Sheffield cuts a dash to diversification

By Andrew Bounds


Sheffield's reputation for making steel was replaced by one for creating white elephants as it sought to escape from the last recession.

The city lost a quarter of its jobs in just eight years in the 1980s so the council tried to induce a feel-good factor with events such as the World Student Games in 1991. It spent £147m on the Don Valley Stadium, only sporadically used since, an Olympic-sized swimming pool and an arena. It successfully bid for the lottery-funded £15m national centre for popular music which shut months after it opened in 1999 for lack of visitors.

Sheffield has learned its lesson. In the 1980s one businessman goose-stepped outside the town hall when it began flying the red flag of the "people's republic of south Yorkshire". His contemporaries are more likely to have breakfast with council chiefs.

Nigel Tomlinson, chief executive of the city's chamber of commerce, said the turning point was the setting up of a city liaison group of business and council leaders in 1997. "The public and private sectors decided they could not conduct policy by standing on the tops of their buildings shouting through a megaphone," he said. "Public-private partnership was born in Sheffield."

It was not a moment too soon with the city "in terminal decline", said Mr Tomlinson. Confidence began to return. Existing steelmakers such as Forgemasters International slimmed down and reinvented themselves while a new breed of smaller specialist metalworkers grew, especially in the medical instruments field. "Most of the cutlery-making has gone to Asia but we make 60 per cent of the world's scalpel blades," he said.

The authorities addressed Sheffield's traditional weaknesses by attracting retail investment, hotels and professional and financial services firms. Some £750m of European Union money over the last decade helped build infrastructure and provide sweeteners. Its universities added medicine, media and languages to strengths in engineering and mining.

Companies such as Abbey, Nationwide Building Society, DLA Piper, HSBC (which took over Sheffield-based Midland Bank) and Aviva now have big operations in the city of 530,000.

There have been job losses. SIG, an insulation supplier, is cutting 900 jobs around the country, while Corus, the steelmaker, is shedding more than 700 in nearby Rotherham.

However, with less than a fifth of the workforce in businesses employing more than 500 people, the city may avoid mass redundancy programmes.

"We have had a dash for diversification," said Paul Scriven, council leader. The council acted as a facilitator for business, he added.

John Mothersole, council chief executive, said there were 10,000 jobs in the digital sector. The next step was to invest £120m in broadband communication that would give 98 per cent of homes across south Yorkshire access in five years. "We will have the best network in Europe," he said.

That has been a focus of Sheffield's rebranding. While Liverpool and Manchester are known for their music scene, the steel city where electro-pop was born in the 1980s is often overlooked. The revival of bands such as the Human League and Heaven 17 and newer ones such as the Arctic Monkeys are helping put it on the map.

Sheffield's economy has been growing at about 5 per cent for a decade but that has not been enough to heal the scars of a generation of decline. More than 10 per cent of the working population in some inner city wards had debt problems in 2007. There are acute skills shortages and the number of registered unemployed has grown by a quarter this year to hit 3.1 per cent.

Mr Tomlinson said the year would be tough, but not a repeat of the 1980s. "The vision is to be a core European city. This recession will set us back but by continuing to invest we will get there."
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Sheffield specialises in "white elephants" ha ha.