What does a better deal for the north look like?

A 'Crossrail for the North' is unlikely to address the fundamental economic challenges northern cities face and detracts from more effective ways to address the country's divides, writes economist Paul Swinney. 

It’s been great to see northern leaders pull together on transport funding, and there’s no doubt that they’ve caught the attention of policymakers. The worry though is that while they have gained the ear of national politicians, their central request for better intercity transport links will have little impact on the fundamental challenges northern cities face.

The idea of a high speed rail link is based on the idea of people being able to live in one city and work in another, opening up jobs in Liverpool to residents of Leeds for example, and visa versa. But this is unlikely to happen to any great extent for a number of reasons.

The first is that commuting is a cost – people don’t enjoy doing it. Workers commute long distances into London both because the pull factor of high wages and the push factor of expensive housing, which appears to push young families out into London’s hinterland in particular.

These push and pull factors are nowhere near as strong around northern cities. Lower wages reduce the attractiveness of travelling long distances, while lower housing costs mean that people are able to live much closer to their job, cutting down their commuting time and the cost of it.

The second is that people tend to choose to live in the same city region that they work in. For those that don’t, their choice is revealing – they don’t choose to live in another city region, but choose a rural location instead. This is most likely because a rural location offers something different to living in their place of work. The figure below shows this for Greater Manchester, with those living outside of the conurbation choosing to live in rural Cheshire or Lancashire, rather than in Liverpool or Leeds.

The third is that a high speed rail link is just one line, serving a small number of commuters. This is compounded by the ‘high speed’ element, which will necessarily mean that there won’t be a number of stops to pick up commuters along the way. If increasing commuting is the aim, we should be looking at improving transport connections within city regions and to their surrounding hinterland, better linking residents in and around cities to the jobs within them.

This is exactly what Crossrail and Crossrail II are doing in London – adding to London’s transport network to ferry commuters in the suburbs and hinterland to jobs in its centre. Crossrail for the North is something different – a link between cities. We should be asking questions about transport provision in the North. But these questions should principally be around Crossrail for Manchester and Crossrail for Leeds, not Crossrail for the North.

There is no doubt that the North requires policy support – the North-South divide is at least 100 years old. While conversations have honed in on transport, what has become a little lost is that transport isn’t even the biggest challenge to attracting business investment in many northern cities. Looking at skills shows that northern cities perform poorly not just in a UK context, but in a European one too. This is a big problem – high-skilled businesses are likely to invest in places where they can get the workers they need. Northern cities aren’t competitive on this front, and this is reflected in the types of businesses they have been able to attract.

The skills issue seems to have been lost for two reasons. The first is the lure of the grand projet – building infrastructure captures the imagination much more easily than actions to improve skills.

The second is an issue of fairness. On face value, the statistics that underpin this argument are shocking. But there are a number of issues with how they have been presented, as shown by Henry Overman and more recently the Mayor of London.

Despite these reservations, London has been given unfair preference. This isn’t around transport infrastructure spending, but around its other policy privileges, benefiting from having a mayor, a degree of devolution and Transport for London (and its associated powers) for almost two decades. Our strongest city is also our most powerful.

So what does this mean for northern leaders as they look to get a deal out of Westminster? The specific policy interventions will vary from city to city, but there are some basic principles that they should be looking to do or gain:

• For those cities that don’t have one, strike a devolution deal and get a mayor over an appropriate city region geography.
• Address the skills issues in their cities, focusing on reducing the number of people with no or few formal qualifications.
• Get Transport for London style powers to help improve the transport network within their city regions.

It’s right for northern leaders to gather together to lobby Westminster for funding and powers to improve their economies. For them to get the outcomes that we all want – greater prosperity the North’s residents deserve – we must make sure we’re focused on solutions that tackle the North’s biggest challenges.

Paul Swinney is a principal economist for Centre for Cities