New Order: devolution and the future of living standards in Greater Manchester

Published on Incomes and Inequality

In May 2017 Greater Manchester will go to the polls to elect the region’s first ‘Metro Mayor’. Greater Manchester has been at the forefront of the current programme of devolution and the new mayor will wield more power than any other city leader. However, it will be on the results of how this power is used, rather than its existence, that success will be measured.

Given the region’s recent economic performance Greater Manchester’s new mayor will have a full in-tray. The region’s economy performed strongly before the financial crisis. Growth was faster than in the rest of the country; real wages rose by 15 per cent and employment rose by 4 percentage points in the decade to 2007. Since then though growth has disappointed; wages are still significantly below their pre-crisis peak and Greater Manchester did not see an employment boom to the same extent as the rest of the country. Furthermore new geographic inequalities have emerged, incomes in the richest neighbourhoods in the region are 1.8 times those in the poorest (up from 1.6 times in 2007) and since the crisis nearly all employment growth has occurred in the south of the conurbation. The new mayor will need to be a leader for the whole region.

  • Productivity: output per hour worked is £26.60 in Greater Manchester compared to £30 in the rest of the country. To address this the region needs to improve the prospects for both lower and higher skilled workers. Despite being good at attracting and retaining students after they graduate, Greater Manchester has fewer professionals and managers than the UK average. Add to this that nearly one in five workers will be paid the minimum wage by 2020 – and it is clear that productivity improvements are needed in many sectors.
  • Geographical inequality: while improving the region’s economic performance is vital this must also reduce geographic disparities. At present if you are an ethnic minority person in Trafford you are more than 50 per cent more likely to be in work than if you live in Manchester. In terms of employment Greater Manchester is the city region with the greatest geographic disparities. As a result it is important that people in Rochdale, Oldham, and parts of Salford and Manchester have the same opportunities as those in Trafford and Stockport.
  • Housing: Housing costs as a share of income have been rising in Greater Manchester over the past two decades. Although this has affected different people and different areas to differing degrees it is striking that home ownership in the region has fallen by nearly 15 percentage points since 2003 – the largest fall recorded in the country. The new mayor has an opportunity to ensure that the region’s incipient housing problem doesn’t turn into something more concerning.