Regional and local economic development
Rigorous economic analysis at a regional and sub-regional level is a vital input to many strategic policy areas. These include regional and local economic and spatial strategies, local employment land reviews, planning future skills provision, and assessing the economic impact of the closure of a major local employer or the securing of a major new inward investor. Such analysis will be built on a range of skills and tools and must be founded on recognised and accepted methods. Often such studies will require model-based analysis and/or long-term forecasts.
Tools and competence
Cambridge Econometrics has a strong track record in undertaking rigorous and innovative analysis for regional and local government and business over the last three decades. Our core expertise is in quantitative modelling and forecasting, to support planning and policy. We are skilled at working in teams with other consultancies. In this way we can integrate relevant information from detailed data analysis with insights from other, often more qualitative analysis, to provide a complete analysis of the policy issue under investigation. We communicate this to clients in a manner that 'makes sense' to you.
Specifically we offer:
- an established reputation for understanding the economic linkages within regional and sub-regional economies and linkages with the rest of the national and international economy
- rigorous and detailed analysis, combining formal modelling and other statistical techniques with vital qualitative information
- MDM-E3, a highly disaggregated dynamic model of the UK regions based on an input-output framework which allows a wide range of regional economic analysis right through from individual industry detail up to top-level macro-level indicators and levers
- the Local Economy Forecasting Model (LEFM), developed jointly with the Institute for Employment Research, Warwick University, a user-friendly software tool that can be used to undertake a wide range of sub-regional analysis, from developing alternative scenarios to undertaking impact analysis
Examples of our work
Cambridge Econometrics has undertaken a wide range of studies to help regional and sub-regional organisations to plan for the future, often in collaboration with other consultancies, as shown by the examples below.
UK
Regional Forecasts Economic Intelligence Service
UK
Local Forecasts Economic Intelligence Service
Support for North West Economic Forecasting Panel
North West Development Agency
This project, led by SQW, has provided ongoing support to the North West's independent Regional Economic Forecasting Panel in its analysis of regional economy and its future prospects and in the production of high-profile dissemination reports. The formal outputs each year comprise two short-term forecast reports reviewing prospects over the next three years, and a long-term report that considers prospects some 20 years out. In addition, over the period of our involvement we have sought with the Panel to deepen its understanding of the performance of the North West economy, to widen and develop the issues it considers and to develop it as an asset for the region and its policy makers. Topics that have been developed over time include the potential implications of city-regions to the prospects for the North West, the nature of the productivity gap with the UK as a whole, and the effects of in-migration on the long-term growth prospects of the region.
CE's specific responsibilities to the project include providing the core content of the short-term forecast reports drawing on contextual information on the future prospects for the world and UK economies, making high-level presentations at panel meetings to help members form a view on prospects, developing the Panel's subsequent forecasts for the North West and implementing these in a version of the Local Economy Forecasting Model (LEFM) software for subsequent use by the NWDA, and developing and implementing the Panel's long-term forecasts as well as technical support to the Panel in developing and exploring the economic arguments.
Maintaining Economic Growth in a Pressured Region
South East County Leaders
This project, led by CE and undertaken in collaboration with the consultancy Quality Economic and Social Research, explored the historical relationship between labour demand and supply in the South East, considered how this may change in the medium and longer term, and demonstrated the relationship between the economic growth assumptions and the housing proposals of the submitted draft South East Plan (the Regional Spatial Strategy for the South East). Population projections developed by Anglia Ruskin University (ARU) showed that, under the housing proposals of the draft South East Plan, population in the South East would grow more slowly than in the past, and this posed the question as to whether economic growth in the region would be restricted by this. The study took the ARU population projections and developed a scenario to investigate the sensitivity of labour demand and supply in the region to various factors, such as: demand for population-related services; productivity; offshoring; double jobbing; activity rates; raising of the pension age/pensions crisis; teleworking/working from home; government welfare to work policies; and commuting. The study also investigated where, within the region, the pressure points for growth were likely to be. The final report of the project was presented by the South East County Leaders as evidence in the Examination in Public of the draft South East Plan, and CE attended the EIP to answer questions on the analysis and results of the study.
Review of EEDA approach to Sectors and Clusters
East of England Development Agency
This project, led by KPMG, provided an updated analysis to underpin the sector and cluster strategy within the East of England. The East of England sector and cluster approach was originally set out in the RES 1999 and 2001 which identified priority sectors. These were based on analysis of economic data and modelling of the region at the time by Cambridge Econometrics and developed as a 'nine key sectors' approach which was launched in the RES 1999 and further defined by CE in work for EEDA for the RES in 2001. EEDA's revised regional economic strategy, ‘A Shared Vision’ (2004), acknowledged the contribution a sector and cluster approach made to the region's approach to economic development and the Corporate Plan set out activities that were specifically targeted at supporting particular sectors and clusters. CE's role in the project was to provide an update of the earlier analyses and detailed economic context for an assessment of the future economic and social trends within the East of England, to highlight the areas of focus for implementation of the Regional Economic Strategy.
Rural Economic Development Outside and Inside City-Regions
Department for Environment, Food and Rural Affairs
This project, undertaken by CE and SQW, assessed the implications of the city regions agenda for the relative economic performance of rural areas falling within and outside of city-regions. The project defined city-regions in an empirically operational way, and distinguished between those rural areas that fall within the scope of city-regions in England and those that do not, and compared their relative performance. It included a review of relevant academic literature and policy documents and, drawing on them, the development of a set of hypotheses to test the reasons why the performance of rural areas might be affected by city-region processes and policies. The project also used economic data to describe the ways in which rural areas within city-regions interact with the urban areas, and reviewed the performance of the economy in more peripheral rural areas. Econometric methods were used to test the hypothesis that productivity in rural areas within a city-region benefits from the more vibrant economy of the city. The final phase of the project drew out the implications of the data analysis and tested and developed these conclusions in discussion with policy makers.
Validation of the Productivity Gap Between the Northwest and
Other Regions and Between Northwest Sectors
North West Development Agency
This project, led by CE in collaboration with SQW, combined desk-based data analysis and consultations with organisations operating in the North West to explain the observed productivity gap between the North West and the England average, and the wider South East. The analysis reviewed the evidence for possible explanations for the productivity gap, including imperfections in datasets, differences in regional consumer and house prices, and factors that could explain and justify a genuine gap. A special analysis was undertaken for productivity differences in the financial and business services sector, including interviews to gather qualitative views to provide complementary evidence. The study then applied economic theory to interpret the gap and made recommendations as to how it could be tackled by appropriate policy interventions.
Chairman's Monthly Briefing
Yorkshire Forward
Under this project CE provided the Chairman of Yorkshire Forward with a concise monthly briefing summarising key points about the state of the economy of the Yorkshire and the Humber region, set in the context of the UK and world economies. Changes that had occurred in the previous month were highlighted. The briefing was accompanied by a two-page background note, including a table of economic indicators, that brought together the key evidence on which the Chairman's Briefing was based. The project also provided for access to senior staff to support the Briefing.
Economic Scenarios for South East England
South East of England Regional Assembly
This project provided projections of employment and output to 2021 for the South East under a business-as-usual case and a high-productivity growth scenario in order to inform discussion of the Regional Spatial Strategy.
Assumptions for the high-productivity growth scenario were developed by identifying sectors which it was considered had the greatest potential for an acceleration in productivity growth, for example because of prospective technological change or the effects of the South East's specialisation within the UK and the global economy. These assumptions were prepared by CE, drawing on the analysis maintained in our UK Industrial, UK Regional and European Services, and then discussed with the client to ensure that the proposed scenario captured the key developments from their point of view. The scenario was implemented in CE's Multisectoral, Multiregional Dynamic Model of the UK economy (RMDM) and disaggregated into considerable sectoral and geographical (unitary authority/local authority district) detail to identify implications relevant to local authorities.
Scenario Projections for the South West and TTWAs to 2026
South West Development Agency
This project, undertaken for the South West Regional Development Agency and South West Regional Assembly, provided projections of employment and output to 2026 for the South West and its Travel-To-Work-Areas under a business-as-usual case and two alternative scenarios. The two scenarios worked out in full sectoral and TTWA detail two broad scenarios set out in the Draft Regional Economic Strategy for the South West. The scenarios were developed using CE's Multisectoral, Multiregional Dynamic Model of the UK economy (RMDM) to implement the assumptions and identify what impact they will have on employment by industry in the South West and its TTWAs. The additional assumptions required to flesh out the broad scenarios were developed by CE on the basis of its analysis of which sectors were most likely to be susceptible to accelerated growth, and tested with SWRDA and SWRA against their own understanding of the drivers of growth in the South West region.
West Midlands Regional Spatial Study - Regional Centres Study
West Midlands Regional Assembly
This project, led by Roger Tym & Partners, was tasked with identifying the centres in the West Midlands where major new retail, leisure and office development should be focused so as to best meet particular objectives. These objectives included supporting urban regeneration, achieving a balanced network and supporting sustainable objectives. In particular the study sought to quantify the scale of development that should be accommodated by 2021, to identify how development could be directed to those centres that will best promote accessibility and give a guide to the market perceptions of the opportunities for major investment within or outside the network of strategic centres.
CE's role in the project was to develop industry employment projections for the districts in the West Midlands under alternative scenarios. A 'business as usual' scenario helped identify the extent to which market forces might led to outcomes in contrast to the 'desired' pattern of development, while an alternative scenario based on the population projections contained within RPG helped illustrate the possible sensitivity of outcomes to the demographic base.
Commuter Flows in London and the Wider South East 2001 to 2016/21
The Corporation of London
This project established a common methodology and database for estimating commuting flows within London and its neighbouring regions (the South East and the East of England). The project was led by Cambridge Econometrics, with contributions from the transport consultancy WSP and a consultant from the London School of Economics, The resulting model was used to assess the commuting implications of policies on investment in major transport infrastructure and of alternative paths for economic development. The impacts on commuter flow patterns were examined for a range of scenarios affecting future transport and land use planning issues, which may be put into effect by 2021.
Key issues addressed by the study include: examination of commuting flow change and its spatial variation using the 2001 Census workplace and journey-to-work data; examination of the relationship between the occupational structure and skill requirements of employment projections and the skills and characteristics of the available workforce in London; the extent of growth of sub-regional employment centres outside London and the extent to which they will compete with London for highly-skilled labour; the relationship between locations of employment and housing growth and public transport capacity inside and outside London; the extent to which development in the Sustainable Communities Plan growth areas of Thames Gateway and London-Stansted-Cambridge appear likely to change the strength of journey-to work flows in those areas; the influence of major new transport infrastructure/capacity on commuting flows in the areas served.
Employment and Housing Growth Implications of Second Runway
at Stansted
Government Office for the East of England
This project, jointly funded by the Government Office for the East of England and the East of England Development Agency, looked at the employment and housing implications of a second runway at Stansted airport. The context for the study was that the original Regional Planning Guidance (February 2004) was prepared on the assumption of only one runway. A study commissioned from Colin Buchanan & Partners (The Buchanan Study) and published in December 2003 looked at development options of a second runway, and CE (in collaboration with York Consulting) was chosen to apply an alternative methodology which would provide a different way of viewing the impact of the expansion on employment and housing demand. The CE study used an econometric approach to isolate direct from indirect sectoral employment effects by district across the whole of the South East, and was thus able to condition the findings on the gravitational affects of other London airports which could be seen to be in competition with Stansted for freight and passenger flow. The final report was presented to a key stakeholder meeting containing representatives from the main regional institutions.
New Heartlands Housing Renewal
Liverpool City Council
The New Heartlands is charged with promoting housing market renewal in Liverpool through a locally-tailored approach to regenerating local neighbourhoods. This project, undertaken by a team led by Amion Consulting and including Pion Economics and Keppie Massey as well as CE, analysed the prospects for population growth, the implications for housing demand, and the potential displacement effects that might result from housing initiatives. This formed part of a larger body of work examining actual and potential housing supply, market research with existing and prospective residents, an examination of the proposed phasing of the redevelopment programme and the development of local capacity for asset management.
CE's role was to examine critically the alternative demographic forecasts for the area and to develop a series of alternative scenarios for the future path of the economy, embodying varying views on commuting and migration patterns.
Working Futures 2: Projections of Employment by Sector and Region
Sector Skills Development Agency
This major project, led by the Institute of Employment Research at the University of Warwick, involved the provision of projections of employment by sector and occupation for the forthcoming decade. The projections also included a spatial dimension down to a regional and LLSC area level. CE's role, as in the earlier project Working Futures 1, was to provide the regional and local projections for economic activity and employment by detailed sector. In addition, CE's Multisectoral, Multiregional Dynamic model of the UK economy (RMDM) was extended to generate projections of demographic change, economic activity rates, labour supply and unemployment by gender and age group.
Developments in skills policy and implementation had placed increasing demands on the projections, including a need for the data to be available at a more detailed regional and sectoral level. The project addressed these requirements, which had arisen as a result of the development of the LSC and its local arms and of the SSDA and the Sector Skills Councils. The results included detailed projections of employment to the year 2014, for the UK, the regions and the LLSCs. The forecasts were disaggregated by gender, status, industry (based on SIC2003), occupation and qualifications.
Socio-Economic Impacts of Large-Scale Science Facilities
Yorkshire Forward
Yorkshire Forward had, in partnership with others, been campaigning to bring the European Spallation Source (ESS) neutron-scattering research centre to Yorkshire and had secured a site for the purpose. This study, led by Arthur D Little (ADL), quantified the potential impact of a major large-scale science facility, such as the ESS, on the Yorkshire economy. CE's role in the project was to model the potential economic impact of such a development on Yorkshire & the Humber through the application of a version of the Local Economy Forecasting Model (LEFM) software tailored to the regional economy. A series of alternative scenarios was developed using information on typical construction costs as well as the operating and purchasing characteristics of such a facility, provided by ADL. CE also estimated the impact on the UK economy taking into consideration the possible displacement effects that such a new facility could have on existing research facilities.
Southwark Futures
Southwark Council
This study, led by CE in collaboration with SQW, examined the interlinkages between the economic and demographic future for the borough and highlighted the potential implications for those tasked with delivering public services. It did this through two phases of work. An initial baselining exercise, examining all key data sets provided a detailed understanding of the current socio-economic characteristics of the borough and the scale of recent change. It considered the demographic and household structure, the business base, the domestic and business property profile, levels of economic engagement and education, health and environmental indicators. The understanding gained by the baselining exercise informed the development of a number of alternative scenarios for the borough. The scenarios were designed to draw out the implications of key areas of uncertainty, including the impact of possible policy interventions available to the Council, while recognising that a major impact on the Southwark economy and its residents comes from developments in the wider London economy. The scenarios were quantified in a series of interlinked models providing projections of the impact on demographic structure (eg through migration effects), the local economy, incomes and housing demand. An important objective of the project was to increase the internal capacity of the Council to undertake similar analysis in the future. The models developed for the project were provided to the Council and supported with user documentation and training.
Regeneration implications of development of Thurrock retail
offer
The Junction
Led by BBP Regeneration, and in collaboration with SQW, this project tested the progress towards, and the challenges implied by, the proposed spatial employment and housing development allocations recommended by the panel of inspectors for Thurrock following the Examination in Public of the draft East of England Regional Spatial Strategy. The work undertaken by CE involved providing forecasts of jobs by sector for the Essex Thames Gateway and Thurrock district, building on earlier work by CE for the Thames Gateway South Essex Partnership. The work assessed the gap between the latest 'business as usual' forecasts of jobs in the area by CE and an 'RSS' scenario that embodied the aspirations of the Plan, and the challenge this might present to delivering jobs in the area in accordance with the planning aspiration. The work analysed and forecast job creation in the retailing and logistics sectors in the Thurrock area. The project was undertaken to inform a major private sector retail client as it prepared its response to the recommendations of the Panel inspectors on West Thurrock/ Lakeside Basin future retail space and the Thames Gateway Urban Development Corporation.
Braintree District Futures 2025
Braintree District Council
This project, undertaken in collaboration with SQW Ltd, provided Braintree District Council with a set of economic visions for the district, which were used by the council to help determine a new 'direction and ambition'. A review of the current position of Braintree was undertaken, and then three alternative visions of the future for the district were developed: 'Business as Usual'; 'Braintree: Providing a Focus on Leisure, Heritage and Nature'; and 'Braintree: Where Ideas Take Shape'. Descriptions of Braintree district under each of the visions were provided, and the visions were quantified using CE's Local Economy Forecasting Model (LEFM). The visions were presented at a leadership workshop for members of Braintree District Council, during which the implications for the different areas of local policy were discussed. The results of the workshop were used to develop the council's new economic strategy.
Economic Forecasting for Cardiff
Cardiff Council
Cardiff Council asked CE to provide a review of the prospects for the Cardiff economy, to be used by the council in developing its new economic development strategy. The council needed to identify which sectors the strategy should target, and so CE provided detailed (41 industries) economic projections for Cardiff using its Local Economy Forecasting Model (LEFM) tailored to the Cardiff economy. Clearly, Cardiff, as Wales' capital, has an important role to play in driving economic growth in South East Wales and Wales as a whole, and the new economic development strategy needed to take account of this. The key policies from the current local, sub-national and national economic strategies, which will all have an impact on future economic growth, were reviewed in the report, and conclusions were drawn from these and the economic projections.
Employment Land Review for York
York City Council
CE developed a set of detailed economic forecasts for York using its Local Economy Forecasting Model (LEFM), to inform this project, an employment land review being undertaken by SQW Ltd for York City Council. The basic projections from the model were developed by CE, in consultation with SQW, to take into account growth expected to be generated by 'Science City York', an initiative developed through a partnership between York City Council and the University of York, which provides a range of support services to assist in the creation and growth of technology-based businesses, entrepreneurs and skills development opportunities.
For further information email:
Mike May-Gillings
Manager, UK Local Economy Services
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