Manchester's Economic Recovery Plan: Strategic Areas for Job Creation & Investment, Study notes of Innovation

Download Manchester's Economic Recovery Plan: Strategic Areas for Job Creation & Investment and more Study notes Innovation in PDF only on Docsity!

Recovery and Investment Plan

POWERING

RECOVERY

Manchester's Economic Recovery

and Investment Plan

CONTENTS

FOREWORD 3

1. INTRODUCTION 8

2. MANCHESTER’S

MODERN JOURNEY 9

3. A PIVOTAL POINT 14

4. MANCHESTER’S FUTURE 21

5. STRATEGIC INVESTMENT 23

6. MANCHESTER

ECONOMIC RECOVERY

AND INVESTMENT PLAN 34

Recovery and Investment Plan EXECUTIVE SUMMARY This is Manchester’s Economic Recovery and Investment Plan. It has been produced by Manchester City Council in partnership with the private sector and other stakeholders, and complements the Greater Manchester Combined Authority and Greater Manchester Local Enterprise Partnership city region proposals. It sets out what Manchester is doing to respond to the COVID-19 pandemic and reinvigorate its economy, with plans to protect and create jobs, and support new business opportunities in the city's economy. The unexpected arrival of COVID-19 has not changed the city’s aspirations, nor will it derail the city’s social and economic objectives. As identified in the Our Manchester Strategy and the Our Manchester Industrial Strategy, the city continues to look forwards, building on the historic developments and assets delivered in previous decades, delivering a more inclusive economy, supporting the foundational economy, and achieving the ambition to be zero- carbon by 2038, at the very latest. PROSPERITY PEOPLE PLACE This Plan sets out how Manchester can play a leading role in the levelling-up agenda, with ambitious plans to build on recent investment in economic assets and infrastructure and accelerate growth in high- productivity sectors. These plans will be based on a new partnership arrangement at national, subregional and local levels, where a progressive and inclusive city

• working hand in hand with business, academia and other partners – can tackle our new priorities, which are focused on people, assets, innovation, and investment. Since March 2020, the focus has been on protecting the city’s businesses and people from the impact of COVID-19, and now is the time to align this approach to the Our Manchester Industrial Strategy to focus on the three pillars:

Recovery and Investment Plan

A PIVOTAL MOMENT

The city now finds itself at a pivotal moment, setting out the vision for the city and how to achieve it in a post-COVID-19 world, compounded by a series of uncertainties. The city faces a crucial turning point in setting in train the course for the next 20 years. Accelerated by the impact of COVID-19, the challenges for the 2020s are the same as the previous decades – setting out a vision, a plan and a way forward. The Our Manchester Strategy lays out those foundations, and it must now be considered in the context of new, more challenging hurdles, some of which also offer new opportunities. Manchester’s investment programme and project pipeline, allied to the role of the Council and its own business and civic partnerships, are critical to the Government’s levelling-up agenda and national, regional and subregional structures and policies. Therefore, the Comprehensive Spending Review 2020 2020 is not only an opportunity to focus on macroeconomic and fiscal planning and priorities, but it can also provide the essential framework for creating the right incentives and drivers for aligning local, subregional and national investment priorities to deliver local and national priorities. Greater recognition of the importance of the city’s recovery, the levelling-up agenda and long-term productivity and economic growth should be reflected in the use of deals/partnerships that allow early investment in pipeline projects and the development of a new wave of job creating programmes, with an increased use of flexibilities and new financial tools. Our four strategic investment propositions – innovation, the city centre, zero-carbon and housing retrofit, and north Manchester (outlined on the following page) – provide a major opportunity to drive forward a new approach to investment and partnership.

EARLY RECOVERY

The 2020/21 winter period will be very challenging for many businesses, the self-employed and workers, and there is a need to put in place early support packages to assist those affected by the national lockdown and a possible slow return to full economic and social activity. The Government needs to act decisively in this crucial period, and Manchester has proposals that will provide support over the next nine months to ameliorate the scale of the economic downturn in the city. Training and skills package: The two-year Skills and Employability Recovery Programme will assist more than 6,000 residents each year to improve their skills by staying in education or developing new skills in areas of market demand. It will also help other residents to take up new self-employment opportunities. Targeted furlough: The original Job Retention Scheme was due to end in October and be replaced by the Job Support Scheme, which was less attractive to businesses. However, as a result of the November lockdown, the Government has put in place an extension of the Job Retention Scheme. At the time of writing, the Coronavirus Job Retention Scheme

• also known as the furlough scheme – will remain open until March 2021 , with employees receiving 80% of their current salary for hours not worked, up to a maximum of £2,500. Local Restrictions Support Grant: In addition, business premises in England that are forced to close will receive local grants worth up to £3,000 per month under the Local Restrictions Support Grant. SEISS: To reflect the recent changes to the furlough scheme, the UK- wide Self-Employment Income Support Scheme (SEISS) has been extended, with self-employed individuals receiving 80% of their average trading profits for November. Protecting cultural institutions: The Government has made funds available to help arts and cultural institutions deal with the effects of the national lockdown and social- distancing measures. While many of the major institutions are based in London, it is important that sufficient funds are made available for the North and Manchester- based institutions and venues. Phoenix Programme for The Cultural and Creative Economy: The proposed Cultural and Creative Phoenix Fund will (a) work with independent venues (b) support studios and workshops to remain open (c) provide commissioning grants for small independent companies, freelance and artisan producers to provide outputs for Heart of Manchester events and activities (d) organise a series of events, fairs and festivals to showcase Manchester’s cultural and creative works.

INVESTMENT PLAN

The Manchester Economic Recovery and Investment Plan takes its lead from the Our Manchester Industrial Strategy, with an initial programme of investment under the three pillars. In addition, there are several important long-term investments of major significance to the city that would benefit from a new approach to investment and partnership. These are listed below and set out in more detail in chapter 5.

Recovery and Investment Plan Programmes Investment Manchester Youth Skills Programme £8m A Partnership for Jobs with JCP £6m Start-up Manchester £20m Graduate Reskilling Programme £14m Apprenticeship market for young people £6m Higher Technical Skills Programme £12m STEM £6m Programmes Investment City Centre (6) £72.5m City Centre Transport and Mobility (4) £21.5m Zero-Carbon and Climate Resilience (8) £290m North Manchester 1 (1) £66m 1 Incudes the North Manchester General Hospital and Health campus and Northern Gateway, supported by £50m Housing Infrastructure Fund. 2 Includes £120million ID Manchester and £90million for Manchester Manufacturing Innovation Park South Manchester Economic Recovery and Investment Plan People (seven initial projects) (two-year programme) Summary £36m per annum programme providing support for 6,000 people; this will need to be repeated for several years to reduce high unemployment rates to the pre- COVID-19 levels. Includes support to stay in education to improve qualifications and skills, upskilling for occupational demand and self-employment. Focus on employer demand for digital skills. Summary A £450m investment programme with the potential to boost the construction sector over the next three years. It will focus on the city centre economy, the engine of growth over the past ten years, major housing initiatives for low/zero-carbon residential retrofit, and a major affordable housing programme. Includes a major housing programme, with over 10, homes improved and 6,000 new affordable homes. Investment will support a major Intermediate Labour Market (ILM) programme, with the potential to provide 800 jobs for local residents and the largest apprenticeship programme in the city. Place (19 initial projects) Programmes Investment Science, Technology, Health, Innovation 2 (10) £268.5m Culture, Creative, Media and Digital (7) £37m Manchester Airport and Airport City (3) £22m Digital (4) £16.5m Prosperity (24 initial projects) Summary Significant investment in science and technology, including digital infrastructure, an innovation district and enterprise zones, delivering an extensive ecosystem for small and medium-sized companies. Major job-generating investment with high-growth sectors, new-starts and scale-up, as well as major Foreign Direct Investment (FDI) companies. The medium-term potential for jobs is in excess of 20,000. Includes Airport City, the fastest-growing employment location in the city.

Recovery and Investment Plan This is Manchester’s Economic Recovery and Investment Plan. It has been produced by Manchester City Council, in partnership with the private sector, and complements the Greater Manchester Combined Authority and Greater Manchester Local Enterprise Partnership city region proposals. It sets out what Manchester is doing to sustain the economy and its people, and what Manchester proposes to do in the future in response to the COVID-19 pandemic, as well as other challenges and opportunities. This is a positive statement about Manchester’s future, while recognising the challenges and impact of COVID-19 on Manchester’s people and public/community services. This is a pivotal moment, and there is an opportunity to deliver in a new way by promoting a reassessed model of inclusivity, including zero-carbon and climate-resilient growth. The Economic Recovery and Investment Plan is not an entirely new framework, but takes the approach of further building an inclusive economy set out in the Our Manchester Strategy and the Our Manchester Industrial Strategy. This Plan sets out how Manchester can play a leading role in the levelling-up agenda. It includes ambitious plans to build on recent investment in economic assets and infrastructure, and accelerate growth in the high-productivity sectors set out in the UK Industrial Strategy. To be successful, the Plan highlights that Manchester needs a new place-based partnership arrangement at national, subregional and local levels, where our progressive and inclusive city can tackle its new priorities, which are focused on assets, people, innovation and investment. 1. INTRODUCTION

Recovery and Investment Plan

CONFIDENCE IN THE CITY

Manchester is one of the few places in the UK with the foundations and the building blocks that can re-establish economic growth after a crisis. After the 2008 financial crisis, the city bounced back, experiencing incredible employment growth to lead its recovery. A total of 117,000 net jobs were created between 2010 and 2016, a growth rate of 1.4% per annum, higher than the UK excluding London. 2 It is in the past four years where growth was truly exceptional: property filled up, 350,000m 2 of new commercial space was built, the airport announced its £1billion Airport Transformation programme, and

• perhaps most importantly of all – the universities really began to influence business growth. Unlike other cities across the country, Manchester does not depend on one sector. While the foundational economy was vital in driving economic growth in recent years, with a boom in the tourism, leisure and cultural sectors providing thousands of jobs, the city’s strength lies again in its diversity. Its growing sectors are highly skilled and knowledge- intensive, accelerated through the agglomeration and concentrations of talent and business. Key businesses in the city, including those on the Business Sounding Board, have confirmed their commitment to the city, and to leading the way in building confidence in Manchester – particularly the city centre – as a place to do business. 2 Greater Manchester Forecasting Model 2018

Recovery and Investment Plan

THE CITY CENTRE AND

OXFORD ROAD CORRIDOR –

THE ENGINE OF GROWTH

The resurgent city centre continues to be the engine of the city’s and Greater Manchester’s growth. Its importance is highlighted in the 2019 Greater Manchester Independent Economic Review; one in five jobs in Greater Manchester is located here, and employment increased by 17.2% (59,000 jobs) between 2014 and 2018, two and a half times the national growth rate of 6.8% and higher than any other UK city, including London. This is a testament to the construction boom delivering high-quality office workspaces. 3 It represents 41% of all Greater Manchester growth, while 50% of jobs were taken up by residents from other Greater Manchester boroughs and 15% from further afield (Cheshire, Merseyside and Lancashire). This plan is not only about kick-starting growth in an unprecedented time for the country, but is also focused on re-establishing the growth of the past five years. Economic activity in recent years has seen the reach of the city centre expand, laying the foundations for public and private-sector investment. The development of Grade A office space around St Peter’s Square and Spinningfields at the heart of the civic centre, NOMA to the north, and First Street to the south have helped to transform and expand the city centre’s economic offer. The graduate retention and the highly skilled talent pool form one of the primary drivers for investment and growth. The city is home to two major universities: The University of Manchester, and Manchester Metropolitan University, which provide an attractive higher-education offer for overseas and home students, including STEM and creative subjects linked to the city’s growth sectors. New residential and mixed-use development in the city centre was a feature of economic growth, with 8,000 new apartments meeting high levels of demand from a growing young and highly skilled workforce. 3 ONS Business Register and Employment Survey data A key contributor to growth has been the rise of the world-class facilities and businesses that have found a home in the city. Cultural institutions, including The Whitworth Art Gallery, HOME Manchester, Central Library, the Science and Industry Museum, the National Cycling Centre, and Etihad Campus, attract thousands of visitors annually, while the international conferencing facilities at Manchester Central attract significant business tourism to the city. Alongside these cultural assets are the driving forces of employment in the city’s growing sectors: the business, financial and professional services; advanced materials and manufacturing; health innovation; digital; and the creative and media sectors. At the heart of this is the Oxford Road Corridor, one of the major economic drivers for the city and wider city region. It is home to a diverse and highly skilled business base, particularly in the science and technology sector, closely supported by Bruntwood SciTech. Manchester Science Park, the Henry Royce Institute, the Citylabs campus, the National Graphene Institute, and Circle Square host more than 170 companies working in sectors such as genomics, medtech, health innovation, digital innovation, cyber security, AI and blockchain. These sector- specialist clusters fuel the Manchester economy, creating jobs (an estimated 15,000 within the next ten years) and economic prosperity for the city. The evolution of Manchester Airport into an international gateway has been invaluable to the city, Greater Manchester and the North. It has established links across Europe, the US, mainland China and Hong Kong, attracting foreign direct investment and building Manchester’s global brand.

Recovery and Investment Plan The opportunities identified in the Our Manchester Industrial Strategy are more relevant than ever; if anything, the need to re-establish economic growth and investment momentum has reinforced the three-pillar approach based on: People: Equip residents and workers with the qualifications and softer skills that will enable them to access more opportunities. Place: Ensure sustainable growth is achieved in key assets, including the city centre and around the Airport. Create the conditions that will deliver a more inclusive, zero-carbon economy by investing in transport infrastructure, digital infrastructure and the environment. Prosperity: Create higher-quality job opportunities, including better pay, improved working conditions and flexibility, particularly within the foundational economy. Establishing sustainable growth in people and skills is a high priority, as is long-term sustainability in our place and assets, which is critical to the future development of the city. The Manchester Climate Change Framework outlines our strategy towards making Manchester a thriving, zero-carbon, climate- resilient city, which this plan will help to deliver. By 2025, Manchester will be an exemplar city in the global zero-carbon economy, recognised as one of the best places in the world to innovate, invest and launch climate-change solutions. Green growth creates good-quality jobs, opportunities, and new skills through zero-carbon buildings and retrofit, as well as new forms of energy and the transformation of existing infrastructure. Despite the impact of COVID-19, the city remains well-placed to align with the Government’s levelling- up agenda, with existing investments and innovation assets primed to play a key role in levelling up the North. This is a city of opportunity with a history of delivery and resilience; Manchester’s economy holds the key to levelling up the North and closing the productivity gap. While much of our investment is concentrated in our key growth, district centres across the city have been and will remain important for the communities they serve, particularly demonstrated during the lockdown period. Manchester is investing in these centres, which provide local services and employment through investment in capital, including in roads and public realm, and through promotion of and support to local businesses. This is part of our commitment to a more inclusive economy and is at the heart of the Our Manchester Strategy. In further developing the Our Manchester Industrial Strategy, work is continuing to ensure economic growth is inclusive and the importance of the foundational economy to the city is fully recognised in new policy development and initiatives.

Recovery and Investment Plan 3. A PIVOTAL POINT The city now finds itself at a pivotal moment, setting out the vision for the city and how to achieve it in a post-COVID-19 world, compounded by a series of uncertainties. The city faces a crucial turning point as it puts in place plans for the next 20 years. This pivotal point is characterised by four challenges. Challenges are not new for the city. Manchester has always been a city that has had the ability to reinvent itself and find ways to overcome adversity.

THE IMPACT OF COVID-

Labour market and business sectors under threat In Manchester, the specific sectors at greatest risk include aviation, arts, cultural and creative industries, and parts of the leisure and hospitality industry and associated supply chains. In September 2020, the number of individuals on Universal Credit was over 74,000 in Manchester, a 76% increase compared to March statistics. While this remains lower than the national figure of 89%, there are great concerns around the impact on young people. The number of the city’s 20 to 34-year-olds claiming Universal Credit increased by 79% and youth unemployment doubled. The impact of COVID-19 has hit the self-employed particularly hard. On 31 September 2020, 28, Manchester residents were on furlough and a further 16,200 were receiving self-employment support, equating to a 72% take-up rate. A recent YouGov survey of 500 businesses found foundational services have already been hit hardest, with 30,000 jobs furloughed in accommodation and food, 15,000 in administrative and support, 11,000 in transportation and storage, and 10,000 in wholesale and retail. Workers and visitors in the city centre The challenge facing every economy now is of ensuring a return to normality as soon as possible. The statistics in Manchester have been encouraging, although they also highlight how far the city has yet to go. Manchester is seeing a gradual increase in use of public transport across rail, light rail and bus modes, as indicated, which is an extremely positive sign. Daily vehicle movements have been more robust, remaining strong despite an initial decrease, while cycling uptake is more positive. However, the recently announced Tier 3 and national restrictions will have a further impact, particularly on the city centre, and sectors such as retail, hospitality, tourism and culture are likely to see a slowdown in the return of staff and visitors. In summary, the picture is still an unclear and emerging one.

Recovery and Investment Plan

A NEW PARTNERSHIP AT

NATIONAL AND SUBREGIONAL

LEVELS

The Government has a major role to play in helping Manchester to re-establish the economic momentum that saw the city confirm its role as the leading jobs growth centre in the UK. Further investment in the opportunities available in Manchester is central to the levelling-up agenda and rebalancing the economy. This will result in the city providing employment for communities across Greater Manchester and beyond, and supporting an extensive supply chain of small and medium-sized companies in the wider conurbation and the North of England. Therefore, the Comprehensive Spending Review 2020 is not only an opportunity to focus on macroeconomic and fiscal planning and priorities. It can provide the essential framework for creating the right incentives and drivers for aligning local, subregional and national investment priorities to deliver local and national priorities. The Government needs to look beyond resources; rather, it needs to deploy them in the most efficient way to deliver maximum value for money. This includes getting resources to the front line: where people and businesses actually interact, where training and skills and other public services will go right to the heart of labour-market productivity, where science and research can give us the biggest national and regional impacts, and where towns and cities can prosper. Manchester is looking for a new partnership at national and subregional levels, working hand in hand with academia, business, investment and other partners to address new priorities linked to assets and people. This is the essence of a place-based settlement where all parts of the Government, including subregional structures, contribute positively to an agreed programme of local and national investment and growth. Chapter 5 of this document sets out four strategic investments that would benefit from a national, subregional and local partnership.

Recovery and Investment Plan Extending Enterprise Zones Within Greater Manchester, two Enterprise Zones (EZs) have been established. These are the Greater Manchester Airport City Enterprise Zone, centred on the Manchester Airport and Wythenshawe Hospital environs, established in 2012; and the Manchester Life Sciences Enterprise Zone, focused on the Oxford Road Corridor in and around The University of Manchester and the Manchester University NHS Foundation Trust (MFT) which was established on 1st October 2017. In terms of the benefits to be secured by businesses in Enterprise Zones, the Airport City Enterprise Zone stopped offering such opportunities on 31 March 2018, while the Greater Manchester Airport City (Extended) and Manchester Life Sciences Enterprise Zone can still offer benefits to new occupiers until 30 March 2021. Business rate growth can be retained from the Airport City Enterprise Zone to 31 March 2036, and from the Airport City (Extended) and Life Sciences Enterprise Zones to 31 March 2041. The following flexibilities are needed: extend the period that businesses can secure existing EZ benefits within the Greater Manchester Airport City (Extended) and Manchester Life Sciences Enterprise Zones for a further five years; consider a business case for the physical expansion of the Manchester Life Sciences Enterprise Zone to include a range of new workspace/incubation facilities opportunities that can be catalysed by EZ designation; extend the period that all business rates growth (or growth from any successor arrangement) within the two Greater Manchester Enterprise Zones is retained from 25 years to 40 years, with an agreement to borrow against a proportion of forecast business rate income to invest into local COVID-19 Economic Recovery Plans. Our submission to the Spending Review 2020 also expressed our interest in setting up a further Enterprise Zone at St John’s in the city centre.

Recovery and Investment Plan Spending Review 2020 At the time of writing, the Spending Review 2020 had just been announced. This Plan can make a significant contribution to the priorities for the Spending Review 2020 and future budgets, including the prioritising of jobs and skills, levelling up of economic opportunity, making the UK a scientific superpower, and strengthening the UK’s place in the world. Greater recognition of the importance of cities to recover, the levelling-up agenda, and long-term economic growth should be reflected in the use of deals and partnerships. These should allow early investment in future projects and the development of a new wave of job-creating programmes, with an increased use of flexibilities and new financial tools. Manchester is prioritising investment at Manchester Airport and Airport City, in the city centre and the Oxford Road Corridor, which are the major job-growth locations in the North of England. The city is also investing in the sectors of science and technology, creative, media and digital industries, which will continue to drive new employment. The Government’s budgets must reflect the need for infrastructure to support job growth. A UK Aviation Strategy, aligned with the Paris Agreement, is an essential enabler to ensure the aviation sector can continue to support jobs in Manchester and other cities across the UK. The Government also needs to continue to make funds available to support housing for a growing working-age population. The Spending Review 2020 needs to make available funds to support zero-carbon objectives, including the need to move rapidly to electric vehicles and deliver the pace and scale of the housing retrofit required in the UK. These opportunities need to be linked to local employment opportunities and the development of zero-carbon companies and skills in a growing workforce. UK Shared Prosperity Fund Government statements (July 2020) acknowledge the importance of local growth funding to places and people, and its commitment to creating the UK Shared Prosperity Fund to succeed European structural funds. This fund will provide vital investment in local economies, cutting out bureaucracy and levelling up those parts of the UK whose economies are furthest behind. Given the historical importance of ERDF and ESF to Manchester and Greater Manchester, we would welcome the Government accelerating its plans for the Shared Prosperity Fund and involving local partnerships in the Spending Review 2020 to support the new fund’s introduction as soon as possible in

2021. Investment from the Shared Prosperity Fund will help Manchester to bring forward the full set of propositions and realise the benefits set out in this Plan. Accelerated decision-making Government Ministers have moved quickly to announce new initiatives, and in some instances support has been made available quickly. This recent urgency now needs to be extended across Government departments, where a business-as-usual approach for civil-service processes will not deliver the momentum needed to effect economic recovery. With regard to skills, it is proposed that over a three- month period a group of senior officials from DWP, the Education and Skills Agency, and the Combined Authority are to resolve a number of matters regarded as urgent and imperative. This would mean agreeing changes to policy and process, and identifying fast- track programmes and business-programme cases, with a truncated appraisal and approval process. Government departments typically used a two-stage appraisal process – an initial outline business-case stage followed by a full business case. The Government should move to a one-stage business-case approach for advanced projects. The current Government appraisal system for housing and regeneration initiatives places an emphasis on land-value uplift to determine a benefit-to-cost ratio and value-for-money assessment. The variations in land values across the country are an effective advantage to the South of the country, at the expense of the North. This approach undermines the Government’s levelling-up agenda.

Recovery and Investment Plan

WE’RE

READY

TO

RECOVER