Written evidence submitted by the Welsh
Assembly Government
SUMMARY
- The labour market in Newport has performed relatively
poorly in recent years with the latest data showing (ILO) unemployment
at 9.9%, compared to the average for Wales of 8.4%.
- There is also a relatively high claimant count
rate in Newport, at 4.7% of the 16-64 population, above the Wales
rate of 3.7%.
- There is a relatively high dependence on public
sector employment, estimated at 28.5% of residents (compared to
a figure for the UK of 25.0%); and
- Taken together, these factors suggest that the
local economy is particularly vulnerable going forward, given
the pressure on the public sector.
- In addition, specific issues arise in connection
with the prospective loss of jobs in Newport city centre, which
is currently experiencing severe difficulties, with closure or
relocation of prominent "anchor" retailers.
- The loss of jobs at the Passport Office (especially
if coupled with the loss of customer facing / attracting services)
could compound such effects, with potentially severe consequences
for the city centre.
- To close the Newport Passport Office leaves Wales
as the only nation within the United Kingdom and the only "national
region" within the European Union not to have its own Passport
Office.
- The proposal raises questions about the UK Government's
commitment to the quality of service to the bilingual population
of Wales.
- The majority of central Government civil service
jobs in Wales are in non-devolved Whitehall Departments. Proposals
and actions by individual UK Government Departments risk having
an unintended cumulative negative impact in Wales.
PURPOSE
1. The Committee has said it wishes to examine
this issue in line with its remit for those issues which affect
the people of Wales. This document outlines the potential impact
on the people and communities of the Newport area arising from
the proposed closure of the Newport Passport office as part of
the UK Government's fiscal consolidation measures.
2. The approach is to employ the overall spending
cuts outlined in Budget 2010 and the subsequent Comprehensive
Spending Review (CSR). The figures used are in advance of any
refinement on the implications of the spending review at UK level
and the completion of the Welsh budget setting process. These,
it is expected, will yield more detail on the nature and location
of effects.
3. This document does not repeat the detailed
arguments set out in The Case for Newport, the written
submission from Newport City Council. However, our own separate
analysis fully bears out the points made in that submission.
PUBLIC SECTOR
EMPLOYMENT REDUCTION
IN WALES
4. Office of Budget Responsibility estimates,
made for the UK as whole, suggest that public sector employment
losses in Wales could account for some 5,000 posts in 2011-12
rising to around 30,000 by 2014-15. This would represent about
0.5% and 2.5% of Welsh employment respectively. Taking into account
multiplier effects, these numbers might increase to around 8,000
in 2011-12 and 51,000 by 2014-15, representing around 0.5% and
3.0% of Welsh employment.
5. The area covered by Newport Local Authority
is presently towards the higher end of reliance upon public sector
employment at 28.5%, it is around the seventh highest within the
22 Welsh Local Authorities, and is well above the UK average.
6. In the recent past, the devolved Welsh Assembly
Government has been able to offer transfer opportunities to civil
servants from non-devolved organisations (such as the Passport
Office); this has saved the considerable cost of redundancy -
some £34,000 per individual - to the taxpayer and has helped
maintain levels of economic activity. The impact of the UK Government's
fiscal consolidation is upon devolved as well as non devolved
jobs and now makes any assistance of this sort improbable in the
foreseeable future.
7. In addition, other employers within the devolved
Welsh public services are equally impacted and face considerable
job-loss themselves going forward. This includes the Local Authority
in Newport and other organisations including in the Health and
Education sectors. Together they currently employ some 12,000
to 15,000 people within the Newport area.
8. Apart from the Passport office, other major,
non-devolved UK Government employers with offices in the area
include the Department of Work and Pensions/Job Centre Plus (DWP/JCP),
the Office for National Statistics (ONS) and the Intellectual
Property Office (IPO). Together, these currently employ over 2,900
local residents and, in common with the rest of the public sector,
all anticipate reductions in permanent jobs over the next four
years.
WIDER IMPLICATIONS
9. Over Wales as whole, non-devolved, central
government civil servants represent some 12% of all public sector
employment. The majority of these jobs are in sizeable organisations
such as DVLA in Swansea and Companies House in Cardiff. But there
is also a widespread DWP/JCP presence as well as a smaller - but
in areas with few career options, important - dispersal of bodies
such as the Ministry of Justice and the Ministry of Defence. The
implications for the well being of Welsh people and the Welsh
economy from any precedent set in Newport is now a major issue
for the Welsh Assembly Government.
10. Wales is a bilingual nation. The Newport
Passport office currently promotes the full accommodation of the
requirements to comply with the Welsh Language Act (1993), particularly
the principle that Welsh and English should be treated on the
basis of equality in the conduct of public business and the administration
of justice. Closing the Passport Office has implications for one
of the most distinctive signifiers of national culture and identity
across the UK, the living Welsh language.
11. The closure of the Passport Office would
leave Wales as the only nation within the UK without its own Passport
Office and this point is also made by Newport City Council in
its evidence to the Committee. This matters; not least for reasons
of economy, language and identity noted above but also because
it would leave Wales as the only EU "national region"
without a Passport Office, which raises fundamental questions
about the broader commitment of the UK Government.
VULNERABILITY OF
NEWPORT
12. Taken together, vulnerability can be expected
to be greater where the public sector accounts for a high share
of employment, the labour market is relatively weak and Job Seekers
Allowance recipients form a higher share of the population. This
is broadly the situation found in Newport with:
- an employment rate of 66.3%;
- an estimated public sector employment rate of
residents of 28.5%; and
- an ILO unemployment rate of 9.9%.
13. The importance of Newport to Wales and the
challenges the city faces were recognised by the Welsh Assembly
Government and Newport City Council when they established the
Urban Regeneration Company Newport Unlimited in 2003. With a mission
to work with the public and private sectors, the company's aim
is regeneration; it had an instrumental role in the hosting of
the Ryder Cup 2010. But such efforts by the Welsh Assembly Government
to lift an already economically challenged area face major risks
from unforeseen impact where the welfare of Wales is not the first
consideration. The loss of jobs from the Passport Office is a
case in point.
14. As noted above, Newport city centre is currently
experiencing difficult trading conditions which are likely to
be exacerbated by the loss of a major employer and customer-facing
service provider. Recent and prospective closures in the main
shopping area have included major chains which provide relatively
well paid work at the quality end of the retail trade. This is
being followed by moves away by other major "anchor"
retailers who are looking to relocate to a retail park at the
edge of the city.
15. Although difficult to quantify, the loss
of well paid, satisfying employment in public and private sectors
is likely to impact upon the confidence and sense of well-being
within the local community which is then liable to become "depressed"
in the psychological as well as the financial sense. Such loss
of confidence can also makes the area less attractive to future
inward investment.
CONCLUSION
16. Newport, particularly the city of Newport,
is showing clear signs of being vulnerable to economic decline.
It is more dependent than most cities upon public sector employment
and has a high claimant count and ILO unemployment rate. Without
any immediate signs that there is growth within the private sector
locally (in fact the opposite picture appears to be emerging)
the risk looks significantly higher going forward. The loss of
300 relatively well paid, high value jobs with the closure of
the Passport Office could compound such effects, tipping the city
centre into a period of decline which will be difficult to reverse.
17. In addition, the proposed closure raises
serious issues about the commitment of the UK Government to Wales,
its people, culture and economic sustainability going forward.
November 2010
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