It was the markets, not governments, that led to the decline of the North. Can George Osborne reverse that? – Telegraph Blogs

Manchester Town Hall (Photo: Alamy)

The 19th century was the odd one out in British history. More properly, one should perhaps say “the long 19th century”, stretching as it did almost 150 years from the latter decades of the 1700s to the end of the First World War.

Throughout most of English history, the South was more prosperous than the North. You can see evidence of this in the great parish churches of East Anglia, built out of the profits of the wool trade. London of course was always the largest and richest city in the land, but in the early 18th century, the next two in size of population were Bristol and Norwich. The Industrial Revolution changed all that; they were supplanted by the rapidly growing cities of Lancashire and Yorkshire, and the Midlands: Manchester, Leeds and Birmingham, while Liverpool became England’s great Atlantic port in place of Bristol.

Something similar happened in Scotland. For most of Scottish history, Scotland looked east to Europe, and north-east to Scandinavia. Edinburgh was established as the capital, and, after the loss of Berwick-on-Tweed, which had been the greatest Scottish port in the early Middle Ages, became through its port of Leith (along with Aberdeen and Dundee) the country’s chief commercial centre. The 1707 Treaty of Union, opening England’s overseas empire to the Scots, changed all this. Glasgow flourished on the sugar and tobacco trades with the West Indies and Virginia, and then became the centre of heavy industry, based on the proximity of coal and iron. By the end of the 19th century, Glasgow was more than twice the size of Edinburgh. More ships were launched on the Clyde than in Germany, and Glasgow boasted of being “the second city of the Empire”, a claim challenged only by Birmingham.

By the middle of the 20th century, this process had gone into reverse. In England, London continued to grow, and its economic power was unrivalled. The South and South-east flourished as light industry replaced metal-bashing. The Midlands did well enough, first as the centre of the car industry. But the great cities of northern England went into decline. Much the same happened in Scotland. Glasgow declined, Edinburgh flourished and grew; and then, on account of North Sea Oil, Aberdeen did likewise, achieving unprecedented prosperity. House prices everywhere reflected this shift in the balance of the economy.

None of this was planned. The rise and fall of the north of England and of west-central Scotland were the result of the working of national and international markets. It was the markets, not governments, that made Manchester, Leeds, Newcastle and Glasgow economic powerhouses; the markets, not governments, that made Liverpool and Glasgow great ports. And it was market forces that led to their decline and the present prosperity of London and the South-east, Edinburgh and Aberdeen. Indeed that decline persisted despite numerous government attempts to arrest it by the injection of public money.

Now, George Osborne has revealed an ambitious scheme to achieve the regeneration of the North of England by means of public investment in transport and the infrastructure, in education and the provision of facilities for investment in science and technology, and – perhaps the most interesting feature of his Grand Design – by restoring authority and autonomy to local government in order to encourage the self-reliance and audacity that characterised municipalities in the 19th century.

Many will be sceptical. We have grown accustomed to believing that market forces possess an irresistible momentum, and that central planning of the economy is doomed to failure. So indeed it often is. Not always, however. It was central planning of its economy which saw France transform itself from being a predominantly agricultural (peasant) country in the decades after 1945, the time now remembered by the French as “the thirty glorious years”. So planning sometimes works.

However, it seems likely that it does so only when it works in harmony with market forces, rather than in opposition to them. And it is possible – or just possible – that Osborne will be lucky because his timing may be right. The overcrowding and cost of living, especially the cost of housing, in London and the South-east may be reaching a tipping point. If so, then the markets may see opportunities for investment and development in northern cities of England, and in Glasgow and the west in Scotland. Nothing is cast in stone; economies must be flexible if they are to create wealth. A combination of market interests and intelligent planning may alter the pattern of the economy, and may make the second half of this century more like the 19th century than the last hundred years.

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5 August 2014 | 3:28 pm – Source:

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