The public sector dispersal of government jobs

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Two possible locations have been assessed for the public sector dispersal of government jobs. The government jobs are to be relocated from London and the South East to other parts of the UK. Sunderland is a location assessed for the relocation of 50 information support centre jobs. Birmingham is assessed for relocation of 100 jobs in a policy function role.

Work Types Defined

King Sturge (2003) defines each work type scenarios of the government jobs in question. Activities performed in an information support centre typically include handling telephone calls, issuing forms and standard data processing. Specialised knowledge is not required and there little contact with London, therefore there is not much need for staff to travel to London.

Activities performed in a policy function role include policy making and policy delivery. Specialised skills and knowledge are required and there is a need for regular access for staff to travel to London. The cost and speed of travel time between the proposed receiving location and London will need to be considered.

Socioeconomic Profile of Sunderland

This section of the report provides an overview of the socioeconomic characteristics of Sunderland. These characteristics are necessary for analysis to determine if Sunderland is an appropriate location to receive 50 proposed public sector support centre jobs.

For this report, data for the Metropolitan Borough of Sunderland is analysed for Sunderland, this includes the surrounding towns of Washington, Hetton-le-Hole and Houghton-le-Spring. It is located in the North East of England, one of nine regions in England. Sunderland is located approximately 240 miles away from Greater London.

Labour Supply

Employment and Unemployment as of June 2010

All people*

Sunderland (numbers)

Sunderland (%)

North East (%)

Great Britain (%)

Economically active

137,800

74.0

73.7

76.4

In employment

120,900

64.9

66.3

70.4

Employees

109,600

59.1

60.0

60.9

Self Employed

10,400

5.4

5.8

9.0

Unemployed

15,200

11.2

9.9

7.7

*Aged 16-64, Source: Nomis (2010)

The current rate of unemployment in Sunderland is 11.2%, higher than the national rate of 7.7% in Great Britain. Sunderland is located in a region that suffers from a higher unemployment rate than the national rate of Great Britain. Sunderland and the North East also have a smaller proportion of self-employed labour than the national proportion.

History of Dispersing Activity

“The British economy is highly unbalanced with more rapid economic growth in London and the South East which produces simultaneous overheating in large parts of these regions and underutilisation of infrastructure and human resources in others.â€Â (Marshall, Year?, p1)

A gap between growth and development rates exists in the UK. Relocating public sector activity away from London and the South East is a method of achieving balanced economic development, regional equality and social benefits. Relocation may also benefit London by removing some inflationary pressures on wages and property.

Gross value added (GVA) is an indicator of economic activity in a region and allows comparisons to be made between regions. It is used to compare productivity of different regions.

Gross Value Added (GVA) per head indices at current prices in 2008 (UK=100)

United Kingdom

100

London (NUTS 1)

170.9

South East (NUTS 1)

105.6

North East (NUTS 1)

Sunderland (NUTS 3)

77.6

85.0

Source: Office of National Statistics (2010)

Reasons and History

There are several reasons as to why there may be a need to relocate public sector activity away from the South East to other parts of the UK.

The Flemming Review published in 1963 was an initial influence for the dispersal of public sector activity. 57,000 London based job were recommended to be relocated. 22,500 jobs were relocated from London between 1963 and 1973 as a response to the Flemming Review, less than half of the recommended amount. This review focused primarily on cost saving, notably property and labour cost saving without a loss in efficiency.

Cost saving is a key driver for dispersal discussed by Experian (2004), in the report The Impact of Relocation. Operating costs, labour costs and property costs are higher in the South East than the rest of the UK. As wages are unbalanced across the UK, costs can be reduced by relocating to a location that has a lower wage rate. Property costs are also an issue as there is competition from the private sector for the most suitable premises for operation in the South East.

Relocating also gives the opportunity to create new ways to deliver a public service.

A problem in London in particular is labour force availability, as competition from the private sector can make it difficult to recruit the most skilled labour. This competition also makes it harder for the public sector to retain existing staff.

Relocating can reduce pressure on resources and infrastructure in London and the South East.

There are also wider government objectives identified by Experian (2004). If most public sector activity is located in the South East there is a lack of representation. Therefore moving services from away from the South East gives a wider representation and makes the government, as Experian (2004, p.27) describes it as “less remote and invisible.â€Â

Economic Benefits

Employment opportunities created both directly and through the multiplier effects on the economy. Multiplier effects may increase employment in the private sector. Direct job creation is from the relocated activity itself, indirect job creation is the result of the relocated government activity purchasing goods and services from firms in the local area. Other potential indirect creation is through public sector employees using their income to purchase goods and services. The extent of the indirect employment creation depends on the size of the local multiplier effects, the higher the multiplier the greater the effect.

Government departments usually offer training schemes, this can increase aggregate skill levels of labour in the region. The benefits of government training schemes can be transferred to the private sector, if employees move from the public sector to the private sector. The area may also benefit from the relocation of professional and managerial staff, increasing the representation of these occupations and aggregate skill levels in the region. The location will benefit from investment in buildings, technology and ICT, enhancing the attractiveness of the area to private sector investment (Office of the Deputy Prime Minister, 2006).

Increased confidence

Mention crowding out effects.

Considering the benefits from the dispersal of public sector activity for the receiving location and London and the South East, the gap between regional growth rates may be narrowed. This is a benefit for the national economy.

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