liverpool city region local industrial strategy evidence base evide… · liverpool city region...

Liverpool City Region Local Industrial Strategy

Evidence baseJuly 2019

Liverpool City Region is a growing economy . . .

2

Liverpool City Region is a £32bn economy - measured

by Gross Value Added (GVA). In the last decade, we

have added over £6bn to our economy, against the

backdrop of the deepest recession the UK has

experienced since the Second World War.

Our economy stagnated during the recession, while

others were shrinking, and it took longer for the full impact

to be felt in LCR. This means it has taken us longer to

recover, while other economies started to rebound as

early as 2009, our recovery did not start until 2013.

We are now experiencing strong levels of growth, for

three of the last four years we have grown faster than the

national average, and between 2016 and 2017, our

economy grew by more than 5%.

GVA Growth 2007-2017

Source: ONS

90

95

100

105

110

115

120

125

130

£0

£5,000

£10,000

£15,000

£20,000

£25,000

£30,000

£35,000

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10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

GVA £ millions Indexed growth (Right Hand Side)

. . . but we have performance gaps to close

3

A delayed recovery has widened the gap between

LCR and the UK in terms of relative output, and

productivity.

Our economy generates £20.4k of GVA for every LCR

resident, 77% of the UK level. Since 2010, the gap has

increased from £4.5k to £6.7k per person.

Our productivity (GVA per filled job) tracks much

closer to national levels, and is 89% of the UK level.

Despite this, every filled job in the LCR produces £6k

less output than the UK.

40,000 42,000 44,000 46,000 48,000 50,000 52,000 54,000

20102011201220132014201520162017

UK

North

West

GVA per head (2010-2017)

Source: ONS

GVA per filled job (2010-2017)

18,000

20,000

22,000

24,000

26,000

28,000

20102011201220132014201520162017

UK

North

West

. . .and so, to close these gaps, we need to improve our performance

against the five foundations

4

In October 2018, HM Government published a Policy

Prospectus for Local Industrial Strategies to “build on

unique local strengths to ensure every community,

and the country, reaches their economic potential

and creates high quality good jobs.”

Local Industrial Strategies should boost productivity and

earning potential across local areas by focusing on the

five foundations of productivity.

1 – People

6

Our population is growing – but at a relatively slow rate . . .

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% Change in population by LEP (1997-2017)

Source: Mid Year Population Estimates

1.5 million people live in the City Region, and our population has grown year-on-year since 2003. However, comparatively,

we have experienced a slow rate of population growth, growing slower than any other LEP.

7

… and we have a number of ageing communities

Dependency Ratio (2017)


0.440.460.480.500.520.540.560.580.600.620.640.660.680.70

Dependency Ratio UK Level

At the City Region level, the ageing population is less

prominent than for other areas of the UK. However,

this masks the prevalence of the ageing society in

other areas of the City Region, particularly Sefton and

Wirral.

In both of these areas, the dependency ratio is also

considerably higher than the UK level, reflective of the

high proportion of residents age 65+ and smaller

Working Age Populations. In these areas, the Working

Age Population face a greater burden in supporting

the ageing and youth population.

We have a Working Age Population of 977k which has grown (with fluctuations) over the last 30 years.

8

Overall, our Working Age Population is growing. . .

910

920

930

940

950

960

970

980

990

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Thousands

Liverpool City Region Working Age Population (1997-2017)


Our skills profile is improving. Since 2004, the proportion of highly skilled residents has increased, at the same

time, the proportion of residents with no qualifications has fallen.

19%

15%16% 15%

24%

33%

18%19%

10% 11%

0%

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10%

15%

20%

25%

30%

35%

% with NVQ4+ - aged

16-64

% with NVQ3 only - aged

16-64


16-64


16-64

% with no qualifications

(NVQ) - aged 16-64

Jan 2004-Dec 2004 Jan 2018-Dec 2018

9

. . . And the WAP is becoming more skilled. . .

Change in qualification levels (2004-2018)

Source: Annual Population Survey

10

. . . But we need more highly skilled workers

While our skills profile is improving, comparatively, we have a low proportion of highly skilled workers (NVQ4+), and a

high proportion of residents with no qualifications. A highly skilled population is a key component of a competitive,

productive economy.

0%

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16-64


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LCR North West UK

Qualification levels of the Working Age Population (2018)


11

Our employment rate is growing. . .

Employment Rate (2004 -2018)


64%66%68%70%72%74%76%

2004 2006 2008 2010 2012 2014 2016 2018

LCR North West UK

Each year a growing number of our residents are

employed, with significant growth in our employment

rate from 2014 onwards. This fast rate of growth has

closed the gap considerably between the LCR

employment rate and that of the UK.

As of 2018 72% of our Working Age Population were

in employment, compared to 74% in the North West

and the UK rate of 75%.

At the same time, our unemployment rate has fallen

significantly from 6.2% in 2004, to 4.1% in 2018. As of

2018, the unemployment rate was lower than that of

both the North West and the UK. 2%

7%

12%

2004 2006 2008 2010 2012 2014 2016 2018

Liverpool City Region North West UK

Unemployment Rate (2004 -2018)

12

. . . but a high proportion of our WAP is inactive. . .

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With 26% of our Working Age Population currently inactive, we have the third highest rate of economic inactivity of

all LEPs in the UK, this is a key driver of our output gap with the UK.

Economic Inactivity Rate (2018)


13

. . . and disconnected from the world of work

Economically Inactive

26%

Economically Active

74%

Working Age Population

100%WAP 968k

Employees 620k

Self

employed

73k

Unemployed 25k

Economic Inactivity by reason

Long-term sick (30%), Student (23%),

Looking after family/home(23%),

Retired (12%), Temporary sick (2%),

Other (10%)

We have 274k residents that are economically

inactive, a high proportion of these (30%) do not

participate in the labour force due to long term

sickness. Long term sickness is highest in St Helens

(37.4%) and lowest in Liverpool (26.9%).

Of our working age population, we have a proportionately

higher number of residents that do not want a job when

compared with the UK. In addition to sickness there are a

number of reasons for this, such as stay at home parents

and people who have retired early – essentially lifestyle

choices.

Liverpool City Region Labour Supply (2018)


Economically

Inactive

274k

14

Inactivity is underpinned by complex health-related challenges

Our economic inactivity rate reflects the range of

complex health and wellbeing challenges residents in

the City Region face:

• One in four people of working age in the LCR have

limiting health conditions;

• Life expectancy is two and a half years lower

than for England;

• The prevalence of ill health is increasing; and

• There is a high prevalence of mental health

disorders1.

Unfavourable health conditions in the LCR contributes to

both the employment and productivity gap.

05

1015202530

Halton KnowsleyLiverpool Sefton St.

Helens

Wirral

England Average

1 Health for Wealth: Building a Healthier Northern Powerhouse for UK Productivity

70

75

80

Halton KnowsleyLiverpool Sefton St.

Helens

Wirral

England Average

Male Life Expectancy at Birth (2018)

Prevalence of Common Mental Health Disorders (2018)

Source: Public Health England

Source: Public Health England

2 – Business Environment

Our Business Base is growing . . .

16

There are 48,000 active businesses in the Liverpool City

Region. Since 2012, our business base has grown

each year and at a faster rate than both the North West

and the UK.

This is driven by a consistently higher business birth

rate, reflective of our entrepreneurial culture.

Number of Active Enterprises in the LCR (2012-2017)

Source: UK Business Demography

Source: UK Business Demography

Business Birth Rate (2012-2017)

37,975 39,690 41,690 43,530 46,045 48,405

-10,000

10,000

30,000

50,000

2012 2013 2014 2015 2016 2017

10%

15%

2012 2013 2014 2015 2016 2017

LCR NW UK

. . . But our business density is too low

17

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Our business density is the lowest of all LEPs and contributes to our performance gaps with the UK. A larger business

base will increase competition, generate more output and employment opportunities and, ultimately, improve performance

of the Liverpool City Region.

Number of Businesses per 10k of WAP

Source: UK Business Counts, Mid Year population estimates

As our business base grows we need more scale-up businesses .

. .

18

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Scale-up businesses are an important source of employment and drive productivity. Relative to our business base, we

have the fifth highest proportion of Scale-up businesses of all LEPs. However, the scale-up population is small, with

just 610 located in the City Region.

Number of Scale-ups per 10k of businesses

Source: The Scale-up Institute and UK Business Counts

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. . . And we need more exporting businesses

19

Businesses that sell beyond local markets tend to be more productive. In LCR, just 14% of the business base is in

export intensive sectors, and just 2.4% of businesses export regularly. Increasing the number of businesses that

sell products and services overseas could improve productivity of the City Region.

% Share of businesses in Export-intensive Industries

Source: UK Business Counts

Across the City Region we have developed, and continue to develop core strengths across a number of sectors that

provide real opportunity for strong levels of growth in terms of both jobs and GVA. Our sector accelerators, are sub-

sectors of the economy that have strong growth potential, unique and nationally significant assets and strong potential

to form innovation-led growth clusters across the City Region.

The sectors we have identified to drive the opportunity in the Liverpool City Region are:

• Automotive manufacturing

• Chemicals and Pharmaceuticals manufacturing

• Life Sciences and Healthcare

• Digital and Creative

• Clean Growth

(Note Clean Growth sector analysis will be added following forthcoming work)

We have transformational growth opportunities

0

100

200

300

2010 2011 2012 2013 2014 2015 2016 2017

LCR

UK

One quarter of a million cars are produced in the

Liverpool City Region annually. The sector is diverse,

on the one hand we are home to Briggs Automotive

Company (BAC) producing 20 high performance

supercars each year, and on the other hand is the 300-

acre Jaguar Land Rover site where a car comes off the

production line every 90 seconds.

Across the sector there are approximately 55

businesses, employing more than 7,000 people. Since

2010, the sector has grown considerably faster than

the UK, with a Compound Annual Growth Rate (CAGR)

of 16%.

There is a high concentration of employment and

output compared to the UK, but a lower concentration

of businesses. This is reflective of the high number of

large, key employers in the sector.

2.35

0.96

2.84

Employment

Number ofBusinesses

GVA

GVA Growth 2010-2017 (Indexed 2010=100)

Degree of specialisation (LQ analysis)

Source: Office for National Statistics

Source: Office for National Statistics, BRES, UK Business Counts

Automotive Manufacturing

Liverpool City Region is home to some of the world’s

biggest pharmaceutical players. In 2017, the sector

contributed in excess of £1.5bn of GVA. There are over

130 businesses operating in the sector, employing more

than 7.5k employees.

Nationally, the sector has contracted, with a £4.5bn

decline in output since 2010, against this backdrop, the

sector has shown resilience in the Liverpool City Region.

There is a considerably high concentration of

employment, businesses and output compared to

the UK, demonstrating the LCR’s sector specialism and

expertise.

2.73

2.00

3.22

Employment

Number ofBusinesses

GVA

LC…

40

60

80

100

120

2010 2011 2012 2013 2014 2015 2016 2017

LCR

UK





Chemicals and Pharma Manufacturing

Our Universities produce world leading research

related to the Life Sciences and Healthcare sector.

In 2017, the sector contributed more than £3bn of GVA

and provided c. 95,000 jobs, across a business base of

more than 2,000. Since 2010, the sector has grown,

albeit at a slighter slower rate than that seen nationally.

Our specialism in the sector is demonstrated through a

higher concentration of employment, businesses and

output than what is seen nationally.

80

90

100

110

120

2010 2011 2012 2013 2014 2015 2016 2017

L

C…

1.53

1.19

1.52

Employment

Number of BusinessesGVA

LC…





Life Sciences and Healthcare

The Digital and Creative Sector in LCR is growing, with

a constant stream of new businesses starting,

locating and growing in the City Region. We also

have a strong, and growing advanced computing sector,

underpinned by nationally significant assets such as

the most powerful supercomputer in the UK.

The sector is growing significantly, and faster than the

national rate. Output from the sector surpassed £1bn in

GVA in 2017, and the sector has grown at a CAGR of 7%

since 2010.

There are around 2,500 businesses in the sector,

providing close to 13,000 jobs.

While there is less evidence of industrial concentrations,

the sector continues to grow with emerging specialisms.

0.57

0.67

0.94

Employment

Number ofBusinesses

GVA

LC…





80

130

180

2010 2011 2012 2013 2014 2015 2016 2017

LCR UK

Digital, Creative and Technology

3 – Ideas

Our business base engages in innovation. . .

26

Percentage of businesses engaging in innovation activities

Source: BEIS, UK Innovation Survey

Innovation activity engaged in (%)

0 20 40 60

Innovation Active

Collaboration

LCR

UK

0 10 20 30 40 50

Process

Product and service

New to market

Strategic & marketing

LCR

UK

Source: BEIS, UK Innovation Survey

With 57.2% of businesses innovation active, we have a

higher proportion of businesses engaged in

innovation than the UK average.

A high proportion of businesses engage in

collaborative innovation (this includes collaboration

with other businesses, research institutes, HEIs and

government).

The most common innovation activity is that related to

new/improved strategic business practices and changes

to marketing concepts or strategies.

. . . And businesses secure a considerable amount of innovation

funding . . .

27

52%

12%

36% Private

SectorNHS

Since 2003, organisations in the Liverpool City Region

have secured 655 Innovate UK grants, totalling over

£73m.

Of the 655 grants, almost three quarters (73%) have

gone to private sector businesses. By value the share

falls to 52% showing that typically, private sector

businesses receive lower value grants than

Universities or the NHS.

73%

1%

26%Private Sector

NHS

University

Company Sector Value of Grants Number of Grants

Aimes Digital £3.2m 23

Unilever FMCG £1.9m 10

Videregen Life Sciences £1.5m 2

Ulemco Clean Growth £1.4m 5

Acal Energy Chemicals £1.3m 12

Top companies by value of Innovate UK funding received (2003-2018)

Breakdown of Innovate UK funding by number of grants

Source: Innovate UK

Breakdown of Innovate UK funding by value of grants

Source: Innovate UK Source: Innovate UK

. . . but we are in the bottom half of all LEPs for the amount of

funding attracted

28

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Mil

lio

ns

Innovate UK funding by Local Enterprise Partnership

Source: Innovate UK

We have a strong research base. . .

29

University Number of Students

Liverpool Hope University 8,000

Liverpool John Moores University 22,000

The Liverpool Institute of Performing Arts 690

The University of Liverpool 25,000

Liverpool School of Tropical Medicine 120

University Areas or Research Excellence

Liverpool Hope University Mathematics and Computer Science

Liverpool John Moores University Sport and exercise science

The University of Liverpool Chemistry , computer science and

informatics

Liverpool School of Tropical Medicine Clinical medicine, public health

Universities have a significant role to play in nurturing

the knowledge economy and high quality research

makes a major contribution to economic prosperity.

Universities in the Liverpool City Region are home

to Research Excellence and achieved noteworthy

results in the last Research Excellence Framework

review in 2014.

The University of Liverpool had seven subjects in which

research was ranked in the top ten in the UK, and

ranked first in the UK for research in Chemistry.

Areas of research excellence

Universities in the City Region and Student Population

Source: Research Excellence Framework, 2014

. . . And our Universities have a relatively high R&D expenditure

30

Universities in the Liverpool City Region have the highest relative expenditure on R&D of all North West LEPs.

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Higher Education expenditure on R&D per FTE

Source: Eurostat, 2014

. . . But business R&D expenditure is low

31

Business expenditure on R&D per FTE

Source: Eurostat, 2014

£-

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£1,000

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Although business expenditure is higher than that of our HEIs, compared to other LEPs, business expenditure on R&D in

the Liverpool City Region is low.

Evidence on collaboration between Universities and the business base

is mixed

32

UniversityTotal Number of

Contracts

Total Value of

Contracts

Rank (out of

162)

Liverpool Hope University 25 372 106

LJMU 122 2,038 57

The University of Liverpool 469 15,296 19

Relationships between universities and businesses are

important to unlock innovation and growth, and to

develop and graduate talent.

There is some evidence of collaboration between

Universities and businesses, but these tend to be

focussed on larger organisations, with limited long-term

relationships fostered between universities and SMEs.

£-

£10,000

£20,000

£30,000

£40,000

£50,000

£60,000

Income for consultancy and contract research for businesses (2014-

2016)

Source: HEBCI

Business and Community Services by HE provider

Source: HESA

4 – Infrastructure

Our local rail infrastructure provides uneven connectivity . . .

34

The Merseyrail network is the “jewel in the crown” of the

city’s rail assets and patronage has grown rapidly since

the franchise was devolved in 2004.

At a local level, Liverpool City Region and its wider

functional geography is well connected, especially at

the core. However, for some areas, especially those of a

more rural nature, rail connectivity is weaker.

Internal connectivity of Liverpool City Region and its hinterland by rail

Source: Merseytravel Long Term Rail Strategy

. . . And Liverpool is poorly connected to other locations around

Britain

35

Connectivity of key GB towns and cities

Source: Merseytravel Long Term Rail Strategy

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Liverpool’s wider connectivity (based on whether or not a direct service links the locations) is poor, especially for a city of

its size. Of the 20 cities with better connectivity, only seven have a larger population than Liverpool.

We are connected internationally by John Lennon

airport and our close proximity to Manchester airport.

LJLA is a growing international airport and has

grown considerably over the last decade. It now

handles over 5 million passengers annually. However,

connectivity to the airport is weak, unlike many other

major global airports, it has no dedicated rail line.

Our Westward facing port is another international

gateway as well as being a significant asset to the LCR

economy. The port handles over 33 million tonnes

of freight cargo per year and serves more than 100

global destinations including China, Africa, Australia,

India, the Middle East and South America.

0

2

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2014 2015 2016 2017 2018

Milli

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Liverpool John Lennon Airport Passenger Numbers (2014-18)

Port Tonnage (2014-18)

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31

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2014 2015 2016 2017 2018

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We have key international gateways

We are a digitally connected City Region

37

Liverpool is one of the best digitally connected

cities in the UK. We have built our own Internet

Exchange, ensuring world-class speeds. We connect to

London directly (LINX) and to the GTT transatlantic

internet cable linking the city to North America and

Europe.

Liverpool is also a 5G testbed area creating a

platform for the smooth roll out of 5G mobile

internet connectivity over the next few years creating

multi-gigabyte connectivity across the region.

All districts in the City Region have access to

superfast broadband, and digital connectivity is

higher than national averages across all LAs.

However, digital inclusion is an identified challenge

with a higher than average proportion of the population

that rarely, or have never used the internet.

Superfast Ultrafast

Halton 98.85% 73.72%

Knowsley 99.12% 79.69%

Liverpool 97.46% 80.95%

Sefton 99.39% 62.42%

St Helens 98.57% 87.46%

Wirral 98.75% 58.69%

UK 94.95% 54.01%

0%

5%

10%

15%

LCR North

West

UK

Digital Connectivity by Local Authority

Source: SQW analysis of https://labs.thinkbroadband.com/local/England

Proportion of the population that have rarely/never used the internet

Source: SQW analysis of https://labs.thinkbroadband.com/local/England

5 – Place

Liverpool City Region has a rich asset base. It is home

to more museums, theatres, galleries and heritage

buildings than any other place outside of London. Adding

to this are the natural assets across the City Region, we

have miles of coastline and beaches and over 100

parks. Around 80% of the City Region is blue/green

space.

There are some place-based challenges in the City

Region, including higher than average crime rates,

significant pockets of deprivation, and low wages.

Blue and Green Infrastructure in the City Region

There are significant place-based assets across the City Region

Indicator LCR England

Workplace Earnings £538 £575

Resident Earnings £534 £575

% of LSOAs in UK most deprived 31% -

Crime per 1k Population 90 86.5

Affordability Ratio 5.86* 8.0

* North West data, LCR Data not available

40

Neighbourhoods are characterised by significant levels of

multiple deprivation

Liverpool City Region has a significant number of

neighbourhoods characterised by deprivation.

Almost one third of all LSOAs in the City Region are in

the most deprived decile in the UK.

These neighbourhoods are located across the City

Region but there is a particular concentration in a

corridor running North from East Wirral, through North

Liverpool/South Sefton to North Knowsley.

The scale of deprivation, and the impact this has on

economic growth and productivity, underlines the

need to regenerate these neighbourhoods.

Our growing Social Economy will also be important

in improving the opportunities for residents in our most

deprived communities.

Deprivation levels across the Liverpool City Region

Source: Index of Multiple Deprivation

41

. . . That also suffer from low air quality

There is a striking correlation between areas with poor air quality and high levels of deprivation

Deprivation levels across the Liverpool City RegionDeaths from respiratory diseases

42

The City Region needs to have the right housing choice. . .

Since 2016, over 11,000 new homes across all tenures

have been delivered across the city region – the

highest rate of delivery since the 2008 recession.

However our current housing choice is

characterised by a higher than average proportion

of lower value houses (Council Tax Bands A and B)

than that found nationally, 68% of our housing stock is

in Council Tax Band A or B, compared to 44% of

housing stock in England.

This limited housing choice offer has implications

for quality of life and attracting/retaining skilled

labour to the City Region.

0%

10%

20%

30%

40%

50%

60%

A B C D E F G H

% o

f p

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s

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Housing Stock by Council Tax Band

Source: Council Tax Band Stock of Properties

. . . And higher quality office space

Office availability Office demand

Built last five

years

All (sq ft.) Average

annual take

up (last 5 yrs.)

Years supply

Halton - 36,500 122,500 3

Knowsley - 87,000 45,600 1.9

Liverpool 10,900 2,315,900 304,400 7.6

Sefton - 446,500 88,000 5.1

St Helens - 202,600 54,900 3.7

Wirral 700 249,000 65,700 3.8

Total 11,600 3,666,100 681,000 5.4

Liverpool City Region has high availability of office

pace, especially in the Liverpool and Sefton. However,

the majority of this space is old, and not meeting the

expectations of businesses. Only Liverpool and Wirral

have had new office space delivered over the last five

years.

The oversupply of low quality office space is supressing

rent yields, and subduing private sector activity in

developing higher quality space.

High quality business space that is fit for purpose is

one important driver of attracting new businesses into

the City Region, and addressing the low business

density challenge.

Office availability and demand (2016)

Source: Cushman & Wakefield

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