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This is the first of a regular biannual series of Newsletters for LEFM users. Its aim is to keep users abreast of current issues, providing support for their work and updating them on developments in the LEFM software. The editors would be pleased to receive comments on this first issue and suggestions for subsequent issues (write or Email the Editors of the Newsletter, Saxon Brettell and Rob Wilson at the addresses below). The Newsletter is published in both electronic and paper versions.
Version 2.1 of Local Economy Forecasting Model has been released, and all users updating to the March round of CE/IER forecasts are receiving this new version as standard. The latest version incorporates additional features, reflecting suggestions from LEFM users, that are designed to make the model more versatile. Version 2.1 includes flexible tabulations and further options regarding occupation assumptions. In addition to the locally based assumptions that already existed in LEFM, the user can now impose national or regional trends in occupation change upon their local areas.
LEFM updates from March will also include data from the 1993 Census of Employment, the first data set at a local level released on the basis of the SIC92 classification. This is a major reclassification from SIC80. Some problems were initially evident in the data released by NOMIS with some inconsistencies in the areas and these data were withdrawn and re-released. Also the 1991 dual-classified data essential for understanding the effect of the changes at local level have only just been released, and very interesting they are too....
Users of these data will know that the SIC92 revision has required a major reclassification of employment by the Office of National Statistics (ONS has been formed from the merger of OPCS and CSO), with overnight some 10% of UK manufacturing employment being reclassified into business services. Local analysts will need to look carefully at the changes in their own local data sets and in principle this is best done with the 1991 data since it is dual coded, although 1993 is a fuller data set. Census of Employment time series are the major guide to economic restructuring at the local level so that this break in the series will be a major concern to local practitioners. The good news is that in future these data will be available annually from ONS, with less than a year's delay (although based on a sample rather than a full census). CE/IER have assessed the dual-classified information just released for 1991 and have established a linkage procedure for constructing consistent series for 1981-93. Local authorities will have the advantage of access to detailed information on the reclassification of their local firms and we are happy to work with local agencies with LEFM if they want to undertake a more thorough analysis of their local data sets so as to establish an agreed consistent data series at their local level - more on these items and other data changes at the....
This conference is now an established annual event for LEFM users. We intend it to be the major opportunity for LEFM users with different experiences to meet, exchange information and discuss practical issues with other users and CE/IER providers - so put the date in your diaries now! Further details on the conference and a booking form are enclosed with the hard copy version of this newsletter. For additional information and to book your place, contact Barbara Wilson at IER.
As the number of LEFM users is rapidly expanding across the UK, this is set to become a major conference for local economy practitioners and we wish to reflect this in the content of the conference. As last year, it will be a two-day event held on Thursday June 6-Friday June 7 1996. It takes place, also as last year, in the Scarman House conference centre located in the grounds of the University of Warwick. This gives state-of-the-art facilities for conferencing, excellent guest accommodation and catering, all in a splendid environmental setting - just the forum for a series of stimulating presentations this year.
In addition to contributions from CE and IER, there will be a number of external speakers at this year's event. To complement the formal sessions on important new LEFM developments and advice on how to get the most out of new data available at local level, a broad theme for this year will be to cover the issues of partnership building, and developing local economic strategies. This reflects our awareness that many users are seeing the role of their organisations both deepen and broaden. As a consequence, they are frequently being asked to provide economic context and support for locally-based initiatives involving partnerships (often in groups involving local authorities, TEC/LECs, Chambers, Government Offices and Business Links). Such partnership building has been important in attracting inward investment. Users also face increasing calls for evaluation of their own agency's work and its impact on local economic activity. LEFM can provide a suitable framework for such an evaluation. The speakers will review the issues involved, and draw lessons from a number of recent projects involving impact analysis and policy evaluation for local partners.
There will also be plenty of formal and informal opportunities to talk to speakers, designers and other LEFM users, and to gain or improve hands-on experience using the LEFM software. There will be LEFM practical sessions for novices and for more experienced practitioners, and opportunities to receive one-to-one based advice from our expert team. Indeed there will be time to interrogate software designers, if necessary continuing late into the night in the conference bar! Between sessions and in the morning and evening, as our participants discovered last year, one can also take advantage of the University's splendid facilities for sport, with extensive walks available in the beautiful environment of the grounds, especially useful for laptop users.
EVALEFM - a local-economy-forecasting-impact-evaluation model, with enhanced facilities for evaluating the impact of European investment spending, has been developed and implemented for Merseyside and Strathclyde local areas
EULEFM - a local economy forecasting model for Europe is under development. A German language version of LEFM has been developed for use in the new Länder of Germany in cooperation with Ecometrika GMbH in Berlin. This is designed to work with the E3ME model developed by a team led by Cambridge Econometrics for Europe in the same way that LEFM works with CE's MDM national-regional model in the UK. The E3ME model was developed under the European Commission's Joule II R&D programme, and distinguishes some 32 industry sectors. The E3ME project began in 1993 with the aim of developing a single regionalised model of Europe designed to evaluate policies to reduce greenhouse gas emissions by some 60% over the next 50 years. A proposal to enhance the model and extend it to cover new Member States has been accepted under the Joule III Programme, and this will form the starting point for the next phase of research.
Among significant recent model developments for LEFM has been work enhancing the simulation facilities in LEFM. This has been used to evaluate the impact of EU and UK government support for local areas. Work for the Brent Regeneration Agency, the Stockport Partnership, and the regional partners in Merseyside and Strathclyde region, has led to enhanced treatment of the supply-side of the model.
Merseyside has been granted EU Structural Funds status under the Objective 1 category. The Monitoring Committee of the regional partners has overall responsibility for monitoring the implementation of the agreed Single Programming Document (SPD) for Merseyside, designed to facilitate convergence of Merseyside towards average European income levels over 1994-99. Work on the SPD was originally undertaken in 1994 by CE and IER. They used version 1.01 LEFM software model to help set quantitative `baseline' targets for EU support on infrastructure and human resources. These targets were subsequently embodied in `Merseyside 2000', the EU-approved SPD providing the basis for implementation of the detailed programme. This work was followed up in 1995 with a second project giving an interim assessment of the programme after two years and reviewing the guidance on approvals. This follow-up work was undertaken for the Labour Market Strategy Group (representing Merseyside Government Office, local TECs, local authorities and others) in close association with KPMG's Liverpool office. It used an enhanced version 2.01 EVALEFM model to provide an up-to-date counterfactual scenario, (ie an assessment of what the local economy might have achieved if the Objective 1 programme had not occurred) and compared this with a baseline forecast simulation. A number of variant future development scenarios were simulated reflecting enhanced support for `clusters' of export-oriented sectors in the local area. The EVALEFM model was thereby used to underpin effective labour market policy advice. The work informed the dissemination of guidance for applicants for funds in 1996, and supported the information requirements of local economic development agencies. The outcome - Merseyside Economic Assessment - established a consensus approach for the many participating agencies, allowing them to support the recommended new initiatives to achieve the programme objectives. LEFM was seen by the partners as a fundamental tool for achieving a consensus among the partner organisations, since it provided a clear framework for considering the development alternatives.
Version 2.0 multi-area LEFM software provided the framework for an economic assessment of the East Midlands economy for a research group comprising the Government Office for the East Midlands and the seven independent agencies (TECs and recently merged TECs and Chambers) concerned with local training, enterprise and development. The study, undertaken by CE and York Consulting, established an overall economic appraisal for the region and the seven local TEC areas in close consultation with the East Midlands research group. The work was guided by a forward-looking study utilising a LEFM for each of the seven areas, consistent with the latest CE forecast for the East Midlands region. The study identified the sources of economic growth and restructuring effects at a detailed industry level, identifying strengths, weaknesses, opportunities and threats to the component local economies of the region in a context of the global competition faced by the UK economy. The outcome was a comprehensive report suitable as a reference document for the agencies and for use in Single Regeneration Budget (SRB) and other forms of funding bids, and the provision of TEC-level LEFM software embodying the detailed forecasts from the study.
Analysis of historical behaviour and trends is not always a good guide to future events. Major discontinuities can arise as a result of closures of large organisation or substantial inward investment. The LEFM package is designed to allow users to address such issues explicitly using an impact module.
This has been used to assess the impact of both Phase 1 and Phase 2 of the Toyota investment in Burnaston in Derbyshire. The former is a retrospective analysis of what the effects of Phase 1 have been, while the analysis of Phase 2 is prospective. In both cases the LEFM software enables an analysis of both direct and indirect effects of the investment on the local economy.
The results illustrate the substantial effect that the Toyota investment has had on the local area. In total, some 6,000 jobs will have probably been created in the south Derbyshire area by the end of Phase 2, of which about a third are indirect. The package also enables an assessment of the sensitivity of these conclusions to a range of alternative assumptions. Further details on how to use the impact module of LEFM are available on request.
Partnerships between TECs, Councils and other bodies are very much the vogue. Some have been going strong for a number of years. A good case in point is the partnership between Leicestershire Training and Enterprise Council and Leicestershire County Council. They have been working together in producing a Labour Market Assessment for Leicestershire for the last four years.
Their most recent publication Leicestershire Economic Assessment, March 1996 published jointly by the TEC and Council, is based on the use of LEFM. LEFM has provided a framework which the partners have used to work together and develop their own view of local economic and labour market prospects. This has included linking the LEFM results with detailed demographic modelling and forecasting work undertaken by the Council including numerous sector studies.
Details of these publications are available from Leicestershire TEC. Call 0116 265 1515 for further information.
The dramatic changes under way in the further and higher educational system and related organisations have highlighted the need for information about employment and careers prospects. Educational establishments are now charged with ensuring that their courses have relevance to the local and national economies.
The reorganisation of the way in which careers advice is delivered has also focused the attention of some careers advisors on how they can make the best use of the available information to provide the most useful advice to their clients. Sussex Careers Services Ltd (previously East Sussex Careers Service) is at the forefront of such developments and has found LEFM a useful item in its tool-kit.
The present version of LEFM does not analyse qualifications held by the workforce explicitly. However, CE/IER are currently considering whether such an addition to the package would be a valuable enhancement. Readers' thoughts on this issue are welcomed. Please contact Saxon Brettell or Rob Wilson on the phone numbers or Email addresses given at the end of this newsletter.
LEFM is a general economic forecasting model for local areas capable of addressing issues that link development and policy. The essential purpose of the model is to provide a forward- looking framework to inform analysts and decision-makers at the local level about the key economic features of their locality, including the main behavioural and technical links between the economy and the labour market.
TABLE 1: THE CURRENT VERSION OF THE LEFM MODEL | |
LEFM 2.1 | |
| Industrial Classification SIC92 | |
| Industries | 49 |
| of which services | 19 |
| Occupations | 22 |
| Price base | 1990 |
| Estimation period | 1981-1993 |
| Solution period: | 1994-2010 |
| Base input-output tables | 1990 |
Table 1 summarises the main features of LEFM. It is a detailed model of sectors and occupations at the local level. The model is constructed, estimated and solved on a personal computer. The model is based on a sophisticated analysis of local data with a user-friendly `front-end' to the model.
In summary LEFM provides:
Saxon Brettell, Anthony Barker, Cambridge Econometrics
Covent Garden, Cambridge, CB1 2HS, United Kingdom
Tel: 01223 460760
Fax: 01223 464378
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Dr Rob Wilson, Barbara Wilson, Institute for Employment Research, University of Warwick
Coventry, CV4 7AL, United Kingdom
Tel: 01202 523530
Fax: 01203 524241
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