New findings warn that Birmingham’s reliance on the public sector could hold back its recovery. Paul Dale reports

Birmingham’s economy is becoming over-dependent on non-wealth producing public sector jobs, a major report into employment patterns has warned.

Research by the Centre For Cities thinktank reveals that 50,000 private sector jobs, chiefly in manufacturing, disappeared in the West Midlands between 1998 and 2007 – with employment in the sector plummeting in Birmingham from 50 per cent at the post-war peak to 11 per cent today.

During the same nine-year period 80,000 public sector jobs were created, a trend driven by the rise of local government quangos, other public agencies and the relocation of Whitehall offices.

In Birmingham, the picture is even starker. Almost 30,000 private sector jobs were lost during the nine years, while over 40,000 public sector jobs were created – a net gain of 10,000 new jobs, but none of them in manufacturing. Just over 31 per cent of Birmingham’s workforce is now employed in public administration, education and health.

The imbalance could pose problems after the next General Election, when harsh public spending cuts are likely to hit local authorities and all public bodies, the Centre For Cities study warns.

Birmingham City Council, along with most West Midlands local authorities, has already begun to shed jobs and there are fears that a spending squeeze will cause unemployment, already above the average for English regions, to rise even further.

The thinktank is warning that, while Birmingham’s economy is not critically vulnerable to cuts, the city will not be able to rely on future public sector growth to drive recovery.

The report, commissioned for Birmingham City Council, warns that the future of the regional and city economies depend on promoting knowledge-intensive employment – creative and digital industries, high value manufacturing, financial and professional services.

The document states: “The centre of Birmingham has been transformed in the past two decades, but recent employment growth has been modest and over-reliant on the public sector.

“This could hamper recovery from a recession that has hit Birmingham hard. The priority now must be a renewed focus on private sector growth, seeking ways to promote firm formation and expansion.

“With government spending cuts on the horizon, Birmingham can no longer rely on public sector jobs growth. Adding private sector jobs, particularly those in the knowledge economy, will be crucial to Birmingham’s future prosperity, over the next decade.

The report urges the city council to do more to plan for the demise of regional development agency Advantage West Midlands, the rise of new Local Enterprise Partnerships and the possibility of an elected mayor for Birmingham if the Conservatives win the election.

The study repeats criticism of Birmingham’s continuing failure to promote itself nationally and internationally, describing poor marketing as a “real constraint” on inward investment.

The document warns: “This is a long-standing problem that was referred to time and again in our interviews. Recent survey evidence reinforces this perception, indicating that just 25 per cent of European business people were familiar with the city as a place to do business.

“Although marketing is only one element of making a city attractive for business, getting it right could both unlock private investment and help the city punch its weight in national debates and in negotiations with Whitehall.

“Birmingham’s marketing lacks coherence in message and delivery. Successful city brands must be built on real assets but should also be attractive and resonant.”

The report urges Birmingham to build a powerful message around its major assets listed as its science base, diverse population, central location, cultural offer and environmental ambitions.”

Centre for Cities welcome a recent council decision to co-locate Birmingham’s two main promotional bodies, Marketing Birmingham and Locate in Birmingham, but says progress to a full merger must be speeded-up.

Centre for Cities concludes that Birmingham is well placed to grow knowledge industries with:

* More than 30,000 research students, more than any other core city region.

* £90 million of research funding last year, more than any other city region except Manchester.

* Above average success in creating new firms from university research.

Dermot Finch, chief executive of the Centre for Cities said: “Birmingham cannot rely on future public sector jobs growth to support its recovery. The city is much more than the UK’s biggest local authority.

“It has a strong research base, with some world-class universities like Warwick and Birmingham on its doorstep, and Birmingham will need to draw upon their strengths to generate more high-value private sector jobs.”

Council cabinet regeneration member Neville Summerfield said: “Like every other city Birmingham is having to face up to major challenges brought about by the global economic collapse.

“But, I am pleased to see the report recognises much work has been done in Birmingham to minimise the impact and give the city a comparative advantage in the low carbon economy which is expected to emerge in the future.”

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