1.3.5 The service economy

The tertiary sector developed to support secondary industry and the needs of workers. Today, 79% of the UK's GDP comes from, and 80% of workers are found in, the service sector — an example of tertiarisation.

Expansion of retailing, commerce and entertainment in central areas

  • These tertiary activities originally clustered in central areas for the following reasons:

    • There was a large catchment area population to support the services.

    • These were the most accessible points in the past.

    • Access to a large workforce.

    • New technological infrastructure would develop in these areas first.

  • Expansion of the tertiary sector has occurred because:

    • Many people have higher incomes to spend on basics and more disposable incomes to spend on services and luxuries

    • The ageing population may be mortgage-free and have more disposable income

    • Modern technology has created a demand for new services

    • Changing tastes have led to the growth of certain retail services, such as coffee shops

Gentrification and associated social changes in central urban places experiencing re-urbanisation

  • People have been moving back into cities for the following reasons:

    • Old industrial areas have been redeveloped, turning derelict industrial buildings into apartments. For example, Little Kelham in Sheffield is on a former steelworks site, and involved the building of new homes as well as the conversion of old industrial buildings into apartments.

    • People unable to afford property elsewhere, including rural areas, move to cheaper areas near city centres.

    • Increasing pressure due to rapid population growth in urban areas forces people into central areas.

    • Increasing numbers of young professionals prefer to live in the central area to be close to services such as restaurants and entertainment.

    • The number of 20- to 29-year-olds living in city centres such as Manchester has tripled since 2001.

    • Re-urbanisation can result in gentrification:

      • High-income, young professionals can afford to renovate older housing

      • Old industrial buildings are converted into luxury accommodation rather than affordable social housing.

      • Services develop in the area to cater for the higher-income population.

      • As the area becomes more desirable, it attracts other wealthier people into it.

      • Tredegar Square in Mile End, London was built in the 1830s. comprising grand town houses. By the 1970s the area was run down, with homes in a poor state of repair. Many had been made into small flats, let to poorer members of the population. By the 1990s, having been saved from demolition, with ownership transferred from big landlords to individuals, the housing stock had been renovated and the area became a desirable place to live for young, wealthy people.

Re-urbanisation can result in social change in an area:

  • Low-income residents are priced out of buying or renting in the area. People in the bottom 10% of relative deprivation are the most affected.

  • Members of the original population feel socially excluded.

  • The ethnic diversity found in deprived areas changes as the new, incoming population dominates.

  • An increase in higher-paid professional, managerial, technical and creative jobs attracts young professionals, excluding older and unskilled people in the area.

The impacts of changes in the service economy

  • Changes in the service economy are complex. While some areas are growing, others are in decline.

  • Features of cities facing decline include:

    • Higher rates of poverty

    • Lower rates of employment growth

    • Lower rates of immigration of economically active groups

  • Ten of the top 12 most declining cities in the UK are in northern England, for example Rochdale, Burnley and Bolton, reflecting the impact of deindustrialisation as well as geographic location.

  • The tertiary sector is not just found in central urban areas — it also operates in other locations (see below).

    Location

    Description

    Out of town retailing

    Superstore or a collection of chain stores close to good transport links, for example Meadowhall in sheffield

    Office park 

    Office buildings grouped together, usually in the outskirts, which offer lower building costs, good transport links, less congestion and a pleasant environment, for example cobalt business park in north Tyneside, which is the largest in the UK, employing 14,000 people

    Leisure and entertainment complex

    Leisure facilities such as cinemas are increasingly found in outer areas, often with retail parks. Stadia are moving to redeveloped areas or the outskirts for more space, for example in 1998 Reading FC moved to the new Madejski Stadium, which was built on a landfill site outside the town

    Home (internet shopping)

    The increase in shopping is having an impact on the tertiary services in central areas and elsewhere

  • As well as bringing social changes, developments in the service sector can affect people in the following ways:

  • Closure of shops and services in the central area, because they are unable to compete with other locations and the internet, can leave people feeling isolated.

  • Closure of chain stores such as Mothercare, Toys R Us and House of Fraser has resulted in many people becoming unemployed. This can lead to even more closures in the area in a 'domino effect'.

  • The central area becomes characterised by poorer-quality shops and less choice (eg. the growth of charity shops).

  • Movement to out-of-town locations favours those with cars.