Yorkshire and Humber economy transitioning from traditional industries into new growth sectors
28 November 2018
- Yorkshire and Humber outperforms national average productivity growth in three of 13 sectors
- Best performing sectors against the national average were transport and storage (33.4%), financial and insurance (+31.7%), and public administration (+19.5%)
- Employment almost at record levels with unemployment rates dropping from from 10% in 2011 to 5% in 2018
- Infrastructure, skills, collaboration and enterprise identified as key to unlocking future growth
- Findings come from Deloitte’s latest Power Up report: UK-Wide Growth Unlocking productivity across UK regions and nations, which examines 20 years’ of productivity and employment data from the Office of National Statistics (ONS)
A report by Deloitte has found that the Yorkshire and Humber economy is in a key transition period, from traditional heavy industries into more diversified business sectors.
While manufacturing still represents 15% of the regional economy - above the 10% national average, sectors including financial and insurance, transportation and storage and public administration are demonstrating the strongest productivity growth, outperforming the national average since 1997.
Consulting more than 50 business leaders, educators, local government officials and other influencers from across the UK, including Yorkshire and the Humber, Deloitte’s Power Up UK-Wide Growth report sets out to combine the ONS data with the insight from regional voices to identify how best to unlock future growth.
Business leaders in the region identified infrastructure, skills and collaboration between business, public sector and education as the key priorities for driving growth, alongside the ability to scale up business.
Beckie Hart, CBI regional director, said: “The biggest challenge affecting business in the region is definitely infrastructure. 55% of businesses in the region are dissatisfied with the current infrastructure and 95% of businesses in our region think that the Northern Powerhouse rail proposition is very important. Better infrastructure is a huge driver of improving productivity.”
Tom Riordan, chief executive of Leeds City Council, cited the importance of collaboration in unlocking future growth, he added: “Collaboration has most impact when businesses, universities and councils align their collective efforts and investments around specific assets and skills that are distinctive and of national and global significance. The best example in Leeds is HealthTech.”
The report highlighted sectors with high growth in productivity, such as transport and manufacturing. However, these did not demonstrate similar growth in employment over the same period. Manufacturing has seen a decline of 32% in employee numbers since 1997 and while transport has increased by 24%, it still makes up a relatively low percentage of the overall workforce.
Stuart Cottee, Deloitte practice senior partner for Yorkshire & the North East, said: “A clearer demonstration of the transitional nature of the Yorkshire economy, are those sectors that have delivered strong growth in both productivity and employment, such as administrative and support services; professional, scientific and technical services; information and communication services; as well as education and health. Many of which have previously been identified as regional priorities.
“Our report shows a clear diversification of the Yorkshire and Humber economy over the last 20 years. It highlights a need for better jobs, rather than simply more jobs, and these need to be targeted and focused on specific needs and opportunities.
“Yorkshire and the Humber is a large region with differing specialisms, from advanced manufacturing around Sheffield and renewable energy in the Humber, to legal and financial services and the digital sector in Leeds, as evidenced by the recent decision by Channel 4 to locate its new headquarters in the city.
“Clearly, skills and the ability to better connect people to the right jobs is a priority as the economic landscape continues to change, but the opportunity for growth is significant across the region.”
Pauline Biddle, managing partner for UK regions Deloitte, said: “Our UK regions have huge opportunity for growth. We’ve taken the overall topic of productivity to help identify where we can maximise on opportunities by learning from the past, and then combined this with the very real experiences and views of the present.
“Analysing data by industry, we looked at the best regional performer for each sector. If this performance was replicated across the UK as a whole, this would be worth an additional £263bn to the economy, or nearly £10,000 for every UK household.
“There is an overwhelming sense of regional pride and commitment that comes through from the interviewees,” says Biddle. “Regional businesses need a devolution framework and for deals to work effectively. We need to plan and execute place-based strategies and work with recently appointed metro mayors in our city regions, but making sure that other areas do not lose out unfairly in spending and investment allocations.”
Note to editors
*Sectors that have demonstrated strong growth in employment and productivity:
- Administrative and support services (66% growth in employment and 71% in productivity);
- Information and communication (48% growth in employment and 59% in productivity);
- Professional, scientific and technical (95% growth in employment 47% in productivity);
- Education (53% growth in employment and 47% in productivity); and
- Health (44% growth in employment and 73% in productivity).
About the Power Up report
The report consulted and interviewed more than 50 business leaders, educators, local government officials and other influential figures in Scotland, Wales, Northern Ireland and the eight English regions outside London. The report describes each UK region and nation’s economic performance. It investigates strengths and weaknesses and outlines a series of proposed actions, deriving from discussions with senior business leaders that can help to raise the contribution of many regions to a new level.
The regions and nations are:
- East of England;
- East Midlands;
- North East;
- North West;
- Northern Ireland;
- South East;
- South West;
- West Midlands;
- Yorkshire and Humber; and
About the Power Up data
The 15 sectors analysed:
- Agriculture, mining, and utilities;
- Wholesale and retail trade;
- Transport and storage;
- Accommodation and food service;
- Information and communication;
- Financial and insurance activities;
- Professional, scientific and technical activities;
- Administrative and support services;
- Public administration;
- Human health and social work;
- Arts, entertainment and recreation; and
- Other service activities.
All data is sourced from the Office for National Statistics (ONS), some publicly available, others under license agreement.
The employment numbers are from 1982 to 2017. The productivity (as measured by output per hour worked) numbers are from 1997 to 2015 across 15 industries and all regions. The change in productivity is analysed across three different time frames – pre-crisis (1997-2007), post-crisis (2007-2015) and overall (1997-2015). The annual UK productivity is the average of the productivity numbers for the four quarters. The UK productivity for each industry is the based on the average of all the regional numbers for each industry.
Interviews were conducted with:
- Beckie Hart, Regional Director CBI
- Tom Riordan, CEO Leeds City Council
- Kersten England, CEO Bradford Metropolitan District council
- Gerald Jennings and Mark Goldstone, West and North Yorkshire Chamber of Commerce
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
For more information, please visit www.deloitte.co.uk.
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