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.

 

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What is the EU customs union and will Brexit make us leave?

International trade secretary Liam Fox's job makes more sense if we leave the customs union. 

Brexiteers and Remoaners alike have spent the winter months talking of leaving the "customs union", and how this should be weighed up against the benefits of controlling immigration. But what does it actually mean, and how is it different from the EU single market?

Imagine a medieval town, with a busy marketplace where traders are buying and selling wares. Now imagine that the town is also protected by a city wall, with guards ready to slap charges on any outside traders who want to come in. That's how the customs union works.  

In essence, a customs union is an agreement between countries not to impose tariffs on imports from within the club, and at the same time impose common tariffs on goods coming in from outsiders. In other words, the countries decide to trade collectively with each other, and bargain collectively with everyone else. 

The EU isn't the only customs union, or even the first in Europe. In the 19th century, German-speaking states organised the Zollverein, or German Customs Union, which in turn paved the way for the unification of Germany. Other customs unions today include the Eurasian Economic Union of central Asian states and Russia. The EU also has a customs union with Turkey.

What is special about the EU customs union is the level of co-operation, with member states sharing commercial policies, and the size. So how would leaving it affect the UK post-Brexit?

The EU customs union in practice

The EU, acting on behalf of the UK and other member states, has negotiated trade deals with countries around the world which take years to complete. The EU is still mired in talks to try to pull off the controversial Transatlantic Trade and Investment Partnership (TTIP) with the US, and a similar EU-Japan trade deal. These two deals alone would cover a third of all EU trade.

The point of these deals is to make it easier for the EU's exporters to sell abroad, keep imports relatively cheap and at the same time protect the member states' own businesses and consumers as much as possible. 

The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals. In theory, if the UK walks away from the customs union, we walk away from all these trade deals, but we also get a chance to strike our own. 

What are the UK's options?

The UK could perhaps come to an agreement with the EU where it continues to remain inside the customs union. But some analysts believe that door has already shut. 

One of Theresa May’s first acts as Prime Minister was to appoint Liam Fox, the Brexiteer, as the secretary of state for international trade. Why would she appoint him, so the logic goes, if there were no international trade deals to talk about? And Fox can only do this if the UK is outside the customs union. 

(Conversely, former Lib Dem leader Nick Clegg argues May will realise the customs union is too valuable and Fox will be gone within two years).

Fox has himself said the UK should leave the customs union but later seemed to backtrack, saying it is "important to have continuity in trade".

If the UK does leave the customs union, it will have the freedom to negotiate, but will it fare better or worse than the EU bloc?

On the one hand, the UK, as a single voice, can make speedy decisions, whereas the EU has a lengthy consultative process (the Belgian region of Wallonia recently blocked the entire EU-Canada trade deal). Incoming US President Donald Trump has already said he will try to come to a deal quickly

On the other, the UK economy is far smaller, and trade negotiators may discover they have far less leverage acting alone. 

Unintended consequences

There is also the question of the UK’s membership of the World Trade Organisation, which is currently governed by its membership of the customs union. According to the Institute for Government: “Many countries will want to be clear about the UK’s membership of the WTO before they open negotiations.”

And then there is the question of policing trade outside of the customs union. For example, if it was significantly cheaper to import goods from China into Ireland, a customs union member, than Northern Ireland, a smuggling network might emerge.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.