Could hybrid working help revive smaller cities?

Hybrid working has the potential to level up certain areas of the country post-Covid, according to a new report.

The PwC research shows that areas that could benefit from a shift to working from home include outer London and smaller cities like Wigan, Bradford and Blackpool, but it cautions that it is early days to make predictions.

Jonathan House, devolved and local government lead for PwC, said: “The pandemic has led to people living their life much closer to home and the likelihood is some of these lifestyle changes will stay for the medium-term. Citizens will value different things and those places that meet those needs will be the ones that bounce back quicker.  This opens up opportunities for places that have advantages in terms of liveability and community, and where ‘price of success’ factors, such as housing affordability, are less of an issue. The report sets out a series of recommendations for leaders from across national and local government, as well as the private and third sectors, as they plan their recovery strategies. This includes taking a broad approach to economic wellbeing and building resilience will be essential to create liveable vibrant places where people want to live, work and visit.”

Separate PwC research also shows a majority of both executives and employees surveyed this month say that remote work shifts caused by COVID-19 have been successful at their organisations. Fifty-two percent of executives said that productivity improved during the prolonged work-from-home period, while 34% of employees said the same.

Learning lessons about resilience

Meanwhile, the latest PwC-Demos Good Growth for Cities report shows that the UK cities and towns hardest hit by the economic fallout from the pandemic are likely to make the fastest recovery, but are expected to be worse off than at the beginning of the pandemic compared to more resilient places.

The research says cities and towns hardest hit during the pandemic, such as Bradford, Liverpool and Southend have seen their economies decrease by more than 12.5% in 2020, yet are among those with the strongest projected GVA growth rates for 2021. These cities are predicted to recover faster than others in 2021, with growth rates of 5.3% and higher.

The report, however, highlights the deep seated challenges facing many of the worst hit towns and cities which it says are likely to be those traditionally vulnerable to volatile economic performance.

The Good Growth for Cities report calls for a doubling-down on efforts to address structural issues – such as improving local skills, encouraging new business development and addressing local environmental challenges – whilst directing effort and resources to the towns and cities that need them to achieve longer-term sustainable growth. Creating employment opportunities and improving skills levels should be top priorities nationally and locally – particularly for younger people.

Karen Finlayson, regional lead for government and health industries at PwC, said: “A broad brush approach to levelling-up will not address the challenges facing the places that have been hardest hit. We need a precise approach which takes into account the strengths and needs of individual towns and cities to build more resilience and drive a fair recovery across the UK. Given continued uncertainties, particularly with the post EU trading environment and unknowns around pandemic recovery, action is required so that levelling up is a reality not an unattainable aspiration.”

The Demos-PwC Good Growth for Cities Index ranks 42 of the UK’s largest cities based on the public’s assessment of 10 key economic wellbeing factors, including jobs, health, income and skills, as well as work-life balance, house affordability, travel-to-work times, income equality, environment and business start-ups.

Pay gaps

PwC has also voluntarily published its ethnicity pay gap report which shows that black staff are paid an average of 40.9% less than their white colleagues. The average pay gap for all ethnic minorities is 31.6% while the median difference is 3.5%. Kevin Ellis, chairman of PwC UK, said: “It’s clear from this detailed data that we haven’t yet solved pay gaps but it does demonstrate our commitment to focusing on inclusion in the widest sense possible. We still have work to do to achieve better representation, especially at the most senior levels.” PwC’s Big Four rival EY has disclosed a 48.9% gap between the pay of black staff and their white counterparts, with the lack of black employees at senior levels also a key factor. Along with pay gap statistics, PwC published targets to increase the number of women and people from ethnic minorities in senior roles by 2025. The firm wants 15% of partners to be from ethnic minorities and 30% to be women by 2025. PwC’s gender pay gap decreased from 14.7% in 2019 to 11.6% for 2020.

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