to reach a point where additional benefits are minimal. Figure 7.05: UK Competitiveness Index 2010 and the Proportion of Population in Poor Health 12. Data on general health is drawn from the UK census of 2001. 29

Table 7.04 reports correlation coefficients between the proportion of the population reporting poor health and the UK Competitiveness Index 2010. As Figure 7.05 showed the primary relationship is negative. Localities with higher competitiveness Index scores are also likely to display a lower proportion of the population with poor health. All correlation coefficients are statistically significant. Table 7.04: Correlation of UK Competitiveness Index 2010 with Proportion of Population in Poor Health Including the City of London Excluding the City of London Pearson Correlation Coefficient -0.313-0.625 p-value (0.000) (0.000) N 379 378 Spearman Rank Correlation Coefficient -0.772-0.772 p-value (0.000) (0.000) N 379 378 Table 7.05 reports a regression of the measure of the population of a locality with poor health on the UK Competitiveness Index score and the UK Competitiveness Index score squared. This allows for a non-linear relationship suggested in Figure 7.05 to be accounted for. Both the competitiveness score and score squared are significant indicating the presence of a non-linear relationship. The negative coefficient on the UK Competitiveness Index term and the positive coefficient on the squared term are consistent with a negative relationship, which decreases in strength as the competitiveness Index score rises, so theoretically at some point the relationship would become positive again. Whether localities could ever reach this point is unclear. Table 7.05: Regression of Proportion of Population with Poor Health on UK Competitiveness Index 2010 Coefficient t-statistic p-value Constant 0.44673 22.700 (0.000) UKCI -0.00584-16.255 (0.000) UKCI 2 0.00002 13.478 (0.000) Adjusted R 2 0.588 A ranking of areas in the UK to provide an indication of the level of happiness in the area has been developed by Ballas and Tranmer. 13 The measure is developed from the British Household Panel Survey using items covering factors such as confidence, stress and the extent to which people enjoy life. It is interesting to compare these rankings where possible with the results of the UK Competitiveness Index. 14 The inclusion of the outcome factor in the UKCI is intended to represent the need for increases in productivity not to be at the expense of living standards. However, the outcome measures relate to income and employment, and do not account for other influences on wellbeing. Table 7.06 shows that of those living in cities, respondents in Manchester displayed the highest level of happiness. Manchester also performed relatively strongly on the City UK Competitiveness Index ranking 13th out of 43. However, it does not appear that there is a strong link between happiness and competitiveness, as the next happiest city is Nottingham, which had a city ranking of 26th in the City UK Competitiveness Index. This lack of a strong link is confirmed by Bradford being the third happiest city, but in terms of competitiveness only six cities score lower on the UK Competitiveness Index in 2010. Spearman rank correlation coefficients confirm the absence of a statistically significant link between UK Competitiveness Index ranking and happiness ranking (coefficient -0.081, p-value 0.633). 13. Ballas,D. 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. 14. A number of local authority districts are merged in the happiness index so comparisons cannot be carried out between all localities. Instead comparisons are made between UK cities, as even where areas have been merged the city itself will dominate the results and the rankings are unlikely to be affected greatly. 30

Table 7.06: City UK Competitiveness Index and Happiness Index Happiness Happiness Rank UKCI 2010 UKCI 2010 City Rank City (273) City Rank Rank (379) 1 Manchester 2 13 127 2 Nottingham 28 26 216 3 Bradford 30 37 309 4 Chichester 34 9 78 5 Plymouth 40 36 300 6 Stoke on Trent 41 42 367 7 Winchester 42 3 29 8 Brighton and Hove 48 10 86 9 Carlisle 54 34 283 10 Portsmouth 63 23 188 11 Newport 73 28 238 12 Lancaster 81 31 253 13 St Albans 86 2 25 14 Birmingham 97 32 257 15 Newcastle-upon-Tyne 102 24 195 16 Exeter 106 12 113 17 Preston 107 20 165 18 Cambridge 118 5 32 19 Bristol 137 8 68 20 Salford 142 25 214 21 Norwich 146 11 111 22 Kingston upon Hull 156 43 373 23 Sunderland 161 41 334 24 Peterborough 172 17 159 25 York 178 16 145 26 Oxford 195 7 54 27 Guildford 202 1 17 28 Derby City 203 15 143 29 Aberdeen City 206 4 31 30 Liverpool 230 35 298 31 Wolverhampton 233 40 327 32 Coventry 235 27 228 33 Leicester City 238 33 263 34 Wakefield 239 39 324 35 Leeds 240 19 164 36 Sheffield 241 29 241 37 Gloucester 242 21 176 38 Southampton 248 22 183 39 Cardiff 256 14 130 40 Edinburgh 262 6 38 41 Dundee City 263 30 245 42 Glasgow City 268 18 162 43 Swansea 269 38 310 31

Chapter 8 UK Competitiveness Index 2010 and Creativity One perspective on the competitiveness of a locality in the modern world is the link to the creative skills and abilities of the people residing in the area. It is these creative individuals who often generate and maintain the competitive edge of a locality. Therefore, it becomes important for localities to attract and keep these creative individuals. In order to do this it is necessary to provide the amenities individuals desire to make the locality an attractive place to live. Under this hypothesis, we might expect a relationship between a locality s competitiveness and the proportion of the workforce employed within creative occupations, as well as those occupations associated with developing a culturally attractive environment to live in. Figure 8.01 presents the relationship between local competitiveness and the concentration of workers employed as science, technology, education and research professionals. 15 There is a clear positive relationship between the proportion of employment in these occupations and a locality s competitiveness score. There are some outliers such as Cambridge and Oxford which generate much greater location quotients, 2.90 and 2.31 respectively, due to their dominant university employers. Both are ranked highly in the UK Competitiveness Index, with Cambridge in 32nd position and Oxford 54th, but neither has broken into the top 25. Equally the City of Westminster and Camden rank second and third in the UK Competitiveness Index, but have location quotients of 1.25 and 1.01 respectively; these indicate the presence of alternative routes to competitiveness alongside science and technology. Figure 8.01: UK Competitiveness Index 2010 and Employment of Science, Technology, Education and Research Professionals 15. Science, technology, education and research professions are broadly captured using the Standard Occupational Classification 2000 (SOC2000) sub-major groups 21 and 23. The concentration of workers in these groups is measured as the proportion of workers in a locality employed in the relevant occupations divided by the proportion of workers in the UK as a whole employed in the same industries. The data is drawn from the 2001 census as this is still likely to be the most reliable source of information of this type at this level of disaggregation. The City of London is excluded from Figure 7.01 given its outlying position on the UK Competitiveness Index. 32

As noted above, in order to attract and retain creative workers it may be necessary to create a vibrant and attractive environment to live in, and as such more people may be employed within occupations associated with entertainment. Figure 8.02 below presents the concentration of employees within entertainment occupations, such as those associated with culture, media and sport compared with overall competitiveness. 16 Those localities with higher levels of employment within the entertainment occupations are found to have higher scores for competitiveness, consistent with the development of attractive environments to retain creative workers. The line of best fit is found to explain over half of the variation. Figure 8.02: UK Competitiveness Index 2010 and Employment within the Entertainment Occupations Table 8.01 presents the Pearson correlation coefficients between local competitiveness and the location quotients for science, technology, teaching and research occupations, entertainment occupations, as well as those employed within the associate professional occupations of science and technology. Results are presented including the outlier of the City of London and also with this non-residential locality excluded. To better control for outliers Spearman rank correlations are also presented to reflect the correlation between the ordinal ranks rather than actual competitiveness scores and occupational locational quotients. A clear positive relationship is found between the concentration of employees in the science, technology and research occupations and competitiveness, confirming the relationship that was graphically shown in Figure 8.01. Similarly significant positive relationships are found between the concentration of the workforce in entertainment occupations and a locality s competitiveness. In both cases the Pearson correlation coefficients indicating a positive relationship are stronger when the outlier of the City of London is excluded. 16. Employment within entertainment occupations is defined as those employed within SOC2000 sub-major group 34. Data again is from the 2001 census. The outlying locality of the City of London is excluded from the figure to avoid the distortion caused by its extreme UK Competitiveness Index score. 33

A third group of employees included in the analysis are the associated professionals linked to the science and technology. The Pearson correlation coefficient is negative and significant when the City of London is included in the sample, but this significance disappears when this locality is excluded. The lack of a positive relationship does appear to indicate that it is the core creative professionals that are most important to achieving competitiveness. Table 8.01: Correlation of UK Competitivness Index 2010 with Occupational Location Quotients Including the City of London Excluding the City of London Science, Technology Pearson Correlation 0.328 0.621 and Research Professionals Coefficient p-value (0.000) (0.000) N 379 378 Associated Professionals Pearson Correlation -0.131-0.058 Science and Technical Coefficient Occupations p-value (0.011) (0.263) N 379 378 Entertainment Occupations Pearson Correlation 0.490 0.717 Coefficient p-value (0.000) (0.000) N 379 378 Science, Technology Spearman Rank 0.765 0.764 and Research Professionals p-value (0.000) (0.000) N 379 378 Associated Professionals Science Spearman Rank 0.028 0.036 and Technical Occupations p-value (0.592) (0.489) N 379 378 Entertainment Occupations Spearman Rank 0.750 0.748 p-value (0.000) (0.000) N 379 378 34

Chapter 9 - Concluding Remarks This report presents a barometer of the current and changing fortunes in the competitiveness of the UK s regional and local economies. It highlights a number of important patterns: For the first time London is no longer the most competitive UK region. Whilst this may be reversed as the financial industry recovers, it does appear to be part of a longer term pattern with regions such as the South East and East of England displaying growing competitiveness and expertise in a variety of industries. Although the competitive dominance of the big three regions may not lessen there are some signs of a greater spread of improved competitiveness outside the capital. Many of the UK s cities are performing strongly, ranking highly in the City UK Competitiveness Index even when the region in which they are located performs less well, with examples including Cardiff in Wales and both Edinburgh and Glasgow in Scotland. Where particular localities are performing strongly in lagging regions there is little evidence that neighbouring localities are benefitting from spillovers. An example of this can be found in Wales, with the strong performance of Cardiff, and the improvement of Newport, contrasting with the performance of the neighbouring localities of: Rhondda, Cynon, Taff; Caerphilly; and Torfaen, all firmly entrenched at the bottom of the UK Competitiveness Index. Similarly rural areas have in many cases failed to improve their position. Indeed, overtime efforts to boost regional competitiveness may result in greater intra-regional disparities. If the pattern of increasing competitiveness in the South East and East of England continues, infrastructure upgrades will be required to ensure that these regions are able to fulfil their potential. This will mean that the distribution of resources between regions will have to be carefully considered. In particular, it will be important to ensure that the benefits of those large infrastructure projects designed to maintain London s global competitiveness are weighed up against alternative projects in other regions, which may yield a greater net benefit to the UK. It is important to reconsider those policies aimed at uncompetitive regions. While many large urban areas have improved their competitiveness considerably, there is little evidence that this is benefiting these regions as a whole. It may be that too much hope is being pinned on the existence of halo effects where the benefits of urban renewal flows outwards to the surrounding areas. If this is the case, it is imperative that initiatives are formulated to boost the competitiveness of all localities in less competitive regions, ranging from smaller urban areas through to more agricultural rural areas. Finally, the analysis of the relationship between competitiveness and carbon emission intensity indicates that there are a number of paths to competitiveness. Although some routes may be more desirable than others, this is not to say that all localities should adopt the same route. Rather they need to consider those that are most appropriate given the locality s characteristics and resources, but still bear in mind the wide range of outcomes these choices entail. 35

Appendix Locality Population 2008 Region Amber Valley 121,100 East Midlands Ashfield 116,500 East Midlands Bassetlaw 112,200 East Midlands Blaby 93,400 East Midlands Bolsover 74,300 East Midlands Boston 58,300 East Midlands Broxtowe 112,000 East Midlands Charnwood 167,100 East Midlands Chesterfield 100,800 East Midlands Corby 55,800 East Midlands Daventry 79,700 East Midlands Derby City 239,200 East Midlands Derbyshire Dales 70,700 East Midlands East Lindsey 141,000 East Midlands East Northamptonshire 86,200 East Midlands Erewash 111,300 East Midlands Gedling 112,100 East Midlands Harborough 82,800 East Midlands High Peak 93,200 East Midlands Hinckley and Bosworth 105,200 East Midlands Kettering 90,700 East Midlands Leicester City 294,700 East Midlands Lincoln 88,400 East Midlands Mansfield 100,600 East Midlands Melton 49,300 East Midlands Newark and Sherwood 113,300 East Midlands North East Derbyshire 98,200 East Midlands North Kesteven 106,100 East Midlands North West Leicestershire 90,800 East Midlands Northampton 205,200 East Midlands Nottingham 292,400 East Midlands Oadby and Wigston 57,200 East Midlands Rushcliffe 109,800 East Midlands Rutland 39,200 East Midlands South Derbyshire 92,700 East Midlands South Holland 83,400 East Midlands South Kesteven 132,000 East Midlands South Northamptonshire 91,000 East Midlands Wellingborough 76,400 East Midlands West Lindsey 88,900 East Midlands Babergh 87,000 East of England Basildon 172,600 East of England Bedford 155,700 East of England Braintree 142,100 East of England Breckland 131,800 East of England Brentwood 73,200 East of England Broadland 123,300 East of England Broxbourne 90,100 East of England Cambridge 122,800 East of England 36

Castle Point 89,800 East of England Central Bedfordshire 255,000 East of England Chelmsford 167,100 East of England Colchester 181,000 East of England Dacorum 139,600 East of England East Cambridgeshire 82,300 East of England East Hertfordshire 135,500 East of England Epping Forest 123,900 East of England Fenland 91,800 East of England Forest Heath 64,700 East of England Great Yarmouth 94,400 East of England Harlow 79,000 East of England Hertsmere 98,700 East of England Huntingdonshire 168,900 East of England Ipswich 122,300 East of England King's Lynn and West Norfolk 144,800 East of England Luton 191,800 East of England Maldon 63,100 East of England Mid Suffolk 94,700 East of England North Hertfordshire 123,800 East of England North Norfolk 101,500 East of England Norwich 135,800 East of England Peterborough 164,000 East of England Rochford 83,200 East of England South Cambridgeshire 139,300 East of England South Norfolk 119,200 East of England Southend-on-Sea 164,300 East of England St Albans 133,700 East of England St. Edmundsbury 103,700 East of England Stevenage 80,000 East of England Suffolk Coastal 125,600 East of England Tendring 147,600 East of England Three Rivers 87,700 East of England Thurrock 151,600 East of England Uttlesford 73,700 East of England Watford 81,000 East of England Waveney 117,700 East of England Welwyn Hatfield 108,300 East of England Barking and Dagenham 168,900 London Barnet 331,500 London Bexley 223,300 London Brent 270,600 London Bromley 302,600 London Camden 235,700 London City of London 7,900 London Croydon 341,800 London Ealing 309,000 London Enfield 287,600 London Greenwich 222,900 London Hackney 212,200 London Hammersmith and Fulham 172,200 London 37

Haringey 226,200 London Harrow 216,200 London Havering 230,100 London Hillingdon 253,200 London Hounslow 222,600 London Islington 190,900 London Kensington and Chelsea 180,300 London Kingston upon Thames 160,100 London Lambeth 274,500 London Lewisham 261,600 London Merton 201,400 London Newham 249,500 London Redbridge 257,600 London Richmond upon Thames 180,100 London Southwark 278,000 London Sutton 187,600 London Tower Hamlets 220,500 London Waltham Forest 223,200 London Wandsworth 284,000 London Westminster 236,000 London County Durham 508,500 North East Darlington 100,500 North East Gateshead 190,600 North East Hartlepool 91,700 North East Middlesbrough 139,000 North East Newcastle upon Tyne 273,600 North East North Tyneside 197,300 North East Northumberland 311,000 North East Redcar and Cleveland 139,500 North East South Tyneside 151,600 North East Stockton-on-Tees 191,900 North East Sunderland 280,300 North East Allerdale 94,500 North West Barrow-in-Furness 71,800 North West Blackburn with Darwen 140,700 North West Blackpool 141,900 North West Bolton 262,800 North West Burnley 87,300 North West Bury 183,100 North West Carlisle 103,700 North West Cheshire East 361,500 North West Cheshire West and Chester 328,600 North West Chorley 104,800 North West Copeland 70,300 North West Eden 51,900 North West Fylde 76,500 North West Halton 119,800 North West Hyndburn 81,600 North West Knowsley 150,800 North West Lancaster 143,700 North West Liverpool 434,900 North West Manchester 464,200 North West Oldham 219,700 North West Pendle 89,900 North West Preston 132,000 North West 38

Ribble Valley 58,500 North West Rochdale 206,300 North West Rossendale 67,300 North West Salford 221,300 North West Sefton 275,100 North West South Lakeland 104,400 North West South Ribble 107,200 North West St. Helens 177,500 North West Stockport 281,000 North West Tameside 215,500 North West Trafford 212,800 North West Warrington 196,200 North West West Lancashire 109,400 North West Wigan 306,800 North West Wirral 309,500 North West Wyre 110,900 North West Aberdeen City 210,400 Scotland Aberdeenshire 241,500 Scotland Angus 110,300 Scotland Argyll & Bute 90,500 Scotland Clackmannanshire 50,500 Scotland Dumfries & Galloway 148,600 Scotland Dundee City 142,500 Scotland East Ayrshire 119,900 Scotland East Dunbartonshire 104,700 Scotland East Lothian 96,100 Scotland East Renfrewshire 89,200 Scotland Edinburgh, City of 471,700 Scotland Eilean Siar 26,200 Scotland Falkirk 151,600 Scotland Fife 361,900 Scotland Glasgow City 584,200 Scotland Highland 219,400 Scotland Inverclyde 80,800 Scotland Midlothian 80,600 Scotland Moray 87,800 Scotland North Ayrshire 135,900 Scotland North Lanarkshire 325,500 Scotland Orkney Islands 19,900 Scotland Perth & Kinross 144,200 Scotland Renfrewshire 169,800 Scotland Scottish Borders 112,400 Scotland Shetland Islands 22,000 Scotland South Ayrshire 111,700 Scotland South Lanarkshire 310,100 Scotland Stirling 88,400 Scotland West Dunbartonshire 90,900 Scotland West Lothian 169,500 Scotland Adur 60,700 South East Arun 146,600 South East Ashford 113,500 South East Aylesbury Vale 176,000 South East Basingstoke and Deane 161,700 South East Bracknell Forest 114,700 South East Brighton and Hove 256,600 South East 39

Canterbury 149,700 South East Cherwell 138,200 South East Chichester 110,500 South East Chiltern 90,900 South East Crawley 101,300 South East Dartford 92,000 South East Dover 106,900 South East East Hampshire 111,700 South East Eastbourne 96,100 South East Eastleigh 121,000 South East Elmbridge 132,400 South East Epsom and Ewell 72,400 South East Fareham 110,300 South East Gosport 80,000 South East Gravesham 98,000 South East Guildford 135,700 South East Hart 90,600 South East Hastings 86,400 South East Havant 117,600 South East Horsham 130,700 South East Isle of Wight 140,200 South East Lewes 95,200 South East Maidstone 145,400 South East Medway 253,500 South East Mid Sussex 131,600 South East Milton Keynes 232,200 South East Mole Valley 82,000 South East New Forest 175,400 South East Oxford 153,900 South East Portsmouth 200,000 South East Reading 145,700 South East Reigate and Banstead 134,800 South East Rother 88,800 South East Runnymede 83,400 South East Rushmoor 89,600 South East Sevenoaks 114,700 South East Shepway 100,100 South East Slough 121,200 South East South Buckinghamshire 64,800 South East South Oxfordshire 129,100 South East Southampton 234,600 South East Spelthorne 91,200 South East Surrey Heath 83,400 South East Swale 131,900 South East Tandridge 83,500 South East Test Valley 115,400 South East Thanet 129,900 South East Tonbridge and Malling 117,100 South East Tunbridge Wells 107,400 South East Vale of White Horse 116,900 South East Waverley 118,700 South East Wealden 143,300 South East West Berkshire 152,800 South East West Oxfordshire 101,600 South East Winchester 112,700 South East 40

Windsor and Maidenhead 142,800 South East Woking 92,200 South East Wokingham 159,100 South East Worthing 100,200 South East Wycombe 161,500 South East Bath and North East Somerset 180,300 South West Bournemouth 163,900 South West Bristol 421,300 South West Cheltenham 112,000 South West Christchurch 45,800 South West Cornwall 532,200 South West Cotswold 83,500 South West East Devon 132,700 South West East Dorset 85,900 South West Exeter 123,500 South West Forest of Dean 81,900 South West Gloucester 115,300 South West Isles of Scilly 2,100 South West Mendip 110,100 South West Mid Devon 76,700 South West North Devon 92,300 South West North Dorset 67,900 South West North Somerset 206,800 South West Plymouth 252,800 South West Poole 138,800 South West Purbeck 46,000 South West Sedgemoor 112,800 South West South Gloucestershire 257,700 South West South Hams 83,500 South West South Somerset 158,700 South West Stroud 110,700 South West Swindon 192,900 South West Taunton Deane 108,700 South West Teignbridge 127,600 South West Tewkesbury 79,100 South West Torbay 134,000 South West Torridge 65,600 South West West Devon 52,900 South West West Dorset 97,200 South West West Somerset 35,500 South West Weymouth and Portland 65,000 South West Wiltshire 455,500 South West Anglesey 69,000 Wales Blaenau Gwent 69,100 Wales Bridgend 134,800 Wales Caerphilly 172,400 Wales Cardiff 324,800 Wales Carmarthenshire 180,500 Wales Ceredigion 78,000 Wales Conwy 112,000 Wales Denbighshire 97,600 Wales Flintshire 151,000 Wales Gwynedd 118,200 Wales Merthyr Tydfil 55,700 Wales Monmouthshire 88,400 Wales 41

Neath Port Talbot 137,600 Wales Newport 140,700 Wales Pembrokeshire 118,800 Wales Powys 132,600 Wales Rhondda, Cynon, Taff 234,100 Wales Swansea 229,100 Wales Torfaen 91,100 Wales Vale of Glamorgan 124,900 Wales Wrexham 132,900 Wales Birmingham 1,016,800 West Midlands Bromsgrove 92,800 West Midlands Cannock Chase 94,800 West Midlands Coventry 309,800 West Midlands Dudley 306,500 West Midlands East Staffordshire 109,100 West Midlands Herefordshire, County of 179,300 West Midlands Lichfield 97,900 West Midlands Malvern Hills 74,800 West Midlands Newcastle-under-Lyme 124,700 West Midlands North Warwickshire 62,300 West Midlands Nuneaton and Bedworth 122,000 West Midlands Redditch 79,900 West Midlands Rugby 91,700 West Midlands Sandwell 289,100 West Midlands Shropshire 292,800 West Midlands Solihull 205,500 West Midlands South Staffordshire 106,400 West Midlands Stafford 124,700 West Midlands Staffordshire Moorlands 95,500 West Midlands Stoke-on-Trent 240,100 West Midlands Stratford-on-Avon 118,800 West Midlands Tamworth 75,800 West Midlands Telford and Wrekin 162,100 West Midlands Walsall 255,400 West Midlands Warwick 135,700 West Midlands Wolverhampton 236,400 West Midlands Worcester 94,100 West Midlands Wychavon 117,300 West Midlands Wyre Forest 98,700 West Midlands Barnsley 225,900 Yorkshire and the Humber Bradford 501,700 Yorkshire and the Humber Calderdale 201,800 Yorkshire and the Humber Craven 56,200 Yorkshire and the Humber Doncaster 291,600 Yorkshire and the Humber East Riding of Yorkshire 335,000 Yorkshire and the Humber Hambleton 87,100 Yorkshire and the Humber Harrogate 160,500 Yorkshire and the Humber Kingston upon Hull 258,700 Yorkshire and the Humber Kirklees 403,900 Yorkshire and the Humber Leeds 770,800 Yorkshire and the Humber North East Lincolnshire 158,200 Yorkshire and the Humber North Lincolnshire 160,300 Yorkshire and the Humber Richmondshire 51,500 Yorkshire and the Humber Rotherham 253,900 Yorkshire and the Humber Ryedale 53,500 Yorkshire and the Humber 42

Scarborough 108,500 Yorkshire and the Humber Selby 82,000 Yorkshire and the Humber Sheffield 534,500 Yorkshire and the Humber Wakefield 322,300 Yorkshire and the Humber York 195,400 Yorkshire and the Humber Note: The Isles of Scilly is not included in the UK Competitiveness Index composite measures due to a lack of data in some key indicator variables. Data Sources The key sources of data used in this report are: Annual Business Inquiry Annual Employment Survey Annual Survey of Hours and Earnings (ASHE) DBERR DETINI Eurostat Labour Force Survey National Statistics New Earnings Survey NISRA Nomis Claimant Count Regional Trends Small Business Service UKTradeInfo VAT Registered Businesses 43

Centre for International Competitiveness The Centre for International Competitiveness focuses on researching and exploring the competitiveness of economics and businesses. Our mission is to provide a platform for stimulating and disseminating research on competitiveness across the business, policymaking, and academic communities. The Centre aims to provide a research bridge connecting studies and debates relating to the competitiveness of economics nations, regions or localities and businesses. The linking of macro and micro-level aspects of competitiveness provides the cornerstone of the Centre s vision for producing and disseminating research relevant to understanding and furthering competitive business strategy making and economic policymaking in tandem. The Centre is the home of the influential World Knowledge Competitiveness Index, European Competitiveness Index, and the UK Competitiveness Index series of reports. The Centre offers research-based management and economics consultancy and provides an interface between academic expertise and commercial research consulting, within an international environment. Through us, clients are given access to the latest thinking, research, best practice, benchmarking and analysis of economic and business development issues. Knowledge Partners Our work is based on a high level of commercial and academic credibility, through the engagement of clients as knowledge partners both commercial and academic with whom we are able to share new thoughts and new solutions, which our clients are then able to action. As founders of a suite of competitiveness analysis tools, we are able to utilise our evaluation and analytical resources to better understand the issues facing regional and local development policymakers and strategists. Innovation Intelligence It is one of our key research aims to constantly monitor the changing business and technology environment, and to inform relevant actors of new modes of business. In particular, we offer strategic support to a wide range of clients in fields relating to the economics and implementation of technology and innovation. www.cforic.org www.uwicresearch.co.uk/management Centre for International Competitiveness Cardiff School of Management University of Wales Institute, Cardiff Colchester Avenue Cardiff CF23 9XR Wales Untied Kingdom Telephone: +44 (0) 29 2041 6470 Fax: +44 (0) 29 2041 7090 44