The Leeds Economy CONTENTS Gross Value Added and productivity Business stock and level of entrepreneurship Major organisations Historical economic development Gross Value Added and productivity Sources of data ONS produces annual estimates of Gross Value Added (GVA) for different parts of the UK. There is a two year time lag: the latest data are for 2005. The data for 2006 will be published in December 2008. The lowest spatial level for which they are made is NUTS 3. There are 128 NUTS 3 areas in Great Britain. Leeds MD is a NUTS 3 area in its own right, but some other NUTS 3 areas are groups of local authorities. For example, Calderdale, Kirklees and Wakefield together comprise a NUTS 3 area. ABI data on the number of employees are available on a local authority basis and so can be used with the GVA data to provide rough productivity estimates (GVA per employee) for NUTS 3 areas. GVA • Leeds MD’s GVA was £15.27bn in 2005 • It is around 43% of West Yorkshire’s, 19% of Yorkshire and the Humber’s, and 1.4% of UK’s • Leeds is by far the largest centre of economic activity in the Yorkshire and Humber region: it is 85% higher than Sheffield’s and 130% higher than Bradford’s, for example • Leeds’ GVA is the 3rd largest of the 30 NUTS 3 areas in the north of England, exceeded only by Greater Manchester South (£27.92bn) and Birmingham (£18.04bn) • Compared with other major GB cities and conurbations, its GVA is exceeded only by London (£206.32bn and comprising 5 NUTS 3 areas), Greater Manchester South (£27.92bn) and Birmingham (£18.04bn). Greater Manchester North’s is £14.16bn, Glasgow’s £14.11bn, Tyneside’s £13.60bn and Edinburgh £13.02bn. • Growth between 2000 and 2005 was 30% in current prices, a faster rate than in West Yorkshire and Yorkshire and the Humber, but equal to GB. Similar to growth in Greater Manchester South, it was faster than in other major English cities and conurbations, though not reaching the levels of Cardiff, Edinburgh, Glasgow or Tyneside. Productivity and sectors • GVA per employee was £37,050 in 2005 • It is higher than West Yorkshire and Yorkshire and the Humber’s, but is 37% lower than London • It is lower than Greater Manchester South, Nottingham, Bristol, Cardiff and Edinburgh • Growth between 2000 and 2005 was 22% in current prices. This was slightly higher than West Yorkshire and Yorkshire and the Humber, but lower than GB. Table 4.1 GVA and GVA per employee Selected Spatial Areas GVA, £m, Current Prices GVA/Employee, £, Current Prices 2000 2005 % 2000 2005 % change change GB 805,565 1,048,874 30 31,948 39,585 24 NUTS 1 London 134,720 206,324 53 33,177 50,811 53 Yorkshire and the Humber 61,034 78,513 29 29,371 35,178 20 NUTS 2 West Yorks 27,875 35,219 26 29,725 35,976 21 South Yorks 13,359 17,660 32 27,570 32,544 18 North Yorks 9,551 12,478 31 29,864 36,411 22 E Riding & N Lincs 10,249 13,155 30 30,510 35,786 17 NUTS 3 Leeds 11,753 15,268 30 30,310 37,050 22 Bradford 5,643 6,623 17 28,783 34,437 20 Calderdale, Kirklees & 10,479 13,328 27 29,735 35,585 20 Wakefield York 2,932 3,692 26 31,360 36,947 18 Sheffield 6,354 8,265 30 28,299 32,801 16 Tyneside 10,124 13,603 34 28,903 34,199 18 Greater Manchester North 11,556 14,157 22 27,599 33,046 20 Greater Manchester South 21,551 27,925 30 30,648 38,008 24 Liverpool 5,585 7,133 28 28,360 31,568 11 Nottingham 5,019 6,957 39 28,459 37,627 32 Birmingham 14,745 18,038 22 30,926 36,356 18 Bristol 7,603 9,506 25 31,957 41,384 29 Cardiff & Vale of Glamorgan 6,599 8,978 36 31,304 38,630 23 Edinburgh 9,445 13,017 38 32,363 41,106 27 Glasgow 10,516 14,108 38 28,897 34,263 19 Source: Local Gross Value Added (ONS, December 2007) and Annual Business Inquiries 2000 and 2005 (NOMIS) London: 32 Boroughs and City of London North Yorks: North Yorks County plus York E Riding & N Lincs: Hull, E Riding, NE Lincs, N Lincs Tyneside: Newcastle, Gateshead, N & S Tyneside Gtr Manchester North: Bolton, Bury, Oldham, Rochdale, Wigan Gtr Manchester South: Manchester, Salford, Stockport, Tameside, Trafford Table 4.2 shows the contribution of each sector to output Table 4.2 Output by sector, Leeds MD Sector 2008, £m % of whole Sector’s % of % change in economy whole output 1998- output in economy 2008 2008 output in 1998 Agriculture, forestry, fishing, 40 1 4 -67 mining, energy, and water Manufacturing 1,754 11 16 -2 Construction 1,046 7 6 50 Wholesale and retail 1,851 12 13 27 Hotels and restaurants 375 2 3 32 Transport and communications 1,103 7 7 40 Finance and business services 5,569 36 25 96 Public administration; community, 3,625 23 26 23 social & personal services; education and health Whole economy 15,464 100 100 38 Source: Yorkshire Futures/Experian Business Strategies (Spring 2008) Business stock and the level of entrepreneurship The number of businesses registering and de-registering for VAT are useful indicators of the scale of business start-ups and closures and so the level of entrepreneurship in a particular area. Notes on the data The figures do not give a complete picture of business start-ups and closures: approximately 42% of UK enterprises at the beginning of 2006 were VAT-registered. Part of the explanation is that there are a few VAT exempt sectors and also some firms’ annual turnover is below the threshold for VAT registration which was £64,000 from April 2007. Some businesses below the threshold do register, however. About a quarter of all registrations have a turnover below the threshold. For detailed statistical reasons, totals for the same year in different tables do not always exactly correspond, and the stock at the beginning of one year plus the sum of registrations and de- registrations in that year might not exactly correspond with the stock at the end of the year. Data are not available at the ward level. Business survival rates (the proportion of businesses surviving say 3 years after registration), are not published for Leeds. They are available at the West Yorkshire level. VAT data: Stock, registrations and de-registrations Table 4.3 shows changes in the stock, registrations and de-registrations for Leeds MD between the beginning of 1996 and the end of 2006. The stock of VAT-registered companies increased by 2,205 or 13% over the period. The total number of enterprises in Leeds is unknown but if the UK ratio holds (where 42% of all enterprises are VAT-registered) then there could be over 46,000, an increase of approximately 8% since 2001 Table 4.3 VAT registrations and de-registrations 1996-2006, Leeds MD Year Stock at Registrations De-registrations Net Stock at end start of year Change of year 1996 17,255 1,820 1,715 105 17,360 1997 17,360 1,955 1,725 230 17,590 1998 17,595 1,920 1,740 180 17,775 1999 17,775 1,880 1,775 105 17,880 2000 17,880 1,945 1,800 145 18,025 2001 18,025 1,835 1,795 40 18,065 2002 18,065 1,955 1,875 80 18,145 2003 18,150 2,095 1,735 360 18,510 2004 18,510 2,040 1,770 270 18,780 2005 18,775 1,965 1,560 405 19,180 2006 19,180 2,030 1,645 385 19,565 Source: Small Business Service, BERR Comparative change in stock Table 4.4 shows, for Britain’s urban areas (counties have been excluded), where the largest stocks are and the rate of growth. Leeds, with a stock of over 19,565 companies, has the third largest stock in Britain. London’s stock is over 309,000, followed by Birmingham with over 23,500. However, the growth in Leeds’ stock has been moderate. Table 4.4 Key urban areas: stock and changes in stock Stock at end 2006 % change in stock beginning 1996 to end 2006 London 309,225 28.3 Edinburgh 13,855 26.1 Bristol 12,385 20.6 Cardiff 8,035 17.7 Kirklees 11,190 17.6 Liverpool 8,665 17.3 Leicester 8,085 16.3 Leeds 19,565 12.7 Bradford 11,555 12.7 Sheffield 12,015 12.4 Nottingham 6,420 11.4 Glasgow 13,735 10.9 Birmingham 23,490 10.6 Newcastle 5,650 10.4 Aberdeen 6,660 8.9 Manchester 11,865 3.1 West Yorkshire 56,035 15.6 Leeds City Region 79,200 17.1 Yorkshire & Humber 139,970 15.8 Great Britain 1,892,385 19.9 Source: Small Business Service, BERR Registration rates Table 4.5 shows that Leeds had a registration rate in 2006 only slightly lower than the national rate. Areas with high registration rates tend to have high de-registration rates, reflecting the short lifespan of many new businesses. Table 4.5 Business registration rates Area Registration rate per 10,000 resident adults, 2006 London 57 Bristol 39 Manchester 37 Edinburgh 37 Kirklees 34 Leeds 33 Bradford 31 Birmingham 30 Cardiff 30 Sheffield 25 Liverpool 25 Nottingham 26 Newcastle 25 West Yorkshire 33 Leeds City Region 33 Yorkshire and Humb 31 GB 37 Source: Small Business Service, BERR Sectors Table 4.6 shows the exceptional growth in recent years of the number of enterprises in the finance and business services sector. This was at similar rates locally, regionally and nationally. By contrast, the numbers of enterprises in the manufacturing and wholesale and retail sectors have fallen more rapidly in Leeds than in the region or nationally. Table 4.6 Changes in business stock by sector, start 2001 to end 2006 LEEDS MD Yorks and Great Humber Britain Stock, end Stock end % change % change % change 2001 2006 Agriculture, forestry & 370 355 -4 -3 -3 fishing, mining, energy, water Manufacturing 2,125 1,770 -17 -4 -6 Construction 1,915 2,290 20 21 18 Wholesale and retail 4,540 4,520 - 5 4 Hotels and restaurants 1,190 1,355 14 16 18 Transport and 825 935 13 11 10 communications Financial 5,455 6,730 23 22 18 intermediation, real estate, renting & business activities Public administration; 1,640 1,610 -2 3 60 community, social & personal services; education and health TOTAL 18,060 19,565 8 10 9 Source: Small Business Service, BERR Size of workplaces Note on the data The Annual Business Inquiry (ABI) estimates the number of “data units”, which are roughly equivalent to workplaces, and the number of employees working at them. Data units are not equivalent to businesses: one business could have several workplaces in Leeds. Table 4.7 shows that most workplaces are medium or small scale. In 2006, around 80% of all workplaces each employed fewer than ten people. These accounted for 15% of all employees in Leeds. 1% of workplaces each employed more than 200 people, but they account for 39% of total employees. The table also shows that the 14% growth in employment from 1998-2006 was accompanied by only a 8% increase in the number of workplaces. The growth in both employment and workplaces over the period is particularly apparent in the workplaces employing over 50. Table 4.7 Size of workplaces, Leeds MD Unit (workplace) 1-10 11-49 50-199 200+ All size 1998 Units (workplaces) 20,000 3,800 900 300 24,900 Employees 62,900 84,500 81,000 136,900 365,200 2006 Units (workplaces) 21,700 3,900 1,100 300 27,000 Employees 64,000 87,000 102,000 163,700 416,800 Source: Annual Business Inquiry, NOMIS Major organisations Largest Employers in Leeds 53 companies and public sector organisations each employ more than 500 people in Leeds. Employ Organisation Activity Over 10,000 Leeds City Council Local government Leeds Teaching Hospitals NHS Trust Healthcare services in Leeds Over 2,000 British Telecommunications Telecommunications BUPA Medical services Direct Line Group Insurance and motoring assistance First Direct Telephone banking Halifax Bank Leeds Metropolitan University Higher education Royal Mail Postal services University of Leeds Higher education Ventura Customer Management services Over 1,000 ASDA Group Retail British Library Library; document supply centre Centrica Gas distributor Department of Health Government services Department for Work and Pensions Government services G E Money In store credit card services Halifax Direct Direct Banking Leeds City Link Bus and coach operators Moores Furniture Group Kitchen & bedroom furniture PricewaterhouseCoopers Chartered accountants Yorkshire Bank Banking and financial services Yorkshire Power Electricity supply Over 500 Barclays Bank Bankers BT Mobile Telecommunications Carlsberg Brewers Commusischorleys Direct mail and communications Dependable Services Hygiene rental Services Depuy International Medical equipment Elite Group Freight forwarders Eversheds Legal services HSBC Banking HSBC Customer Service Centre Telephone support IBM UK Computer systems KPMG Management consultancy Leeds Building Society Building society Leeds Industrial Co-op Soc Retail Lever Faberge Toilet preparations manufacturer Lloyds TSB Banking and allied financial services Loop Customer Management Customer liaison, billing Marks & Spencer Retail Nampak Cartons Cartons for food sector National Westminster Bank Bankers O2 Cellular phone operation Office Cleaning Services Contract office and window cleaning Park Lane College Further education Premier Farnell Distribute electronic, electric products Schneider Electric High voltage switchgear Scientific Games Lottery and games tickets Symphony Group Kitchen furniture Walker Morris Commercial law firm Yorkshire Post Newspapers Newspapers and publications Yorkshire Television TV programme company Yorkshire Water Services Water and sewerage services Source: Economic Policy, Leeds City Council Historical Economic Development 1322 A fulling mill is erected on the east side of Leeds Bridge, encouraging the growth of cloth production in the district. Specialist workers, such as dyers gained Leeds a reputation as a finishing centre for the woollen industry in the surrounding area. 1626 Charter of Incorporation awarded by Charles I in recognition of Leeds’ prosperity and fame in the making, selling and exporting of woollen cloth. Leeds adopts the Golden Fleece as its coat of arms. 1661 Cloth workers guild set up by the Corporation. Though cloth dominates the economic life of Leeds, the town is also important for other trades and professions. Five other guilds are formed. The first largely consists of building workers; the second shopkeepers. The three others consist of cordwainers (shoemakers); tailors and workers in hardware. Coal mining and quarrying continue to be highly important industries in the borough. 1698 Traveller Celia Fiennes wrote, “Leeds is a large town…esteemed the wealthyest town of its bigness in the County”. 1699 Termination of the Aire and Calder Navigation gives Leeds a vital link eastwards to Hull and the North Sea. 1700 Termination of the Leeds and Liverpool Canal links Leeds to Liverpool and enables raw materials to be brought cheaply in bulk to the town. 1755 Act of Parliament aimed at improving street lighting described “The Town…is a place of great Trade and large extent, consisting of many streets, narrow lanes and alleys, inhabited by great numbers of Tradesmen, Manufacturers, Artificers..”. 1758 Opening of Middleton Colliery Railway, the world’s first commercial railway. 1792 Building begins on the world’s first woollen factory at Bean Ings, Wellington Street by Benjamin Gott - one of the most significant and innovative figures in the history of the woollen industry. 1812 Matthew Murray builds the first successful steam engine at his Hunslet works in south Leeds. 1893 Yorkshire Factory Times writes “Leeds is at last a city" through incorporation by royal charter. In the same year, the Chamber of Commerce recognises that the “good fortune” of Leeds is based on a diversity of manufacturing and commercial activity. 1902 It was said that “the [Leeds] district is favoured by reason of the variety of its industries and the effects of bad trade are never felt to the same extent as in districts which are dependent on one or two industries merely.” 1911 Tailoring, engineering and textiles are the three largest industries accounting for 45% of the workforce. 30,000 are employed in the ready-to-wear clothing industry alone, which grew further under the influence of Montague Burton (1885-1952). 1938 The Leeds Publicity and Development Department could state that the City is not only a centre for clothing, printing and engineering, but that “increasing interest is being given to furniture making, chemicals and soap manufacture, coach building, watches and clocks, fish canning, button making, electrical appliances and accessories.” 1951 Only half of the workforce remains in manufacturing while over two fifths work in services. Between 1951and 1973, 37,000 jobs were lost in manufacturing whilst 32,000 were gained in the business and service sectors. 1974 Local government reorganisation increases the City’s population by 50% to 750,000 and its area to 211 square miles. The creation of Leeds Metropolitan District is largely due to the recognition that the City had attained definite regional pre-eminence because of its long tradition of commercial activity. 1981 Manufacturing jobs decline to 80,000 jobs, but the strength of the service industries, employing almost 190,000, keep employment high by national standards. 1991 Employment in the financial sector grew by over two-thirds during the 1980s to 45,400. Manufacturing employs 64,000 across Leeds. 1992 First Direct, providing telephone banking services around the clock is the fastest growing employer in Leeds. It is significant to the economic changes in Leeds that their new premises were built on a site previously occupied by the manufacturer Waddingtons – its games division containing such global brands as Monopoly, Cluedo, and Subbuteo. 2005 Leeds becomes the second largest employer in the financial and business services sector outside London, with over 109,000 employees. 2006 Gordon Brown says that the financial and legal strength of centres like Leeds helps to underpin the UK’s world class position in financial services.