Download core cities and the knowledge economy

Thought
Leadership
Driving future
growth: core
cities and the
knowledge
economy
Spring 2014
Supported by
08449 02 03 04
gva.co.uk
Driving future growth: core cities and the knowledge economy | Spring 2014
Introduction
The eight core cities – Birmingham,
Bristol, Leeds, Liverpool, Manchester,
Newcastle upon Tyne, Nottingham and
Sheffield – hold huge economic assets:
world-class universities, deep pools of
labour, large markets and extensive
communication infrastructures.
.
More than 6.5 million people are employed in the area comprising
the core cities’ Local Enterprise Partnerships (LEPs), in over 430,000
VAT-registered businesses.
Their wider urban areas deliver 27% of the English economy. There
are 37 universities with a combined ‘research power’ score that
matches Cambridge, Oxford and the whole of London combined,
and over 680,000 students. These cities also have excellent
domestic and international connections, with 50 million passengers
passing through their airports each year and direct connections to
emerging markets increasing.
By harnessing these assets and doing more to grow what is defined
here as the knowledge economy, there is a unique opportunity
to drive higher value economic growth and diversify the make-up
of the city economies. It is clear from our research that each city
is distinctive and unique in their knowledge economy ‘offer’ and
this report looks at how growth can be achieved and how the real
estate sector can play a central role in enabling that growth.
This report is split into two parts. The first addresses the issue of the
knowledge economy; what it is, why it is important and what role
real estate has in supporting growth within this sector. The second
part of the report provides in-depth analysis of each core city,
identifying the structural core of the knowledge economy and
what sectors are set to drive future growth in that market.
2 I GVA 10 Stratton Street, London W1J 8JR
10 Stratton Street, London W1J 8JR GVA
I 3
Driving future growth: core cities and the knowledge economy | Spring 2014
Executive summary
Why the need for economic
sustainability?
areas of ‘knowledge distinctiveness’ that each core city might
consider developing specific strategies and actions to help
nurture and grow.
The UK economy is in recovery mode and for the core cities,
growth needs to be less reliant upon a few large sectors, notably
finance and insurance and the public sector, but instead
focussed on a multiple number of growing ones.
In most western European economies, it is common for the largest
regional cities to have GDP per capita higher than the national
average, with the cities acting as a beacon for higher value
knowledge jobs and growth. In the UK however, although the total
economic contribution of the core cities is greater than London,
most cities still lag behind the national average. If those shortfalls
were to be closed and the core cities GDP matched that of the
national average, this would contribute an additional £1.3 billion
to the national accounts.
In the past, the core cities drove the industrial innovation that
established Britain as a leading global economy. During postindustrial economic restructuring, these cities successfully
reinvented themselves as centres of economic gravity, with some
increasing their productivity by 60% in the decade to 2007. In
the post-recovery period, the core cities aim to realise their clear
potential to become world renowned as hubs of high value and
knowledge intensive industries.
Our research highlights that each core city has a unique ‘DNA
code’ of knowledge activity already underway and it is for the
business community, the real estate sector and public policy
makers to put in place the conditions that will allow this to flourish
to the longer term benefit of the city economies.
The Core Cities Group¹ has continually campaigned for
decentralisation of growth levers from Government, resulting in
‘City Deals’, bespoke packages of devolved power and resource.
They now have a greater degree of control over the direction
of economic policy than was previously possible under the top
down policies which offered little diversity and failed to recognise
local strengths or assets.
However, the ability to turn meaningful policy at the local level
into action depends on the ability of cities to drive growth. This
ability is fundamentally linked to the ability of the cities to support,
financially and otherwise, the growth of some emergent high
value new businesses.
The core cities also recognise the need for a more diverse and
sustainable mix of growth sectors within the local economy, with
local skills and assets utilised to help deliver growth. They are
doing this is by identifying the sectors in which each city excels
and offers strong growth within the knowledge economy, then
providing the infrastructure and environment to allow these
markets to grow. This report identifies at a detailed level those
¹ It should be noted that the eight Core Cities authorities have participated in a long
term economic collaboration, the ‘Core Cities Group’, for more than 15 years, now led
by a ‘Cabinet’ of their political leadership, and with significant joint working and policy
development in the areas touched on in this publication. These are ambitious cities who
have worked to produce detailed individual and collective economic strategies, including
4 I GVA 10 Stratton Street, London W1J 8JR
Independent forecasts commissioned by the Core Cities Group
(Oxford Economics 2013), demonstrate that they could do even
more. With the right growth policies and local powers to increase
investment and labour market skills in place, they are capable
of collectively putting an additional £222 billion and 1.3 million
jobs into the economy by 2030. The eight city authorities also aim
to become financially self-sustaining and less reliant on central
government funding within this timeframe, enabling them to
create the foundations of sustained growth through a high quality
business environment and quality of life.
Bristol is the only core city which outperforms the national average
GDP per capita. The Core Cities Group is advocating greater local
control over expenditure, and highlights the strong correlation of
repeated research findings between local financial control and
growth elsewhere in Europe and further afield.
According to the OECD, compared to English figures, the level
of taxes controlled at the local or regional level is about 10
times greater in Canada, 7.5 in the US, 7 in Sweden, almost 6 in
Germany, and over 5 times greater across the OECD on average.
This means English cities do not have the level of local financial
control enjoyed by cities abroad. This issue was the subject of
a recent report to the GLA (The London Finance Commission),
which has led to a united call from London Government and the
Core Cities for fiscal devolution, beginning with property taxes.
That broader devolution agenda cannot be divorced from the
recommendations we draw here.
What is the knowledge economy?
It is defined by the OECD as
the trend in advanced economies towards
greater dependence on knowledge,
information and high skill levels.
For many companies, this may be gained through research
and development and design capabilities, patents, the value of
its workers’ knowledge, branding and reputation; and this applies
to SMEs which account for the majority of private sector business
as well as national and global firms.
The main sectors which are part of the knowledge economy are:
• TMT: technology, media and telecoms, IT
• Medical: pharmaceutical, microbiology, life sciences, clinical
sciences
• Advanced manufacturing: engineering, research and
development, aerospace
• Science: energy, environmental sciences, maths and physics,
geosciences, chemistry
Over the next five years to 2018, the knowledge economy is
expected to outperform the wider UK economy. Capturing the
elements of this above trend growth will be central to each
city’s success.
Building on the existing knowledge base
Universities generating cutting edge
research and resulting insights may be
likened to the tip of an arrow, with the
arrowhead behind it representing the
economic activity enabled by researchled innovation
Witty Report 2013.
a joint ‘Growth Prospectus’ (www.corecities.com) which includes proposals for ‘Growth
and Innovation Hubs’, linked across their cities, which would actively support the business
growth sectors we describe in this report. This grouping provides a further potential platform
for strategic engagement with these cities.
The UK’s higher education system is second only to the United
States with over 30 universities within the Top 200 worldwide, while
overseas student levels at British universities are currently at record
highs. UK universities produce 6.9% of all research globally
and 13.8% of those with the highest impact.
Universities are just one of the enablers that the core cities
can use to develop the knowledge economy further. Small and
medium sized enterprises (SMEs) and new start-ups are also a strong
indicator of the level of new business activity in these cities and
need to be encouraged. On their own, their economic impact
will be small, but together in clusters the rewards will be much
greater. At the other end of the spectrum, leading global blue chip
companies also play a significant role in attracting like-minded
and supporting businesses which are often highly specialised.
Science parks also have an important role to play in driving
the growth of the knowledge economy and SMEs. Small
technology companies or corporate projects are often first
incubated in them, but then ‘graduate’ and cluster locally to the
benefit of the regional economy. Science parks are important
in stimulating economic growth and provide a solution to local
employment problems, in particular the retention of the most
gifted young people.
Patents and start-ups provide a useful benchmark by which to
measure innovation. In terms of patents per 100,000 population,
Bristol was the only core city in the top 10 for the UK with 8.3. This
compares to first place Cambridge with 68.7 and the UK
average of 4.6.
The number of net business start-ups (new start-ups minus business
deaths) shows a much more varied picture across the core
cities. Bristol is the strongest of the eight cities with an average
of 63.7 net start-ups per 100,000 population in 2004–2012, while
Nottingham (16.7), Birmingham (3.6) and Sheffield (-10.2) are all
below average for the core cities.
Real estate and the knowledge
economy
Providing the right real estate opportunities and environment is
crucial to enabling the knowledge economy to be nurtured and
expanded. As firms within the sector prosper, grow and strengthen
they will be key to the success of economic diversification and
expansion. Both the private and public sector within real estate
have a role to play in doing this, whether it is site provision or
investment and development.
Cities which understand the interaction between the knowledge
economy, occupiers and the role that property developers and
investors can play in enabling this sector to grow will benefit
significantly.
10 Stratton Street, London W1J 8JR GVA
I 5
Driving future growth: core cities and the knowledge economy | Spring 2014
€60,000
€50,000
€40,000
€30,000
€20,000
Financial crisis
Austerity
National Average
Köln
Stuttgart
Frankfurt Am Main
Berlin
Hamburg
München
Sevilla
Valencia
Zaragoza
Barcelona
Nantes
Madrid
Bordeaux
Toulouse
2010
Boom period
Strasbourg
Paris
Lyon
Utrecht
Eindhoven
Rotterdam
Amsterdam
Bristol
Nottingham
Sheffield
Newcastle
Figure 1 - Core city employment growth in key sectors
Leeds
€0
Liverpool
€10,000
Manchester
Although the financial and insurance sector is again starting
to generate employment growth, this is likely to be at a slower
pace than before and with a greater level of uncertainty. The shift
towards deficit reduction is likely to continue and public sector
employment outside of those areas protected from cuts (health
and education) will continue to fall, disproportionately impacting
on office based jobs.
Figure 2 - GDP per capita for major European cities (2010)
London
In this section of the report, we take
a detailed look at why the core cities
require a greater degree of diversity
within their economies. What is the
knowledge economy and how it is set
to grow? What knowledge base are
the cities themselves able to exploit
to help drive growth? Finally, what can
the property market do to help provide
the necessary conditions to enable the
knowledge economy to prosper?
Over this period, an additional 27,810 people were employed
in these two sectors in the core cities alone, as well as a further
27,240 in education and health. The finance and insurance sector
then lost over 9,000 employees by 2010, while almost 24,000 jobs
were lost in local government, health and education by 2013 as
measures to control public spending were put in place.
In most western European economies, it is common for the largest
regional cities to have GDP per capita higher than the national
average, with the cities acting as a beacon for jobs and growth.
In the UK however, most cities lag behind the national average. If
that shortfall was to be closed and the core cities GDP matched
that of the national average, this would contribute an additional
£1.3 billion to national GDP.
Birmingham
Driving future growth:
core cities and the
knowledge economy
The central role played by the financial and insurance and public
sectors in generating regional employment and GDP growth prior
to the financial crisis meant that the core cities were particularly
exposed when the economic downturn took hold. Over the course
of the five year period to 2007, the number of people employed in
the public sector (excluding health and education) in Birmingham,
Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and
Sheffield rose by more than 13%, with a 8% increase in the number
of people employed in finance and insurance.
The first wave of the City Deal aims to deliver an additional
175,000 jobs to the eight core cities over the next twenty years,
and the knowledge economy has rightly been recognised as
having a central role to play as a growth sector. What the core
cities recognise is the need for a more diverse and sustainable
mix of growth sectors within the local economy, with local skills
and assets utilised to help deliver growth.
GDP per capita
Part 1
1. The case for economic sustainability
in the core cities
Forecast
15%
Source: Eurostat
Employment growth
10%
5%
2010-2013
0%
2002-2007
2007-2010
2013-2017
-5%
-10%
Bristol is the only core city which outperforms the national average
in terms of GDP per capita. In contrast, Liverpool is nearly 40%
below the UK average, which explains why amid all the proposals
by the city to increase jobs in the knowledge economy, there are
also plans to help create 17,400 new jobs through training and
apprenticeships. Newcastle and Nottingham are the other two cities
with shortfalls greater than 20%, whereas Leeds is just 4% below.
-15%
Finance & insurance
Public sector
Education and Health
Source: Experian
The creation of future growth in employment and GDP requires
a rebalancing of local economies in order to provide greater
economic sustainability, less reliance upon any particular sector
of the market and to avoid the level of job losses seen since 2007.
Figure 3 - Increase in GDP per capita required to match
national average
40%
30%
20%
10%
One of the best ways to do this is by utilising each core city’s key
assets and giving them the power to do so while encouraging
knowledge and creative based industries. The core cities now
have a greater degree of control over the direction of economic
growth than was possible under the top down policies that were
previously in place which offered little diversity and failed to
recognise local strengths or assets.
0%
-10%
-20%
-30%
-40%
London
Bristol
Leeds
Manchester
Birmingham
Sheffield
Nottingham
Newcastle
Liverpool
Source: Eurostat
6 I GVA 10 Stratton Street, London W1J 8JR
10 Stratton Street, London W1J 8JR GVA
I 7
Driving future growth: core cities and the knowledge economy | Spring 2014
There is no universally accepted definition of the knowledge
economy but the OECD defines it as:
“The knowledge based economy” is an
expression coined to describe trends in
advanced economies towards greater
dependence on knowledge, information
and high skill levels, and the increasing
need for ready access to all of these by
the business and public sectors.
One of the key characteristics of this sector is the importance of
links between firms and other organisations as a way to acquire
specialised knowledge. A parallel economic development
has been the growth of innovation in services in advanced
economies. In a knowledge based industry, a significant part
of a company’s value may consist of intangible assets such as
research and development and design capabilities, patents, the
value of its workers’ knowledge, branding and reputation.
Our definition of the knowledge economy also embraces the
creative economy and is most obviously represented by the
information and communication sector (comprising media
activities, telecoms and computing & information services),
often referred to as the TMT (technology, media and
telecommunications) sector.
But the ‘knowledge and creative’ economy is also represented
in other manufacturing and service sectors. This includes parts
of the chemicals, pharmaceuticals and non-metallic products
sub sectors and small parts of the professional services sector
(the scientific research and development sub sector) and the
health sector.
finance and insurance fell 8.8% while total GDP declined by 1.8%.
While not the largest component, the knowledge and creative
economy has been an important driver of growth in the UK
economy over the past decade at least.
Over the next five years to 2018, Experian forecast that the UK
economy will expand by circa 12%, with the core knowledge and
creative sector expanding by a stronger 16%. Clearly this upturn
over the next five years in the overall economy is not expected to
be as strong as the post-recession upturn in the mid-1990s or the
five years to 2007. So for the core cities to grow, the knowledge
economy is an important component.
Figure 4 - Core city output growth by sector
50%
Boom period
Financial crisis
Austerity
Forecast
40%
Output growth
2. What is the knowledge economy?
30%
10%
2002-2007
2010-13
2007-10
2013-17
-10%
Total core knowledge & creative sector
Finance & Insurance
Public Services
Total GVA
Source: Experian
In summary, the sectors we include are¹:
• TMT: technology, media and telecoms, IT
• Medical: pharmaceutical, microbiology, life sciences, clinical
sciences
• Science: energy, environmental sciences, maths and physics,
geosciences, chemistry
During the five years prior to the recession (2002-07), the output
of the core knowledge and creative sector, as defined above,
expanded by 22.6%, above the expansion in the overall
economy at 18.1%. The other high growth sector was finance and
insurance (+40.9% growth), which currently represents about 9%
of the total economy.
8 I GVA 10 Stratton Street, London W1J 8JR
The UK is second only to the United States with over 30 universities
within the Top 200 worldwide, while overseas student levels at
British universities are currently at record highs. UK universities
produce 6.9% of all research globally and 13.8% of those with
the highest impact.
We have analysed each city in-depth for its proposals and
key features of the local knowledge economy in Section Two,
later in the report, but an example of two of the proposals are
included here.
Bristol has identified advanced manufacturing in support of
Airbus UK and the aviation industry at Filton, and media and
creative to support existing businesses such as Aardman
productions and the BBC.
Manchester is seeking to build on the success of the £950
million Media City in Salford Quays and the businesses that it
supports, as well as recognising the city’s role in developing the
new material Graphene and the global reputation of medical
research at its hospitals.
Small and medium size enterprises
An important challenge for all the core cities is to ensure that
there is a business environment that encourages and supports
both small and medium size enterprises (SMEs) and larger
businesses. At the start of 2013, 62.6% of private sector businesses
in the UK were sole proprietorships. At the same time, 99% of all UK
businesses are SMEs generating 48.1% of private sector turnover.
Universities are just one of the enablers that the core cities can
use to develop the knowledge economy further. In terms of
innovation and entrepreneurship, the UK is behind only the USA
in terms of innovation ecosystems activity.² Small and medium
sized enterprises and new start-ups are also a strong indicator of
the level of new business activity in these cities and are important
within the knowledge economy.
According to the World Economic Forum (WEF), the UK ranks
fifth globally and second in the EU for collaboration between
universities and business in research and development (R&D).
However, the Witty report also highlighted that only 4% of
expenditure in 2011 in research and development was from SMEs,
meaning that universities work predominantly with large firms, with
the lure of the likes of big pharmaceuticals taking preference over
SMEs and start-ups.
Individually, their economic impact will be small, but together
in clusters the rewards will be much greater. At the other end
of the spectrum, leading global blue chip companies also
play a significant role in attracting like-minded and supporting
businesses which are often highly specialised and will help enable
some SMEs to develop into large firms themselves.
For the knowledge economy to grow significantly and prosper,
more support needs to be given to smaller firms in this field as
well. Some universities are more active in collaborating with SMEs.
Since 2008, five universities from the core cities were in the Top 20
for interactions with SMEs with over 40,000 between them, but in
terms of value, only Leeds University ranked in the Top 20.
As part of the City Deal, which aims to provide over 175,000 new
jobs in the next 20 years amongst the core cities, each city has
had to identify what their local fields of expertise are, how many
jobs can be created within these sectors and what infrastructure is
required to help enable this.
Over the last six years, encompassing the recession and its
aftermath (2007-13), the core knowledge and creative sector
output fell by 0.4%. This includes a decline of 22.1% for advanced
manufacturing but an increase of 9.4% for TMT. By comparison,
manufacturing (Chemicals, Pharmaceuticals and Non-Metallic Products sub sectors,
amounting to 2.1% of the total economy in 2013) and TMT, which currently amounts to
6.5% of the total economy. In total, therefore, the core knowledge and creative sector
Universities generating cutting edge
research and resulting insights may
be likened to the tip of an arrow, with
the arrowhead behind it representing
the economic activity enabled by
research-led innovation. Maximising
the size of these arrowheads and their
economic benefit to the UK, specifically,
is fundamental…
vary from providing an improved broadband network across
the city to the establishment of enterprise zones to encourage
businesses to locate in specific locations, creating collaborative
environments that build on local strengths.
In 2005, the government identified and named Nottingham,
Birmingham, Bristol, Newcastle, York and Manchester as the UK’s
six ‘Science Cities’, recognising the strength science had in these
markets, while the Technology Strategy Board has identified seven
sectors in which to support and drive innovation via the Catapult
scheme, in which the core cities feature heavily.
• Advanced manufacturing: engineering, research and
development, aerospace
¹ For this report we define the core knowledge and creative component as advanced
The recent government commissioned Witty and Heseltine
reports both looked extensively at the role that universities and
the core cities have in driving forward growth, with the knowledge
economy playing an integral role in achieving that aim.
(Witty Review Preliminary Findings, July 2013.)
20%
0%
3. Building on the existing
knowledge base
The proposals put forward are wide ranging and seek to create
the necessary conditions to encourage business growth as well
as putting in place structures to allow those businesses to be
supported at a local, national and even global scale. Schemes
currently amounts to 8.7% of the UK economy, although the whole sector is larger as
knowledge and creative based employment exists outside of these sectors as well.
² Quid Research: Mapping Innovation
10 Stratton Street, London W1J 8JR GVA
I 9
Driving future growth: core cities and the knowledge economy | Spring 2014
Innovation
University research
Patents and start-ups are another useful measure by which to
benchmark innovation. Since the introduction of the Trademark
Act in 1994, 2012/13 saw the highest number of patent
applications at over 41,000. But in terms of patents per 100,000
population, Bristol was the only core city in the top 10 for the UK
with 8.3. This compares to first place Cambridge with 68.7 and a
UK average of 4.6. Liverpool was amongst the lowest 10 at 1.5 –
placing it 58th out of 64.³
For this report, GVA commissioned specialist consultancy firm
2Bio to identify the global impact of research produced by
universities in the core cities and to establish what subjects
each city excels in. The analysis sampled 2,000 publications
for each of the core cities over a three month period and
processed them using proprietary, in-house software tools.
The number of net business start-ups (new start-ups minus business
deaths) shows a varied picture across the core cities. Bristol is the
strongest of the eight cities with an average of 63.7 net start-ups
per 100,000 population between 2004 – 2012, compared to a
national average of 42.9 for England and 21.4 for the core cities
themselves. Nottingham (16.7), Birmingham (3.6) and Sheffield
(-10.2) are all below average for the core cities.
Manchester, Bristol and Nottingham are very active in social
sciences and a drill down analysis of the major areas of activity
indicate a strong leaning towards community healthcare and
planning and development in Manchester, urban planning and
social capital in Bristol, with Nottingham showing strengths in
urban planning research.
Bristol, Nottingham and Birmingham show the highest impact
for their research in the area of business and economics
research. Management of technology and innovation appears
from this analysis to be the strongest in each institution, and
consists of themes around the impact of poverty on economic
systems (Bristol), global investments and policy (Nottingham)
and financial markets modelling and trends (Birmingham).
There will be opportunities to engage with these specific areas
of expertise in each city and they can become a part of any
marketing towards attracting inward investment and growing
businesses.
Information technology
While the number of net start-ups in Bristol has increased strongly
in the last two years (112.1 in 2011, 86.7 in 2012), it is also home
to the highest number of student start-ups since 2008 in the
UK thanks to the University of West of England, accounting for
a turnover of £145m. Only two other core city universities rank
in the top 20, with Liverpool John Moores (13th, £20.4m) and
Nottingham Trent (17th, £17m).5
Manchester, Liverpool and Birmingham edge ahead in this
area of research activity. In Birmingham, management science
and operations research is predominant, having applications in
developing systems for business processes. Liverpool is active
in computational theory with interests in modelling information
and systems, and Manchester in human/ computer interaction.
These areas all have business applications, whether in
managing organisational data (Birmingham), modelling and
mining information (Liverpool) and how users engage with
systems and data (Manchester).
Figure 5 - Net start-ups per 100,000 population
70
60
Engineering
50
Net start ups per 100,000 per capita
Social sciences
Business and economics
A good example of the environment which Bristol has created to
sustain new business start-ups is the SETSquared incubator which
is part of the Temple Quarter enterprise zone. Founded in 2003,
there are currently 18 companies located there, supported by
Bath, Bristol, Southampton, and Exeter universities. The partnership
has helped raise over £106 million for start-up firms in the last
six years and created 650 jobs and is ranked as the fourth best
business incubator in the world.4
Manchester, Birmingham and Sheffield come out strongest in
this analysis, which is not unsurprising given each city’s industrial
heritage. Materials science is strong in both Birmingham and
Manchester and electrical engineering in Sheffield. Sheffield’s
research is on new devices/systems and their potential
applications in energy.
40
30
20
10
0
-10
A summary of each sector and each city’s particular strengths
is included below:
Newcastle
upon Tyne
Manchester
Liverpool
Sheffield
Leeds
Nottingham
Birmingham
Bristol
Manchester’s materials science research has a significant
element of research associated with Graphene, and other
areas are related to the physical and structural characteristics
of inorganic materials (e.g. cobalt, aluminium, steel) and
applications of nano-processed materials.
-20
Average 2004-2012
England
Core Cities Average
Source: ONS, GVA
³ Centre for Cities 2012 using Intellectual Property Office data
Birmingham has a lot of activity (and therefore expertise) in
imaging and analysis of materials, both organic and inorganic.
5 Witty
This research helps to explain the physical and mechanical
properties of materials, and shows some good examples of use
of imaging for veterinary, and by extension to human, diagnosis.
Environmental sciences
Sheffield, Birmingham and Bristol feature strongly in this
category. Birmingham is strongest in and is focused on the
effects of pollutants on human health. Bristol is active in
ecology, particularly in respect of evolution, habitat changes
and impact on species and some work on human ecology.
Sheffield’s research is strongest in ecology, with some indication
of a greater use of genetic tools and analyses to support
their research.
These areas have major and direct influence on human
society and there is a strong and growing environmental sector
for a wide variety of services and technologies to develop
better fuel sources, environmental waste monitoring and
consultancy services.
Geosciences
Liverpool, Manchester and Bristol field the strongest in this area
of research. Bristol is active in geochemistry and petrology,
researching the physical and chemical profiles of volcanic
events and earthquakes. This is complemented in Bristol by
interests in the fields of global and planetary change and earthsurface process. Liverpool’s earth-surface processes research is
concerned with how the different land formations developed,
and Manchester’s atmospheric science research is involved with
the impact of pollutants and other material on the atmosphere.
Clinical sciences
Birmingham, Bristol and Newcastle exhibit the greatest amounts
of impact of their research. In Birmingham, metabolic diseases
(e.g. diabetes) and gastroenterology clinical research are
strong. In Bristol, immunology stands out as having the greatest
impact using our measurements, particularly in relation to
inflammation and E.coli and HCV as infectious agents.
In Newcastle, Immunology and Hematology are their strongest
areas. For immunology it is research on viral infections
(HIV, hepatitis) and some bacterial infection research. In
hematology, clinical trials, leukemia and stem cell research
predominates.
Chemistry
Sheffield, Bristol and Liverpool are the highest rated in this
analysis. Bristol is researching into substrates for electrochemical
reactions with application in energy (fuel cells), Liverpool in
inorganic chemistry, and Sheffield in a wide variety of research
from organic synthesis of pharmaceuticals, to the creation of
new polymers.
Report
4 Observer
Tech Monthly article, The Best of British start-ups, Killian Fox and Tess Reidy,
12th January 2014
10 I GVA 10 Stratton Street, London W1J 8JR
10 Stratton Street, London W1J 8JR GVA
I 11
Driving future growth: core cities and the knowledge economy | Spring 2014
Table 1- Leading research activity impact for each core city
Life sciences
City
1st
2nd
3rd
In life sciences, Bristol, Birmingham and Manchester lead the
field based on this analysis. Birmingham’s strongest area within
this is genetics, with both fundamental mechanistic research
undertaken as well as interests in the genetics basis of diseases
such as leukemia and mitochondrial diseases.
Sheffield
Chemistry
Maths and
physics
Life sciences
Newcastle
Clinical
sciences
Life sciences
IT
Leeds
Clinical
sciences
IT
Business and
economics
Manchester
Social sciences
IT
Engineering
Liverpool
Geo – sciences
Maths and
physics
Chemistry
Birmingham
Clinical
sciences
Maths and
physics
Life sciences
Mathematics and physics
Bristol
Business and
economics
Life sciences
Social
sciences
Birmingham is very active in areas relating to the performance
of optical fibres, particularly for imaging and information
transmission applications. Liverpool is strong in the behaviour
of material and detectors, and Sheffield’s research is about
material behaviour in electrical systems and imaging.
Nottingham
Business and
economics
Social
sciences
Chemistry
As with Birmingham, Bristol too is very active in genetics
research, but a drill down analysis shows interests in
cardiovascular disease markets, the underlying genetic basis
of allergies and (not unsurprisingly given it has one of only five
veterinary schools in the UK) veterinary genetics. Manchester’s
strength lies in the biochemical and molecular basis of action
of proteins and lipids, and of signalling mechanisms within cells.
Source: 2Bio
Figure 6 - Methodolgy of 2Bio research
Global analysis of knowledge impact
Select key areas based on high impact
Review activity in those areas to
identify likely global industry partners
Match local activity to industry players
(create a priority contact list)
Create relationships to:
1. Support local developments (start-ups)
2. Potential inward investors
This type of data process provides an ability to undertake a variety
of different analysis on the datasets. We will focus on
how this can be used for each of the core cities to determine
their relative strengths and demonstrate an example of further
drill-down analysis and what can be derived from this
Knowledge-based approach.
The benefits of this approach are:
If a city embarks upon a delivery plan
using this knowledge-based asset
analysis and industry intelligence
approach, it will inform strategic
planning across the city with respect
to development of key infrastructure
to support the marketing activity. it
can provide a sound basis for master
planning, development planning and
investment priorities in a knowledgebased economic development
delivery plan.
3.It is relatively quick and can be extended in time or carried out
rapidly for a defined window of time (i.e. what happened last
year, or last week, how has a city changed).
4.This is a Knowledge Asset Dashboard and can be used to
benchmark a city against comparator cities.
5.Provides information to inform a strategy for deciding what to
invest in, based on what a city excels at.
1.Relies on a record of peer reviewed information and is therefore
objective.
2.Can be used to identify real areas of excellence and strength,
backed up by hard data.
12 I GVA 10 Stratton Street, London W1J 8JR
10 Stratton Street, London W1J 8JR GVA
I 13
Driving future growth: core cities and the knowledge economy | Spring 2014
4. Real estate and the knowledge
economy
Perhaps most importantly, science parks project the image of a
modern economy, helping to attract private research and raising
the ‘innovative profile’ of the region more generally.
This chapter explores the role of property in supporting the
knowledge economy and how it is integral to allowing these
sectors to grow.
According to UKSPA, almost a third of science park floor space
is accounted for by bio-related industries, but with less than 18%
of all tenants, suggesting that the majority of these occupiers
are large firms, requiring a greater degree of space for labs.
Computer / telecoms make up 27% of all tenants but only 19% of
space, while the tenant to floor space ratios for tech consultancy
and business services are even smaller.
Science parks
Figure 8 - UK Science parks: tenant mix by product sector
Figure 9 - UK Science parks floorspace
UKSPA Science park floorspace (total 13.7 million sq ft)
London 1%
35
Core city regions 33%
30
25
Scotland 19%
20
%
The science park concept was transplanted to the UK from
North America in the early 1970s with the foundation of
Cambridge Science Park. However, it was not until the 1980s
that the numbers blossomed, largely stimulated by generous
government incentives designed to encourage the transfer of
pioneering research into marketable applications. Another wave
followed in the late 1990s, fuelled largely by high growth in the
IT sector. The chart below gives an indication of the growth in
science parks over this time.
There are some notable clusters of science parks, such as Oxford
and Cambridge, which make up 20% of UK floor space and
almost half is located in the South East and East. The M8 corridor
between Glasgow and Edinburgh is another cluster which has
a significantly higher proportion of science parks employment
to overall employees and accounts for almost 20% of space.
However, the catchment of the eight core cities (core city regions)
accounts for about a third of the space.
15
Figure 7 - UK Science parks: jobs in tenant companies
Source: UKSPA
There is no single model for a successful science park and they
differ in terms of maturity, size, design, purpose and setting. A
science park will normally evolve to accommodate a range of
occupiers both in terms of activity and size. As the park establishes
itself, it may provide space for larger occupiers with buildings
designed for single occupancy (i.e. 10,000 sq. ft. to 120,000 sq.
ft.). The ownership of science parks also varies; often the parks are
Nottingham plans to foster the former manufacturing space
around the old Lace Market into a creative quarter with the
aid of improved transport links and broadband infrastructure.
Similarly in Birmingham, fringe markets such as Eastside, Digbeth
and the Jewellery Quarter have been identified as growth areas
with infrastructure improvements set to improve access with the
city centre.
es
y
er
ss
es
sin
h
Te
c
Bu
co
ns
M
ul
at
ta
vic
nc
ia
er
og
ol
hn
ec
lt
ia
str
du
By floorspace
1,827
2,000
1,556
1,500
1,199
931
1,000
Source: UKSPA
607
500
1987
1990
1995
2000
2002
2003
2005
2007
2008
2009
2011
2013
Source: UKSPA
A science park is a special type of supportive business
environment designed to harness technology transfer and growth
in the most innovative sectors of today’s knowledge economy.
There are two characteristics that clearly distinguish them from
a standard business park: business incubation and links with a
knowledge centre.
They also offer a flexible environment specifically designed to
encourage the start-up and growth of innovative, knowledge
based business through provision of ‘incubator’ space, services
and support. Science parks also have an important relationship
with centres of knowledge creation and technical expertise. In the
UK, these are nearly always universities, though it could equally be
the research laboratory of a multinational company.
Other 2%
In
By number of tenants
2,265
ls
s
ie
s
ec
Te
l
r/
te
pu
om
C
3,000
2,500
om
gy
er
En
m
on
vir
3,105
En
3,094
o-
3,373
3,286
3,006
Bi
3,500
re
la
en
te
ta
l
d
4,000
Other South East / East 26%
Oxford 8%
0
Currently in the UK there are at least 80 science parks, with a
combined floor space of just over 13 million sq ft. Although
most are science parks in the traditional sense, inter-linked with
academic institutions, there are a number of parks which are
solely privately owned.
Universities and hospitals play an important role in the location of
science parks. A good example of this is the Liverpool Knowledge
Quarter which centres on a new £500m BioCampus and Royal
Liverpool University Hospital, or the redevelopment of the former
Royal Eye Hospital to create a 100,000 sq. ft. biomedical research
centre near to the 15 acre Manchester Science Park.
However not all space requirements will be on this scale or
focus on out of town development. GVA estimate that 64% of
knowledge economy based occupiers are based in out of town
locations. However, given the high proportion of start–ups and
SMEs within the knowledge economy, there will be plenty of
scope for space to be used in city centres, whether that is existing
office stock or buildings currently in alternative uses.
5
4,083
In terms of space occupied, 69% of all science park tenants have
less than 15 staff, while only 12% have more than 150. There are
also clear differences in how businesses use space. Those which
are more laboratory or manufacturing intensive, such as biorelated or industrial technologies, require a greater ratio of floor
space per employee than the more traditionally office based
sectors such as business services, technological consultancy and
computer and information systems,
City centre office demand
Cambridge 11%
10
4,500
owned and managed by the associated university, while others
are joint ventures to promote regional development, usually in
conjunction with a local authority.
While the knowledge economy presents opportunities for
real estate, the sector also raises some problems which need
consideration. Outside of science parks, which are usually
anchored by a tenant with a strong covenant, local authority
or university; the majority of firms within the sector are startups or small SMEs. Their priority is for real estate to be a small
outgoing and do not have the same track record behind them;
instead they are measured on potential. This is adverse to many
institutional investors preferred modus operandi.
In this instance, it is important for a partner such as a local
authority, university or serviced office operator to take on the
status of head tenant and provide space to these SMEs which
provide them with the right environment to grow and prosper,
while at the same time reassuring investors that their return is
safeguarded in some way.
Science parks have an important role to play in driving the growth
of the knowledge economy. Small technology companies are
first incubated in them, but then ‘graduate’ and cluster locally to
the benefit of the regional economy. Science parks are important
in stimulating economic growth and provide a solution to local
employment problems, in particular the retention of the most
gifted young people.
14 I GVA 10 Stratton Street, London W1J 8JR
10 Stratton Street, London W1J 8JR GVA
I 15
Driving future growth: core cities and the knowledge economy | Spring 2014
5. Conclusion
Our report is a call to arms for a much
greater focus on growing the knowledge
economy of our core cities. Each
city’s knowledge economy is uniquely
different but the common thread that
binds all is that these are the places
where knowledge, creativity and
vibrancy combine to greatest effect and
that will produce the greatest results.
The core cities have been here before of course; the global
industrial revolution came about in the core cities where the
industrialists, engineers, scientists, financiers and entrepreneurs first
came together to create and participate in an unprecedented
prosperity and knowledge agenda.
The knowledge economy
The knowledge economy is already happening and there are
many businesses leading the charge with the university sector
having a key role to play. However, it has some way to go before
its full potential is truly released across our core cities. Our research
has highlighted that performance is hugely variable between
cities, with one exception; the core cities are still punching below
their weight in terms of the UK average rate.
There is a certain market failure associated with the knowledge
economy. We are very good at generating very valuable ideas
and nurturing new businesses but much less good at seeing the
full benefit of turning these ideas into longer term contributors to
our city-regional accounts. At the heart of this is the ability of the
core cities to nurture successful knowledge based companies
and support their growth.
It is evident that our core cities do not have the financial
autonomy to fully support this sector, something that the Core
16 I GVA 10 Stratton Street, London W1J 8JR
Cities Group is seeking to address, but without greater financial
and business support targeted at knowledge businesses, the
potential of this sector will continue to be undermined.
Do we really know what our respective knowledge economies
look like? Our research starts to drill down further to explore what
is emerging from the university sector in terms of very high quality
research. In time, much of this research will form new businesses
locally and become a key feature of each core city economy.
The core cities
Each city is different and each has its own economic strengths.
The analysis we have carried out highlights those sectors which
each of the core cities will have a greater ability to grow as
a consequence of the human capital being generated, the
research and its potential applications, and the potential for
commercialisation spinning out of specialist fields.
Many of the high quality research themes engaged upon by the
university sector are sponsored by global research partners, be
they university collaborations or major corporate sponsorships.
This is a relationship that the core cities need to work harder on
developing and in attracting such business investment instead of
exporting knowledge globally.
Witty was an important starting point in the recognition of the
university sector becoming the ‘arrow-head’ in growing the
knowledge economy. However, this agenda is wider than the
university sector and much more attention needs to be given
over to attracting new co-locating companies and businesses,
from new start-ups and SMEs through to leading global blue
chip companies.
Investors need something to invest in whether they are property
investments or business led. The approach advocated by GVA
is bottom up and starts with the identification of some of the key
sectors of the future economy of each of the core cities and the
important relationships that surround each sector.
Investors from the private sector need to be made aware of the
knowledge potential of each core city and be engaged at a
sufficiently early stage to help shape the investment proposition.
Real estate and the knowledge economy
Providing the right real estate opportunities and environment is
crucial to enabling the knowledge economy to be nurtured and
expanded. As firms within the sector prosper, grow and strengthen
they will be key to the success of economic diversification and
expansion. Both the private and public sector within real estate
have a role to play in doing this, whether it is site provision or
investment and development.
Whilst there is significant activity in this sector we would contend
that there is still insufficient understanding of the dynamics of the
knowledge economy in each of our core cities, which this report
seeks to address. Science parks are an important feature of the
collective response to unleashing the potential but it is undoubtedly
the case that those with a clear vision and appreciation of
demand have performed better than those without.
Our report seeks to provide a greater depth of understanding
as to what each core city is set up to deliver and the specific
research themes that will become a key feature of our city
economies over the next ten years. Based on this granularity of
intelligence, GVA are calling for a review of the property offer that
is underpinning the knowledge economy. We specifically need
to examine the gaps in the offer and how we go about providing
the right type of space in the right locations.
Cities which understand the interaction between the knowledge
economy, occupiers and the role that property developers and
investors can play in enabling this sector to grow will benefit
significantly as these development opportunities will not just
happen without this understanding. Too often the approach to
investment divorces property investment from business and
public investment, delivering sub-optimal outcomes from the
knowledge economy.
GVA concludes that a new model of investment is required that
reflects a more equity based approach reflecting the higher
risk to investment in early stages (when it is arguably needed
the most) and less risk in later mature stages. It is the same for
property as it is for the growth of a new business. There are billions
of potential public sector resources in play at present and a
smarter way of targeting this resource towards the knowledge
economy sector needs to emerge.
10 Stratton Street, London W1J 8JR GVA
I 17
Driving future growth: core cities and the knowledge economy | Spring 2014
Part 2
City profiles
This chapter will take a more detailed
look at each of the core cities, giving
an opportunity to identify what it is that
each particular city does well and
what opportunities there are in order to
develop the knowledge economy and
promote growth, in both an economic
and real estate context. 18 I GVA 10 Stratton Street, London W1J 8JR
10 Stratton Street, London W1J 8JR GVA
I 19
Birmingham
Source: 2Bio
20 I GVA 10 Stratton Street, London W1J 8JR
Driving future growth: core cities and the knowledge economy | Spring 2014
Birmingham
1. Key data
Key locations
Eastside, Digbeth and Jewellery Quarter,
Longbridge Technology Park, Birmingham
Science Park, Birmingham Research Centre,
Population
1,085,417 (2012)
Universities
(students 2012)
Aston University (10,200), Birmingham City
University (23,440), University of Birmingham
(31,070)
Key knowledge
economy
employers
Jaguar Land Rover, BMW, GKN, Fujitsu,
Aero Engine Controls, npower, Rexel, CSC
Computers, Oracle, AECOM, Elonex,
Monarch.
The total knowledge and creative sector currently amounts to just
5% of output in Birmingham, lower than in any of the other cities
covered in this study and well below the UK average of 8.7%.
Output growth over the next five years is expected to be 11.9%,
slightly below the 13.8% achieved between 2002 and 2007 and
well below the UK knowledge and creative sector growth rate of
15.7%. However, it is just above the expected Birmingham overall
economic growth rate.
30%
Innovation for start-ups in the city is supported by Creative England,
based in the city, who specialise in film, games and digital media.
Catapult Venture Managers also invest in supporting medical and
software firms.
30%
20%
Much of the proposals put forward for Birmingham involve improving
the infrastructure to help attract new businesses, particularly
amongst SMEs within the creative, digital media and ICT sectors. This
includes ultrafast broadband within the city centre EZ, development
of 26 sites and linking Moor Street and New Street stations.
In addition to this, the city will provide £2.5 million for business
development funding for SMEs as well as establishing a US road
show to help attract foreign direct investment with support from UKTI.
Employment by sector
Of all the core cities, Birmingham has the largest share of any for
advanced manufacturing (2.6%) due to the city’s historic links to
the automotive industry and to a certain extent, aviation. Transport
equipment manufacturing accounts for 1.6% of this total share.
10%
Output
Summary of LEP proposals
Innovation
The average number of net start-ups per 100,000 of population for
2004-2012 is 3.58, which is considerably lower than the UK average
of 42.9 and the core cities average of 21.4.
Figure 10 - Output by sector
2. Current position and future potential
Most of the SMEs involved in the creative, digital and media sectors
are being encouraged to locate close to the city centre, with the
former Birds custard factory at the heart of this hub, with over 400
businesses located there. Further development is taking place to
increase the size and potential of both Birmingham science park in
Aston and Longbridge’s technological and innovation centres.
Commercial property market
0%
2002-2007
2007-2013
2013-2018
-10%
-20%
-30%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Source: GVA, Experian
3. Enablers – what strengths are there
to enable transition?
Research output
Birmingham Science Park at Aston is the largest science park in
Birmingham with 350,000 sq. ft. of space and 167 occupiers. In
the wider region Warwick University Science Park, the first university
based Science Park (opened in 1984) and Coventry University
Technology Park, are both over 500,000 sq. ft. in size. There are also
smaller establishments at the University of Wolverhampton Science
Park and MIRA Technology Park in Nuneaton.
West of the city centre in Edgbaston, proposals for a Bio-Incubator,
Institute of Transitional medicine and life sciences centre will
together assist the medical and bio cluster already evident in this
location, building on the strength of the University of Birmingham
and University Hospital.
Closer to the city centre, Eastside, Digbeth and the Jewellery quarter
are looking to build on the success of Lucan Gray’s custard Factory
in attracting creative and media based industries.
However, the TMT sector is the lowest of all the core cities for TMT
at just 2.2%, with media activities at 0.3%, telecoms at 0.5%
and computing accounting for 1.4% of employment. This gives
Birmingham a core knowledge and creative sector employment
rate of 4.8%, the third lowest of the eight cities.
In terms of impact of research by universities and institutions in the
city, Birmingham’s strength lies in maths and physics and clinical
sciences, where the city ranks first amongst the core cities for these
sectors. The city also features strongly for life sciences, environmental
sciences and IT, while engineering and business and economics
also score highly. Across all sectors, Birmingham ranks inside the top
three for seven of them, out of a possible 10.
Economic assessment
Key occupiers
Birmingham’s knowledge economy is supported by three universities
and over 60,000 students, with close links to the world’s leading
pharmaceutical companies. There are two well established science
parks, with plans for a 30,000 sq. ft. digital plaza due in summer
2015 at Birmingham Science Park in Aston.
Birmingham’s economic growth over the next five years is expected
to be 10.8%, slightly weaker than the UK average of 11.7%. Between
2002 and 2007 Birmingham’s growth rate was almost identical at
10.5%, but this was well below the UK average of 18.1%.
The largest advanced manufacturing occupier in the city is Jaguar
Land Rover, with over 5,000 employees. The automotive sector
accounts for another six firms, ranging from BMW and MG to smaller
operations such as Sertec and VDO who operate in a supporting
role to the major occupiers.
In terms of research, the city is strongest in clinical and life sciences,
as well as physics and maths. The city’s heritage within the
automotive industry means it is well established within the advanced
manufacturing sector, while its creative and digital offering is
continuing to grow and attract new talent.
22 I GVA 10 Stratton Street, London W1J 8JR
GVA view
10 Stratton Street, London W1J 8JR GVA
I 23
Bristol
Source: 2Bio
24 I GVA 10 Stratton Street, London W1J 8JR
Source: 2Bio
Driving future growth: core cities and the knowledge economy | Spring 2014
Bristol
1. Key data
Key locations
Temple Quarter Enterprise Zone, Filton, Bristol
and Bath Science Park
Population
432,451 (2012)
Universities
(students 2012)
Bristol (19,220), University West of England
(30,390), Bath (15,153), Bath Spa (8,550)
Key knowledge
economy
employers
Hewlett Packard, Airbus UK, GKN Aerospace,
Rolls Royce, BAE, GE Oil & Gas, ST
Microelectronics, BBC Bristol, MBDA Missiles,
New Earth Solutions
Over the next five years this sector’s growth rate is expected to be
11.2%, considerably higher than growth over the last six years or the
preceding five years. It is very similar to the overall Bristol economic
growth rate of 11.9%, as the figure below shows, but below the UK
average growth rate for this sector of 15.7%.
The city’s long term plan is to create 95,000 new jobs over the
course of the next 20 years. On a more immediate timescale, Bristol
proposes to create 80 new businesses primarily in and around the
Temple Quarter enterprise zone, creating 1,000 new jobs with a fifth
of these funded by foreign direct investment.
There are proposals to create six enterprise zones in all, with 4,000
plus high tech jobs at Filton, over 17,000 creative, media and
microelectronics jobs at Temple Quarter, 9,000+ at the Science
Park, 9,000+ media and publishing in Bath city, 10,000 advanced
manufacturing roles in Avonmouth and over 10,400 in South Bristol.
Employment by sector
The core knowledge economy accounts for 5.8% of all
employment in Bristol, compared to output of 6.3% in GVA. Most of
that is within the TMT sector at 4.6%. The strongest component of TMT
is computer and information services with 3% and media at 1.1%.
Within advanced manufacturing’s 1.2% share, 0.7% of that is for the
making of transport equipment, which includes aviation.
Economic assessment
During 2002-07, the finance and insurance sector achieved the
strongest growth (+30.8%) in Bristol. Both the TMT sector (+7.6%) and
the advanced manufacturing sector (-14.4%), which between them
comprise the core knowledge and creative sector, achieved growth
rates below the Bristol overall average economic growth rate.
The core knowledge and creative sector amounts to 6.3% of
Bristol’s total economy, which is below the UK average of 8.7%.
26 I GVA 10 Stratton Street, London W1J 8JR
Bristol has the highest number of net business start ups per 100,000
population for the core cities, both in terms of average between
2004-2012 (63.7) and over the last two years (112.1 in 2011, 86.7 in
2012). It is also the highest core city in terms of patents per 100,000
population, ranking seventh nationally with 8.3, almost double the
UK average.
40%
30%
20%
10%
Output
Summary of LEP proposals
Innovation
Figure 11 - Output by sector
2. Current position and future potential
0%
Bristol and Bath Science Park is home to 50 different companies,
providing 550 jobs. Science park occupiers include AACE Ltd
(aerospace), Cubik Innovation (microelectronics), KBase Connect
(computer and information services) and Marine Current
Turbine (energy).
2002-2007
2007-2013
2013-2018
-10%
-20%
-30%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Source: GVA/Experian
3. Enablers – what strengths are there
to enable transition?
Research output
The areas of research where Bristol institutions have the greatest
impact are life sciences and business and economics, ranking
first amongst the core cities in these fields. Bristol also ranks
second for social sciences, clinical sciences and chemistry, while
environmental and geosciences both rank third. It also has one of
the higher impacts for engineering, just missing out of the top three.
Key occupiers
Some of the largest knowledge based employees in Bristol focus on
aerospace and aviation in particular (Airbus UK, GKN Aerospace,
Rolls Royce, BAE, MBDA Missiles) and advanced manufacturing
(ST Microelectronics), TMT (Hewlett Packard, BBC Bristol), as well as
energy and environmental professional services such as New Earth
Solutions and GE Oil & Gas.
GVA view
Bristol is one of the strongest core cities in terms of innovation, and
the universities have helped support business growth in the city
centre and Temple Quay, while the Bristol and Bath Science Park
offers space outside of the city centre.
The city has a very strong and developed advanced manufacturing
sector, with defence and aerospace at the heart of this. Although
dominated by large occupiers such as BAE and Airbus, new
opportunities will arise here as well as in the creative, digital and
science sectors.
Examples of recent successful start-up companies include
Maplebird which develops small unmanned aerial vehicles (UAVs),
initially for military use but with potential for civil applications; Hieta
which specialises in manufacturing high performing metals for
engine components and recently secured £3.5 million in funding
from the Technology Strategy Board; and XMos who develops multicore microcontrollers and having raised $71 million in 2007, now
employs over 50 people and is recognised as one of the
south west’s most successful start-ups.
Commercial property market
Bristol has one of the smaller science park provisions of the core
cities with just 75,000 sq. ft. at the Bristol and Bath Science Park. This
site is home to 50 firms who employ over 550 people. Opened in
2011 and currently amounts to 80,000 sq. ft. with the same under
construction, the LEP anticipates a further 850,000 sq. ft. being
built out over the next fifteen years. Elsewhere in the region, Exeter
Science Park has also very recently opened; attracting its first
tenant last year.
The city LEP has identified several potential enterprise zones to
attract specific industries, focusing on a mixture of city centre and
out of town locations. The Temple Quarter and South Bristol EZ’s
are in the centre of Bristol, while the Bath City EZ is also in a central
location in Bath. The science park has been designated as an EZ to
stimulate further demand from potential occupiers, while Filton and
Avonmouth are to the north and west of the city respectively.
Temple Quarter is part of a wider regeneration around the
Temple Mead station and quay, with plans for a new arena and
exhibition centre included amid the existing Victorian wharf
and warehouse buildings.
10 Stratton Street, London W1J 8JR GVA
I 27
Leeds
Source: 2Bio
28 I GVA 10 Stratton Street, London W1J 8JR
Source: 2Bio
Driving future growth: core cities and the knowledge economy | Spring 2014
Leeds
Key locations
Holbeck Urban Village, Airedale digital
cluster, Leeds Innovation Centre, Bioincubator.
Population
757,655 (2012)
Universities
(students 2012)
Leeds Metropolitan University (27,985),
University of Leeds (32,510), Leeds Trinity and
All Saints (3,320).
Key knowledge
economy
employers
BT, ITV, Plusnet, AE Turbine Components,
Cameron, Schneider Electric, IBM, Kodak,
Optare, Scientific Games, Agfa graphics, IC
Blue.
2. Current position and future potential
Summary of LEP proposals
Although one of the UK’s largest city regions, only 10% of Leeds
firms export outside of the UK. The city’s first aim is to increase
international trade options to at least 15%, with the primary focus
on the medical, pharmaceutical and bioscience sectors. The Leeds
University based medical and bioscience hub will be at the core
of this.
Leeds is also looking to expand its advanced manufacturing sector,
which includes medical instruments, aerospace components and
automotive. Plans are also in place to expand the Airedale digital
corridor to support creative and technology based industries.
Employment by sector
At 5%, the total knowledge and creative sector in Leeds is below
the core city average of 5.4% of total employment. Advanced
manufacturing accounts for 1.6% of all employment, with nonmetallic products accounting for half of this at 0.8%, the highest
of any core city.
TMT accounts for 3.4% of all employment, compared to 3.9%
average for core cities. Media activities are just 0.4% of this, the
main employers being telecoms (1.3%) and computing and
information services (1.8%).
Economic assessment
Over the next five years Experian expect Leeds to achieve output
growth of 12.2%, slightly higher than the UK average of 11.7%. This
30 I GVA 10 Stratton Street, London W1J 8JR
is slightly below the growth achieved in Leeds over the five year
pre-recession period of 14.4%, but much stronger than the -7%
achieved over the last six years (2007-13).
3. Enablers – what strengths are there
to enable transition?
Over the 2002-07 period strongest growth was in professional and
other private services (+40%) and finance and insurance (+34.9%).
Information and communications (the TMT sector) was the only other
sector to achieve output growth (+16.9%) higher than the overall
Leeds average. Over the next five years growth is expected to be
more widely spread, with seven sectors achieving similar growth
above the city average.
Research output
The core knowledge and creative sector amounts to 7.6% of the
Leeds economy, slightly below the UK average of 8.7%. Output
growth over the next five years is expected to be 14%, slightly
weaker than the UK average of 15.7%, but above the overall Leeds
economic output growth of 12.2%. Importantly, the knowledge and
creative sector is expected to achieve slightly higher growth over the
next five years than during the 2002-07 period and much stronger
growth than over the last six years, as the figure below shows.
Within the city itself, the sectors which produce research with
the highest impact are clinical sciences, IT and business and
economics. No publications fall within the top three highest ranking
across the eight core cities, although by this measure, geosciences
rank a close fourth behind Liverpool, Manchester and Birmingham.
Key occupiers
Within TMT, there are some major occupiers such as BT, IBM and
ITV. Plusnet is a local firm who recently moved into new 32,000
sq. ft. offices. Major advanced manufacturers include AE Turbine
Components and Schneider Electric, both of whom employ over
500 people, as well as IC Blue and Optare.
GVA view
Leeds has a strong further education platform which is supported
by the fact that the University of Leeds owns over 1,200 acres
of land. The city is strong in clinical science research and has a
strong reputation for health and innovation in the medical sector
thanks to the University of Leeds medical school which is one of
the largest in Europe.
Holbeck urban village continues to attract TMT occupiers with the
first phase of Tower Works at 100% occupancy. Plans are in place
for a further 150,000 sq. ft. of space for the next phase, as well
as Marshall Mill and Round Foundry Media Centre. Further afield,
the Airedale Digital corridor, supported by the Advanced Digital
Institute, continues to attract new firms.
Innovation
For 2012, the number of net start-ups was in line with the 20042012 average of just over 29 per 100,000 population. While down
compared to the UK average (42.9), this remains higher than the
average for the core cities of 21.3 per 100,000. In 2011, the rate
for Leeds was 49.3 per 100,000.
Figure 12 - Output by sector
40%
30%
Holbeck urban village is the main hub for TMT start-ups in
Leeds, with 150 companies at Tower Works. Firms include web
developers Refractiv and gaming firm Double Eleven. The QU2
incubator provides office space and advice for tech start-ups
with support from the universities.
20%
10%
Output
1. Key data
0%
2002-2007
2007-2013
2013-2018
-10%
Commercial property market
The University of Leeds established the 22,000 sq. ft. Leeds
Innovation Centre, which provides incubator and office
accommodation.
-20%
-30%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Source: GVA/Experian
There are some large differences between individual sub sector
growth rates over the next five years compared to the 2002-07
period (and the 2007-13 period). Pharmaceuticals, non-metallic
products and media activities are expected to see much stronger
growth than over 2002-07, whereas the reverse is true for telecoms,
computing and information services and finance and insurance.
York Science Park is located next to the University of York. It
provides 300,000 sq. f.t of space to businesses in creative and
digital media, technology, IT, bioscience and biotechnology.
The area around Holbeck urban village is home to a number of
the city’s new digital and creative start-ups, while the emerging
TMT sector in the Airedale corridor is also a recognised growth
market with potential to expand.
10 Stratton Street, London W1J 8JR GVA
I 31
Liverpool
Source: 2Bio
32 I GVA 10 Stratton Street, London W1J 8JR
Source: 2Bio
Driving future growth: core cities and the knowledge economy | Spring 2014
Liverpool
Key locations
Liverpool Innovation Park, Liverpool
Science Park, BioCampus and Liverpool
Knowledge Quarter, Heath Business
and Technical Park, Sci-Tech Daresbury,
Liverpool and Wirral Waters Enterprise
Zone.
Population
469,690 (2012)
Universities
Liverpool University (21,875), Liverpool
John Moores (24,455), Liverpool Hope
University (7,770).
Key knowledge
economy
employers
Unilver, Jaguar Land Rover, Diligence,
Cammell Laird, Eli Lilly and Company,
RedX, Medimmune UK, Nutrica, Clarke
Energy, Eden Bio Design.
2. Current position and future potential
Summary of LEP proposals
Liverpool’s principle aim is to harness the strength of the big
science sector which is currently concentrated at Sci-Tech
Daresbury science and innovation centre. The leading firms here
have grown by an average of 37% per annum for the last four
years and it is one of only two big science centres in the country,
the other being in Oxford. Growth here will look to create 10,000
high value jobs which will add £217 million GVA per annum to the
Liverpool economy.
Proposals for the Knowledge Quarter aim to create 14,000 full
time jobs, with 900 high value ones at the £500m BioCampus
and New Royal Liverpool University Hospital. The Knowledge
Quarter also includes the Liverpool Science Park and the School
of Tropical Medicine.
Major infrastructure projects include the £800 million transport
investment fund, £450 of PFI for a new Mersey Bridge and a £200
million international trade centre. A further £10 billion will be put
towards the Liverpool and Wirral Waters enterprise zone.
34 I GVA 10 Stratton Street, London W1J 8JR
In terms of job creation, the city is hoping to create 12,000
advanced manufacturing jobs, 6,000 in life sciences and 6,000
digital and creative, as well as SMEs accounting for over 10,000.
Liverpool has the highest number of interactions between SMEs
and universities, with almost 30,000 since 2008. However, these
fail to convert in terms of value and the city is outside the UK Top
20 in this regard. Liverpool John Moores University though has
helped support graduate start-ups with a combined turnover of
over £20 million since 2008, placing the university 13th in the UK.
60%
Employment by sector
In terms of advanced manufacturing and TMT, these core
knowledge economy sectors account for 5.6% of employment in
Liverpool. There is a particularly high number of jobs in the health
sector (12.2%) compared to the other core cities put it is difficult
to distinguish between those that are knowledge based. The city
also has the highest share of pharmaceutical jobs, equivalent to
0.8% of all employment compared to an average of 0.2% for the
other core cities.
Innovation
Figure 13 - Outlook by sector
50%
40%
30%
Output
1. Key data
20%
10%
2007-2013
0%
2013-2018
2002-2007
-10%
Economic assessment
Over the next five years Experian expect Liverpool’s GVA output
to increase by 7.9%, below the UK average of 11.7%. This is
noticeably weaker growth than over the pre-recession five years,
2002-07, of 16.5%, but a great improvement on the 2007-13
growth of -2.4%.
Over the 2002-07 period growth was boosted by very
strong performance in sectors such as chemicals (+46.9%),
pharmaceuticals (+88.5%), telecoms (+32.9%), computing and
information services (+89.7%), professional services (+68.1%) and,
to a lesser extent, public services (+12.8%). All these sectors are
expected to show much weaker growth over the next five years.
The core knowledge and creative sector amounts to 10.3% of
the total economy, which is higher than in the UK as a whole.
This is mainly due to the size of the pharmaceuticals sub sector,
which represents 4.2% of Liverpool’s economy, compared to 0.7%
nationally. The core knowledge and creative sector is expected to
see 5.3% output growth over the next five years, below the city’s
total growth of 7.9% and a fraction of the growth rate achieved
between 2002 and 2007 and well below the expected UK figure
of 15.7%.
-20%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Source: GVA/Experian
3. Enablers – what strengths are there
to enable transition?
Research output
Liverpool ranks first of all the core cities in terms of impact for
geosciences, closely followed by chemistry and maths and
physics. It is also well represented by IT, ranking third in this sector,
as well as clinical sciences, life sciences and engineering.
Key occupiers
There is large scale public sector employment in Liverpool
which includes the MoD, DWP, Child Support Agency, DVLA,
Land Registry and Health and Safety Executive, as well as the
local authorities.
The main employers in the city with a link to the knowledge
economy include Jaguar Land Rover, IBM, IT firm Diligenta and
shipbuilder Cammell Laird.
As already established, there is a sizeable pharmaceutical sector
in the city which is largely focused around the science parks with
Eli Lilly and Company, RedX, Medimmune UK and Eden BioDesign
some notable examples.
Overall, the number of net new business start-ups in the city has
suffered greatly following the financial crisis. In 2007, net start-ups
peaked at 84.8 per 100,000 population. In the last two years
though, this number has failed to exceed 10, against a long term
average of 25.2. Most start-ups focus around the science parks
and there have been some considerable successes, such as
the pharmaceutical company RedX. More needs to be done to
support further innovation across the rest of the city.
Commercial property market
The Liverpool Knowledge Quarter will be the focal point for a large
proportional of the clinical and medical focused businesses,
which hopes to create 14,000 full time jobs in biotechnology,
ICT, and creative and digital. MerseyBio Incubator is also located
next to the University of Liverpool and provides fifteen 650 sq. ft.
laboratory units for developing biotechnology businesses.
The redeveloped Baltic Triangle has attracted the creative and
tech firms, including games developers at the Studio School.
Some advanced manufacturing will be within the Atlantic
Gateway super port but this is a 50 year project so the focus on
this may not be immediate. Instead, the main concentration of
development activity is set to be in support of Sci-Tech Daresbury
science and innovation centre. A joint venture is in place to
develop up to 1 million sq m of office and lab space which will
eventually support 10,000 high value jobs.
GVA View
Liverpool has the largest concentration of pharmaceutical
industry in Europe and is investing heavily in growing the sector
further. The city has secured £190 million of European funding to
help start development of the Knowledge Quarter, which focuses
on the redevelopment of the Royal Liverpool Hospital site into a
new BioCampus, providing 750,000 sq. ft. of research space. The
city is also supported by one of the leading science parks in the
UK at Sci-Tech Daresbury.
10 Stratton Street, London W1J 8JR GVA
I 35
Manchester
Source: 2Bio
36 I GVA 10 Stratton Street, London W1J 8JR
Source: 2Bio
Driving future growth: core cities and the knowledge economy | Spring 2014
Manchester
Key locations
Economic assessment
Manchester Science Park, Corridor
Manchester, Airport City Enterprise
Zone, Media City.
Population
976,323 (2012)
Universities
University of Manchester (40,680), University
of Salford (21,755), Manchester Metropolitan
University (34,595).
Key knowledge
economy
employers
Jacobs Engineering, Cisco, Fujitsu,
Hyde Group, Renold, Siemens, Waters
Corporation, BASF, Electrium, Hewlett
Packard, Landis & Gyr, PZ Cussons,
Tetrosyl, BBC, ITV, ENER-G, UKFast, Satellite
Information Systems
2. Current position and future potential
Summary of LEP proposals
Manchester is looking to build on its strengths of which includes
a large media and creative sector supported by Media City,
strong IT and computing sector and the life sciences and
healthcare sector which centres on the science parks and
Manchester Corridor.
A National Graphene Institute is also being established to build
on the city’s excellent reputation within that field, with the aim of
increasing FDI via the MIDAS scheme which will create multiple
spin-offs as more practical uses for the material are discovered.
An enterprise zone is also being established at Airport City to
increase Manchester’s business in these sectors from overseas.
Employment by sector
At 6.6% of employment, the knowledge economy in Manchester
is one of the largest of all the core cities (average 5.4%). The
largest component within this comes from TMT (5.1%), again,
the largest of all core cities bar Newcastle. Computing and
information services play an important role in this, accounting for
3.1% of employment. Within the advanced manufacturing sector
(1.6%), chemicals and non-metallic products are the main job
providers with 0.6% each.
38 I GVA 10 Stratton Street, London W1J 8JR
For the city of Manchester we have combined the local
authorities of Manchester, Salford and Trafford, to create a
realistic geographical area, overcoming the restrictive nature
of Manchester’s local authority boundaries. Manchester local
authority dominates this area, with a GVA output total which is
over twice as large as Trafford’s and more than five times as large
as Salford’s. Together, this area represents over 50% of Greater
Manchester, in GVA output terms.
Over the next five years Experian expect Manchester city’s output
growth to be 12.3%, slightly higher than the UK average. This
compares to a very similar growth figure (+14.3%) over the five
year period leading up to the recession (2002-07), which was
slightly below the UK average.
Over the 2002-07 period economic growth was driven by two
main sectors – finance and insurance (+35.4%) and professional
and other private services (+31.2%). Only two other main sectors
exceeded the GVA average – information and communication
(+16.3%) and accommodation, food services and recreation
(+16.2%). Over the next five years, output growth is expected to
be much more widely spread with seven main sectors exceeding
the city average, led by construction (+17.2%).
The core knowledge and creative sector amounts to 9.1% of the
total city economy, marginally above the UK average, and is
expected to see 13.8% output growth over the next five years,
slightly above the city total growth rate of 12.3%. It is slightly
weaker than the UK core knowledge and creative sector average
growth rate of 15.7%, but well above the growth rate between
2007 and 2013 of -0.4% and the growth rate between 2002 and
2007 of 8.8%. The composition of ‘knowledge and creative’
sector growth is shown in the figure below.
Innovation
Figure 14 - Output by sector
The 2004-2012 average for net start-ups per 100,000 in
Manchester is 30.2, higher than the core city average (21.3)
but below the UK average (42.9), having been particularly hard
hit during 2009/10. However, in 2012, the number of net start-ups
reached 52.2 per 100,000, the second highest of all the
core cities.
40%
30%
20%
10%
Output
1. Key data
2007-2013
0%
2002-2007
2013-2018
-10%
-20%
-30%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Source: GVA/Experian
Clearly there are some large differences between individual
sub sector growth rates over the next five years compared to
the 2002-07 period. Pharmaceuticals and computing and
information services are expected to show much weaker growth,
whereas chemicals, non-metallic products and media activities
are all expected to show stronger growth. Also noticeable is the
much weaker growth expected in the finance and insurance
sector, although it is still expected to be slightly stronger than the
knowledge and creative sector.
3. Enablers – what strengths are there
to enable transition?
Research output
Manchester is the only city to have the highest research impact
of all the core cities in three different sectors, those being social
sciences, IT and engineering. Life sciences, clinical sciences and
geosciences also feature prominently.
Key occupiers
There are a large number of prominent new start-ups in
Manchester, across a broad range of sectors. Examples of this
include Pharmakure which concentrates on repurposing existing
medical drugs for other uses; Sixteen South provides animation
for children’s television programmes, while Mof Technolgies
creates nano-materials for use in clean energy.
Commercial property market
Manchester Science Parks is one of the UK’s leading science
parks which operates across four sites, extending to 300,000 sq.
ft. and 160 occupiers. It supports growth in companies across
sectors such as ICT, biotechnology, industrial technologies and
digital media.
Media City is an established centre for creative and media firms,
anchored by ITV and the BBC and home to over 150 businesses.
At the same time, Project digital is a requirement by 30 technology
firms looking for as much as 270,000 sq. ft. in the city with occupiers
such as Apple and Cisco rumoured to be involved.
GVA view
Manchester recognises that the knowledge economy is central
to its future growth and is looking to develop a range of clusters
for specific knowledge based occupiers and ensure that the right
conditions are in place to enable growth and further innovation.
Much of this is down to the city’s ability to attract large scale
foreign investment through MIDAS and major blue chip occupiers
such as the BBC, Cisco and the large number of TMT, science and
medical firms now based in these clusters. Manchester is also well
served by a high number of graduates, many who stay on in the
city, leading to a skilled and diverse workforce.
Astra Zeneca was a major occupier who recently moved to
Cambridge but that departure has provided a new opportunity
for other firms to take space at Manchester Science Park.
Siemens, Fujitsu, Siemens and Waters Corporation all employ over
500 staff each in the advanced manufacturing sector, while the
BBC accounts for over 2,500 jobs at Media City.
10 Stratton Street, London W1J 8JR GVA
I 39
Newcastle
Source: 2Bio
40 I GVA 10 Stratton Street, London W1J 8JR
Source: 2Bio
Driving future growth: core cities and the knowledge economy | Spring 2014
Newcastle
1. Key data
Key locations
Newcastle Accelerated Development
Zone, Science Central, Stephenson Quarter,
Gateshead Quays, Baltic Business Centre
Population
282,442 (2012)
Universities
Newcastle university (21,055), Northumbria
University (29,300).
Key knowledge
economy
employers
Sage Group, Hewlett Packard, Scott Logic,
Ubisoft Reflections, Nissan, Akzo Nobel,
AMEC, BAE, GE Oil & Gas, Duco, Sanofi
Aventis, A&P Tyne, Voler Stevin, Offshore
Group, INEX, British Engines.
2. Current position and future potential
years output growth is expected to be strongest in the utilities
sector (+35.8%), although this follows an 80% fall between
2007 and 2013 and this sector is very small and so potentially
susceptible to dramatic output swings. Over the next five years
output growth will be higher than the Newcastle average in
four sectors, including the information and communication
(TMT) sector.
The core knowledge and creative sector amounts to 9.8% of
Newcastle’s economic output, slightly above the UK average.
Output growth is expected to be 11.2% over the next five years,
much weaker than it was in 2002-07 (+32.7%) and weaker than
the UK average of 15.7%, but stronger than it was over the last six
years (+6%). The composition of core knowledge and creative
sector growth is shown in the figure below.
Figure 15 - Output by sector
Summary of LEP proposals
Employment by sector
40%
30%
20%
10%
0%
2002-2007
2007-2013
2013-2018
-10%
Of all the core cities, Newcastle has the largest number of
employees within the knowledge economy at 6.8% (average
5.4%). Most of these are in TMT (5.1%), which is the largest
alongside Manchester, with computing and information systems
accounting for 3.5% of employees. Advanced manufacturing
(1.7%) is predominantly made up by manufacturing jobs in
pharmaceuticals and non-metallic products.
Economic assessment
Newcastle’s output growth is expected, by Experian, to be 9.2%
over the next five years, slightly below the UK average of 11.7%.
This is much lower than the 17.4% achieved over the pre-recession
five year period (2002-07), but much better than the -2.1%
achieved over the last six years.
Over the 2002-07 period output growth was very strong in
a number of sectors – finance and insurance (+60.6%),
manufacturing (+35.1%), professional and other private services
(+29.8) and transport and storage (+25.1%). Over the next five
42 I GVA 10 Stratton Street, London W1J 8JR
Research output
The highest impacting area of research for Newcastle is clinical
sciences, which ranks third amongst all the core cities within this
specific subject. Within the city itself, other strong subjects include
life sciences, IT and environmental sciences.
Key occupiers
GVA view
Alongside the energy, technology, environmental and marine
sectors, the city has an excellent reputation for clinical and life
sciences, centred on the University of Newcastle and the Royal
Victoria Infirmary.
There is however only one lab in the city core, meaning many spin
off and smaller firms have had to move outside of the city centre
to lower cost locations. There is a strong need for speculative
space in central locations to help support growth within the life
science and medical sectors.
Computing has a major role to play in Newcastle and this is
reflected by some of the major occupiers, including Hewlett
Packard, Sage, Scott Logic and Ubisoft Reflections. Aside from
Nissan, advanced manufacturers include Akzo Nobel, Amec, BAE
and Sanofi Aventis. Building on the city’s offshore energy ambition,
Duco, Flexlife, Offshore Group Newcastle and GE Oil and Gas are
all major occupiers.
Innovation
50%
Output
Newcastle intends to build upon its strengths in the environmental
and low carbon sectors, using £500 million to create 8,000 new
marine and offshore sector jobs in the Low Carbon EZ. This will be
supported by the Science Central advanced development zone
and the government designating Tyneside as one of five centres
for offshore renewable engineering.
60%
3. Enablers – what strengths are there
to enable transition?
-20%
-30%
-40%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Newcastle had one of the highest net start-up rates of the core
cities prior to the downturn at 90.2 per 100,000 population in
2008, compared to an average of 33.1 for 2004 to 2012. In 2012,
this rate stood at 24.8, higher than both the core city (21.3) and
national (42.9) averages over the same period, but still below the
level of net growth the city has previously experienced.
Utilitywise opened in 2006 and has grown in size to over 600
employees. Tech start-ups include Givey, Screach TV, Atomhawk
design and Earsoft. TMT in the city is supported by Thinking Digital,
an annual conference to showcase local talent.
Commercial property market
Source: GVA/Experian
Whilst there are clearly some large differences between individual
sub sector growth rates shown in the table above over the next
five years compared to 2002-07, almost all sub sectors are
expected to see lower growth. The one exception is media
activities which saw a decline in 2002-07, flowed by strong growth
during the recession and its aftermath, and healthy growth over
the next five years.
North East Technology Park in Sedgefield, County Durham is home
to several high-tech companies specialising in fields such as
nanotechnology, X-Ray technology, forensics and semiconductor
technology.
The Wilton Centre in Middlesbrough (260,000 sq. ft.) was originally
owned by ICI and is now managed as a multi-tenanted research,
technical and business centre. The main lab is the International
Centre for Life, which supports life science research.
The city council and University of Newcastle have acquired 22
acres close to the city campus to develop the 35,000 sq. ft.
Science Central, with space available to technology SMEs. Further
proposals at the scheme include lab space and a data centre.
10 Stratton Street, London W1J 8JR GVA
I 43
Nottingham
Source: 2Bio
44 I GVA 10 Stratton Street, London W1J 8JR
Source: 2Bio
Driving future growth: core cities and the knowledge economy | Spring 2014
Nottingham
Key locations
BioCity, Lace Market, Hockley
Population
308,735 (2012)
Universities
Nottingham Trent (27,930),
University of Nottingham
(35,630).
Key knowledge economy
employers
Boots, Siemens, Romax
Technology, Blackburn Starling,
Promethean Particles, Confetti
media, Broadway, Antenna.
2. Current position and future potential
Summary of LEP proposals
Nottingham’s proposals for enhancing the knowledge economy
focus primarily on two areas. The first is the city’s emerging TMT
sector which is concentrated in the Creative Quarter around
the former Lace market and Hockley, supported by improved
broadband and low carbon energy supply. Funds include £35m
venture capital and a £20m technology grant fund.
The other is the medical and science industries which are
supported by Boots and BioCity, one of the largest bioscience
incubators in Europe. Nottingham University also has campuses
in Malaysia and China which will be utilised for foreign direct
investment with support from UKTI and BIS.
Employment by sector
At 4.7%, Nottingham is one of the smaller knowledge economies
in terms of employment. This is partly due to having a very small
advanced manufacturing sector at 0.3% compared to a core
city average of 1.5%. TMT is much stronger at 4.4% (cf average
3.9% for core cities) with computing and information services
accounting for 3.5% of this.
Economic assessment
Expected economic growth in Nottingham of 11.3% over the
next five years is almost identical to the expected UK average of
11.7%. It is also the same as the 2002-07 growth rate, although
that was well below the UK average.
Over the 2002-07 period growth was fairly evenly distributed with
no one sector dominant, except utilities (+63.4%), but this sector
46 I GVA 10 Stratton Street, London W1J 8JR
is very small, amounting to only 0.8% of total output. The next
strongest growth sector was information and communications
(TMT), amounting to 6.6% of Nottingham’s economy, achieving
output growth of 25.7%. Over the next five years output growth is
expected to be widely spread, as was the case in the past, but
with construction being the strongest sector (+23.9% growth) and
the TMT sector achieving only marginally above average growth
of 11.6%.
The total core knowledge and creative sector currently amounts
to 7% of Nottingham’s economy, slightly below the UK average
of 8.7%. Growth of 10.8% is expected over the next five years,
marginally below overall city economic growth, but weaker than
the growth achieved between 2002 and 2007 (+19.8%) or the
expected UK growth over the next five years of 15.7% as the
figure below shows.
Research output
Overall, Nottingham ranks second for business and economics
and third for social sciences out of all the core cities. The other
main areas in terms of impact from the city include chemistry, life
sciences and clinical sciences.
Key occupiers
One of the stand-out occupiers in Nottingham is Boots,
which employs over 5,000 staff, with the development of
pharmaceuticals one of the main roles. Rolls Royce and Siemens
are also major occupiers in advanced manufacturing, with
smaller firms such as Blackburn Starling and Romax Technology.
In the wider region, Loughborough University Science and
Enterprise Park dominates with 500,000 sq. f.t of current space,
with a strong research bias towards engineering, innovative
manufacturing, energy technology and sport. There is planning
permission for a further 400,000 sq. ft.
GVA view
The Nottingham economy has gradually changed from traditional
industry to knowledge economy, allowing greater ability to
compete in global economic markets. The city is well supported
by both Nottingham Trent and the University of Nottingham who
together have helped provide the city with the largest bioscience
incubator in Europe. There is also a burgeoning creative industry
within the city centre, with some well established firms providing
training and guidance to new start-ups and students.
The 2004-2012 average for net start-ups in Nottingham is 16.7 per
100,000 population, lower than both the core city and national
averages of 21.3 and 42.9 respectively. Having peaked at 100 per
100,000 in 2005, the level currently stands at 4.85 per 100,000 in
2012, compared to -11.5 in 2011.
60%
50%
40%
30%
20%
10%
3. Enablers – what strengths are there
to enable transition?
Innovation
Figure 16 - Output by sector
Output
1. Key data
2002-2007
2007-2013
2013-2018
0%
-10%
-20%
Promethean Particles is based at BioCity and owes its origins to
the University of Nottingham, forming in 2008. Confetti media,
Broadway, Antenna are the major firms in the TMT sector based in
the Creative Quarter who are acting as mentors for smaller startups, providing facilities and training to support growth.
Commercial property market
-30%
-40%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Source: GVA/Experian
As for other cities there is a wide divergence of growth at the
sub sector level, both in the past and in the future, particularly
for very small sub sectors. It is interesting to note that advanced
manufacturing amounts to only 0.3% of Nottingham’s economy,
a much smaller proportion than in any of the other seven cities,
whereas the reverse is true for the TMT sector, with Nottingham
ranking as having the third largest as a proportion of the
overall economy.
There is a strong tradition of bioscience research in Nottingham.
BioCity Nottingham is one of Europe’s largest healthcare and
bioscience incubators providing 130,000 sq. ft. of space for
60 bioscience, pharmaceutical, medtech, healthcare and
environmental companies, employing nearly 500 people.
Nottingham Science Park was developed in the 1980s and is
located near to the University. Recent developments include
the Highfields Centre, an automotive academy for Toyota and
Central College, and No.1 Nottingham Science Park home to
green-tech companies.
The University of Nottingham Innovation Park (UNIP) opened in
2008. UNIP seeks to attract high-tech companies which have
synergy with the University’s research, focusing on green tech,
ICT and satellite navigation.
10 Stratton Street, London W1J 8JR GVA
I 47
Sheffield
Source: 2Bio
48 I GVA 10 Stratton Street, London W1J 8JR
Source: 2Bio
Driving future growth: core cities and the knowledge economy | Spring 2014
Sheffield
Key locations
Don Valley, Advanced Manufacturing Park
including the Nuclear Research Centre and
Advanced Manufacturing Research Centre,
Sheaf Valley, Devonshire Quarter, Sheffield
Digital Campus
Population
557,382 (2012)
Universities
University of Sheffield (25,965), Sheffield
Hallam (37,160).
Key knowledge
economy
employers
Boeing, Rolls Royce, Tata, Plusnet, Tribal
Technology, Forgemasters, Firth Rixon,
Swann Morton, Siemens.
2. Current position and future potential
Summary of LEP proposals
Having been forged in the steel and coal industry, much of
Sheffield’s knowledge economy proposals looks to build on
manufacturing. The city is home to the Advanced Manufacturing
Research Centre and Nuclear Research Centre, with support
from Boeing, Rolls Royce and Sheffield University. Other significant
employers include Forgemasters and Tata Steel and the city is the
only one in the UK to have its own “made in” protected trademark.
Sheffield also has a strong digital sector, and the universities have
strong links with Sony, Microsoft and Cisco. The city is looking to
create a Cloud City and will require new datacentre infrastructure
as well as providing new opportunities for innovation and business
opportunities.
Employment by sector
At 4.2%, the knowledge economy in Sheffield is the smallest
of all the core cites (average 5.4%). Advanced manufacturing
accounts for 1.2% of employment (1.5% average), while TMT
accounts for 3%. Within that, telecoms account for 1.1%, one of
the largest shares amongst the core cities, as well as 1.3% for
computing and information services.
Economic assessment
Economic growth in Sheffield over the next five years is forecast
to be 8.8%, below the UK average of 11.7%, and below Sheffield’s
performance in the five years prior to the recession (+11%), which
was well below the UK average of 18.1%.
50 I GVA 10 Stratton Street, London W1J 8JR
In the 2002-07 period the two strongest growth sectors by
far were information and communications, i.e. TMT, (+45.4%),
with telecoms dominant, achieving growth of 73.5%, and
professional and other private services (+40.3%). Over the next
five years growth is expected to be much more evenly spread,
with seven sectors achieving fairly similar growth above the
Sheffield average.
The core knowledge and creative sector amounts to 7.3% of the
Sheffield economy, slightly below the national average of 8.7%.
Output growth is forecast to be 13.9% over the next five years, well
above the expected Sheffield average economic growth rate of
8.8% and close to the UK core knowledge and creative sector
growth rate of 15.7%. Nevertheless, this expected growth rate is
weaker than the exceptional 39% achieved between 2002 and
2007 and the strong 16.6% achieved between 2007 and 2013.
Figure 17 - Output by sector
Research output
Sheffield has the highest impact of any core city for
environmental sciences and chemistry, whilst it is second for
engineering and third for maths and physics, reflecting the work
done by the universities to support the advanced manufacturing
and energy sectors in the city. Other sectors in which the city
manages to specialise in include social sciences, clinical
sciences and life sciences.
GVA view
Sheffield has been particularly reliant in the past on the public
sector and providing space for call centres for the finance and
business sector. Having made its reputation for heavy industry
and manufacturing, the city has a strong educational base with
connections to the engineering and technology sectors which
will drive the growth towards creating a more established
knowledge economy based on advanced manufacturing
and digital technology.
Key occupiers
Plusnet lead the technology sector in the city, with other firms
including Tribal Technology. The other main strength of Sheffield
is advanced manufacturing, with occupiers including Tata Steel,
Sheffield Forgemasters, Allvac, Rolls Royce and Swann Morton.
Plusnet was founded in the city in 1997 before being sold to BT in
2007. Current hopefuls include Twile, specialising in online media
content and software developer Otus Labs.
30%
20%
10%
0%
3. Enablers – what strengths are there
to enable transition?
Innovation
40%
Output
1. Key data
2002-2007
2007-2013
2013-2018
-10%
Overall, Sheffield has the lowest number of net start-ups of all
the core cities, with an average of -10.1 per 100,000 population
between 2004-2012, compared to 21.3 per 100,000 for the core
cities and 42.9 for the UK. The net rate has been negative since
2008, with the latest figure for 2012 at -34.9.
Commercial property market
-20%
Core Knowledge economy
Finance & insurance
Public Services
Total output all sectors
Source: GVA/Experian
There are many large differences at the sub sector level between
2002-07 and 2013-2018. The two strong points are non-metallic
products and finance and insurance, showing positive growth
over the next five years contrasting with negative growth over the
five years pre-recession.
Sheffield University has developed two innovation centres for
start-ups, early and medium-stage businesses and corporate
labs. The Sheffield Bioincubator and the Kroto Innovation Centre
are home to a growing community of life science and biotech
companies. Sheffield Technology Parks also provides specialist
support to technology start-ups in the creative and digital sectors.
The Advanced Manufacturing Park in Catcliffe has a heavy
university presence, working in conjunction with firms such as
Boeing and Rolls Royce on research and development.
The Digital Campus opposite the railway station offers two
50,000 sq. ft. units with Sheffield Council anchoring one to provide
managed office space for small creative firms. The largest
letting in recent years in the city has been Plusnet’s move into
the 53,000 sq. ft. City Plaza.
10 Stratton Street, London W1J 8JR GVA
I 51
London West End
London City
Belfast
Birmingham
Bristol
Cardiff
Dublin
Edinburgh
Glasgow
Leeds
Liverpool
Manchester
Newcastle
Published by GVA
10 Stratton Street, London W1J 8JR
©2014 Copyright GVA
GVA is the trading name of GVA Grimley
Limited and is a principal shareholder of
GVA Worldwide, an independent
partnership o
f property advisers operating
globally gvaworldwide.com
For further information
please contact:
Carl Potter
Senior Director
National Markets
0121 609 8388
[email protected]
Iain Jenkinson
Senior Director
Planning, Development and Regeneration
0161 956 4016
[email protected]
Ian Stringer
Regional Senior Director, Birmingham
0121 609 8308
[email protected]
David Mace
Regional Senior Director, Bristol
0117 988 5251
[email protected]
Paul Manning
Regional Senior Director, Leeds
0113 280 8013
[email protected]
Patrick Whitby
Regional Senior Director, Liverpool
0151 471 6751
[email protected]
Mark Rawstron
Regional Senior Director, Manchester
0161 956 4100
[email protected]
Michael Cuthbertson
Regional Senior Director, Newcastle
0191 269 0507
[email protected]
Daniel Francis
Head of Research
020 7911 2363
[email protected]
James Kingdom
Senior Researcher
020 7911 2125
[email protected]
08449 02 03 04
gva.co.uk
This report has been prepared by GVA for general information purposes only. Whilst GVA endeavour to ensure that the information in this report is correct it does not warrant
completeness or accuracy. You should not rely on it without seeking professional advice. GVA assumes no responsibility for errors or omissions in this publication or other
documents which are referenced by or linked to this report. To the maximum extent permitted by law and without limitation GVA exclude all representations, warranties and
conditions relating to this report and the use of this report. All intellectual property rights are reserved and prior written permission is required from GVA to reproduce material
contained in this report. GVA is the trading name of GVA Grimley Limited © GVA 2014.
09727