Birmingham is perilously close to falling into the “struggling cities” category where house prices, job creation and economic wealth are significantly below average, according to an academic study.
More than 61,000 private sector jobs disappeared from the city between 1998 and 2008, research by the Centre for Cities has revealed.
Almost 125,000 jobs would have to be created to bring Birmingham up to the average level for employment opportunities. As things stand, Birmingham has the third-worst employment rate of any English city.
And while the report shows that economic growth in London and the south of England far outstrips the Midlands and the North, several of Birmingham’s rival cities are performing surprisingly well. Manchester managed to create a net figure of 33,700 jobs in the decade to 2008, Leeds 25,400 and Newcastle 24,200.
The West Midlands, meanwhile, was the only region in England to record a net loss during the same period – with 65,600 jobs, 3.7 per cent of the total, disappearing. By contrast, the East Midlands enjoyed a 3.1 per cent increase.
The report makes the point that, even when the economy was buoyant, Birmingham failed to take full advantage.
The figures are in line with research by Advantage West Midlands which has pointed to a productivity gap of more than £10 billion between the region and the average for England.
Roger Philips, chairman of the under-threat West Midlands Leaders’ Board representing 33 councils including Birmingham, admitted that the economic outlook for the region remains difficult.
Coun Philips (Con Herefordshire) added: “It is very worrying that we were the only region to record a net loss of jobs over the past 10 years.
“That’s why my colleagues and I on the Leaders’ Board are determined to put in place the right measures to boost growth.
“We have a duty to scrutinise the performance of Advantage West Midlands and we shall continue to do so.”
Centre for Cities researchers placed English cities in league tables based on economic performance. Buoyant cities, with above-average job creation, included London, Milton Keynes and Cambridge.
Birmingham just falls into the second group, stable cities, but on the scoring basis used is described as being “vulnerable” and is close to joining Bolton, Barnsley, Middlesbrough, Hull, Blackburn, Birkenhead, Burnley and Stoke as struggling cities.
Gross Value Added, the Government’s measure of economic output, rose by only 2.3 per cent in Birmingham between 1998 and 2008. The figure was almost twice as high in the best-performing cities.
The relatively small improvement in economic output, below the national average, contrasts with the official image as portrayed by the city council between 2004 and 2008, which was to present Birmingham as a strongly performing city with robust job creation and huge growth in the professional services sector. In fact, the continuing decline in manufacturing appears to have wiped out most of the gains from jobs in finance and legal services.
Describing the scale of the challenge as “enormous”, the report warns that the Government’s anticipated public spending clamp down will result in thousands of jobs being lost in the public sector – one area where Birmingham has seen expansion in recent years. The study urges the Government to invest more in private sector growth but to be realistic about what can be achieved.
The paper adds: “Even cities that have experienced a net decline in private sector jobs have a significant amount of sustainable private sector activity that is worth supporting. The most obvious example is Birmingham. Although it lost about 60,000 jobs from its private sector between 1998 and 2008, it still had an economy that provided employment for about 750,000 private sector workers even after this decline.”
The report concludes that the previous government’s New Deal policies, which saw more than £100 million invested in Birmingham, failed to have much impact on job creation. Birmingham has the fifth highest worklessness rate of any city today, behind Liverpool, Barnsley, Sunderland and Hull.
Neither is Centre for Cities impressed by regional development agency Advantage West Midlands. The report suggests that many of the jobs that have come on stream since 1998 would have been created even without AWM.
Speaking in Birmingham last week, Vince Cable, the Business Secretary, said the Government would scrap the current regional development agency system, which sees £200 million being administered by AWM.
Instead it would bring in partnerships between councils and businesses in the area to look after the region’s economic well-being.
Tim Huxtable, Birmingham’s new cabinet member for regeneration, said the city was feeling the impact of the “worldwide slowdown”.
Coun Huxtable (Con Bournville) said: “It is in the private sector we must seek to base future growth. Birmingham has some great selling points for private sector investors; our job is to sell these benefits around the world, while helping existing businesses diversify the services and products they offer.”