Manchester cracks productivity puzzle
Productivity, a puzzle no more?
It’s 60 years since Dr Beeching, British Railways Board chairman was tasked by Government to come up with a plan to cut mounting losses. His plan was to shut 7,000 stations and cut 70,000 jobs over three years and turn a loss of £100m into a surplus of £18m. His cuts were whittled down by affected MPs to 2,363 stations and the loss of a third of the branch network. Intercity services survived, although weakened by the consequential loss of additional passengers feeding through from the missing branch network. But the intracity network – connections within and to major cities, and cross country lines – has never recovered. Travel within cities and towns outside London for work or recreation became a lot harder. It’s still a challenge for suppliers, merchants and their customers.
A journey from Wotton under Edge in the Cotswolds to Newcastle shows how hard it can be. It was Friday, and I wanted to get back that evening, so I parked at Birmingham Airport and flew. On the way back I boarded the plane at Newcastle airport, but there was an engine fault and we were told to return in 90 minutes. There’s not a lot to do in Newcastle airport late afternoon on a Friday so I was back at the gate within the hour to find the replacement plane had arrived early and left without me.
Plan B was take the next plane. But that was 9am Monday! Plan C was hire a car and drive to Birmingham. There were no cars! Plan D was a train to Birmingham, but the last through-train had departed, and the last indirect train would leave me stranded in Sheffield. Plan E was take a train to London, stay overnight, train to Birmingham and collect my car. Luckily, I was in time for the last train and arrived in Kings Cross at 1.30am Saturday. The rest of the journey was uneventful leaving me to reflect on the old adage that all roads (and rail lines) lead to London.
Today, 60 years on, another conservative government, and economists and commentators in their London-based ivory towers muse about the puzzle of Britain’s lacklustre growth and flatlining productivity.
The puzzle is that London’s productivity and growth is up with leading cities internationally, but productivity outside London in UK cities like Manchester and Birmingham is dire. It takes the average worker in the UK’s second and third largest cities nearly five days to produce what London’s average worker manages in three.
One reason is underperforming cities cannot easily tap into large labour markets. Commuters outside London must rely on cars, but the routes in and the centres are routinely gridlocked with traffic. The problem is particularly acute in Manchester where the average person can reach 12.5 times as many graduate jobs within half an hour by car as they can by public transport in the same time. Given the concentration of businesses in city centres, improving access is critical. In 2020, the centre of London produced three times as much as the whole of Manchester with just 1.5 times the number of workers. Intracity (not intercity) connectivity is key to unlocking massive productivity gains. It’s estimated that £23bn is lost each year from unrealised productivity.
However, each city and its hinterland is different with its own unique legacy and barriers to growth. So there can be no blanket solution, no easy magic bullet that mandarins in Whitehall can apply nationally and expect to work. It can’t, argue some economists who specialise in travel. Birmingham’s problems are different from Manchester’s and require local solutions that solve Birmingham’s problems. Those dedicated solutions are not only more effective but significantly cheaper and faster than applying one national solution that solves all.
George Osborne the former chancellor launched the idea of levelling up in 2014 to boost the productivity and wealth of northern cities such as Liverpool, Manchester, Leeds, and Sheffield. Now it seems there’s evidence that it works.
In June, Lord Jim O’Neill the economist and crossbench peer who chairs the Northern Powerhouse came on BBC radio’s Today programme to report on the findings of a Northern Powerhouse partnership project in Manchester using new ONS data. The data series, from 2002 to 2022, started to be published at the beginning of last year. It’s the first time we’ve been able to see productivity by borough. What it showed was that for the first time productivity in Manchester rose a bit more than London. It’s still 32% below in absolute terms but it’s a sign of change. And Greater Manchester with nine boroughs including some that have been seen as lost causes, like Oldham and Rochdale, improved more than Manchester itself. This is significant because Manchester was the first place to start on George Osborne’s ‘devolutionary revolution’ and shows the effect of the Metrolink tram/light rail system and its network of 99 stops and 64 miles within Greater Manchester.
The areas the tram has spread into are the areas which have done better, says Lord O’Neill, and the areas where it isn’t in have not. The ability of people to get around reliably attracts businesses and people so productivity can improve.
Could the solution to the productivity puzzle be something quite simple? Restore the authority and means that cities used to have in their heyday and just let them get on with it?
The ability of people to get around reliably is fundamental to the supply chain and how productive we are or can be, says Mike Rigby, CEO of MRA Research.
