Automation revolution to hit most socially deprived towns hardest, finds CSJ

The same towns in the North and the Midlands that were worst hit by the loss of industry are most at risk of a second surge in unemployment triggered by robots taking over skilled and semi-skilled jobs, a major new report warns today.

Researchers have identified 10 towns that have low productivity and are highly vulnerable to the Fourth Industrial Revolution in which technologies driven by artificial intelligence will make many jobs redundant.

Big cities such as London, Manchester and Birmingham are found to be well placed to ride the automation wave, but many smaller towns – weakened by high levels of social deprivation – are at risk of falling further behind their bigger rivals, in much the same way as they lost ground with the collapse of heavy industry in the 1980s.

The report calls for urgent action with enterprise zones featuring tax breaks and financial support for firms being created in the ten towns most as risk of accelerating economic decline.

At a total cost of £1.4 billion - £500 for every one of 2.8 million residents – government money should be devolved to local councils for infrastructure investment, urban regeneration, and programmes to reduce social breakdown and poverty.

In addition, they should benefit from scrapping employer’s national insurance payments by high growth businesses.

Critically, the report finds, factors such as crime, drug use, family breakdown and educational failure, make it harder for these post-industrial towns to build economic momentum.

Formerly thriving manufacturing strongholds are today blighted by a chronic and varied combination of unemployment, high welfare dependency, educational failure, drug addiction and devastating levels of family breakdown.

The report finds the ‘left behind’ towns with high social deprivation are least likely to attract the jobs of the future, which will mostly be service-based and generated in major cities with good transport links, cultural attractions and dynamic local leadership such as London, Manchester and Birmingham.

The think tank has analysed jobs growth figures and calculated that the gap in jobs growth between the prosperous South East and the ‘rustbelt’ regions in the North and the Midlands is only due to widen.

The think tank calculates that job growth in London will be double that in the East Midlands and three times the rate of growth in the North East. In the West Midlands meanwhile, job growth is due to grind into reverse gear with a one per cent drop over the next seven years.

The CSJ report fears the additional blow of the automation revolution will sink these ‘left behind’ towns further into social and economic deterioration and split the UK irretrievably into a two-tier economy with jobs and prosperity focused on London and the South East.

Andy Cook, chief executive of the CSJ, commented: “Parts of the UK are trapped in a cycle of deprivation that is only set to get worse as the jobs market changes.

“Automation will bring huge positives to the UK economy as a whole, including a much-needed boost to productivity, but not everyone will benefit equally.

“To allow the residents of these ‘left behind’ towns to seize the opportunities in the future jobs market, they need a policy blueprint that provides better transport links, better teachers in schools, better housing and dynamic local leadership to raise aspirations and create opportunities.

“In cities such as Manchester, the effect of strong leadership is clear. Manchester’s revival as a hub for marketing, technology, design and other professional services is in large part down to the powerful leadership of the joint leaders of the city council. It now attracts the second largest amount of foreign direct investment for a city in the UK after London. Tees Valley is also a case study of an area being turned around by its newly created Mayor installed in the Combined Authority.

“We need to a raft of new measures to bring around a regional revolution. Power must be put in the hands of accountable local leaders, such as the metro mayors, who know where resources would be best used.

“Turning around the ‘rustbelt’ region is not only important to the country as a whole if we are to compete internationally; it’s vital to improving the lives of those who suffer the injustice of being born where opportunity is lacking.”

The report also highlights the low mobility of workers among low income households as people struggle with the cost of housing, poor access to transport and, in the worst cases, fear becoming homeless if they move area.

The CSJ warns: “The loss of jobs linked to deindustrialisation in the second half of the 20th century set off a chain of social and economic repercussions that are still being felt in post-industrial communities today.

“From an economic perspective, business closures and lower levels of business investment reduced the opportunities for skilled, well-paid work, leaving many unemployed, dependent on welfare and often without any opportunities for new employment.

The report concludes: “Policy makers have to look at the social problems that have taken hold in some communities. If you do not tackle crime, welfare dependency, support better schools, reduce the risk of young people being caught up in gang and drug culture, as well as helping parents stay together to support young children, it will be hard to generate the growth, jobs and economic opportunity some communities so desperately need.”