Private sector job creation in London versus the rest of the UK: confusion over the facts. Photo: Wikimedia
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Sorting fact from fiction: jobs in London vs. rest of UK

Labour is claiming today that 8 out of 10 new private sector jobs created since 2010 have been in London; the Tories say 3 out of 4 of them have been created outside the capital. Which is it?

The final report in Lord Adonis’s Growth Review has been making waves today, but not entirely in the way Labour likely expected.

The former Labour Transport Secretary’s “Mending the Fractured Economy” report has been widely commended for its ambitious plans for regional devolution in the UK to combat the economic growth bias in London.

This need to bolster growth in regions outside the capital is partially based on, and most strikingly illustrated by, a somewhat questionable statistic, however.

The report states that “four fifths of all net jobs created since 2010 are in London”. The figure comes from a report by the Centre for Cities, an independent research organisation, published this year but which refers to job figures between 2010 and 2012.

The four fifths figure quoted also refers to private sector, rather than all, job creation in the Centre for Cities report.

Although the statistic has caught the imagination of the public and been widely shared on social media today, updated figures from the Office for National Statistics (ONS) paint a rather different picture of regional job creation under the current government.

The ONS shows that 75 per cent of all new private sector jobs have in fact been created outside of London, a fact brought to my attention by the number of Conservative MPs quoting it on Twitter.

I’ve checked the CCHQ maths so you don't have to (though if you want to, you can download the datasets here; table 7 contains all regional private sector job figures since 2008), and the ONS figures show that since 2010, 1.63m private sector jobs have been created outside the capital, compared with 570,000 in London.

Admittedly the ONS data is based on surveys that  measure employment by place of residence, so are likely to undercount the number of people who work in London but live elsewhere. Meanwhile the Centre for Cities figure is based on data from the Business Register and Employment Survey (BRES), which looks at employment by workplace, so will accurately reflect the geographical location of new jobs.

But the ONS datasets are released quarterly, so they are far more up-to-date than those based on BRES, which is published annually and has not yet released its 2013 figures.

Centre for Cities chief executive Alexandra Jones said: “While no dataset is perfect, BRES data gives a more accurate picture of where jobs are located, rather than where employed people live.”

David Gauke, Tory MP for South West Hertfordshire and Exchequer Secretary to the Treasury, was nonetheless piqued by Labour's use of the Centre for Cities statistics, tweeting earlier:

Other senior Tories have been griping that the government has already adopted many of the conclusions in Adonis’s report.

One Conservative source pointed out to me that the key proposal to allow cities and county regions to keep more of their tax revenues is already part of the government’s City Deals scheme, which allows cities like Manchester to retain some of the tax revenues they generate through local growth, which they can then invest in local infrastructure.

On the BBC’s Today programme this morning, the similarity between the recommendations in Adonis’s report and those in Conservative Michael Heseltine’s regional growth plan, which have been accepted by George Osborne, was pointed out.

Lucy Fisher writes about politics and is the winner of the Anthony Howard Award 2013. She tweets @LOS_Fisher.

 

Photo: Getty
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Time to start fixing the broken safety net that no longer catches struggling families

We are failing to ensure we look after the children of families both in and out of work.

Families on low incomes are once again bearing the brunt of a tough economic environment. Over the past decade, rising costs of items such as food, energy and childcare, combined with stagnating wages and cuts in benefits, have repeatedly put a squeeze on family budgets.

Between 2014 and 2016, some of these pressures eased, as inflation sank to zero and pay started to grow again. But now that inflation has returned, for the first time in postwar history the increasing cost of a child is being combined with a freeze in all financial support for children. The failure to uprate either benefits, tax credits or the wage levels at which tax credits are withdrawn means that inflation is bound to erode modest family incomes both in and out of work.

The gradual fall in living standards that this produces will be worsened by other benefit cuts that come in over the next few years, for different families at different times. For a start, the phasing out of the “family element” of Child Tax Credit (and its equivalent in Universal Credit) will eventually result in all low-income families getting more than £500 a year less from the state than at present.

Since this only applies to families whose oldest child was born in April 2017 or later, it hits families with the youngest children first, with the effect spreading gradually through the population. The restriction of tax credit entitlements to a maximum of two children is also being phased in, affecting only third children born from this year on, but will clobber families much more severely, with a loss of nearly £2,800 a year per child.

Some existing larger families who escape this cut have nevertheless had their income severely reduced this year (by anything up to £6,000) by the reduction in the benefit cap.

My latest report on the cost of a child, for Child Poverty Action Group, takes stock of these trends and the effects they will have on parents’ ability to provide for their families effectively. For some families in work, improved support for childcare and a higher minimum wage partially offsets the losses incurred as a result of the above cuts. But for those relying on benefits as a “safety net” when they are not working, the level of this net is being progressively lowered over time. On present policies, the support that it provides will sink below half of what families need as a minimum sometime early in the 2020s – having in contrast provided about two thirds of their requirements at the start of the present decade.

There comes a point when a “safety net” stops being worthy of its name because it is no longer enough to provide even the bare essentials of modern life. The evidence shows that when income sinks this low, most families can only escape severe material hardship either by going into debt or by getting help from extended family members.

We are about to enter a new parliamentary season, led by a government that survived by the skin of its teeth after a disgruntled electorate failed to give it the clear majority that it sought. Raising family living standards has been at the heart of the political promise to improve people’s lives. The benefits freeze alone seems to contradict this promise by creating a downward escalator for the half of families relying on some kind of means-tested benefit or tax credit, in combination with child benefit.

For those  who are “just about managing”, and particularly for others who are not managing at all, the clearest signal that Philip Hammond could give in his Autumn Budget that he is starting  to reverse the direction of that escalator would be to restore a system of benefit upratings. This would at least allow incomes to keep up with living costs, stopping things from getting systematically worse, and giving a stable foundation on which measures to improve living standards could build.

Professor Donald Hirsch is director of the Centre for Research in Social Policy at Loughborough University