Scottish Cities score high for income, skills, jobs and transport but Aberdeen falls in PwC survey

But while Edinburgh was 3rd, Aberdeen has fallen from 5th to 10th place.

Glasgow also fell from 24th to 29th but outperformed Newcastle, Birmingham and Sheffield.

However, there was better news in a comparison of the devolved cities which saw the Scottish cities outperform their Welsh and Northern Ireland counterparts with Inverness leading the way.

Published today, the index measures the performance of 42 UK cities against a basket of 10 categories defined by the public and business as key to economic success and personal and family wellbeing.

Moving beyond simple measures of GDP or gross value-added (GVA), the 10 factors evaluated include jobs, health, income and skills, work-life balance, house-affordability, travel-to-work times, income equality and pollution.

Scottish cities score particularly well on elements such as skills, jobs, income and transport, all of the cities scoring around or above average with the biggest improvements since the previous index in jobs, new businesses and skills. Jobs increases were well above the UK average in four out of the seven Scottish cities.

For all the Scottish cities there is one standout feature in terms of below average scores – the health of the workforce. All of the Scottish cities score either around or below average for this variable. The report notes that this may raise some questions about the relationship between health outcomes and inputs (e.g. spending) and the likely impact of welfare reform on those currently not currently participating in the workforce.

Corporate Finance Partner at PwC Paul Brewer said: “It was only a few years ago that Aberdeen was ranked second in the report but has now slipped to tenth place as the impact of the reorganisation of the North Sea Oil & Gas industry takes effect. As our recent Sea Change report highlighted, there is still opportunity in the oil basin but the city also needs to continue to explore other options to future proof itself. Aberdeen does demonstrate its resilience as the only Scottish city to perform above average in terms of new businesses per head.

“This year’s report has a number of positives for Scotland – jobs, skills and new businesses are the factors with the largest increase since the last survey in many cities – and in particular the skills increase across the country is to be welcomed as skill availability is a key requirement for sustainable economic growth and employment.

“But there are also issues that need addressing. The country as a whole is scoring average for owner occupation and house price to earnings but in health and work/life balance we perform below average.

“Scotland has consistently underperformed the UK on economic inactivity through poor health and I would expect to see further debate around health-care funding and administration in Scotland with consideration given to the larger health picture including welfare, lifestyle and delivery of care.”

For Glasgow, David Leslie, office senior partner for PwC in Glasgow, said: “Glasgow continues to outperform other cities in the UK - it is ahead of the likes of Newcastle, Birmingham, Liverpool and Swansea. The city has done well in terms of installing modern, business-suitable infrastructure and transport facilities for the skilled workforce that lives and works in the area.

“Having said that, it is disappointing to see the city slip a little in rankings after doing so well in the past few years, but it is a minor slip and may well be a hiccup instead of the start of a trend, especially when you consider that with City Deals on the horizon, that will lead to a boost for the city.

“The report praises Glasgow for improving jobs and skills - the cornerstone of any growing economy - and we know the region is aiming to continue being a powerhouse in the services sector and boost the pharma offering to businesses.”

For Edinburgh and Leith, Mark Hoskyns-Abrahall, office senior partner for PwC in Edinburgh, said: “Edinburgh continues to be a solid operator in the Scottish economy with above-average increases in jobs, income, work/life balance and skills. These are attractive qualities that make not only the city attractive to firms looking to locate here but also for employees. There will no doubt be close analysis of why Edinburgh is performing so well in these areas by others, though the relevant bodies will look to address the transport issue that has been flagged up in the findings.

“Obviously it remains to be seen what impact Brexit will have on the city – and in particular the financial sector which drives so much of it – but companies appear to be beginning to make plans and policies to ensure their workforce remain relevant no matter what the future holds and that is a positive for Edinburgh. Additionally, as we’ve seen with the rise of the FinTech and CyberSecurity sectors, Edinburgh can adapt to the marketplace.”

For Aberdeen, Kevin Reynard, office senior partner for PwC in Aberdeen, said: “While it is disappointing to see Aberdeen slip, this is not surprising and Aberdeen remains within the top 10. There has been a lot of focus and effort on the Oil & Gas sector as well as diversification to other areas - and this is reflected in the fact that there has been growth in the availability of skills and the number of new businesses starting up – the only area of Scotland to do so.

“Obviously this report has been prepared as the full impact of the North Sea contraction was being felt. Our reports this year have indicated that Aberdeen may be slowly turning the corner and there is a hope, belief and optimism that there is still a cycle of profit from within the energy sector in the North Sea. Critical to the future success of Aberdeen and the N East is the oil and gas industry working ever more closely together and continuing to revamp how it works.

“However what we cannot predict between now and the next report is the role Brexit may play in transforming impacting the fortunes of cities across the UK.”

Meanwhile. the majority of UK cities and English Local Enterprise Partnership (LEP) areas are now outperforming their pre-financial crisis peak. However, the overall improvement of the index masks considerable variation between cities, and in many cases, within cities.

Many cities that have scored highly in terms of jobs, incomes and business start-ups are beginning to experience the ‘price of success’ in terms of pressure on housing affordability, transport and work-life balance.

The biggest drivers of higher scores since 2012-14 have been falling unemployment and greater numbers of new businesses (see below). Those cities that have seen the biggest improvement in overall score are typically those which have experienced particularly large falls in unemployment or increases in business start-ups.