John Humphrys asks: is the idea of a 'Northern Powerhouse' a good one?
George Osborne, the Chancellor of the Exchequer, wants to create a ‘northern powerhouse’ among the cities of the north of England. At a meeting in Manchester on Monday, he said: “We need a northern powerhouse. Not one city, but a collection of cities – sufficiently close to each other that combined they can take on the world.” The key, he believes, is much better transport links between the region’s existing cities, so he’s floating the idea of a new high-speed rail link – HS3 – between Manchester and Leeds. Does the idea make sense?
Governments of all parties have long scratched their heads about what to do about the so-called ‘North-South divide’ – the fact that the south-east of England, and especially London, tend to power ahead, leaving other parts of the country, and especially the old industrial north, limping behind. During the recent upturn in economic growth this pattern has been followed much as usual.
One solution to the problem, pioneered by the last Labour government and enthusiastically pursued by the coalition government, is the building of a high-speed rail link, initially between London and Birmingham and then to be extended to Manchester and Leeds. HS2, as it is known, is intended to revitalise the Midlands and the north, in part by speeding up the journey time between London and these provincial cities.
Critics, however, say it may have the opposite effect. Faster speeds to London, they claim, will simply result in more people in the north of England feeling able to commute to London. In other words, economic activity will become even more concentrated in the south-east. As evidence for this they point out that the speed of rail connections to London in the east of England has led people from as far away as York to think they can work in London while living up north.
Although the government disputes this, ministers have never claimed that HS2 would be sufficient to revitalise the north. Now the Chancellor is suggesting something in addition. Mr Osborne is that rare breed, a Conservative MP from a northern seat (the posh bit of Cheshire, south of Manchester). He is therefore very aware of the problem. In his speech on Monday he said: “the powerhouse of London dominates more and more. And that’s not healthy for our economy. It’s not good for our country.”
He set out his idea in bold terms. “We need to think big. We need an ambitious plan to make the cities and towns here in this northern belt radically more connected from east to west – to create the equivalent of travelling around a single global city.”
What he is tapping into is an idea economists and urban planners call ‘agglomeration theory’. This says that cities, which were widely regarded as places of decline and decay thirty years ago are now, in modern advanced economies, the centres of economic growth. This is because they enjoy a critical mass of people that helps make innovation possible, encourages enterprise and attracts skilled workers.
London itself is of course such an economic powerhouse, but agglomeration theorists point out that fast transport links extend the reach of the powerhouse way behind London’s traditional boundaries. The bigger London-centred economy takes in places such as Reading, Milton Keynes and Cambridge. It’s not just that these towns act as dormitories for London workers, but rather that they are places of economic activity themselves. Many people who work in these towns commute from London. It’s the concentration of skills and economic activity in this wider group of connected towns and cities that makes the whole region buzz. It is a pattern successfully followed elsewhere in the world, for example among the connected German cities along the Rhine.
Mr Osborne wants to replicate this in the north. He said: “You have to create the conditions where smart, entrepreneurial people want to work and make their lives.” He believes that the existence of the old northern cities, together with their universities and an increasingly strong science research base make this possible. But the key is to improve the transport links. He said: “As well as fixing the roads, that means considering a new high-speed rail link.”
That new link, HS3, would be between Manchester and Leeds, across the Pennines. The two cities are about thirty-five miles apart, much the same as from Reading to central London, but the current journey-time is about twice as long. Tom Riordan, the chief executive of Leeds City Council, says: “We’ve only got one train line and four services an hour and it takes much longer than elsewhere. We need east-west links. In London you don’t worry about moving from a job in the East End to the West End. It is the same place. We have to change the mindset.”
Given existing plans to speed up the links between Manchester and Liverpool, and between Leeds and Sheffield, the idea is that by adding HS3 the four cities would ‘agglomerate’ into a powerhouse of 9 million people and become a match for London’s 8 million.
Not everyone is convinced though. Why, they ask, should transport links be so important in a world of internet communication and Skype, never mind mobile phones? Even if improved rail services did help stimulate the northern economy would it really be worth the vast cost of high-speed rail?
The idea of a northern powerhouse also sparks alarm in other parts of the country who fear that in future they would lose out not only to London and the south-east but also to the new northern powerhouse. The north-east, for instance, fears being squeezed between this new powerhouse to the south and a post-referendum Scotland to the north.
Some suspect that what lies behind Mr Osborne’s idea is politics rather than economics. They claim the Tories are desperate to shake off the image of being an essentially southern party uninterested in what goes on in the north and are seizing on this idea as a way of trying to persuade northern voters that the Conservatives have something to offer. Mr Osborne is also seen as grabbing a tactical opportunity to wrong-foot the Labour leadership, which has already expressed some reservations about the wisdom of pursuing HS2. The Chancellor was keen to refer to “an unusual alliance of a Conservative prime minister and Labour civic leaders” over HS3, encouraging people to infer that ‘moderate’ Labour councils in the north would find a more receptive partner in a Conservative government than in a Labour one.
For the time being, however, Mr Osborne’s plan is no more than an idea for the long-term. The question is: is it a good one? What’s your view?
