RELOCATION
Rethinking relocation I
n the past decade, many public sector organisations have relocated outside of their traditional base in London. This has had a profound effect on the places to which public sector employees have relocated, stimulating economies and adding to the cultural and social diversity of those places.
Whilst the public sector was being allowed to grow through continual increases in public spending, all of this was fine. But now the bubble has burst and the government is planning to significantly reduce the number of public sector jobs, there is the potential for this to cause considerable damage to those cities, both socially and economically.
When one considers the potential scale of this problem, it becomes clear that this is something which needs to be addressed swiftly.
“We have calculated that over two thirds of the 1.2 million net additional jobs which have been created in Great Britain’s cities between 1998 and 2007 were in the public sector,” says Kieran Larkin, analyst at the Centre for Cities.
“While the majority of that has been the growth of existing services such as jobs at schools and hospitals, around 22,000 civil service jobs have been relocated out of London since 2004.
“Cities have often been keen to attract relocated public sector employment as part of their economic strategy,
Sep/Oct 10
make sense to send those jobs to places where the level of public sector employment is slightly lower such as Milton Keynes or Leeds.
Kieran Larkin
partly because it was viewed as a safe source of jobs. But now that those kinds of jobs are potentially viewed as being vulnerable, that attitude towards public sector employment may change. Cities shouldn’t be looking to the public sector to be a big source of future jobs growth.
“At the Centre for Cities we would certainly like this to be kept in mind when the next round of public sector relocations takes place. Relocation can be a way for the government to save on unnecessary spending, but it must be done sensibly and in a sustainable fashion, which means not relocating state backed jobs to places which already have high levels of public sector employment.”
It also makes sense to avoid having huge concentrations of public sector employment as there are in places like Liverpool and Newcastle-upon-Tyne, which are now likely to bear the brunt of any cuts.
“Although we do not have any strong views over where jobs should be relocated to, it would
“It is not as straightforward as simply finding places with lower levels of public sector employment. There are many other factors to consider, one being the fact that some cities will have higher office rents than others, therefore making it impractical to move there, because the savings would not be substantial enough.
“The government therefore has a difficult balancing act to maintain in finding places which are not too expensive but that are already not awash with public sector jobs.”
Apart from the need to massively reduce public spending, the economic climate has also stumped those in charge of relocation in another way - property prices.
Given that it can cost a considerable amount of money to move even part of an organisation to the other side of the country, the government must be sure that any move would deliver substantial enough cost savings to not only offset the move but also save money in the long run.
“There is the possibility that as property prices have fallen during the recession that the differential between London and other places, in terms of rental prices, has narrowed to some extent, reducing the amount which would be saved as a result
Nowhere will the impact of public sector redundancies be felt more than in those towns and cities which have a high percentage of public sector workers. Public sector bodies planning to relocate outside of London need to bear in mind the potential effects on those areas, reports Richard Mackillican
of relocation. Having said that, high property prices in the very centre of London still make relocation very attractive.
“Public sector relocations can also require quite a lot of upfront investment. For example, the Lyons report estimated that the payback time would be five to six years for any move. As such, this is not a quick fix for the public finances.”
This is not to say that public sector relocation is at all a bad thing. It just has to be managed effectively with a significant amount of thought being put into the process. When it is done correctly, the rewards for the cities which engage in it can be significant.
“Because of the size of the public sector and the way it is organised, if even just a small part of a department moves it can result in the relocation of at least a few hundred jobs. Cities are going to benefit hugely from that and it could help to reduce unemployment. In addition, in many places these relocated jobs are often relatively better paid than jobs in the private sector. Although there is some controversy over the figures, it seems to be the case that public sector jobs in the Midlands and the north generally pay better than their private sector equivalents.”
In theory then, cities would like to see more public sector workers because they tend to arrive in larger numbers, can be better paid than jobs created by the private sector and, until recently, were far more secure.
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