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Networks, the North and Prosperity

What can be done about the North? The gap between London and the South East grows and grows. The response of many in the political class in the North is the dispiriting whinge of entitlement. The Leader of Newcastle Council has recently attracted national publicity for his decision to cut all arts funding in the city as part of the wicked ‘cuts’. The city ‘needs’ more subsidies. The idea that the Geordies themselves might make some payment towards their own arts seems not to cross his mind.

Certainly, many parts of the North have received bad publicity, and almost nowhere more so than the Lancashire town of Rochdale. The centre of a major child sex abuse scandal, the borough was vilified recently for the huge amounts its inhabitants spend on on-line gambling. But its chief claim to fame, or notoriety, is the Falinge estate. For five years in a row, this has been named as the local area with the highest rate of adult worklessness in the whole of the UK. All in all, a pretty depressing picture.

But even here, there are sparks of life, of entrepreneurial spirit. One of the town’s pubs, the Baum, has just been named as the Campaign for Real Ale’s National Pub of the Year. The nearby city of Manchester shows that the North does have the capacity to re-invent itself. The council is the majority shareholder in the airport, developed to be now easily the third largest in the UK, and is acquiring Stansted from BAA.

The Sunday Times had an excellent feature on Burnley, like Rochdale an ex-mill town fallen on harder times. Burnley’s leading companies have formed a club which provides ideas and access to networks for its members and lobbies to build the image of the town. Already, new companies have been attracted.

What many parts of the North lack are the networks which allow entrepreneurship to thrive. Rather, their networks are just not dense enough, there are not enough connections. Think Silicon Valley. Not only are the firms themselves closely connected, the place swarms with venture capitalists, with skilled labour frantically networking.

Not everywhere can have hi-tech industries, or develop a major airport. But networks are the key to successful firms and local prosperity, regardless of the sectors of the economy in which they operate. Networks build trust and co-operation, they provide access to local capital, they provide information on supply chains, and ideas on how best to sell goods and services to the prosperous South East.

The North used to be one of the richest places in the whole world, the birthplace of the Industrial Revolution. It does not ‘need’ more subsidy, billions have been wasted with such policies. It needs to get off its knees and re-create the entrepreneurial spirit in which it used to excel.

Paul Ormerod

As published in City Am on Wednesday 20th February

Picture – the Falinge Estate in Rochdale

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