ECONOMIC MONITOR

May 2014

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SUMMARY Positive economic indicators reflect an increasingly bright outlook for the borough

economy. Inflation fell to 1.6% in March, a four-year low, meaning that the Consumer Prices Index rate remains below the 2% target set by the Bank of England. Markit’s Purchasing Managers’ Indices (PMIs) for period covering April 2014 measured levels of business activity in manufacturing (57.3), construction (60.8), and services (58.7) showing solid signs of growth, each remaining well above the 50.0 no-change mark. A figure below 50.0 would highlight a decline within the sector.

Hive membership to date include 192 borough based businesses, with 20% of all businesses registered within manufacturing & automotive. The creative industries represent 14% with service based businesses representing 13% of total membership.

Latest data shows that health remains the largest sector within the Borough. 20% of all jobs primarily within the public sector had seen growth between 2009 and 2012. Manufacturing remains the key private sector representing 17% of all jobs within Blackburn with Darwen, with specialist niche subsectors which are innovating, exporting and churning higher value jobs, replacing traditional roles in the local area. Other growth sectors since 2008 include education, construction and motor trades. Business and professional services has seen a 13% increase between 2008 and 2012.

The number of enterprises and business units has increased within the borough between 2012 and 2013 which suggests conditions for growth continue to improve. The borough business age is younger, with 31% of businesses established within the last 3 years compared to 26% in Lancashire.

The borough tends to have a larger share of mid-sized to large businesses, predominantly within manufacturing which support a greater number of jobs in the area – almost 1 in every 5 jobs. The borough also has a higher proportion of businesses (12%) which exceed £1million turnover compared to Lancashire and UK as a whole (9%).

The council’s economic development company, Regenerate Pennine Lancashire has helped create 249 jobs over 2013/14 using £1.3m of grant investment. The council / Government can help support businesses through land and property enquiries, planning, skills and recruitment.

The council latest business survey found that 79% of firms had employed additional staff during 2013; 72% of firms expect employment levels to grow over the next 3-5 years, whilst only 3% forecast levels to decline; However, 41% of firms regularly

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experience difficulties when recruiting staff, whilst 31% of surveyed firms were holding unfilled vacancies.

Analysis on salaries showed that workplace based earnings (£390pw) is higher than resident based earning (£350pw), indicating higher value employment may be serviced by non-residents. Over 2013, income from employment was largely static but strongly rising levels of workplace activity bode well for future stronger pay trends. A long-awaited return to rising real wages is likely to boost consumer spending as we move through 2014, adding another piece to the jigsaw of the UK’s economic recovery.

Positive signs continue within Jobs Seekers Allowance at the Blackburn with Darwen level. In March 2014, the proportion claiming Jobseeker’s Allowance (JSA) was 3.5%. This suggests that the trend of monthly falls in claimant numbers has returned, following slight increases in January and February as a result of temporary seasonal jobs coming to an end. The 3.5% working age claimants in borough remains above the national JSA claimant average of 2.9%.

Latest 2013 NVQ level 4 attainment has had a 2.1% increase to 25.3% when compared to previous year. GCSE attainment has also been improving but continues to perform below the Lancashire average. 42% of the borough’s surveyed firms currently offer apprenticeships, but cite there is a ‘lack of suitable candidates’ and ‘a lack of in house capacity to support an apprentice’ as the most common barriers to taking on an apprentice or offering additional placements.It is important that local skills level continue to increase to reflect local economic needs to help sustain steady economic growth.

The latest Land Registry data shows that the average house in Blackburn with Darwen cost £71,846 in April 2014. Whilst below the England & Wales average, house prices in Blackburn with Darwen have now increased year-on-year for the last seven months. Land Registry house sales data over 2013 have shown sales to have been in excess of 100 in each month. This increase is in part likely to be as a result of improved confidence in the housing market, while initiatives such as Help to Buy have had a significant impact on the new build market. The rental market continues to play an important role in meeting housing demand in Blackburn with Darwen and rental levels remain reasonably steady.

Whilst businesses need to continue to be risk averse understanding key macroeconomic factors such as interest rate increase, currency fluctuations, and inflationary led pressures such as wage increases and rising energy costs which could affect local businesses, the above summary suggests that there is a lot to be confident about for new and existing businesses in the borough

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HIVEHive is the borough’s business leaders’ network which works together to raise the profile and prosperity of the area. The Hive network takes a shared responsibility to create a world-class business area, which creates wealth and opportunities for all.

The current membership breakdown and the top 3 sectors is shown below:

Sector Hive companies

Community & voluntary sector 9Construction & Engineering 8Creative industries 27Education, employment & business support 21Finance, legal, HR & property 25IT & communication 13Leisure 2Manufacturing & automotive 39Other business or consumer services 19Public sector services 8Retail, food & drink 14Transportation, storage & fulfilment 7 TOTAL MEMBERS TO DATE 192

Business news….did you know Blackburn named in the top ten most innovative areas based upon the number of patents

approved per 100,000 residents (Centre for Cities) Blackburn ranked 11th in the UK for its proportion of high-growth businesses in 2013

(Experian) Barclays 2013 Entrepreneurs Index found 206 Blackburn firms in 2013 had sales growth

of 10% or more, putting us 11th on the list across the whole of the UK

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SECTORS

Macroeconomic factors such as interest rate increase, currency fluctuations, sharp wage increases, price of energy and inflation could risk long term sustained growth within Blackburn with Darwen.

ManufacturingManufacturing, the largest private sector within the BwD economy continues to benefit from growth of output and new orders. Input prices have remained steady helped by low interest rates and falling inflation. The sector is buoyant and performing very well.

ConstructionAcross the UK, house building reclaimed its place as the main driving force behind the resurgent construction sector, but commercial and civil construction remains steady. Local Plan consultation is currently in place within the borough to help identify housing potential going forward.

ServicesWithin the service sector, new business and employment all continue to rise. Public service continues to be a dominant sector which helps support over a £1bn annually into the local economy.

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BUSINESS

The borough’s business age compared to Lancashire is younger, with 31% of businesses established within the last 3 years compared to 26% in Lancashire, and 41% of businesses aged 10 or older compared to 45% in Lancashire overall.

EnterprisesBoth the number of enterprise and local units has increased in the borough between 2012 and 2013. 14% of all enterprises were within the retail sector followed by professional and scientific businesses representing 12% and manufacturing at 11%. However, manufacturing sector had the greatest number of businesses compared to all other sectors when measured by companies with more than 10 employees

Manufacturers are big employers which tend to employ more people and create more wealth than some of the other economic sectors. Around 10,500 work in manufacturing representing 1 in every 5 jobs in the borough, a key sector which has the potential to export, innovate and continue to generate new jobs in all sectors of the economy.

Blackburn with Darwen has a slightly higher representation of higher turnover businesses, with 12% having a turnover of more than £1 million, compared to 10% in Pennine Lancashire and 9% in Lancashire and the UK as a whole.

Age of Borough Businesses Business Size by Turnover

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Source: UK Business: Activity, Size, Location (2012)

COUNCIL BUSINESS SUPPORT AND FINANCECommercial Space

Two of the three Council owned commercial venues within the borough are currently full. These high occupancy levels suggest that service based businesses continue to perform well. It is important that a ladder of accommodation is available to support local companies to expand and grow.

Blackburn’s landmark Cathedral Quarter development comprises 30,000 sq ft of new grade A office space. On site now with completion due Autumn 2015.

Contact CentreThe council operates a dedicated helpline for incoming business enquiries (01254 588180). In month 1 (March) 222 calls were received, rising to 316 in April 2014.

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Business Rates50%

Planning48%

Land & Property0%

Business Grants1% Supplier opp's

1%

Council's Incoming Business Enquiries by Section

Regenerate Pennine Lancashire

The Council and its economic development company, Regenerate Pennine Lancashire, operate grant funding programmes to create new employment and deliver private sector investment. Programmes include:

Assistance to Industry (the Council’s discretionary grant scheme)2013/14 grant paid = £216,812 / jobs created = 124.5

Accelerating Business Growth (a Regional Growth Fund scheme available across Lancashire)Grant allocated to BwD-based projects = £1,074,148 / jobs to be created = 124

In 2014/15, under the FUSE programme, substantial grants from £5k to £50k are available through Regenerate Pennine Lancashire for businesses based in or looking to relocate to Blackburn with Darwen which have been trading under 3 years and are looking to grow.

Additional Government support for businesses include: Wage Incentive: £2,275 to recruit an 18 to 24 year old who has been unemployed

for at least 6 months.www.gov.uk/jobcentre-plus-help-for-recruiters/other-employment-schemeshttp://www.bootstrap.org.uk/youth-contract-wage-incentive/ Tel: 01254 867154

The National Apprenticeship Service provides support for employers. There’s £1,500 to support the recruitment of a new 16 to 24 year old apprentice; it’s for employers with up to 1,000 staff who have not recruited an apprentice within the last twelve months.www.apprenticeships.org.uk/Employers/Steps-to-make-it-happen/Incentive.aspxTel: 08000 150 600

EMPLOYMENT

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In a recent survey carried out in December 2013 of BwD businesses:

79% of firms had employed additional staff during 2013;

72% of firms expect employment levels to grow over the next 3-5 years, whilst only 3% forecast levels to decline;

However, 41% of firms regularly experience difficulties when recruiting staff, whilst 31% of surveyed firms were holding unfilled vacancies.

The borough has 61,500 jobs compared to 60,000 residents of working age. This means the borough is a net importer of people who come and work in Blackburn with Darwen.

Analysis on salaries also shows that workplace based earnings (£390pw) is higher than resident based earning (£350pw), indicating higher value employment are being serviced by non-residents.

Unemployment rate has seen a modest decrease to the 12 months ending December 2013 currently at 8.1%. This is now at the same level as the regional but slightly higher than the national average. In March 2014, the proportion claiming Jobseeker’s Allowance (JSA) is 3.5% (3,305) which is above the national average of 2.8%, although this trend is declining as more people move into employment following seasonal variations.

In December 2013, self-employment had returned to levels seen in December 2012 7,300 (8.4%) following a period of decline, but remains below the regional and national average.

Blackburn with Darwen

North West Great Britain

8.4 8.3

9.6

7.98.5

9.5

8.48.9

9.7

Self EmploymentDec-12 Sep-13 Dec-13

SKILLS

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It is important that local skills levels match the needs of the local economy.

In 2013, professional occupations rose by 3.7% representing 18% of the total working age population of the borough. These roles support both the manufacturing and service sectors. Roles within care and leisure had fallen by 1.7% compared to 2012, currently representing 8.9% of the total workforce. Elementary roles have also fallen by 1.6%, currently at 13.6%

These changes across occupational groups suggest there are demands on higher value employment.

Qualifications (January 2013-Dec 2013)

Qualification levels whilst improving continue to remain below the regional and national average.

Blackburn with Darwen (no. of residents aged 16-64)

Cumulative % of Blackburn with Darwen residents (aged 16-64)

Cumulative % of North West residents (aged 16-64)

Cumulative % of Great Britain residents (aged 16-64)

NVQ4 and above 21,900 25.3 31.0 35.2NVQ3 and above 39,300 45.3 51.9 55.8NVQ2 and above 56,200 64.8 70.2 72.5NVQ1 and above 68,400 78.9 83.0 84.4Other qualifications 6,000 7.0 6.0 6.3No qualifications 12,300 14.1 11.0 9.3

Source Annual Population SurveyGCSE Attainment

The graph shows the proportion of pupils achieving five GCSEs A*-C including English and Mathematics GCSE.

Blackburn with Darwen is ranked 13th/23 Local Education Authorities (LEAs) in the North West in terms of attainment levels (59.5%). In comparison, BwD is almost 2% below the Lancashire LEA of 61.2%.

In 2012-13, 59.5% of pupils in Blackburn with Darwen, attained 5 A*-C including English and Mathematics at GCSE. This was 2.5% higher than that recorded in the previous year and 21% higher than that recorded in 2006.

ApprenticeshipsThe borough Business survey from December 2013 found that:

42% of the borough’s surveyed firms currently offer apprenticeships, with ‘a lack of

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2005/06

2006/07

2007/08

2008/09

2009/10

2010/11

2011/12

2012/13

30.0

35.0

40.0

45.0

50.0

55.0

60.0

65.0

38.6

59.5

45.9

61.2% of pupils achieving 5+A-C including

English and Mathematics GCSE

Blackburn with Darwen

Lancashire

suitable candidates’ and ‘a lack of in house capacity to support an apprentice’ cited as the most common barriers to taking on an apprentice or offering additional placements.

Alongside this, 39% of firms surveyed identified skills gaps in the current workforce.

Government official data shows that BwD’s overall apprenticeship starts in 2012/13 saw a slight increase in comparison to the previous years, whereas both regional and national totals have decreased.

Whilst BwD has a strong success rate in terms of the number of 16-18 year olds who complete their apprenticeship, outperforming both the region and national averages at all levels, employers are reminded that the ‘Raising of the Participation Age’ to 18 does not necessitate staying on at a school’s sixth form or going to college – an apprenticeship counts as staying on in learning too.

HOUSING MARKETIn BwD, the average house price recorded in April 2014 was £71,846, which had fallen by 4% when compared with previous year. However, prices have started to show an upward trend coinciding with the increasing sales since November 2013 (£69,370).

The lower average prices reflect the nature of the local housing market which is dominated with smaller lower value terraced properties, whilst the lower proportion of family homes attract a higher premium, often more than double the average borough house price. The supply of housing, particularly focusing on family homes to meet the demands of a growing workforce and population is a fundamental requirement if the supply side of the economy is to function effectively.

Since the introduction of the Government’s Help to Buy scheme, 44 households had benefitted to the month ending April 2014.

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Produced by

PLACE Strategy Unit01254 585771

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