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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. 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