HAVERING ECONOMIC ASSESSMENT
Prepared for the Towns and Communities Board
by Havering’s Regeneration Service
November 2010
Havering’s Local Economic Assessment is two sections:
Section 1 – The strategic overview of Havering’s economy
Section 2 – The State of Havering’s Economy
The Council formally consulted on the draft LEA during the period December 2010 to January 2011. Comments and suggestions received in response to that consultation helped shape this final document. The local and regional partners and community organisations formally consulted were:
· Representatives from LB Havering
· Representatives from Havering College
· East London Small Business Centre
· Representatives from Job Centre Plus
· Gateway to London
· Business Link
· Federation of Small Businesses
· London Riverside BID
· HCCI
· East London Business Place
· HAVCO
· Working Links
· Lifeline
· CEME
· London South Bank University
· TGLP
· Representatives from Havering Strategic Partnership
Contents
Executive Summary / 41 / Introduction to Havering’s Local Economic Assessment / 7
2 / Brief description of Havering and its economy / 8
3 / Scope / 12
4 / Process and methodology / 13
5 / Havering’s economy / 14
5.1 / - Business and enterprise / 14
5.2 / - Employment and skills / 17
6 / Regeneration projects / 18
6.1 / - Rainham / 18
6.2 / - Harold Hill / 27
6.3 / - Hornchurch / 31
6.4 / - Romford / 36
7 / Gaps in our understanding of Havering’s economy / 43
8 / Key recommendations / 44
9 / External issues and opportunities / 44
9.1 / Crossrail / 44
9.2 / 2012 Games / 45
9.3 / Sub-regional Competition / 45
10 / External Policy Directives / 46
10.1 / Child Poverty / 46
10.1.1 / Tackling Child Poverty in Havering / 46
10.1.2 / The extent of Child Poverty in Havering / 47
10.2 / Worklessness / 47
11 / Ownership / 47
Executive Summary
From April 2010, all county and unitary authorities in England had a duty to prepare a Local Economic Assessment (LEA) this was seen as an important part of the Local Democracy, Economic Development and Construction Act 2009. Although, this was rescinded in June 2010 understanding the economy, and having sound evidence that supports or challenges assumptions, will help to respond most effectively to rising unemployment and future cuts in public spending.
It is clear that the coalition government are keen to promote the
localism agenda in which communities and their local authorities have
much greater autonomy in deciding their needs. The Localism Bill sets out the Government’s role in empowering locally driven growth, encouraging business investment and promoting economic development. For local communities this means ensuring that everyone has access to opportunities that growth brings and everyone is able to fulfil their potential.
Crucially, LEAs should not be constrained by local authority boundaries. They should seek to identify the ‘functional economic areas’ within and across boundaries. For instance, for Havering, this could identify links with Thurrock, London East and Central London in terms of travel to work flows, retail catchment areas or leisure patterns. A sub-regional Local Economic Assessment, covering Thames Gateway London has informed our own LEA.
Havering’s LEA describes the economy of Havering, the ‘economic flows’ which characterise its economic life and the areas economic competitiveness. It looks at sectors which make up the economy, economic activity rates and worklessness and external economic challenges. It is not necessarily expected to make recommendations – any recommendations will emerge from the reports and analyses that it informs. However, it may identify clear issues and draw logical conclusions that may clearly identify actions and underpin local authorities’ power to promote the economic, social and environmental well-being of their area
Havering is home to 234,000 people of whom 149,000 are working age. There are just over 8,000 businesses and approaching 70,300 employees. In defining Havering’s economic geography it is important to understand how the economy works. The LEA should tell the economic ‘story of the place’, forming a key evidence base to inform other major strategies/plans and should lead to improved economic interventions including better spatial prioritisation of investment, and contribute to the overall aim of delivering sustainable development.
Havering’s economy performs comparatively well, with one of the highest working age employment rates of 70% (the lowest in London is Newham 60%)[1], and an income support claimant rate of 5% (compared to London’s 6%)[2]. The median gross weekly pay of full-time workers resident in Havering is £594.70 with the London average pay rate of £606.80 and that of those whose jobs are located in Havering itself at £543.00[3], reflecting the fact that nearly 60,000 residents commute west into the City to work.
Prior to the recent economic difficulties, Havering’s economy had grown
significantly. Unemployment remains relatively low when compared with regional and national levels and economic activity rates are high. However, the area faces a number of emerging issues including:
1. a large public sector workforcemaking it vulnerable to budget cuts;
2. high proportion of people working in the service sector;
3. a large number of small businesses, including a large number of new businesses being created, which indicates a strong innovative
economy, but also increases vulnerability to cashflow difficulties and cutbacks during difficult economic times;
4. high proportion of retired people, and a declining working age
population which will increase the dependency ratio in future;
conversely, a large number of older people also provides
opportunities such as the Over 50’s Forum which provides an opportunity to make the fullest use of their skills in developing new ventures and taking on new business challenges;
5. shortage of demand for commercial development land;
6. pockets of deprivation, particularly in the north and south of the borough
7. significant increase in the numbers of long term unemployed;
8. a relatively low wage economy
9. very high house prices makes the area less affordable for first time home buyers
10. experiencing skills gaps, exacerbated by demographic change with a loss of young people and a higher proportion of retired people than in other boroughs
11. coming under pressure from business and local communities to enhance the LEA area’s infrastructure, particularly the need to
address increasing congestion in the urban area and inadequate
wider connectivity;
12. specific sectors which are strong or have potential to grow in the area and a shared desire to move towards a green knowledge economy.
Section 1 – The strategic overview of Havering’s economy
1.0 Introduction to Havering’s Local Economic Assessment
Under the former national Government, the important role of local authorities in economic development was recognised, and following the 2007 Review of Sub-National Economic Development and Regeneration a duty was placed on all local authorities to carry out a Local Economic Assessment (LEA) for their area from 1st April 2010.
With the subsequent change of Government, that duty was rescinded, nevertheless, Havering will continue work on the development of an LEA, as it is considered that an LEA will provide a robust and consistent foundation for future economic policy and strategy, including, the review of the Regeneration Strategy.
Government guidance advised local authorities to bring together data, evidence, and the expertise of economic development partners, to develop a shared and sound understanding of the economic activity of the residents and firms located in the local area. The idea is that this will help local authorities to better plan for and encourage economic growth and prosperity in their area.
The main objectives for LEAs were that they should:
• Provide a sound assessment of economic conditions in the area and how they affect residents and businesses.
• Identify the comparative strengths and weaknesses of the local economy and the nature and form of local economic challenges and opportunities.
• Identify the local economic geography, including the economic linkages between the area being assessed and the wider economy.
• Identify the local constraints to economic growth and employment and the risks to delivering sustainable economic growth;
• and where possible include an assessment of child poverty in accordance with Section 21 of the Child Poverty Bill
The Department for Communities and Local Government (DCLG) has advised on the identification of functional economic areas as the basic units to be included in the Assessment. The guidance suggests that, ‘economic analysis is best undertaken at the spatial level at which the relevant economic market operates – or the ‘functional economic market area’ (FEMA).’ However, the DCLG guidance also acknowledges that, ‘there is no universal approach to defining FEMA’s. The pattern of economic flows can be different depending on which local markets are being considered.’ It also allows that, ‘Mapping functional areas, however, is only a starting point to bringing about sub-regional policy collaboration. Success also requires strong political support at a local and regional level.’
In preparation for this, the Council commissioned Renaisi to undertake a piece of diagnostic work to bring together the existing and relevant evidence about the borough’s economy, identify information gaps, the direction of future economic and strategic policy and make recommendations about work required to fill any gaps.
In preparing their LEA’s London boroughs should also take account of the London Plan and the Mayor of London’s strategies for Economic Development and Transport. The Mayor of London’s Economic Development Strategy (EDS) is the key document which has five objectives:
• To promote London as a city that excels as a world capital of business.
• To ensure that London has the most competitive business environment in the world.
• To drive London’s transition to a low carbon economy and maximize the economic opportunities that this creates.
• To give all Londoners the opportunity to take part in London’s economic success, access sustainable employment and progress in their careers.
• To maximise the benefits to London from investment to support growth and regeneration, and from the 2012 Olympic and Paralympics Games and its legacy.
2.0 Brief description of Havering and its economy
Havering is one of the largest boroughs (geographically) in Greater London, with a population of around 225,000, 90,000 households and an area approaching 43 square miles, half of which is in Green Belt countryside, and 92% of land in the borough is used as public or private open space, which is around 10% higher than the London average.
Strategically located where the Thames Gateway crosses the M25 and the green belt, Havering as a place is well situated to play a key role in Europe’s largest geographical regeneration project. Havering is well served by road, bordering the M25, rail and air, with excellent transport links offering easy access to central London which is less than half an hour away, east into Essex and the rest of Great Britain and Europe. Stansted, Gatwick and City airports are only an hour, and the Channel Tunnel is easily accessible. Accessibility to central London and to the west will be improved in 2018 with the completion of Crossrail.
Havering’s economy is also considered, in particular its importance to the London economy with 36% of its working population commuting everyday outside of the borough[4]. Within this travel to work area, Havering is a net exporter of commuters; more people travel to work outside the borough than travel from outside the borough to work. This in line with the ‘London Borough’ average and most neighbouring authorities, such as Barking and Dagenham and Bexley.
1 Residents of Havering aged 16-74 in employment by area of workplace: 2001[5]
Equally important is borough based employment with business and financial services, retail, manufacturing and construction as key sectors. Low skills are identified as a threat to the economy of the borough alongside wider economic issues which will affect the main sectors of the Havering economy, including the impact of the economic downturn and spending restrictions over the next few year
However, it is anticipated that the economy will receive a boost from the huge investment surrounding the London 2012 Olympics & Paralympics Games. Much of the area’s economy is characterised by small businesses with a market that does not extend far beyond the boundary, and therefore, achieving job growth and balancing it with population growth will be a challenge.
2 Breakdown of Jobs by key sector in 2008[6]
The borough’s economic resilience is likely to come from Romford’s retail and hospitality sectors with the recent London growth in the number of business that fall under the ‘Hotels and Restaurants’ sub-sector indicating that Romford may be able to benefit from London’s projected growth in the hospitality sectors.
In addition the opportunities to secure public sector office occupiers relocating from central London could offset the potential losses in the finance and business services sector. The Romford Area Action Plan identifies the continued presence of the office sector as important to supporting retail and leisure in the town. The growth of residential development in the town centre will also be an essential element in supporting Romford’s viability as a metropolitan centre and make it more resilient to fluctuations in office demand in the area.
Future economic growth in the area could also come from making the most of opportunities from strengthening the logistics sector and higher education as suggested by the Outer London Commission and the growth in green industries in the Thames Gateway as outlined in recent work by the LDA. The importance of local manufacturing to the London economy is also recognised along side construction and logistics.
Rainham Compass identifies the importance of the further and higher education sector with the continued growth of Havering College’s new ‘southern’ campus. 5,000 new jobs are estimated for this area, which will require support from new homes and social and physical infrastructure, bringing an expanded workforce with a range of skills.
3 Havering’s Strategic position in the sub-region[7]
Havering’s economy performs comparatively well, with one of the highest working age employment rates of 70% (the lowest in London is Newham 60%)[8], and an income support claimant rate of 5% (compared to London’s 6%)[9]. The median gross weekly pay of full-time workers resident in Havering is £594.70 with the London average pay rate of £606.80 and that of those whose jobs are located in Havering itself at £543.00[10], reflecting the fact that nearly 60,000 residents commute west into the City to work.