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Economic Potential of Preston Northwest Regional Development Agency

May 2009

Final Report


Northwest Regional Development Agency

Economic Potential of Preston – Draft Final Report

CONTENTS

Executive Summary ............................................................................................................... 1 2.

Introduction ............................................................................................................. 15

3.

Policy Context ......................................................................................................... 25

4.

Macro- Economic Context...................................................................................... 34

5.

what makes A Successful city?............................................................................. 45

6.

Investing in the Physical City ................................................................................ 48

7.

Economic Distinctiveness...................................................................................... 64

8.

Human capital in organisations............................................................................. 97

9.

Expanding an Embedded Educational Offer ...................................................... 109

10.

Economic Linkages and Connections ................................................................ 127

11.

Investment in communities.................................................................................. 144

12.

Leadership ............................................................................................................. 154

13.

SWOT Analysis...................................................................................................... 168

14.

Delivering Preston’s Economic Potential ........................................................... 175

November 2008


Northwest Regional Development Agency

Economic Potential of Preston – Draft Final Report

EXECUTIVE SUMMARY In October 2008 GVA Grimley Ltd was appointed by the Northwest Regional Development Agency (NWDA) to undertake a study exploring the Economic Potential of Preston. The primary objective of this work is to form a strategic assessment of the economic potential of Preston, generating a vision for the future growth of the city1. What do we mean by Preston? Is it the functional economic sub-region or true housing market area? Do we refer to the Local Authority District? Or even just the city centre? The answer is all of the above and the analysis contained within this report will refer to each of these spatial geographies as the appropriate line of enquiry demands. This report therefore concentrates on the economic potential of the local authority area of Preston, and especially Preston City Centre while giving due consideration to the functional economic area of Central Lancashire comprising the local authority areas of Preston, South Ribble and Chorley. The economic potential of Preston should therefore be viewed within this wider economic geography. The study has involved a number of distinct tasks including: •

A review of previous reports and analysis on Central Lancashire

A macroeconomic overview

New primary research •

A substantial Business Survey, with a sample of almost 500 Central Lancashire businesses

Consultation with key stakeholders

The analysis of Central Lancashire is set within a broad conceptual framework of what makes ‘places’ work in terms of seven key drivers:

May 2009

The Physical City;

Economic Distinctiveness;

Human Capital;

The Educational Offer;

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Northwest Regional Development Agency

Economic Linkages and Connections;

Investment in Communities; and

Leadership

Economic Potential of Preston – Draft Final Report

This draft final report offers a comprehensive picture of how Central Lancashire measures against these key criteria and goes on appraise the key elements of Preston’s economic potential going forward. The headline finding is that Central Lancashire has performed well over the past several years, with strong growth in employment and GVA. In addition, Central Lancashire is a resilient economy and well placed to weather the current economic downturn, as it has previous times of economic difficulty. There are a number of reasons for this but the broad spread of sectors is still its main economic strength.. Businesses in Central Lancashire, canvassed through a detailed business survey (in October 2008) certainly remain optimistic for the future. However, despite this Central Lancashire has not delivered to its full potential over the past ten years of broadly positive economic performance. This is illustrated by a number of key facts: •

Inward Investment - Central Lancashire’s failure to attract a significant share of Northwest FDI over recent years, NWDA Inward Investment Team Statistics indicate that Central Lancashire has had just a 3% share of inward investment projects over the period 2004-2008, and has captured just 1.5% of the new jobs created and 3.4% of the safeguarded jobs;

Business Base - Central Lancashire’s growth in VAT stocks trails the Northwest and England averages. Within Central Lancashire itself, growth in VAT stocks has been underpinned by South Ribble and Chorley, Preston’s performance has been weak. Chorley and South Ribble’s VAT stocks have increased by 15.4% and 14.7% respectively over the period 2001-2008, whereas Preston’s VAT Stock grew by just 6.1%, less than half of the UK or Northwest rate;

Employment Growth – Since 1998 employment in Central Lancashire has increased by more than the Northwest average, with employment growth of around 19%, compared to 8% in the Northwest. Employment growth varied from 15% in Preston to 31% in Chorley.

1 For the purposes of this study, we consider that ‘growth’ will emerge through the internal maximisation of assets and/or through the exploitation of economic complementarities between the city and other centres of growth and opportunity throughout the region.

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Northwest Regional Development Agency

Economic Potential of Preston – Draft Final Report

However a significant number of new jobs have come not from private sector employers, but from public sector growth, with public administration and defence, education and health and social work accounting for almost 15,000 of the new jobs. Private sector growth has been equally strong in some sectors such as Other Business Activities; •

GVA – growth in employment has not translated into a concomitant increase in GVA. Whereas regionally employment has grown by 8% since 1998, GVA has grown by 28% during roughly the same period; Central Lancashire on the other hand has posted an employment increase of 19%, GVA has grown by 29%. By implication, if productivity growth ratio had kept pace with the regional average then GVA growth should have been 67%;

Occupational Structure – workplace analysis of Central Lancashire’s occupational structure indicates that a high proportion of its employment remains in administrative and secretarial occupations (17% - compared to Northwest and England and Wales averages of 13% and 12% respectively;

Earnings – Although Gross Weekly Pay (workplace earnings) in Central Lancashire is only slightly below the Northwest average (£441 per week compared to £450 per week) wages are significantly lower in Preston, at around £426 per week. Earnings in Central Lancashire, like the rest of the Northwest, trail England and Wales earnings by almost 7%. Gross weekly pay in Preston is significantly lower than earnings in Liverpool and Manchester, the two Northwest Cities it aspires to compete with;

Population Growth – Although the Central Lancashire population has been growing steadily, and in line with the England and Wales average, Chorley and South Ribble are the real drivers of population growth. Recent recovery in population growth for Preston since 2003 cannot hide the fact that its rate of growth has been less than a quarter than that for the wider Central Lancashire area since 2000.

City Centre ‘Offer’ – Although Central Lancashire has increased its retail floorspace by more than the regional average, growth has been driven by out of town retail, particularly in South Ribble. Preston has seen only a 2% increase in retail floorspace since 1998, compared to a rise of 22% in Manchester and the development of Liverpool One. Preston City Centre is therefore falling behind its competing cities elsewhere in the Northwest and has failed to bring forward the Tithebarn redevelopment quickly enough;

Housing – Central Lancashire has improved its housing offer, with new suburban housing development at Cottam, East Preston and Buckshaw Village and the beginnings of city living apartment development around Preston City Centre, but a significant

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Economic Potential of Preston – Draft Final Report

proportion of the housing stock within inner east Preston remains low price and low quality; •

Capitalising on its Transport Links – Central Lancashire has not capitalised on its position as the transport hub of Lancashire. Despite having excellent motorway links, and access, through Preston station, to fast, frequent rail services to London, Birmingham, Glasgow, Manchester, Manchester Airport, Liverpool and beyond (with Preston being by some distance the busiest NW station outside Manchester and Liverpool), as discussed above Preston has seen low business formation rates and little of the Northwest’s national and FDI has chosen to locate in central Lancashire, instead locating at less well connected destinations such as Chester Business Park (MBNA, Marks and Spencer Financial Services).

These key findings and a range of other issues are explored in the main body of the report, but in themselves , and based upon the following Strengths, Weaknesses, Opportunities and Threats, lead us to propose a set of issues requiring intervention, to enable Preston and Central Lancashire to realise its economic potential in the future.

Strengths •

Economic structure aligned with higher value sectors that are growing nationally (computing, business services and finance) and advanced engineering, software and digital design.

Strong service sector performance, particularly connected to public-sector related activity. Although declining, manufacturing will still make an important (and disproportionate) contribution to the strength of the Core Central Lancashire economy.

The presence of BAE systems at Warton and Samlesbury provides Central Lancashire with a substantial base of intellectual capital, a core of skilled, well paid employment. More than half of the workforce are skilled technicians and nearly a quarter are classified as (non-executive) professionals.

Central Lancashire is well placed to capitalise on the expected renaissance in the UK Nuclear Industry. Westinghouse has recently established their UK HQ in Preston and are one of the two companies short listed to build new reactors. The proximity of Heysham Power Station, the relative proximity of Sellafield, its strong engineering base, UCLan and Preston’s position as the closest emerging regional services city make Central Lancashire well placed to capture a large share of any new opportunities in this area.

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Northwest Regional Development Agency

Economic Potential of Preston – Draft Final Report

At the heart of Lancashire – Preston acts as the ‘hub’ for all communication flows throughout Lancashire (75,000 journey to work trips into Preston); Access to major centres of London, Manchester and Glasgow via rail and serves Manchester / Manchester Airport by good road links.

Direct rail links to Manchester Airport and (outside of peak times) fast journey times by road to both Manchester and Liverpool Airports, serving more than 200 destinations worldwide.

Increasing population since 1981 (over 8%) set against a population decline in Northwest of 3% since 1981, forecast to continue to increase to 2031 (compared to decline in Liverpool).

Large working age population within 30km, over 800,000 people providing larger workforce potential than Chester, Blackburn and almost as many as Liverpool. Working age population within 10km also significantly larger than NW competitors.

Access to more than 200,000 people of working age qualified to NVQ4 within 30km, providing large and skilled workforce.

The University of Central Lancashire (6th largest University in the country) providing a highly skilled population. The presence of the University offers a significant driver for economic growth and is increasingly aligning its knowledge base towards some of those sectors that have made Central Lancashire prosper in recent years. The university has invested over £60 million in new facilities over the last few years with student numbers expected to increase from 35,000 to 50,000 by 2010.

Weaknesses •

The Gross Value Added (GVA) gap with the rest of the UK is about £600 million. By far the majority of the GVA gap is attributed to services, with substantial productivity gaps apparent in Finance and Banking; Professional Services; Business Services and Computing Services.

Central Lancashire at a significant disadvantage to major conurbations of Manchester and Liverpool in terms of working age population living within 10km, and almost 500,000 fewer people of working age living within 30km as Warrington.

Strategic and functional relationships with the surrounding Lancashire sub-areas, as well as Liverpool and Manchester have not been fully exploited particularly given Preston’s strategic location and infrastructure advantages.

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Economic Potential of Preston – Draft Final Report

Despite the presence of UCLan, lack of graduate level employment means many leave Preston once their studies are completed.

Whilst levels of achievement in Central Lancashire schools have generally risen, and are well above average in South Ribble and Chorley. Preston’s overall performance is significantly below average.

The indicators of multiple deprivation highlight significant areas of Preston are in need of comprehensive socio-economic and physical regeneration with the inner urban areas of Chorley, Leyland and most especially Preston display incidents of being ranked within the 5% most deprived wards in the country. Levels of long term limiting illness are highest in the inner urbanised areas of Preston, Leyland and Chorley fluctuating from between 16% and 24%.

Preston (more specifically Preston east) suffers from the highest levels of persons with no qualifications (those aged 16-74) with levels between 42.1% and 48.6%; this is replicated in Chorley and in parts of Leyland and Bamber Bridge.

Labour supply constraints (skills, deprivation) act as a constraint to further economic growth.

A city centre falling behind - Preston has seen only a 2% increase in retail floorspace since 1998. The city centre office market has historically been constrained by supply-side factors - primarily constrained by the unwillingness of developers to undertake speculative development.

Strategic leadership is currently hampered by the two-tier system, which frequently directs resources and priorities away from the City. Preston Vision has had relatively few resources to drive delivery of the major redevelopment proposed for Preston in comparison with other URCs which have been set up to drive similar levels of regeneration in other UK towns and cities. The current proposals for the new Preston Vision risks a repeat of this.

Opportunities •

Capacity for growth - strong supply of employment land, with almost 300 ha available for employment development in Preston, South Ribble and Chorley. Strong housing growth potential – with the Central Lancashire Growth Point proposing to develop 21,200 new homes by 2020.

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Economic Potential of Preston – Draft Final Report

The development of Tithebarn would substantially increase retail floor space within the city centre and improve the retail and cultural offer of Preston City Centre, a crucial factor in maintaining the wider appeal of the Central Lancashire area.

Tithebarn and the proposed Central Business District would jointly expand the city centre office offer, and address the lack of new, Grade A office accommodation in Preston City Centre, and improve chances of professional and business services to the City.

The development of an enhanced city centre offer would be the catalyst for a wider platform of investment into Central Lancashire, including foreign direct investment. International image and marketing represents a key long term goal.

Recent years have seen strong growth in the education and health sectors, with UCLan a key driver, continued growth at UCLan, the continued improvement of its reputation and its ability to draw in young, talented under and post graduates is important to Central Lancashire’s appeal.

Results from the Business Survey suggest that the relationship between UCLan and Central Lancashire businesses is relatively weak, but this does not capture the full scope of the University’s business and knowledge transfer activities. The University is actively encouraging start up businesses and graduate entrepreneurs, developing a new business incubator facility alongside other activities. The University offering the potential for further knowledge and skills transfer, and can help address the difficulty some Central Lancashire businesses have in findings the skills they need;

The new Preston Vision, if adequately resourced, offers significant potential to galvanise new investment into the city and look to strengthen links across Central Lancashire and the region. The New Growth Point Partnership also brings a new phase of joint-delivery for the districts of Central Lancashire and the Fylde Coast authorities of Blackpool, Fylde and Wyre.

Threats: •

Central Lancashire has seen relatively little additional, new, Grade A city centre office supply developed over the last 10 years, but this is increasingly the office product demanded by major professional and business services firms, that are moving away from the out of town business park due to lack of the wider vibrancy and retail offer of city centre locations. Central Lancashire risks losing office employers to other regional cities that have or are developing this offer.

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Economic Potential of Preston – Draft Final Report

The slow pace of delivery of the Tithebarn development, if left unaddressed, will harm the attractiveness and competitiveness of Central Lancashire relative to its competitors, but may also harm Central Lancashire’s reputation in the private sector as a place to invest. The slow pace of delivery has already meant that the housing led redevelopment of the wider city centre area, especially the mixed use area to the south of Church Street and Fishergate has not come forward, and further delay might mean additional missed opportunities.

The Central Lancashire housing offer, and especially the offer in Preston itself, does in part acts as a disincentive to those with higher skills / prospective graduates / professionals to live and work in Preston – meaning the benefits of Preston’s higher paying jobs do not get retained within the local economy and meaning that some employers find it harder to attract the workforce they need.

Delivering Preston’s Economic Potential In considering the economic potential of Preston and Central Lancashire, there is strong evidence to suggest that here is a locality that has for a number of years performed well and that crucially, is set to show a similar degree of resilience in face of the economic challenges that currently exist. Looking forward, it has the potential to make a greater relative contribution to regional growth accounts simply because it is less exposed to the factors that are driving the down-turn. Its insularity is both a strength and a weakness. Trading patterns and supply chains are very localised and the locality has not developed the linkages with other major centres of the region – Liverpool and Manchester specifically – that it might. Nor has it developed real tangible relationships to date with other adjoining areas of Lancashire. However, the actions required to address the key challenges faced by Preston and Central Lancashire will lead to a greater participation of the locality in the region and the sub-region. If implemented effectively then one would expect to see these links develop and mature – but crucially in the context of this study, Preston is not there yet. Preston and Central Lancashire could develop a role within the region that offers a counterbalance to the regional centres of Manchester and Liverpool. It has more in common with these centres than it does with other centres within Lancashire – a competitive economy, strong transport links, a growing higher education offer – but it neither has the capacity to up-

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Economic Potential of Preston – Draft Final Report

scale to the size and contribution of Liverpool and Manchester but nor will it ever grow to such an extent as to completely dominate the existing towns of Lancashire. In respect of the latter, Preston can attract the higher value investment that other towns of Lancashire can not. Key strategic interventions include: •

Development and Regeneration – Delivery of an improved Preston City Centre, through delivery of the Tithebarn Redevelopment in particular remains key to Central Lancashire realising its economic potential, policy scenarios that deliver accelerated delivery of Tithebarn and the Central Business District and other transformative actions.

International Image and marketing – linked to the development of Tithebarn in particular it is important that Central Lancashire capitalise on its many positive attributes and publicise these to improve its share of Northwest Foreign and Direct Investment (FDI) and help create a perception shift among other investors. Investment in a positive international image and a coordinated marketing attempt should aim to attract headline grabbing FDI. This may be a longer term consideration but one that can be effectively planned for now.

Maintaining the competitiveness of indigenous sectors that are regional growth sectors – looking at transformational actions within the Regional Economic Strategy to understand both those areas where Central Lancashire is already able to compete and which sectors, such as professional services, where Central Lancashire has the potential to improve its competitive position.

Improved and targeted business support – Central Lancashire, and especially Preston, has seen modest growth in business stocks compared to many of its neighbours, and so policies to improve business support, to encourage entrepreneurship and enterprise growth and work with existing businesses seeking to grow has the potential to boost the economic performance in Preston, unlocking growth potential in existing small firms, overcoming property or skills log jams and in the process freeing up existing start up space.

The Skills Agenda – delivery of Tithebarn, delivery of the housing growth point, and improving linkages are important for Central Lancashire to attract and retaining higher skilled workers, that many businesses find in short supply and will need in the future.

These represent the policy imperatives facing Preston and Central Lancashire. The successful implementation of these will see a locality that plays a much greater role within the region. Under these broad themes, key actions for focus include:

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Economic Potential of Preston – Draft Final Report

A Clear Role for Preston;

Tithebarn;

Central Business District;

Engineering, Manufacturing and New Technologies;

More Coherent Marketing

Foreign Direct Investment;

Government Relocation;

Enhanced Business Support

Enhanced Linkages; and

Delivering the Housing Growth Point

A Clear Role for Preston Preston is an emerging Regional Services City supplying employment opportunities, retail, administrative and other services to its wider hinterland. Like other regional services cities, Preston combines elements from other city types. In particular, its traditional role was as a industrial city (cotton and associated engineering). But because of its wider asset base – retail centre, fast growing university, excellent rail and road links to the national economy, county administrative centre and gateway to the City-Region – Preston is in the process of modernising its economy. It is the only regional services city in Lancashire and the natural candidate to fulfil this role. To that end the role model for Preston are other regional services cities such as Bristol. This is not to argue for all economic development activity to take place in Preston (or the broader Central Lancashire area) at the expense of other areas, but to argue that Preston is the only centre capable of growing as partial counterbalance to the two city regions of Manchester and Liverpool,

Tithebarn The Tithebarn redevelopment is the biggest element of economic potential in the short term for Central Lancashire and could be seen as a pre-requisite for other developments or other elements of Preston’s economic potential to be fulfilled. The Tithebarn Development Specification outlines the quantum of development planned for Tithebarn as:

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Economic Potential of Preston – Draft Final Report

More than 80,000m2 of new retail floorspace;

20,000m2 of new / replacement office;

8,000m2 of financial and professional services, food and drink floorspace;

5,820m2 of leisure floorspace (which would accommodate a new city centre cinema);

A new 5,000m2 hotel (assumed to approximate 100 bedrooms); and

A new bus station and car parking

If the office and retail floorspace is all delivered, this would result in an 18% increase in Preston’s retail floorspace, and the first significant new office floorspace in Preston City Centre for a number of years, replacing some of the unpopular and outdated existing stock of office premises. The Environmental Statement for Tithebarn, produced in September 2008, estimates that Tithebarn will create up to 540 jobs, after factoring displacement and leakage, and additional GVA of between £13 – 15million per annum.2 Implementation of Tithebarn is likely to bring three further major benefits for Preston. •

Higher Profile – similar to that created by Cabot Circus (Bristol) and Liverpool 1;

Housing Investment around Preston City Centre; and

Increased attractiveness of UCLan to potential students and increased graduate retention through improved lifestyle offer.

Central Business District The successful development of Tithebarn is seen by some developers as a prerequisite for Preston City Centre to develop a Central Business District. Tithebarn may pave the way for Preston to develop a competitive and attractive Central Business District. It has been suggested that a CBD ought to be a development in the region of 80,000m2, requiring in the region of 8 hectares of land (assuming a relatively high density development). A Central Business District offers the best chance for Lancashire of attracting a major professional or business services investment or government relocation that has the maximum benefits to the wider economy.

2

Heart Of The Tithebarn Regeneration Area Environmental Statement: Volume 1

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Economic Potential of Preston – Draft Final Report

Engineering / Manufacturing and New Technologies Central Lancashire’s existing business base is clearly the foundation of economic growth in Central Lancashire, but two sectors provide particular opportunities for growth: •

Nuclear – through development and growth of Springfield Nuclear Fuels, which could see the creation of almost 1,000 additional jobs over the next 3 years;

Aerospace – through growth at BAE systems and the development of the 17 ha Samlesbury Aeropark

In addition, there is a potential opportunity for further growth in some specialist areas such as global renewables, taking advantage of Central Lancashire’s skill set and the reluctance of other areas to accommodate some of these businesses – advanced recycling. In the Cuerden Regional Investment Site in South Ribble, Matrix Park and Revolution Park at Buckshaw Village Central Lancashire has two highly attractive locations for industrial and logistics firms seeking to relocate to the area, with both locations enjoying excellent access to the M6, M65 and M61.

More Coherent marketing 1.1

Developing a more coherent marketing campaign is important for Central Lancashire. To date marketing in Central Lancashire has been both disjointed and uncoordinated, and both South Ribble and Chorley have pursued their own goals, marketing their own Boroughs and aiming to market Leyland and Chorley Town Centre. Both are arguably too local, on the other hand the Lancashire wide “Make it Lancashire” brand and marketing campaign are arguably too broad. If Preston’s role is to be Lancashire regional services city, then, for Central Lancashire at least, Preston ought to be the major focus for marketing efforts, promoting the city first and foremost - with South Ribble and Chorley presented as attractive but constituent parts of Preston / Central Lancashire or sold with regard to proximity to Preston and its wider offer.

1.2

Development of Tithebarn and the enhanced city centre that would result is probably a necessary first step before launching a high profile campaign, but when Tithebarn is delivered, Preston ought to be the focus for much of the marketing and promotional aimed at attracting investment and new businesses in Central Lancashire.

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Economic Potential of Preston – Draft Final Report

Major Inward Investment The development of Tithebarn and a Central Business District will provide a step change in the quality of Preston City centre and the office product on offer. This, coupled with a major marketing push emphasising Central Lancashire’s existing assets (such as the large and well qualified population living within 30km, its land and transport assets, the University, housing offer) enhance the chances of Preston capturing a major inward investment similar to MBNA at Chester or New Balance at Warrington. A major inward investment generating 500 new jobs in Central Lancashire could be expected to generate a further 1,250 jobs in the wider economy and a significant boost to Central Lancashire GVA. A high profile “name” investment (e.g. a major international name) could be expected to have a much greater impact.

Government Relocation Central Lancashire is one of a number of areas that could potentially capitalise on major government relocations, implemented since the Lyon’s Review. Expected relocations to 2010 are expected to total some 20,000 jobs3, by June 2008 17,118 posts had been relocated. 3,669 of these posts were relocated to the Northwest but no significant numbers to Central Lancashire. The creation of a Central Business District may provide the means for Preston to provide the right premises offer to attract a major government relocation, and this may prove to be the sensible approach to kick starting development of a new Central Business District, by anchoring the scheme around a major Government relocation.

Enhanced Business Support 1.3

Business Support services are already widely recognised as good in Central Lancashire, the challenge for Preston and for Central Lancashire is to address blockages and barriers for further growth. This includes addressing the lack of move-on space, thereby freeing up existing space for the next wave of entrepreneurs and start ups; and supporting businesses to find the skilled labour they require, through still closer working / liaison between UCLan / the four Central Lancashire Colleges and employers. Proactive attempts to attempt to reverse the Lancashire “Brain Drain” by tempting back those who have left the area to study elsewhere

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Economic Potential of Preston – Draft Final Report

could be one way of supporting businesses by helping them access the skills they need to grow and develop.

Delivering the Housing Growth Point The delivery of the Housing Growth Point is critical to both addressing housing affordability issues and addressing the quality of the housing offer in Central Lancashire, however successful delivery of the Growth Point proposals will help Central Lancashire to retain and attract the skilled workers it and its businesses will increasingly need. Tithebarn will enable a proportion of the new housing to be delivered as city living developments around the edges of Preston City Centre, providing further diversity to the housing offer and providing an attractive environment for the retention of graduates and young urban professionals, in a virtuous circle creating a more attractive environment for the creation of a Central Business District.

3

http://www.ogc.gov.uk/government_relocation_relocation_programme_progress__8170.asp

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Economic Potential of Preston – Draft Final Report

2.

INTRODUCTION

2.1

In October 2008 GVA Grimley Ltd was appointed by the Northwest Regional Development Agency (NWDA) to undertake a study exploring the Economic Potential of Preston.

2.2

The primary objective of this work is to form a strategic assessment of the economic potential of Preston, generating a vision for the future growth of the city4.

2.3

This is a wide-ranging and high-level futures study which will ultimately determine the potential GVA impacts of increasing the strategic nature of planning and investment within Preston. An important objective of the study will be to identify those public sector decisions or investments which will in future enable, or conversely constrain, the city in achieving growth.

2.4

The current Regional Economic Strategy (RES) already recognises the need to support and sustain conditions for growth in areas with strong economic drivers, including the need to capitalise on the strengths and key assets of the cities of Manchester, Liverpool and Preston as key drivers of city-regional growth.

2.5

The latest adopted Regional Spatial Strategy (RSS) however does not place such an emphasis on the importance of Preston as the “third-city” driver of the regional economy. In itself this is a departure from previous draft versions and indeed the Secretary of State’s Proposed Changes to the draft RSS.

2.6

We will examine whether this remains a potential risk to the growth of the city going forward through the course of this study; but the contention here is that there is now a very real point of difference in the regional policy framework, which provides an interesting departure point for this study and how it informs the development of the forthcoming North West’s Regional Strategy. The development of the strategy provides an exciting opportunity to unify spatial, economic, environmental and social priorities and actions. The strategy will be led by the NWDA but developed in partnership to ensure an agreed vision and strategy for the region is developed.

Purpose of this Report 2.7

We have proposed an approach to this study that seeks to gain new primary evidence from the cohort that matters, but is often overlooked in such studies: Preston’s business

4 For the purposes of this study, we consider that ‘growth’ will emerge through the internal maximisation of assets and/or through the exploitation of economic complementarities between the city and other centres of growth and opportunity throughout the region.

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5

community. We have carried out a detailed survey of almost 500 businesses with the explicit purpose of seeking to understand, both tactically and strategically, the state of the business environment on a range of issues ranging from skills and training, trading conditions, business prospects and supply chain management. 2.8

A great deal of knowledge already exists about this particular sub-region through previous 6

work undertaken at the Preston level, across the Central Lancashire , Central Lancashire and Lancashire areas and indeed in neighbouring Lancashire authorities and sub-regions. We have been continuously engaged in and around Preston since 2004 and as such can offer some unique and in-depth analysis of the issues faced. However, we are purposefully looking for new evidence from the business community to supplement our understanding. When taken together the evidence provides a useful barometer for determining how far Preston has progressed in achieving its strategic goal of becoming the Third City of the North West. 2.9

Four years on, this report seeks to draw together what we know from previous conclusions derived and provide an updated position as to where the authors consider ‘contemporary Preston’ is at present. In our opinion in 2004, the “North West’s Best Kept Secret”7, offered significant optimism for economic growth based on the resilience of its business base and the degree to which Preston had secured a more diverse and growth oriented sectoral share. Its geographical location and relative accessibility together with its clear functional relationship with the high resident value of South Ribble and Chorley, offered further clues to its potential. Finally, the pipeline of exiting new investments, showcased by the Tithebarn Regeneration Area, spoke of a city that was really going places.

2.10

2008 of course presents many challenges for the UK and the global economy and the prognosis for 2009 is of a steadily worsening situation. This report provides further detail on these important macro-economic challenges before drawing out the implications for Preston.

2.11

This report seeks to embed our understanding of Preston in a conceptual framework of what makes ‘places’ work. This draws on recent work by Paul Hildreth8, Alan Harding9 (for the North 10

West Development Agency) and the published reports from the Work Foundation . 2.12

As Hildreth (2006) rightly concludes, there is a considerable evidential base connected with the Core Cities movement and within this, tangible evidence of a positive correlation between city-size and economic performance, higher productivity and higher per capita incomes.

5

461 business surveys have been completed with businesses across Preston, Chorley and Leyland Principally by GVA Grimley 7 Preston City Council (2004) Economic Regeneration Strategy and Priority Action Plan 8 Role and Economic Potential of English Medium Sized Cities 9 The Changing Geography of the North West economy 10 Neil Lee – Distinctiveness and Cities (cref the Work Foundation’s Ideopolis concept) 6

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However, as Hildreth also suggests, the very many medium-sized and small cities are still important to both regional and national economies as this is where a significant proportion of a country’s population live and do business, yet much less is known about them. 2.13

We consider the Ideopolis research to be particularly helpful for cities such as Preston. Principally because it is arguably more important for such cities to develop distinctively rather 11

than pursue a ‘find and replace’ approach to economic development . The most successful cities are those that develop their own unique strengths, original knowledge and creative capabilities that are difficult for other places to replicate and in which increased competitiveness flows as a result. The most successful cities are also those that recognise their own unique qualities as well as the unique qualities of those other towns and cities in which they interact. The worst case scenario is where cities and towns start to compete for the same resources, on the same basis, following the same strategies. 2.14

Hence, our conceptual framework draws together the key ingredients from this research and reflects our understanding of what makes cities work.

Definition of Preston 2.15

What do we mean by Preston? Is it the functional economic sub-region or true housing market area? Do we refer to the Local Authority District? Or even just the city centre? The answer is of course all of the above and the analysis contained within this report will refer to each of these spatial geographies as the appropriate line of enquiry demands.

2.16

At the sub-regional level, travel to work patterns and migration trends are key indicators of the relative strengths of connections and relationships. Hence, they are often insightful in helping to define a functional economic area. Large cumulative flows indicate stronger relationships and the calculation of net flows indicates the key employment centres and the relative scale of their catchments.

2.17

Previous work12 undertaken by the authors highlights a functional relationship between Chorley, South Ribble and Preston (Central Lancashire) exhibit strong connections with significant flows between all three Authorities. Preston acts as a clear employment pole with strong net flows from both South Ribble and Chorley.

2.18

Migration trends reinforce this relationship. Subsequent Regional Spatial Strategy iterations identify this area as a clear functional Housing Market Area.

11 Lee (October 2007) Ideopolis: Knowledge City-Regions Distinctiveness and Cities – Beyond ‘Find and Replace’ Economic Development 12 Lancashire Economic Partnership (2007) Lancashire Economic Strategy: Appendix A

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2.19

Economic Potential of Preston – Draft Final Report

Following this approach across Lancashire, five sub-areas can be identified that to a large degree are quite self contained. These are: East Lancashire, West Lancashire, Central Lancashire, the Fylde Coast; and Lancaster and are shown in Figure 1 below: Figure 1: Five Sub Areas of Lancashire

Source: Lancashire Economic Strategy 2.20

Hence for the purpose of this report, we refer to the true functional economic area of Central Lancashire as this refers to the three local authority areas of Preston, South Ribble and Chorley. The economic potential of Preston should therefore be viewed within this wider economic geography.

2.21

However, and as various investigations unfold, all spatial geographies from the city centre to the sub-region will emerge as the unit of analysis (either quantitative or qualitative). Wherever

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possible we have sought to examine in detail the relevant spatial geography to the particular line of enquiry. The economic potential of Preston therefore demands investigation across each of these definitions.

Views of Businesses 2.22

The findings of the Business Survey have been added to the findings from the last business survey conducted by MORI early in 2005, to provide further supplementary evidence to help understand the competitiveness of the local business base. The 2005 survey was commissioned by the Preston City Vision Board as part of the development of the Preston Economic Regeneration Strategy to help it to better appreciate and understand the needs of local businesses and comprised 500 telephones interviews with the owners/senior mangers of manufacturing and service businesses listed in the Central Lancashire Business Directory 2004-2005 and operating in the Preston / South Ribble area. Chorley was not included in the survey.

2.23

The 2008 survey was undertaken by Spirul Intelligent Research in November 2008 through 461 telephone surveys with owners / senior managers of businesses across Preston, Chorley and South Ribble drawing on a database of more than 4000 businesses across the Central Lancashire area provided by Preston City Council and Lancashire Economic Partnership. Detailed analysis of the survey has been carried out by location and by sector, using the following five broad sectors: •

Primary Producers: defined as Building & Construction, Manufacturing and Processing, Engineering & Electronics

Communications: defined as IT, Telecommunications, Communications, Bus and Coach Transport, Other transport

Professional Services: defined as Banking, Insurance and Finance, Legal Services, Business Services and other Professional

Public Services: Health and Education, Public Administration and Defence

Retail, Leisure, Services: Retail, Wholesale activities, Hotel, Bars and Restaurants, Other leisure, Other services, Goods transport, Storage and Distribution

2.24

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Key findings from both surveys have been incorporated into this report.

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This Study Rationale 2.25

The Northwest Development Agency and partners (Lancashire Economic Partnership, Lancashire County Council and Preston City Council) have commissioned this work to provide an independent and objective view of the sustainable economic potential of Preston and its role within the region and in particular to explore why Central Lancashire, and especially Preston itself, while it has performed adequately over recent years, has perhaps not achieved its full potential.

2.26

This is demonstrated by a number of key facts: •

Inward Investment - Central Lancashire’s failure to attract a significant share of Northwest FDI over recent years, NWDA Inward Investment Team Statistics indicate that Central Lancashire has had just a 3% share of inward investment projects over the period 2004-2008, and has captured just 1.5% of the new jobs created and 3.4% of the safeguarded jobs.

Retail – Although Central Lancashire has increased its retail floorspace by more than the regional average, growth has been driven by out of town retail and especially growth in South Ribble. Preston has seen only a 2% increase in retail floorspace since 1998, compared to a rise of 22% in Manchester and the development of Liverpool One. Preston City Centre is therefore falling behind its competing cities elsewhere in the Northwest and has failed to bring forward the Tithebarn redevelopment quickly enough.

Housing – Central Lancashire has improved its housing offer, with new suburban housing development at Cottam, East Preston and Buckshaw Village and the beginnings of city living apartment development around Preston City Centre, but a significant proportion of the housing stock within inner east Preston remains low price and low quality.

Business Base - Central Lancashire’s growth in VAT stocks trails the Northwest and England averages. Within Central Lancashire itself, growth in VAT stocks has been underpinned by South Ribble and Chorley, Preston’s performance has been weak. Chorley and South Ribble’s VAT stocks have increased by 15.4% and 14.7% respectively over the period 2001-2008, whereas Preston’s VAT Stock grew by just 6.1%, less than half of the UK or Northwest rate;

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Employment Growth – Since 1998 Employment in Central Lancashire has increased by more than the NW average, with employment growth of around 19%, compared to 8% in the Northwest. Employment growth varied from 15% in Preston to 31% in Chorley. However a significant number of new jobs have come not from private sector employers, but from public sector growth, with Public Administration and defence, Education and Health and social work accounting for almost 15,000 of the new jobs. Private sector growth has been equally strong in some sectors such as Other Business Activities.

GVA – growth in employment has not translated into a concomitant increase in GVA. Whereas regionally employment has grown by 8% since 1998, GVA has grown by 28% during roughly the same period; Central Lancashire on the other hand has posted an employment increase of 19%, GVA has grown by 29%. By implication, if productivity growth ratio had kept pace with the regional average then GVA growth should have been 67%.

Population Growth – Although the Central Lancashire population has been growing steadily, and in line with the England and Wales average, Chorley and South Ribble are the drivers of population growth. Recent recovery in population growth for Preston since 2003 cannot hide the fact that its rate of growth has been less than a quarter than that for the wider Central Lancashire area since 2000. This is quite a telling result during a rd

period where it should be forging it position as the 3 city in the North West. •

Occupational Structure – workplace analysis of Central Lancashire’s occupational structure indicates that a high proportion of its employment remains in administrative and secretarial occupations (17% - compared to Northwest and England and Wales averages of 13% and 12% respectively.

Earnings – Although Gross Weekly Pay (workplace earnings) in Central Lancashire is only slightly below the Northwest average (£441 per week compared to £450 per week) wages are significantly lower in Preston, at around £426 per week. Earnings in Central Lancashire, like the rest of the Northwest, trail England and Wales earnings by almost 7%. Gross weekly pay in Preston is significantly lower than earnings in both Liverpool and Manchester, the two Northwest Cities it aspires to compete with.

Capitalising on its Transport Links – Central Lancashire has not capitalised on its position as the transport hub of Lancashire. Despite having excellent motorway links, and access, through Preston station, to fast, frequent rail services to London, Birmingham, Glasgow, Manchester, Manchester Airport, Liverpool and beyond (with Preston being by some distance the busiest NW station outside Manchester and Liverpool), as discussed above Preston has seen low business formation rates and little of the Northwest’s national and

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FDI has chosen to locate in central Lancashire, instead locating at less well connected destinations such as Chester Business Park (MBNA, Marks and Spencer Financial Services) 2.27

This range of key areas where Central Lancashire has not, perhaps, fully realised its potential provides the rationale for carrying out this study.

2.28

This commission seeks to explore the potential contribution of the city and its surrounding area in driving the regional economy. This could be through the internal maximisation of its assets (the potential for Preston to generate growth in itself) and /or through the exploitation of economic complementarities and linkages with Manchester and Liverpool in particular but also including other centres within Lancashire.

2.29

As this study will provide an evidence base for the forthcoming Integrated Regional Strategy, the partners are also looking for a strategic view of the potential additionality of developing a strategic role and function for Preston. In short, how economic potential can be realized through more effective and coordinated strategic planning and linkages to broader economic and spatial ‘drivers’.

2.30

The strategic view needs to take account of the following factors: •

any recent major investments and business growth in the city;

the economic geography of the including trading relationships in the main business sectors, within the area and with other regional centres;

the potential for any integrated transport solutions;

the potential to ensure development in this area is carbon neutral;

the opportunities for developing an appropriate mix of housing, and releasing land for employment use and the effect of these enabling factors on green space and quality of life;

2.31

the potential for tackling the specific deprivation existing in parts of this city; and

how global business trends may impact on the city.

Substantial consideration has been given to the way in which large towns and their city regions function economically, and investigation continues as to the range of drivers that influence their economic prospects. We know much less, however, about the lower levels of the economic and settlement hierarchy - about the different roles that smaller towns play in

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the new service-based economy and about why some smaller towns prosper and others decline in the context of broader city region development. 2.32

Such questions are especially pertinent for parts of the North West, particularly Lancashire: where a significant number of medium-sized towns exist, with close links to other city-regions including Greater Manchester, Merseyside and Leeds.

2.33

This immediately raises questions about the way in which medium-size towns benefit differentially from interactions with the poles of activity that lie at the core of nearby city regions: •

Are better performing towns characterised by features – economic, labour market, infrastructure, housing, life quality, retail offer – that are less prevalent in less successful towns?

Are better performing towns more extensively integrated with city region activity through agglomeration and commuting links?

Are better performing towns simply better placed through their location and economic history?

• 2.34

Are better performing towns a mix of any or all of the above?

Work is currently being undertaken to investigate such issues for Lancashire. The proposed work programme builds upon and extends work that is currently being undertaken for NWDA and partners as part of preparations for the emerging integrated regional strategy. Researching these questions is likely to help inform future economic and planning strategies for the sub-region and region, including the Lancashire Integrated Strategy.

Report Structure 2.35

This remainder of the report is structured around the following sections: •

Chapter 2 - Policy Context – This section will briefly review the regional, sub-regional and local policy and strategy basis that the outcomes of this study will need to respond to;

Chapter 3 Macro-Economic Context – This sections sets out the current trends and challenges facing the global economy and UK and North West Inward Investment Markets;

Chapter 4 The Drivers of Knowledge Based Growth – This section will introduce a conceptual framework which will be used to baseline the economic potential of Preston. A

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concise overview of previous research undertaken across the study area will also be provided. These are then explored in detail in Chapters 5 – 11; •

Chapter 12 SWOT Analysis – draws together the findings from Chapters 5-11 into a comprehensive SWOT Analysis; and

Chapter 13 Delivering Preston’s Economic Potential – draws some firm conclusions and provides a summary of the key policy imperatives facing Preston and Central Lancashire if the area is to reach its economic potential.

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3.

Economic Potential of Preston – Draft Final Report

POLICY CONTEXT The North West Plan

3.1

The recently adopted North West Plan (RSS) sets the spatial planning framework for the region. Within this the regional spatial framework identifies the main development locations across the North West. It prioritises the concentration of new development within the urban areas of the Regional Centres, Regional Towns and Cities. Specific mention is given to the need to support development in the regional towns and cities in the City Regions to secure urban regeneration and economic growth that is complementary to the Regional Centres. Preston, along with Blackburn, Blackpool and Burnley is identified as a Regional City within the Central Lancashire City Region.

3.2

The RSS notes that the combined presence of Preston and the towns of Blackpool, Blackburn and Burnley, present ‘the greatest potential for delivering sustainable economic growth, building on the individual strengths of these urban centres around commerce, higher education, advanced manufacturing and resort tourism’.

3.3

One of the key spatial principles relevant to the Central Lancashire area is to ‘marry opportunity and need’. This principle represents a key question for Lancashire as a whole – how can economic opportunities created in the Central Lancashire area spread to adjacent areas of priority regeneration need including parts of Blackpool and East Lancashire.

3.4

Preston itself acts as the geographic, commercial and administrative centre of Lancashire. The delivery of the Preston City Vision is seen as being integral to the delivery of raised economic performance across Central Lancashire and wider City Region. In addition, a priority for the City Region is seen to be the development of the role of Preston as the City Region’s transport ‘gateway’ and key public transport interchange.

Regional Economic Strategy 3.5

The Regional Economic Strategy (RES), published in March 2006, identifies Manchester and Liverpool as vibrant European cities and states that, with Preston, they serve as key drivers of city-regional growth. The RES aims to capitalise on the strengths of Manchester, Liverpool and Preston, and recognises the importance of Preston as a focus for city-scale investment.

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3.6

Economic Potential of Preston – Draft Final Report

Preston is identified as being a key component within the Central Lancashire City Region

13

economy (which in 2005 had a value of circa £15 billion, based on 2003 prices). The economy of the city region was seen to include the following key assets and opportunities: •

A world class concentration of aerospace and defence manufacturing (most important centre of high technology manufacturing outside South East)

Strong concentrations in advanced manufacturing in chemicals, rubber and plastics, electronics and optical equipment, food and drink, paper and printing and recorded media

Opportunity for growth in environmental technologies and biotechnology

Preston – key location for knowledge-based employment, with fast growth in creative, ICT and new media occupations

Blackpool – the UK’s most visited tourist destination aiming to become a world-class resort destination by securing the regional casino, leisure investment and improvements to Blackpool Airport

Blackburn – strategic gateway to East Lancashire and Enterprise Capital of the Northwest 2005

3.7

Since the publication of the RES, the North West Development Agency (NWDA) has commissioned research by the SURF Centre at the University of Salford, Strengthening the Evidence-base of Key Economic and Spatial Strategies in the North West, which identifies Preston, along with Manchester, Liverpool, Leeds and Chester, as ‘key nodes’ and ‘economic hot spots’ within the North West.

3.8

This is certainly evident when considering the recent economic performance of the area. The core study area is one of three sub-areas which make up the Central Lancashire City Region. It contributes £5 billion to the sub-region’s economy, employing 193,000 people, and has witnessed employment growth of 17% and GVA growth of 27% between 1990 and 2005 evidencing the most growth-oriented structure anywhere in Lancashire.

Sub-Regional Policy Framework Lancashire Economic Strategy (2006) 3.9

Building upon such dynamic growth, the areas of Preston, South Ribble and Chorley are identified as a programme of regional significance within the Lancashire Economic Strategy

13

As this encompasses the local authorities of the Fylde Coast, Central Lancashire and East Lancashire.

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(LES). Specifically it identifies the programme of investment planned in which the transformation of Preston City Centre represents the number one development priority. 3.10

Building on the planned investment through the Tithebarn scheme the Lancashire Economic Strategy also recognises the importance of delivering a central Commercial Quarter, a place to do business, alongside a new Residential and Civic Quarter. Further to this, “Riverworks” is recognised to be an ambitious development project that seeks to capture the latent potential north and south of the River Ribble and Lancashire Canal, for residential, leisure, tourism and employment uses. Central Lancashire City Region Development Programme (2006)

3.11

The Central Lancashire City Region Development Programme (CRDP) sets out how the subregion will take forward the Northern Way Growth Strategy. Eight priorities for action have been identified: connecting the city-region; sustainable urban growth; developing the green city; advanced manufacturing; Blackpool tourism; spreading enterprise; enhancing skills/employability, and expanding the role of Higher Education.

3.12

Further work is being undertaken to develop the schemes that contribute to the eight priorities of the CRDP and the economic benefits they will deliver. As a polycentric City Region, Central Lancashire’s early priority is to analyse the inter-relationships and exploit the opportunities emerging across the sub-region.

3.13

The latest iteration of the CRDP sets out Central Lancashire’s response to addressing the £4bn estimated output gap, of the £13bn output gap attributed to the North West (at 2006)14. In depth analysis was undertaken to support a strategic response which first and foremost seeks to “capitalise on the natural competitive advantage enjoyed by the component subareas of Central Lancashire”15.

Taking advantage of the most ‘natural’ focus for economic growth – the Central Lancashire authorities of Preston, South Ribble and Chorley – by exploiting higher value business and professional services sectors, building on the strong public sector presence and benefiting from the strong linkages to aerospace and advanced manufacturing;

Overcoming the frailties of the Fylde Coast economy and a declining tourism offer (since compounded by the failure of the casino led regeneration programme) by a step-change

14 There is a suggestion that the North West ‘gap’ has widened still that time (Regional Economic Forecasting Panel May 2008). Indeed in the North West Regional European Partnership response to European Commission consultation on Reforming the Budget, Changing Europe (2008/09 Budget Review), suggests a gap of13% lower than the UK, resulting in an output gap of up to £19.5 billion.

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investment in a higher quality resort experience and the better exploitation of many competitive Fylde Coast sectors expected to including advanced manufacturing and aerospace, business and ICT services. •

Realising the potential of Blackpool Airport as a key contributor of employment and GVA growth16 through the value of connectivity and the benefits of business location and adjacency to a an international hub. Over time, it is suggested that Blackpool Airport will develop a complementary role through short haul flights to London Stansted and European destinations to Manchester Airport, which will still remain the primary driver of air service connectivity to the Lancashire business base.

Investment in a strong advanced manufacturing sector in Pennine Lancashire and in developing creative industries, food and drink and professional services.

Extending the influence of the University of Central Lancashire throughout the City Region realising the direct spending power of students and staff, the supply of skilled workforce, links with industry and enhanced programmes of graduate retention and business linkages.

A focus on city and town centres, principally Preston, Blackpool and Blackburn, to create attractive and prosperous centres of commerce, retail and leisure.

The opportunity to harness the economic potential of the “Green Infrastructure” of Central Lancashire, an important distinguishing feature.

3.14

Key challenges to be addressed include:

The need to boost productivity levels through working with businesses and the way they plan for and approach their transactions, labour force relations, skills/training and research and development.

Addressing skills deficits and in particular Level 4 skills in order to support the programme of economic growth envisaged.

Improving graduate retention and engagement with businesses linked to the provision of quality employment opportunities, an appropriate residential offer and vibrant town and city centres.

15

Lancashire Economic Partnership (2006) Central Lancashire City Region Development Programme (para 4.53) An Economic Impact Study of the Airport was undertaken by Lancashire Economic Partnership, which envisages Blackpool Airport growing to around 2.7 million passengers by 2015 and on to 3.4 million by 2030, supporting between 1,860 and 2,210 full time jobs by 2015 generating between £69.5 million and £81.8 million (at 2005 prices) of income. By 2030, it is estimated that employment supported will grow to between 1,740 and 2,060, generating income of between £86 million and £101.3 million

16

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Overcoming significant and in some respects entrenched sustainable communities issues.

Investment in transport and communications barriers, particularly the external linkages to other city regions and indeed, international locations.

3.15

A number of projects are currently being progressed against the above and outside of the principal place-programmes (to which Preston Vision is referred to below) a number of ‘Enabling Frameworks’ have been established, addressing the perceived needs of the City Region in the following areas: Learning and Education; Higher Education; Enterprise; Creating the Right Conditions for Growth (Residential; Green City; Movement; Virtual Connectivity). A key strategic response within this includes the production of a Lancashire Skills Strategy by the Lancashire Skills and Employment Task Group. Preston Economic Regeneration Strategy

3.16

The Preston Economic Regeneration Strategy and Prioritised Action Plan is the centre strand of a range of various sub-regional and regional strategies covering the wider sphere of influence. The Strategy is underpinned and shaped by a number of strategic goals that ultimately aim to propel Preston towards its ambition of becoming a competitive European City. These strategic goals are: •

The Beating Heart of the City Region – that economic opportunities in Preston, together with the Central Lancashire local authorities South Ribble and Chorley, are maximised to the benefit of the regeneration needs of the Central Lancashire city region.

A City with a Big Reputation for Business – prioritising the needs of those businesses that have made Preston a success, recognising Preston’s competitive sectors and capturing the economic spin-out opportunities arising from the University of Central Lancashire.

The Greenest and Healthiest City – capturing the economic opportunities presented by Preston’s unique assets: its river, dockland and waterways, its green spaces and easy access to areas of open countryside.

The City as a Memorable Destination – exploiting Preston’s cultural and heritage resources as a means of developing the ‘Preston brand’ and ensuring that high quality urban design and new iconic developments will be embedded in the redevelopment of the city centre.

3.17

An important part of the vision is raising the profile of Preston as a ‘city with a big reputation for business’. Delivering a city centre commercial quarter has been identified as one of the main priorities for Preston to complement the investment at Tithebarn a major mixed-use retail

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development in the heart of the city. The new commercial quarter will provide space that meets modern day occupier requirements, for new and existing businesses. 3.18

Other key elements include clustering in creative and ICT/New Media sectors and building on Preston’s first mover status in WiFi connectivity. The creative and media sectors are also seen as key drivers of growth in Preston.

3.19

A more aggressive partnership with UCLAN is envisaged (on knowledge transfer, spin-offs), gateways to the City enhanced, the tourism and heritage offer developed and lifestyle enhancement promoted to give Preston a “buzz” – this includes providing the full range of attributes of a city: better hotels, diversity in retail and leisure offers and attractive living and cultural quarters.

3.20

In March 2006, Preston City Council and the adjacent districts of South Ribble and Chorley commissioned the Central Lancashire City Sub-Regional Strategy. This strategy demonstrated latent growth potential in the context of this wider travel-to-work area. South Ribble Economic Regeneration Strategy 2008-2018

3.21

The South Ribble Economic Regeneration Strategy, overseen by the South Ribble Strategic Partnership, sets out the key priorities for the economic regeneration of the Borough, with seven priority objectives and some 56 key actions / projects. The overall vision is that “In 2018, South Ribble will be widely known as a great place to live, work, visit and play in the North West and a vital part of the sub-region’s economy”.

3.22

The Key Priorities and some of the key actions / projects are summarised below: •

Growing the economy – key objectives include attracting investment, diversifying areas of specialization, building on public sector strengths and forging links to Universities by linking regeneration and economic strategies. Key projects include maximising South Ribble’s geographic accessibility, attracting inward investment to the borough and linking to key growth points at Media City and Samlesbury.

Boosting enterprise - The aim is to encourage and assist new business starts and to provide ongoing support to ensure their survival. Developing regeneration packages for businesses in Leyland and Ribble will be provided and the private sector will be encouraged to provide new retail and office space in the borough.

Investing in infrastructure - A modern, flexible and green infrastructure for technology, transport and amenity will be created. In Leyland the station will be improved and the

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green infrastructure of South Ribble will be enhanced through the creation of river corridors and parks such as Worden Park, with a secondary goal of increasing the number of visitors to the Borough. Joint working with Preston and South Ribble through the LDF is identified as an important action to ensure the LDF delivers new infrastructure improvements. •

Space to grow facilities – The strategy aims to ensure there will be a plentiful supply of commercial land and facilities in South Ribble to stimulate new businesses and to allow growth both in urban and rural locations. Bringing forward the Cuerden Regional Investment Site is identified as a key aim, as is developing new retail and office premises. The Strategy seeks, through the LDF, to create additional employment locations and premises across the borough to deliver growth in SMEs and the target employment sectors.

Jobs and skills - The aim is to ensure a variety of jobs for people in the borough through investment, education and training and to attract a higher number of graduates to the area.

Selling South Ribble - The profile of the borough will be raised through a marketing plan to encourage visitors and investors to the area. Developing a new brand for Leyland is highlighted to attract new visitors and businesses.

Improving life in South Ribble - To raise the standard of living and to maximise the sense of place in the borough through the creation of accessible green spaces such as Bannister Brook, the redevelopment of town and district centres, the sustainable development of appropriate and attractive housing and the improvement of tourist attractions.

Chorley Economic Regeneration Strategy March 2006 3.23

The Chorley Economic Regeneration Strategy sets out the key priorities for the economic regeneration of Chorley, with six key strands and 21 enabling actions aimed at an overall vision for Chorley defined as “Growing Sustainably” so that by 2025 it will have become the most sought after place to live and work in the North West and at the heart of the regional economy. This will be achieved through the completion of the following priorities: •

Supporting and developing enterprise - Entrepreneurs and employees will be trained and supported through the business centre at the highly regarded Runshaw College. Flexible working will be encouraged through improvement s in the broadband network, the establishment of rural businesses and encouragements for home based entrepreneurship. The strategy includes a key action around business support, and

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identifies the need to develop a shared business support infrastructure with South Ribble Business Venture and other partners •

Improving transport infrastructure and accessibility - Highway and public transport improvements will be implemented throughout the borough with a new station and park and ride to serve the Royal Ordnance Regional Investment/Buckshaw Village developments and the ‘Kick Start’ bus service to rural settlements. To improve connectivity with the wider region the Manchester to Blackpool train line and available bus corridors will be enhanced. A new motorway junction may be created at Charnock Richard.

Providing a portfolio of sites and premises - The aim is to create a ‘bridge of commercial opportunity’ running from the M61 to the M6.The most important part of the proposed ‘bridge’ will be the 50 ha Royal Ordinance Regional Investment Site (Buckshaw Village) in Euxton. In addition Chorley will be maintaining the supply of premises suitable for small businesses.

Thriving Town Centre- Priority will be given to improving the aesthetics of Chorley town centre’s key gateways and civic spaces. This will be achieved by the consolidation of town centre management and increased investment in the public realm.

Improving Skills and Addressing Worklessness- The reputation that training is cost effective will need to be established through Business Link grants and the courses offered by Runshaw college

Marketing Chorley to the World- Marketing Chorley as a “Modern Market Town” will be achieved by providing a strong design focus for new development whilst simultaneously rediscovering its market heritage.

Central Lancashire, Blackpool Growth Point Programme 3.24

Central Lancashire, Blackpool Growth Point Programme is designed to provide support to local communities who wish to pursue large scale and sustainable growth, including new housing, through a partnership with Government. In October 2007 an expression of interest was made on behalf of the authorities of Preston, South Ribble, Chorley, Blackpool and Lancashire to the Department for Communities and Local Government outlining an accelerated housing growth programme, which would stimulate further economic growth and regeneration.

3.25

The Programme of Development (PoD) was formally approved in December 2008 and proposed to deliver almost 20,000 homes by 2016/17 offering a mix of types in sustainable

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locations. The PoD was centred on the reinforcement of an enhanced public transport investment plan for a more efficient urban transit system although new highway infrastructure was identified as part of the bid to unlock certain sites, which are currently constrained. Central Lancashire Preferred Core Strategy 3.26

All of the above strategies and programmes have been used in the development of recently published Central Lancashire Preferred Core Strategy which sets the spatial vision for the area up to 2026. The Vision as stipulated in the core strategy is that the ‘Central Lancashire area of Preston, Chorley and South Ribble will play a leading role in Lancashire’s world class economy and provide residents with a strong sense of community within a high quality green environment’. In realising this vision the strategy states that the City of Preston will have become well-established as the alternative destination to Manchester and Liverpool for retailing, culture, entertainment, business and higher education, with a transformed, highquality city centre and regenerated surrounding areas.

3.27

With this in mind the purpose of this report will be to provide an initial analysis of Preston’s competitive position and the progress it has made in fulfilling its role as the regions ‘Third City’.

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4.

MACRO- ECONOMIC CONTEXT

4.1

Given that we are now in the midst of an unprecedented period in the global economy it seems appropriate to reflect on wider macro-economic trends that will ultimately define Preston’s prospects over the next 5 years.

4.2

The March 2009 IMF Note17 produced for the G20 summit highlights very clearly the prognosis over the next 18 - 24 months for the global economy in that: •

Global economic activity is falling, notwithstanding forceful policy efforts by many Governments, and is expected to decline between ½% and 1% in 2009 before recovering gradually in 2010. This is the first time that Global GDP has contracted since the end of WW2.

Global GDP is estimated to have fallen to 5% in the fourth quarter of 2008, led by sharp falls in industrialised nations. US GDP declined by 6.2% in the last quarter on 2008, by roughly the same amount in the Euro Zone and by 13% in Japan. Within the Eurozone

China’s recent breakneck growth is expected to slow. The World Bank recently cut its forecast for Chinese GDP growth for 2009 to 6.5%. This is the second downgrade in the last four months, in November, the World Bank cut China's 2009 GDP estimate to 7.5% from 9.2%. China's economic growth slowed to 6.8% in the fourth quarter of 2008 from the year-earlier period, capping full-year growth to 9%, preliminary figures showed in January. In recent years China has grown at an annual rate of nearer 10%.

In normal circumstances the global economy needs to grow by at least 3% per annum to simply stand still with population increases, advanced economies have typically grown at between 2-3% per annum over recent years.

• 4.3

All these figures underline the serious, global nature of the downturn.

Recent UK data underlines the serious situation facing the UK economy. •

Latest Government Statistics released in March 2009 indicate that UK Gross Domestic Product (GDP) decreased by 1.6% in the 4th Quarter of 2008, following a decline of 0.7% in the 3rd quarter of 2008. This in turn followed zero growth in the 2nd quarter of 2008. Weaker service industries, construction and production output drove the deceleration in

17

http://www.imf.org/external/np/g20/pdf/031909a.pdf

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growth. All sectors of the economy except Agriculture, Forestry and Fishing are in decline, with several sectors particularly badly hit: •

Manufacturing has seen the greatest decline, manufacturing output fell by 4.6% in Q4, compared following a fall of 1.6% in Q3 and 1% in Q2;

Distribution, Hotels and Catering has also declined, with output in this sector falling by 2.4% in Q4, following a 2.1% fall in Q3;

Transport, storage and communication is also falling, and fell by 2% in Q4, though this followed only a slight decline of 0.1% in Q3;

Construction output decreased by 1.1% in Q4, and this followed a decrease of 0.2% In Q3 and 0.5% in Q2; and

Services output has decreased by much less, for example Business services and finance decreased by 0.5% in Q4.

Significantly the levels of unemployment nationally are rising, linked to the performance of the economy. The national unemployment rate was 6.5% for the three months to January 2009, up 0.5% from the previous quarter and up by 1.3% over the year. The last time the rate was higher was in the 1997. The number of unemployed people increased by 165,000 over the quarter and by 421,000 over the year, to reach 2.03 million. Many commentators are now expecting UK unemployment to reach 2.5m by mid-2009 and exceed 3m by the end of 2009.

The number of people claiming the Jobseeker's Allowance rose to 1.39million in February 2009, an increase of 138,400 over the previous month and up almost 600,000 over the year.

The redundancies level for the three months to January 2009 was 266,000, up 86,000 over the quarter and up 154,000 over the year. This is the highest figure since comparable records began in 1995.

4.4

By contrast, inflation expectations have undergone a marked change. The past year has seen dramatic swings in commodity prices, with a steep rise in commodity prices in the early part of 2008 that has now slipped back.

4.5

These commodity price rises drove Consumer Price Inflation (CPI) up to 5.2%, its highest position in more than 10 years, well ahead of its target of 2% (CPI) however as oil prices fall (from a high of $147 a barrel earlier in the year to less than $50 a barrel at the time of writing), and commodity prices dip inflation is expected to fall rapidly, and deflation is now the main concern for policy makers.

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Consumer Prices Index (CPI) annual inflation – the Government's target measure – was 3.2 per cent in February. The Retail Prices Index (RPI) inflation slowed to 0.0 per cent in February, down from 0.1 per cent in January.

4.7

Overall the situation is extremely uncertain and there is no forecasting model available that can accommodate the sort of sentiment and impacts that this is having on the market. There is now serious concern that the position could spiral into a very deep depression and the issues that would ensue would be incalculable; what is clear is that the world economy is almost certain to go through a period of recession lasting at least 2 years and may be more protracted up to 5 years.

4.8

Politicians and central banks have acted decisively in recent months, with significant coordinated interest rate cuts by central banks across the world, and an emerging consensus that a significant fiscal stimulus is required to avert a serious recession. The Bank of England cut the base rate by 0.5% on the 8th October, by a further 1.5% on 6th November, 1% in December, 0.5% in January, February and March 2009 With the Bank of England Base Rate at just 0.5% this is the lowest interest rate in its history; The important 3-Month LIBOR (London Interbank Offered Rate – the rate at which banks lend to each other) has now finally th

started to fall and stood at 1.83% on 16 March 2009 - the lowest since April 2004 – having been almost 7% earlier in the year. 4.9

However, despite these measures, globally the financial market is still in serious ‘distress’. Economic growth is slowing rapidly down considerably over the next 18 months to 2 years as the major economies (i.e. G7) alongside China and India take time to accommodate the massive financial adjustment that has been taking place following the collapse of the subprime market in the USA a number of major questions persist in terms of the timeframe for recovery.

4.10

Consequently, despite recent actions, economic forecasters predict a difficult period for the world and UK economy over the next 18 months to 2 years. Such is the pace and dynamics of change in the marketplace at the moment it renders both the estimates and commentary therein almost redundant within days of announcing them. Indeed successive IMF reports highlight the huge uncertainty in the world economic outlook. In other words there was huge uncertainty over the integrity of these most recent results such is the volatility in the global (financial) marketplace and that the risk was biased towards worsening with reduced output forecasts (or greater levels of contraction).

4.11

Ironically perhaps whilst it’s now academic whether the credit crunch has been the primary cause or effect of the oncoming slowdown this may yet prove to be a saving grace for the

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financial system. Credit rationing both corporate and private has resulted from the financial meltdown emanating from bad debts in the USA; the inter-banking system has become a somewhat intractable credit vehicle resulting in recent Government intervention to pump liquidity into the financial system. A recession however, will effectively reduce that element of credit demand which hopefully allows the credit system to function sufficiently to effectively support those businesses and individuals with the least credit risk. Beyond which then there is a major question of uncertainty. Uncertainty is at levels not experienced in a generation and this of itself could protract economic recovery for a considerable period of time. 4.12

A major and critical feature of all of this is the major damage this could have (or indeed may have already had) on the UK Financial sector. This sector has been one of the principal engines of growth for London, the South East, Edinburgh, Leeds and increasingly some regions such as the North and South West. National Statistics data indicate that the Financial and Business Services Sector has lost 102,000 jobs over the last quarter, more than any other sector. Its retrenchment therefore has far reaching consequences for the UK economy.

4.13

Finally, there is the timing of the financial crisis; the unprecedented levels of distress in the market suggests that assumptions of recovery or stability is some considerable period away. In many respect the strategy in the current climate would be to support a period of containment in the short term (i.e. up to 18 months) with planning for medium term progression (i.e. 3 years). However, it would be right to assume that the timing of the economic problems being faced at the moment will take at least as much time to return to a baseline position. In effect, the global and thus UK economy may well experience a period of significant adjustment.

4.14

The scale of the financial crisis, affecting banks and countries across the globe is completely unprecedented within this modern generation and therefore there is a great degree of uncertainty in any analysis of the UK economy. However it would be advisable to assume that the short term strategic and planning basis is almost completely reactive and that a longer term perspective is necessary going forward (i.e. 5 – 10 years).

4.15

Finally, all this comes at a time where the prospects within the traded sector is very weak. On top of which the UK alongside the USA and the rest of Europe face continued:

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Serious credit squeeze despite the recovery plan;

A concomitant and substantial drop in house prices;

Reduced wealth, income and ultimately consumption levels;

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Serious retrenchment in the construction and allied sub-sectors;

Potentially serious retrenchment in the Financial sector;

Tough budgets for the public sector with the decreasing tax take and bailout costs of the Financial sector

4.16

Combine this with very serious levels of private indebtedness then this is a cocktail of problems for the UK economy. Unemployment has started to seriously rise, with knock on effects for consumer spending and economic activity then there could be some very deep ‘adjustments’ in the marketplace.

4.17

All these factors have very important implications for Preston near, medium and long term and the depth of the particular macroeconomic issues cannot be overstated. More importantly this analysis comes right at the cusp of what is without doubt a structural break in the global economy. That is, what happens from here on in will have very limited basis on what’s gone on before. It would therefore seem difficult to base judgement of the future market on past trends; far better to concentrate on more stylised commentary concerning the future market for investment.

Inward Investment Market 4.18

We have previously undertaken a comprehensive analysis of the FDI market for the North West which is highly relevant for this study – although this was a time which also predated these extraordinary events in the global economy. However, just to recap the following key points that are relevant: •

The North West was performing well in the FDI market and whilst historically not punching it’s weight it had been gradually increasing its market share of UK FDI since 2000 posting consistently well above average performance since the turn of the century. The North West was forecast to continue increasing its share of FDI over the next 10 years where the market persisted.

The source of jobs related mainly to reinvestment and safeguarding jobs with growth in new jobs more difficult to come by – this wasn’t unique to the North West but highlighted the need for good aftercare and account management programmes. Since 2004/5 over 21,000 jobs have been safeguarded and more than 15,000 new jobs attracted to the area. The Northwest attracted 155 inward investment projects during 2007/08, an increase of 18 projects 2006/7. These projects created or safeguarded 14,647 jobs.

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The North West securing nearly 155 projects during 2007/08 compared to 22 in 2000/01 seemed to suggest that performance had increased considerably but belied the fact that the size of projects had reduced dramatically over the same period. The average project delivers a quarter of jobs to what it did in 2000/01 - the market for mega projects being very few and far between.

At the turn of the century, it was evident that Shared Services, Communications and Call Centres provided major contribution to new jobs in terms of average project size as did Automotive and Textile/ Clothing. The position today is that none of these sectors provide anywhere near the contribution levels of the past in terms of new job levels. Further it is quite clear that the spread of sectors has at one level broadened enormously with the inclusion of the main utilities. However whether these present feasible targets for the IPAs is debatable; in turn the scope of sectors with scale impacts has narrowed considerably – indeed, it would appear that Finance is the only sector providing scale opportunities per project within the services sector followed by Business Services, Media and Creative and Software. The current issues facing the Financial sector is therefore a major concern for the FDI market going forward.

Some parts of the manufacturing sector still provides a key contribution to the current portfolio of new jobs through the FDI route including Automotive, Food and Drink, Aerospace and Electronics but there is no doubt that new FDI jobs is dominated by services taking a 60% plus share of total market share.

4.19

The key conclusion of the analysis highlighted the following: “Taking the overall picture into account it would appear vital that the North West take a highly specialised approach to the FDI market for new (and indeed safeguarding) jobs. This evidence supports the view that it’s generally true that there are fewer “new” projects and that they are smaller in size, (i.e. jobs and investment ) and that there are more countries chasing them (i.e. the cake is smaller and more people want a slice).” (GVA Grimley, 2007)

4.20

Notwithstanding the current climate, the position with regards to the North West remains pretty much the same; it’s a strong performer in the market and where investment is available then it should be amongst the leading regions in the UK. However, discussions with FDI experts have highlighted the following key conclusions for future inward investment: •

The market for investment will be extremely tight over the coming years – unless the current set of policies kick start some credit flow then we suspect that the scale of investment could reduce at the higher end of the sort of correction that was postulated for the market (i.e. 30% – 40%)

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Whilst the emphasis in FDI policy has become more oriented towards aftercare and account management over recent years in the current climate this focus will reach new heights of importance with a major imperative of ‘holding on to what you already have’

There is no doubt that the Financial sector has yet to experience the full impact of the changes that are incumbent on the market and the expectation is that these sorts of investments are going to dry up quickly certainly in the short term until its clear what will emerge from the global financial meltdown – taking out the Financial and Business / Consumer Services sector component from the UK FDI market will reduce the market share by 25% of all new jobs created through FDI on the basis of more recent results to the UK.

Added to the problems in the Finance sector is the prospect of a more general global recession and the possibility of a severe recession in the USA, the leading contributor of inward investment projects to the UK - accounting for 40% of all projects. Data from the NWDA Inward Investment Team shows that more than 60% of inward investment projects in Central Lancashire since 2004/5 has been by US firms.

4.21

Consequently it is not beyond reason to predict a real contraction of 40% or more in FDI and by implication the total North West take of FDI will contract quite substantially. Where we assume that the impact has a 5 year gestation before recovery then the chart below provides a possible scenario for the FDI market in terms of projects for the North West. It critically assumes that the region carries on its pre-credit crunch performance therefore capturing greater market share. However, a major consideration in this regard would be the performance of the Financial sector where the region has done extremely well – where the latter didn’t recover then clearly these results could appear on the optimistic side although the impact would be generalised and more importantly one would expect the North West to perform at least as well as other regions within the sector

4.22

At the very least is the prognosis that the market will ‘dive’ for a time and the Financial sector is not expected to feature prominently certainly in the short term save for some niche projects aimed at potentially financial recovery and debt collection.

4.23

As a result the focus on aftercare and account management should be the major preoccupation in the region with the overseas offices concentrating on being the early warning system devoting resources towards ‘eyes and ears’ activity around the parent companies (especially those based in the USA)

4.24

There is then the question of where the investments are likely to come from? The UK is trying very hard to take a robust and supportive line with the banks to keep the economy moving

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and this will benefit whatever opportunities that persist in the market. However there is no doubt that the complex financial packages which have been spread from the USA throughout the global banking system have underpinned the UK’s financial plight through very high integration levels in the financial systems between the two countries. However, given the close relationship between the UK and USA, if and when the USA emerges from this financial downturn then the UK will expect to benefit the most, but this may well be some time away. In which case the UK will need to look more towards Asia and Europe for investments and perhaps more critically its own internal market. 4.25

However Preston and Lancashire does not have a particularly strong track record in FDI terms and only takes a very small share of the North West total. Between 2000 and 2004 Lancashire captured just 11% of inward investment projects and 7% of jobs created – with Preston capturing less still. By contrast Greater Manchester and Greater Merseyside captured 38% and 28% of inward investment projects and 33% and 35% of inward investment jobs respectively.

4.26

More recent data provided by the NWDA Inward Investment Team indicates that since 2004/5 Central Lancashire has taken just a 3% share of the Northwest’s Inward Investment projects, which has resulted in just 242 new jobs (only 1.5% of the Northwest total) and safeguarded just 712 jobs (3.37% of the total) – shown on Table 1 below: Table 1: Northwest Inward Investment 2004-2008 Greater Central Northwest Lancashire Manchester Total Number of 498 15 (3%) 210 (42%) Projects Number of 15,739 242 (1.5% 6,407 New Jobs (40.7%) 21,156 712 (3.4%) 6,533 Number of (30.8%) Safeguarded Jobs Source: NWDA Inward Investment team

4.27

Greater Merseyside 107 (21%)

Chester

Warrington

11

21

4,544 (28.8%) 4,361

224

316

154

842

These projects, as discussed above, have been dominated by investment by US firms (60%). 1/3 of the projects have been investments in advanced engineering / materials, 1/5 of the projects in the Creative and Digital Industries sectors but only 1 in professional and business services and only 1 in ICT.

4.28

Discussion with NWDA’s inward investment team suggest that Central Lancashire’s relatively poor performance in attracting significant amounts of Inward Investment over the past few years (or historically) should not be surprising. Three main reasons were provided:

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4.29

Economic Potential of Preston – Draft Final Report

Scarcity – the amount of genuinely footloose inward investment available is actually relatively small, relative to the rest of the economy. Many of the inward investment successes that make up the statistics in Table 1 were actually expansion or further investment by existing businesses. Over the last four years there have been 188 expansions, compared to just 171 first time investments. The Agency view was that a major inward investment for Central Lancashire might come along once or twice every ten years.

4.30

Location Bias – the majority (60%+) of FDI into the Uk goes to London, as the UK’s major world city as investors tend to invest in locations they already know. London, as the UK’s capital, major airport hub, financial centre, seat of Government, and city with a genuine world presence is thus able to capture a huge share of FDI. Manchester and Liverpool act as miniature London’s within the Northwest, and their higher profile and status helps draw in a disproportionate amount of the FDI into the Northwest. Most inward investment projects in the UK end up in the major, well known cities. The Northwest does not have the kind of international image to support a promotional push, much less Lancashire (unlike say Scotland or Wales) and much less Central Lancashire. The Northwest’s familiar world brands are Manchester and Liverpool – suggesting Central Lancashire should advertise its charms in relation to these two well known world cities.

4.31

Funding – for some inward investment decisions, public sector funding / support can be critical. Most of the Northwest’s major inward investment successes have had grant assistance of one kind or other. 91 of the 156 FDI investments in 2007/08 involved direct support from UK Trade and Investment (UKTI), NWDA or the regional partners. Consequently if a major inward investment opportunity emerged, Central Lancashire may have to recognise the need to buy the investment through public funding.

4.32

However the Agency also suggested other factors also come into play when investment / relocation decisions are made. Although land and premises are relatively important, and the Agency’s staff felt that Central Lancashire’s stock of property was not especially competitive, the catchment population or potential workforce and its skills is a far more important issue. As discussed later in this report (see page 100) although Central Lancashire has a large population within 30km, the working age population within 10km of Central Lancashire is significantly smaller than those in Liverpool and Manchester.

4.33

Businesses are seeking a long term reliable workforce, anecdotal information suggest that some recent employers located at Preston East have struggled to recruit (perhaps in part due to the poor transport links to this particular location). Agency staff commented that with regard

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to Professional and Business Services, lack of an available workforce means that currently “Preston is full”. 4.34

That being said, the Agency’s report “FDI Successes for the Northwest in 2007/08 suggested that a focus on India and China would improve Lancashire’s FDI opportunities further, and discussions with the agency identified a number of areas where Central Lancashire may have opportunities. This included Global Renewables (linked to advanced recycling facilities and similar technologies – seen as dirty industries by many, and consequently find it hard to get sites. Capturing some of the major inward investment that other’s do not want might be a key opportunity for the area.

4.35

Central Lancashire’s strengths as a centre for advanced engineering / manufacturing , transport links and land availability might make this an area of real potential. A “Future Technology Park” concept was seen as one way to achieve this.

4.36

Importantly, the agency recommended that for Central Lancashire to succeed in attracting a greater amount of FDI, and importantly to attract high profile names to the area it would have to do something different. Examples included Ultra Fast Broadband connections, high quality fixed infrastructure (such as high pressure gas mains or high levels of electricity capacity / reliability) and multi-point telephone exchanges) – not simply a standard office product or industrial estate.

4.37

The 2008 Business Survey provides further evidence of the local nature of the Central

Lancashire Economy. 58% of businesses surveyed were UK, private independent companies.

Less than 1% were foreign owned private companies. The Central Lancashire economy is

therefore insulated, to some degree, from the effects of decisions taken by multinationals with

regard to branch locations, compared to areas or districts with a preponderance of major

multinational employers.

4.38

Although past performance shouldn’t preclude Central Lancashire from doing better and increasing its share of Northwest (and UK) FDI, the current and future prospective market is unlikely to provide much in the way of increased FDI opportunities and in many respect this should be of little concern to Central Lancashire. However the competitive pressure is likely to mount on all indigenous investment as areas will tend to switch their attention towards supporting start-ups and expanding indigenous businesses as the wider market contracts.

4.39

This will be of much greater relevance to Central Lancashire as it will need to ensure a strong supply side to safeguard not only what business base that it currently has but to provide an attractive alternative to its competitors.

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With all these trends in mind, attention now turns to look more closely at conditions evident within Central Lancashire.

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5.

WHAT MAKES A SUCCESSFUL CITY?

5.1

The future role and economic potential of Preston will be an important factor in achieving this vision. As an emerging regional services city, Preston has a key role to play as a supplier of employment, retail, administrative and other services – including financial, legal and business services - to its wider hinterland. Given the stage and pace of Preston’s transition from a traditional industrial economy it is important that opportunities for further knowledge based growth are fully understood and exploited.

5.2

Local distinctiveness is a key ingredient for knowledge economies to prosper, we believe that a ‘distinctive offer’ for Preston will be critical as it continues to grow. Of critical importance will be Preston’s ability to build upon its unique economic and physical qualities that form the bedrock of it becoming a more successful and competitive place.

5.3

This needs to remain the approach, even given the impending recession and the likelihood of physical regeneration suffering in particular.

The Conceptual Framework 5.4

The concept of distinctiveness is one of a number of interrelated drivers of knowledge based economic growth in successful cities. Combined, these drivers provide a useful framework in which to assess current strengths and weaknesses of the Preston economy and ultimately its true potential. This remainder of this scoping report therefore seek to address a number of practical questions: •

What are the core ingredients that make successful cities work?

What are the drivers and/or barriers to knowledge based economic growth in Preston?

To what extent does Preston have a distinctive offer for knowledge intensive businesses and workers who are considering investing, working and living in the area?

5.5

Although the review of academic literature is undoubtedly in its infancy in this subject (in the UK at least), it emerges that in sectoral terms and in terms of where ‘knowledge workers’ choose to locate, then there is a very strong association with urban centres as key facilitators of the knowledge economy.

5.6

The report ‘Enabling Cities in the Knowledge Economy’ (October 2006), produced for the Department for Communities and Local Government (DCLG) by The Work Foundation,

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highlights the importance of the UK’s urban centres which is developed further by the report produced by Jones et al (March 2006) “Ideopolis: Knowledge City-Regions”, which introduces the concept of an urban ‘Ideopolis’ as a “sustainable knowledge intensive city that drives growth in the wider city-region”. 5.7

Jones et al. (2006) outline a number of key drivers for urban economic knowledge intensity. They are as follows: •

Developing a physical basis for the knowledge city – where suitable high-quality architecture and accommodation exists to supply knowledge intensive workers and businesses.

Utilising a diverse range of ‘economic specialisations’ in which the city can excel.

Encouraging high skill organisations which rely on highly qualified and skilled workers to increase productivity.

Providing a strong education sector locally embedded into the economy and community through universities, and other high-quality education institutions, working closely with the cities’ businesses to assist in the development of potential workers’ skills.

Diverse cultural and leisure facilities to encourage business and workers to invest, work, and live in a city with a strong offer.

Ensuring excellent levels of communications infrastructure, enabling connectivity within, and beyond, the city-region and internationally by road, air and rail.

5.8

Moreover, the work of Jones et al. (2006) concludes that vital in encouraging economic growth in the knowledge sectors is the collaboration in planning frameworks for transport, skills and housing at a city-region spatial scale in order accurately measure existing requirements and to coordinate policy geared towards structural change and attracting higher value business and workers.

5.9

To help answer these questions this section is structured around “seven themes” of what makes a successful city. As this report is all about “what we know” (to date) about Preston, and notwithstanding new lines of enquiry revealing new areas of knowledge, then it seems helpful to present our understanding in this respect. This draws upon the analysis by Hildreth, Lee and others which has also drawn from a review of other cities and places across the globe. One may then start to draw tentative conclusions (at least) as to where Preston currently sits.

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5.10

Economic Potential of Preston – Draft Final Report

The analysis will be is guided by a series of key indicators. Many, if not all of these indicators are cross-cutting and inherently linked to the five drivers of productivity – investment, skills, enterprise, innovation and competition. Using the framework of ‘what makes places work’ these drivers and indicators are helpful in providing thematic basis upon which potential weaknesses can be identified and policy actions devised.

Driver (productivity drivers) Investment in the physical city

(Investment, Competition)

Economic distinctiveness (Enterprise, Innovation, Competition)

Human Capital in organisations (Skills)

Expanding and embedded educational offer (Skills)

Economic linkages and connections (Investment, Competition)

Investment in communities (Investment, skills)

Strong leadership

5.11

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Indicator

- Levels of investment in physical capital - Potential to attract inward investment - Quality of place including the retail, leisure and cultural offer - Adequacy of the local housing offer and local amenities - Sectoral makeup of the local business base and key growth sectors - Gross Value Added (GVA) - Levels of enterprise, entrepreneurship and business start ups - VAT Registrations and business survival rates - Competitiveness of the local skills base - Population trends - Occupational structure - Ability to sustain high wage jobs - Levels of economic inactivity and unemployment trends - Access to and retention of highly skilled labour especially university graduates - Access to appropriate educations and training opportunities - School performance - Economic connectivity and interrelationships - Economic footprint - travel to work (TTW) and migration patterns - Openness of the economy to national/international trade and investment - Levels of Deprivation (Rank of IMD 2007 - Skills Levels - Labour market capacity

- Coherency and effectiveness of governance arrangements - Limits to effective partnership working

These key issues are explored in the following Chapters 5 – 11.

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6.

INVESTING IN THE PHYSICAL CITY

6.1

A City’s physical assets are an important determinant in its future economic success. These are the latent conditions that will retain and attract new higher value businesses and workers. Does Central Lancashire have the high quality office premises important to attract knowledge sectors of the economy? Is the residential offer to persuade decision makers to locate sufficiently robust? Does it offer the cultural, retail and recreational amenities? – the buzz that all great places have.

Land 6.2

Land provides an initial constraint to the economic potential of an area. Central Lancashire encompasses an area of approximately 46,000 hectares, but this area is not all available to support economic development. Only a small proportion of the land in central Lancashire is currently available for employment uses, and much of the land, especially in Chorley and South Ribble is constrained by the Northwest Greenbelt.

6.3

However, Central Lancashire does have some advantages with respect to Land compared to its Northwest comparators and competitors. Some key land statistics are set out in Table 2: Table 2: Land – Key Statistics % Greenbelt Employment land (ha) Area of Area of Admin Area Geography (ha) Greenbelt (ha) Preston 14,294 660 4.6% 102.5 Chorley 20,291 14,570 71.8% 88.4 South Ribble 11,461 7,730 67.4% 82.2 Central Lancashire 46,046 22960 49.9% 273.1 Manchester 11,565 1,710 14.8% 164.2 Liverpool 13,354 530 4.0% 335.0 Chester 44,833 18,520 41.3% 71.9 Warrington 18,238 11,520 63.2% 189.6 Blackburn with 13,701 5,570 40.7% 52.9 Darwen Source: Generalised Land Use Database Statistics for England 2005 / Annual Monitoring

Reports 2007/08 and Department for Communities and Local Government Land Resources 6.4

Collectively Central Lancashire covers some 46,000 hectares. Preston itself covers more than 14,000 hectares. This is more than the Liverpool or Manchester and collectively Central

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Lancashire has significant more land than Warrington or Blackburn. Chester, with its large rural hinterland is the only area with a similar land area. Employment Land 6.5

The amount of land does not begin to tell the full picture, the amount of employment land tells something more about the economic potential of an area. In this regard, Central Lancashire has a positive story to tell. Central Lancashire has some 273 hectares of employment land available (as at 2007/08). This includes 102 hectares in Preston, 88.4 in Chorley and 82 in South Ribble. This is more than the land available in both Blackburn and Chester, collectively a greater resource of employment land than Warrington, more than Manchester and only less than Liverpool.

6.6

The amount of land available may not be an entirely positive indicator. Large amounts of employment land available may instead reflect a lack of success in attracting development in the past, or historic decline in employment (such as in Liverpool) but nonetheless, a supply of attractive, deliverable employment land is a pre-requisite for some kinds of economic growth especially factory and warehousing developments.

6.7

The large employment sites in Central Lancashire, such as at Buckshaw Village, Preston East and Cuerden each with good strategic highway linkages provide the opportunity for new employment development. Greenbelt

6.8

Central Lancashire, and especially Preston is also better placed than other areas of the Northwest to capitalise on its land assets as it is less constrained by the greenbelt than some of its competitors.

6.9

The northwest Greenbelt was designated to primarily check the unrestricted sprawl of Manchester and Liverpool. Consequently the M62 corridor provides the main focus for the Greenbelt in the Northwest, however this provides significant constraints to the Manchester and Liverpool City Regions, and to Warrington and Chester. 63% of the land within Warrington and 41% of the land in Chester is within the Greenbelt. Although large areas of Chorley and South Ribble are also within the greenbelt, less than 5% of the land in Preston is within the Greenbelt.

6.10

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The extent of the Northwest Greenbelt is presented on Figure 2 over the page.

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Figure 2: Northwest Greenbelt

Source: Magic.gov.uk 6.11

Land assets aside, Central Lancashire’s economic potential is closely linked with the quality of its physical buildings, its offices, housing, retail and cultural assets. This section goes on to look at these aspects of Central Lancashire.

Office 6.12

Preston’s transition from industrial town at the centre of the Industrial Revolution through to a modern contemporary commercial centre with an expanding University presence reflects a place that can justifiably boast a rich tapestry of heritage and character. It has successfully plotted a course through years of cultural and physical change: a venerable past and a prosperous present.

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6.13

Economic Potential of Preston – Draft Final Report

However, looking forward and reflecting the challenges of a more globalised economic context, does Central Lancashire posses the accommodation that knowledge intensive business and workers require? The answer increasingly lies in the city centre – the crucible of economic, social, civic and cultural activities attracting shoppers, visitors, employees and residents from a wider conurbation. For Central Lancashire, it is crucial that Preston city centre is, and remains, at the heart of any investment going forward.

6.14

Analysis of Valuation Office Agency (VOA) Commercial and Industrial (C&I) Floorspace Statistics shows that total office floorspace in Central Lancashire is some 510,000m2. The majority of this is within Preston, with smaller amounts in Chorley and South Ribble. Table 3: Office and Commercial Floorspace Trends in Central Lancashire. Growth in Growth in Total Total Office commercial office Commercial Floorspace office floorspace Office April 2007 (m2) floorspace 1998 -2007 (%) Floorspace 1998 -2007 (%) April 2007 (m2) Preston 403,000 339,000 29% 31% Chorley 91,000 70,000 32% 46% South Ribble 117,000 101,000 24% 35% Central 611,000 510,000 28% 34% Lancashire Liverpool 1,096,000 963,000 16% 20% Manchester 2,206,000 1,782,000 13% 17% Chester 382,000 328,000 17% 19% Blackburn 199,000 146,000 59% 87% Warrington 484,000 434,000 22% 30% Northwest 11,788,000 9,255,000 29% 34% England 97,566,000 80,360,000 24% 27% Source: VOA Commercial and Industrial Floorspace Statistics

6.15

The majority of office floorspace is Commercial Office Floorspace (This category also includes central government offices but not local government - the remaining office floorspace comprise mainly local government offices, surgeries and clinics and police stations).

6.16

Preston is by far the largest single centre of office floorspace in the Lancashire NUTS-2 area, accounting for more than a fifth of the total and has nearly a quarter of Lancashire’s commercial office space. Preston has more than double the office and commercial office floorspace of Blackburn, and more than Chester (despite Chester’s higher profile as an office location). Despite this Central Lancashire has only half the office floorspace of Liverpool, and less than a quarter that of Manchester, and so while it may be ahead of Northwest rivals like Chester or Blackburn, it is till a long way behind the two Northwest City Region commercial office powerhouses. Preston also trails Warrington, which has almost as much office floorspace as the whole of Central Lancashire.

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6.17

Economic Potential of Preston – Draft Final Report

Growth in office and commercial office floorspace has also been strong in recent years. Central Lancashire has increased its office floorspace by 28% and commercial office floorspace by 34%, compared to much slower growth in Manchester and Liverpool. However growth in Central Lancashire has been dominated by out of town development, at Preston East, Buckshaw Village or elsewhere.

6.18

This is not to devalue the contribution that these developments have made. Office developments outside of Preston City Centre do contribute to economic growth, and developers are clearly responding to market demand. Further small scale office development on previously developed land might be desirable in ensuring the vitality of Leyland or Chorley Town Centre. Sites like South Rings (adjacent to J1A on the M65 / J29 on the M6), Preston East or Matrix Park at Buckshaw Village have further capacity to accommodate further out of town office investment and attract future investment and jobs in target sectors, but these developments will have few knock on effects for the health, vitality and image of Preston. Out of town development is also less sustainable, with public transport options limited to all these existing out of town locations.

6.19

Over the last 10 years Preston City Centre has seen no new office development (though there has been some limited refurbishment), and instead the vast majority of office development in Central Lancashire has been in out of town locations, that have delivered little in terms of wider benefits for the wider vitality of the city. Compare that to development of Spinningfields or developments adjacent to Piccadilly Station in Manchester. Over the last 10 years Manchester has used city centre office development to drive the rejuvenation and revitalisation of the city centre. Importantly this past investment means Central Manchester now has around 50,000m2 of vacant office space, and around the same amount under construction, providing instantly available space for potential occupiers.

6.20

The Central Lancashire Office Needs Study 2006 delivered by Drivers Jonas and QESR determines the anticipated office needs of Central Lancashire in terms of future land provision up to 2021. The Study focussed on how future changes will impact on the needs of Central Lancashire and how the authorities may need to adapt their approach to accommodate this change. The study found that the office market in Central Lancashire is characterised by two clear offers, firstly outdated secondary stock located in the urban centres, which are generally not DDA compliant; and secondly, modern out of town business parks with ample car parking.

6.21

Whilst the strengths of the location for attracting office based users such as demographics, skill base, value, major university, and strategic transport/facilities are all evident across Preston and indeed Central Lancashire, the study found that the market specifications required to meet modern standards are not available.

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6.22

Economic Potential of Preston – Draft Final Report

In broad terms, while the quantity of office floorspace within Preston and Central Lancashire is good, the quality, especially in Preston City Centre, is not.

6.23

The existing office supply in the city centre presents one of the key constraints in Preston being able to retain the competitiveness of its business base. This was highlighted in 2005 as an issue going forward. Contrast the experience of Manchester and Liverpool over the past ten to fifteen years when times were good, albeit public sector support was required initially. Today, however, the financial dynamics of delivering bigger physical investment over the next five years have changed markedly.

6.24

A key element of the Preston Vision was to address this issue through the development of a new commercial area, a “Central Business District (CBD)” within the city centre to supplement the existing city centre office space much of which has become outdated. Discussions with developers Grosvenor and Lead Lease suggest that as a minimum this should be in the region of 80,000m2, but they felt that substantial public sector investment would be required to get a CBD for Preston off the ground , perhaps through investment in public realm and one or two 5,000m2 buildings to build confidence that would lead the private sector to invest.

6.25

Grosvenor’s Tithebarn Redevelopment proposed for Preston City Centre also has a substantial (20,000m2) office element, and would see some of the older, outdated city centre stock replaced with new, higher quality office premises.

6.26

In the 2005 Mori Business Survey over a fifth of respondents were occupiers in the financial and professional service sector. The following characteristics typified their response: •

a strong indigenous base and attachment to Preston;

middle and higher led operations;

growth and expansion identified as a major issues, in which the supply of quality premises was the major constraint;

accessibility and skilled workforce were future requirements, as was proximity to research and development.

6.27

The latest business survey provides an update on the occupier demand. For these

businesses, although almost all wished to remain in Central Lancashire (83%), the quality of

Central Lancashire premises (identified as a key driver for 57% of those seeking to move) and

the cost of premises (identified by 28% of businesses) were the major issues.

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6.28

Economic Potential of Preston – Draft Final Report

When asked where within Central Lancashire they may wish to move to, Preston City Centre

was a clear favourite, the locational choice of 30% wishing to move, however businesses also

identified, elsewhere in Preston (20%), the M6 / M65 / M61 motorway corridors (15%),

Chorley and Leyland Town centres (13% and 9% respectively as potential alternative

locations.

6.29

The development of a ‘Central Business District’ and the office elements of Tithebarn would provide new, high quality offices to meet the requirements of both new and existing businesses and will be supported by complementary mixed uses. The principle of such development is now founded in planning policy and strategy. However delivery of both is still some way away, and until these two developments are brought forward (with the CBD probably following Tithebarn) Central Lancashire will still have a poor quality office offer at its heart in Preston City Centre.

Retail 6.30

Central Lancashire has a wide variety of retail centres which have experienced varying degrees of success. This difference can be seen in the city and town centres of Preston, Chorley and Leyland. Preston is the main retail and service centre in Central Lancashire and Lancashire as a whole. It has attracted significant investment in recent years but requires further investment if it is to fulfil its true potential.

6.31

Analysis of Valuation Office Agency (VOA) Commercial and Industrial (C&I) Floorspace Statistics show that total retail floorspace in Central Lancashire has seen limited growth since 1998.

6.32

Central Lancashire has added in the region of 60,000m2 of additional retail floorspace since 1998, a rise of 8%. Although this is higher than the Northwest average of 5%, growth in retail floorspace has been driven by South Ribble, accounting for more than half the growth. Preston itself has added just 9,000m2, or just an additional 2%.

6.33

While this growth is similar to that in Liverpool, Liverpool’s figure does not include the major Liverpool One Development, meaning that both Manchester and Liverpool have added significantly greater retail floorspace than Preston. Central Lancashire has significantly less retail floorspace than both Manchester and Liverpool (again allowing for the fact that Liverpool’s figures exclude Liverpool One). Table 4: Retail Floorspace Trends in Central Lancashire. Growth since Total Retail Floorspace

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Growth since

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1998 (m2) April 2007 (m2) Preston 454,000 9000 Chorley 173,000 19,000 South Ribble 155,000 32,000 Central Lancashire 782,000 60,000 Liverpool 1,153,000 21,000 Manchester 1,335,000 240,000 Northwest 14,906,000 717,000 Source: VOA Commercial and Industrial Floorspace Statistics

6.34

1998 % 2% 12% 26% 8% 2% 22% 5%

th

Experian ranks Preston 46 in terms of UK retail centres, and Preston trails behind other Northwest centres including Manchester, Liverpool, The Trafford Centre, Bolton and Chester – see Table 5 below. However, when catchment population is factored in, Preston City Centre is actually performing strongly. Comparison spend per head is higher in Preston than Manchester, Bolton, the Trafford Centre and Chester. Table 5: 2008 Retail Centre Rank and Total Comparison Spend Total Comparison Catchment Area 2008 UK Centre population18 Spend Rank Name Manchester 4 £2,092,705,293 1,923,109 Liverpool 5 £1,989,748,030 966,487 Trafford 25 £1,012,783,005 2,425,117 Centre Bolton 30 £966,979,104 1,381,224 Chester 35 £854,184,489 581,067 Preston 46 £778,800,197 395,652 Source: Experian / Where Britain Shops

6.35

Spend per Head

£1,088.19 £2,058.74

£417.62 £700.09 £1,470.03 £1,968.40

Chorley is developing towards a contemporary market town with a mix of national retailers and some specialist shopping, although further investment is required. By being more distant from Preston it has more scope to be a self sustaining town centre. Leyland, on the other hand, closer to Preston and requires significant investment in its quality of retail offer, environment and public spaces to become a vital and viable town centre in its own right.

6.36

The Central Lancashire Preferred Core Strategy’s Vision recognises the key service role of city, town, district, local and village centres in Central Lancashire. The aim for Preston is that it will provide a viable alternative shopping and leisure destination to Manchester and Liverpool. Within Preston city centre it is assumed that the Tithebarn Regeneration Area will have been delivered and that this will have greatly enhanced the city’s retail and leisure offer and created further opportunities for city living.

6.37

The Tithebarn Regeneration scheme is a proposed £750million mixed-use redevelopment of a significant part of Preston City Centre. It is central to the vision for Preston City Council and is

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seen as a critical catalyst for the wider regeneration aspirations of Central Lancashire. Tithebarn is also cited as a flagship project, alongside Riverworks and the Commercial Quarter as component parts of the Preston Vision. The proposals for the heart of the Tithebarn Regeneration Area seek to transform the city centre into a vibrant destination and place to live and will include a new John Lewis department store and other shops, improved markets, a modern bus station, a new cinema, cafes, bars and restaurants, residential development, new office development and an enhanced public realm throughout. 6.38

The Development Specification submitted to Preston City Council in September 2008 indicates a maximum development of more than 250,000m2 comprising:

6.39

More than 80,000m2 of new retail floorspace

20,000m2 of new / replacement office

8,000m2 of financial and professional services, food and drink floorspace;

5,820m2 of leisure floorspace (which would accommodate a new city centre cinema);

A new 5,000m2 hotel; and

A new bus station and parking

These proposals are being led by the Preston Tithebarn Partnership, a joint venture company formed by Grosvenor and Lend Lease, working in partnership with Preston City Council. Consultation with the developers Grosvenor and Lead Lease saw them emphasise what they see as Preston’s unique potential within the Northwest to grow into a significantly stronger retail centre. There was a strong view that Preston was significantly better placed than Chester, Blackburn, Carlisle, Warrington or any other Northwest Centre to develop and strengthen as a retail centre, and that only Preston for example, of the towns and cities listed above would be able to attract the likes of John Lewis.

6.40

Preston’s strengths are a combination of demographics (its retail catchment population), the ability to provide a comprehensive regeneration opportunity (unlike say the very constrained Chester City Centre) and its existing retail offer, offering a good base to build upon.

6.41

Grosvenor and Lend Lease both felt that Preston’s competitors and comparators were other core cities such as Sheffield, rather than other Northwest Cities such as Chester or Blackburn.

6.42

That said, Tithebarn has yet to commence. Preston’s current city centre fabric and retail offer is not as strong as competitors elsewhere and works against the objective of it becoming a

18

Source: Experian Top Towns 2008

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more viable location for city centre knowledge intensive business. As stated earlier, the quality of accommodation (principally office based) and the quality of the surrounding physical environment and access to high quality retail, leisure and recreational services, are important pre-requisites of this objective. Indeed, this is a symbiotic relationship somewhat. 6.43

In purely commercial terms alone, the feasibility of delivering new office accommodation incentre can be facilitated directly by the attractiveness and appeal of the adjoining uses, amenities and facilities.

6.44

In South Ribble the Leyland Town Centre Masterplan puts forward schemes to regenerate the area including in respect of housing. The Chorley Town Centre Strategy identified that vacant and underused floorspace above ground floor shops would suit conversion into housing accommodation.

Housing 6.45

The housing market and the economy of Central Lancashire are very closely related. Previous work has highlighted that Central Lancashire, as a functional sub-region, is shaped by migration and travel to work movement patterns across the three local authority areas. If the area is to attract employment opportunities, particularly higher value, there will be a need for a commensurate supply of high value housing to attract employees.

6.46

The Central Lancashire and Blackpool Growth Point Programme of Development argues for increased housing to capture the potential for strong knowledge based employment growth in the area. As well as the higher end ‘executive style housing’ the residential offer and wider quality of place also need to be tailored for the needs of recent graduates as well as affordable housing for lower grade employees.

6.47

The Chorley, Preston and South Ribble Housing Strategies all refer to the need to improve existing housing using evidence from Stock Condition Surveys. The worst levels of housing condition are in Preston. Many of these properties are in Inner East Preston an area adjacent to the city centre displaying various other forms of deprivation.

6.48

The housing offer across Central Lancashire varies considerably, but there are significant differences between the housing offer in Preston, and that in Chorley and South Ribble. These are clearly revealed by the data in Table 6 below.

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Table 6: Key Housing Statistics % Social Rented Average Area House Prices Jan 06 – Dec 06 Preston £141,421 19.5% Chorley £159,510 6.7% South Ribble £156,432 10.7% Northwest £150,046 11.3% England £206,715 8.7% Source: ONS Neighbourhood Statistics

6.49

Economic Potential of Preston – Draft Final Report

Council Tax Band A and B(Mar 06)

Council Tax Band E and above (Mar 06)

65% 53% 46% 62% 41%

8% 15% 12% 11% 19%

The table demonstrates the key differences between the housing offer: •

Average house prices are significantly lower in Preston than in Chorley and South Ribble and below the Northwest average. House prices in both Chorley and South Ribble are above the average for the Northwest, but significantly below the England average.

Preston has a significantly higher proportion of social rented properties, 1 in 5 homes in Preston is owned by an RSL, less than 1 in 14 homes in Chorley are social rented.

65% of Preston’s homes are in Council Tax band A or B, just 8% in Band E and above. The UK averages are 41% and 19% respectively. Although South Ribble and Chorley both have smaller proportions of Band A and B properties and larger proportions of Band E properties, only Chorley comes close to the UK average.

Central Lancashire as a whole therefore has a relative lack of the kind of high value, highly desirable homes that influence location decisions of high net worth individuals – a situation in which the Growth Point Programme is seeking to address.

These borough level figures also mask significant differences within Preston. Social housing, Band A and B properties and the cheaper housing stock are concentrated in Preston in the central and inner east areas of Preston, by contrast the more expensive more desirable properties are concentrated in Fulwood and the North of Preston.

6.50

The emerging findings of regional research into housing markets across the North West identified that within Central Lancashire affordability issues have become increasingly acute, with high demand for housing across much of the area driving high house price increases far in excess of comparable rises in incomes. Indeed the ratio of lower quartile house price to lower quartile earnings has increased dramatically from 4.86 to 9.07 over the 2002 – 2006 period, with the level of demand for social rented housing expressed through the housing register increasing from 3,230 to over 6,310 between 2001 and 2006. These conditions have led to the identification of an estimated shortfall of 1,165 affordable units per annum.

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Central Lancashire Growth Point 6.51

The Central Lancashire Housing Growth Point Bid is a response to these two issues, the need to address the growing affordability gap and the need to develop high quality aspirational family housing to match the economic growth ambitions of Central Lancashire.

6.52

The Growth Point Programme of Development proposes the delivery of some 21,200 homes by 2016/17, representing an accelerated provision of 5,000 homes above RSS targets between 2008/09 and 2016/17. This will also include delivery of at least 4,000 affordable houses built to high quality standards and integrated within new mixed-tenure developments.

6.53

The Growth Point includes both high quality family housing in suburban settings, but also a considerable amount of new city centre housing, reflecting the significant potential to develop new housing around the edges of Preston City Centre, in a similar way that the trend for “City Living” has seen extensive development of new apartments in other cities (especially Manchester and Liverpool).

6.54

There is clear interest from developers, reflected in Preston City Council’s 5 year housing supply which identifies a significant number of housing sites around the City Centre, development on most of these sites has not commenced, partly this has been due to the slow delivery of Tithebarn, partly due to the broader market downturn.

6.55

However the number and scale of sites provides a further indication of Preston City Centre’s latent potential. In total the 5 year supply figures include 13 sites and the potential for almost 1,500 new dwellings excluding those proposed within the Tithebarn scheme. These new developments would build upon other recent apartments developments around the city and helping to further improve the housing offer and widening the choice of housing.

Culture, Leisure and Recreation Offer 6.56

Central Lancashire has a number of good quality parks including 8 Green Flag Award winners including Avenham, Miller, Grange and Haslam Parks in Preston, Hurst Grange and Worden Park in South Ribble and Yarrow Valley Country Park in Chorley. There are also smaller, community-based facilities such as bowling and tennis clubs. Some traditional public sector facilities such as playing fields are in need of new investment to bring them up to an acceptable standard.

6.57

In addition the waterways and the surrounding countryside including the Lancaster and Leeds / Liverpool Canals, River Ribble, Forest of Bowland Area of Outstanding Natural Beauty

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(AONB) and the West Pennine Moors, offer opportunities for informal recreation such as fell walking and cycling. Indeed the environmental quality of the ‘envelope’ that surrounds Preston and Central Lancashire offers further tangible evidence of the quality of place attributes that are key to attracting investment. 6.58

The main cultural and entertainment assets in Preston are: •

Guild Hall complex;

Harris Art Gallery and Museum and Central Library;

National Football Museum;

Museum of Lancashire / Queens Lancashire Regiment Museum;

The Ribble Steam Museum;

University of Central Lancashire - 53 degrees music venue, and also the Mitchell and Kenyon Cinema;

6.59

Out of town cinemas at Riversway and Capitol Centre; and

Creative industries – links to UCLan, Watermark.

Others in Leyland include Worden Arts and Craft Centre, the South Ribble Museum and Exhibition Centre and the British Commercial Vehicle Museum. In Chorley, they include Astley Hall Museum and Art Gallery, and the Chorley Little Theatre.

6.60

Central Lancashire benefits from some high quality indoor and outdoor facilities, operated by the public and private sectors. There are a number of local leisure centres as well as specialist facilities such as the South Ribble Tennis Centre. The University of Central Lancashire’s outdoor facilities at Cottam are available to the wider community and have been a major boon to sport in the area. Recent years have seen a growth in health clubs and gyms operated by the private sector.

6.61

The Local Futures Local Amenities Index provides one way of considering how Preston’s culture leisure and recreation offer compares with elsewhere. Calculated by measuring the number of heritage sites, cultural amenities (cinemas, theatres, museums etc), retail th

floorspace and percentage of employment in hotels in restaurants, Preston ranks 89 out of the 408 local authorities nationally. 6.62

However Preston is significantly behind Manchester and Liverpool and (on this index) lags Blackpool. These indices rest on a number of measures and in including the number of people employed in the hotel and restaurant trade help to explain the high ranking of Blackpool (and

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other seaside resorts), there is also little accounting for the quality of the amenities on offer (lots of hotels and restaurants does not necessarily mean good hotels and restaurants) but Preston, although well performing with regards to much of the rest of the UK is a long way behind Manchester and Liverpool on these rankings. Table 7: Local Futures - Local Area Manchester Blackpool Liverpool Preston Source: Local Futures

6.63

Amenity Index 2008 (GB =100) Score (GB = 100) National Rank 12th 254 14th 238 21st 185 89th 164

Considering restaurants further, Central Lancashire has not capitalised on the growth of quality chain restaurants, or other food and drink outlets over a period when restaurants like Strada, Café Rouge, Zizzi or chains like Prêt A Manager have opened numerous outlets elsewhere. Central Lancashire has just one of the main restaurant chains – Pizza Express on Winckley Street, and none of the others.

6.64

Consider five of the best known chains, and how Central Lancashire’s food and drink offer compares with other Northwest rivals: Table 8: Food and Drink Offer – Central Lancashire, Manchester, Liverpool and Chester Café Rouge Pret a Strada Pizza Zizzi Manger Express Central No Yes No No No Lancashire Chester Yes Yes No No No Manchester Yes Yes Yes Yes Yes Liverpool Yes Yes No Yes Yes Source: Various

6.65

The proposed Tithebarn development is intended to address this, and the broader issue of the poor quality of Preston’s evening economy offer through the refurbishment of the Guild Hall, a new cinema and new food and drink offer enhancing this important aspect of place and the quality of the Preston offer.

6.66

Looking more closely at the heritage assets, in total, Central Lancashire boasts over 1,300 Listed Buildings, 26 Conservation Areas, 17 Scheduled Ancient Monuments, a number of Parks and Gardens of Historical Interest and many more local sites of archaeological and historical interest. Historic assets are valuable and significant both in themselves and for their contribution to education, recreation, the economic life of the area and the quality of life of residents and visitors.

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6.67

Economic Potential of Preston – Draft Final Report

As highlighted by the Northern Way Quality of Place Research knowledge intensive businesses and workers are likely to respond to a comprehensive package covering culture, as well as an attractive education, town centre and residential offer.. Indeed the report notes: ‘The combination of education, culture and research, and the attractors of quality of life and quality of place help to entice the right people and businesses to a region and hence drive development and competitiveness’.

6.68

Culture and leisure therefore have an important role in revitalising and regenerating towns and cities and these broader City Level Quality of Place factors are believed to be 19

disproportionately important to workers in the Knowledge Economy or Creative Industries .

Conclusion 6.69

Investment in the cities physical assets is an important future consideration for ensuring that Preston has the accommodation and amenities that are demanded by a knowledge intensive economy.

6.70

The following conclusions can be drawn from the above analysis which are important considerations for the development of future policy actions: •

Central Lancashire has a large quantity of office floorspace, and more floorspace than Chester, and more than anywhere else in Lancashire, and has seen strong growth in recent years, however the quality of the office offer in Preston City Centre is poor.

The existing office supply in the city centre presents one of the key constraints to Central Lancashire being able to retain the competitiveness of its business base. The out dated in-centre stock is acting as a particular constraint to the growth of the city centre.

Whilst the strengths of Preston as a location is evident it has been noted that the market specifications required to meet modern standards are not available within the existing office supply.

As a whole Central Lancashire has a wide variety of retail centres which have experienced varying degrees of success. For Preston however it is crucial that the city centre is, and remains, at the heart of any investment going forward. Investment in neighbouring centres means that Preston must also secure investment to complete.

The Tithebarn Regeneration Scheme is central to the vision for Preston City Council and is seen as a critical catalyst for the wider regeneration aspirations of Central Lancashire,

19

Quality of Place: The North’s Residential Offer, Phase 1 Report (Llewellyn Davies Yeang, 2006)

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helping to strengthen the town centre offer and the attractiveness of Preston to graduates and knowledge intensive businesses and workers alike. Tithebarn is likely to a prerequisite for the development of a Central Business District, and kick starting the city centre and edge of centre “City Living” housing development. •

The housing offer across Central Lancashire is also important. This varies considerably, but there are significant differences between the housing offer in Preston, and that in Chorley and South Ribble.

Preston itself has a relative lack of the kind of high value, highly desirable homes that influence location decisions of high net worth individuals. The Central Lancashire Growth Point proposes significant new house building, with an additional 21,200 new homes by 2016 / 17, more than 5,000 more than the RSS requirements. These new homes will both help to address supply issues, broaden the housing offer and help to sustain the broader economic growth of Central Lancashire.

In addition, within the Growth Point are substantial amounts of city centre apartments on the drawing board, awaiting the Tithebarn scheme.

Affordable products targeted at lower grade workers will also be needed to meet future demand.

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7.

ECONOMIC DISTINCTIVENESS

7.1

Building economic specialisms for which the Preston and wider Central Lancashire economy is known is also identified as a key driver of knowledge based growth in successful cities. Moreover this recognises the dangers of over reliance on a single industry and instead stimulate development in range of economic sectors that have the potential to benefit from knowledge spill over’s both within Preston itself, but also through interdependency with other successful cities.

7.2

Preston is already emerging as a new economic force. It has survived the decline in manufacturing employment that has affected other parts of Lancashire and the North West and now provides employment in higher-value sectors that have been growing nationally.

7.3

Despite this however, past research has shown that there remains a need to attract more high value employment opportunity within the service sector, broadening the base away from the public sector and administration employment that currently accounts for a significant proportion of the service sector at the current time. However as the global economy moves into what is truly an unprecedented period it necessary to take a fresh look at recent economic trends and prospects of the Preston economy.

The Business Base 7.4

The total VAT base in Central Lancashire is just under 10,400 in 2006 – quite evenly distributed between the 3 constituents but with Preston obviously taking the largest share with nearly 40% of the total. Figure 3 below analyses the trend growth in VAT stock since 2000 for (Greater) Preston, the North West and England & Wales combined (all data sourced from ONS).

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Figure 3: Overall Trends in VAT Stock 2000-2006

Overall Trends in VAT Stock : 2000 - 06 1.15

Index 1= 2000

1.1

1.05

1

0.95

0.9 2000

2001

2002

England and Wales

2003

North West

2004

Central Lancashire

2005

2006

Preston

Source: ONS 7.5

The results are interesting inasmuch that it highlights that Central Lancashire is not performing as well as the rest of the region and indeed, Preston’s own performance has actually been quite weak. In other words, Chorley and South Ribble have underpinned the results for Central Lancashire in the main since 2000. The results can be interpreted in one or two ways: •

that the business base in Preston has indeed underperformed over the period and that it’s lagging behind the rest of the region; and / or

that the business base in Preston is more fragmented or smaller and with a higher propensity to operate below the VAT threshold.

May 2009

The sector distribution of VAT businesses is shown below in Figure 2.

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Figure 4: Business Units Sector Distribution 2006 – Central Lancashire

l socia rv and er Se alth / He & Oth Fish n lities o in ti a dm d Uti For & uc ng lic A g an ...Ed Agri, cturi Pub Minin fa u Man

te Esta Real

erv ss S sine & Bu

l Inte ncia s Fina omm s&C ts n ra T Restn ls & Hote

ction stru Con

le lesa Who

il / Reta

Source: ONS 7.6

It shows that there are three sizeable VAT based industries in Central Lancashire – Construction, Wholesale / Retail and Business Services which make up nearly 65% of VAT businesses in Central Lancashire which is slightly above the regional average (63%). The th

4 largest VAT sector is Manufacturing at near 8% share of total VAT businesses but this is below the regional average of 8.5%. Generally speaking there is very little to differentiate the sector distribution of business units with the rest of the region. Table 7 provides the comparison for the aggregate sectors. Case Study: BAE Systems 7.7

BAE Systems is perhaps the key employer in Central Lancashire. Its two locations at Warton and Samlesbury employ over 7,500 and over 4,000 employees respectively. BAE Systems is one of the UK’s most important employers. Preston represents the ‘hub’ of its resident workforce albeit it draws from a national and international catchment.

7.8

It is currently servicing a contract for the F-35 Lightning II, for the US Air Force along with a host of other countries. With future investments in Unmanned Autonomous Systems (UAS), the short term prospects look positive, most recently reflected in half-yearly results to June 30th 2008 of an operating profit up by £146million to £789 million on the same period in 2007. Tranche three of the Typhoon contract negotiations have started for up to a further 236 aircraft, which is expected to be completed by early 2009.

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7.9

Economic Potential of Preston – Draft Final Report

Almost half of BAE’s workforce are based in the North West (more than 17,000 people) with the same number again supported indirectly through partnerships, joint ventures and its 20

supply chain (with more than 1,200 suppliers in the region) . 7.10

The company provides many high value-added and high wage jobs: more than half the regional workforce are skilled technicians and nearly a quarter are classified as (nonexecutive) professionals.

7.11

The Military Air Solutions business at Warton alone recruits 100 graduates each year with total expenditure on salary, skills and learning of £80,000 per graduate entrant over a twoyear period. As well as this human capital investment, the company's apprenticeship programme at the Preston Training Centre delivers skilled technical workers (equivalent to NVQ level 3) at a rate of 400 people a year. Significantly, the company has a greater than 80% success rate in retaining its apprentices. Altogether, about 500 young people enter BAE Systems higher and further education training schemes, which are run in partnership with North West universities and schools.

7.12

Despite BAE Systems remaining one of the country’s great export stories, its future is not without risk, none more so than the squeezing of some £2bn from a £16bn defence budget in the UK. With the election of the new US President and a new administration with a different outlook on defence priorities, further potential risks remain an important consideration.

7.13

BAE has strong aspirations to further develop their Samlesbury site, into an Aeropark, to house other aerospace businesses and their supply chains. This has led BAE to identify 17 ha of land at the Samlesbury base to accommodate this supplier park. Self Employment

7.14

The evidence of a switch towards a ‘non-VAT’ or smaller business base is not particularly supported through the self-employment trends for Central Lancashire although it may indeed reflect a switch from sole trading into the corporate sector. Figure 5 shows that following strong growth in 2005 (increasing from just over 15,000 to over 18,500) there has been a generally downward trend in the rate of self employment. The latest estimate suggests that self-employment is some 8% below its level in 2004 at 13,900 down from a peak increase of near 19% in 2006. Whilst the regional rate of self-employment has oscillated over the same period it appears on an upward trend at the moment – which is diametrically opposed to the trend in Central Lancashire.

20

Lancashire County Council (2008)

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Figure 5: Self Employment Trends: Central Lancashire and the Northwest 2004-2007 1.25

1.2

Index 2004/05 = 1

1.15

1.1

1.05

1

0.95

0.9 Apr 2004Mar 2005

Oct 2004Sep 2005

Jan 2005Dec 2005

Apr 2005Mar 2006

Jul 2005Jun 2006

Oct 2005Sep 2006

Jan 2006Dec 2006

Central Lancashire

Apr 2006Mar 2007

Jul 2006Jun 2007

Oct 2006Sep 2007

Jan 2007Dec 2007

Apr 2007Mar 2008

North West

Source: Annual Population Survey 2008 7.15

There are possibly one or two explanations here; it can be financially advantageous to register as a company certainly in taxation terms, (whether VAT or non-VAT registered). This may in part explain some of this shift although it’s not clear why this would take place at this pace and so recently. More worryingly perhaps, recent UK policy towards start-up / small businesses has not been particularly supportive with for example the recent removal of the £10,000 corporate tax allowance for small businesses as well as the intended phased corporate tax increases. Perhaps a more logical explanation is the onset of recession affecting particular businesses in the area (e.g. Construction) - effectively a ‘real’ trend decline in selfemployment rather than a switch to a corporate base. Survival Rates

7.16

Business survival rates in Central Lancashire are analysed below and compared with the regional results. Figure 6 shows the trend in 6 month survival rates; it highlights that there has been a significant increase in the rate and indeed convergence in relative business survival rates since 1995. The constituents of Central Lancashire have a 99% survival rate which is very slightly above the regional average of 98.6%.

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Figure 6: Business Survival Rates: 6 Months Survival (by year of registration) 101.0

99.0

97.0

95.0

NW

Chorley

93.0

Preston South Ribble

91.0

89.0

87.0

85.0 1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Source: DTI 7.17

Figure 5 shows the business survival rate at 24 months. There is some difference in these results. The probability of a business starting up and surviving 24 months hence has been generally increasing over time; performance however has been more variable in Preston and South Ribble since 1998. On the basis of these results though one would comment that performance has been gradually falling behind the regional average at the Central Lancashire level

21

and whilst its not clear why this should be the case the lower rate of churning may be

indicative in this regards.

21

A weighted average survival rate at 2003 was some 3% points lower than for the region as a whole. This was the exact reverse in 1995.

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Figure 7: Business Survival Rates: 24 Months Survival (by year of registration) 85.0

83.0

81.0

79.0

77.0

%

NW

Chorley

75.0

Preston

South Ribble 73.0

71.0

69.0

67.0

65.0 1995

1996

1997

1998

1999

2000

2001

2002

2003

Source: DTI 7.18

To the extent that more businesses are surviving longer then this would appear to be as much correlated with the state and timing of the economic cycle as anything else (i.e. not especially related to specific local policy). These results are nevertheless positive at this juncture.

7.19

Analysis in Figure 8 below provides a more detailed analysis of the trends in VAT stock by sector since 2000. Figure 8: Business Change (2000-2006)

30.00

25.00

20.00

Business change (%)

15.00

10.00

England and Wales

North West

5.00

Central Lancashire 0.00 A

-5.00

gr i,

-10.00

-15.00

M

Fo

r&

Fi sh

in in g

M an d

U

tili t

an u

ie s

fa ct

Co n ur in g

st ru

ct io

n

W ho le sa le

H ot els /R et ai l

Tr an &

R es

tn ts

s

&

Fi na n C

om

m s

ci al In te

R ea lE

P

st at e&

ub lic

E Ad

Bu si ne s

s

m

S

in

er v

&

du ca tio

n

O th er S

/H ea l

er v

th

an d

so

ci al

w

or k

Source: ONS

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7.20

Economic Potential of Preston – Draft Final Report

Preston’s under-performance is apparent across the board apart from the contribution rates for Transport and Communications and Public Admin / Other Services. More creditable performance is also perhaps apparent within the Finance as well as Business Services sector where the VAT stock has increased above the national average (though below the regional average). Particularly noteworthy in these results however is the steep drop in manufacturing VAT stock which has declined by nearly 12% in the last 6 years (105 businesses).

7.21

There is a general long term downward tendency in the registration and deregistration rate relative to the stock – this is though more apparent in Preston. In other words the degree of VAT ‘churning’ is slowing down on a more general front implying either lower value activity or a more general weakness in business (de)formation rates. This shown in Figure 9 below. Figure 9: Business Registrations / De-registrations 1994-2006 12

11

(%)

10

9

8

7

6 1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

England and Wales (Dereg)

North West (Dereg)

Central Lancashire (Dereg)

England and Wales

North West

Central Lancashire

Source: ONS 7.22

This is not peculiar to Central Lancashire but it is more apparent over time. Regardless this is of some concern because high churning rates are a very necessary part of developing a fertile and prosperous economy. Whilst these rates have allowed for a sizeable contribution to growth in VAT stock since 2000, the rates of registrations have peaked since 2003 (deregistrations peaked in 2002) and there are clear signs here that things are slowing up – a precursor perhaps to the recession.

7.23

Exploring therefore the possibility that businesses in Preston may well be downsizing then the following analysis is based on the ABI data which measures business (PAYE) units and

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therefore provides a more comprehensive measure of the business base. Figure 10 below shows the trends in business units since 1998 and clearly highlight that the business base is expanding rapidly in Central Lancashire compared to the regional average – growing by 22% since 1998 compared to 13% for the region. Figure 10: Business Units - Trends 1998-2006 1.25

1.2

Index 1998 =1

1.15

1.1

1.05

1

0.95

0.9 1998

1999

North West

2000

2001

Central Lancashire

2002

2003

Log. (Central Lancashire)

2004

2005

2006

Log. (North West)

Source: ONS 7.24

It would appear from this result that it’s the second proposed ‘hypothesis’ that is material here – that is, the business base in Central Lancashire is becoming more fragmented / smaller and increasingly operating below the VAT threshold. Most particularly perhaps is that there would appear to be a value impact in this regard in that on balance this would suggest (or indeed support) the view that the area is increasingly preoccupied with lower value activity. As the analysis shows, this is not something recent – it is a growing trend in Central Lancashire .

7.25

According to the ABI data for 2006 there are just under 13, 850 business units in Central Lancashire ; estimates from the IDBR database indicates the total is approximately 1,000 more at 14,840 in 2007 which suggest that this trend is continuing at a pace. Table 9 below analyses business units by size and whilst the differences between the groupings are small there is a tendency towards a smaller business unit in Central Lancashire than regionally.

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Table 9: Business Size Analysis 2007 NW (%) Size 0-9 81.88% 10 - 49 14.46% 50 - 249 3.14% 250 + 0.51% Total 100.0% Source: IDBR 2008

7.26

Central Lancashire (%) 83.05% 13.24% 3.30% 0.47% 100.0%

GVA Grimley’s previous analysis of relative productivity rates in Lancashire highlighted that Central Lancs – which is effectively Central Lancashire – had one of the largest productivity gap with the rest of the UK which was almost entirely sourced amongst the services sector.

7.27

The key results from this analysis are set out in Table 10 below and this table shows what GVA in Central Lancs ought to have been if GVA per capita in manufacturing (row B) or services sectors (row C) in Central Lancashire matched the UK GVA per capita. Table 10: GVA Gaps in Central Lancashire

[A] Actual GVA in Central Lancs [B] GVA in Central Lancs assuming UK manufacturing productivity in 17 industries. Industry employment shares as per baseline [C] GVA in Central Lancs assuming UK productivity in other industries. Industry employment shares as per baseline

[D] GVA in Central Lancs under assumptions [B] and [C] combined. Industry employment shares as per baseline. Source: GVA Grimley / CE

7.28

£ms 3786.1 3811.3

Increment on baseline % £ms

25.2

0.7%

4361.9

575.8

15.2%

4387.1

601.0

15.9%

Notwithstanding the limitations in the data the analysis highlighted that the key productivity gap with the rest of the UK was with regards to services (and this result would be consistent with ‘adjusting’ for the Financial Services in London / South East). This would seem to support the assertion of a pre-existing and growing tendency towards lower value added activity which is being reinforced by the more recent business base data.

7.29

Overall therefore taking account of the current rapidly worsening economic climate and the likely investment base short term, this is not a particularly healthy picture for Preston itself – less so the case for Central Lancashire. Whether there is indeed spill over activity to the Central Lancashire area which is being fuelled by deficiency in the Preston product or the

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generally more attractive proposition of living and working in more sub-urban surroundings is a moot point. 7.30

What is clear is that since its announcement as a third city Preston appears not to have cashed in on the potential benefits and this has indeed been a particular concern of developers – epitomised perhaps by the slow progress on the Tithebarn redevelopment. Tithebarn is a key project that, when completed, will seriously underpin Preston’s city status as a key retail centre in this part of the North West with the creation of a significant amount of additional retail floorspace, a large boost to jobs and significant increase in GVA locally. Despite the current economic climate, developers Grosvenor and lead Lease, and anchor store John Lewis are still committed to the scheme and the evidence base here (and in the previous sub-section) highlights the need for Tithebarn to come forward quickly to help drive growth in Preston.

Employment Trends 7.31

Total employment in Central Lancashire in 2006 was around 173,000, with nearly 90,000 located in Preston itself (i.e. 52%); the residual employment is shared broadly equally between Chorley and South Ribble (i.e. approx 24% each). Employment grew by nearly 27,500 from 1998 - 2006

7.32

Analysis of recent employment trends is supported by the ABI data. Overall trends are shown below in Figure 11 and highlight that: •

Central Lancashire and all its constituents have been growing strongly since 1998 – well ahead of the average for the region22

Employment in Central Lancashire has increased by approximately 19% since 1998, but growth has ranged between 15% in Preston to 31% in Chorley during this period – this compares with 8% for the region.

22 The reader should note that data relating to Central Lancashire has been biased upwards since 2002 with the inclusion of employed people based overseas. Strictly speaking therefore the growth rates are biased upwards by approximately 4800 since 2002. However the underlying growth pattern is still substantiated net of the 4800.

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Figure 11: Employment Trends 1998-2006 1.4

1.3

Index 1 = 1998

1.2

1.1

1

0.9

0.8 1998

1999

2000

North West

2001

Preston

2002

Chorley

2003

South Ribble

2004

2005

2006

Central Lancashire

Source: ONS 7.33

Therefore despite the apparent changing structure of the business base the sub-region has still been creating a lot of employment locally – not a surprise perhaps given the indigenous skills base. The key sectors underpinning growth at the Central Lancashire level since 1998 are detailed in Table 1123 below.

23

Sub-sectors totalling less than 200 in 2006 are excluded

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Table 11: Top Growth Sectors - Central Lancashire 1998-2006 2006 1998 Number Number

20 : Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials 35 : Manufacture of transport equipment 41 : Collection, purification and distribution of water 45 : Construction 55 : Hotels and restaurants 60 : Land transport; transport via pipelines 63 : Supporting and auxiliary transport activities; activities of travel agencies 67 : Activities auxiliary to financial intermediation 70 : Real estate activities 71 : Renting of machinery and equipment without operator and of personal and household goods 72 : Computer and related activities 74 : Other business activities 75 : Public administration and defence; compulsory social security 80 : Education 85 : Health and social work 92 : Recreational, cultural and sporting activities 93 : Other service activities Source: ABI

7.34

Share of Economy % 0.4%

574

716

Change 1998 2006 24.74%

248 153

4,723 210

na 37.25%

2.7% 0.1%

7,250 8,774 2,414 1,005

9,535 11,171 3,420 2,750

31.52% 27.32% 41.67% 173.63%

5.5% 6.5% 2.0% 1.6%

943

1,231

30.54%

0.7%

1,701 888

2,362 1,388

38.86% 56.31%

1.4% 0.8%

1,157 12,550 11,400

2,763 21,102 15,532

138.81% 68.14% 36.25%

1.6% 12.2% 9.0%

11,283 16,385 1,845 1,543

16,418 21,705 3,125 2,051

45.51% 32.47% 69.38% 32.92%

9.5% 12.5% 1.8% 1.2%

These sectors make up almost 70% of the Central Lancashire economy in employment terms – they are therefore by far the most important sectors in the economy at this point in time. From this analysis it is apparent that the public sector has done particularly well since 1998. It is also apparent from these results that there are a number of these sectors which would have benefited greatly from the housing boom in the UK – Construction, Real Estate, Financial Intermediation, Manufacture of wood etc but that are equally vulnerable to current downturn.

7.35

The Business Survey findings provide further evidence of the recent strong performance of

the Central Lancashire economy. The survey asked businesses if the number of people they

employ has gone up, gone down or stayed the same over the past 3 years.

7.36

The results of the survey indicate that the majority of businesses (57%) have stayed the

same, however employment has gone up significantly at 8% of the businesses we surveyed,

and gone up slightly at 17% of businesses surveyed. However a number of businesses

reported that the number of people they employ had fallen either a little (14%) or significantly

(5%).

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7.37

Economic Potential of Preston – Draft Final Report

Overall however more businesses reported growing employment than falling employment. At

the sector level, a higher proportion of firms in the Primary producer and Communication

sectors have seen significant increases in employment.

7.38

Looking ahead, despite the problems in the wider UK economy, businesses in Preston are

remarkably positive. Less than 5% of businesses expect their workforce to fall, and less than

1% expect the number of people they employ to go down significantly.

7.39

We have elsewhere commented that Preston has developed an uncanny knack of meandering through recessionary periods without huge employment losses. Put simply, BAE Systems apart, it is not an area that is unduly exposed to a particular industry or sector; quite the contrary in fact, it has developed a well balanced economy which will be relatively robust in the current climate (as far as this sort of assertion goes). Albeit it is evident from the results that services maintain a very significant contribution to local growth prospects and it is clear from recent economic output data that it is under severe pressure.

7.40

The counterpoint to the growth areas of the Preston economy are the worst performing sectors that have experienced employment decline over the decade. Table 12 below provides details of the declining sectors of the Preston economy. Table 12: Worst Performing Sectors - Central Lancashire 1998-200624 % 2006 1998 change Number Number 1998 2006 01 : Agriculture, hunting and related service 1,506 1,106 -26.6% activities 15 : Manufacturing of food and beverages 2,946 2,310 -21.6% 17 : Manufacture of textiles 1,833 1,038 -43.4% 18 : Manufacture of wearing apparel; dressing 1,063 340 -68.0% and dyeing of fur 21 : Manufacture of pulp, paper and paper 845 328 -61.2% products 24 : Manufacture of chemicals and chemical 1,240 976 -21.3% products 25 : Manufacture of rubber and plastic 1,545 1,338 -13.4% products 26 : Manufacture of other non-metallic mineral 240 73 -69.6% products 27 : Manufacture basic metals 294 166 -43.5% 28 : Manufacture of fabricated metal products, 2,323 1,589 -31.6% except machinery and equipment 29 : Manufacture of machinery and equipment 2,112 1,230 -41.8% not elsewhere classified

24

Share of Economy %

0.6%

1.3% 0.6% 0.2%

0.2%

0.6%

0.8%

0.0%

0.1% 0.9%

0.7%

Sectors with less than 100 employees in 1998 are excluded

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31 : Manufacture of electrical machinery and apparatus not elsewhere classified 32 : Manufacture of radio, television and communication equipment and apparatus 34 : Manufacture of motor vehicles, trailers and semi-trailers 36 : Manufacture of furniture; manufacturing not elsewhere classified 40 : Electricity, gas, steam and hot water supply 50 : Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuel 52 : Retail trade, except of motor vehicles and motorcycles; repair of personal and household goods 64 : Post and telecommunications 65 : Financial intermediation, except insurance and pension funding Source: ABI

7.41

Economic Potential of Preston – Draft Final Report

1,822

229

-87.4%

0.1%

403

143

-64.5%

0.1%

2,608

1,909

-26.8%

1.1%

1,541

1,190

-22.8%

0.7%

699

308

-55.9%

0.2%

5,192

4,805

-7.5%

2.8%

18,059

15,601

-13.6%

9.0%

4,933 2,323

3,187 1,775

-35.4% -23.6%

1.8% 1.0%

Manufacturing make up most of the employment losses since 1998. However by far the largest absolute loss has been in the Retail Trade – with nearly 2,500 jobs lost. Almost 8,000 jobs have also been lost in Manufacturing since 1998 and (recent) losses in the Finance sector are also becoming apparent at this stage of the economic cycle.

7.42

Location Quotient analysis shows how well balanced the Central Lancashire economy is. Table 13 below itemises the LQ results for Central Lancashire for both the growth and declining sectors relative to the North West for 2006. A score of 1 indicates a comparable structure with the region in quantitative terms at least. Less than 1 indicates less concentration than regionally and greater than 1 the converse.

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Table 13: LQ Results for Central Lancashire Growth Sectors GP % 0.4 20 : Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials 35 : Manufacture of transport equipment 2.7 41 : Collection, purification and 0.1 distribution of water 45 : Construction 5.5 55 : Hotels and restaurants 6.5 60 : Land transport; transport via 2.0 pipelines 63 : Supporting and auxiliary transport 1.6 activities; activities of travel agencies 67 : Activities auxiliary to financial 0.7 intermediation 70 : Real estate activities 1.4 0.8 71 : Renting of machinery and equipment without operator and of personal and household goods 72 : Computer and related activities 1.6 74 : Other business activities 12.2 75 : Public administration and defence; 9.0 compulsory social security 80 : Education 9.5 85 : Health and social work 12.5 92 : Recreational, cultural and sporting 1.8 activities 93 : Other service activities 1.2 Declining Sectors GP % 01 : Agriculture, hunting and related 0.6 service activities 15 : Manufacturing of food and 1.3 beverages 17 : Manufacture of textiles 0.6 18 : Manufacture of wearing apparel; 0.2 dressing and dyeing of fur 21 : Manufacture of pulp, paper and 0.2 paper products 24 : Manufacture of chemicals and 0.6 chemical products 25 : Manufacture of rubber and plastic 0.8 products 26 : Manufacture of other non-metallic 0.0 mineral products 27 : Manufacture basic metals 0.1 0.9 28 : Manufacture of fabricated metal products, except machinery and equipment

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Economic Potential of Preston – Draft Final Report

NW % 0.3

Central Lancashire LQ NW base (2006)

0.8 0.1

3.24 1.11

5.0 7.0 2.3

1.11 0.93 0.88

1.8

0.90

0.8

0.90

1.5 0.7

0.92 1.16

1.7 11.7 5.6

0.93 1.05 1.59

9.4 12.7 2.5

1.01 0.99 0.72

1.1 NW % 0.5

1.06 Central Lancashire LQ NW base (2006)

1.8

0.74

0.6 0.1

1.03 1.42

0.4

0.46

1.3

0.43

0.9

0.83

0.4

0.10

0.1 1.2

0.75 0.74

1.63

1.33

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29 : Manufacture of machinery and equipment not elsewhere classified 31 : Manufacture of electrical machinery and apparatus not elsewhere classified 32 : Manufacture of radio, television and communication equipment and apparatus 34 : Manufacture of motor vehicles, trailers and semi-trailers 36 : Manufacture of furniture; manufacturing not elsewhere classified 40 : Electricity, gas, steam and hot water supply 50 : Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuel 52 : Retail trade, except of motor vehicles and motorcycles; repair of personal and household goods 64 : Post and telecommunications 65 : Financial intermediation, except insurance and pension funding Source: ABI

7.43

Economic Potential of Preston – Draft Final Report

0.7

0.9

0.77

0.1

0.4

0.35

0.1

0.1

0.66

1.1

0.6

1.76

0.7

0.7

0.97

0.2

0.2

1.10

2.8

2.0

1.42

9.0

10.8

0.84

1.8 1.0

1.8 2.0

1.05 0.52

There are only two growth sectors that have materially different concentration levels to that for the region – Public Administration and the Aerospace sub-sectors which is included in SIC 35 Manufacture of Transport Equipment (both of which are also inter-related and therefore induce a degree of bias in favour of Public Admin). However LQ analysis shows that Preston remains exposed to shrinking sectors including Manufacture of wearing apparel; dressing and dyeing of fur , the Sale, maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuel and the manufacture of motor vehicles, trailers and semi-trailers. Employment in the manufacture of wearing apparel sector is limited, however the other two sectors still employ nearly 7,000 people in Central Lancashire .

7.44

Otherwise there are no particular biases in the economy. Moreover it is highly likely that given the difference in the respective growth rates with the region that employment is likely to be more aligned with that for UK growth (the Finance sector apart perhaps). Ironically this high level of employment growth in part explains the observed lower productivity rates relative to the UK benchmark.

7.45

The question perhaps is how long can this be maintained? It can be presumed that something will have to give somewhere – in that, either value added has to increase substantially to accommodate this sort of employment growth rate and / or the rate of employment growth will need to subside to equate with a more competitive environment that

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is likely to occur. However, as noted elsewhere, the Central Lancashire economy is somewhat an enigma. It has, as we noted, meandered previous recessions and posted strong employment growth throughout. However there are indications in the data that this may not be possible to be maintained where the value base is being eroded over time and there are apparent weaknesses in the labour market, certainly within Preston itself.

Unemployment 7.46

There is now widespread realisation that the UK is going to experience a deep recession with the prospect of significant increases in unemployment. No area is immune to these problems and there are already clear trends in the distribution of unemployment across the UK. The chart below highlights the regional distribution of the change in unemployment (measured by those claiming Job Seekers Allowance) over period from January 2008 to February 2009, a period which has seen the number of JSA claimants rise by more than 600,000. Figure 12: Regional Change in Unemployment (JSA Claimants January 2008 – February 2009) 2.5

80,000.0

70,000.0 2.0 60,000.0

50,000.0

1.5

40,000.0

1.0

30,000.0

20,000.0 0.5 10,000.0

0.0

0.0 North East North West Yorkshire and The Humber

East Midlands

West Midlands

East

London

Change (numbers)

South East South West

Wales

Scotland

Northern Ireland

Change (%)

Source: ONS 7.47

In terms of numbers, Four UK regions appear to be experiencing the brunt of these job losses at the moment – the West Midlands, Yorkshire and Humber, the North West and South East. The highest absolute increase in those claiming Job Seekers Allowance has been in the South East, over 74,000 but the Northwest has been only slightly behind, with an increase of

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almost 73,500. The highest increases in the proportion of people claiming Job Seekers Allowance have been the Northeast and Wales, both areas have seen the proportion of people claiming JSA rise by 2% (from an already high base position in the Northeast). The proportion of people on Job Seekers Allowance in the Northwest has risen by 1.7% to 4.3%. However, the analysis provides a graphic indication that there has been no shelter from the rises in unemployment– save for the East Midlands perhaps. 7.48

Within the Northwest’s 43 Local Authority areas, unemployment has risen unevenly. Absolute numbers of people claiming Job Seekers Allowance have risen fastest in the major metropolitan areas of the Liverpool and Manchester City Regions, reflecting their greater levels of employment to start with, but unemployment is rising fastest in other parts of the Northwest. The areas with the largest absolute rises and fastest increases are both set out in Table 14. Table 14: NW Increases in JSA Claimants - Largest / Fastest Increases % Increase in JSA Area Increase in JSA Area Claimants Claimants 1. Manchester 1. Congleton 5,484 134.8% 2. Liverpool 2. Macclesfield 5,258 131.0% 3. Wigan 3. Rossendale 4,463 126.9% 4. Rochdale 4. South Lakeland 3,059 125.6% 5. Bolton 5. Ribble Valley 2,993 120.5% 6. Wirral 6. Warrington 2,910 118.4% 7. South Ribble 7. Salford 109.1% 2,813 8. Stockport 8. Chester 2,798 104.2% 9. Tameside 9. Pendle 2,783 99.1% 10. Warrington 10. Eden 2,553 99.1% 1,172 23. Preston 14. Chorley 93% 1,004 29. Chorley 35. Preston 55.7% 980 31. South Ribble Source: Nomis March 2009

7.49

In absolute terms, unemployment has risen by more than Preston, Chorley and South Ribble in more than half the local authorities in the Northwest. Collectively, Central Lancashire has seen the number of people claiming job seekers allowance rise by 3,156 since January 2008, less than the rise in Manchester, or Liverpool or Wigan.

7.50

Unemployment is rising especially slowly in Preston, which has seen numbers on Job Seekers Allowance grow by 55%, less than 34 other areas of the Northwest, and although unemployment is rising faster in Chorley and especially South Ribble, this is from a low starting point. Congleton and Macclesfield have seen those claiming JSA rise by more than 130% since January 2008.

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7.51

Economic Potential of Preston – Draft Final Report

To date, of the 73,455 additional JSA claimants generated in the Northwest between January 2008 and February 2009 just 3,156 or 4.3% have been generated in Central Lancashire, compared to more than 7% in Manchester and Liverpool, more than 6% in Wigan and greater than 4% in Rochdale, Bolton and Wirral.

7.52

Consequently as this recession deepens, Central Lancashire and especially Preston is performing relatively well, mirroring resilience in previous recessions, however the economic analysis does indicate that it too may well suffer some hardship this time around.

7.53

In order to estimate how badly Central Lancashire may be hit, the following may well be assumed: •

that unemployment is expected by many commentators to increase to between 2.5 m 3m over the next 2 – 3 years.

the expected unemployment share for the North West should approximate 12% based on recent historical share of UK total unemployment (it currently stands at 12.6%)

unemployment in February across the UK was 2.03m therefore an increase to 2.75m would expect to contribute some 86,400 additional unemployed in the North West within 2 – 3 years

the share of employment taken by Central Lancashire in the North West is 5.7% therefore we could expect up to 6% of the increase in unemployment to occur in Central Lancashire,. Assuming a 6% share then this would suggest an increase of unemployment of around 5,184 people in Central Lancashire over the next 2- 3 years.

However just 4.3% of the additional JSA claimants between January 2008 and February 2009 have been in Central Lancashire, should this trend continue then Central Lancashire may experience a lower increase in unemployment, perhaps as little as 3700.

This would seem to be a reasonable prognosis given Preston’s past ability to limit impacts of recession but equally recognising some frailties in the economy and the presence of some significant manufacturing

7.54

Latest forecasts by Experian for Lancashire indicates that employment across the whole of Lancashire is expected to increase by 6,800 between 2006 – 2016. Where we assume that Central Lancashire takes a ‘fair share’25 of that increase then this would suggest that employment in Central Lancashire should increase by some 1700. However where we then net off the forecast increase in unemployment then this would seem to suggest that the economy is expected to contract certainly in the short term if not over the forecast period.

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Consequently Central Lancashire may experience a reduction in employment of at least 2,000 and as much as 3,484 jobs given the current prospects on unemployment. 7.55

Clearly where sentiment worsens concerning national unemployment levels then this will impact directly on this estimate. These are aggregate estimates and provide little in the way of detail in terms of timing and potential sectors that are going to be affected. However there are clear signs that very few (if any) sectors will escape the impact of this recession, though some will be affected more than others. UK’s manufacturing base has shrunk considerably since the 80s with a resulting higher likelihood that the relative balance of losses will be more evenly spread than on previous occasions. That said in terms of proportionality the greater impact is almost certainly going to fall on manufacturing.

7.56

As we already note Central Lancashire ’s structure is in part biased by the ‘ghost’ employment of overseas employees in BAe – albeit these jobs are not wholly immune to the recession for the time being these jobs are ‘assumed away’. This would then leave us with the following general structure of the economy. Table 15: Employment – Central Lancashire 2006 Number of employees Sector Agriculture & mining 1,167 Manufacturing (net of Transport Equipment) 15,765 Utilities 518 Construction 9,535 Hotel, Retail and Distribution 40,499 Transport and Communications 9,363 Financial 3,291 Professional & Business Services 27,686 Public Administration & Defence 15,532 Education & Health 38,123 Other Services 6,758 Total 168,237 Source: ABI

7.57

% 0.7% 9.4% 0.3% 5.7% 24.1% 5.6% 2.0% 16.5% 9.2% 22.7% 4.0% 100.0%

Fundamentally Central Lancashire is not an economy that is biased towards manufacturing. The manufacturing base in the North West is 12.5% (including BAe), therefore at 9.4% the Central Lancashire economy is not especially exposed in terms of the manufacturing density of jobs.

7.58

Just under 54,000 people are employed in public administration and defence, education and health. Consequently, almost a third of all jobs in Central Lancashire are public sector oriented, these are amongst the most secure jobs in the economy at this point in time.

25

In this case the share of Lancashire’s total employment in Central Lancashire is 25%.

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7.59

Economic Potential of Preston – Draft Final Report

At the same time the density of employment in financial services is low compared to the regional average of 3.4% – whilst reflective of the weaker value added contribution in this economy, in the current climate, again, limited exposure for Central Lancashire. By deduction therefore the biggest threat of job losses is likely to fall on Retail and Construction. These two sectors account for 51,000 jobs in the Central Lancashire economy.

7.60

However this again reflects previous comments that we have made about Preston; it may not set the world alight but it also has an uncanny balance that avoids major economic distress. Indeed if Central Lancashire was to deliver on these projections then the likelihood is that there will be short term and long term phases or dynamics of change. In the short term, on the basis of current economic projections and commentary, then we should presume economic loss. Medium to longer term then on the basis that Preston has this inherent resilience to withstand and/ or recover from economic distress then we could presume that the longer term forecast may well be positive. This is particularly the case where it starts to deliver on its city status.

7.61

In current times it is opportunistic to demonstrate resilience and confidence and this would seem particularly apt for Preston. In turn the following chart simulates a possible baseline outcome for Preston in terms of overall employment path for the next 10 years or so. It assumes the net loss in employment resulting from the short term increase in unemployment over the next 2 years is then followed by a strong period of recovery consistent with reaching the baseline forecast growth (i.e. equivalent to roughly 8600 jobs post 2011). Figure 13: Simulated Forecast Employment – Central Lancashire 2006-2016 (Baseline) 172,000

1.02

170,000

1.01

1 168,000

nos

0.98 164,000 0.97 162,000

Index 2006 = 1

0.99 166,000

0.96 160,000

0.95

158,000

0.94

156,000

0.93 2006

2009

2011

2014

2016

Source: Experian / ONS

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7.62

Economic Potential of Preston – Draft Final Report

The key issue perhaps is whether the recovery phase could be as strong as predicted here. This we would suggest could be down in part to the commitment levels and attitude rd

concerning the role and function of Preston as the 3 city in the North West. This outcome is consistent with the current overall forecast for Lancashire.

Gross Value Added (GVA) 7.63

Official GVA estimates are disaggregated down to NUTS 3 level which means that it’s not possibly to estimate the GVA for Central Lancashire using official sources. Data that has been produced previously for the Central Lancashire sub-area provides some indicative measures of past GVA trends26. In this regard Figure 14 below provides these results. Figure 14: GVA Trends 1997-2007 1.3

1.25

Index 1997 =1

1.2

1.15

1.1

1.05

1

0.95

0.9 1997

1998

1999

2000

2001

North West

2002

2003

2004

2005

2006

2007

Central Lancs

Source: CE 2006 7.64

These are interesting results and in many respects are fully consistent with the theme that has developed with this analysis. First it is apparent from the past trends that the inclusion of the overseas employees in 2002 has a major and permanent impact on the GVA estimates for the sub-area. This has a particular impact in Central Lancashire compared to other areas as BAE Systems employ a large number of these workers. Taking the trends prior to 2002 then

26 Whilst these are forecast based estimates by using data up to 2007 then this avoids large forecast errors given the base year for the estimates was 2006 – therefore only 3 years of forecast is utilised. This also avoids the implication of the economic downturn which are obviously not incorporated in forecasts which are of 2006 vintage. Inter alia the GVA analysis herein is robust.

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arguably the result would not be as positive as they appear post 2002. Despite this the relative growth in employment has not converted to a concomitant increase in GVA – in fact, to support higher productivity then GVA growth would need to be greater than the relative growth rate in employment. It is evident from these results that this has not really materialised – it’s at the margin. Whereas regionally employment has grown by 8% since 1998, GVA has grown by 28% during roughly the same period; Central Lancashire on the other hand has posted an employment increase of 19%, GVA has grown by 29%. By implication, if productivity growth ratio had kept pace with the regional average then GVA growth should 27

have been 67% . 7.65

Therefore whilst we may ponder how Preston has been able to achieve this feat, in the current climate there must be a question of its underlying sustainability – this despite the inherent knack in the sub-area to admirably weather economic problems and create employment for its population.

7.66

Indeed the productivity analysis here has been supported through customised Cambridge Econometrics data and there are issues with this data in the way it has been compiled. Specifically variability in the productivity rates within Lancashire (such as in the case here for Central Lancashire) is driven by relative employment shares not variable GVA levels across the sub-areas. Therefore whilst the measure of absolute GVA gap with the rest of the UK is appropriately measured through the methodology it is limited by the fact that the underlying information is based on NUTS3 data. Employment share analysis therefore scales these results to reflect position for the sub-areas. In turn the GVA per head gap with the rest of the UK is most accurately measured at NUTS3 level through official sources and is shown in Table 16 below. Table 16: GVA Per head 2006

UK North West Lancashire NUTS 2 Lancashire County Source: ONS – Local Gross Value Added

7.67

2006 £19,430 £16,482 £15,145 £15,608

Index UK = 100 100 87 80 82

As expected, the GVA per head gap roughly approximates to the overall GVA gap measured for Central Lancashire. What this analysis adds is that this is mainly as a result of weaker productivity in the service sector.

27 Roughly speaking the North West GVA growth was 3.5 times the relative growth in employment for the period. Therefore Central Lancashire should have posted a 67% increase in GVA (i.e. 19% *3.5). Noting here that the structural break in employment does not affect these results since the impact has been factored into the GVA estimates also.

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Central Lancashire’s Knowledge Economy 7.68

There are a range of definitions of a “knowledge based business” or the “knowledge economy”. However research carried out for the Southwest Regional Development Agency in 200528 suggested that Knowledge based businesses could be broadly defined as those operating in 48 International REV3 SIC sectors, broadly equivalent to the UK SIC 92. These are listed in Table 17 over the page. Table 17: Knowledge Based Industries - SIC Codes SIC 1992 2441 2442

Description

3340 3350 3530 6420

Manufacture Of Pharmaceutical Products Manufacture: Pharmaceutical Preparations Manufacture Of Office Machinery Manufacture Of Computers Manufacture Of Electronic Valves Manufacture Of TV / Radio Transmitters Manufacture Of TV / Radio Receivers Etc Manufacture Medical / Surgical Equipment Etc. Manufacture Of Instruments For Measuring Up Manufacture Of Industrial Process Control Equipment Manufacture Of Optical Instruments Etc. Manufacture Of Watches And Clocks Manufacture Of Aircraft And Spacecraft Telecommunications

6511 6512 6521 6522 6523 6601 6602 6603 6711 6712

Central Banking Other Monetary Intermediation Financial Leasing Other Credit Granting Other Financial Intermediation Nec Life Insurance Pension Funding Non Life Insurance Administration Of Financial Markets Security Broking And Fund Management

3001 3002 3210 3220 3230 3310

3320

3330

Source: Boddy et al 2005 7.69

SIC 1992 6713 6720

Description

7210 7220 7230 7240 7250 7260

Hardware Consultancy Software Consultancy And Support Date Processing Data Base Activities Maintenance / Repair / Office Machinery Etc. Other Computer Related Activities

7310

Research: Natural Sciences / Engineering

7320

Research: Social Sciences / Humanities

7411 7412 7413 7414

Legal Activities Accounting / Book Keeping Activities Market Research / Public Opinion Polling Business / Management Consultancy Activities. Management Activities: Holding Companies Architectural / Engineering Activities Technical Testing And Analysis Advertising Photographic Activities Higher Education Hospital Activities Motion Picture And Video Production Radio And Television Activities Artistic And Literary Creation Etc

7415 7420 7430 7440 7481 8030 8511 9211 9220 9231

Activities Auxiliary to Financial Intermediation Act. Auxil. To Insurance / Pension Funding

29

Work has been carried out with Beta Model (www.betamodel.com) to obtain details of the

number of businesses and employees within these sectors in Central Lancashire,

28

The Knowledge Driven Economy, Regional Economic Strategy and Regional Spatial Strategy in the Southwest of England , April 2005 by Professor Martin Boddy, Faculty of the Built Environment, University of the West of England http://download.southwestrda.org.uk/res/general/KE%20Final%20Report%20190705.pdf 29 However it is not possible to match all of these definitions, and there are five “missing” SICs For example, 7210 Hardware consultancy and 7220 Software computer resolve to the same YP Class 'Computer Consultancy' and are listed under 7220. The full list of unmatched SICs are 3330 - Manufacture of industrial process control equipment; 6511 - Central Banking; 6602 Pension Funding; 7210 - Hardware Consultancy and 7415 - Management activities: holding companies

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Manchester, Liverpool and the Northwest to enable analysis of Knowledge Businesses with Central Lancashire, and these are shown in Table 18. Table 18: Knowledge Based Businesses and Employees April 2008 Manchester Central Preston Chorley South Ribble Lancashire 760 541 481 1,782 3,187 Number of Knowledge Based Business Total Number of 5,631 4,141 4,200 13,972 17,169 Businesses % of all 13.5% 13.1% 11.5% 12.8% 18.6% Businesses Number of 15,225 8,590 5,321 29,136 94,102 employees in Knowledge based Businesses Number of 76,160 39,083 48,626 163,869 291,239 Employees 20% 22% 10.9% 17.8% 32.3% % of all employment in Knowledge based businesses Source: Beta Model

7.70

Liverpool

NW

1,904

35,525

14,153

267,298

13.5%

13.3%

56,202

678,596

217,738

3,115,473

25.8%

21.8%

Data from the Beta Model indicates that in April 2008 Central Lancashire had 1,782 knowledge based businesses, employing approximately 29,000 employees. Knowledge based businesses comprise 12.8% of its businesses and 17.8% of its workers. These numbers exclude the 4,000 workers at Samlesbury (counted by Beta Model in Ribble Valley) and the 6,000 employees at Warton (in Fylde) employed by BAe Systems; as well as the employees approximately 1800 employees at the Springfield Nuclear Facility employed by Westinghouse PLC and who are also part of the Knowledge Economy. Case Study: Westinghouse

7.71

Westinghouse’s nuclear fuel sites at Springfield, represent one of Preston’s major knowledge sector businesses, one of the larger knowledge sector employers and, given the renaissance in the nuclear industry in the UK, one with considerable potential for growth.

7.72

Processing several thousand tonnes of uranium a year, Springfield produces all of the UK’s nuclear fuel, as well as fuel for Spanish and Japanese reactors. Springfields was the first plant in the world to make nuclear fuel and to date has produced several million fuel elements and provided products and services for over 140 reactors in more than 12 countries.

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7.73

Economic Potential of Preston – Draft Final Report

In November 1999, following the acquisition of Westinghouse by BNFL and their American partners, Morrison Knudsen, Springfields became the UK Fuel Business of the Westinghouse Nuclear Fuel Business Unit.

7.74

Westinghouse are now planning further growth within Preston. Westinghouse currently have around 2000 people employed in Nuclear Fuel Manufacturing at its Springfields Facility near Preston. This comprises c1550 permanent staff, c150 Agency Supplied Workers (ASW's) and c300 project based contractors. If plans for growth come to fruition during 2010-12 this could rise to 2,500 at the manufacturing site. Alongside this, Westinghouse could have c400 additional staff to support the UK New Build Programme based in Preston on the same timescales.

7.75

Westinghouse have made Preston their UK headquarters for any new nuclear operations, building on its location, transport links and skilled workforce.

7.76

Within Central Lancashire, the largest share of knowledge businesses and knowledge employees are within Preston and Chorley, Preston accounts for over half the knowledge economy jobs in Central Lancashire, Chorley a further 29%. South Ribble has the lowest share of knowledge based businesses (11.5%) and employees (10.9%).

7.77

Although broadly comparable to the Northwest, Central Lancashire is lagging behind Liverpool and Manchester in terms of the proportion of businesses (especially in Manchester) and employees in knowledge based sectors. 18.6% of Manchester and 13.3% of Liverpool businesses are in knowledge based sectors, and both have a larger share of employees in knowledge based industries – 25.8% in Liverpool and 32.3% in Manchester.

7.78

Employment is not evenly spread across the 48 knowledge economy sectors, across the Northwest. Hospital Activities (SIC 8511) accounts for over 200,000 jobs, or almost 1/3 of all knowledge economy jobs.

7.79

The top 14 knowledge based sectors in the Northwest, in terms of total employment, are set out in Table 19 below. These 14 sectors account for almost 85% of all knowledge based employment.

Table 19: Northwest Knowledge Based Employment – Top 10 Sectors April 2008 Northwest % Share of Employee Numbers Knowledge Based Northwest Employment Sector Hospital Activities 218,714 32.2% Architectural & Engineering Activities 80,096 11.8% Legal Activities 43,645 6.4%

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Higher Education Software Consultancy & Supply Accounting, Book-Keeping & Auditing Activities Other Monetary Intermediation; Banks, B' Societies Non-Life Insurance Advertising Telecommunications Business & Management Consultancy Activities Manufacture Of Aircraft And Spacecraft Manu Of Instruments & Appliances For Measuring Manu Of Electronic Valves/Tubes & Other Elec Comp Sum of top 14 sectors Total Knowledge Based Employment

Economic Potential of Preston – Draft Final Report

37,353 31,913 25,303 25,063

5.5% 4.7% 3.7% 3.7%

19,651 18,741 18,355 16,873 14,672 14,540

2.9% 2.8% 2.7% 2.5% 2.2% 2.1%

11,694

1.7%

576,613 678,596

84.90% 100%

Source: Beta Model 7.80

Importantly, across the Northwest, the public sector dominated sectors of Hospital Activities and Higher Education account for more than 256,000 of the Knowledge economy jobs in the Northwest, or 37.7% of all knowledge based jobs. The presence of a major hospital, or one or more University therefore boost the apparent size of the knowledge economy, relative to areas that lack them.

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Table 20: Central Lancashire Knowledge Based Employment – Top 11 Sectors April 2008 Central Total Employees Lancashire % Central South Chorley Preston Share of Sector Lancashire Ribble Knowledge Based Employment Hospital Activities 4,623 3,987 831 9,441 32.4% Architectural & Engineering 1,015 1,509 1,533 4,057 13.9% Activities Legal Activities 1,322 364 394 2,080 7.1% Non-Life Insurance 1,731 70 74 1,875 6.4% Accounting, Book-Keeping & 1,121 399 279 1,799 6.1% Auditing Activities Advertising 341 218 474 1,033 3.5% Higher Education 834 153 11 998 3.4% Telecommunications 626 226 118 970 3.3% Other Monetary Intermediation; 577 233 122 932 3.1% Banks, B' Societies Software Consultancy & Supply 377 241 254 872 2.9% Other Financial Intermediation 243 433 1 677 2.3% Sum of top 11 sectors 12,810 7,833 4,091 24,734 84.4% Total Knowledge Based 15,225 8,590 5,321 29,136 100% Employment Source: Beta Model

7.81

Within Central Lancashire, as across the rest of the Northwest, employees engaged in Hospital activities are by far the biggest component of the knowledge based employment in Central Lancashire. Employees in this important sector account for over 9,000 of the knowledge based workers in Central Lancashire, 32% of total employment. (in Liverpool and Manchester the proportions are 28.9% and 31.7% respectively). However within Central Lancashire’s sub-areas of Preston, Chorley and South Ribble, Hospital Activities account for 30.4% of knowledge economy jobs in Preston and just 15.6% in South Ribble, but 46.4% in Chorley – suggesting Chorley’s knowledge economy is not as vigorous as Preston’s.

7.82

Looking beyond the Hospital Activities and Higher Education sectors, which between them employs over 10,000 of Central Lancashire’s 29,000 knowledge economy workers) dominated as they are by public sector workers and dependent on national expenditure on the NHS and Higher Education, Knowledge based employment in Central Lancashire is concentrated in 5 sectors: •

Architectural & Engineering Activities – which employs 4057 employees across Central Lancashire, 13.9% of knowledge based employment;

Legal Activities – which employs 2,080 workers, concentrated in Preston, 7.1% of knowledge based employment;

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Non-Life Insurance – employing 1,875 workers, overwhelmingly concentrated in Preston, 6.4% of all knowledge based jobs;

Accounting, Book-Keeping & Auditing Activities – employing 1,799 workers, concentrated in Preston, 6.1% of all knowledge based jobs; and

Advertising – employing 1,033 employees, scattered across Central Lancashire, 3.5% of the total knowledge based employment.

7.83

The various Manufacturing sectors employ a further 1,860 workers in Central Lancashire, with BAe and Springfield accounting for a further 10,000 manufacturing workers.

7.84

Other key differences between the Central Lancashire Knowledge Economy, and the Knowledge economy in Manchester, Liverpool and the wider Northwest include: •

Legal Activities – a similar proportion of Central Lancashire’s knowledge based employees are employed in legal activities compared to the rest of the Northwest (7.1% in Central Lancashire, 6.4% across the Northwest), but Manchester and Liverpool both have more people employed, and a higher proportion of their knowledge based jobs are in this high value sector. There are some 11,500 people employed in legal activities in Manchester, over 6,000 in Liverpool;

Business & Management Consultancy Activities – Liverpool but especially Manchester have large business and management consultancy sectors. Almost 3,500 people are employed in this sector in Manchester, approximately 1,350 in Liverpool. This compares to just 458 in Central Lancashire;

Market Research – another knowledge based business service sector, Market research, Is also almost unknown in Central Lancashire, but has a significant presence in Manchester. There are just 17 jobs in this sector in Central Lancashire, there are more than 550 in Manchester;

Radio & Television Activities / Motion Picture & Video Production – these interlinked sectors, unsurprisingly given the location of BBC and ITV studios, provide far more jobs in Manchester and Liverpool than Central Lancashire. Beta Model figures suggest there are just 215 people jobs in these two sectors in Central Lancashire, compared to more than 2,800 in Manchester and almost 900 in Liverpool. Manchester and Liverpool account for 59% of the Northwest’s employment in these two sectors, Central Lancashire just 3.4%;

Artistic & Literary Creation & Interpretation – relatively few people are employed in this small sector in Central Lancashire (just 436 jobs), Manchester has fewer jobs than

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Central Lancashire, just 342. By contrast, Liverpool has almost 5,300 jobs in this sector, and they account for 9% of Liverpool’s knowledge based jobs; (though this appears to have been boosted by Liverpool’s status as European Capital of Culture as figures from previous years were significantly lower). •

Manufacture Of Basic Pharmaceutical Products – as with artistic & literary creation and interpretation, while neither Central Lancashire or Manchester have much employment in this sector (Central Lancashire just 24 jobs, Manchester just 5 jobs) Liverpool has more than 2,700 jobs; and

Security Broking & Fund Management – very few jobs in Central Lancashire (just 46) are in this sector, but there are more than 1,000 people employed in this sector in Manchester, and more than 500 in Liverpool.

7.85

There are a range of other differences between the knowledge sectors within Central Lancashire (i.e. in Preston, South Ribble and Chorley) and the knowledge economies of Manchester, Liverpool and the Northwest, but the key differences discussed above are summarised on Table 21 below:

Table 21: Knowledge Economy – Key Differences Central Lancashire, Manchester and Liverpool Share of all Knowledge Based Employee Numbers Employment (%) Manchester Liverpool Central Manchester Liverpool Central Sector Lancashire Lancashire Architectural & 4,057 7,772 2,969 13.9% 8.3% 5.3% Engineering Activities Legal Activities 2,080 11,529 6,278 7.1% 12.3% 11.2% Higher Education 998 4,476 7,878 3.4% 4.8% 14.0% 458 3,458 1,351 1.6% 3.7% 2.4% Business & Management Consultancy Activities Artistic & Literary 436 342 5,276 1.5% 0.4% 9.4% Creation & Interpretation 24 5 2,778 0.1% 0.0% 4.9% Manufacture Of Basic Pharmaceutical Products Radio & Television 135 1,830 692 0.5% 1.9% 1.2% Activities Security Broking & 46 1,023 542 0.2% 1.1% 1.0% Fund Management Motion Picture & Video 80 1,012 188 0.3% 1.1% 0.3% Production Market Research & 17 553 34 0.1% 0.6% 0.1% Public Opinion Polling Source: Beta Model

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7.86

Economic Potential of Preston – Draft Final Report

For Central Lancashire’s knowledge economy to grow further, a range of key drivers need to be in place – we explore to what extent these drivers are in place, and therefore to what extent Preston is well placed to capitalise on the potential of the knowledge economy, in later sections of this report.

7.87

Add some forward looking sections here – BAE and Westinghouse, Hospital and Education – but also discuss difficulties of growing other office based sectors of the Knowledge Economy – lack of suitable premises.

Conclusions 7.88

It is clear from the above analysis that the Preston economy has evolved fast, leaving behind its industrial legacy and taking up a new position as an emerging regional services city. Indeed the entire Central Lancashire sub-region, with its growing University at its core and strong skill base should therefore be well placed to grow its knowledge economy in the future. •

Employment has grown strongly since 1998, well ahead of the average for the region, however a significant proportion of the new employment has come in education, health and social work and public administration and defence, rather than through private sector job creation;

Employment in many manufacturing sectors has declined over the same period, with some sectors losing more than 50% of their employment compared to 1998;

With the exception of aerospace and public administration, location quotient analysis shows no particular biases in the central Lancashire economy, yet Central Lancashire still has significant employment in declining sectors.

As the current recession gathers pace, Central Lancashire has thus far weathered the downturn well. In absolute terms, unemployment has risen quicker in much of the rest of the Northwest compared to Preston, South Ribble and Chorley. Although unemployment is rising quickly (from a low base) in South Ribble and Chorley, it has risen by just 55.7% in Preston, less than all but a handful of other Northwest Districts;

GVA per head in Lancashire in 2006 was just £14,568 – much less than the Northwest and Uk equivalents, GVA has increased since 1997, but less than would have been expected had productivity kept pace then GVA growth should have much greater than it has been.

Sectoral trends reveal a falling contribution of manufacturing to economic (output) growth but also strong service sector performance, particularly connected to public-sector related

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activity. Alongside this VAT stock in Financial and Business Services Sector has increased above the national average. •

From an economic perspective a somewhat divergent picture is emerging. At the Central Lancashire level performance has been extremely good with all the main economic indicators showing well above average results. However, at the Preston level, performance has been considerably weaker with a set of data that suggests: •

a general ‘dumbing down’ appears to be taking place in the value base of businesses with a significant shift from VAT status to smaller more fragmented businesses

weakening productivity coinciding with what appears to be potentially unsustainable increases in employment relative to the value added per head component. This is reflective in other indicators such as weekly earnings

generally weaker labour market results (i.e. higher inactivity, higher unemployment) that will be challenged over the coming 2 years as economic distress hits the whole of the UK.

Beta Model data suggests that 12% of Central Lancashire’s businesses, employing 17.8% of its employees are knowledge based businesses, but this is lower than the NW (21.8%), Liverpool (25.8%) and Manchester (32.5%) figures) – though these figures exclude the major knowledge sector employers of BAE and Westinghouse.

Through BAe and Westinghouse, Central Lancashire has a core of high value knowledge sector manufacturing, including the majority of the NW aerospace industry. Central Lancashire also has strengths in insurance, accountancy and a base on which to grow these other key parts of the knowledge economy – if the product, and perhaps especially the office premises product, is right.

Analysis of Central Lancashire’s knowledge economy as it currently stands, compared to Manchester and Liverpool, suggests Central Lancashire may have difficulty in pursuing sub-sectors of the Knowledge economy where Liverpool or Manchester are strong – areas where Central Lancashire is relatively weak include Legal activities, TV and radio / motion picture related areas, Security broking, fund management and some other more technical financial sector businesses and Pharmaceuticals.

7.89

Looking ahead structural as well as socio-economic impediments will need to be addressed, particularly as economic pressure increases.

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8.

HUMAN CAPITAL IN ORGANISATIONS

8.1

High quality jobs and highly skilled people are key attributes within successful and competitive places. The competitiveness of the local skills base is a key factor which will influence a businesses decision to locate and grow their organisation within a particular place. This section will therefore consider a series of key factors that support the creation of higher level jobs, skills and productivity that are needed within advancing knowledge economies.

Population 8.2

ONS Mid Year population estimates for 2007 show that Central Lancashire’s population was some 342,700 people, this was approximately 5% of the Northwest population of 6.8m. Table 22: Population Estimates Area Preston South Ribble Chorley Central Lancashire Manchester Liverpool Chester Blackburn Warrington Source: Office of National Statistics

8.3

2007 Mid Year Population Estimates 131,900 106,700 104,100 342,700 458,100 435,500 119,100 140,900 195,200

A summary analysis of population trends for Central Lancashire – which is key barometer of local vitality - is shown in Error! Reference source not found., and shows that since 1981 population in Central Lancashire has grown significantly, in line or ahead of population growth in England and Wales, and significantly above the rate of growth across the Northwest as a whole (which has actually experienced a decline in population overt the last 25 years.

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Figure 15: Population Trends 1981-2007

Population Trends 1981 - 07 1.100

1.080

1.060

1.040

1.020

1.000

0.980

North West

6

7 20 0

5 20 0

20 0

3

4 20 0

2 20 0

20 0

1

0 20 0

20 0

9

8

Preston

19 9

7

19 9

6 19 9

19 9

4

5 19 9

3 19 9

19 9

2

1

England and Wales

19 9

0 19 9

19 9

8

9 19 8

7 19 8

19 8

5

6 19 8

4 19 8

19 8

2

3 19 8

19 8

19 8

1

0.960

Central Lancashire

Source: ONS 8.4

Given that this is a medium to long term trend then caution is necessary in terms of reading too much into these results however they do show that the population in Central Lancashire is growing reasonably strongly and that is a positive measure going forward. A truncated analysis of population trends since 2000 is shown in Figure 16Error! Reference source not found..

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Figure 16: Population Trends 2000 -2007

Population Trends: 2000 - 07 1.04

1.03

Index 2000 = 1

1.02

1.01

1

0.99

0.98 2000

2001

2002

England and Wales

2003

North West

2004

2005

Preston

2006

2007

Central Lancashire

Source: ONS 8.5

These results mirror those outcomes for the VAT base; Central Lancashire is performing much better than Preston itself of late. This clearly is of some concern since it does appear to suggest that Preston is somewhat ‘running out of steam’ and that its shoulder areas are perhaps benefiting from this in some way. Recent recovery in population growth for Preston since 2003 cannot hide the fact that its rate of growth has been less than a quarter than that for the wider Central Lancashire area since 2000. This is quite a telling result during a period where it should be forging it position as the Third City in the North West.

Population Forecasts 8.6

The population of Central Lancashire is forecast to continue to grow, adding to the stock of human capital in the area relative to other parts of the Northwest. Table 23: Population Projections 2006-2031(Thousands)

Chorley Preston South Ribble Central Lancashire Liverpool Manchester

May 2009

2006 103.7 132.0 106.4 342.1 436.1 150.6

2031 121.8 148.0 122.8 392.6 433.7 171.8

Change 20062031 18.1 16.0 16.4 50.5 -2.4 21.2

% Change 2006-2031 17.5% 12.1% 15.4% 14.8% -0.6% 14.1%

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Chester 119.7 133.3 13.6 Blackburn 141.2 162.8 21.6 Warrington 194.0 215.7 21.7 Northwest 6853.2 7695.9 842.7 England 50762.9 60431.5 9668.6 Source: ONS Census 1981-2001 & ONS Mid-year population estimates, 2006

8.7

11.4% 15.3% 11.2% 12.3% 19%

Central Lancashire’s population is forecast for grow by a further 50,000 people to 2031, a rise of almost 15%. This is faster than Manchester and much faster than Liverpool, whose population is forecast to continue falling. Neither Chester or Warrington are expected to grow as quickly as Central Lancashire, this growing population therefore has the potential to provide a demographic dividend for Central Lancashire.

Catchment Workforce Population 8.8

Thinking beyond the immediate areas of Chorley, South Ribble and Preston, Central Lancashire’s location and good transport links provides Preston, South Ribble and Chorley with a potentially much larger catchment workforce population that provide it with a greater degree of economic potential than those areas that are more peripheral or isolated. At the last census, almost 95% of people travelled less than 30km to work, 75% travelled less than 10km.

8.9

Table 24 shows the size of the working age population living within 30km and 10km of Central Lancashire, compared to the populations of Manchester, Liverpool, Chester, Warrington and Blackburn. This is not to suggest that these represent Travel to Work areas, but provide a useful indication of the human capital located within a relatively short distance from each of these locations. Table 24: Working Age Populations - 30km / 10km Working age population within 30km Central Lancashire 889,733 Manchester 1,890,600 Liverpool 1,083,408 Chester 700,800 Blackburn 801,700 Warrington 1,316,670 Source: GVA Grimley 2009

8.10

Working age population within 10km 213,900 771,446 543,800 114,860 148,390 183,050

This clearly shows just how far ahead Manchester is compared to the other locations listed above. With a working age population of almost 1.9m within 30km of Manchester City Centre, investors into Manchester can draw upon a potential labour force that is almost 600,000

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people larger than anywhere else and twice as large as Liverpool. Warrington, at the centre of the Manchester – Liverpool M62 corridor also has a very large working age population within 30km, of over 1.3m people, able to draw on the dense Greater Manchester and Merseyside conurbations, as well as rural Cheshire and Southern Lancashire. 8.11

Central Lancashire’s 30km working population is significant, although not as large as Manchester or Warrington, it is not significantly less than Liverpool (less than 200,000 people) and more than Chester and Blackburn (indeed its notable that despite Chester’s reputation as a growing economy, the working age population within 30km is actually very low).

8.12

However the narrower 10km workforce shows the scale of the gap in human resources available to Central Lancashire (or Chester, Blackburn and Warrington) relative to Liverpool and Manchester. The historically high density development in Manchester and Liverpool means that both have working age populations within 10km that dwarf those of the other major towns and cities in the region. Almost 800,000 people of working age live within 10km of Manchester City Centre (roughly within the M60) and more than 500,000 people of working age live within 10km of Liverpool City Centre either side of the Mersey. This compares to just 213,000 in Central Lancashire, and fewer still in Blackburn, Chester and Warrington.

Occupational structure 8.13

The proportion of highest value jobs - managers and senior officials, professional occupations and associate professional and technical occupations is not dissimilar to the Northwest picture. Workplace analysis from the Annual Population Survey showed that around 40% of jobs in Central Lancashire are in these highest level occupations, about the same proportion in the Northwest.

8.14

The continued growth of these higher value jobs is therefore critical for Preston to achieve additional growth and make a more positive contribution to the regional economy.

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Figure 17: Occupational Structure 2007 (Workplace analysis)

Percentage of all employees (%)

100%

Elementary occupations 80%

Process, Plant and Machine Operatives

Sales and Customer Service Occupations

60%

Personal Service Occupations 40%

Skilled Trades Occupations

Administrative and Secretarial Occupations

20%

Associate Prof & Tech Occupations W es t or th N

R ib bl e en tra lL an ca sh ire

Professional Occupations

Managers and Senior Officials

C

So ut h

C ho rle y

Pr es t

on

0%

Source: APS. 8.15

Further analysis of the occupational structure of Preston illustrates that a high proportion of employment remains in administrative and secretarial occupations (17%). This is significantly higher than both the North West and England and Wales averages currently standing at 13% and 12% respectively. Whilst this emphasises Preston’s role as the administrative centre of Lancashire, it may also act as a disincentive to prospective employees who perhaps perceive Preston as relatively low wage economy.

8.16

Residence based analysis of Central Lancashire’s occupational structure, from the 2001 Census, provides a slightly different picture.

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Figure 18: Occupational Structure 2001 (Residence Analysis) 100%

Elementary Occupations

Process; Plant and Machine Operatives

Percentage of all employees (%)

80%

Sales and Customer Service Occupations

Personal Service Occupations

60%

Skilled Trades Occupations

Administrative and Secretarial Occupations

40%

Associate Professional and Technical Occupations

Professional Occupations

20%

Managers and Senior Officials 0%

Preston

Chorley

South Ribble

Central Lancashire

Northwest

England

Source: ONS 8.17

Just under 40% of jobs in Central Lancashire are in higher value occupations (managers and senior officials, professional occupations and associate professional and technical occupations) less than 40% of residents in Central Lancashire are employed in these higher value occupations.

8.18

Although the workplace analysis shows that Chorley has the lowest proportion of high value employment, the residence analysis indicates that Chorley has the highest proportion of residents employed in high value occupations.

8.19

The Business Survey provides further evidence with regard to the increasing importance of

the skills agenda. All firms were asked what proportion of their workforce were semi-skilled,

skilled or professionals.

8.20

Whilst 58% of firms said they employed no one that they would describe as semi-skilled,

much fewer firms employed no professional or skilled staff (though 37% of firms said they

employed no professional staff, and 45% of firms said they employed no skilled staff.

8.21

30% of firms stated that a large majority (>75%) of their employees were professional staff.

Amongst the 62 professional services firms that responded to the survey, 60% of firms said

the majority of those they employed were professionals.

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8.22

Economic Potential of Preston – Draft Final Report

13% of businesses reported that they had difficulties recruiting to fill vacancies. Among those

who have had trouble recruiting workers, the main problem was the recruitment of skilled

workers. 56% of businesses that reported difficulties filling vacancies said they had most

trouble recruiting skilled workers. 26% of firms reported difficulties in recruiting professional

workers, just 16% reported difficulties in recruiting semi-skilled workers.

8.23

Public services, Primary producers and Communication firms had greater difficulty recruiting

and filling vacancies compared to professional services and retail leisure and service

businesses. 23% of firms in the Primary Producer sector

8.24

Overwhelmingly businesses who had experienced difficulties felt that this was due to a lack of

specialist / skilled staff simply not being available.

8.25

Going forward businesses in Preston believe they will need skilled and professional staff in

the future. 48% of firms said they would need professional skills over the next three years,

48% said they would need skilled staff – just 26% felt that semi-skilled workers would be

required.

Earnings 8.26

An analysis of average weekly earnings helps support the assertion that Preston’s economy is relatively low value. At £426 gross per week, workplace earnings are almost £25 lower than the North West average. The differential between resident earning is even greater with Preston residents earning nearly £30 less than the North West average.

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Figure 19: Gross Weekly Pay (Resident and Workplace analysis) 490.0 480.0

Gross weekly earnings (£)

470.0 460.0 450.0

Resident

440.0

Workplace

430.0 420.0 410.0 400.0 390.0 England and Wales

8.27

North West

Central Lancashire

Preston

Further analysis reveals that gap between Liverpool and Manchester is even greater. Whilst this can be explained by a larger proportion of higher value occupations in Manchester – 49.5% compared to 42.5% - the same trend is not apparent between Preston and Liverpool. What is interesting here is that Liverpool has a slightly smaller proportion of higher value occupations, yet average weekly earning are higher. This suggests that higher value jobs in Preston are paid less than Liverpool.

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Figure 20: Gross Weekly Pay in Preston, Liverpool and Manchester

Gross Weekly Earnings (ÂŁ)

500.0

490.8

480.0 457.9

460.0 440.0 426.6 420.0 400.0 380.0 Preston

Liverpool

Manchester

Workplace Earnings Source: ONS 8.28

It is vital to retain the graduate skills that have developed in the city, and for postgraduates to continue contributing to the thriving economy of the area. To a large degree this will involve ensuring that appropriate job opportunities that will enable graduates to remain in Preston are made available. Potential earnings will also be a significant driver. Whilst lower wages are likely to positively influence a businesses decision to locate in an area, the same is may have a more negative impact on the potential of Preston to retain skilled workers and graduates who will be seeking the higher paid jobs. Analysis of both resident and workplace based earnings demonstrate that wages in Preston are significantly lower than those recorded at the wider Central Lancashire area, North West and England and Wales.

Economic Inactivity 8.29

Analysis of the labour market indicates that as with most of the UK there has been a steady gradual improvement in the workforce activity in terms of levels of economic (in) activity and employment rates. Indeed and perhaps somewhat predictably, many parts of the UK were at or near full employment in the run up to the current economic problems. Figure 21 below highlights the relative position of (Greater) Preston regionally in terms of economic inactivity.

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Figure 21: Economic Inactivity 2004-2007

Economic Inactivity: 2004 - 07 (%) 2004

2007

25.0 24.0 23.0 22.0 21.0 20.0 19.0 18.0 17.0 16.0 15.0

North West

Chorley

Preston

South Ribble

Central Lancashire

Source: ONS 8.30

Economic inactivity has been declining in Preston over recent years, but is still high relative to Chorley and South Ribble but rates of economic inactivity in Central Lancashire are now generally below the regional average where movement has been decidedly downwards over the last 3 years or so. Economic inactivity has risen in both Chorley, South Ribble but has arguably been ‘unsustainably’ low (especially in South Ribble) in recent years.

Conclusions 8.31

In concluding this section, the following key findings can be drawn for further consideration: •

Central Lancashire has access to significant human capital, with almost 900,000 people of working age living within 30km, but whilst this is more than areas such as Blackburn and Chester, and surprisingly comparable to Liverpool (with some 1.1m people of working age within 30km) Warrington with 1.3m and Manchester with almost 1.9m people of working age have access to a much larger pool of human capital.

Within 10km, Central Lancashire has just 213,000 people of working age, more than Warrington, Blackburn and Chester but significantly less than the dense conurbations of Manchester and Liverpool (with 771,000 and 543,000 respectively).

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The population in Central Lancashire has grown and is forecast to continue to grow reasonably strongly and that is a positive measure going forward. However growth in Preston itself appears to have slowed in recent years.

Workplace analysis shows that whilst a large proportion of jobs within Preston are in managerial and professional occupations, a significant proportion are also in administrative and secretarial and lower skilled jobs. This in turn has resulted in gross weekly earnings in Preston being lower than both regional and national averages, so although Central Lancashire has access to a large working age population within 30km, for many, lower wages in Central Lancashire provide less incentive to travel. Significantly higher wages in Manchester and Liverpool provide a much greater incentive for residents of surrounding areas to travel.

There is evidence to suggest that future job creation across Lancashire will be focussed on higher order occupations. As is demonstrated later, although those skilled to NVQ4 have increased, there is evidence to suggest that graduate retention remains an important priority across the sub-region. Indeed businesses who had experienced difficulties in recruiting staff felt that this was due to specialist / skilled staff simply not being available – this a sentiment that was reported in the previous business survey.

There is also evidence to suggest that Preston has generally weaker labour market results (i.e. levels of economic inactivity) compared to Chorley and South Ribble. This is possible a symptom of deeper structural issues within the local labour force, including skills and aspirational issues that need to be overcome through continued public sector investment.

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9.

EXPANDING AN EMBEDDED EDUCATIONAL OFFER

9.1

The contribution of higher education establishments to economic growth is a much debated topic. Given this context it is important to consider the role that the University of Central Lancashire (UCLan), Further Education Colleges and other educational establishments play within the wider Preston economy. Of particular interest is the extent to which these institutions have relationships and are embedded within the local business community, but also, the extent to which they attract, retain and provide high quality human capital for Central Lancashire businesses.

9.2

A key anecdotal issue for Lancashire with regard to its human capital is a long term issue for the sub-region that could be called the “Lancashire Brain Drain”.

9.3

HESA student data indicates that 60% of the students from Lancashire study outside of Lancashire, and although some study at other Northwest institutions (20% of Lancashire students studied at Greater Manchester institutions) and some students commute from Lancashire to study, almost 37% of Lancashire students leave the Northwest altogether to study.

9.4

Some (though not all) of these are the most academically gifted students (e.g. students travelling to study at Oxbridge or the other top tier Universities)

30

and anecdotal information

suggest the majority do not return to Lancashire once they graduate, consequently Lancashire as a whole, on an annual basis, loses many of its brightest educational prospects, and this process has been ongoing for a great many years. Although no wider analysis has been carried out for this study, the same position is undoubtedly the case for other areas in the Northwest such as Cheshire and Cumbria. 9.5

Although for many students, attendance at Oxford, Cambridge, or another of the UK (or global) elite universities is in their interests, if they go away to study, do not return, and are not replaced by incoming students of a similar ability, this is potentially detrimental to the Central Lancashire economy.

9.6

This chapter of the report therefore considers the nature of Central Lancashire’s educational offer, focusing principally on the University of Central Lancashire (UCLan), while also considering the area’s College and School provision.

30

Runshaw Colleges website notes that currently, over 1000 former Runshaw students are studying at the most prestigious Russell Group and 1994 Group of universities. Only 1 of which, Lancaster, is within Lancashire. Their website states that over 40 former students are currently studying at Oxford or Cambridge

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Higher Education 9.7

Universities UK recently produced a report on the economic impact of Higher Education Institutions (HEI). The study was the third of its kind and presented an up to date analysis of key economic characteristics of UK HEIs. The report confirmed: •

That the HEI sector was a substantial industry with a significant impact on the economy; and that over five years the sector had increased its generated economic impact by £10bn (from £35bn to £45bn).

That there was a substantial employment effect of Higher Education activity with around 600,000 jobs created through the economy in 2003/04 and of these, some 330,000 people were directly employed by HEIs.

The importance to the sector and the wider economy of international students, including the significant impact of the volume of personal off- campus expenditure by these students

9.8

Within the North West HEIs are significant businesses in their own right, generating over £2bn income per annum and employing over 36,000 people. With over 250,000 students registered at North West HEIs conservative estimates indicate that students in the Northwest alone spend around £1.9billion in the region. These impressive direct impact figures only show half the story, there are other indirect impacts across a broad range of agendas including innovation and knowledge transfer, supply of graduates and provision of high-level skills to employers, enterprise and entrepreneurship, and clustering and agglomeration effects.

9.9

In addition to this, the NWDA has recently commissioned a study which aims to explore in more depth the current and potential future economic impact of North West HEIs in the regional economy. This study concluded: •

That overall, the HEIs in the North West and their graduates contributed c. £3.5bn in GVA to the regional economy in 2007

that spending by HEIs in the North West, on employment, goods and services and capital projects generates output in the North West economy of c. £1.8bn p.a. and contributes c. £1.1bn p.a. GVA

That students also spend a significant amount within the economy, generating demand on and output from businesses in the region., with total off-campus student expenditure in 2006/07 is estimated to be c. £2.7bn.

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the main contribution of the HEI sector to the economy comes through the deployment of the knowledge and skills of its graduates. Using data on graduate earnings’ premium and based on the number of North West HEIs’ graduates entering employment in the region in the last ten years, we estimate the contribution to the region’s GVA in 2007 as c. £2bn

That HEIs’ business and community interactions generate a further set of contributions to the North West economy that includes contract research, consultancy services and facilities equipment for clients , CPD/CE to individuals, businesses and other, noncommercial organisations, licensing IP to businesses and non-commercial organisations in the region and contributions to new company formation summarised (including 198 start-ups by graduates in 2007

University of Central Lancashire 9.10

The presence of the University of Central Lancashire in Preston offers a significant driver for economic growth in Preston. In terms of student numbers, around 32,000

31

students make it

one of the largest Higher Education institutions in the country. 9.11

Of its 32,000 student population nearly 6000 are taught at UK partner colleges and a further 3,000 study at our partner institutions outside the UK. Supported by nearly 3000 staff, 23,000 students study on the Preston campus of which 9000 are part-time.

9.12

Over the past few years, applications for undergraduate places at the University have increased dramatically and the growth of the university in recent years has been dramatic, total student numbers have risen from under 20,000 in 1998 to more than 30,000 in 2006/07. UCLan’s 2008 Annual Review showed that UCLan had 32,398 students in 2007/08, of which 13,353 (41%) were part time.

9.13

The increased popularity of the university is also apparent when looking at UCLan’s relative position against other universities. The Times Good University Guide 2009, published by Harper Collins, provides a league table of all universities in the UK. Within these league tables rd

UCLan is currently ranked 63 out of a total of 113 universities, an improvement of 7 places on its 2008 assessment when it was ranked 70th. When ranked solely against other post-1992 Universities, UCLan ranks within the top 10. 9.14

UCLan is not a traditional red brick and this needs to be borne in mind when considering its role and contribution of wider economic growth. Many of its total student population are partpart-time students, many of which take up Health and NHS Funded Posts.

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Source: UCLan 2007 Annual Review

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The 2008 Research Assessment Exercise (RAE) highlights one of main the differences between UCLan and the other post-1992 universities, compared to the established research universities like Manchester or Liverpool.

9.16

UCLan submitted 245 FTE Category A staff into the 2008 RAE, across 17 subject areas, higher than almost all of its Northwest peers save for Manchester, Manchester Metropolitan, Salford and Lancaster. Lancaster submitted 611 staff, Liverpool 958 and Manchester 1,824 staff across 53 subject areas.

9.17

27% of the research done at UCLan was judged to be 4* (“World leading”) or 3* (“internationally excellent”) and again, while UCLan some of its North west Peers (such as Chester, Bolton, Liverpool John Moores and Edge Hill, it trails the research intensive institutions – 51% of research at Liverpool, 55% at Lancaster and 64% of research at Manchester was judged to be 3* or 4*

9.18

The presence of UCLan undoubtedly provides a strong economic advantage to Preston, helping to reduce outflows of talented students from Lancashire, attracting in talented individuals to study, some of whom then remain in the Preston area afterwards. This provides Preston with a strong advantage relative to other Lancashire towns that lack a compensating draw. UCLan’s large size, growing reputation, attractive campus and relative strength also provides a stronger building block for the economic potential of Preston to areas with les well regarded institutions or areas that have no University at all. Courses and Educational Offer

9.19

UCLan, in line with most Universities, offer a wide range of subjects, with their website advertising that the University has more than 800 undergraduate and postgraduate courses to choose from – and more than 3000 possible combinations through our Combined Honours Programme.

9.20

Student numbers by main subject area are shown in Figure 22 , but the largest group are students studying subjects allied to medicine, and overwhelmingly, nursing. Other large groupings include students studying Business and Administrative studies (the majority of whom study Business Studies), Education (around 1,000 of whom were studying to be teachers), and Creative Arts and Design (with a large proportion studying design studies).

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Figure 22: Student Numbers by Main Subject Area Combined Education Creative arts & design Historical & philosophical studies Languages Mass communications & documentation Business & administrative studies Law Social studies Architecture, building & planning Engineering & technology Computer science Mathematical sciences Physical sciences Agriculture & related subjects Veterinary science Biological sciences Subjects allied to medicine Medicine & dentistry 0

1000

2000

3000

4000

5000

6000

Source: HESA 2008 9.21

Whilst many of UCLAN’s 800+ courses tend to attract local students, the university is nationally renowned for a number of specialist courses including Journalism, Fashion, Forensic Science, Astro Physics, Motor Sports Engineering, Nuclear (with a specific relationship currently being developed with the decommissioning agency and Springfield) and Dentistry.

9.22

From September 2009, UCLan’s Burnley Campus will introduce the BSc (Hons) in Engineering Business Enterprise that combines the latest in engineering skills in product design, manufacturing processes, supply chain management and operations management, with practical business skills such as teamwork, leadership, finance and marketing.

9.23

In addition, the MSc programme in Manufacturing Leadership will provide an integrated manufacturing and management programme designed for people who have the ambition to develop, lead and transform manufacturing industry.

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UCLan’s Student Body 9.24

69% of UCLan’s students come from the North West, with a high proportion (almost 13,000) being students doing part-time courses32. 75% of UCLan’s part time students are from the North West.The university has also been successful in attracting overseas students, especially from China, to study in Preston.

9.25

Historically lower levels of students are recruited from East Lancashire due to perhaps similar aspirational and cultural issues that appear to act as a barrier to many working in Preston, however the university is seeking to improve its links with the area and having been delivering courses in East Lancashire through Burnley College, has a new campus in Burnley which is due to open in September 2009, giving UCLan an on site presence in East Lacashire.

9.26

In terms of recruitment the University recruits primarily from the NW Region, but also has a strong international outlook recruiting students from China and India – particularly to the business school. The University offers subsidised work placements, which many international students are keen to take up.

9.27

UCLan’s student intake is a diverse one, and includes traditional A-level students and people with no qualifications at all. HESA data showing the highest qualification of students on entry show that 28% of UCLan’s intake had A / AS levels or similar, 11% already had a first degree, 14% another HE qualification, and 29% had no qualifications or unknown qualifications. Put in context the proportion entering with no / unknown qualifications was 6% at Chester, 34% at Manchester, 9% at Lancaster, 30% at Cambridge – suggesting major differences in how well these statistics are recorded.

9.28

33

UCAS points provide another indication of the nature of UCLan’s intake. The median UCAS score of UCLan students is 260 points, (equivalent to more than 3 Cs at A-Level), and although this is higher than some of UCLan’s fellow post-1992 Universities, the median UCAS scores at the top UK Universities are much higher e.g. 530 for Cambridge, 410 for the University of Manchester, 380 for the University of Lancaster. However 30% of UCAS students have more than 320 UCAS points (equivalent to more than 3 B’s at A Level) and 17% have more than 360 UCAS points (equivalent to 3 A’s at A-Level). Entrants for some course, notably nursing and journalism, have a higher median points score – over 300 in both cases.

32

33

Source: UCLan 2007 Annual Review

University and Colleges Admission Service

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In terms of achievements, 51% of UCLan students achieved a First (8%) or Upper Second Class (43%) degree in 2006/07, broadly comparable or better than other similar institutions. 26% of Cambridge students achieved a First in 2006/07, 16% of Manchester University students, which leads the Northwest institutions, achieved a First. UCLan’s economic impact

9.30

The economic impact of UCLan is significant, (though the NWDA study into the economic impact of NW HEIs does not provide disaggregated results). Employing some 2,600 people, the university had an income of £169m in 2008, expenditure of £170.6m and contributes £300m to the regional economy. Many of the Universities employees live locally, but a proportion commute to the University from East Lancashire, the Fylde, Greater Manchester and Merseyside, spreading their spending across the county and region.

9.31

Although the economic contribution of UCLan is difficult to quantify its student population does make an important contribution to the local economy. This can be looked at in terms of spend, but also the estimated 11,000 employed in part-time jobs across the city. Established links between a town or city’s university and its business community can be a critical successful factor for knowledge economies to grow and flourish. Research notes that a thriving network of researchers, skilled workers and businesses are likely to facilitate advances in knowledge innovation and that a city with these assets likely to be in an advantageous position34.

9.32

A form of economic impact addressed by the NWDA report were things like use of University Intellectual property, or contribution to CPD / CE. The latest Higher Education Business and Community Interaction Survey (HE – BCI) provides a range of measures here. Not being a research intensive institution UCLan has few IP claims, and filed just 5 “Disclosures” in 2005/06 and 2006/07 (compared to >260 at Cambridge, >480 at Manchester and >60 at Lancaster. UCLan’s cumulative patent portfolio is just 13, Lancaster just 17. Manchester has some 220 patents in its portfolio and Cambridge some 358.

9.33

UCLan’s income from Intellectual Property in 2006/07 was some £15,000, this compares to £22,000 at Lancaster, £252,000 at Chester, more than £2.3m at Imperial College London, almost £3.5m at Cambridge and more than £5m at Manchester.

9.34

In terms of CPD and CE, UCLan is delivering extensive support and training to the tune of more than 95,000 learner days in 2006/07. Significantly more than many other Northwest HEIs, but lower than the leading HEIs in this field. Nottingham Trent University delivered some 318,000 and Southampton Solent University some 758,000 learner days in 2006/07.

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9.35

Economic Potential of Preston – Draft Final Report

UCLan has also invested heavily in the campus and their facilities. Since 2004, it has invested more than £60 million in new buildings and facilities to provide a modern working and learning environment for such courses. Recent campus developments include: •

the Computer and Technology Building and new Students Union buildings which have been followed by the £10m Darwen Building, officially opened by HRH the Countess of Wessex in September 2005.

the £15.3m ‘media factory’ to aid work in art, design and performing arts plus help graduates get a helping hand in business.

the opening of the £5.5m School of Dentistry and the first School of Pharmacy and Pharmaceutical Sciences in Lancashire in September 2007, adding further diversity to UCLan’s offer.

an investment of £10m into boosting research, creating ten major international research areas including, among others, digital technology, diversity and mental health and investment in the Lancashire Business School.

9.36

UCLan is currently in the process of spending an additional £60 million on new buildings and facilities to support teaching, learning and leisure activities Business Liaison and Knowledge Transfer

9.37

UCLan has a well developed business support service. HE-BCI returns indicate that UCLan has significant numbers of staff employed in dedicated business / community support functions. UCLan has some 47 staff working with commercial partners, 44 working with public sector partners and 37 working with social / community partners (all FTE), this is a greater level of resource than many other Universities, and on a par with Manchester and Liverpool.

9.38

At present a partnership between local business and the University, facilitated through the University’s Knowledge Transfer Service, offers employers access to consultancy support, employee development, student placements and specialist research and development capabilities.

9.39

In the last year UCLan’s Knowledge Transfer Service (KTS) has registered more than 2,500 workshop attendances from more than 750 separate students and individuals, attending more than 100 business and personal development workshops.

34

Source: Roles and Economic Potential of English Medium Sized Cities: A Discussion Paper, Hildreth, P. (2006)

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9.40

Economic Potential of Preston – Draft Final Report

UCLan also undertakes student enterprise and graduate retention activity funded through ERDF. The Unite Project (which is also supported by the University of Chester, Lancaster University and St. Martin’s College) provides North West based initiative providing support to small to medium enterprises (SME’s) through the use of free short term, 4 week, student and graduate placements, with student’s wage is paid for by the project.

9.41

In September 2007 the University of Central Lancashire (UCLan) saw the opening of the state-of-the-art Media and Performing Arts building – The Media Factory. The top floor houses the Northern Lights project, a comprehensive programme of business support aimed at students, graduates and businesses of the North West, enabling new and emerging media, creative and ICT businesses to tap into a range of support. Part funded by European Regional Development funds (ERDF) and hosted by UCLan, the Northern Lights project located in Knowledge Transfer, is committed to supporting and delivering enterprise and entrepreneurship in the region. Creative industries based on the arts and media have been highlighted as having particular potential and the Northern Lights has been very successful. Creative industries and new media are well suited to this type of facility with the demand for space currently outstripping supply.

9.42

This has also enabled the University’s KTS to support a huge range of businesses resulting in more than 220 new jobs and £15 million in increased turnover. Businesses utilising the varied support are knowledge-based or creative and include design agencies, web and multi-media companies, consultancies, photographers and jewellery designers.

9.43

In addition to the Northern Lights programme, UCLan has a wide range of other business support services •

35

available that include:

Designlab UK offers creative support to small businesses, for example help with rebranding, website development or marketing and PR opportunities;

CallNorthWest, led and supported by industry, has been set up to support the call and contact centre sector in the North West;

The Health Tech Hub - an interdisciplinary project with the Faculty of Design and Technology, supported and led by the Faculty of Health, University of Central Lancashire which aims to facilitate interaction between industry, academia, the health professions and the public to identify unmet needs and develop potential innovations or solutions;

35

More details on these, and the other business support services available at UCLan can be found at

http://www.uclanknowledgetransfer.co.uk/project_list.php?id=all&project_category=0#search

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Knowledge Transfer Partnerships (KTPs) - a Government initiated scheme which helps companies access the knowledge and skills within the UK’s ‘Knowledge Base’ (i.e. universities, colleges, independent research and technology organisations and Government-funded research institutions);

Paradigm – Project for Applied Research in Advanced Digital manufacturing, aiming to engage UCLan with even more small to medium sized manufacturing businesses in the North West;

9.44

UCLan’s strategy is however evolving and is very much focussed on moving up the value chain. Increasingly the university is looking to develop research capability and closer relationships with the larger employers such as United Utilities, Springfields and BAE. Nuclear Energy is seen as being particularly important. There is also an ongoing focus on student placement in second year, with a view to increasing the chances of graduates staying to work in Preston after graduation.

9.45

Results from the Business Survey suggest these all programmes are starting to have positive

effects, but can be developed further.

9.46

Businesses were asked if they had recruited anyone to graduate positions over the last 3

years. The vast majority of firms interviewed had not. Just 9% of businesses surveyed had

recruited a graduate. Numbers of graduates recruited were low.

9.47

67% of firms that had recruited to graduate positions had recruited just 1 or 2 graduates over

the previous 3 years. Although a small number of firms had recruited more than 10 graduates

over the last three years (though this is still only 3-4 per year) these were mainly firms in the

public services and primary producer sectors within the survey.

9.48

Just over half of the firms (51%) who have recruited graduates have recruited from UCLAN.

and 38% of the firms who have recruited for graduate positions have recruited more half of

their graduate intake from UCLAN.

9.49

However, when asked about what the main advantages to being located in the Preston area,

just 2% of businesses mentioned the University, and less than 1% made reference to the

quality of education / schools / colleges.

Start Ups and Spin Offs 9.50

The HE BCI provides more evidence of the role that UCLan plays in the Central Lancashire economy, in terms of generating new businesses and therefore new entrepreneurial activity

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and new employment, a key issue for Preston though less so for Chorley and South Ribble) in recent years. 9.51

Although UCLan has seen relatively few firms spun off from the University, this is not atypical. UCLan has seen no spin offs with HEI ownership, no formal spin off firms, and no staff start ups. However across all UK HEIs in 2007 there were only 172 spin off firms with HEI ownership, only 54 formal spin offs and just 623 staff start ups. Most Universities had none. Looking further back there are larger numbers of active former spin off firms, but Universities with larger numbers include Oxford and Cambridge and other Russell Group Institutions.

9.52

However, UCLan has a very strong track record in graduate start ups with 230 graduate start ups in 2005/6 and 2006/7. To put this in context, total graduate start ups across all 164 UK HEIs totalled 1,177 in 2005/6 and 1,508 in 2006/7, meaning UCLan accounted for in the region of 10% of all graduate start ups over this period. UCLan reported more than 240 active graduate start ups in 2006/7, employing some 296 people, again a significant proportion of those reported by all HEIs. Graduate Retention

9.53

Despite all UCLan’s successes, graduate retention is still an issue for Preston and Central Lancashire, and there remains scope for graduate retention to be improved. At present 95% of UCLans’s graduates are in employment or further study six months after graduation. Of this total, only a third stay to work in Lancashire. Unsurprisingly students originally from Lancashire are far more likely to stay and work in Lancashire (66%) than those from elsewhere in the North West (43%). Very few of UCLan’s students from elsewhere in the UK (14%) stay to work in Lancashire.

9.54

This then questions the attractiveness of Lancashire, or perhaps more importantly Preston as a graduate location of choice. The implementation of a package of “lifestyle” measures across the city centre to encourage higher rates of graduate retention (retail and leisure offer, affordable city centre living, vibrant urban spaces) may lead to a more positive trend.

Lancashire Teaching Hospitals Trust 9.55

Central Lancashire also houses The Lancashire Teaching Hospitals Trust - a major teaching hospital with a Department of Undergraduate Medical Education, based at Royal Preston Hospital, affiliated to Manchester and St Andrew’s Medical Schools. The Trust also works in partnership with the University of Central Lancashire to support students in becoming qualified nurses. The Department of Undergraduate Medical Education was established in March 2003

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and is affiliated to Manchester and St Andrew’s Medical Schools. The Undergraduate Department is responsible for the delivery of the final three years of clinical training for medical students undertaking the Manchester Medical School's degree programme. 9.56

The first cohort of medical students commenced their medical studies at the Trust in September 2003 and graduated in 2006. The department is co-ordinating the course for an annual intake of 80 students, with 240 students on-site during each academic year.

Further Education 9.57

Alongside the university Central Lancashire’s further education establishments also have a vital role to play in enhancing the future economic potential of Preston, firstly in providing access to A-Levels for 16-19 year olds, and enabling them to access higher education opportunities, secondly in providing adult training and re-training opportunities to individuals and businesses across Central Lancashire and thirdly, as sizeable businesses in their own right, providing significant employment, and as with UCLan, supporting local supply chains. Three of the local colleges, Preston, Runshaw and Myerscough are all partner colleges to UCLan and offer foundation degrees and other higher education options across a range of subjects helping UCLan to broaden access to higher education across Central Lancashire. Preston College,

9.58

Preston College’s 2005/6 annual report showed that it had almost 26,000 students, however the vast majority of these are adults in part time study reflecting the college’s status as an all purpose tertiary college.

9.59

Latest DSCF statistics show that the college has over 3,300 students aged 16-18, and although average point score per student (at General and Applied A/AS or equivalent achievement) is lower than the Local Authority and England average, it is by no means the weakest 16-18 college in Lancashire, and in terms of value added scores Preston College learners performed significantly better than expected across the entire A Level programme. 2005-06 saw Preston College in the top 24% of colleges in the UK for value added.

9.60

The College has a much greater impact in terms of its adult training. In 2005/6 the College reported more than 14,000 adult (25+) participants in part time courses, and more than 500 people aged 25+ studying full time., including number studying for construction skills. The College’s Strategic Plan for 2007/8 – 2011/12 include a number of objectives to improve the College’s engagement with employers and boost adult training including developing the Centre of Vocational Excellence (CoVE) in Retail, improve employer engagement, increase

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the volume and range of work with employers in key sectors and establish a Centre of Excellence in Business and Management. 9.61

Coupled with these ambitions, the college has ambitious plans for the physical regeneration of its campus, with proposed investment of more than £100m into the college’s facilities and physical infrastructure, which, subject to funding, will provide the college with modern, fit-forpurpose infrastructure to deliver their services.

9.62

The economic contribution of Preston College has been estimated at more than £164m, of which £26m is the impact of the college itself through the money it spends on staff and suppliers (a figure which takes into account leakage and monies withdrawn from the local economy), £500,000 is attributed to the spending of students from outside of Lancashire who study at the college and £136m is estimated to be generated by the past learners within the workforce. Cardinal Newman College

9.63

Cardinal Newman College is a sixth form college, serving a wide catchment that includes all of Central Lancashire and beyond, and latest DSCF statistics indicate it had some 2244 students aged 16-18. The college is well regarded and heavily oversubscribed.

9.64

Latest DSCF League Tables were released in January 2009 and saw Cardinal Newman College rise from being the 12th placed college in January 2008 to being top of the national table in January 2009. Average point score per student is 1079, significantly higher than the Lancashire and England average, and the highest in the Country.

9.65

The latest value added scores confirmed Cardinal Newman as the only college in Lancashire whose value added scores have been rated as “outstanding” at AS and A Level – results that mean the College is within the top 1% of colleges and schools in the country.

9.66

The college is undergoing a £35m major redevelopment , due to be completed in 2011. The new Science and Maths building is complete, as is the second phase which includes new performance studios, recording studios, rehearsal rooms, IT suites and student study areas, alongside teaching facilities for Media Studies, Film Studies, Communication Studies, English, Modern Foreign Languages and the new Music Centre of Excellence. Phase Three of the redevelopment will begin

in March 2009 and when complete will be home to new facilities for Sports Studies, Business Studies, Travel & Tourism, Law, ICT & Computing, Art, Philosophy, Religious Studies and other subjects.

Runshaw College

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Established as a sixth form college in 1974, Runshaw College offers sixth form education out of its site in Leyland, with a wide range of A Levels and Vocational programmes and adult education from Basic Skills to Higher Education at our two adult centres in Euxton and Chorley. Runshaw's Business Centre delivers training and development programmes and work based training to hundreds of businesses across the North West.

9.68

Latest DSCF statistics show that the college had almost 4300 students aged 16-18, making it the largest of Central Lancashire’s colleges, and average point score per student is higher than both the Local Authority and England average. Runshaw is the only college in this area, and only one of an elite minority in the whole country, to have the government’s Beacon College status for excellence in teaching and learning, and was judged as Outstanding in its last Ofsted inspection.

9.69

Runshaw offers a range of Higher Education programmes in conjunction with UCLan including Honours Degrees (year one), Foundation Degrees, Higher National Certificates (HNC), Postgraduate Certificates in Education; Professional Development University Certificates; and Pathways to HE. A wide range of Adult courses are also available including Business, Administration & Finance; Catering, Hospitality & Travel; Computing & IT; Engineering; Management & Marketing ; Teacher Training & Education. Myerscough College

9.70

Myerscough College is situated to the north of Preston and just outside the study area boundary (though the College has four other Northwest centres of learning) and specialises in sport, farming and rural skills, consequently its catchment extends over Central Lancashire and beyond, offering adult education, 16-18 14-16 education.

9.71

Latest DSCF statistics show that the college had almost 1,885 students aged 16-18, making it the smallest of Central Lancashire’s colleges. Formerly Lancashire College of Agriculture, Myerscough continue to have a vocational focus with a range of courses including agriculture, motor sports, mechanisation, sports and leisure, golf, arboriculture, landscape

design, animal care, equine studies, horticulture, photography, and farriery/metalwork.

Myerscough was judged to be outstanding in its last Ofsted inspection. 9.72

Through the four Colleges, Central Lancashire has a good mix of adult and sixth form education provision, with an outstanding general college and sixth form at Runshaw, a well regarded specialist agricultural college at Myerscough, a centre of academic excellence at Cardinal Newman and an ambitious and improving provider in Preston College. Collectively the colleges teach almost 12,000 16-18 year olds, broaden access to education through their links to UCLan and providing a wide range of adult training opportunities.

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Schools 9.73

The Central Lancashire area also has 151 primary schools in Central Lancashire, and 29 secondary schools. A number of these have been highlighted as Outstanding Providers by Ofsted, schools that, in the inspection year, received an outstanding inspection report and where the pupils were achieving very well. These included Myerscough and Runshaw College (see above) two of the area’s high schools (All Hallows and Lostock Hall – both in South Ribble) and 3 local primary schools.

9.74

However, although levels of achievement in Lancashire schools have risen and are above the England Average, and although there are a number of excellent schools, there are a number of poorly performing schools in Preston, South Ribble and Chorley.

9.75

School league tables or GCSE results do not tell the full story about the quality of teaching at a school, however they are an important factor for many parents in choosing where to live, and especially for higher skilled older workers, the poor perceived performance of some schools in Preston is a contributory factor in the relative deprivation of parts of East and Inner Preston, deterring the affluent and well educated from moving into the these areas, prompting people who do “make it” to move out for the good of their children and creating a low aspiration / deprivation spiral for residents in these areas.

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Table 25: Central Lancashire Secondary School Performance 2007 5 or more grades A*-C LA School including English and maths GCSEs Bishop Rawstorne Church of England Chorley 75% Language College St Michael's Church of England High School Chorley 71% Holy Cross Catholic High School, A Sports Chorley 59% And Science College Parklands High School Chorley 52% Chorley Southlands High School Chorley 51% Albany Science College Chorley 40% Archbishop Temple School a Church of Preston 75% England Specialist College Preston Muslim Girls' High School Preston 72% Broughton Business and Enterprise College Preston 64% Our Lady's Catholic High School Preston 56% Ashton Community Science College Preston 45% Corpus Christi Catholic Sports College Preston 44% Fulwood High School and Arts College Preston 44% Moor Park Business and Enterprise School Preston 26% Tulketh Community Sports College Preston 26% Christ The King Catholic Maths and Preston 23% Computing College City of Preston High School Preston 7% Whinfield School South Ribble 100% Hutton Church of England Grammar School South Ribble 73% All Hallows Catholic High School South Ribble 70% Penwortham Girls' High School South Ribble 64% Lostock Hall Community High School and South Ribble 63% Arts College Balshaw's Church of England High School South Ribble 62% Priory Sports and Technology College South Ribble 55% Leyland St Mary's Catholic Technology South Ribble 50% College St Mary's Roman Catholic High School, South Ribble 41% Brownedge Wellfield High School South Ribble 36% Worden Sports College South Ribble 34% Walton le Dale Arts College and High South Ribble 22% School Lancashire Average 48.2% England Average 46.8% Source: DCSF

9.76

Central Lancashire has some 5 schools where the proportion of pupils achieving 5 GCSEs at Grades A-C are significantly lower than the Lancashire and England average. 4 of these are in Preston.

9.77

There are then acknowledged spatial links between educational achievement and deprivation, with areas in central and east Preston being amongst the lowest 10% in the country. Many

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schools are in need of capital investment and the Lancashire County Council as local Education Authority has submitted a Building Schools for the Future bid including all of the Central Lancashire area.

Conclusions 9.78

Established links between a university and business community is a critical successful factor for knowledge economies to grow and flourish. Universities, Colleges and Schools, have a critical role to play in ensuring an area’s human capital meets the needs of the existing business base, and is attractive to businesses considering locating in the area. This section has highlighted that: •

UCLan currently makes an important contribution to the local economy. With further ambitions for growth it has potential to be a key driver of further knowledge intensive business growth.

UCLan already goes a long way to redressing the Lancashire Brain Drain, attracting in new students to replace some of the 60% of students who leave Central Lancashire to study elsewhere and retaining a good proportion of existing students in the area.

UCLan has a well developed knowledge transfer service, and a range of business support services, and outperforms many of its New University peers on a range of measures, while delivering excellence, such as world class research, or highly regarded courses, in many areas comparable to Lancaster, Manchester and Liverpool Universities.

UCLan is helping address Preston business formation issues, through the Media Factory, Northern Lights Project and high levels of Graduate Start Ups.

Measures have and continue to be put in place to strengthen the links between the university and local business base it appears there may be scope for further improvements to encourage further graduate retention and ensure that local businesses benefit from better accessible to pool of skilled labour.

Graduate retention therefore remains an important priority but with lower than average wages, Preston may struggle to compete with its larger and more vibrant regional neighbours. Better alignment between courses delivered by the University and the employment sectors that Preston has a comparative advantage in could also help sustain increased graduate retention rates in the future.

Central Lancashire further education offer includes an outstanding general college and sixth form at Runshaw, a well regarded specialist agricultural college at Myerscough, a

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centre of academic excellence at Cardinal Newman and an ambitious and improving provider in Preston College. Existing links with UCLan at three of these four colleges are helping to broaden access to higher education and major investment is underway or planned at Cardinal Newman and Preston College, both of which would benefit from this investment. •

Weaknesses in educational standards across parts of Central Lancashire at secondary level but particularly in Inner / East Preston have been highlighted. Whilst on the one hand this has the potential to result in a longer deficiency of skills to meet the growing demands employers, it could also act as a disincentive to prospective higher value ‘family builders’ from choosing to live and work in Preston.

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10. ECONOMIC LINKAGES AND CONNECTIONS 10.1

Research suggests that medium sized cities can not be approached as stand alone places36. Instead the success of these cities in attracting and retaining businesses and the workforce, whilst also generating jobs, is dependent on the linkages that exist between them and other economic centres both regionally and on a national scale. Indeed access to highly skilled people and economic interdependency are key factors in differentiating between successful and unsuccessful medium sized cities.

10.2

Preston lies at the centre of a network of small and medium towns and cities within Lancashire with strong connections between Preston and the market towns of Chorley and Leyland, but also a wider set of linkages to the Fylde Coast, East Lancashire, West Lancashire Countryside and Lancaster to the North. This network of places with their own distinct characteristics and separated from each other by stretches of open countryside provides a unique offer for Lancashire, relative to the much more urban conurbations of Manchester and Liverpool.

10.3

This gives weight to the idea of Preston as a City” with room to breathe” referenced in the City Region Development Plan 2006.

Economic connectivity 10.4

As has been identified in the Cities Northwest

37

research, policy actions aimed at improving

linkages and bolstering economic performance need to complement the big-city policies, but should be local responsive and address specifically the needs of a particular place – in this instance Preston. The research recognises the important role of Central Lancashire within the regional economy but does not conform to the convention city region model. This it is noted, gives it a character different in kind from the Northwest’s other two city-regions. It is however considered to be a significant extension of the Northwest megalopolis with distinctive economic characteristics and strengths including the largest concentration of advanced manufacturing and aerospace outside the South East and increasing levels of knowledgebased employment, particularly around Preston. 10.5

For Central Lancashire no central city exists. Instead, four distinct cities or towns exist along a 40-mile west-east corridor. Indeed as Hall (2006) notes that the functional relationships

36 37

Hildreth, P (2006) Roles and Economic Potential of English Medium Sized Cities NWDA and IPPR (2006) Cities Northwest

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between them are unclear and probably limited. However these staunchly independent places, sit against a background of attractive open country, offering potential for quality living and working. For this reason Preston and the other centres are also seen to offer potential for developing a set of independent counter-magnets to Liverpool and Manchester (Hall, 2006).

An Economic Footprint 10.6

An analysis of journey-to-work data from the 2001 Census highlights an interesting feature of the functionality of the wider Lancashire sub-region. Across the sub-region it is possible to identify specific clusters based on three broad destination districts. This includes a Central Lancashire cluster; a Blackpool centred cluster (including Blackpool, Wyre and Fylde) and an East Lancashire cluster. The analysis suggests however that there is very little interaction between the three and that at present functional linkages between the various sub-areas within is relatively weak. Though things will have changed since 2001, and anecdotal increases in movements along the M65 between Preston and Blackburn have been reported, suggesting this relationship may be strengthening but strengthening from a low starting point..

10.7

At one level, this is particularly surprising given that the distance between Preston and Blackburn is 10 miles, yet only 2% of all trips into Preston originate from Blackburn and the distance between Preston and Blackpool is 16 miles, yet only 3% of all trips into Preston originate from Blackpool. It therefore holds that in functional terms, there is a certain degree of separation between the core area (focussed on Preston), West Lancashire and East Lancashire.

10.8

Chorley, South Ribble and Preston exhibit strong connections with significant flows between all three Authorities. Preston acts as an employment pole with strong net flows from both South Ribble and Chorley. Notably all three authorities exhibit cumulative flows with the Manchester City Region, though it is thought that lots of these movements are to the peripheral areas of the city region such as Bolton. These cumulative flows are shown in Figure 23.

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Figure 23: Cumulative Travel to Work Flows 2001

Source: Census 2001 10.9

A number of key points emerge from the analysis travel to work and commuting patterns which help explain the current functionality of the Central Lancashire Economy38: •

The majority of journeys to work start and end in Preston, suggesting significant retention of labour in Preston district;

In Chorley approximately half of the population work within Chorley District and the other half commute to the surrounding areas particularly Manchester City Region (16%), Preston (11%) and South Ribble (13%);

As the major population and economic centre in Central Lancashire, Preston draws in large numbers of workers from the surrounding authorities. This is most notably the case with neighbouring South Ribble with over 14,000 journeys a day made to Preston. In contrast only 4,149 people travel in the opposite direction;

38

Central Lancashire Transport Study - MVA October 2008

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Although significant numbers travel from Chorley to Preston and South Ribble to work, the largest destination for workers from Chorley is the Manchester City Region. This is possibly explained by Chorley’s closer proximity to Manchester and well developed road and rail links from the town; and

The three main origins of journeys to Chorley are South Ribble (3,728), Manchester (3,694) and Preston (1,100).

10.10

From this a number of findings can be drawn: •

The majority of journeys to work in Central Lancashire are made by car (over 70% in Chorley and South Ribble);

Over 10% of journeys to work are by bus in Preston but figures for Chorley and South Ribble are much lower. This could be accounted for by a range of factors including less comprehensive services, longer more complicated journeys and the availability of free workplace parking;

Preston, as the largest urban centre in Central Lancashire draws in labour from across the area; other employment centres were identified in Leyland, Chorley town centre and at Walton Summit; and

South Ribble in particular has high levels of out-commuting compared to the other two districts in the study area. Preston is more self sufficient and a large number of residents, particularly in Chorley, commute to Greater Manchester.

10.11

Linking back to the earlier discussion on workforce catchment populations, (discussed on page 100) we see from these flows that while Central Lancashire has a potential workforce catchment that is quite large (more than 800,000 people of working age live within 30km) it doesn’t capitalise on this. Manchester (Greater Manchester) however does – drawing individuals from further than 30km away, including individuals from Central Lancashire, adding to Manchester’s already significant advantage in human capital.

10.12

It is noted however that the absence of wider inter-dependencies within the North West is holding back the economic and social potential of the region. A recent study

39

undertaken on

behalf of the NWDA examined the organisational connectivities of firms within financial and professional services. The research assessed the number of links between London and the top 100 ranked town and cities that were either in the North West or South East. Whilst the links between the South East were generally stronger organisational connectivities with the North West were evident. Unsurprisingly the links were most pronounced between London 39

Harding, A. (2007) The Changing Geography of the North West Economy: IPEG

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and Manchester (530 offices), followed by Liverpool (303) and then Preston (95). However although being third within the regional hierarchy the gap between Preston and Manchester is significant. 10.13

In some respects this trend is explained by connectivity and the vibrancy and dynamism of Manchester as a city, particularly in terms of the stock of advanced producer services which according to the research tend to concentrate within more diverse and better connected cities. It is stated that whilst Liverpool, Preston and Chester show signs of this vibrancy, establishing stronger links as opposed to competing with Manchester is seen as a key to their future economic success.

10.14

Together these centres are considered to be the key nodes for economic activity in the North West. The main advantages are that they act as a focus for: •

public and private consumer services;

‘travel-to’ movements (work, shop, be entertained, be educated, travel, access public services etc.);

advanced manufacturing industries (variously in automotives, aerospace, chemicals, pharmaceuticals, bio-technology), and

producer services (e.g. in law, finance, other businesses services and IT) which together account for the fastest employment growth in recent years

10.15

The research highlighted a mixed pattern of interaction between the nodes with LiverpoolManchester and Liverpool-Chester relationships being particularly strong. Preston however sits within the polycentric Central Lancashire City Region within which commuting relationships denote the relative absence of inter-connectivity and inter-dependence between it and the Manchester City Region. Whilst there is some movement from Manchester to Central Lancashire at present the most dominant flows are from rural to urban, thus implying the absence of the urban inter-dependence required for medium sized cities such as Preston to benefit from the economic growth and organisational connectivity between itself and larger economic centre of Manchester.

10.16

The Business Survey provides more up to date evidence for the movement patterns of

employees across Central Lancashire. 75% of firms surveyed draw the majority of their

employees (>75%) from within a 10 mile radius.

10.17

85% of firms said that none of their workers travel in from between 25-50 miles (which would

include Manchester and Liverpool) and 92% of firms said none of their workers commute in

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from more than 5 miles away. Asked specifically about Manchester and Liverpool, the survey

suggested that links were stronger with Manchester than Liverpool.

10.18

The Business Survey provides further evidence of the lack of linkages between firms in

Preston and those beyond the Lancashire sub-region, and especially Manchester and

Liverpool. Businesses were asked what proportion of customers and suppliers were local and

what proportion were from further away.

10.19

With regard to customers, half of all Preston businesses stated that they have no customers

more than 50 miles away. 26% of firms said that the majority (>75%) of their customers were

within a 10 miles radius.

10.20

Businesses were asked specifically what proportion of their customers were based in

Liverpool and Manchester. Many firms said they had no customers in either Manchester or

Liverpool, however 27% of firms said that up to a quarter of their customers were in either

Liverpool or Manchester and a small minority of firms had a much higher proportion of

customers in Manchester and Liverpool.

10.21

Preston’s supplier base is slightly more widespread, but 28% of businesses still said that the

majority (>75%) of their suppliers were based within a 10 mile radius. However 8% of firms

said that the majority of their suppliers (>75%) were from more than 50 miles away. However,

again, linkages with Manchester and Liverpool are not especially strong. More than half of all

businesses said that none of their suppliers were in either Manchester or Liverpool, and those

that did have suppliers in the two cities only had a small proportion of their suppliers (<25%).

10.22

Preston businesses expect the proportion of local customers and suppliers to broadly stay the

same over the next 3 years, with if anything a trend to further localization, rather than to more

regional linkages. When asked to what extent businesses expect the proportion of sales to

local customers and purchases from local suppliers to change, more firms expected them to

increase than to decrease (though interestingly more firms expected sales to local customers

to decrease significantly than increase significantly.

10.23

Firms were asked about major customers or suppliers. There were few names in common,

however major public sector and quasi public sector organisations were among the major

customers identified including Lancashire County and Preston City Council, local RSLs,

UCLAN and local NHS trusts.

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Strategic Location 10.24

Good transport is also important to the future success of the area and will facilitate improved linkages between functional areas. Central Lancashire benefits from a number of locational advantages that have and will continue to support the growth of the local economy. The area is served by highly accessible transport infrastructure, with Preston acting as the hub for the county of Lancashire, where the M6/M61/M55 and M65 motorways converge.

10.25

As can be seen from Figure 24 below, Preston also occupies a strategic point on the rail network. Preston sits on the West Coast Mainline and consequently benefits from direct services to and from London that Blackburn and Blackpool both lack, is part of the Cross Country intercity network and sits at the junction of local rail lines to Blackpool and the Fylde Coast, Blackburn and East Lancashire, Chorley, Bolton and Manchester, the Ribble Valley and West Lancashire. Figure 24: Strategic Location

Source: North West Plan 10.26

Preston is consequently well served with fast and frequent rail services to Liverpool and especially Manchester and longer distance services to other key cities across the UK including Birmingham, Glasgow, Edinburgh, and London.

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10.27

Economic Potential of Preston – Draft Final Report

Central Lancashire also sits between three major airports, with Manchester, Liverpool John Lennon and Blackpool Airports all less than 1 hours drive away and linked by good motorway connections, and Preston and Chorley both have regular, direct services to Manchester airport.

10.28

The Business Survey underlined how important the excellent transport linkages are for

Preston. Businesses were asked what they saw as the main advantages to being located in

Preston.

10.29

Preston’s road infrastructure, and specifically close proximity to the M6 / M65 / M61 and M55

was cited by 48% of businesses as one of the main advantages of being in the area. More

broadly businesses noted other transport and locational factors including good car parking

(20%), good transport infrastructure (17%) Preston’s central location and proximity to

customers and markets (27%) as key advantages to being located in Preston.

10.30

However although 8% of firms made reference to the quality of public transport, just 2% of

businesses mentioned the proximity to the West Coast mainline, and less than 1% mentioned

Blackpool airport

Road 10.31

Central Lancashire boasts some of the best road connections in the UK, with easy access to the M6, M55, M61 and M65 motorways. This makes driving easier and more attractive than alternative modes. As a result of this many of the approach routes into Preston are experiencing capacity problems during peak periods, particularly at pinch points such as river crossings and this is forecast to get worse.

10.32

Congestion can have a negative impact on the local economy as it affects the reliability of employees being able to get to work on time, it can also have a negative impact on retail as visitors may decide to go to alternative retail centres that are easier to access and congestion can also have a negative impact of the delivery of goods and services.

10.33

The Business Survey suggests that although generally transport and Preston’s excellent

connectivity are seen as some of the main positives and advantages of locating in Preston,

when businesses were asked about the disadvantages 13% suggested levels of congestion

were a disadvantage, and 8% identified specific congestion problems. 18% suggested parking

was a disadvantage.

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10.34

Economic Potential of Preston â&#x20AC;&#x201C; Draft Final Report

Businesses who felt congestion was an issue were largely based in Preston, however a

perception that parking was poor was more evenly spread between businesses in Preston,

Chorley and Leyland.

10.35

Proposals for existing links to be improved will mitigate against some of the adverse capacity issues. In particular proposals for a new motorway junction at Charnock Richard and improvements at Junction 31a of the M6 at Preston East. Better road connections in the area, achieved by completing the Penwortham bypass and the potential of a new crossing over the River Ribble are also being considered. Rail

10.36

Rail stations currently suffer from a variety of access issues that range from the lack of parking provision through to poor pedestrian and cycling links between the town/city centres and major employment areas e.g. Bamber Bridge, UCLan. There are also capacity issues on services to Manchester and the timings between Transpennine and Northern Rail services would benefit from reviewing in order to provide a more attractive offer, as sometimes there is only 5 minutes between successive services.

10.37

Analysis of passenger numbers, presented in Table 26 reveal that in 2006/07 Preston accommodated 3.4 million passengers, ranking third behind stations in Manchester and Liverpool and above other important interchanges such as Crewe. Chorley and to a lesser extent Leyland stations are also relatively well used (though Leyland is not DDA compliant) however the other neighbourhood stations in Central Lancashire are all relatively lightly used and passenger numbers are in decline. Bamber Bridge station attracted fewer than 70,000 passengers, while Euxton Balshaw Land and Lostock Hall stations attracted just 42,000 and 33,000 passengers respectively in 2006/07.

10.38

Compare these numbers to the local stations on the Merseyrail network, most of which enjoy 15 minute frequency direct services in to Liverpool and the limitations of Central Lancashireâ&#x20AC;&#x2122;s local rail network is clear. Hoylake station on the Wirral is used by almost 300,000 passengers in 2006/07, Bebington by more than 430,000.

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Table 26: Rail Connectivity Station

Manchester Piccadilly Liverpool Central Liverpool Lime Street Manchester Victoria Manchester Oxford Road Preston Chester Stockport Manchester Airport Bolton Crewe Blackpool North Lancaster Wigan Wallgate Blackburn Warrington Central Warrington Bank Quay Chorley Wigan North Western Leyland Bamber Bridge Euxton Balshaw Lane Lostock Hall Source: Office of Rail Regulator

10.39

Economic Potential of Preston – Draft Final Report

Passenger Numbers – all Entire and Exits 2006/7 14,513,542 7,169,618 6,377,363 5,060,044 4,330,755 3,418,215 2,440,874 2,237,758 1,959,598 1,952,364 1,750,043 1,673,032 1,395,832 1,285,028 1,051,142 968,743 830,481 703,702 544,313 293,412 64,189 41,496 32,559

Interchange Passengers 2006/7 1,524,955 561,475 853,653 261,636 402,203 1,202,667 646,195 550,647 30,571 313,188 1,272,584 838 496,663 73,883 69,607 85,697 261,752 331,395 -

Trend

Decline Growth Decline Growth Growth Growth Growth Growth Growth Growth Growth Growth Growth Growth Growth Growth Decline Growth Decline Growth Decline Decline Decline

The quality of rail links from Central Lancashire varies. Although Preston enjoys fast direct links to London, average journey times are now only a little over 2 hours some local journey times are very poor. Journeys from Preston – Burnley can take up to 52 minutes, journeys to Colne, less than 30 miles away take more than 1 hour and Chorley and Leyland have very poor connectivity to destinations in East or West Lancashire. The Merseyrail network employs electric trains at typically 15 minute frequencies from a network of 67 stations, as well as diesel services out to Knowsley, Halton, St. Helens and beyond. Manchester’s Metrolink has 36 local stations (with more planned) offering a 10 minute frequency for much of the day) with many more stations on the heavy rail network serving the conurbation. Central Lancashire has just 21 stations (if lines out to Blackpool and Blackburn are considered) with many served only by half-hourly services (and some by just hourly services) for much of the day.

10.40

As Liverpool and Manchester continue to upgrade their public transport infrastructure (Although the TIF Bid was rejected Manchester still plan significant expansion of the Metrolink, and Liverpool are considering a number of enhancements to the Merseyrail

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network) lack of a comparable local public transport network in Central Lancashire may harm the attractiveness of the area to investors and potential residents. 10.41

In addition, as the reliance on rail and passenger numbers increase, capacity issues will worsen. Like congestion, ongoing capacity issues will have negative implications for the wider sub-regional economy and the degree to which economic connectivity can be achieved with Manchester and other smaller centres across the region. Air

10.42

Central Lancashire is also well placed to benefit from the Northwest’s three airports at Manchester, Liverpool and Blackpool. However not as well located as other towns in the Northwest, notably Warrington. Peak congestion on the motorways, especially the M61 and M60 and M6 Thelwall Viaduct means that journey times to the Northwest’s two principal airports can be upward of 1.5 hours.

10.43

Consequently Blackpool Airport offers the main opportunity for greater connectivity by air. A number of airlines operate from Blackpool including Jet2.com, Flybe, Aer Arann and Manx2.com however Ryanair have recently withdrawn from the airport, and an analysis of the destinations served by Blackpool shows that the majority of the destinations are “holiday” destinations around the Mediterranean. Figure 25: Blackpool Airport - International Destinations

Source: Blackpoolinternational.com

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10.44

Economic Potential of Preston – Draft Final Report

Compare Blackpool’s modest 18 destinations (all contained within Europe), with Liverpool’s 61 destinations and Manchester’s 192 destinations, which includes 8 destinations in the USA, 4 destinations in Canada and direct connections to the destinations in the Middle East, Caribbean and Eastern Europe.

10.45

Importantly Blackpool has no direct connections to the major European hubs at Heathrow and Gatwick, Schipol at Amsterdam or Paris Charles de Gaulle (CDG). Given this, Blackpool’s connection to Dublin, currently just 1 flight per day, on only 5 days a week, provided by Aer Arran, is crucial in that it provides access to onward flights to the rest of the world. Liverpool passengers can fly to Dublin, Schipol, and Paris CDG, Manchester passengers to all the major hubs.

10.46

A York Aviation Study for Lancashire Economic Partnership in 2006 was bullish about growth potential at Blackpool airport. The York Aviation report forecast that passenger numbers would grow to 700,000 in 2006, to 2.7m by 2015 and to 3.4m by 2030 (A bullish high case scenario linked to the Super Casino proposal forecast 4.3m passengers by 2030). Although passenger numbers have grown strongly over the last 10 years, (from 1998 to 2007 terminal passenger numbers grew from 93,000 to 558,000) they have not been in line with the numbers forecast by York Aviation, with passenger numbers of 553,000 in 2006, almost 150,000 less than York had forecast. Further, passenger numbers dropped by 21% in 2008 to 439,000, a bigger drop than any mainland UK airport. Rises in air passenger duty, the current macro-economic climate, and the withdrawal of Ryanair all make the levels of growth forecast in the 2006 report less likely.

10.47

Aircraft movements in and out of Blackpool Airport peaked at 77,000 in 2005, but this has subsequently dropped back to 54,000 in 2008.

10.48

In contrast, Manchester and Liverpool airports had more than 5m and 21m terminal passengers in 2008 (10 and 47 times the number of passengers at Blackpool), and although passengers numbers at both airports have declined in 2008, decline has been relatively small at just -2% and -4%. In 2008 there were 85,000 aircraft movements at Liverpool and 205,000 aircraft movements at Manchester.

10.49

Blackpool airport also has only minor significance as a freight airport. Just 47 tonnes of freight passed through Blackpool airport in 2008. To put that into context, Manchester saw more than 141,000 tonnes of freight, and Heathrow (the UK’s largest freight airport) saw almost 1.4million tonnes of freight pass through.

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10.50

Economic Potential of Preston – Draft Final Report

Blackpool airport does have positive advantages for Central Lancashire businesses compared to its two bigger competitors, work carried out by the Lancashire West Partnership in 2004 shows then that businesses appreciated ease of access, parking and check in and thought these aspects much better than Liverpool or Manchester (this was reiterated recently in discussion with local business Westinghouse. However Blackpool ranked much more poorly in terms of routes, facilities, frequency and timing of services. The most popular business destinations back in 2004 were London Stansted, a service which no longer operates, and Dublin, a service which has reduced with Ryanair’s departure from the airport.

10.51

Given this context the links to Manchester Airport rather than Blackpool are most important for the future prosperity of the area. Indeed the polycentric form of the wider City Region makes improving connectivity and hard and soft infrastructure links a key element of the future development of the area and its economy. The CRDP in particular recognises the need to move away from a historic supply-side approach of providing large high-profile physical infrastructure projects to an approach which looks to gain maximum use from existing infrastructure and ensuring the development of improved linkages between key settlements, current and future employment sites and service centres with emphasis placed on promoting sustainable travel patterns.

10.52

A detailed study into the Lancashire’s transport infrastructure – A Sub-Regional Transport Framework for Lancashire – An Evidence Base On Transport And Lancashire’s Economy (Atkins 2009) has recently been completed, and supports the findings above and elsewhere in the report. It s conclusions include: •

That Lancashire’s businesses have a complex web of local connections, but only a small proportion of suppliers and customers are located in Greater Manchester or Merseyside, though for some sectors these connections, and broader national connections are much stronger;

Strategic connectivity is generally good across Lancashire, with the motorway network providing good links to regional and national markets;

Congestion on the strategic road network is limited to hotspots, but without action congestion could become widespread and acute;

Rail links are highly variable, consequently rail links play only a minor role in catering for local travel needs in Lancashire, the report states a very substantial improvement in rail services would be required for rail to play a more significant role in meeting Lancashire’s travel needs. As rail becomes an increasingly important element of the travel mix, there is a danger that parts of Lancashire will be excluded from future economic growth;

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Transport capacity will constrain the potential to deliver new housing and employment, with congestion in urban areas in particular providing a particular constraint;

Businesses have few problems recruiting people with entry level skills, but struggle to attract and retain people with the higher level skills needed to drive forward the economy; 40

Broadband Connectivity 10.53

A final connectivity consideration is access to broadband internet. Fast, reliable broadband connections are increasingly important to businesses and consumers. Central Lancashire is well served by both standard broadband services supplied down the phone line, and Central Lancashire has been extensively cabled enabling access to Virgin Media’s cable broadband network (unlike other more rural areas of Lancashire), which offers the potential for higher speed cable broadband.

10.54

Central Lancashire is served by 16 telephone exchanges, and although all are enabled for ADSL (i.e. enabling them to offer broadband services over a telephone wire) just 5 (31%) of the exchanges are SDSL enabled (allowing fast upload speeds to the internet as well as fast download speeds). 100% of exchanges in Liverpool and 75% of exchanges in Manchester are already SDSL enabled.

10.55

A further issue is Local Loop Unbundling (LLU) – where internet service providers install their equipment in BT exchanges. The more LLU operators the more competitive the broadband market. Within Central Lancashire there are still five exchanges yet to be unbundled (by contrast there are none in Liverpool or Manchester). On average Central Lancashire’s exchanges have an average of 3.2 (including all exchanges) or 4.2 (excluding exchanges with no LLU operators), this compares to an average 6.42 operators per exchange in Manchester and 5.73 in Liverpool. This means that for large areas of Central Lancashire there is less competition and less choice for consumers and businesses.

10.56

The planned relocation of the BBC to Mediacity, intended to be an internationally competitive environment and marketplace for digital, media and creative firms, housing in addition to the BBC, other major blue chip brands as well as digital and creative SMEs> Mediacity presents both an opportunity and a threat to Central Lancashire – opportunity because if Central Lancashire can foster strong links with mediacity this can provide a stimulus for further growth for UCLan’s / Preston’s digital and creative firms and future firms being generating at Media Factory. Threat as media-city will undoubtedly have a strong magnetic effect on firms and individuals seeking to work in the digital, creative and media sector.

40

Data quoted drawn from www.samknows.com

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10.57

Economic Potential of Preston – Draft Final Report

A key element of the Mediacity:UK philosophy is the opportunity for the whole of the North of England to link in and benefit. This is based on substantively improving and extending the regional data fibre networks and linking them into key creative ‘hubs’ and ‘spokes’ across the three regions under the current working title of ‘Northern Net’. This aims to connect organisations and businesses from the Digital and Creative Industries with a highperformance, reliable, symmetric network at what is aimed to be reasonable cost, and linking content creators, content deliverers and content users or commissioners across the North of England more directly than is currently the case.

10.58

To facilitate the use of the Northern Net fibre network, initial typically publicly owned sites (key creative facilities / workspace providers) across the North will be provided with equipment to allow for media data to be converted, edited, stored and transferred across the network. UCLan have applied to become one of these Media Enterprise Centre ‘Access Bureaus’, which will be open to the public, and will attempt to cater for the varying needs of the industry regarding hardware, software and the many digital and analogue formats in use today.

10.59

Each facility is intended to provide a range of services including meeting rooms, digital storage, editing systems, media transfer, very high speed data transfer, and video conferencing.

Conclusions 10.60

As has been demonstrated economic connectivity and inter-dependency between cities is seen as critical to the ongoing success of the North West economy. At present access to national and international markets is limited with interaction between businesses contained within the wider city region.

10.61

From the above analysis the following conclusions can be highlighted: •

It has been widely reported that Preston, alongside Manchester, Liverpool and Chester, is identified as a ‘key node’ within the regional economy.

As has been identified Preston sits within the polycentric Central Lancashire City Region within which commuting relationships denote the relative absence of inter-connectivity and inter-dependence between it and the Liverpool and Manchester City Regions. Whilst these nodes would benefit from greater interaction, it can be argued, given the previous analysis and current economic climate, that there is also a case for protecting and enhancing Preston own offer in the short term.

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The distinctiveness of Central Lancashire and the wider city region should be however be recognised by policy and complement the actions proposed for the larger centres.

Some linkages to Manchester do exist but have yet to be fully exploited. The business survey has revealed that that Central Lancashire currently operates within a relatively self contained market with trading relationships focussed within the three local authority areas. This mirrors the economic footprint identified in terms of travel to work patterns.

In terms of location and physical transport linkages within the area, these are considered to be a key strength, with Preston benefiting from direct access to the national motorway network via the M6, M55 and M65 and national rail services with links to north, south and cross country to major cities such as Manchester, Birmingham and London. Analysis of passenger numbers reveals that in 2006/07 Preston accommodated 3.4 million passengers, ranking third behind stations in Manchester and Liverpool and above other important interchanges such as Crewe.

Although inter-regional and intercity rail links from Central Lancashire are good (due to Preston’s position on the West Coast Mainline, The local rail network in Central Lancashire is much less of an asset than the corresponding networks of Manchester and Liverpool, both of which continue to improve.

Central Lancashire also has good linkages to international gateways provided by Manchester, Liverpool and to a lesser extent Blackpool Airports. However transport connections to Manchester and Liverpool are hampered by congestion at peak times, and Blackpool airport has not, as yet, fulfilled the potential identified in the 2006 York Aviation report. In particular Blackpool does not provide daily access to any of Europe’s major hub airports, and its existing connection to the Dublin hub is just 1 flight per day, on just 5 days a week.

The economic benefits of its strategic location have not be fully realised, particular in terms of its ability to attract international trade and investment.

Broadband connectivity is an increasingly important tool for businesses and consumers, although Central Lancashire is relatively well served by broadband services (and has extensive access to cable broadband as well as more common ADSL services, Central Lancashire currently provides a lower level of service and has less broadband competition than Liverpool or Manchester.

Mediacity provides a potential opportunity for, but also presents a threat to, Central Lancashire’s creative and digital media businesses, many of whom have taken advantage of UCLan’s Media Factory. Mediacity could be a strong magnetic pull for

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businesses in these sectors to relocate nearer Manchester. Ensuring Central Lancashire’s businesses have access to the best broadband technologies going forward, e.g. through ensuring UCLan’s bid to be a Media Enterprise Centre ‘Access Bureaus’ is successful, is important for Central Lancashire to retain and grow this important sector.

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11. INVESTMENT IN COMMUNITIES 11.1

For cities to be successful and remain competitive there is a need to ensure that any increases in knowledge intensity to benefit local communities. However, whilst Preston’s economy has grown the indicators of multiple deprivation highlight significant areas of Preston that are still in need of comprehensive socio-economic and physical regeneration.

11.2

Research carried out by the government demonstrated that people living in deprived areas are more likely to be worse off than similar people living in more prosperous areas. The particular effects of an area include: •

People living in deprived areas are less likely to exit poverty than those living away from concentrations of deprivation;

Living in deprived areas can help perpetuate worklessness as there are few employed contacts through which individuals can find work – this is the most common route into employment for the unemployed;

Educational attainment is affected by neighbourhood characteristics. Concentrations of deprivation in an area affect the mix of children in a school; children from low socioeconomic groups tend to benefit from a more mixed school intake;

Likelihood of using drugs is raised by living in an area where they are more readily available. 65% of heroin users say friends are all users;

11.3

The most commonly used indicator for identifying deprived areas is the Index of Multiple Deprivation (IMD). The 2007 Indices of Deprivation assesses each lower super output area (LSOA) within England against seven domains of deprivation. The seven domains are income, employment, health and disability, barriers to housing and services, living environment and crime.

11.4

Within Preston 35 of the 84 Lower Super Output Areas (LSOAs) fall within the 10% most deprived in England. These are generally concentrated in the central and inner city wards and areas with a high percentage of social rented accommodation. The most deprived LSOA in Preston (in Ribbleton) is the 79th most deprived LSOA in England. A further 19 LSOAs are in the 2nd most deprived 10% nationally. As can be seen from figure 4.15 deprivation is less pronounced in Chorley and South Ribble, however pockets of deprivation do exist.

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11.5

Economic Potential of Preston â&#x20AC;&#x201C; Draft Final Report

Preston's Local Area Renewal Strategy (2006) identifies the east of Preston as an area in need of regeneration activities to improve housing, education, health, employment and other social and community issues. A key tool in delivering Neighbourhood Renewal in this area is the concept of Neighbourhood Management. Figure 26: Indices of Multiple Deprivation (IMD 2007) across Lancashire

Source: Lancashire County Council 11.6

Comparing changes in the overall rank of IMD between the 2004 and 2007 datasets, shown in Table 27 below, reveals that whilst conditions in Chorley and South Ribble generally

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improved, those in Preston have worsened, or at least not improved at the same rate as other deprived authorities across the country. Table 27: Rank of IMD 2004 and 2007 by District Rank of IMD 2007 Rank of IMD 2004 Local Authority Preston 59 48 Chorley 172 188 South Ribble 229 233 Source: Indices of Multiple Deprivation (IMD) 2004 and 2007

11.7

Difference -11 +16 -+

From the earlier analysis it can be suggested that deprivation is a function of the poor skills and qualifications that are evident within the local population. Indeed those with low or no formal skills often have low incomes and may struggle to find employment.

11.8

Others however are simply choosing not to work. Skills and willingness work have implications for the future economic capacity of Central Lancashire and are considered in more detail below.

Economic Capacity 11.9

Despite the perilous economic conditions it is relevant to consider to what extent the economy is at ‘full employment’ and therefore to what extent it has the capacity to absorb significant (or indeed any) increases in employment. The evidence here suggests that there is likely to be greater capacity in Preston itself to absorb growth than it’s Central Lancashire constituents – in fact the scope outside Preston would appear to be very limited indeed. Table 28 below summarises the potential labour market capacity in Central Lancashire . Table 28: Labour Market Capacity 2007

workforce of which active of which unemployed unemployed net of structural unemployment economically inactive economically inactive who want a job Total Capacity Source: APS 2008

11.10

Preston

Chorley

83300 64000 4300 2838

64,400 50,900 2,000 1320

65700 55200 1700 1122

Central Lancashir e 213,400 170,100 8,000 5280

19300 4500 7338

13,500 2,600 3,920

10500 2500 3622

43,300 9,600 14,880

South Ribble

Two points are worth highlighting here; first is that capacity rates are likely to increase over the next 2 – 5years; according to the calculation here the rate is around 7% at any one point in time. With unemployment expected to increase then this is likely to increase possibly

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above 10%+ over the coming period. The last year has seen the number of people claiming Job Seekers Allowance rise by more than 3,000 people in Central Lancashire, 11.11

The second important factor here is that this does not take account of commuting; therefore capacity has a core element of flexibility relating to the transport and logistical system available. In terms of Central Lancashire then clearly these are excellent. Therefore one can conclude that there is very little to constrain expansion plans in Preston itself – less so the Central Lancashire area although even in this case the transport system would allow for developments outside the city. The key issue beyond this is the skills (and related training) available to support potential investment opportunities and developments.

11.12

Lancashire as a whole clearly has distinct issues relating to skills with concentrations of residents with either low or no skills which acts as a constraint on economic potential and contributes to higher levels of economic inactivity. Much of these skills issues relate directly to the historical industrial legacy of the area with the skills base of employees no longer matching the requirements of an economy increasingly focused on service sector employment.

11.13

Figure 27 below analyses workforce skill levels for Central Lancashire constituents and regionally. The results show that actually the working population in Central Lancashire are highly qualified and score above the regional average at almost every level – although this also includes those with no qualifications. However this would seem to support the proposal that there is no apparent capacity constraint in the area – indeed quite the contrary.

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Figure 27: Skills Levels 2007

Skill Levels: 2007 90.0 80.0 70.0 60.0 50.0

%

40.0 30.0 20.0 10.0 0.0 NVQ4

NVQ3

North West

NVQ2

Chorley

NVQ1

Preston

Other

No Qualifications

South Ribble

Source: APS (2008) 11.14

Over 40% of the working age population are qualified to NVQ 3 or above, mirroring regional and national trends. At 27%, the levels of those educated to NVQ level 4 (degree level) are above regional averages but 1% below national averages.

11.15

Linking the levels of skills with the size of workforce catchment populations discussed under the Population section (see paragraph 8.8 ) it is clear that Central Lancashire has the potential to access a significant number of highly skilled workers, educated to NVQ4 and above.

11.16

Table 29 provides an estimate of the numbers of people educated to NVQ4 and above within the working age population living within 30km. This shows that Central Lancashire has the potential to access a large pool of well educated people, over 200,000 people, living within 30km of the area. Importantly Central Lancashire has access to nearly as many highly skilled people as Liverpool, and more than Blackburn or Chester (though far fewer than either Warrington or Manchester).

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Table 29: Workforce Population within 30km – qualified to NVQ4 Working age Area Qualified to NVQ4 or above Population within 30km % Number Central Lancashire 889,733 213,209 24.0% Manchester 1,890,600 497,062 26.3% Liverpool 1,083,408 244,466 22.6% Chester 700,800 184,238 26.3% Blackburn 801,700. 180,683 22.5% Warrington 1,316,670 319,808 24.3% Source: GVA Grimley

11.17

Although Preston’s 30km catchment provides the potential to access a very large number of highly skilled individuals, again a narrower 10km analysis provides a different picture and underlines just how much of an advantage Manchester and Liverpool enjoy in attracting knowledge economy businesses to invest and grow.

11.18

Manchester City Centre has almost four times as many highly skilled individuals within 10km as Central Lancashire, more than 200,000 people compared to just 58,000. Liverpool too has a substantially larger number of highly skilled individuals.

11.19

However, Central Lancashire is ahead of all its major Northwest rivals in absolute terms, with more than 20,000 additional skilled workers compared to Chester’s 10km catchment, and more than double that available to Blackburn. That said, 32% of Chester’s 10km working age catchment workforce are qualified to NVQ4, higher than Manchester, Central Lancashire and Warrington. Table 30: Workforce Population within 10km – Qualified to NVQ4 Working age Area Qualified to NVQ4 or above Population within 10km % Number Central Lancashire 213,900 58,059 27.1% Manchester 771,447 210,647 27.3% Liverpool 543,800 114,127 21.0% Chester 114,860 37,763 32.9% Blackburn 148,390 28,415 19.1% Warrington 183,050 50,951 27.8% Source: GVA Grimley

11.20

Taking Preston on its own it is apparent that the city has increased in share of graduates from a figure of 23.5% in 2005 to 28.9% - however this is not to say that these graduates are necessarily employed in Preston or contributing to growth in higher value employment.

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11.21

Economic Potential of Preston – Draft Final Report

Despite these improvements, 18% of Preston residents have no qualifications, and parts of Inner East Preston suffer from very high levels of persons with no qualifications (those aged 16-74) with levels between 42.1% and 48.6%.

11.22

Linking the broad workforce catchment populations with the proportions of population with no qualifications again indicates that Central Lancashire does well. Just 15% of the 30km workforce have no qualifications, in line with other parts of the Northwest and significantly lower than Liverpool. Within the 10km workforce Central Lancashire does better still, with just 13% having no qualifications, Central Lancashire’s workforce performs better than all the comparator areas except Chester. Table 31: Workforce Population– No Qualifications Area Working age Population within 30km with no Qualifications

Central Lancashire Manchester Liverpool Chester Blackburn Warrington

11.23

Number 134,052 286,024 189,930 98,255 104,804 209,265

% 15% 15% 18% 14% 13% 16%

Working age Population within 10km with no Qualifications

Number 28,035 124,206 109,285 13,452 25,847 25,534

% 13.1% 16.1% 20.1% 11.7% 17.4% 13.9%

Addressing skills issues will be critical for Preston’s future success. Evidence for the subregion also suggests that employment expansion has occurred in sectors that require higher rather than lower skills. The trend therefore will be for greater demand in higher skilled jobs (NVQ level 4) and for skill levels generally to be increasing across the board.

Policy response 11.24

It is evident that with in Central Lancashire Preston in particular contains a latent labour force that has the potential to make a significant contribution to the local economy however obstacles remain in mobilising this workforce. At the heart of this issue is raising aspirations and overcoming the high proportion of the population who are unable to obtain work or progress due to poor health and absence of basic skills and qualifications.

11.25

A two way response is therefore needed, requiring both top down and bottom up interventions that seek to promote participation - matching employers with the skilled workers they require, whilst at the same time promoting skills development and economic inclusion at the a more local level. Indeed linking opportunity to need in this way is about identifying and enabling

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actions, and shaping them to benefit the local working population and those currently excluded from the labour market. 11.26

Improving skills and economic inclusion is therefore a key priority within the Central Lancashire Preferred Core Strategy. In particular, it suggests that the authorities will facilitate this by: •

Working with existing and incoming employers to identify skills shortages.

Seeking developer contributions towards funding of employment skills training, facilities and associated costs.

Working with colleges and other training agencies to develop courses and increase access to training, particularly out in local communities that are the most deprived in this respect.

Encouraging knowledge based businesses and creative industries associated with the University of Central Lancashire to enable graduate retention.

11.27

However, the often multifarious nature of the barriers to work also calls into question the need for a wider package of support dealing with education and health barriers. There is a strong spatial relationship between social and economic factors that impact on health, such as low income and poor housing. This means that the more deprived urban neighbourhoods, and the eastern suburbs of Preston in particular, show high levels of poor health, making particular demands on health and support services41.

11.28

The Government also wants to promote a local based level of support from employers, which is already taking place via the Working Neighbourhoods Fund, City Strategy and Multi-Area Agreements (MAA) emerging elsewhere in the City Region. Reducing health inequalities is a key priority in all the Sustainable Community Strategies, and is reflected in the Lancashire Local Area Agreement (LAA) targets.

11.29

Preston City Council have already identified a number of project opportunities with themes including a New Economy, Retailing and City Centre, Tourism and Heritage, and Gateways into the city. These projects are of both city and sub-regional importance and will contribute to our goals of place-making and promoting Preston as the 3rd city of the North West. In addition to this there are numerous projects being delivered through the Lancashire Local Area Agreement to address worklessness and raise skill levels. These include, for example, the

41

Source: Central Lancashire Preferred Core Strategy (September 2008)

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Central Lancashire City Regional Development Programme, the Lancashire Skills Strategy and Aim Higher (Higher Education). 11.30

Emphasising the importance of participation the Lancashire Skills Strategy aims to promote economic inclusion though awareness raising, recruitment, preparation and training and progression. These programmes will have particular relevance to improving the life chances, skills and qualifications of Central Lancashire’s deprived communities.

Conclusions 11.31

This section has highlighted that to achieve sustainable economic development policy actions and investment are also required to improve tackle deprivation, raise aspirations and improve the prospects of the wider population. •

Despite Preston’s recent economic performance, there is evidence to suggest that the city suffers from a significant level of concentrated deprivation, particularly when compared to the neighbouring local authority areas of South Ribble and Chorley.

It can be suggested that this deprivation is a function of the poor skills and qualifications that are evident within parts of the local population. Although Preston and the wider Central Lancashire sub-region exhibit a mix of high and low skilled workers the analysis has identified a significant proportion of residents with little or no qualifications.

Despite some issues of deprivation, especially in east Preston, the Central Lancashire economy has a large number of well educated people living within 30km, over 200,000 people, this is nearly as many highly skilled people as Liverpool, and more than Blackburn or Chester (though far fewer than either Warrington or Manchester).

Within 10km, the Manchester and Liverpool have a much stronger advantage. Manchester City Centre has almost four times as many highly skilled individuals within 10km as Central Lancashire, Liverpool more than twice as many.

However, Central Lancashire is ahead of all its major Northwest rivals in absolute terms, with more than 20,000 additional skilled workers compared to Chester’s 10km catchment, and more than double that available to Blackburn.

Together the wider issues associated with poor skills levels combined with lack of willingness work amongst some residents is likely to have implications for the future economic capacity of Central Lancashire. However, the often multifarious nature of the barriers to work also calls into question the need for a wider package of support dealing with education and health barriers.

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Economic Potential of Preston â&#x20AC;&#x201C; Draft Final Report

In terms of economic capacity, the evidence here suggests that there is likely to be greater capacity in Preston itself to absorb growth than its Central Lancashire constituents. Similarly Prestonâ&#x20AC;&#x2122;s relative accessibility and transport system also means one can conclude that there is very little to constrain expansion plans in Preston itself. The key issue beyond this however is the skills (and related training) available to support potential investment opportunities and developments

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12. LEADERSHIP 12.1

A key question for any locality to consider concerns the effectiveness of the networks of partnerships that are working towards the achievement of a common set of goals. A unifying vision with wider stakeholder ownership is a prerequisite for success. Evidence of delivery against that vision is the most important indicator of success.

Sub National Review 12.2

As part of the 2007 Comprehensive Spending Review the Government undertook a review of sub-national economic development and regeneration in England. The review was led by the Financial Secretary to the Treasury and involved close working between HM Treasury, the Department for Communities and Local Government and the Department for Business, Enterprise and Regulatory Reform and extensive involvement by other Government Departments. The review was also shaped through a consultation programme with key stakeholders including, Regional Assemblies, Regional Development Agencies, local authorise, and other public sector agencies including the Lancashire Economic Partnership.

12.3

The review is built around the idea that in order to ensure that places can respond quickly and flexibly to economic change the Government must build on the reforms it has made since 1997 and devolve further responsibility to regions and local authorities. One of the core outcomes of the review is therefore to identify the optimal geographical level for decisionmaking on all issues relating to economic development and the regeneration of deprived areas.

12.4

There is recognition that the economic profile of areas means that their ability to benefit from economic change differs, in appreciation of these differences the conclusion is reached that: “Regions and localities need greater flexibilities, powers and incentives to respond to economic change, and to ensure that all areas, including the most deprived, are able to contribute to and benefit from economic growth”. – Sub-National Review, HM Treasury, 2007

12.5

This onus on managing policy at the right spatial levels includes the suggestion that responsibilities should be allocated in line with economic impacts, based on a bottom-up approach to collaboration of roles. However, critically the assertion is also made that decisionmaking should continue to be streamlined and bureaucracy minimised. In light of this within the SNR greater emphasis is placed upon the intermediary spatial level of governance

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represented at the sub-regional or city-regional level. This focus is based upon the concept that cities/urban areas are stronger where they work together with adjacent areas. 12.6

In December 2008, the Government published wide-ranging legislation that will give people rights to shape local services and give greater responsibility to local authorities to promote economic development helping communities respond to local challenges. The Local Democracy, Economic Development and Construction Bill places a new duty on local authorities to assess the economic conditions of their respective areas with further powers for local authorities to work together to promote economic development and regeneration.

12.7

These include new powers to create Economic Prosperity Boards (EPB) (“the creation of corporate bodies at sub regional level to promote economic development”) and the creation of multi-area agreements (MAAs) with statutory duties.

12.8

The creation of an MAA is usually between two top-tier authorities – the benefits of which is the freedom and flexibility to agree targets and by bringing together funding arrangements, authorities can lever in private finance. Both Pennine Lancashire and the Fylde Coast have embarked on the production of their respective MAAs42.

12.9

An EPB by contrast is a vehicle by which “any two or more authorities may review the effectiveness and efficiency of arrangements to promote economic development and regeneration within the geographical area43”. If the case for the establishment of an EPB shows that it would improve the statutory functions relating to economic development and regeneration and improve economic conditions within the area then a ‘scheme’ can be published. By virtue of a combined authority, a scheme could contain functions relating to economic development, regeneration and transport (Clause 98).

Lancashire Network of Partnerships44 12.10

Governance across Lancashire is a complex picture. The system of local government review across Lancashire has created one large authority, that includes 12 district Councils (two of which being city councils), together with the unitary authorities of Blackpool and Blackburnwith-Darwen following the 1998 review.

42 The ‘residual’ Lancashire authorities, including Central Lancashire, together with Lancashire County Council and ‘Team Lancashire’ have been meeting regularly to review the scope for joint working across the ‘Mid Lancashire area’. 43 Local Democracy, Economic Development and Construction Bill (2008) Clause 92 44 The purpose of this section is not to review or evaluate the range of organisations established across Lancashire but to present the subject matter of Preston in its wider governance context. The assertion here is to question the effectiveness of the networks of partnerships in providing sufficient focus and support for the city of Preston, rather than questioning the effectiveness of the organisations themselves

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Economic Potential of Preston – Draft Final Report

For Central Lancashire this has created a situation where Preston, the aspiring third city of the Northwest has no control of important parts of their communities, including Highways, Schools and Social Services. If Central Lancashire is to compete with other cities, lack of Unitary Status reduces the ability to act independently and limits the resources available.

12.12

In contrast, the two neighbouring Unitary Authorities of Blackburn and Blackpool both have significantly more autonomy and much greater resources. An analysis of recent accounts is instructive: Table 32: Local Authority Staffing and Expenditure All Staff LA

Preston South Ribble Chorley Blackburn with Darwen Manchester Lancashire County Council Source: Local Authorities

12.13

961

380

23,729 (17,580 FTE)

Budgeted Net Spend 2008/09 £25.5m £17.5m £14.6m £367m £481m £683m

Relative to their larger unitary neighbours, Preston, Chorley and South Ribble have significantly smaller budgets, and lower levels of staff resource to deliver and drive change. Whereas Blackburn and Manchester have budgets for 2008/09 running into the hundreds of millions, Preston, Chorley and South Ribble will collectively spend less than £60m.

12.14

Staff numbers give further indication of the gap in resources available. Manchester City Council employ more than 23,000 people (17,580 FTE), and while this includes large numbers of individuals such as teachers or social workers that do not fall under the remit of a District like Preston, Manchester employ more than 20 times the people employed by Preston City Council, which itself is more than twice as large as Chorley.

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Lancashire County Council (including Lancashire County Developments Ltd), Lancashire Partnership and Team Lancashire 12.15

Lancashire County Council, a four star Council and ‘improving well” following the most recent Audit Commission review, exercises strategic leadership by developing and clearly communicating the Authority’s purpose and vision as prescribed in the Corporate Strategy for the period 2005-09. Its Local Area Agreement (LAA) contains a set of performance indicators and outcomes that have been agreed between local partners and Government.

12.16

Lancashire County Council, with its partners in the Lancashire Partnership (the Local Strategic Partnership) have also published its Sustainable Community Strategy, Ambition Lancashire with its vision for Lancashire “to position Lancashire by 2025 as an area of outstanding opportunity, combining a world-class economy with a breathtaking environment and exceptional communities”.

12.17

In terms of economic development functions, Lancashire County Developments Limited (established in 1989) is Lancashire County Council's economic development company, providing all the economic development services of Lancashire County Council. It works as a special purpose vehicle in which any profit making activity is recycled back into a range of projects for small and medium sized businesses, disadvantaged individuals and community projects. A number of priorities are stated: •

supporting local business through access to loans and venture capital for those businesses who want to grow or diversify;

promoting Lancashire as a great place for business both in the UK and Europe;

providing good quality managed workspace alongside planning advice for developers and businesses re-locating to Lancashire;

business support through advice on grants and economic intelligence;

support for disadvantaged individuals who want to support themselves;

promoting and supporting the tourism industry in Lancashire;

campaigning for Central Government and European funding to boost the Lancashire economy

12.18

Finally, Team Lancashire represents the sub regional improvement and efficiency partnership comprising the 15 principal councils founded on a common vision set out in the concordat “Working Better Together”. Team Lancashire has been established to achieve better value for

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money through the pooling of resources, sharing responsibilities and collaborative learning. The partnership will run for an initial three years and will involve work in areas such as regeneration and development, health, community cohesion, empowered neighbourhoods and street scene. It will also look at general council efficiencies, shared services, shared facilities and procurement.

12.19

Funding is secured from the North West Improvement & Efficiency Programme (NWRIEP). Although Team Lancashire is explicitly concerned with the ‘Shared Services agenda’ of the sub national review, its remit will also extend to matters of economic development in which Outcome measures will also be determined.

Lancashire Economic Partnership 12.20

Lancashire Economic Partnership (LEP) operates primarily at a strategic level, managing subregional projects where appropriate. The primary roles of LEP is to lead on the development, implementation and review of the Lancashire Economic Strategy (LES) (Section 2) which complements the Regional Economic Strategy for the North West but also the Central Lancashire Development Programme – part of the Government’s Northern Way initiative.

12.21

LEP represents the geographic area served by the twelve Lancashire district councils, two unitary authorities (Blackpool and Blackburn with Darwen), and Lancashire County Council and brings together a wide cross-section of interests including: local & unitary authorities, private sector, voluntary & community sectors, health, transport, tourism, housing, education & training and business support. Its priorities are

May 2009

Blackpool World Class Resort Destination

Preston City Vision

Pennine Lancs Transformational Agenda

Aerospace & other Advanced Manufacturing

Skills

Tourism and Rural Development

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Sub Regional Partnerships 12.22

A number of collaborative models are also being driven forward within Lancashire that have a direct bearing on the future economic prosperity of Preston and Central Lancashire. Central Lancashire Local Development Framework

12.23

The Central Lancashire authorities (Preston, Chorley and South Ribble) are taking a proactive approach to the issues facing their respective areas and are currently producing a joint Local Development Framework with the support of the GONW. The process of formalising joint working arrangements has been finalised with these being established through a Section 28 Agreement under the terms of Planning and Compulsory Purchase Act 2004. The joint Core Strategy Issues and Options Paper version 2 is currently out for consultation. Central Lancashire and Blackpool Growth Point

12.24

The successful Growth Point Proposal represents a significant advancement in joint working. The new Growth Point Partnership brings a new phase of joint-delivery for the districts of Central Lancashire and Blackpool with the Fylde Coast authorities of Fylde and Wyre potential partners in a subsequent phase.

12.25

Whilst the focus is on delivering housing growth across the two sub-areas the implications will be considerably wider with infrastructure improvements, joint regeneration priorities and service delivery core components of its successful delivery. A core component of the vision of delivering growth across the two areas is the improvement of connectivity and linkages throughout and between the two sub-areas.

12.26

The objectives of the programme going forward are: •

the delivery of an ambitious Programme of sustained housing growth and renewal in an efficient, coordinated and effective manner;

a programme that delivers sustainable and high quality outcomes for our neighbourhoods and communities;

a step change in the provision of quality affordable housing delivery – in whatever form this may take;

being proactive and working in partnership, securing the effective use of funding resources and support from external partners, set in a clearly articulated and robust financial model for delivery that captures development value; and

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Economic Potential of Preston – Draft Final Report

securing land commitments from public sector partners as part of the delivery model.

The Growth Point will also represent the foundation of a new way of working that brings together different agencies through a joint articulation of local ambitions and that could ultimately be developed into a strategic investment statement. Indeed, with the emergence of the Homes and Communities Agency and the principal of a “Single Conversation” in delivering an outcomes based “Local Investment Agreement”, the principal of a further investment statement is somewhat inevitable.

Mid Lancashire Service Co-Operation 12.28

In the context of Team Lancashire and their commitment to work with the NWRIEP agenda, the Mid Lancashire Authorities, have established a working group in order to explore initial ideas for collaborative working. The mid Lancashire authorities comprise the local authorities of West Lancashire, Chorley, South Ribble, Preston and Lancaster.

12.29

Additionally, in the context of implementation of the sub national review and the work to develop a Lancashire perspective on the new Single Integrated Regional Strategy (SRIS) authorities are encouraged to work together on and beyond a functional economic area basis, as referred to above. This applies to the implementation of the economic assessment duty and to wider policy, strategy and operational activities.

12.30

Although this is being taken forward as a single multi-area initiative, the Mid Lancashire grouping comprises three functional economic footprints following the LES. The partners have established a number of areas of interest, including: •

European Issues (Preston & Lancaster) – including representing the wider area on Lancashire European Steering Group

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LEP Policy Steering Group – Lancaster, Preston, West Lancs

SRIS Writing Group – Lancaster, Preston on behalf of the wider group

City-Building – Lancaster & Preston

University links – Preston, Lancaster, West Lancs

Transport – Preston, South Ribble, West Lancs, Chorley, Lancaster

Rural issues – all, but perhaps particularly Chorley, West Lancs and Lancaster

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Lancashire County Council has an interest in underpinning and linking with all these development, policy and operational areas, particularly in the context of the sub national review and the SRIS, which itself focuses on four related themes of economic development, spatial planning, housing and transport.

12.32

The Mid Lancashire grouping has started to map out their top priorities against each of these areas with the following issues appearing as priorities and common interests:

12.33

place-making

the skills agenda

worklessness

rural issues

connectivity/transport

the development of more knowledge economy jobs

the role of key physical development projects as catalysts

sites and property issues

the need for both affordable housing but also higher end accommodation

marketing and promotion

tourism

the quality of life/cultural/leisure offer

business support/enterprise development

enhanced GVA growth

linkages between urban nodes – polycentricity and agglomeration economics

links to 3 adjacent city-regions (Manchester, Merseyside) and sub-regions (Cumbria)

In a Lancashire context, it is clear that the Mid Lancashire authorities provide the most economically productive strip in Lancashire, in part associated with the strong north/south communication routes, a feature which genuinely ‘binds’ them together and provides an underlying rationale for collaboration.

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However, the ability to extend this into a statutory MAA and take advantage of the benefits of joint working and the ability to lever in finance is beyond this group. The prospect of a Economic Prosperity Board however may be something to pursue.

12.35

The Mid Lancashire authorities are currently considering their preferred delivery vehicles reflecting the need for a more structured partnership with Lancashire County Council. Pennine Lancashire Development Company

12.36

Pennine Lancashire signed its own Multi-Area agreement in late 2008 and to assist in the delivery, discussions have been held on the creation of a Pennine Lancashire Development Company, an organisation of 50/60 staff accountable to the Pennine Lancashire Leaders and Chief Executives (PLLACE) and owned by member local authorities. It is proposed that this will be supported by NWDA funding, over the next 4 years. Local Partnerships

12.37

Preston City Council is a district council, working alongside Lancashire County Council as part of a two-tier local government system. At the time of the last Comprehensive Performance Assessment (CPA) inspection in 2004, the Council was rated as ‘good’ and a recent reevaluation showed that the council is making good progress in line with the improvements programmed in the Corporate Plan.

12.38

Importantly in the context of this study, the Audit Commission in 2004 also stated that “it has

realistic and robust ambitions which include plans for major city centre”. 12.39

The Preston Strategic Partnership (PSP) is responsible for developing, implementing and monitoring the progress of the Preston Sustainable Community Strategy (PSCS). The PSP ensures the different organisations across public, private and voluntary work together to deliver services more effectively in Preston.

12.40

The Community Strategy Action Plan (CSAP) contains a series of outcomes and targets for the Partnership to work to. All outcomes and targets are designed to deliver the vision set out in the PSCS. The partners on the PSP are also responsible for delivering the actions in the Lancashire Local Area Agreement relating to the priorities for Preston.

12.41

Chorley and South Ribble are both Borough Councils, who also work alongside the County Council. At their last CPA assessments in 2008 and 2007, Chorley and South Ribble were both rated as ‘excellent’, and both have improved since their previous inspections.

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Economic Potential of Preston – Draft Final Report

The South Ribble Partnership fulfils a similar role to the Preston Strategic Partnership, and is open to all public sector organisations, businesses, voluntary organisations and community groups. The Partnership structures include a Steering Group, providing an overarching decision-making body and a smaller sub-group of key representatives from across the Partnership that provides a leadership and governance role and drives the delivery of the Sustainable Community Strategy at an operational level and monitors performance information as it becomes available. The Group gives steer to a number of thematic groups, including the Economic Partnership, to develop action plans and partnership-based projects to deliver improved local services in line with the priorities of the Sustainable Community Strategy.

12.43

The Chorley Partnership is the Local Strategic Partnership for Chorley. There are over 100 groups and organisations involved in some way with the Partnership, and it is responsible for developing and implementing the Sustainable Community Strategy for Chorley 2007-2025. The Chorley Partnership became the Borough's Local Strategic Partnership in October 2002. In 2006 the Partnership was remodelled, including new members and a new structure to prepare it for future joint working. Preston Vision

12.44

Preston Vision was founded in 2003 to develop a comprehensive vision and regeneration plans linked to Preston's aspiration to become the Third City of the Northwest. In 2005, Preston Vision adopted an Economic Strategy and Prioritised Action Plan (see para 3.16) which set out the aspirations for the city going forward. This was overseen by the Preston Vision Board, an informal public/private sector partnership, with no decision making authority but still accountable to the Council and Preston Strategic Partnership via the Leader and Chief Executive of Preston City Council.

12.45

To date almost £14million of funding has been attracted into the city, principally through NWDA resources. Of this, over £930,000 has been secured (or allocated) for staffing support (between 2005 and 2011). The staffing supporting the Vision Board consisted of a manager, a temporary development officer and a secretary.

12.46

The Strategy and Action Plan represented an ambitious programme of development of some £2bn across the city, designed to secure Preston’s status as the Third City of the North West by 2012. This would be delivered through the integration of existing regeneration programmes and through further public sector resources but in the main, through private sector contributions through the principal investments of Tithebarn, the Commercial Quarter and Riverworks. This program of works and the ambition contained within is comparable to the

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level of change being managed by the various Urban Regeneration Companies (URCs) across the UK, but a comparison with the staff resources available up to now for Preston Vision with those driving the URCs is instructive – shown in Table 33. 12.47

The URCs employ between 4 and 17 people with most averaging around 8 or 9 full time employees. Annual budgets vary too, but average around £1m per annum. The URCs are looking to direct between £100m and £200m of public funding, to lever in private sector investment of between £0.5 - £1.6billion. This is a lower level of investment than that envisaged for Preston and set out in the Strategy and Action Plan. Table 33: URC Key Statistics Established URC

Staffing

Bradford URC September 2002 9.5 Derby July 2003 9 Cityscape Gloucester February 2004 8.5 Heritage URC October 2001 8 Leicester Regeneration Company Opportunity April 2005 17 Peterborough URC New Swindon August 2002 6.5 FTE URC Sunderland May 2002 12 ARC Walsall March 2004 4 Regeneration Company Source: URC Annual Reports 2007/2008

12.48

Annual Budget 2007/2008

£1.166m Not available

Lifetime Outputs Private Public Sector Sector Investment Investment £123m £979m £99m £690m

£1.142m

£150m

£1bn

£784k

£88.6m

£1.6bn

£1.4m

£166m

£674m

Not available

£176m

£866m

£1.098m

£183m

£1.1bn

£917k

£160m

£523m

A programme of works underpinned the Action Plan and it is clear from the document review (Section 2) that considerable slippage in the implementation of the three principal schemes has taken place, due to a number of reasons but undoubtedly an important factor being the level of capacity and resource in place to drive the Strategy was not sufficient for a programme of this scale. The economic impacts of such slippage are considerable and offer at face-value at least, a candidate explanation as to why Preston has seemingly ‘underperformed’. The purpose of this report however is not to undertake an evaluation of the previous Preston Vision Board ‘deliverables’ but it is clear that the level of capacity and resources required to deliver the Strategy at a programme management level were simply not

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there. Whereas the average URC has had at least 8 staff, in some cases much more, Preston Vision has relied on just 1 full time manager and a small degree of support. 12.49

The NWDA propose to place the Vision Board onto a more formal footing and enter into new funding arrangements with it. This would enable the NWDA to commit to a programme of funding and allow the Vision Board more flexibility in prioritisation. In turn the Vision Board would be able to give greater assurance to project sponsors as to the likely availability of funding.

12.50

The intention is to formalise previous structures and create a new company limited by guarantee. The Company’s objectives would be “assist, promote, encourage, develop and secure the social, physical, economic, environmental and educational related development of the Preston City centre area and the gateways (the “City Area”).”.

12.51

Preston Vision will have the powers set out below:

to bring, or in any way facilitate the bringing of, any land and buildings in the City Area into effective use, to create or in any way facilitate the creation of an attractive environment and to ensure or assist in ensuring that employment, housing, social, cultural, educational and recreational facilities are available to encourage people to live and/or work therein;

to assist, promote and encourage existing and new business, industry, commerce and education within the City Area, including the provision of financial support, business counselling and relocation programmes;

to advertise and promote projects within the City Area and the benefits of projects within the City Area as a location for the expansion and creation of industry, commerce and educational institutions;

to promote the social, environmental and educational benefit and the interests of tourism, commerce, industry and education in the City Area in all circles of local and central government and administration including quasi-governmental bodies and agencies in the United Kingdom and the European Union and elsewhere; and

to exercise a positive influence on, and provide appropriate advice, to contribute and to collaborate with statutory and local authorities, quasi-governmental bodies and agencies and other relevant partners in carrying out their duties as to local and regional planning, highways and regeneration for the City Area;

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Economic Potential of Preston – Draft Final Report

Founder members would include the City Council, County Council and the University of Central Lancashire. The Founder Members would enter into a Members Agreement with the Company initially for three years regarding the funding of the Board and its operations. Key features would be: •

Preston City Council would continue to provide serviced office accommodation and employ two members of staff (a Secretary and part-time finance officer) who would be seconded to the Company. The cost of the staff would be reimbursed by the NWDA.

Lancashire County Council would act as Company Secretary.

UCLAN would act as Accountable Body for the stream of funding from the NWDA into the Company and also employ all other staff (anticipated to be a chief executive and two development managers) who would similarly be seconded to the Company for which they would be reimbursed by the NWDA.

12.53

South Ribble Borough Council has been invited to become a member of the Company mirroring its current membership of the informal body.

12.54

This level of resource brings Preston Vision closer to the level of resource of the Urban Regeneration Companies, but the 5 members of staff that this revised proposal would bring still looks light relative to the level of resource being used to drive delivery in places like Sunderland, Leicester and Derby, and significantly lower than the level of staff resource being discussed for the Pennine Lancashire Development Company.

Summary Conclusions 12.55

The supposition here is that the level of resource required to drive the economic regeneration of Central Lancashire over the last 10 years, and to drive key elements of the regeneration of Preston City Centre (especially Tithebarn) have undermined and held back delivery. This has resulted in delay to Tithebarn, knock on effects in terms of City Centre Housing, little progress on developing a Central Business District and unfocussed development leading to significant out of town development across Central Lancashire.

12.56

It must be said that this is not attributable to one team, organisation or authority; merely that the Strategy itself either underestimated the capacity and resources of the networks of partnerships that were charged with delivering this or that the networks of partnerships charged with delivering this were not effectively engaged in delivery and programme/project management as much as they might. The answer is probably both and on this evidence one would justifiably question the effectiveness of such networks in delivering this scale of investment.

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Economic Potential of Preston – Draft Final Report

Consequently the assertion is made that there has not been a sufficient focus of energy and resources in delivering a programme that was designed to propel Central Lancashire, with a significantly stronger Preston City centre at its heart, forward towards its Third City aspiration. •

As District Council’s, Preston South Ribble and Chorley have significantly less staff and money to work with to direct and grow the Central Lancashire economy. With a combined annual expenditure of less than £60m, the three Central Lancashire districts will spend less than 12% what Manchester will spend in the next financial year. Preston has less than 6% of the staff employed by Manchester City Council;

The two tier local government structure means that Central Lancashire’s three districts lack direct control over key strategic issues in their localities including schools, highways and public transport consequently the relationship with the various Lancashire County Council Directorates are critical to delivering any large scale regeneration;

To date, the resources of Preston Vision have fell far short of those required to deliver the scale of change it aspires to deliver. The average URC operates with a staff team of 8-9 people with an annual operating budget of around £1m per annum to deliver investment in many cases less than that envisaged in Preston, although the new structures proposed go some way to strengthening Preston Vision, the revised structure would still leave Preston Vision than less staff than most of the URCs;

12.58

This report is about binging the evidence together but the question of resources, leadership and governance are of such importance to the future success of Central Lancashire going forward and the delivery, in particular of a much stronger Preston City Centre that further options and models of delivery will need to be explored by the NWDA, Local Authorities and other key partners in the future.

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13. SWOT ANALYSIS 13.1

This section builds on the previous section to provide a summary of the main strengths and weaknesses of the Central Lancashire. The aim here is to essentially distil those factors that make knowledge cities work and examine the extent to which Preston exhibits these.

The strengths and weaknesses of the Central Lancashire Economy 13.2

From an economic perspective a somewhat divergent picture has emerged from this assessment. As previously noted, at the Central Lancashire level performance has been extremely good with all the main economic indicators showing well above average results. At any level this is an extremely positive set of results to date and concomitant of an area with 3rd City status. However, at the Preston level, performance has been considerably weaker – in most cases below average and with a set of data that suggests: •

a general ‘dumbing down’ appears to be taking place in the value base of businesses with a significant shift from VAT status to smaller more fragmented businesses

weakening productivity coinciding with what appears to be potentially unsustainable increases in employment relative to the value added per head component. This is reflective in other indicators such as weekly earnings

generally weaker labour market results (i.e. higher inactivity, higher unemployment) that will be challenged over the coming 2 years as economic distress hits the whole of the UK.

13.3

This dichotomy between the centre of Preston and its surrounding suburbs is a function of the differences between the educational and housing market offer in inner and east Preston, characterised by poorer quality housing and the lowest performing secondary schools, and the prosperous northern parts of Preston (Fulwood), Chorley and South Ribble.

13.4

There are it would appear some structural impediments here as well as those socio-economic that need to be considered going forward. At the same time one must be careful not to judge these results harshly; as we note, Preston has a long standing reputation of avoiding severe economic distress but it is clear that economic pressure is going to increase and there is some evidence here to suggest that Preston itself could be a little exposed especially where low value activity is concerned.

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What makes cities work? 13.5

Preston has however been classified as a ‘regional services city’ and is emerging as a new economic force. Developing a clear understanding of what makes cities work - or perhaps more importantly what will make Preston as a knowledge city work, will therefore be critical for its continued success.

13.6

This is about understanding the stimulants or indeed constraint that will shape Preston’s prospects in the future, in particular those that will increase productivity and knowledge based economic growth. This analysis has presented an assessment of Preston’s performance against a series of drivers in an attempt to achieve this. What is evident is that whilst Preston already exhibits a lot of the core ingredients to achieve greater knowledge intensity, the extent to which these are in tune or functioning in a way that benefits the economy is open to debate.

13.7

The work of Jones et al. (2006) also concludes that vital in encouraging economic growth in the knowledge sectors is the collaboration in planning frameworks for transport, skills and housing at a city-region spatial scale in order to accurately measure existing requirements and to coordinate policy geared towards structural change and attracting higher value businesses and workers.

13.8

A number of key drivers for urban economic knowledge intensity have been identified through this report which provide a useful framework for identifying the strengths, weaknesses, opportunities and threats facing the Preston improve its relative performance.

13.9

These drivers provide the basis for identifying the types of policy actions needed to achieve more positive outcomes. Looking ahead it will be important that Preston builds on its strengths and address weaknesses to drive forward economic growth. The SWOT below presents these issues for further discussion.

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Strengths •

Strong supply of employment land, with almost 300 ha available for employment development in Preston, South Ribble and Chorley;

Preston in particular is less constrained by the greenbelt than other parts of the Northwest; in contrast 63% of land in Warrington and 41% in Chester is within the Greenbelt

Strong housing growth potential – with the Central Lancashire growth point proposing to develop 21,200 new homes by 2020;

A falling contribution of manufacturing to economic (output) growth but strong service sector performance, particularly connected to public-sector related activity;

Although declining, manufacturing will still make an important (and disproportionate) contribution to the strength of the Core Central Lancashire economy;

The presence of BAE systems at Warton and Samlesbury provides Central Lancashire with a substantial base of intellectual capital, a core of skilled, well, paid employment (with Beta Model data estimating that approximately 10,000 people are employed across the two sites). More than half of the workforce are skilled technicians and nearly a quarter are classified as (non-executive) professionals;

Central Lancashire is well placed to capitalise on the expected renaissance in the UK Nuclear Industry, on the back of the need to increase investment in carbon free power generation. Westinghouse has recently established their UK HQ in Preston and are one of the two companies in the frame to build new reactors. The proximity of Heysham Power Station, the relative proximity of Sellafield, its strong engineering base, UCLan and Preston’s position as the closest emerging regional services city make Central Lancashire well placed to capture a large share of any new opportunities in this area.

At the heart of Lancashire – Preston acts as the ‘hub’ for all communication flows throughout Lancashire (75,000 journey to work trips into Preston);

Access to major centres of London, Manchester and Glasgow via rail and serves Manchester / Manchester Airport by good road links;

A highly functional and self-contained area, in which 84% of all journey to work movements and over 70% of migration flows are contained;

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Increasing population since 1981 (over 8%) set against a population decline in Northwest of 3% since 1981, forecast to continue to increase to 2031 (compared to decline in Liverpool);

Large working age population within 30km, over 800,000 people providing larger workforce potential than Chester, Blackburn and almost as many as Liverpool. Working age population within 10km also significantly larger than NW competitors.

Access to more than 200,000 people of working age qualified to NVQ4 within 30km, providing large and skilled workforce;

Economic structure aligned with higher value sectors that are growing nationally (computing, business services and finance) and advanced engineering, software and digital design;

University of Central Lancashire (6th largest University in the country) providing a highly skilled population;

The presence of the University of Central Lancashire in Preston offers a significant driver for economic growth and is increasingly aligning its knowledge base towards some of those sectors that have made Central Lancashire prosper in recent years.

The university has invested over £60 million in new facilities over the last few years with student numbers expected to increase from 35,000 to 50,000 by 2010.

Access to major centres of London, Manchester and Glasgow via rail; Preston is the Northwest’s busiest station outside Manchester and Liverpool;

Proximity to Blackpool airport could act as a driver of economic growth across the Western sub-areas of Lancashire,

Direct rail links to Manchester Airport and (outside of peak times) fast journey times by road to both Manchester and Liverpool Airports, serving more than 200 destinations worldwide;

The New Growth Point Partnership brings a new phase of joint-delivery for the districts of Central Lancashire and the Fylde Coast authorities of Blackpool, Fylde and Wyre.

Weaknesses •

The office market has historically been constrained by supply-side factors - primarily constrained by the unwillingness of developers to undertake speculative development

Significant greenbelt constraints in Chorley and South Ribble (71% and 67% of land in Chorley and South Ribble respectively falls within the Greenbelt);

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Central Lancashire at a significant disadvantage to major conurbations of Manchester and Liverpool in terms of working age population living within 10km, and almost 500,000 fewer people of working age living within 30km as Warrington;

The Gross Value Added (GVA) gap with the rest of the UK is about £600 million. By far the majority of the GVA gap is attributed to services, with substantial productivity gaps apparent in Finance and Banking; Professional Services; Business Services and Computing Services.

Current leakage of graduates from UCLAN out of the area, (though evidence of later returning to live);

Significant areas of deprivation and housing market failure within Preston east and pockets of deprivation within both Chorley and Leyland;

Labour supply constraints (skills, deprivation) act as a constraint to further economic growth;

Whilst levels of achievement in Central Lancashire schools have generally risen, and are well above average in South Ribble and Chorley. Preston’s overall performance is significantly below average.

The indicators of multiple deprivation highlight significant areas of Preston are in need of comprehensive socio-economic and physical regeneration with the inner urban areas of Chorley, Leyland and most especially Preston display incidents of being ranked within the 5% most deprived wards in the country.

Levels of long term limiting illness are highest in the inner urbanised areas of Preston, Leyland and Chorley fluctuating from between 16% and 24%

Preston (more specifically Preston east) suffers from the highest levels of persons with no qualifications (those aged 16-74) with levels between 42.1% and 48.6%, this is replicated in Chorley and in parts of Leyland and Bamber Bridge.

Strategic and functional relationships with the surrounding Lancashire sub-areas, as well as Liverpool and Manchester have not been fully exploited particularly given Preston’s strategic location and infrastructure advantages.

Strategic leadership is currently hampered by the two-tier system, which frequently directs resources and priorities away from the City. Preston Vision, has had relatively few resources to drive delivery of the major redevelopment proposed for Preston relative to URCs set up to drive similar levels of regeneration in other UK towns and cities.

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Opportunities •

The Development of Tithebarn would substantially increase retail floor space within the city centre and improve the retail and cultural offer of Preston City Centre, a crucial factor in maintaining the wider appeal of the Central Lancashire area.

Tithebarn and the proposed Central Business District would jointly expand the city centre office offer, and address the lack of new, Grade A office accommodation in Preston City Centre, and improve chances of professional and business services to the City.

Recent years have seen strong growth in the education and health sectors, with UCLan a key driver, continued growth at UCLan, the continued improvement of its reputation and its ability to draw in young, talented under and post graduates is important to Central Lancashire’s appeal

The continued expansion and improvement of UCLan is critical in helping to address the “Lancashire Brain Drain”, though many Lancashire students study at Lancashire Higher Education Institutions, and more travel to other Northwest institutions (such as Liverpool and Manchester), anecdotally we know that a proportion of the most academically gifted Lancashire sixth form students currently leave the County to study at higher education institutions elsewhere in the UK. UCLan currently does attract gifted students from elsewhere in the UK (in a way that does not happen in Blackpool or Blackburn for example) and Central Lancashire needs to capitalise on this;

Results from the Business Survey suggest that the relationship between UCLan and Central Lancashire businesses is relatively weak, but this does not capture the full scope of the University’s business and knowledge transfer activities. The University is actively encouraging start up businesses and graduate entrepreneurs, developing a new business incubator facility and alongside other activities the University are designed to support over 800 SMEs located within the eligible 'Objective 2' areas in the North West, providing the opportunity for 570 jobs and 110 new businesses to be created over the next two to three years. The University offering the potential for further knowledge and skills transfer, and can help address the difficulty some Central Lancashire businesses have in findings the skills they need;

The development of mediacity:UK at Salford and the relocation of a significant proportion of the BBC to its Northern base (including BBC 5Live) provides an opportunity for Preston to forge links and attract spin off business activity via the well regarded journalism specialisms at UCLan.

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Further investment in business incubation facilities to encourage start ups

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Threats: •

Central Lancashire has seen relatively little additional, new, Grade A city centre office supply developed over the last 10 years, but this is increasingly the office product demanded by major professional and business services firms, that are moving away from the out of town business park due to lack of the wider vibrancy and retail offer of city centre locations. Central Lancashire risks losing office employers to other regional cities that have or are developing this offer;

Linked to an ongoing lack of good quality city centre office accommodation is Government relocation constrained due to office supply issues;

The slow pace of delivery of the Tithebarn development, if left unaddressed, will harm the attractiveness and competitiveness of Central Lancashire relative to its competitors, but may also harm Central Lancashire’s reputation in the private sector as a place to invest. The slow pace of delivery has already meant that the housing led redevelopment of the wider city centre area, especially the mixed use area to the south of Church Street and Fishergate has not come forward, and further delay might mean additional missed opportunities;

Slow delivery of the improved retail offer provides a window of opportunity for competitors, such as Blackpool to change shopping patterns and Diversion of retail spend to neighbouring centres e.g. Blackpool;

The Central Lancashire housing offer, and especially the offer in Preston itself, does in part acts as a disincentive to those with higher skills / prospective graduates / professionals to live and work in Preston – meaning the benefits of Preston’s higher paying jobs do not get retained within the local economy and meaning that some employers find it harder to attract the workforce they need;

Failure to diversify economy into higher value activity; and

A number of the courses at UCLan (journalism, motor engineering, health) on the whole are not designed to meet the demands of local employers, but instead are turning out high skilled, high value employees for other areas of the UK (e.g. London newsrooms, the Newbury Formula 1 cluster, the national NHS).

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14. DELIVERING PRESTON’S ECONOMIC POTENTIAL 14.1

In considering the economic potential of Preston and Central Lancashire, there is strong evidence to suggest that here is a locality that has for a number of years performed well and that crucially, is set to show a similar degree of resilience in face of the economic challenges that currently exist. Looking forward, it has the potential to make a greater relative contribution to regional growth accounts simply because it is less exposed to the factors that are driving the down-turn.

14.2

Its insularity is both a strength and a weakness. Trading patterns and supply chains are very localised and the locality has not developed the linkages with other major centres of the region – Liverpool and Manchester specifically – that it might. Nor has it developed real tangible relationships to date with other adjoining areas of Lancashire.

14.3

However, the actions required to address the key challenges faced by Preston and Central Lancashire will lead to a greater participation of the locality in the region and the sub-region. If implemented effectively then one would expect to see these links develop and mature – but crucially in the context of this study, Preston is not there yet.

14.4

Preston and Central Lancashire could develop a role within the region that offers a counterbalance to the regional centres of Manchester and Liverpool. It has more in common with these centres than it does with other centres within Lancashire – a competitive economy, strong transport links, a growing higher education offer – but it neither has the capacity to upscale to the size and contribution of Liverpool and Manchester but nor will it ever grow to such an extent as to completely dominate the existing towns of Lancashire. In respect of the latter, Preston can attract the higher value investment that other towns of Lancashire can not.

14.5

Key strategic interventions include: •

Development and Regeneration – Delivery of an improved Preston City Centre, through delivery of the Tithebarn Redevelopment in particular remains key to Central Lancashire realising its economic potential, policy scenarios that deliver accelerated delivery of Tithebarn and the Central Business District and other transformative actions.

International Image and marketing – linked to the development of Tithebarn in particular it is important that Central Lancashire capitalise on its many positive attributes and publicise these to improve its share of Northwest FDI, and help create a perception

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shift among other investors. Investment in a positive international image and a coordinated marketing attempt should aim to attract headline grabbing FDI. •

Maintaining the competitiveness of indigenous sectors that are regional growth sectors – looking at transformational actions within the Regional Economic Strategy to understand both those areas where Central Lancashire is already able to compete and which sectors, such as professional services, where Central Lancashire has the potential to improve its competitive position.

Improved and targeted business support – Central Lancashire, and especially Preston, has seen modest growth in business stocks compared to many of its neighbours, and so policies to improve business support, to encourage entrepreneurship and enterprise growth and work with existing businesses seeking to grow has the potential to boost the economic performance in Preston, unlocking growth potential in existing small firms, overcoming property or skills log jams and in the process freeing up existing start up space.

The Skills Agenda – delivery of Tithebarn, delivery of the housing growth point, and improving linkages are important for Central Lancashire to attract and retaining higher skilled workers, that many businesses find in short supply and will need in the future.

14.6

In considering the economic potential of Central Lancashire, this report identifies a number of key hurdles for Central Lancashire to overcome in delivering its economic potential, and appraises the potential scale of the opportunity. This includes:

May 2009

A Clear Role for Preston;

Tithebarn;

Central Business District;

Engineering, Manufacturing and New Technologies;

More Coherent Marketing

Foreign Direct Investment;

Government Relocation;

Enhanced Business Support

Enhanced Linkages; and

Delivering the Housing Growth Point

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Economic Potential of Preston â&#x20AC;&#x201C; Draft Final Report

This section of the report outlines the areas where and how Central Lancashire can grow in the future.

A Clear Role for Preston 14.8

Preston is an emerging Regional Services City supplying employment opportunities, retail, administrative and other services to its wider hinterland. Like other regional services cities, Preston combines elements from other city types. In particular, its traditional role was as a industrial city (cotton and associated engineering). But because of its wider asset base â&#x20AC;&#x201C; retail centre, fast growing university, excellent rail and road links to the national economy, county administrative centre and gateway to the City-Region â&#x20AC;&#x201C; Preston is in the process of modernising its economy.

14.9

As a result Preston is growing a spread of service industries including in financial, legal and business services. These are in turn attracting other economic activities to the city and its role and an economic node within the North West is growing. As a consequence Preston can realistically be ambitious about its future. It has plans to redevelop its retail centre (John Lewis has signed up to be the flagship store), and achieve major commercial development. However, the transition from industrial city to regional services city has not been without pain. It still retains significant social inequality and clusters of deprivation.

14.10

It is the only regional services city in Lancashire and the natural candidate to fulfil this role, To that end the role model for Preston are other regional services cities such as Bristol. In a Lancashire context Preston then is both the only location currently fulfilling this role, and the only location that can further develop, based on its existing facilities, land assets, human capital, business base and connectivity

14.11

This is not to argue for all economic development activity to take place in Preston (or the broader Central Lancashire area) at the expense of other areas, but to argue that Preston is the only centre capable of growing as partial counterbalance to the two city regions of Manchester and Liverpool,

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Tithebarn 14.12

The Tithebarn redevelopment is the biggest element of economic potential in the short term for Central Lancashire and could be seen as a pre-requisite for other developments or other elements of Preston’s economic potential to be fulfilled. The Tithebarn Development Specification outlines the quantum of development planned for Tithebarn as:

14.13

More than 80,000m2 of new retail floorspace;

20,000m2 of new / replacement office;

8,000m2 of financial and professional services, food and drink floorspace;

5,820m2 of leisure floorspace (which would accommodate a new city centre cinema);

A new 5,000m2 hotel (assumed to approximate 100 bedrooms); and

A new bus station and car parking

If the office and retail floorspace is all delivered, this would result in an 18% increase in Preston’s retail floorspace, and the first significant new office floorspace in Preston City Centre for a number of years, replacing some of the unpopular and outdated existing stock of office premises.

14.14

The Environmental Statement for Tithebarn, produced in September 2008, estimates that Tithebarn will create up to 540 jobs, after factoring displacement and leakage, and additional GVA of between £13 – 15m45

14.15

Implementation of Tithebarn is likely to bring three further major benefits for Preston. •

Higher Profile – the development of Liverpool 1 and Cabot Circus in Bristol both received high profile press coverage regionally and nationally, and helped to raise the profile of both Liverpool and Bristol as retail and leisure destinations. Tithebarn is of a similar scale to both of these developments and consequently could provide a similar boost to Preston at the centre of Central Lancashire.

Housing Investment – a considerable amount of edge of city centre housing development is currently waiting for the wider housing market to recover, but also for Tithebarn to get underway (discussed in paragraph 6.54). Successful development of Tithebarn, market permitting, is likely to unlock some of these developments, creating a

45

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further boost to Preston’s image, improving Preston’s housing offer and creating additional employment in construction. •

Increased attractiveness of UCLan and increased graduate retention – The major improvements to Preston City Centre that Tithebarn will bring have the potential to provide a major boost to student recruitment and graduate retention at UCLan. Although courses and quality of teaching are clearly important factors for where people choose to study, for many students lifestyle issues are also very important. Preston currently offers a less attractive lifestyle offer than Manchester or Liverpool or the other major cities. Tithebarn will go a long way to addressing this and may result in more applicants to UCLan and result in a higher calibre intake. Consider the University of Chester, although considered a less attractive university (ranked 23 places lower in the 2009 Good University Guide) it nevertheless attracts candidates with a median UCAS points score of 270, compared to UCLAN’s 260 – in part this must be due to Chester’s image as a nice place to live and the quality of Chester City Centre. A more attractive city centre, and improved housing offer may be influential in seeing a greater number of UCLan graduates remaining in the city, providing a boost to Central Lancashire’s human capital resources.

14.16

In many ways, Tithebarn is pre-requisite to fulfilling other aspects of Preston’s economic potential.

Central Business District 14.17

The successful development of Tithebarn is seen by some developers as a prerequisite for Preston City Centre to develop a Central Business District, however, by providing a step change in the quality of Preston’s City Centre Offer, in a similar way to Cabot Circus in Bristol and Liverpool 1 in Liverpool Tithebarn may pave the way for Preston to develop a competitive and attractive Central Business District.

14.18

It has been suggested that a CBD ought to be a development in the region of 80,000m2, requiring in the region of 8 hectares of land (assuming a relatively high density development). This would represent an increase in Preston’s commercial office floorspace of some 23%, lower than the rate of growth in commercial office floorspace over the last 10 years (which has grown by 31% since 1998. Developed out over a 10 year period, development of 8,000m2 per annum is broadly in line with the recent trends in Preston and Central Lancashire.

14.19

A Central Business District of 80,000m2 in Preston could generate significant amounts of new employment, even taking into account leakage and displacement.

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Leakage – some of the jobs created in a Preston Central Business District will be filled by people living outside Central Lancashire, but the majority would be likely to be filled by residents on Chorley, South Ribble and Leyland.

Displacement - In addition some of the office space created within the CBD is likely to displace office occupiers from other office locations in Central Lancashire, perhaps from Riversway and Preston East (locations that have developed in response to the lack of quality city centre offer. Given that the new office developments will replace some existing office buildings, the level of displacement in this element is likely to relatively high, perhaps as much as 50% of jobs in a CBD will be displaced jobs from elsewhere in Preston / Central Lancashire.

14.20

A Central Business District also offers the best chance for Central Lancashire of attracting a major professional or business services investment or government relocation that has the maximum benefits to the wider economy.

Engineering / Manufacturing and New Technologies 14.21

Central Lancashire’s existing business base is clearly the foundation of economic growth in Central Lancashire, but two sectors provide particular opportunities for growth: •

Nuclear – through development and growth of Springfield Nuclear Fuels

Aerospace – through growth at BAE systems and the development of the Samlesbury Aeropark

14.22

Although neither of these businesses are located within the area, located just outside, both employ a significant number people who live within Central Lancashire, and draw on a significant number of suppliers.

14.23

In addition, there is a potential opportunity for further growth in some specialist areas such as global renewables, taking advantage of Central Lancashire’s skill set and the reluctance of other areas to accommodate some of these businesses – advanced recycling. Aerospace

14.24

BAE have strong ambitions to develop their Samlesbury Complex as a broader “Aeropark”, making land available to allow their suppliers and other aerospace firms to develop on the Samlesbury site to form a centre of aerospace expertise. To that end BAE have set aside a 17 ha area of the site to accommodate this Aeropark, developed at a plot ratio of 40% the

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Aeropark could accommodate up to 68,000m2 of development (more if higher density office development were included). 14.25

If this aspiration is fulfilled, many of the jobs created are likely to be new jobs, as UK aerospace firms set up on site, or move from other areas of the UK to locate at Samlesbury, and although (as with the current BAE workforce), the workforce is likely to be drawn from a wider area than central Lancashire, a large proportion of any workers at the Aeropark would be likely to live in Central Lancashire. Nuclear

14.26

Broadly speaking, Westinghouse currently have around 2000 people employed in Nuclear Fuel Manufacturing at its Springfields Facility near Preston. This comprises c1,550 permanent staff, c150 Agency Supplied Workers (ASW's) and c300 project based contractors. The renaissance in nuclear power, in response to the growing need to develop low carbon energy in the Uk has seen

14.27

Consequently, Westinghouse are now planning for growth rather than decline in employment and if plans come to fruition during 2010-12 this could rise to 2,500 at the manufacturing site, with c400 additional staff to support the UK New Build Programme based in Preston on the same timescales.

14.28

This would result in an additional 1,000 high quality advanced manufacturing and professional grade jobs by 2012. The presence of the Nuclear Industry at Sellafield has led to a substantial cluster of support and supplier firms to the nuclear industry in West Cumbria, for example at the West Lakes Science and Technology Park, this is something that could be replicated in Preston, linked to UCLan and the much greater availability of skilled labour in the Preston area than in West Cumbria, consequently a plausible scenario of nuclear renaissance at Springfield could be the creation of a nuclear industry support cluster of a proportionally similar scale to that at Sellafield. The Energy Coast Masterplan states that the Civil Nuclear industry in West Cumbria directly employs around 12,000 people, but indirectly supports a further 2,600 jobs. A similar core to support staff ratio would see an additional 1,000 nuclear workers employed by Westinghouse generate an additional an additional 210 jobs. These could then have onward multiplier effects in the Central Lancashire economy.

14.29

Not all these new jobs are likely to be filled by Central Lancashire residents, levels of leakage are likely to be high, but it may be assumed that 50% of these jobs or more may be filled by Central Lancashire residents or by workers who relocate to the Central Lancashire area.

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14.30

Economic Potential of Preston – Draft Final Report

Unlike the more standard office and retail jobs generated by the Central Business District or new retail in Tithebarn, new nuclear jobs are likely to be well paid, with a higher than average GVA per head. Assuming GVA per head in the nuclear industry is 50% higher than the Lancashire average, then 600 new jobs in the nuclear sector may generate an increase in GVA of £13.4m. Environmental Technologies and Services

14.31

An opportunity may exist for Central Lancashire to exploit its competitive advantages and capture investment from the fast growing Environmental Technologies and Services markets, – capitalising on Lancashire’s engineering/manufacturing supply chain capability. This was recognised in the recent Lancashire Environmental Technologies and Services Study – Identifying Opportunities for Manufacturing Firms in Lancashire (2008), which reported that the main growth sub-sectors of ETS are identified as recycling and waste management, contaminated land remediation, renewable energy and energy efficiency.

14.32

The report noted that growth across these sub-sectors is forecast (UK CEED) at 93% worldwide over the next 10 years and that sub-sectors are already represented in the Lancashire economy, and were identified as having opportunities for growth in the 2005 ETS Mapping Study. It concluded that annual turnover in the Lancashire ETS manufacturing sector could increase by £238 million, and employment by 4,400, over the period 2005-2015.

14.33

Central Lancashire’s existing stock of employment land including sites in Preston, Chorley and South Ribble sites offers opportunities to accommodate this kind of investment and grow employment in these sectors. Accommodating New Industrial and Logistics Firms

14.34

Alongside Samlesbury Aeropark, in the Cuerden Regional Investment Site, and Matrix Park and Revolution Park at Buckshaw Village, Central Lancashire has two highly attractive locations for industrial and logistics firms seeking to relocate to the area, with both locations enjoying excellent access to the M6. Cuerden Regional Investment Site is a major land allocation totalling some 65 hectares reserved for substantial regional investment opportunities. Located at the interchange of the M6/M65 motorways (junction 29) and 2 miles from the M61 it is supported by South Ribble Borough Council, the Northwest Development Agency and English Partnerships. Cuerden in particular offers clear opportunities for the growth of engineering / manufacturing and new technologies.

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14.35

Economic Potential of Preston – Draft Final Report

Revolution Park is a 51 hectare logistics and industrial park situated to the southern end of Buckshaw Village. Multipart and Wolseley UK are already located at the park, one of the Northwest's designated regional strategic sites. Matrix Park is one the western edge of Buckshaw Village and over 60 acres at Matrix Park has already been committed for almost one million sq ft of new industrial and office accommodation. A range of companies are already located here including Barclay & Mathieson, GR & MM Blackledge, Vernon Carus, Inkjet, Stokers Furniture, DHM, Exact Abacus, Lea Hough & Co, JRB Environmental, Lancashire Digital, Speed Medical, NSG Environmental, AK Stainless.

14.36

Buckshaw Village is well located less than two miles from both the M61 and M6

More Coherent marketing 14.37

Developing a more coherent marketing campaign is important for Central Lancashire. To date marketing in Central Lancashire has been both disjointed and uncoordinated, and both South Ribble and Chorley have pursued their own goals, marketing their own Boroughs and aiming to market Leyland and Chorley Town Centre. Both are arguably too local, on the other hand the Lancashire wide “Make it Lancashire” brand and marketing campaign are arguably too broad. If Preston’s role is to be Lancashire regional services city, then, for Central Lancashire at least, Preston ought to be the major focus for marketing efforts, promoting the city first and foremost - with South Ribble and Chorley presented as attractive but constituent parts of Preston / Central Lancashire or sold with regard to proximity to Preston and its wider offer.

14.38

Development of Tithebarn and the enhanced city centre that would result is probably a necessary first step before launching a high profile campaign, but when Tithebarn is delivered, Preston ought to be the focus for much of the marketing and promotional aimed at attracting investment and new businesses in Central Lancashire.

Major inward investment 14.39

The development of Tithebarn and a Central Business District will provide a step change in the quality of Preston City centre and the office product on offer. This, coupled with a major marketing push emphasising Central Lancashire’s existing assets (such as the large and well qualified population living within 30km, its land and transport assets, the University, housing offer) enhance the chances of Preston capturing a major inward investment similar to MBNA at Chester or New Balance at Warrington.

14.40

NWDA figures suggest major inward investments have much greater multiplier effects than other types of investment, with local multiplier effects of 2.5 (or more for manufacturing

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investment). A major inward investment generating 500 new jobs in Central Lancashire could be expected to generate a further 1,250 jobs in the wider economy and a significant boost to Central Lancashire GVA. 14.41

A high profile “name” investment (e.g. a major international name) could be expected to have a much greater impact.

Government Relocation 14.42

Beyond Foreign Direct Investment, Central Lancashire is one of a number of areas that could potentially capitalise on major government relocations, implemented since the Lyon’s Review. Expected relocations to 2010 are expected to total some 20,000 jobs46, by June 2008 17,118 posts had been relocated. 3,669 of these posts were relocated to the Northwest but no significant numbers to Central Lancashire. Major relocations to the Northwest included 1,522 posts to Liverpool / Bootle, 1,038 to Manchester and 503 to Blackpool. Although these figures suggest that the bulk of government relocations have concluded,

14.43

Government departments considering relocation are asked to consider the impact on local authority areas in the top 20 per cent of the Indices of Deprivation - those areas which have, th

potentially, the most to gain from Government business relocation. Preston, ranked 48 in the 2007 IMD is in the worst 12% and so a strong candidate. 14.44

King Sturge’s Comparative Assessment of Locations produced in 2003 ranked Preston in the upper quartile of over 100 areas within the United Kingdom as a location for Interactive Contact Centres, Higher Value Back Office functions and Science functions.

14.45

The creation of a Central Business District may provide the means for Preston to provide the right premises offer to attract a major government relocation, and this may prove to be the sensible approach to kick starting development of a new Central Business District, by anchoring the scheme around a major Government relocation.

Enhanced Business Support 14.46

Business Support services are already widely recognised as good in Central Lancashire, the challenge for Preston and for Central Lancashire is to address blockages and barriers for further growth.

46

http://www.ogc.gov.uk/government_relocation_relocation_programme_progress__8170.asp

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14.47

Economic Potential of Preston – Draft Final Report

Key issues include a lack of move-on space, especially move-on space in Preston City centre, which is hampering successful projects such as the Northern Lights project at Media Factory. Provision of appropriate move-on space is vital to free up start up / incubator space for the next wave of entrepreneurs. This points up a further gap in Preston’s portfolio of employment premises, lacking both high levels Grade A City centre office accommodation, and affordable move-on space to accommodate growing businesses.

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Other business support issues include the difficulty firms have in finding the right skills they need, a growing issue identified in both the business survey undertaken in support of this report, and the consultation undertaken as part of the wider Lancashire Transport and Economy Work.

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A key business support task may then be for still closer liaison between employers and UCLan / the four Central Lancashire Colleges to ensure skills needs are identified, and appropriate courses developed. A bigger task may be for employers to work with the colleges to reverse the Lancashire Brain Drain by tempting back those who have left the area to study elsewhere to come back to work in the Preston area. Targeted marketing at central Lancashire exiles, on the back of the wider marketing push discussed above, could be one way of supporting businesses by helping them access the skills they need to grow and develop.

Enhanced linkages 14.50

Improved local linkages within Central Lancashire and more importantly from Central Lancashire to other sub-regional destinations offer the potential to bring increased agglomeration benefits to the Central Lancashire economy. The Centre for Cities studies report “The route to growth: transport, density and productivity” produced in April 2007 notes the link between the size of the working age population and productivity, and states that recent UK research concluded that doubling a city-region’s working age population would increase productivity, and that doubling the number of working age people within easy reach of a city increases its productivity by between 3 and 8 per cent (Rosenthal and Strange 2004).

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The working age population within 30km of Central Lancashire is already large, but in practice linkages are poor, and there are few movements from Blackburn and beyond into Central Lancashire. Enhanced transport linkages within Lancashire may result in an effective increase in the working age population available to power growth in central Lancashire, providing the potential, increase in productivity from agglomeration discussed above. These benefits are (to some extent) currently captured by Manchester in the Northwest.

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Northwest Regional Development Agency

Economic Potential of Preston â&#x20AC;&#x201C; Draft Final Report

Delivering the Housing Growth Point 14.52

The delivery of the Housing Growth Point is critical to both addressing housing affordability issues and addressing the quality of the housing offer in Central Lancashire, however successful delivery of the Growth Point proposals will help Central Lancashire to retain and attract the skilled workers it and its businesses will increasingly need.

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Tithebarn will enable a proportion of the new housing to be delivered as city living developments around the edges of Preston City Centre, providing further diversity to the housing offer and providing an attractive environment for the retention of graduates and young urban professionals, in a virtuous circle creating a more attractive environment for the creation of a Central Business District.

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