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 motorcycles • 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 activities 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 intervention. 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 Proportion Financial Services 2% .07% Professional and Technical 15% 21% Services Health and Social Care 10% 5% Hospitality (hotels, cafes, 4% 2.4% bars, restaurants ) Cultural Tourism 1.8% 6% (museums, galleries, arts, festivals) 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 Care. Hackney’s Leading Subsectors within Professional and Technical Services Subsector Firms Jobs Activities of head offices; management consultancy 520 4,803 activities 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 Proportion 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 Gateway. 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 delivered. 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 Activities of head offices; 520 5% 2 management consultancy activities Wholesale trade 490 5% 4 Food and beverage service 485 5% 2 activities 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 activities 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.
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