The Economist - 19_25 April 2014

BritainThe Economist April 19th 2014 45Also in this section46 Recruiting priests47 Bagehot: Why politicians are hatedFor daily analysis and debate on Britain, visitEconomist.com/britainThe industrial northNever walk aloneMANCHESTERNorthern solidarity could give Britain a big economic boostTHE rivalry between Manchester Unitedand Liverpool Football Club isamong the oldest and fiercest in football.The teams first met in 1894, when competitionbetween the two cities—30 milesapart—reached fever pitch. That yearmarked the opening of the ManchesterShip Canal, an effort to bypass Liverpool’sbustlingportwith a directwaterroute fromthe Mersey to central Manchester. Over acentury later, old enmities continue to dividemany of England’s northern cities.Such localism is taken for granted in Britain.But it is sappingthe competitiveness ofthe country’s industrial heartland.Trace a rectangle 110 miles long and 90miles wide, with Blackpool at its northwestcorner and Birmingham to the south.The region contained in it has most of theingredients for a global metropolis. In areaand population it is comparable to GreaterChicago—home of corporate headquarters,world-class cultural amenities andsoaring towers. Both Chicago and Britain’smetropolitan north are former industrialcentres that grew rich in the 19th centurybut fell on hard times in the 20th. Yet theirpaths have diverged. Real incomes in Chicagoare roughly 80% higher than in Britain’sex-industrial core (see chart), accordingto figures gathered by the BrookingsInstitution, an American think-tank. Andthough the fortunes of Britain’s cities areimproving, the gap in productivity and dynamismbetween its biggest industrial corridorand those offoreign peers is striking.Cities thrive or wither on how wellthey foster connections between peopleand between firms. In the 19th century,when the cost of moving bulky goods washigh, cities were a means to shrink supplychains. Firms crowded around coalfieldsand each other to cuts costs and boost productivity.But transport costs fell steadilyinto the 20th century, reducing the need tocrowd factories cheek by jowl. Manufacturersinstead sought cheap labour, leavingsome industrial towns to rot. A new dynamobegan to drive urban growth: thespeedy flow ofknowledge within cities.The shift has wrong-footed many an industrialcity. Those which have managedthe transition best have been able to call ona critical mass of skilled workers. Chicago’sadvantage is obvious; the metropolitanarea circles a dense central city. Muchof the region is linked by a single transportsystem and city government. Britain’s oldmanufacturing belt is not so geographicallycoherent. Yet it lags more sprawlingpeers as well. The German industrial conurbationthat stretches from Dortmund toCologne is also more productive, despitelacking a defined heart.Several factors keep what might becalled Britain’s collective second city underperforming.Poor transport links amplifythe distance between the region’s hubs.Fewer than 40 miles divide Manchesterfrom Leeds—less than the length of the Piccadillyline on the London Underground.But the rail journey between the two citiestakes more than twice as long as that betweenReading and London, which coversa similar distance. (The rolling Penninesare not a great obstacle; a canal joined thecities nearly two centuries ago.) A 2009study by economists at the Spatial EconomicsResearch Centre (SERC) reckonedthere was 40% less commuting betweenManchester and Leeds than one would expect,given the cities’ characteristics.Divided government is another handicap.Local officials are scattered betweenmyriad town councils, and are more interestedin beating neighbouring districtsthan deepening links with them. The nationalgovernment periodically tries tosolve this—mostly unsuccessfully. The lastLabour government introduced agenciestasked with organising development on aregional level but they did little to encourageproper regional governance. The coalitionhas replaced them with local enterprisepartnerships but they are poorlyfunded and mostly impotent.Antipathy to regional partnerships, 1Come togetherMetropolitan areas*GDP per person, $’000 at PPP †Population*, m2012 estimates0 10 20 30 40 50 60Chicago9.5London14.0Ruhr valley ‡11.6Manchester2.6Birmingham3.7Leeds2.3Liverpool2.0Shenzhen §10.8Sheffield1.5PrestonLeedsBlackpoolLiverpool SheffieldManchester BirminghamENGLANDLondon200 km*Includes surroundingeconomically linked areasand commuting region† Purchasing-power parity‡ Germany § ChinaSource:BrookingsInstitution