Why do some UK cities punch below their weight?
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Since the 2008 crisis, the UK has failed to recover the strong productivity growth rates experienced in previous decades.
This is partly because its major cities punch below their weight. While London has productivity levels akin to Paris, England’s other major conurbations of Manchester and Birmingham lag behind their continental peers of Hamburg and Milan.
Worryingly, it takes the average worker in the UK’s second and third-largest cities almost five days to produce the same amount as London’s average worker manages in three.
Among the core issues is that businesses based in cities such as Birmingham and Manchester cannot effectively tap into large labour markets.
Commuters outside London rely heavily on cars, but the centres of large cities usually feature roads gridlocked with congestion. This problem is particularly acute in Manchester, where the average person can reach 12.5 times as many jobs and 11 times as many graduate jobs within half an hour by car as they can by public transport in the same amount of time.
Improving access to city centres is crucial, given the large number of businesses concentrated in such areas, especially when it comes to productive knowledge-based industries such as fintech and AI.
In 2020, the centre of London alone produced three times as much as the whole of Manchester, despite having just 1.5 times as many workers. And as a share of total output, Manchester and Birmingham’s centres rank among the lowest of all large UK cities.
This needs to change. Intracity connectivity is key to unlocking the estimated £23bn lost each year in unrealised productivity gains.
Getting to work is one thing, finding somewhere to live within commuting distance is another. Transport and housing policy must work in tandem to improve job access. The UK’s preference for low-density housing is key to why many people face long commutes. Tellingly, just 2 per cent of homes in Manchester and Birmingham are in the centre — in London, that figure is 5 per cent.
There are signs that things are moving in the right direction. In both cities, one in every eight homes built since 2011 was in the city centre. High-density developments in commutable suburbs, such as the Salford Central regeneration project in Manchester, will also expand the urban labour pool.
There are other barriers to growth. Most major cities aside from London are still grappling with an industrial legacy that has delayed their transition into productive economies.
This is particularly true of Birmingham, which still employs 9 per cent of its workforce in manufacturing and has below average employment. Each city will need its own set of targeted policy interventions to close the gap with the capital.
But transport is central. For Manchester and Birmingham, connecting city centres with more high-skilled labour will be a critical part of attracting businesses, workers and investment. There is still a long way to go, although local leaders are taking steps in the right direction. Manchester buses, for example, will be back under local government control by the start of 2025. These great cities, historically centres of enormous prosperity and industry, need help to create a virtuous cycle of growth, raising productivity so that they can realise their potential.
Methodology
Cities are defined using the Office for National Statistics’ travel-to-work areas, which are designed to contain the majority of each city’s workforce. Job accessibility was calculated by comparing Census data for population at output area level with employment data for workplace zones using the TravelTime API. City centres are set using the Centre of Cities definition.
Comments