Historically the North West has been a hub of media production but this has been recently catalysed with the birth of Media City UK. From Granada TV at the Quay Street Studios; Coronation Street, University Challenge and a whole host of TV and film has entered our screens. But now, for the first time, over half of the BBC’s staff are based outside of London and the South East.
This article is going to briefly investigate the impact this huge expansion has had on the local economy and the long-term implications it may have.
Manchester and the Northern Powerhouse
Since 2011, Media City UK has gained more and more momentum and has become the beating heart of TV/Media production in the North and the BBC’s second home. Although the roots have been firmly embedded, this process didn’t occur unopposed; for example, Jeremy Clarkson1 was very much fixed on keeping Top Gear firmly rooted down South and some of the 1000+ staff that have had to relocate showed more resistance than others.
On a broader level, the Government (now more than ever) appears to be committed to following through on its desire to make the North a true ‘Powerhouse’ once again. Once spearheaded by George Osborne2, it has publically and politically proved a popular scheme and such terminology has provided a handle/reference point for the scheme since its ‘re-branding’. This week will also see further levels of devolution occurring with an elected Mayor3 to take office in Manchester to show how the UK’s economic and political reliance on London is changing.
Putting Manchester more specifically in focus, the UK Powerhouse report4 (Produced for Irwin Mitchell by CEBR) sheds a positive light on Manchester’s prospects. Economic growth is expected to remain at 0.7% until Q4 of 2017, marginally beating that of London, and despite the fall-out from Brexit, a rise in inflation and falling business investment. By the end of 2017, the value of Greater Manchester’s economy will reach £58.8 billion – up by £634 million on the 3 months immediately after Brexit – with a further 22,258 jobs created.
Peel Holdings5, the company behind Liverpool’s John Lennon Airport, the Trafford Centre and Mersey Docks, constructed MediaCity UK as the case for such a development was very apparent. Amion Consulting Limited6 published a report providing economic reasons for developing the area. From a production perceptive, studio space is more than half the cost of that in London and this can be operated by full-time staff with a salary of 40% lower than London – but this is balanced with a fall in lifestyle costs from living “up North”. With a current pool of 60,000 people working in creative and design industries in Greater Manchester, this number is set to boom with growth forecasted of 27% by 2034, taking the number to roughly 76,200.
KPMG7 have constructed a report which gives an insight to the impact that the BBC’s activities have had in the North West – primarily focused around the Salford site. As the BBC is the largest operator in MediaCity, this analysis should give an indication as to the overall contribution the site makes to the area.
The first indicator that they have identified to isolate the impact of the BBC’s contribution is focusing on Gross Value Added, or GVA for short, which is a measure of the economic value of goods and services that are produced and is a key component of Gross Domestic Product (GDP). Interestingly, the BBC cannot be analysed as a traditional or ‘normal’ company as a large amount of its operations are publically funded which does add complications to the data. However, as KPMG reports, the BBC (regardless of its direct funding structure) does have implications on wider supply chains and additional external sources for content etc. As suppliers have suppliers which have suppliers, and so on, this is an ever-extending multiplying effect.
Within the report, it is determined that the BBC’s activities in the North West added £227m to the UK’s GVA in the Financial Year 2014/15 via its supply channels. Breaking this down further illustrates this multiplier effect from the initial expenditure the BBC conducts to produce content whereby approximately half of the £227m (£138m) of indirect GVA is attributed to the BBC’s direct suppliers (regarded by KPMG to be Tier 1 Suppliers). In turn £80m of indirect GVA is added to the wider supply chain with £59m of induced GVA being as a consequence of all these combined activities.
This increase in expenditure is also support by the BBC themselves. They, according to the report, suggest that expenditure within the North West has increased by 139% over FY11/12 and FY 14/15 and that over time this amount is only set to increase further.
The work conducted by KPMG does provide an incredible insight into the tangible impacts that the investment has provided, but there is a significant range of ‘intangibles’ or ‘positive externalities’ (to use economic terminology) that are born out of this growth. For example, network effects, overall market expansion, development of knowledge (human-capital) in the region and the transfer of these skills.
This therefore leads onto the impact upon employment within the area. Given the high productivity/skill jobs that are being implemented within MediaCity the benefits are typically far higher from this concentration in talent. Previously skill levels in Salford have been lower than in both the North West and the rest of the UK. However, as the KPMG report outlines, there has been “marked progress in this area, which has coincided with the arrival of the BBC in the area”.
Of the 2,000 job openings that emerged as part of the media city development, 1/3 were BBC staff that moved from London with the remainder sourced largely from the North-West region. At present, over 80% of the staff that the BBC employees in the North are now based in Salford and clearly illustrates the high value the organisation places on the region.
This increase in labour mobility is only possible from the significant level of investment that was made. Furthermore, the indirect GVA growth because of MediaCity continues to have a multiplier effect on employment in the region.
Over the next 10 years, the MediaCity site is set to double in size geographically following a £1bn expansion plan8 that the local council has just approved. As a greater number of production companies are priced out of London and the South East, this development certainly has grounds and therefore will continue to drive the area forward and prove the North to be a centre for media production. Within the development, more TV studios and production space will be supported with more shops, offices, a 330-bed hotel and 1,400 new homes all of which have multiplier consequences.
Many consider it safe to argue that the BBC’s presence in the North West has been an unanimously positive one. Despite turbulent macroeconomic changes and turmoil, the investment that has been made in the area continues to have a truly impactful presence and supports a whole network of wider supply channels.
Digital State welcomes the influx of media presence in the area and the economic growth it supports. However, with this increased focus, it becomes more important than ever for firms to be able to gain from this growth in the market and compete online. Effective digital marketing tools and a strong online presence are essential pillars to any market facing organisation and can add significant value to businesses.