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Economy / Jobs

So why isn’t Newcastle booming?

The latest instalment of our series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities.  

One of the great privileges of editing CityMetric these last few years is that it’s given me an excuse to visit the cities of parts of the country I don’t know and which, let’s be honest, the London media tends to ignore. Often, it turns out, these cities are rather magnificent, and I’ve come away baffled both that we don’t shout about them more, and that they’ve been, economically speaking, left to rot.

Last month I completed my tour of the major British cities, when I visited Newcastle, and spent three days, pretty much, wandering about. I’d heard good things, but I was still bowled over by quite how great the place is: glorious Victorian architecture, fine parks, pubs and cafes, beautiful countryside on every horizon and, in the eastern suburbs, the seaside. All that, and it has the finest collection of bridges in one place that I’ve ever encountered, too. Never mind England, this is one of the great cities of Europe.

And yet, as anyone who knows anything about the British economy could tell you, it’s not doing all that well. This chart shows GVA per worker – a measure of productivity – in Great Britain’s core cities and capitals. At £45,970, Newcastle is 10th out of 12, some way behind similarly sized port cities like Liverpool (£48,830) and Glasgow (£49,340).

 

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On wages, Newcastle’s ranking is the same. The average weekly wage in Newcastle is £501, compared to £512 in Liverpool and £526 in Glasgow.

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And so it goes on. This one’s exports per job, which you’d want to be high, but which is, in Newcastle, low:

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This one’s claimant count, the percentage of working age people claiming out of work benefits. This time you’d want it to be low, but oh look:

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This trend isn’t universal. On welfare spend per capita, Newcastle is high, but lower than both Liverpool and Glasgow; and its employment rate is actually middle of the pack. But nonetheless, the pattern is clear: even by the standards of post-industrial northern cities, even by the standards of places with similar economic histories, Newcastle is depressed.

And yet, it’s glorious. What gives?

A couple of obvious possibilities spring to mind. One is that blame lies with the type of industries on which Newcastle built its wealth. As far back as the 17th century, it was a port city, which made its money largely from exporting coal to London. Glasgow may also have been hit by the decline of the British shipping industry; but few of the core cities were as dependent on coal-mining, and those that were (Nottingham, Sheffield) generally fared even worse than Newcastle.

Another possible culprit is geography. The big idea in urbanism over the last few years has been “agglomeration”, the idea that a bigger, denser labour market drive productivity. If that’s correct, Newcastle’s relative remoteness may be holding it back: there just aren’t that many people in the North East, and attempts to fold it into programmes like the Northern Powerhouse always felt like a slightly embarrassed afterthought rather than a proper economic development strategy.

But Paul Swinney, the Centre for Cities’ head of policy, and a native of the city’s next door neighbour Sunderland, puts forward another theory for the region’s problems – one found at the intersection of local government and the built environment.

Newcastle, as noted, has many beautiful buildings in its city centre. But that isn’t where the late One North East Regional Develoopment Agency or other similar bodies focused either their efforts or their subsidies, Swinney notes. Instead, the money went largely to out of town business parks like Newburn Riverside, a few miles west up the Tyne.


This had a couple of implications. One is that the presence of subsidised offices in the suburbs undercut the commercial property market in the centre: private developers didn’t develop, because it was harder to make money doing it.

It also had an impact on the type of jobs attracted to the region. Public sector agencies and space-hungry but relatively low-skill industries like call centres moved in; higher wage jobs like finance, tech or business services didn’t. As a result, “In Newcastle, there aren’t loads of people walking round in suits compared to Manchester or Leeds,” says Swinney. “And in Sunderland you struggle to find people in suits full stop: all the jobs are out if town.” If the regional development agency had focused on making the city centres “an attractive place to do business,” he adds, “I think you’d see a slightly different economy.”

To be fair, the city council is now focusing its efforts on reviving the city centre. It’s in the middle of a £45m investment to turn its 50-year old Civic Centre into modern, open-plan office space; once completed, it’ll provide space to rent to other employers, too, and this plus the maintenance savings should bring in £32m over 25 years.

It’s also looking for ways to encourage families to move back to the city centre, says Ged Bell, the Labour councillor responsible for employment policies. It’s looking for ways to bring new industries, such as renewables, to what were once the Tyne shipyards, too. The city council clearly recognises that it needs to make more of that glorious centre than it did in the past – although whether austerity and the dead hand of national government will allow it remains to be seen.

No city deserves to boom: that’s not how economics works. But Newcastle, more than most, seems on the face of it to have all the ingredients that should make for a thriving regional centre. I don’t really know why that’s not how things have played out there. But I can’t help but think that, if we spent more time asking, the UK would be in a better state than it is today.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites.

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