Udvalget for Landdistrikter og Øer 2014-15 (1. samling)
ULØ Alm.del Bilag 132
Offentligt
Non-technical summary of the research paper ‘Relocation of Public Sector Workers: Evaluating a
place-based policy’ by Giulia Faggio (University of Westminster and ESRC’s Spatial Economics
Research Centre at LSE)
Prepared for a public hearing in The Danish Parliament on April 22, 2015 in order to provide an
overview of the British experience with the relocation of public sector jobs from London to other
parts of the UK
Since World War II, the government has used relocation programmes of public sector workers as a
tool to boost regional development. In recent years, the move of part of the BBC from London to
Salford and the relocation of the ONS headquarters from London to Newport have attracted public
attention. Advocates of relocation programmes hold the view of helping lagging regions through
public investment. Opponents view relocation programmes (and the associated redundancy
packages for workers who chose not to relocate) as wastes of taxpayers money. Despite the
attention given by the government and the media, it is not clear whether relocation programmes are
beneficial or detrimental for local labour markets.
Research by Giulia Faggio of the University of Westminster and ESRC’s Spatial Economics Research
Centre investigates the impact of a recent relocation programme, the 2004 Lyons Review, upon the
areas the received the relocated jobs. The review proposed the dispersal of about 25,000 civil
service jobs – public sector jobs that requires little or no face-to-face contact with the public and,
thus, can be relocated – out of London and the South East to less prosperous destinations.
The study finds that 100 extra civil service jobs in a local economy ‘create’ 50 additional jobs in the
private sector. In particular, those 100 relocated jobs stimulate the creation of 40 new jobs in
business services and finance, insurance and real estate (FIRE) as well as 30 additional jobs in
catering. Conversely, the same 100 civil service jobs ‘destroy’ 20 jobs in manufacturing.
The positive effect on catering is easily understood. Local restaurants and pubs benefit from money
spent by public sector staff. The positive effect on FIRE means that estate agencies, insurance
companies and local consultancies also benefit from the arrival of civil service staff. Civil servants
relocating in an area are likely to search for accommodation, open bank accounts, buy insurance
products, etc. In addition, local consultancies and auditing offices might be positively affected by
intermediate demand from public sector organisations.
Why is the manufacturing sector negatively affected? Firstly, the inflow of additional public sector
workers into a small geographical area is likely to raise housing costs. Secondly, manufacturing
products are tradable: they can be produced anywhere and shipped at relatively low cost. Because
of higher housing costs and the nature of manufacturing goods, manufacturing employers may
decide to relocate themselves moving out of costly locales and into less costly areas.
When analysing relocation programmes, it is hard to know
a priori
the geographical spread of the
policy. Evidence suggests that effects are highly localised: they are concentrated in the areas
receiving the relocated jobs and they drop sharply beyond 2km from a relocation site. There is also
evidence of moderate displacement: 100 additional civil service job ‘create’ 8 additional local service
jobs in areas within a 0-1km distance from a relocation site and ‘destroy’ 2 local service jobs in areas
within a 1-2km distance.