(Aug 12): Around 90,000 of London’s white-collar jobs are poised to transfer to other parts of the UK over the next five years, as Prime Minister Andy Burnham’s devolution drive and the capital’s cost pressures encourage businesses to shift work elsewhere.

The move is estimated to transfer as much as £9 billion (US$12.1 billion or RM49.72 billion) of employers’ spending to regional centers like Manchester, Leeds and Birmingham over the next five years, according to an analysis conducted by recruitment company Robert Walters and shared with Bloomberg. That sum could rise to £15 billion when taking into account the transplants’ cash flows into property and local businesses.

While the 90,000 roles make up a fraction of London’s total workforce, the relocation plans are symptomatic of a wider rewiring of the UK economy. Jonny Bohane, senior manager for market intelligence at Robert Walters, said the figures indicate a “rebalancing of the scales towards stronger regional jobs growth”. 

Manchester and the broader North West are likely to be the main beneficiaries of the relocation push, attracting 22,500 roles, or about a quarter of the predicted total, according to the report. The Midlands and Yorkshire would get a further 20% and 15% of the jobs each, with the rest spread out across the UK.

The analysis used past job relocations from major UK public and private sector employers to establish a baseline, then combined Robert Walters’ own placement volumes with LinkedIn talent movement data to create projections of regional hiring demand. 

The model also took into account office capacity, data on the adoption of hybrid working, the depth of local talent pools, regional development initiatives, and the political backdrop of the government’s push to decentralise the UK. 

With only 5% of taxes and 20% of spending decisions controlled locally, Britain is the most fiscally centralised of the OECD’s 38 members, a status Burnham has made it his mission to change. 

The new prime minister wants to devolve more power to regional governments by giving them greater control over revenue raised locally. He’s called it a push to deliver “growth in every postcode”, and laid down a marker by setting up a Manchester outpost of the prime minister’s office in Downing Street, called No 10 North.

The shift away from London, however, predates Burnham. From Deloitte to Goldman Sachs, banks and professional services firms have built up hubs across the UK in places like Birmingham and Manchester. The Bank of England also plans to have about 10% of its staff working from Leeds by next year.

Daniel Harris, managing director for the UK and Ireland at Robert Walters, said the trend will accelerate as “cost considerations remain high, and hybrid working allows organisations to build more geographically diverse teams”. He said UK firms tend to be keeping their senior managers in London while turning to local hires for more junior roles.

Separate figures from Employment Hero, an human resources platform, also showed small- and medium-sized businesses expanding faster in regions outside the capital, with payrolls in the North up 6.3% quarter-on-quarter in July — growing twice as fast as in London.

Increasing numbers of Londoners have also relocated to other parts of the country, taking advantage of hybrid working to escape the capital’s exorbitant living costs while holding on to their London jobs. 

Last year, the city’s population fell for the first time since the 1980s, when excluding the pandemic. The most popular destinations included Scotland, as well as Buckinghamshire, Birmingham, Essex, Brighton and Bristol, in England, with the exodus most pronounced for families with children.

Uploaded by Chng Shear Lane