tglp digital gateway seminar: will hutton
TRANSCRIPT
The Digital Economy and the Thames Gateway
Will Hutton
January 24th 2011
The tough 2010s
• Minimum 5 per cent of GDP lost for ever. Loss could be as high as 10 per cent.
• Trend growth rate 1991 to 2009 ( trough to trough) was 2.0 per cent but contained bubble effects. Note between 1997 and 2007 half GDP growth financial services, property and construction.
• There will be deleveraging and build up of saving
• Yet 3 million economically inactive, 2.8 million involuntarily idle and 2.5 million unemployed.
• Public sector has generated half jobs growth since 1997. Cannot be repeated 2010-20.
…….Where are growth and jobs to come from in the 2010s?
Challenge 2: Low skills and high unemploymentThe recession has been very severe; it is likely to take at least 3-4 years for economic output to recover to 2008 levels…
A recession of the North, Midlands and Wales – and areas such as the Thames Gateway
Places affected the most are those with:
• Lowest levels of skills
• Highest levels of employment in manufacturing
Mainly the North, Midlands and Wales, but also areas in the Thames Gateway
% Net public sector jobs 1998-2008
Net Public Sector Job Creation 1998 - 2008
Source: TWF & Annual Business Inquiry – Workplace Analysis
Knowledge economy and the 1980s recession and recovery
Total employment, EU KLEMS database definition 1980=100. KE market based is telecoms, high tech, business, financial, and cultural services; KE public based is education and healthcare
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990
ind
ex 1
980
=10
0
KE market based KE public based Manufacturing Other Services
Knowledge economy and the 1990s recession and recovery
Total employment, EU KLEMS database definition 1980=100. KE market based is telecoms, high tech, business, financial, and cultural services; KE public based is education and healthcare
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
ind
ex 1
990=
100
KE market based KE public based Manufacturing Other Services
Knowledge based industries defined by the OECDNote: manufacturing classified by R&D intensity; services classified by ICT use and employment of graduates. Recreational and cultural industries recognised as knowledge based by EU but not OECD, and includes libraries and museums.
Market based Knowledge industries
Public based knowledge industries
Other market based industries
Other public based industries
• High to medium high tech based manufacturing
• High tech services (telecommunications, computer services, R&D services)
• Financial services
• Business services (real estate, advertising, accountancy, legal, technical, consultancy)
• Cultural and creative industries
• Education
• Health and social work
• Low to medium low tech based manufacturing
• Distribution, hospitality
• Transport
• Other services (dry-cleaning, hairdressing, refuse collection
• Recreational and cultural services*
• Public administration
Key drivers of the knowledge economyGrowing as proportion of GDP in all western & advanced Asian economies
Driver Two Shift in demand towards higher
value added, experiential services and tech
based goods as consumers have become more sophisticated and
diversified.
Driver One New technologies, especially General Purpose Technologies ( GPTs), create
new goods, services, processes
and business models with multiple spill-overs.
The rise and rise of “intangibles” – proof positive of the emergent Knowledge EconomyIntangibles investment share 1970-2004
Business investment in intangibles as a share of market sector value added adjusted to take account of intangibles. HMT October 2007.
0%
2%
4%
6%
8%
10%
12%
14%
16%
70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 20 21 22 23 24
sh
are
of
ma
rke
t g
ros
s v
alu
e a
dd
ed
Recovery from the 2008/09 recession in the UK and US
Enterprise Cities – or growing divides?
Aldershot
Barnsley
Birkenhead
Birmingham
Blackburn
71
9
Bradford
Brighton
Bristol
Burnley
Cambridge
5
Coventry
Crawley
Derby
Doncaster
Gloucester
4
Hastings2
Hull
Ipswich
LeedsLeicester
6
London
LutonManchester
Mansfield3
Milton Keynes
Newcastle
Northampton
Norwich
Nottingham
Oxford
Peterborough
Plymouth
8Preston
Reading
Rochdale
Sheffield
Southampton
Southend
Stoke
Sunderland
Swindon
TelfordWakefield
Warrington
Wigan
Worthing
York
8000
13000
18000
23000
28000
33000
38000
43000
48000
14 18 22 26 30 34 38% of private sector KE employment, 2008
GVA
per
hea
d, 2
007
(wei
ghte
d by
wor
kpla
ce e
arni
ngs)
GVA National average(£20,458)
1 - Bolton2 - Huddersfield3 - Middlesbrough4 - Grimsby5 - Chatham
6 - Liverpool7 - Blackpool8 - Portsmouth9 - Bournemouth
PKE National average (25.4%)
The knowledge economy in the Thames Gateway
Source: Annual Business Inquiry – Workplace Analysis (2008)
% Workforce employed in knowledge industries (2008)
A short history of general purpose technologies (GPTs)…
• 9000 BC – 1400AD Seven GPTs domestication of animals & plants;
wheel; smelting of ore; writing; use of bronze; iron & steel; creation of water wheel
• 1400 – 1750 Two GPTs three masted sailing ship and printing
• 1750 - 1900 Five GPTs steam engine; factory system;
railway; ironsteamship; communications
• 1900– 2000 Nine GPTs internal combustion engine; electricity; motor vehicle; airplane; mass production; computer; lean production; internet; biotechnology
Twenty-first century prospects ? Grand Challenges for Engineering
• Nanotechnologies• Energy from fusion• Advanced materials• Carbon sequestration• Manage the nitrogen cycle• Water• Health informatics • Durable customised infrastructure• Customised medicine• The brain• Cyberspace security• Enhance virtual reality• Personalised learning
Some 21st century jobs – UK Dept of Business
• Body parts manufacturing and storing• Pharming – cultivation of genetically modified crops• High rise farming – cultivation in skyscrapers• Personal brand consultants for social networking• Customised avatars as teaching aids• Space guides• Miniaturisation doctors • Old age well being advisers• Care assistants
Rebalancing the economy
Drivers of growth and jobs over past decade no longer available…• financial services• property boom• consumer debt• public sector
Must be replaced by big growth areas the UK has some advantage in…• manu-services (integration of high value services with manufacturing)• low carbon economy• creative and cultural industries• high tech and intermediary services
The highly skilled are clustering in highly skilled cities
The Innovation Ecosystem
Public research
OpennessAccess to
finance
Skills
Competition
Demand
Source: NESTA
A new architecture of “ intermediate institutions”
• Research Universities
• Technology Transfer Institutes
• Creative hubs
• Network of intermediate financial institutions – Green Bank, Infrastructure Bank
• Long term ownership, anchor companies
• Comprehensive lifelong learning
• Intermediate employment insurance mutuals, residential FE colleges, vocational academies to support flexi-security
• Cities with innovation “anchor” institutions
Net Private Sector Job Creation 1998 - 2008
Source: TWF & Annual Business Inquiry – Workplace Analysis
Skills have been key drivers of success
Source: Annual Population Survey (2008)
Residents with graduate level qualifications (2008)
Creative industries are a strength for the Thames Gateway – digital is part of this
Cultural and creative assets in the Thames Gateway
Canterbury Christ Church
University
Universities and the Creative Industries in the
Thames Gateway
Music3* plus – 30% (7.4
FTE)
University of Essex
History of Art, Architecture and
Design3* plus – 75% (7.4
FTE)
University of Kent
Drama, Dance and Performing Arts3* plus – 70% (24.9
FTE)
University for the Creative
Arts
Art and Design3* plus – 30% (43
FTE)
Queen Mary, University of
London(Mile End campus,
Tower Hamlets)
Drama, Dance and Performing Arts3* plus – 90% (12
FTE)
Anglia Ruskin University
Art and Design3* plus – 30% (10.5
FTE)
Music3* plus – 15% (6.5
FTE)
University of East London
Art and Design3* plus – 40% (9.9
FTE)
Drama, Dance and Performing Arts3* plus – 35% (5.2
FTE)
Communication, Cultural and Media
Studies3* plus – 80% (14.9
FTE)
University of Greenwich
Communication, Cultural and Media
Studies3* plus – 10% (7 FTE)
Goldsmiths College,
University of London
Art and Design3* plus – 55% (41.2
FTE)
History of Art, Architecture and
Design3* plus – 50% (11.5
FTE)
Drama, Dance and Performing Arts3* plus – 65% (12.5
FTE)
Communication, Cultural and Media
Studies3* plus – 80% (21.7
FTE)
Music3* plus – 70% (17.2
FTE)
London Metropolitan
University
Architecture and the Built
Environment3* plus – 40% (15.5
FTE)
Art and Design3* plus – 10% (36.6
FTE)
Drama, Dance and Performing Arts3* plus – 25% (6.5
FTE)
Communication, Cultural and Media
Studies3* plus – 40% (12.5
FTE)
Architecture and the Built
Environment3* plus – 40% (10
FTE)
Key challenge - fewer opportunities for the unskilled
Source: Annual Population Survey (2008)
Residents with no qualifications (2008)
The Thames Gateway
• Think innovation and investment ecosystem
• Pivotal role of universities as nodes• Innovative science parks • Digital sector / wider creative industries
linkages• “Five minds of the future” curricula for
Universities and colleges• How to get spill-overs?• Key challenge: Sharing the benefits of
potential growth with existing, often low skilled residents
• Transport ?• East London or Thames Gateway?