APPENDIX 12
Memorandum from South & East Economic
Development Strategy (SEEDS) (JG 18)
1. SEEDS
The South & East Economic Development Strategy
is an association of local authorities in the South East of England.
It covers the same area as the Regional Development Agency for
the South East and for the southern part of the RDA for the East
of England. It was set up in 1986 in response to the increasing
polarity between the richest and poorest sectors of society in
the region and to develop sustainable economic strategy on a regional
basis. Since then it has produced over 40 reports on diverse aspects
of the economy from engineering, the pharmaceutical and RTD industries
to green jobs and the social economy.
This submission will focus on the case for the
South East as covered by the two RDA areas outlined above and
the need to include the South East in any demand and supply policies.
It will make proposals for dealing with demand through the public
and private sectors and look at some of the consequences of failing
to address the jobs gap.
2. PERCEPTIONS
AND REALITY
The South East has traditionally been viewed
as one of the more prosperous regions in Britain characterised
by high growth rates, entrepreneurialism, the business and financial
service and high tech industries. Peck and Shutt (93) referred
to the South East as the "powerhouse of national economic
growth in the eighties". The boom years of the eighties led
to growth in the South East built on "credit, consumption
and house prices, on deregulation and privatisation". The
liberalisation of the economy meant that there was no focus on
re-investment or sustainable economic development. As a consequence
the region suffered very badly in the recession of the nineties
exposing underlying weaknesses in the economy. Between June 1990
and June 1992, 1.13 million jobs were lost nationally of which
50 per cent were in the South East. In the SEEDS report of 1997,
"Re-making the Regional Economy", the following reasons
were cited for the South East lagging behind other regions as
the UK moved out of the recession:
— slower productivity growth in the
service sector compared to the manufacturing sector;
— the defence dependency of the region;
— the continuing shake-out of employment
in the banking and insurance sectors resulting from mergers and
branch closures;
— the relatively poor performance in
attracting only 5 per cent of foreign direct investment coming
to the UK in the 90s;
— continuing high land costs and congestion
in the region.
The South East is a region of contrasts. Its
size, economic output, proximity to London, mainland Europe and
access to international gateways make it a powerful economy in
relation to the other UK regions. At the same time there are anomalies
within the region which make it less competitive and less sustainable
in the long term.
The SEEDS report "Re-making the Regional
Economy" (1997) highlighted the opportunities and problems
facing the South East.
2.1 Opportunities:
The SE had 27 per cent of national manufacturing
employment, 41 per cent of advanced high tech manufacturing and
55 per cent of R&D employment. It had 39 per cent of services
employment including over 50 per cent of the employment in business
services sector.
2.2 Problems:
R&D jobs fell 46,000 (24.5 per cent) nationally
between 1986-92. In the period 1985-91, total business R&D
expenditure rose by only 9 per cent in the UK compared to 21 per
cent in Germany, 31 per cent in France. France and Germany between
them accounted for over 60 per cent of R&D business expenditure.
Secretarial and clerical jobs are predicted
to decline by 107,000 in the South East between 1994-2002.
The South East in unlikely to see an improvement
in its relative position until after 2005.
Several of the older new towns in the South
East are experiencing heavy job losses as companies move to cheaper
locations abroad or in other parts of the country. Both Basildon
and Harlow have experienced job losses in excess of 1,000 in the
last year. This is an area that requires further monitoring.
2.3 Opportunities:
The South East as a whole has a relatively low
unemployment rate.
2.4 Problems:
One in five households in the South East of
working age had no member in work.
The number of full-time employees on temporary
contracts doubled in the South East in the 10 years up to 1994.
Only 62 per cent of the labour force was in full-time permanent
jobs.
The number of men who had given up looking for
a job in the region increased from 10.6 per cent in 1990 to 12.3
per cent in 1993.
At the local labour market level unemployment
rates vary from below 1.5 per cent in September 1998 in Newbury,
Crawley and Aldershot and Basingstoke to 6 per cent or more in
Thanet, Hastings, Clacton, Harwich, the Isle of Wight.
2.5 Opportunities:
Average household incomes in the South East
were 10 per cent above the national average in the late 1970s
but 25 per cent above by the early 1990s. GDP per capita in London
was 44 per cent above the UK average.
2.6 Problems:
The South East is ranked only 18th in terms
of GDP per capita among 77 European regions in 1995 cf to 15th
in 1994.
In 1993 the Isle of Wight GDP per capita was
only 67.9 per cent of the UK average while East Sussex was 74.7
per cent and Kent 87.4 per cent.
On the DETR's 1998 index of deprivation six
local authorities in the South East ranked in the top 70 most
deprived areas in the country on the Index of Deprivation for
the intensity of deprivation indicator—Brighton and Hove,
Luton, Portsmouth, Southampton, Medway Towns and Reading.
The ratio between the top 10 per cent and the
bottom 50 per cent of incomes in the region rose from 9 per cent
above national average in the early 80s to 15 per cent in the
early 90s.
2.7 Opportunities:
The South East is still seen as having a desirable
"quality of life" demonstrated by the net migration
to ROSE—33,000 per year migrate from the North to the South.
Young people migrating to London mean that most of the region
except the coastal areas are less affected by the ageing population.
2.8 Problems:
The quality of the environment in deprived areas
makes these undesirable places to be and the cost of housing in
other areas makes these places too expensive to be.
Whilst high quality social and recreation facilities
abound, increasing private provision excluded significant numbers
who remain deprived of adequate provision.
High levels of homelessness.
Deprivation fuels crime and other anti-social
behaviour which leads to people feeling unsafe on the streets.
Traffic congestion is growing with predictions
of a continued growth of 50 per cent within 15-20 years and doubling
by 2030 which would gridlock the regional street network.
Insidious forms of pollution from traffic to
incinerator emissions and water contamination are leading to new
public health problems.
2.9 Opportunities:
The South East continues to make a contribution
to sustainable economic development in line with the recommendations
of the RIO Summit conference in 1992.
2.10 Problems:
The South East is a high energy user—mainly
in the form of fossil fuels which are non-renewable sources of
energy and highly polluting.
The South East imports large quantities of a
wide range of poorly managed resources and exploits its own resources
in ways which cannot be sustained indefinitely.
Waste is being allowed to accumulate in the
South East on the assumption of unbounded carrying capacities.
2.11 Opportunities:
The South East came third in terms of allocated
government expenditure per head in 91-93 and 93-95 behind the
North and North West.
2.12 Problems:
Costs are higher in the South East. Rents are
almost one-third higher than in the West Midlands for example.
The South East generates more tax revenue which
is used to subsidise other regions.
Expenditure on trade, industry, energy and employment
in 1997 was calculated at £7 per head cf to a national average
of £10 and £24 in the North East.
The South East has 38 per cent of the UK population
but only received 33 per cent of SRB funding in Round 1.
TECs in the South East received only two-thirds
of the national average funding.
Only 3 per cent of ERDF funds were allocated
to the South East.
2.13 Clearly there are winners and losers
in the South East economy. Green (1997) summarises these as follows
in "Re-making the Regional Economy":
Winners
Those employed in growth industries-business
services; those in high level non-manual occupations; core workers
in non-precarious employment; those in multiple earner households;
those with higher level qualifications; those in multiple earner
households; those with extensive journey to work horizons; those
with limited/no breaks from employment.
Losers
Those employed in primary and manufacturing
industries; those in semi and unskilled jobs; full and part-time
workers in insecure/precarious employment; those in no-earner
households; those with few formal qualifications; those in council
housing; those with limited journey to work horizons; the long-term
unemployed.
Source: adapted from Green, 1997.
SEEDS takes the view that economic growth that
does not take account of social exclusion will not be successful
because the associated problems that arise from not dealing with
the issues such as the increase in crime levels, health problems
and a reduction in quality of life. SEEDS has evidenced the polarities
within the economy of the South East and the need to take an holistic
approach to addressing the needs of the South East economy.
It has produced a number of sector reports that
look at the demand and supply side issues within the South East
economy and made a number of recommendations around the supply
side issues which it is pleased to see that the Government has
taken on board.
Turok and Edge (1999) talk about the jobs gap
within the economy by which they are referring to the gap between
labour supply and labour demand. You can train as many people
as you like in skills that are relevant to the local economies
but at the end of the day if there is not the job growth to go
with that supply of labour there will be no change to the rates
of social exclusion and long-term unemployment.
3. LOW PAY
POVERTY TRAP
The South East is predicted to have the highest
rate of job growth in the UK over the next 10 years. Green and
Pitcher (1998) put the figure at 425,000 jobs between 1997-2006.
Many of these jobs will be in managerial and administrative, professional
and associated jobs. The South East has by far the highest income
per head in the country. In the early 1990s income in the South
East was 25 per cent above the national average according to Martin
(1995). Job losses are predicted in manufacturing, clerical and
secretarial occupations and unskilled and craft related areas.
There has been an increasing polarisation in
the South East labour market between wealthy and poor social groups
and between places. These disparities have been highlighted in
key reports including the Joseph Rowntree Foundation's enquiry
into Income and Wealth in 1995. In the South East the ratio between
the top 10 per cent and the bottom 50 per cent of incomes was
15 per cent above national average in the early nineties.
This polarisation of the labour market affects
those in low-paid, casualised employment, in particular:
2. Those in insecure employment
4. Those without qualifications.
Women, people with disabilities, ethnic minorities
and workers aged over 50 years are particularly vulnerable in
the above framework.
4. SUPPLY AND
DEMAND
Much is already being done to address supply
side issues in the labour market but SEEDS has argued that unless
the gap between demand and supply is met there will be no movement
through the labour market and people in low-paid casualised employment
will remain trapped without anywhere to move on to.
4.1 Demand
SEEDS have made a number of recommendations
in a discussion paper on Job Creation and the Demand for Jobs
published in 1999. This included a 10-point plan for dealing with
job creation and the demand for labour which is summarised as
follows:
4.2 Private sector and business support:4.2.1 Employer
responsibility
The responsibility of employers have not been
a focus for action in this area. SEEDS has suggested that:
1. Companies could sign up to a declaration
of good practice in employment including areas such as equal opportunities
monitoring, job rotation schemes, community involvement, etc.
2. Companies would produce an annual report
on progress against these standards.
The Government could support moves to ensure
working conditions are not bid down in order to attract investment
into Europe.
4.2.2 RTD
New jobs and protecting old ones will depend
on investment in Research and Technological Development. Howells
(1997) in a SEEDS report "RTD in South East Britain",
made 16 recommendations to policy makers and a plea for them to
be informed, creative and pro-active in this field. The DTI White
Paper, "Our Competitive Future" sought to reverse the
disinvestment and neglect since the 1970s in the field of RTD.
But according to the OECD, UK public expenditure on civil research
fell from 0.72 per cent of GDP in 1981 to 0.43 per cent in 1996.
While the £1.4 billion to modernise the science and engineering
base will make up some of the loss, the £10 million to RDAs
to deal with sector collaboration beyond the biotech industry,
is inadequate.
There continues to be a need for a strong national
innovation policy framework for RTD with a regional dimension.
4.2.3 Green Jobs
Holistic thinking is required to link environmental
regulation and tax incentives with job creation. A wide range
of jobs can be created linked to the environment. Waste recycling
tends to be labour intensive and creates jobs in collection, sorting
and transportation of recyclables. Jobs may be linked to secondary
material processing industries. Higher technology, more skilled
jobs can be created in the development of new technologies to
reduce pollution and in clean-up technologies.
The Government therefore has a key role to play
in introducing green taxes and new regulations which will stimulate
green growth, eg removal of VAT on insulation materials and a
tax on packaging. It should also set up a cabinet committee that
will join up thinking in this area and look at innovative ways
of creating green collar jobs.
4.2.4 Intelligent Regions
The Regional Development Agencies are a major
step forward in co-ordinating an approach to sustainable, cohesive,
economic strategy. It will be important for a focus to be given
here on increasing quality employment—ie employment with
training and career opportunities which is not just for highly
paid professionals. SEEDS has always argued that this needs to
be achieved in part through a sectoral approach which increases
co-operation between firms at the regional level, learning lessons
from the European "intelligent regions".
Key elements of the approach may be in:
— Developing an understanding of critical
mass in skills, and productive capacity that need protecting.
— Developing clusters and aftercare
services.
— Promoting a stakeholder approach
on behalf of key firms which recognises the interests of local
communities as a voice in drawing up industrial policy.
— Getting large companies to work with
small companies on quality issues.
— Drawing up regional innovations and
technology strategies.
4.2.5 Business Support
The current government has an opportunity to
review the effectiveness of current business support. Within the
new structures SEEDS would like to see a broader focus on employer
responsibility, innovation, sustainability, collaboration and
networking to reflect public sector support along with support
for community business, the voluntary sector and the enterprise
agency role.
4.2.6 Financial Exclusion
Many people made redundant from their jobs and
the long-term unemployed find themselves doubly excluded from
the labour market through discrimination by the financial institutions.
There is some evidence that access to a bank account becomes a
major difficulty from the moment redundancy sets in.
This is an area that the Government might wish
to look at more closely and look at ways to ensure that people
become even further marginalised in society because of the problems
incurred by the inability to access finance.
4.3 Public and Community Sector Job Creation4.3.1 Local
Job Plans
In 1987 SEEDS argued for targeted local jobs
plans for each area. This targeting was to take three forms:
— Geographical targeting—jobs
are targeted on areas of towns/cities with the highest incidence
of unemployment.
— Needs targeting—where job provision
is matched to the most pressing needs for improved services.
— Group targeting—where jobs
are created directly for those who suffer the most disadvantage
in the labour market.
The Government should insist that local job
plans are a key element of any regeneration proposal. They would
fit in the Government's Best Value proposals. SEEDS would propose
that they cover:
— The impact of the LA's own employment
policies and spending programmes on jobs in the targeted area
and that of other public sector providers.
— The specific needs of the area and
where new jobs and services could be funded.
— Bringing in money from outside—linking
residents to quality jobs outside the area—customised training
etc and linking community enterprise to markets outside the area.
— Getting money generated to have a
higher local multiplier effect, eg LETS schemes, community shops,
food co-ops, credit unions.
— Developing the asset base of the
community economy—eg handing over public assets to the community
for workshops, community centres, etc.
4.3.2 Career Paths
Not only is public sector pay still restricted
in comparison with the private sector but career paths are poorly
developed in the public sector.
In its most recent report on the Care Sector
(1999) Gowland and Taylor expose the duality of the labour market
in the care sector for older people. The Care sector is characterised
by a predominantly local, female, part-time and increasingly casualised
workforce in which there are high levels of staff turnover, low
morale and few opportunities for career advancement. In the public
sector care workers tend to be paid at higher rates of pay and
have better conditions of employment than in the independent sector.
A local authority purchaser of care may purchase a package of
care from another local authority at one price and from an independent
sector provider at a much lower price. And yet, care whether it
is purchased from the public or independent sectors is a skilled
job which has become increasingly complex over the last decade
with little recognition given to the providers of care services.
The report outlines the current problems of retention and recruitment
amongst nursing auxiliaries and care assistant grades in health
and in the social care market. This problem is likely to get worse
in the next century as the older care workers reach retirement
age and leave and demand for care grows. In 1997 the DfEE reported
23,000 vacancies in care jobs of which nearly half remained vacant
by the end of the year.
The issue here is not so much to do with the
supply of jobs but the quality of the jobs. Gowland and Taylor
(1999) point out that care jobs are in direct competition for
jobs in the service sector and that unless the skills of care
workers are fully recognised there is likely to be an outflow
of care workers into other sectors where they can get better rates
of pay and conditions of employment with less responsibility.
A whole range of issues in relation to care work are proposed
in this report from the recognition of skills, to career structures
and alternative delivery structures.
The quality of jobs and low pay issues still
need to be addressed despite the introduction of the minimum wage
and working time directive and the Government should have a role
to play in this because the prospects for a caring workforce in
the future look bleak unless something is some to address these
issues.
Public sector career paths need to be developed
that enable public sector workers to go through a ladder of qualifications
while in work and earning. The Government needs to promote this
issue.
4.3.4 Local Public Enterprise
The public sector has a significant role to
play in the creation of jobs. In 1994 the public sector accounted
for 20 per cent of all jobs.
Local authorities and government make a major
contribution to the local economy through the infrastructure and
support services they provide and promote, direct employment and
jobs they sustain through their expenditure and that of their
employees (Geddes, 1993).
In the mid-nineties a great deal of attention
was given to how full employment could be achieved by Unison,
the Full Employment Forum and others including SEEDS. The Full
Employment Forum proposed an expansionary strategy for the public
sector that would boost demand and increase long term growth.
This increase in public investment it was argued would create
opportunities for private investment. The role of the public sector
in the creation of jobs is still one that needs to be addressed
today. The creation of new jobs will continue to be vital to the
long-term success of the South East economy.
The power to take action that furthers the social,
environmental and economic well-being of the community and the
power to contract for work in other local authorities or the private
sector are key changes that should start to be addressed through
the Government's Best Value agenda. Local public enterprise could
be linked to targeted jobs plans, providing quality employment
and training.
4.3.5 Co-ops and Community Enterprise
SEEDS welcomed the Government's changes for
credit unions but is disappointed in the continuing delays in
progressing the Bill for Co-ops.
Support for co-ops and community enterprise
which are a key component in the development of local, sustainable
employment should be integral to business support and regional
government proposals.
4.3.6 Tax and LETS
Research shows that unemployed, ethnic minority
groups, immigrants and women living in poor localities engage
in less formal employment.
If social exclusion is to be tackled engagement
in informal employment schemes such as LETS should not result
in participants being penalised through the tax system.
Local authority involvement in LETS schemes
should also be encouraged.
5. CONCLUSIONS
The Government is pleased that unemployment
has gone down to the extent it has in the last two years and is
beginning to talk about full employment. Whilst this is a state
of affairs that SEEDS would endorse, it would not endorse full
employment if the price to pay for this was increased job insecurity,
low pay and careerless jobs.
The challenge for today is how to combine competitiveness
with cohesion and sustainability and to provide access to jobs
with career routes, training and good employment conditions at
one end of the spectrum so that people can move from long-term
unemployment for example into low paid work and from there into
higher paid work and out of the poverty trap. At the other end
of the spectrum the need for sustainable, quality, skilled jobs
still needs to be addressed.
Sustainable jobs in the South East will be those
that can be supported at the local level, will provide career
progression and training and good conditions of employment. The
public sector has a key role in the development of jobs in the
local economy along with national government and the private sector.
It is only through a holistic approach which addresses both supply
and demand issues that a long-term solution will be found.
South and East Economic Development Strategy
October 1999
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