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London’s 19-to-1 Transport Edge Prompts Counterattack

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Light trails from traffic are seen as they pass around the Old Street roundabout, in the area known as London's Tech City, in London. Photographer: Chris Ratcliffe/Bloomberg

April 11 (Bloomberg) -- The rest of England is taking on London.

Eight cities are working together to fight what they say is the capital’s unfair share of money for roads and rails. The imbalance is holding back everyone else, according to Ed Cox, Newcastle-based director of the independent Institute for Public Policy Research North.

“It becomes a self-fulfilling prophecy: If you’re creating the best jobs in London and making it easy to get around, graduates are going to be sucked into the capital,” Cox said in an interview. “In other developed nations, the recovery has been driven by second-tier cities and we’ve lagged behind.”

Transport projects in the government’s December 2013 infrastructure-spending blueprint amount to 4,893 pounds ($8,126) per Londoner, almost 19 times the 264 pounds per person in the northeast region around Newcastle. It’s 840 pounds per person in the northwest, home to Manchester and Liverpool, according to IPPR North’s analysis.

The disparity contrasts with Prime Minister David Cameron’s pledge to promote balanced economic growth. The U.K. ranks 28th in infrastructure out of 148 countries in the World Economic Forum’s Global Competitiveness Report.

“We’re making sure the north of England gets its fair share,” Cameron told lawmakers in the House of Commons in London on March 26.

Regional officials dispute the premier’s definition of “fair.”

Aging Infrastructure

“Our cities gave the world the Industrial Revolution and produced the great urban reformers, building economies and improving lives, but we’re still living on the infrastructure they created all those years ago,” said Albert Bore, leader of the Birmingham City Council.

Birmingham, the second-biggest city, along with Bristol, Leeds, Nottingham, Sheffield, Liverpool, Manchester and Newcastle, are fighting back as part of a group called “Core Cities,” which they formed 19 years ago. They published a growth strategy in November 2013, borrowing London Mayor Boris Johnson’s tactics and those of Ken Livingstone, his predecessor. To broaden their projects’ political appeal, smaller projects are being packaged under a single umbrella.

In February, Chancellor of the Exchequer George Osborne announced the start of the “northern hub,” a 600 million-pound initiative bringing together railway works as local as upgraded platforms at Manchester’s Piccadilly station.

Northern Hub

“One of the reasons the northern hub has been so successful is planners around Greater Manchester have brought together 15 or 20 different proposals and branded them,” IPPR’s Cox said. “Across the country there’s the need to do that much more effectively.”

The Core Cities comprise 16 million people and generate 27 percent of economic output compared with 22.5 percent from London. They say they need 104 billion pounds invested in their infrastructure by 2030 to provide for 244,000 more commuters and 51,000 extra business journeys each day.

“We’re not an anti-southeast, anti-London group,” Chris Murray, the group’s director, said in a telephone interview. “There’s a lot of underutilized economic potential across the rest of the country.”

London has accounted for 79 percent of private-sector job growth since 2010 and is the source of 19 percent of the country’s employment, according to Centre for Cities, a London-based research institute. A third of Britons between 22 and 30 years old are leaving their hometowns to migrate to the capital, the institute’s research shows.

Tilting more infrastructure spending toward the north may narrow the imbalance. For every 1,000 construction jobs, another 2,000 are created indirectly via suppliers and increased consumer spending, according to a 2013 report by the London-based Centre for Economics and Business Research.

London Pipeline

The 14.5 billion-pound Crossrail project, an east-west route through London, accounts for 12 percent of the 121.5 billion pounds of transport spending in the U.K. infrastructure pipeline, which includes all projected public and private investment earmarked for the next two decades. If separate upgrades to the Underground and overground Thameslink rail line are added, the three London projects alone swallow 27 percent.

Crossrail, begun under Gordon Brown’s Labour government in 2009, will run from Reading, a town west of London, with a spur to Heathrow Airport, to Shenfield in Essex county and the southeast suburb of Abbey Wood, when completed in 2019. It’s being built by contractors including Balfour Beatty Plc, Costain Group Plc and Skanska AB. The line, Europe’s largest construction project, is funded by the central and local government, with 4.1 billion pounds from London businesses.

Crossrail 2

Johnson is pushing for Crossrail 2, a 20 billion-pound north-south line that would connect to the Eurostar, which goes under the English Channel to France and Belgium, and the projected High Speed 2 line to the north of England, known as HS2. Transport Secretary Patrick McLoughlin says it’s no sure thing.

“Now Boris has got Crossrail 1 he wants Crossrail 2 -- that’s fair enough but we’ve also got to make sure we see other areas get a bit of the infrastructure investment as well,” McLoughlin said in an interview with Total Politics magazine published March 25. Crossrail is going ahead because of Johnson’s “very hard lobbying and pressure on the government,” he added.

Even the HS2, which is the centerpiece of the government’s rebalancing plan, risks adding to London’s dominance.

“We do not want more of our country’s lifeblood being sucked down into London and the south,” Barry Sheerman, a lawmaker for the northern town of Huddersfield for the opposition Labour Party, told the House of Commons on Oct. 31. “We want the right connectivity that will help all the towns and cities in this country to grow.”

To contact the reporter on this story: Thomas Penny in London at tpenny@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net Eddie Buckle

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