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Boosting the Cardiff Capital Region economy: homes for skilled workers
This blog forms the second in a series on the implications of the Cardiff Capital Region City Deal on planning for housing in South East Wales. It expands upon some of the issues considered in our Insight Focus, Cardiff Capital Region: Planning for Growth. The Cardiff Capital Region (CCR) City Deal aims to increase skills and improve employment opportunities, against a backdrop of a recognised skills shortage across the region[1]. The City Deal Regional Cabinet has already agreed to invest £37.9 million in the development of a compound semiconductor industry cluster in Newport, which is expected to create 2,000 highly-skilled jobs. Hence, there is a need to support the development of a better-skilled workforce in order to anchor the benefits of new job opportunities within the region and help ensure the City Deal momentum continues. Alongside direct efforts to upskill the local workforce, there is a need to think more broadly about how to address the issue of retention of local residents as they progress through their careers and of attracting people with the right skills from elsewhere. This wider strategy should include a focus on housing – not only providing the required number of homes but also the right type of homes and in the right locations in order to strengthen the region’s offer to the ambitious and highly skilled. For younger workers and recent graduates, there is a need to provide good quality private rented homes and smaller homes for purchase. This could help to address the issue of low graduate retention, which was recognised by the CCR’s Growth and Competitiveness Commission (2016)[2] as a particular problem for the region, despite its internationally competitive higher education institutions and further education colleges. For more experienced professionals, it is important to provide larger “aspirational” homes in family-friendly neighbourhoods. This will be necessary in order to reduce the likelihood that upwardly mobile residents will leave the area at the point when they can afford a better home or are looking for a suitable community in which to raise children, and to support the inward migration of such new workers. According to research conducted by Centre for Cities[3], proximity to the workplace is one of the main considerations in choosing where to live for young people in particular. Jobs in high tech industries tend to be clustered around specific locations (the compound semiconductor industry cluster, for example), in contrast to the service industries, where employment is more dispersed. The Growth and Competitiveness Commission Report recommends that the CCR complement its economic strategy by way of a spatial development perspective which recognises the roles of different locations, including Cardiff and Newport as established commercial hubs, Cardiff Airport with its associated Enterprise Zones, and towns such as Bridgend, Barry, Caerphilly and Pontypridd that are “in transition to accommodating high value added activity”. Whilst it is not always possible to build new homes in close proximity to high tech sectors, there is an opportunity to consider how to link new housing to these high tech industry locations by sustainable travel modes. The South Wales Metro project offers a powerful opportunity to open up access to key employment hubs. In addition to increasing the frequency of existing rail services, the Metro project is intended to provide new services, routes and stations and has the potential to decrease travel times on existing routes by more than 20% (see figure 1 and 2), according to Welsh Government’s South Wales Metro brochure (2015). Figure 1 Current train journey times to Cardiff Source: Lichfields analysis of National Rail data and Welsh Government “Rolling Out Our Metro” brochure Figure 2 Potential future train journey times to Cardiff following the completion of the South Wales Metro Source: Lichfields analysis of National Rail data and Welsh Government “Rolling Out Our Metro” brochure The completion of the South Wales Metro would bring all of the existing stations in the CCR within a 50-minute train journey time of Cardiff, compared to a current maximum journey time of an hour. Following the completion of the Metro, a train journey of 30 minutes from Cardiff could take you as far as Caldicot to the east, Bargoed and Abercynon to the north and Sarn to the west. Journeys to the other key employment hubs in the CCR would also be significantly improved. By comparison, in 2015 the average door-to-door commute for UK workers was 28.5 minutes (one-way), while the average journey for those travelling by train was substantially longer, at 65.2 minutes[4]. The proposed reductions in journey times within the CCR would therefore bring a vast area of the region within reasonable commuting distances of key employment areas. However, it cannot be assumed that buyer demand for homes will immediately increase in the areas furthest away from the key employment centres in the CCR. Even after demand begins to increase, it will take time for land values to rise sufficiently to provide developers (and, more importantly, their funders) with the confidence to invest in areas that are currently less attractive. When planning for housing across the region, it is therefore important to be realistic about the areas that will be viable for development. New planning policy, whether it takes the form of Local Development Plans or a Strategic Development Plan for the region, should take account of the need to support housing growth and not to stifle development opportunities that could help to kick-start the transformation of the region. Over time, it is hoped that the continued growth of the parts of the CCR that are already vibrant will spread to every community. New housing can provide a catalyst for this growth by bringing new residents, attracting additional spending in local businesses and enabling new businesses to be set up. However, in order to be successful, there must be an appropriate mix of housing in locations that match the needs and aspirations of skilled workers in particular.   [1] Learning, Skills and Innovation Partnership South East Wales Employment and Skills Plan (2016) [2] Growth and Competitiveness Commission Report (November 2016) [3] Centre for Cities (November 2015), “Urban Demographics – why people live where they do” [4] 2015 ONS Labour Force Survey data published by the Trades Union Congress.  

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Sealing the Deal: the Cardiff Capital Region needs homes
This blog forms the first in a series on the implications of the Cardiff Capital Region City Deal on planning for housing in South East Wales. With the Cardiff Capital Region (CCR) City Deal programme now underway, there are compelling reasons to believe that South East Wales is an area on the up. The City Deal, worth £1.2 billion, aims to provide a 5% uplift in GVA and create up to 25,000 new jobs by 2036, representing a 40% increase above forecasted levels of growth. However, by taking a step back and viewing the CCR in its wider UK context, we see a less confident picture – one of a region with a smaller, more fragile economy that has the potential to fall behind in relation to the rest of the country if care is not taken to support its future growth. As we explore in this series of blogs and in our latest Insight Focus, a vital part of this support is the provision of a sufficient number and appropriate mix of new homes in the right locations. Cardiff is part of the Core Cities Group, which represents the ten largest and most economically important cities outside London. Each of the Core Cities is, in fact, a city region, which includes a number of local authority areas (see figure 1). These city regions have been identified as comparators by the Growth and Competitiveness Commission (established as part of the CCR City Deal). In this blog, I compare the economic performance of the CCR against these other areas and identify the initial implications for housing policy. Figure 1 Core City regions Source: The Core Cities Group Economic status With an annual GVA of £28.3 billion in 2017, the CCR has the second smallest economy of the 10 UK Core City regions. Taking into account its size, the CCR currently has the third lowest level of productivity, at £41,192 GVA created per workforce job, whilst Bristol has the highest at £47,129 per job (see figure 2). Interestingly, despite having the largest economy at £64.7bn, Leeds has the second lowest level of productivity at £40,718 per job. This highlights the importance of considering both indicators in assessing the economic well-being of an area. The fact that the CCR performs poorly in relation to each is troubling. Figure 2 Total GVA / productivity by Core City region (2017) Source: Lichfields analysis of Experian data (March 2017 release) The CCR achieved the second highest level of GVA growth among the Core Cities between 1997 and 2006. However, by 2014 its GVA growth had fallen to the lower half of the Core Cities group and it took nine years for its economy to recover to pre-recession levels following the financial crisis in 2007, such that by 2017 it was only middle-ranking in terms of GVA growth (see figure 3).   Figure 3 GVA all sectors: indexed to 1997 levels Source: Lichfields analysis of Experian data (March 2017 release) Similarly, the CCR experienced the highest level of workforce job growth of all of the Core Cities between 1997 and 2006 but had been overtaken by half of the other Core Cities by 2017. If current trends continue, the CCR’s economy is expected to remain in the middle of the group of Core Cities in terms of GVA, workforce jobs and full-time equivalent (FTE) job growth in the period from 2017 to 2037 (see figure 4). However, its productivity is anticipated to remain at the lower end of the Core Cities group, with the smallest increase (31.5%) of all of the city regions, compared to an average increase of 32.9%. Figure 4 Forecast productivity Source: Lichfields analysis of Experian data (March 2017 release) High tech sectors As key drivers of productivity and sources of well-paid jobs, the high tech sectors are an important indicator of economic health. Between 1997 and 2017, there was a 10% increase in high tech jobs in the CCR (the third lowest across the Core Cities), compared to the highest increase of 43.1% in Sheffield. From 2017 to 2037, the CCR’s high tech sectors are expected to grow by only 8.6%. This indicates that a continuation of current conditions will not be sufficient to deliver the desired boost in highly skilled jobs.   Figure 5 Index of high tech jobs by city region Source: Lichfields analysis of Experian data (March 2017 release) Part of this issue relates to the difficulty faced by the CCR in losing graduates, particularly in STEM (science, technology, engineering and mathematics) subjects, to other areas – despite benefiting from internationally competitive higher education and further education institutions.           Economic headlines Current economic status: 2nd smallest economy of the ten UK Core City regions, with an annual GVA of £28.3 billion in 2017 (see figure 2). 3rd lowest level of productivity (GVA per workforce job), with £41,192 GVA created per workforce job, whilst neighbouring Bristol has the highest productivity at £47,129 per job (see figure 2). Nine years for its economy to recover to pre-recession levels following the financial crisis in 2007. Experienced the third lowest increase (10.0%) in high technology jobs across the Core City regions between 1997 and 2017. If current conditions continue: Expected to remain at the middle of the group of Core City regions in terms of GVA, workforce jobs and FTE job growth in the period from 2017 to 2037. Anticipated to continue at the lower end of the Core Cities group in terms of productivity, with the smallest increase (31.5%) of all of the regions between 2017 and 2037. Only 8.6% growth expected in high tech sector jobs between 2017 and 2037.           The need for the CCR City Deal is clear. Without appropriate support and investment, the future success of the CCR economy is uncertain. It is also worth bearing in mind that a number of the other Core Cities have their own City Deals, and all will be seeking to improve their future economic performance. Even with the City Deal in place, meeting its goals will be challenging, particularly given the modest projected growth in high tech sectors in the CCR. In order to increase high tech growth, it will be important to address the issue of retention of graduates, particularly in STEM subjects. Making the link between the economy and housing: we need workers The vibrant economy of the CCR City Deal needs a vibrant and growing population, including young people and highly skilled workers. The CCR can only hope to attract and retain workers with these characteristics if it can offer a sufficient number of homes of the right type and quality in suitable, accessible and desirable locations. There is also the moral duty to accommodate the area’s ageing population and those who are unable to afford market housing, many of whom (in both categories) will still be active contributors to the local economy. The City Deal programme is taking place amid a complex policy landscape of adopted and emerging Local Development Plans and Plan Reviews, the proposed Strategic Development Plan at the regional level and the National Development Framework for Wales. There are a number of key questions which will need to be debated over the coming months, including how to coordinate the next set of development plans and their policies, how to boost housing delivery, and what constitutes an appropriate distribution of new homes across the region. We will explore these issues and what they mean for housing policy in South East Wales in our forthcoming blogs in this series.   © Lyndon Griffith / Alamy Stock Photo  

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