Central Activity Zone and City Fringe by jennyyingdi


									Business, Enterprise and Employment

1. Employment Base
Hackney has a very diverse employment base. According to the IDBR 2010,
the economy supports roughly 79,000 employees over a wide range of
sectors. The majority of Hackney’s employees, 84%, are in the following sub
sectors. 41% of jobs are in the top 5 sectors highlighted in bold.

      Education                                Other professional; scientific
      Social work activities                    and technical activities
       without accommodation                    Computer programming;
      Activities of head offices;               consultancy and related
       management consultancy                    activities
       activities                               Advertising and market
      Residential care activities               research
      Services to buildings and                Legal and accounting
       landscape activities                      activities
      Food and beverage                        Activities auxiliary to
       service activities                        financial services and
      Retail trade; except of motor             insurance activities
       vehicles and motorcycles                 Architectural and
      Land transport and transport              engineering activities;
       via pipelines                             technical testing and
      Wholesale trade; except of                analysis
       motor vehicles and                       Telecommunications
       motorcycles                              Specialised construction
      Real estate activities                    activities
      Employment activities                    Creative; arts and
      Human health activities                   entertainment activities
      Office administrative; office            Activities of membership
       support and other business                organisations
       support activities                       Construction of buildings
      Printing and reproduction of
       recorded media

Source: Interdepartmental Business Register 2010 (ONS)
2. Business Base

Hackney’s business base is also diverse and spans the range of a variety of
sectors. The sectors with the highest numbers of firms include the list below.
The business base is so broad that the top five sectors only account for 38%
of the stock.

   •   Retail trade; except of
       motor vehicles and
   •   Other professional;
       scientific and technical                •   Office administrative; office
       activities                                  support and other business
   •   Real estate activities                      support activities
   •   Computer programming;                   •   Motion picture; video and
       consultancy and related                     television programme
       activities                                  production; sound recording
   •   Creative; arts and                          and music publishing
       entertainment activities                    activities
   •   Activities of head offices;             •   Construction of buildings
       management consultancy                  •   Architectural and
       activities                                  engineering activities;
   •   Wholesale trade; except of                  technical testing and
       motor vehicles and                          analysis
       motorcycles                             •   Other personal service
   •   Food and beverage service                   activities
       activities                              •   Specialised construction
Source: Interdepartmental                      •   Legal and accounting
Business Register 2010 (ONS)                       activities

3. Subregional Market Share

Hackney’s business stock and employment capacity cannot be measured as
an isolated figure. Economies are not locked into Local Authority boundaries
and the relative share of the active markets in our sub regions defines
Hackney’s productivity and potential. This briefing considers Hackney’s
market share in two sub regions: the City and Central Activity Zone and in
East London.

a) Central Activity Zone/City Fringe
Hackney is one of nine boroughs in the Central Activity Zone (CAZ), and one
of four boroughs considered part of the City Fringe. It is stated in the EDS that
Hackney is strategically positioned to deliver goods, services and labour to
the companies in the City or the CAZ. Data from ONS, the GLA, and reports
commissioned by the City Fringe Partnership provide an estimate of our
market share of city industries as well as suggested levels of policy
Employment Forecasts in Central Activity Zone to2031
 Central Activity Zone                    Total Jobs
 City                                                         77,168
 Camden*                                                      50,158
 Southwark                                                    29,913
 Westminster                                                  18,496
 Tower Hamlets*                                               13,891
 Islington*                                                     9,318
 Hackney*                                                       5,114
 Lambeth                                                        4,232
 Kensington and Chelsea                                           291
 Total                                                       208,581
*indicates City Fringe borough
Source: GLA, Working Paper 39: Borough employment projections to 2031, Nov 2009

While 65% of our firms are located in the three City Fringe Wards, Hackney
has the third lowest levels of job opportunities within the area at 7%, slightly
above Lambeth. Of the total jobs in the CAZ, Hackney accounts for 2% in
comparison Camden accounts for 24% and Tower Hamlets, 4% of future
employment in the CAZ. This is a reflection of our low availability of
employment land space. Similarly, Hackney accounts for the lowest amount of
land available in the CAZ.
The evaluation of the City Fringe Growth Strategy by the Cities Institute at
London Metropolitan University (2009) and the City Fringe Opportunity Area
Planning Frameowork (2008) use empirical, evaluation and survey data to
specifically examine the subset of sectors within the London City Fringe
considering their development, public policy interventions, barriers to growth
and potential investment opportunities. The results are as follows.
Health and Social Care and Hospitality and Catering were the documented as
the primary growth sectors in the City Fringe determined by the number of
firms in the area. In terms of employment, data shows employment in the
creative industries, have declined drastically in London as a whole and the
City Fringe is no different. Fashion, furniture and product design, have all
reduced employment since 2004. The only sectors to demonstrate
employment growth were jewellery, printing, and publishing. While
employment grew in the visitor economy (defined as hotels, cafes, bars and
restaurants, galleries, museums, theatres performance art, heritage sites,
markets and festivals), the total share of London’s employment in these
sectors is low.
Top City Fringe Employment Sectors and Hackney Share
 Sector                      Employment          Firm Proportion
 Financial Services          2%                  .07%
 Professional and Technical 15%                  21%
 Health and Social Care      10%                 5%
 Hospitality (hotels, cafes, 4%                  2.4%
 bars, restaurants )
 Cultural Tourism            1.8%                6%
 (museums, galleries, arts,

Evaluation of the City Fringe Growth Strategy by the Cities Institute at
London Metropolitan University (2009)

Hackney’s comparative advantage within the City Fringe lies within
Professional and Technical Services., Cultural Tourism and Health and Social
Hackney’s Leading Subsectors within Professional and Technical
 Subsector                                               Firms Jobs
 Activities of head offices; management consultancy      520   4,803
 Other professional; scientific and technical activities 805   1,904
 (specialised design and photography, environmental
 consulting, surveying and interpretation/translation)
 Advertising and market research                         175   1,778

 Legal and accounting activities                         210      1,705

 Architectural and engineering activities; technical     310      1,556
 testing and analysis

Interdepartmental Business Register 2010 (ONS)

The comparison of firms to employment highlights an important fact about the
knowledge and creative economies. They do not create jobs at the rate of
factories and services. Employment creation cannot be expected if Hackney
concentrates on these sectors. For instance, the largest employment base is
management consultancy firms. The firm to employee ratio demonstrates an
average 9 employees per company. Legal and accounting services have an
average 8 employees per company and architectural and engineering
companies hold an average 5 employees per company. The majority of these
occupations are listed as Level 4 qualifications. For comparison, Services to
Buildings and Landscape Activities is the opposite situation. With only 70
firms in the borough, the sector employs 3,700 people or 53 employees per
firm. This would be considered a medium size business.
Hospitality is an identified City Fringe growth sector and is also well suited to
lower qualified residents. Hackney has the least amount of firms and lowest
levels of employment in this sector among those identified.

Hackney’s share in service contracts with City companies
We can compare our absolute employment and firm share to the sectors that
buy services from the Fringe.
Sectors with significant levels of procurement and Hackney’s share
 Procurement Sector                                Hackney’s Firm
 Property services and real estate (£660 million); 7%
 Market research and management consultancy        7%
 (£600 million);
 Legal services (£570 million);                    2%
 Printing and publishing (£400 million);           3%
 Office/ industrial cleaning (£320 million); and   0.7%
 Entertainment (£114 million).                     0.6% (does not include
                                                   arts facilities)

Interdepartmental Business Register 2010 (ONS)

Hackney’s advantage within the most prominent sectors of the supply chain
are Property Services and real estate and Management Consultancy and
Market Research.
It is imperative; however, to note that only 4-5% of these services are sourced
from all four City Fringe boroughs. There has also been a decline in market
share of the Fringe. Currently, the most successful sectors from the Fringe
boroughs to sell to the City have less than 10% procurement rates.

   •   Management consultancy (6.7%)
   •   Printing and publishing (6.4%)
   •   Public relations (4.4%)
   •   Entertainment (3.1%
   •   Property advice (2.3%)
   •   Catering (1.6%)
   •   Events and seminars (1.3%)
   •   Legal services (1.3%)
   •   Office cleaning (0.3%)
   •   Facilities management and repair (0.2%)
   •   Office supplies (0.1%)
The worst performing sectors in terms of supplying the City are facilities
management and repair, office supplies, and office cleaning. Legal services
and entertainment sectors are not winning a high proportion of work in the
City relative to their levels of employment. Partially this is due to proximity to
the area, but primarily, most of the contracts for, facilities management, and
office cleaning are let in large contracts that local City Fringe firms are too
small to meet.
In a 2008 survey, City fringe firms stated the following barriers to entry to the
City supply chain
    • Lack of reputation in field or track record with City firms;
    • Lack of credit history;
    • Lack of CSR, environmental credentials and accreditation;
    • Lack of appropriate contacts at City firms; and
    • Lack of knowledge of the bidding process.
At the same time, City procurement managers stated the low market share
was due to price, quality and after sales support and their perception was that
City Firms were deficient in these areas. There is a disagreement in the
responses by Fringe firms. They do not believe their prices or quality are at
issue and instead feel they lack networks and opportunities to sell to the City.
As a solution to the need for increased information, the majority of City
procurement managers and City Fringe firms surveyed suggested an internet
based supplier database, sorted by the type of goods or services
Offered would be the best solution. This idea has been mentioned in previous
surveys. The second most common answer was a suggestion for the creation
of a central database that included accreditation of companies.
City Fringe firms completely agree with this. The majority of respondents
stated the implementation of a central supplier database on the internet that
could be searchable by the type of goods or services required, and would be
a comprehensive source of supplier information. The other top responses
included trade fairs and networking events that facilitate relationship building,
assistance in receiving accreditation to ensure greater trust in product/service
quality, and training to help firms based in the City fringes to produce
compliant bids. Corporate procurement departments currently offer many of
these options, a procurement website could help these events with marketing
to increase attendance.
In total, the City Fringe only supplies 5% of products to the City and
Hackney’s share of the 5% is 7% or negligible. Importantly, business support
for the City is not the same as we are currently providing especially at the
level we are providing it. Their primary concern is networking with large firms
and they suggest creating a database for this. With the success of the internet
based Invest in Hackney property website, it is clear this is a cost-effective
solution to increasing the information flow between buyer and supplier.
b) East London

Hackney’s position within East London, on the other hand, is much stronger.
Providing services to the growth within the East is a major growth opportunity,
but this would not be restricted to a few sectors. As the 2nd largest economy
within the 10 boroughs of East London, Hackney is poised to take a leading a
role in the development of what has become known as the London Thames
Over the past decade, Central Government invested £600m in non-capital
investment for jobs, skills and economic development through multiple
agencies, authorities and delivery vehicles. The London Thames Gateway
Development Corporation alone has invested £213.5 million as of March 2009
in the LBs of Waltham Forest, Havering, Barking & Dagenham, Tower
Hamlets, Newham and Hackney. Of this, £133.5m is capital investment with
another £80m remaining through the 2011 FY.
Over the next ten years, the London Thames Gateway area will see major
investments including Crossrail and the Olympics/ Stratford City exceeding
£30 billion. Forecasts of future job growth range from 140,000 outlined in the
Thames Gateway Delivery Plan to 184,000 included in the London Plan. In
order to achieve these targets, the majority of the key sites identified in this
report will need to be developed. Potentially, if all the key sites were
developed to their full capacity, in excess of 230,000 new jobs could be
Within this area are
            17 Opportunity and Intensification Areas
            59 new Town Centre developments and improvements
            26 Strategic Industrial Locations
            148,450 housing developments in 10 years representing 44% of
              the London total
The primary growth sectors within the Gateway include
      Environmental technologies
      Financial services
      Distribution & Logistics
      Banking
      Creative industries
      Media
      Retail
      Engineering
      Manufacturing
      Life sciences & Biotechnologies
      Digital technology
Hackney’s firms are competitive in many of these sectors, especially
considering the low competition from other East London boroughs. Add these
to the possible supply chain opportunities through the construction and
investment over the next two decades and Hackney’s potential gain is clear.

Sectoral Comparison within East London
 Sector                               Firm     Firm            East London
                                      Count    Proportion      Ranking

 Retail trade                         895      9%              2

 Other professional; scientific and   805      8%              1
 technical activities
 Real estate activities                  680   7%            1

 Computer programming;                   625   7%            3
 consultancy and related activities

 Creative; arts and entertainment        565   6%            1

 Activities of head offices;             520   5%            2
 management consultancy activities

 Wholesale trade                         490   5%            4
 Food and beverage service               485   5%            2

 Office administrative; office support   485   4%            1
 and other business support activities

 Motion picture; video and television    395   4%            1
 programme production; sound
 recording and music publishing

Interdepartmental Business Register 2010 (ONS)

The Green Enterprise District incorporating the Institute for Sustainability and
the Sustainable Industrial Park offers a major opportunity for Hackney’s
scientific, engineering and management consultants. Hackney is unrivalled
across East London in the number of firms and ready employees located in
the borough. The majority of these opportunities will be outside of the borough
as the GED is developing into a new cluster, and Hackney does not have the
land to support major manufacturing, but it is prepared with expertise.

To top