City of London Economic Research

London at work

 

By Robert Clear, Researcher in the City of London Research Team

 

Here we present a brief snapshot of London’s working age population, taken from the latest Office for National Statistics (ONS) data.

London’s working-age profile

The most recent Annual Population Survey (APS) data show that in December 2016 the total number of working age people in London – those aged between 16-64 – was 5,927,900. There was an almost even gender split, with 2,964,600 men and 2,963,100 women – a difference of only 1,500. The table below breaks down the working-age groups in the capital, showing that the largest group was the 35–49s.

London’s labour supply

According to the Labour Force Survey, in February 2017 the total number of people aged between 16 and 64 in employment was 4.5 million – approximately 73.4% of the working age population. This figure is slightly lower than the total for the UK, which stands at 74.6%. The data shows that the total number of working age people in employment in London is fractionally down on the previous quarter, when 8,000 more people were reportedly in employment (4.508 million). This is the first decline since the second quarter of 2015, when the employment figure dropped by 34,000.

Hours worked per week

The two tables below show the average hours worked weekly by those in employment, comparing London with the UK in December 2016 (APS data). In both cases, the largest group are those who worked 35–44 hours per week, each around 45% of the total. The most notable difference is that in London the second largest group are those who work over 45 hours per week (28.8%), whereas in the UK it is 10–34 group (27.4%).

London

UK

Public and private sectors

APS data for December 2016 suggests that the overwhelming majority of employed Londoners worked in the private sector: 3,602,500 compared to the 868,500 who worked in the public sector – 80.6% of the working population compared to 19.4%. The table below reveals an interesting split between the sexes in their pattern of employment. The data shows that, relative to their respective working populations, around twice the percentage of working women are employed in the public sector than men.

Gross weekly pay

Gross weekly pay remained significantly higher in London than the rest of the UK in 2016 (the latest reported year), at £670.80 against £538.70, according to ONS’s annual survey of hours and earnings - resident analysis. Since 2008 there has been a pay gap of over £100 between the capital and the UK as a whole. Gross weekly pay for women in 2016 was £609.50 for London against £480.50 in the UK, and for men it was £733.20 against £577.80.

Claimant count

ONS’s seasonally adjusted claimant count puts the total in London in March 2017 at 114,655– 2% as a proportion of claimants plus total workforce jobs. This compares to 2.2% for the UK.

 

 

 

UK Financial Services – Clustering and Concentration of Firms and Jobs

 

By Dr Laura Davison, Head of Research at the Economic Development Office, City of London Corporation

 

In this article, I've analysed data on the distribution and location of UK firms and jobs in financial services, highlighting how highly concentrated employment is in large firms, and how concentrated financial services clustering is in particular locations.

Across the UK, there are 1.07 million people employed in financial services and insurance (2016) - 3.1% of UK jobs - with two thirds (66%) of these located outside London. There are 89 thousand UK financial and insurance businesses (2016) - 1.6% of the UK total - of which 21 thousand employ at least one person.

Across the UK, in all sectors most businesses are small - 91% employ fewer than five people. Large businesses - those with 250 or more employees - are rare. Out of a total 5.5 million private sector UK businesses, only 7,200 (0.1%) are large employers - 355 (5%) of these large employers are financial services businesses.

Financial services employment is highly concentrated in these large firms - although they make up only 0.4% by number of UK financial services firms, they account for 72% of the sector’s jobs. Large firms play a much more significant role as employers in financial services than other industries - across all sectors, the equivalent proportion is 40%, and only the utilities industry (68%) comes close to this level of concentration (all other sectors are below 55%).

You can see this difference in the following two charts, where I've plotted the distribution of businesses and jobs by firm size, for the UK overall and for financial services specifically.

 

 

You can see from the first chart how similar the spread of firms is by size, for the UK overall and for financial services. But as the second chart shows, in terms of how jobs are distributed across these firms, it’s a very different picture.

It’s particularly noticeable that financial services employment is heavily concentrated in the really large firms - those with more than 500 employees. Across all UK sectors, there are 3 ½ thousand of these firms, of which 210 (6%) are financial services businesses.

These 210 firms account for 67% of the UK’s financial services jobs - the equivalent figure across all UK sectors is 35%. 

So, large employers are clearly very significant employers in financial services. But even this high proportion masks some differences within the industry, given the different types of activities it encompasses.

Banks are a substantial sub-sector in financial services, making up around 40% of financial services jobs[1], with insurance being another well-recognised component- nearly 10% of financial services jobs.[2] [3] But the businesses that provide what’s known as ‘auxiliary’ services are also very important. They provide the market infrastructure for transactions to take place, and a range of sales, fund management and advisory services - and together account for around 40% of financial services employment.[4]

As the following chart shows, these don’t all have the same patterns of employment though.[5]

 

This chart really emphasises just how important the largest firms are for employment in banking and insurance - with 84% of banking jobs in the 80 companies with 500 or more employees, and 81% in the 35 very large insurers and pension funds. By contrast, the auxiliary jobs are much less concentrated - 42% in the 95 very large firms.

It’s also worth noting that the ‘more than 500 employees’ category (the highest category for the Office for National Statistics reporting of firm size) is a little misleading when it comes to financial services. The largest banks – HSBC, Barclays, Lloyds and RBS – each employ tens of thousands of people across the UK.

The financial services industry isn’t just concentrated in a small number of firms, it’s also concentrated in particular geographic locations. ONS have just released their latest analysis looking at how jobs in different sectors are located across the UK, and where they are particularly concentrated – known as the ‘location quotient’.

The map below shows this for financial services.[6] A score above one illustrates a relatively high concentration of jobs; the lower the score, the lower the concentration.

 

As you can see, a number of areas have high financial services concentrations – eight regions have a score greater than one, including Eastern Scotland, West Yorkshire, and Cheshire. Inner London East (3.14) and Inner London West (3.00) are the highest.

Even within London, there are strong and distinctive geographic concentrations of financial services firms and jobs. Of the 210 very large (500 plus employees) UK financial services firms, 90 are based in London, covering 65% of London’s financial services employment. Around 60 of these firms are based in the City of London, and 15 in Canary Wharf (Tower Hamlets).[7]

To show where London’s financial services jobs are concentrated, I’ve plotted these across London boroughs, using a handy cartogram template from the GLA’s London Datastore.[8] Of London’s 362 thousand financial services jobs, 78% (282 thousand) - are based in the City of London, Tower Hamlets, and Westminster.

 

 

Jobs in different sub-sectors are strongly concentrated in particular areas – London’s banking jobs are largely split across the City of London (42%) and Tower Hamlets (31%), while fund management is concentrated in the City of London (46%) and Westminster (40%).

 Insurance is the most strikingly concentrated sub-sector, with 74% of London’s jobs located in the City of London (4% in Tower Hamlets, 3% in Westminster). Even within the 1.12 square miles that constitute the City, insurance is tightly clustered in the East, whereas financial services are more evenly spread.

You can see this in the two following maps, which we commissioned as part of a series looking at firm movements and locations (firms in colour moved in the 2012-14 period, those in grey were stable).

 

 Overall, then, you can see just how concentrated financial services employment is, in very large firms and in particular areas, especially in London. London’s financial services cluster is often highlighted as one of its key competitive strengths – with firms in close proximity benefitting from access to a skilled and specialised workforce, ease of knowledge exchange and shared innovation, enhanced reputation and profile, a large customer pool, and the wide range of related professional services that have grown alongside the cluster.

 

[1] Here when referring to ‘banks’, I've used SIC code 64.1 ‘monetary intermediation’, which also encompasses building societies and credit unions.

[2] Here I’ve used SIC codes 65.1 and 65.2 – insurance and reinsurance.

[3] Business Register and Employment Survey (2015 data, released 2016)

[4] SIC code 66 – ‘Activities auxiliary to financial services and insurance activities’

[5] NB Here I’ve used the overarching SIC codes - 64, 65, 66 respectively – due to data availability at this level

[6] NB draws on 2015 data

[7] NB ONS figures are rounded to the nearest five

[8] Business Register and Employment Survey 2015 data, published 2016.

Trends and growth in UK financial services trade

 

By Saif Ullah, Researcher in the City of London Research Team 

 

The Government’s recent publication of its Brexit White Paper (02/2017) confirmed their intentions to withdraw the UK from the EU’s Single Market and seek a new customs arrangement and free trade agreement with the trading bloc. While much uncertainty resides over how long it will take to negotiate a trade deal with the EU once Article 50 is triggered (let alone how similar any trade deal will be to the current terms enjoyed within the Single Market), the Government has also made clear its ambitions to create a ‘Global Britain’, creating new free trade arrangements with countries around the world.

 

Over the last few days, I’ve been interested in understanding what this vision for a global Britain might mean for the UK’s financial services and insurance (FS) trade, one of the economy’s most important exports. In particular, what do historical patterns of trade in FS say about potential opportunity markets for the UK? Has there been significant growth in particular markets for financial services exports outside of the EU?

 

The Office for National Statistics (ONS) Pink Book provides a good level of detail on sector trade. Usefully, ONS has recently published a short time series of data looking at the types of services exported by the UK to trading partners between 2007-15.  

The first chart below highlights the growth of FS trade more generally over the period, as well as FS trade surplus. In absolute terms, FS exports have increased by £6.8bn (12%) over the period, although they peaked in 2013, reaching nearly £70bn.

 

 

Similarly, looking at the trade surpluses generated by financial services since 2007 (i.e. the difference between the value of FS exports and imports), the FS trade surplus has increased by £9.4bn over the period (21% growth), with the surplus peaking in 2012.

 

The next chart shows what the UK’s major markets for FS exports outside of the EU have been between 2007-15. I’ve chosen three years across the period to illustrate the change in FS exports: 2007, 2011 and 2015. The United States has been by far the UK’s biggest FS export destination, reaching £17.2bn in 2011.

 

 

Other markets have been become major recipients of the UK’s FS trade. Japan is now the second largest recipient of UK financial services outside the EU, importing nearly £3.5bn worth of services in 2015. Switzerland (£1.8bn in 2015) and Russia (£1.1bn) have both also become valuable markets. FS exports to Canada have declined in recent years – having peaked at around £2.3bn in 2012, they have since fallen to around £670m in 2015. Elsewhere, Asian economies such as China (£262m in 2015), Hong Kong (£506m), Singapore (£420m) and South Korea (£204m) have become increasingly important markets, while FS exports to Taiwan (£156m) have grown over the last two years.

 

The final chart below shows the countries where there has been the biggest percentage increase in growth across two periods, 2007-2015 and 2011-15, alongside the level of UK’s FS exports to major markets in 2015. This helps provide some direction of travel in terms of growth of FS exports to particular markets across the period, against the absolute amounts exported to those countries.

 

 

The chart shows that Japan has been the biggest market for expansion of FS exports, both across the whole period (2007-15) and over the last five years (2011-15). FS exports to Japan tripled between 2007-2015 and doubled between 2011-15. Other markets where the UK was able to expand its FS exports over the period were Russia (24% growth 2007-15), China (30%) and South Korea (63%). Across the whole period, FS exports to the United States expanded by 16% but declined by 6% between 2011-15 (despite remaining the UK’s biggest FS export market by a significant amount in 2015), while FS trade with Canada has fallen by 55% since 2007.

 

Overall, the data highlights the importance of UK financial services trade, which generates a huge surplus for the economy, and the growing value of trade with nations outside of the EU. The charts show that, while countries such as the United States and Canada remain major recipients of the UK’s FS exports, other economies such as Japan, China, Russia and South Korea are becoming increasingly important growth markets. In the coming years, with Brexit looming and uncertainty over the level of access UK-based financial services companies will have with major European markets, such economies may offer increased export potential for UK financial services given the already developing market.

 

 

London’s growth in employment: sectors and patterns

 

By Dr Laura Davison, Head of Research at the Economic Development Office, City of London Corporation

 

London is a thriving city, with recent years having seen strong economic and population growth. Across the next few weeks, we’ll be looking in the blog at some of the data around patterns of growth and drivers of these changes.

This week (20/02/17), I’ve looked at jobs growth, using a combination of the Office of National Statistics (ONS) data on workforce jobs and the Business Register and Employment Survey (BRES), to look at some long term and more recent changes.

The first chart plots London’s workforce jobs from 2006 to 2016 – with the lines showing percentage year-on-year growth (or decline where they drop below zero) for London and the UK. Across this period, London has grown by 967K jobs – a 20% increase, from 4.76 million to 5.73 million. UK jobs increased by 8.3% (2.65 million) to 34.59 million. Both London and the UK saw negative or no growth in the years to September 2009 and 2010, but have consistently grown since – London more rapidly than the UK.

  

The next chart - drawing on the same data at a sectoral level – gives a snapshot view of the sectors driving London’s growth across this period – looking at the number of workforce jobs in different sectors in 2006, 2011, and 2016.

   

You can see that in most cases, the increase in employment has been driven by London’s strengths – particularly in the professional and business services areas. The wholesale and retail trade is one exception – having shown small overall growth, but a decline in the period to 2011. Public administration and manufacturing both shrank over this ten-year period.

The next chart looks in more detail at sectoral changes year on year for the more recent data, focusing on 2010 to 2015 – in which stronger growth has been seen. This draws on a different data source – the Business Register and Employment Survey (BRES) which is the official source of employment figures by geography and industry, with the most recent figures being for 2015 (published autumn 2016 – and this data series begins in 2009, so can’t be used to look further back). Note that there are differences in the figures between the two datasets used here, reflecting their different methodologies.

 

Again, you can see from the total employment (dashed line), the consistent growth in employment across this period – with the dotted line showing particularly strong growth in 2014 and 2015. You also get a better feel from the stacked bars as to the sectors driving growth in each year (or shrinking where they drop below the zero baseline). Employment grew from 4.32 million in 2010 to 5.04 million in 2015 – a rise of 714K, 17%.

You can also see the key role that services have played in shaping London’s growth. The four big business services sectors – information and communication, financial, professional, and business administration – together accounted for 38% of London employment in 2010, and 40% in 2015, having grown by 354K jobs – 21% - across this period.

These business services strengths help to underpin London’s economic success – ranked top in PwC’s latest Cities of Opportunity report (overall and for ‘economic clout’), Kearney’s Global Cities Index (overall and for ‘top global services firms’) and Z/Yen’s latest Global Financial Centres Index.

London’s entertainment offer - also world-leading (ranked top for ‘Cultural experience’ in Kearney’s Index, and for ‘Entertainment and attractions’ by PwC), has also been underpinned by strong employment growth. The combination of retail, accommodation and food, and arts and entertainment services sectors saw 16% growth, with over 150K new jobs – and accounting for 21% of London employment in 2015.  

Finally, London’s growing population has been supported by a rise in jobs in health and education – growing by 21% from 2010 to 2015, again more than 150K new jobs – and comprising 18% of London employment in 2015.

Overall, London has seen strong growth across the last ten years, in particular across the last five - strongly driven by its business services economy, and with wider growth across entertainment and hospitality, and health and education.

 

 

As many as 1 in 3 Inner London workers affected by the tube strike

By Maxine Kennedy, Researcher in the City of London Research Team

 

As I’m sure everyone is acutely aware, there was a tube strike this week (9/01/17). With this in mind, I thought it would be relevant to have a look into the data available on the commutes of London’s workforce.

The 2011 Census captured travel to work data across the UK for people aged 16 to 74 in employment. It found that 20% of London’s workforce regularly use either the ‘Underground, metro, light rail or tram’ to get to work and back. A further 18% regularly use a train and 12% use a ‘bus, minibus or coach’. Interestingly, more Londoners walk to work (7%) than cycle (4%). 27% drive either a car or a van.

The data on London's boroughs shows us how people in different areas travel to work. Looking at the level of usage in the ‘Underground, metro, light rail or tram’ category across London shows us which areas were most likely affected by Monday’s strike. Not so surprisingly, the workforce in Inner London uses these types of transport more often than those in outer London. The proportion is highest in Westminster at 36%, although colleagues in the City of London weren’t far behind at 32%.

Other services in this category such as the DLR still ran on Monday, but as these services cover much less of London than the tube network, we can approximate that between a quarter and a third of Inner London workers were affected. The rate would probably be higher if were able to include those who primarily use another form of transport (say, a train) then a tube once they get to central London. Unfortunately, the data only shows people’s main method of transport.

 

Looking at the distances travelled by London’s workforce shows that almost 30% of journeys are less than 5km and almost 50% are less than 10km, so cycling isn’t completely out of the question as an alternative method of transport (for those who are moderately fit/didn’t eat too many mince pies this Christmas).

In fact, lots of people did decide to cycle on Monday, and Transport for London said that at 11.15am, 17,417 Santander cycles had been hired, and by 4pm, there had been a 149% increase in Santander cycle hires. You might be inclined to give cycling a go, particularly if you work in Hackney where 8% of your colleagues in the borough already cycle to work.

But cycling was probably out of the question for those that needed to travel more than 40km to get to work (this accounts for 8% of London’s workforce) – perhaps they joined the other 8% that usually works from home?

Whatever your journey, I hope it wasn’t too bad!

 

 

 

Improving International Access to Credit Markets

By report author Iain Clacher, Associate Professor in Accounting and Finance, Deputy Director of the Centre for Advanced Studies in Finance (CASIF) at Leeds University Business School and Associate at Research Republic.

 

Our latest study, published by the City of London Corporation, ‘Improving International Access to Credit Markets’, shows the increasingly important role that credit markets and innovations in credit markets have played since the financial crisis of 2008. This has been driven by two key factors. The first is the squeeze of bank lending resulting from the demands of recapitalisation and new regulations. The second, as the figure below shows, is an increasing demand for credit in emerging economies.

Emerging Market Corporate Bond Composition

Source: IMF FSR 2015

As part of our analysis, we developed the Credit Market Assessment Framework, which allowed us to undertake a detailed examination of credit markets in 59 countries. These countries account for 91% of global corporate bond issuance and 87% of global GDP. The results show clear trends in the growth and development of well-functioning credit markets and highlight key areas that need to be addressed for each country. Countries with credit markets at the earliest stage of development need more robust legal systems, better bankruptcy and insolvency processes, and a broader investor base. In addition, for some of the most developed markets there are clear agglomeration effects, and this scale is a significant source of competitive advantage.  

Moreover, the analysis shows those countries that have the highest capacity to grow their credit markets and increase the use of debt finance to support economic growth.

In addition to the development of the Credit Market Assessment Framework, we also conducted in-depth case studies across 11 countries: China, Germany, India, Japan, Mexico, Nigeria, Norway, Singapore, the UK, the US, and Vietnam. These cases look at specific credit instruments in each country and highlight the key challenges and opportunities for each market. 

While many of the developed countries in our sample are in a process of deleveraging, it is in these markets that we are also seeing significant amounts of innovation. From our analysis, there are at least three significant areas of innovation:

1. The first is the implementation of the Capital Markets Union. The potential of a pan-European private placement debt market could result in a much more efficient allocation of capital across Europe. This development would allow much of the long term capital that is desperately seeking yield at a time of ultra-low interest rates to find investments that meet this need. At the same, it would allow firms in search of finance access to pools of capital at a time when bank finance is harder to obtain.

2. The second is the development of peer-to-peer lending. As a result of the financial crisis, many firms have struggled to find the finance that they need, while at the same time, investors have struggled to find yield. Consequently, in the UK for example, peer to peer lending tripled between 2013 and 2015 and consumer and business lending was approximately £3bn in 2015. While this is nowhere close to the value of lending that occurs in mainstream credit markets, this is nevertheless a growing area of importance and is likely to see significant growth in the coming years.

3. The third is green bonds. As the global shift towards a low-carbon economy continues, investors are increasingly looking for sustainable forms of investment. Green bond issuance is an important and growing feature of this new landscape. In 2014, it stood at $37bn - up from around $1bn in 2007. Moreover, this demand is not just occurring in developed markets. The developing Asian markets are a major source of demand for green finance. 

As the City looks towards the future, it should seek to develop and grow these areas in order to maintain the UK’s competitive standing as a global, diverse, and innovative credit market.

 

 

To download a free copy of the report, click here.

 

Looking back - the work of the Economic Development Research Team over the past year

Dr Laura Davison, Head of Research

Compiling our annual Research Review gives us the opportunity to look back over the previous year’s commissioned research, and reflect on our priorities for the year ahead. Our programme has a very wide remit, spanning local, national, and international economies. This was reflected in 2015’s topics, which ranged from poverty and healthcare in London, through to the ways in which EU financial services support the wider economy, and global currency usage.

A key on-going theme for us is how to ensure that London continues to function effectively as a world-leading business and financial centre over the long term. This includes looking at the physical and social infrastructure that enables the City to operate as the densest concentration of business and employees in London, with a workday population of 415,000 within one square mile - equivalent to bringing in all of the residents of Brighton and Oxford every workday. Nearly a third of our workforce travels from outside of London, meaning that developments that bring new connections and capacity are critical, for example Crossrail, bringing in 1.5million more people within a 45 minute commute of central London.

It is also crucial to understand how the world of work in the City is changing. In 2015, we worked with the largest companies in the City – who while small in number (225 firms), account for around half of the City’s workforce. The research emphasised the rise in mobile working and a more flexible workforce – with consequent demands on the City’s communications connectivity, for adaptable and well-designed workspace, and a public realm that supports the use of third spaces – such as cafes – to work in. This programme of work continues into this year, looking at the changing needs of the SME firms (employing <250 people) – who make up 98.6% of the business population in the Square Mile.

Financial services continues to be a key industry for London – and the UK more widely, and our annual Total Tax research showed that the tax generated by financial services has continued to rise – now standing at around £66.5bn, equivalent to well over half the annual NHS budget. Across Europe, our research showed financial services accounting for nearly 6% of the EU’s total economic output, with the potential for stable growth of 1.9% per annum to generate an additional 11 million new jobs by 2030 spread across sectors including construction, manufacturing and services.

Looking at global finance, we had the particularly exciting opportunity in 2015 to work with SWIFT to make public new data on the changing use of currencies globally, drawing on their global payments infrastructure linking more than 200 countries and territories worldwide. This emphasised the key role that the UK plays as an intermediary in financial flows, as well as the rapid growth of currencies such as the Chinese renminbi.

For a fuller overview of these and other pieces from 2015, please do download our Research Review – and look out for forthcoming work, as we continue to develop these themes. 

 

Exploring non-graduate routes into employment

Saif Ullah

 

How easy is it nowadays for early school leavers to gain employment? With graduates now taking up an increasing proportion of the UK workforce, it has seemingly become more difficult for people that leave education after their GCSEs and A-Levels to get on the job ladder, despite this non-graduate group making up a large majority (40%) of the workforce.[1]     

The pathways to employment for this relatively unexplored group are looked at in more detail in the Resolution Foundation’s most recent report, Finding your routes: non-graduate pathways in the UK’s labour market.

The research provides some useful insights. Utilising data from the Labour Force Survey and British Household Panel Survey, the analysis adds further weight to the evidence that higher qualifications bring greater earnings for non-graduates. However, while academic qualifications for non-graduates are generally valued more highly by employers than vocational ones, in traditionally vocational sectors such as construction and manufacturing, vocational qualifications typically yield a higher return.

The report also illustrates the ongoing impact of the recession on young ‘mid-skilled’ non-graduates, whose careers have stalled as a result of more graduates taking typical non-graduate work opportunities.

Given these growing difficulties experienced by non-graduates in trying to find their way into employment, the research poses important questions about the potential value of apprenticeships. With the Government targeting the creation of three million new apprenticeships by 2020, could this pathway present a more viable route into employment outside of university education?

Apprenticeships are becoming more commonplace within “white collar” sectors than previously. A wider range of employers are increasing the breadth of apprenticeships that they offer, which in turn has led to increased take up of advanced (Level 3 – equivalent to 2 A-levels) and higher/degree (Level 4, 5, 6 & 7 – equivalent to HNC through to Master’s Degree) apprenticeships. Across all ages, the number of advanced level apprenticeship starts rose by over 25% to 181,800 between 2013/14 to 2014/15, while during the same period the number of higher level apprenticeships more than doubled to 19,800.[2]  

However, apprenticeships still remain relatively uncommon within sectors such as finance, professional services and insurance. In London only 8% of firms employed apprenticeships in 2014, compared to the national average of 11%.

From April 2017, employers with an annual pay bill of over £3 million will have to pay an Apprenticeship Levy of 0.5% to HMRC, which will be used to fund apprenticeships for all companies across England. This new scheme may incentivise more industries to explore the apprenticeship route for employment, particularly given the additional subsidies received from Government.

The success of such reforms to the apprenticeship system, however, will depend on making sure that the quality of training and education provided is sufficient to meet the needs of a wider range of companies. A coordinated approach to developing sector wide standards, involving government, industry, training providers and universities, may help raise the level of apprenticeships and provide more rewarding long-term opportunities for non-graduates, as well as creating a viable alternative to employment away from university education.     

 

 

[1] Resolution Foundation (2016), Finding your routes: non-graduate pathways in the UK’s labour market

[2] See gov.uk FE data library: apprenticeships

 

Full steam ahead - the UK leads the way in maritime business services

By David Z. Smith, Assistant Director, PwC

 

Our recent study (published by City of London Corporation) - The UK’s Global Maritime Professional Services: Contribution and Trends – reveals that the UK is the leading global hub for maritime business services. The sector contributes around £4.4bn to the UK economy and leads the way internationally in maritime insurance, law, education and shipbroking.

Industry leaders we spoke to identified a range of strengths behind the UK’s dominance in maritime business services. These included:

• The depth and breadth of expertise – The size of the sector in the UK means that there is a depth of talent and expertise which cannot be matched anywhere else in the world. While some business has moved to other hubs in recent years, much of the most complex work still takes place in the UK;

• The pre-eminence of English Law – English law remains ubiquitous in the maritime sector and is trusted by maritime professionals around the globe. In addition, the English legal system maintains a strong reputation for fairness, making the UK a desirable location to do business;

• The cluster effect – Many of the individual sub-sectors of maritime business services interact with one another. Strength in one part of the cluster therefore becomes mutually reinforcing for the others, with a flow of business and talent between them.

The factors above are difficult for other countries to emulate, but the industry does face growing competition. This competition underlines the importance of government and industry taking action now to preserve the UK’s position as world leader.

 In the report we identify three main threats:

• A shift in vessel ownership towards Asia;
• Tax and regulatory burdens in the UK;
• Proactive policies from foreign governments to build their own maritime services hubs.

To respond to these challenges it is essential that UK firms and government continue to invest in maritime education and skills development. Companies must also focus on innovation, either by being at the forefront of emerging industry issues or through the use of data and analytics. Institutions that are important pillars of the maritime business services cluster, like the International Maritime Organisation and the Baltic Exchange, must be maintained.

Despite the challenges, the sector also has a number of opportunities for growth. The sector could encourage inward investment by emerging Asian services companies and drive an increase in shipping capital markets activity in London. By focusing on the growth areas as well as addressing the main challenges, the UK will be able to keep its position as world leader for maritime business services.

For more detail on the advantages, challenges and opportunities for the UK’s maritime business services sector you can read the full report here.

Towards New Ways of Working in the City

By Maxine Carr, Economic research officer at the City of London Corporation

‘Future Proofing the Square Mile’ conference
The research team was recently invited to attend ‘City of London: future proofing the Square Mile’, hosted by New London Architecture, sponsored by Berwin Leighton Paisner and in association with the City of London Corporation and the City Property Association.

The conference brought approximately 150 delegates from various organisations to the Guildhall to attend several presentations all looking at how the City can retain its competitiveness in the short and long term future.

The presentations were broad-ranging and featured ‘how will tall buildings meet future occupier needs?’, ‘future proofing the Square Mile’, and ‘what is in store for Aldgate?’ - all crucial topics of consideration for ensuring sustainable growth for the City. However, what stood out to me was the session on ‘new ways of working’ which looked specifically of the future of the City office.

The rise of co-working
It is increasingly recognised that office environments have a direct impact on the quality of work produced, not the mention the wellbeing of staff. Firms such as Google, Dropbox and Airbnb are famous for their well-designed offices that promote collaboration, creativity and innovation, and indeed act as a tool to attract new talent in their own right. New types of co-working offices – where multiple and different types of companies rent office space, often on rolling contracts – are springing up in all major cities worldwide, at an estimated rate of 4.5 new spaces per day.

Co-working spaces are often seen as the solution for freelancers and small start-ups who are looking for desks at an affordable rate and want to benefit from the networking that occurs when several organisations share one office space.

In one sense, the City of London has its roots in co-working and innovative working practices. As Jack Pringle (Managing Director of Pringle, Brandon Perkins + Will) explained, London’s coffee houses that allowed for networking and creative processes are building blocks of the London we know today. For example, in 1688, Edward Lloyd’s coffee house on Tower Street became the hot-spot for marine insurance, and it developed into today’s international insurance market: Lloyds of London.

Yet, over time, there has been a shift away from this fluid conception of an office space. Today, most modern offices are more likely to comply to a more uniform design, mainly communal workspaces divided into personal cubicles.

New ways of working in the City
But now, a new direction is taking hold. As Mr Pringle commented, “the tin ceiling is so last century!” as he discussed the constant need for the City to adapt its supply of office spaces to the meet the demand of changing work styles (for example, more mobile working) and changing occupiers. Demand is shifting because there are now more freelancers and SMEs in the City than ever before, explained Rohan Silver, Co-founder of co-working space, Second Home. Furthermore, despite the City very much remaining a financial services hub, its proximity to Tech City is leading to an increase in the Media, IT and Communications sector within the Square Mile.

Despina Katsikakis from Transforming Workplace noted that organisational structures are being eroded and are becoming less stiff and more flexible, with a new focus on sharing knowledge. Certification systems such as BREEAM and LEED are now commonly used to demonstrate the sustainability of buildings – yet these are limited to the buildings themselves rather than the people that use them. Therefore, the shift towards improving the design of offices is about promoting wellbeing for staff as it is about providing spaces for making more innovative, and therefore productive, workers.

Here in the Research team at the City of London Corporation, we actively take an interest in these issues and have recently worked with consultants Ramidus and the City Property Association to produce two reports: Future Workstyles and Future Workplaces in the City of London and Serviced Offices and Agile Occupiers in the City of London.

WeWork’s Co-Working Spaces in the City
Even though the concept of co-working has been around for some time, the City is only just beginning to establish itself as a provider of co-working spaces. During the afternoon, the conference took to the outdoors where delegates were divided up into five groups for a walking tour of different themes. I chose the WeWork tour of two of their co-working offices, located in Moorgate and Spitalfields.

WeWork explained that their spaces have been specially designed to promote creativity, with a variety of different types of spaces on offer to suit the needs of the different types of people who work there- including freelancers, SMEs and even teams from larger organisations such as KPMG. Lily Choi gave a presentation on the company and informed the group that a massive 60% of WeWork’s member businesses have done transactions with one another, providing evidence for the claim that the space they provide is successful at fostering collaboration between its members.

Co-working is indeed a trend that the City cannot ignore. Adapting to the ever-changing demands of workers and businesses alike is crucial for the City to remain a competitive location for business.