Challenge for growing Northern Powerhouse city regions to share the proceeds of prosperity

The city regions at the heart of the Northern Powerhouse – Greater Manchester, Sheffield and Leeds – have enjoyed rising prosperity over the last few years, according to new research published today.

They have been challenged by the new independent Inclusive Growth Analysis Unit, run by the Joseph Rowntree Foundation (JRF) and University of Manchester (UoM), to ensure the proceeds of this growth are shared by all people and places living in their regions.

The research, the Inclusive Growth Monitor provides a new tool for Local Enterprise Partnerships (LEPs), metro mayors and local authorities to measure how they’re performing on inclusive growth. Each LEP is given a score on 18 different indicators based on prosperity – skills, jobs, and economic output – and inclusion – how much this prosperity is accompanied by improvements in incomes at the bottom of the distribution, unemployment and the cost of living. It is the first time growth and inclusion has been measured in this way.

The research will be updated annually by the new Inclusive Growth Analysis Unit (IGAU), a new partnership between JRF and UoM, to provide a tool for new mayors and city leaders to monitor their progress on prosperity and inclusion.

The report sheds light on the different economic challenges faced by regions. The aim for all LEPs should be high growth and high inclusion.

The inaugural monitor – using the latest available data to look at progress on prosperity and inclusion between 2010 and 2014 - found of the 39 LEPs:

  • London and large city regions in the North – Greater Manchester (GM), Leeds City Region and Sheffield City Region – saw faster than average growth in prosperity.
  • Boosting prosperity didn’t always result in the most progress on inclusion – GM and Sheffield have seen growth in prosperity, but they featured in the bottom half of the index for inclusion.
  • London is a clear outlier – seeing the biggest gains in prosperity but the worst performance on inclusion. City regions in the North need to think about whether London provides a model that they want to emulate.
  • The growth in prosperity wasn’t shared by some areas of the ‘Midlands Engine’. Places such as Greater Birmingham and D2N2 (Derby, Derbyshire, Nottingham and Nottinghamshire) face a bigger task: more growth is needed in these areas and it needs to be inclusive.
  • Places face different challenges to achieve high growth and high inclusion. Some regions with relatively low growth – the Black Country and Stoke-on-Trent and North Staffordshire – saw little growth in prosperity but scored relatively well on inclusion.
  • London, Oxfordshire, Worcestershire, Dorset, Hertfordshire featured as seeing the fastest growth in prosperity.
  • Dorset, the North Eastern, York, North Yorkshire and East Riding, Cheshire and Warrington and Coventry and Warwickshire saw the most progress on inclusion.

Progress on prosperity and inclusion between 2010 and 2014

Dave Innes, policy and research manager for economics at JRF, said:

“The Northern Powerhouse is enjoying resurgent prosperity, which is clearly welcome news. But the aim for city leaders should be to make cities more inclusive as well as prosperous. Other regions have outperformed them on inclusion - incomes at the bottom of the distribution, unemployment and the cost of living – over the last few years. Looking forward, city leaders should focus on making sure this is shared by all within their city regions – reaching the people and places who have traditionally been left behind.”

The indicators included in the Inclusive Growth Monitor
Theme Dimension Broad indicator
Inclusion Income Out-of-work benefits
In-work tax credits
Low earnings
Living costs Housing affordability
Housing costs
Fuel poverty
Labour market exclusion Unemployment
Economic inactivity
Workless households
Prosperity Output growth Output
Private sector businesses
Employment Workplace jobs
People in employment
Employment in low pay sectors
Human capital Higher level occupations
Intermediate and higher level skills
Educational attainment