Tackling poverty could boost Leeds City Region economy by £1 billion – JRF report

Ahead of the Autumn Statement, the Joseph Rowntree Foundation (JRF) issues a warning that if poverty is not tackled in the Leeds City Region, it could lose out on nearly £1 billion a year.

Its latest report urges business leaders and local government officials from across the region to work closely together to ensure that the benefits of growth are shared widely. 

It also suggests that halving unemployment and moving people into jobs paying the Living Wage (£7.65 per hour) could boost the Leeds City Region economy by nearly £1 billion a year, according to the report on connecting growth and poverty reduction.

The estimates are based on research carried out by experts at the Centre for Economic and Social Inclusion (CESI) who assessed the benefits of tackling worklessness and low pay in the region to government, local authorities and the economy. Their full findings are due to be published next month in the context of the Northern devolution debate. 

Earlier this year, JRF entered a partnership with the Leeds City Region Local Enterprise Partnership (LEP) and Leeds City Council to find ways to connect people and places in poverty to opportunities generated by economic growth.  

The research – which assessed the City Region’s current economic performance - raises the possibility of a ‘two tier recovery’ unless action is taken. It found:

  • 130,000 people are unemployed in the City Region, around 8.7 per cent of the workforce. Halving this would add £952 million to the region’s economy – equivalent to 1.8 per cent of the region’s GDP (gross domestic product).
  • The City Region economy was estimated to be worth £55.9 billion last year, around 4 per cent of the UK economy. It is expected to grow 14 per cent by 2020. 
  • 81,000 new jobs are likely to be created in the region by 2020. One in four jobs – around 140,000 – will be low-skilled and low-paid.
  • Between 275,000 and 343,000 people are paid below the Living Wage in the City Region.
  • 29 per cent of residents live in neighbourhoods ranked among the top fifth most deprived in the country.

The report outlines some of the key challenges facing the region’s economy, including:

  • Supporting  people earning below the Living Wage to progress into better paid jobs; 
  • The rate at which unemployed people find work and the level they are paid;
  • The ‘hollowing out’ of the jobs market. Like other parts of the country there are signs of growth in the numbers of high skilled and low skilled jobs, but fewer middle ranking jobs, which in the past would have acted as stepping stones during a person’s career.

Josh Stott, Policy and Research Manager for Cities at JRF, said:

“Our local economy will never reach its full potential with so many people living in poverty. The report makes clear the economic benefits of taking action to address the root of causes of poverty in the form of unemployment and low pay. We are concerned that the economic recovery we face will still have too many people living in poverty. The Leeds City Region needs more and better jobs to connect people and places in poverty to the benefits of economic growth.”

Roger Marsh, Chair of the Leeds City Region Enterprise Partnership, added:  

“The LEP is committed to not just creating growth for growth’s sake, but ‘good growth’ for Leeds City Region. There are significant economic gains for both the regional and national economy if we address the imbalance of poverty. If we halve unemployment in our region, the overall gain to the local economy could be worth £952m per year. That is why the LEP is committed to investing in businesses which offer skills and training for their workforce, to ensure we sustain good growth for the future.”

Councillor Keith Wakefield, leader of Leeds City Council, said: 

“I welcome this report as we know that, alongside unemployment, the low-wage economy isn’t working for lots of people with the prevalence of part time work and zero-hour contracts trapping many people in in-work poverty. Tackling poverty and unemployment is a key priority for the council because, as this report demonstrates, it can have a huge impact on our local economy and it can improve the lives of all those individuals and families living on the breadline.

“Getting people into work is not something any one agency can do alone, so we’re committed to working closely with organisations like JRF to ensure we connect people with the right jobs and opportunities.  In order for us to unlock the full potential of Leeds we need to work together and galvanize businesses and employers to provide opportunities to all our communities.”