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…Manufacturers, the biggest employer in 1901, tended to be located close together around ports or coalfields so that these industries could reduce the costs of fuel.
The invention and take up of electricity and falling transport costs triggered stage two. No longer were manufacturers tied to certain locations. Given that there was little benefit to manufacturers being located next to each other beyond cost, manufacturing decentralised, looking for large areas of cheap land with good transport access.
Deindustrialisation has changed this. Service activities, particularly those that ‘sell’ knowledge, such as finance, law and marketing, benefit from proximity because they benefit from the exchange of ideas that density facilitates. And so proximity has become more and more important as the UK has shifted from a manufacturing based to a services based economy (84 per cent of jobs are now in services), even in an age of email and video conferencing. The world is not getting flatter – it’s becoming even more spikey.
This makes city centres increasingly important parts of the UK economy. Flexioffice’s excellent infographic shows what impact this has had on the London skyline in recent decades. And this role is likely to become ever more important as the UK economy continues to specialise in knowledge intensive service activities.
It is for this reason that it is concerning that many of our cities do not have well-functioning city centre economies, as shown in our report launched this week. In fact, even before the beginning of the recession one third of our cities had been ‘hollowing out’, losing private sector jobs while the rest of the economy was growing. This suggests that if their city centres are unable to sustain economic growth then they may struggle as the UK continues to specialise in high value service activities.
Not only are some of these cities, such as Barnsley and Sunderland, struggling to adapt to an economy based on high value services, they are still struggling with the impact that deindustrialisation – the shift from manufacturing to services – has had on their economies. As shown in an earlier report, Sunderland has swapped coal mining and ship building for more manufacturing – in the automotive industry – and lower paid white collar work – namely call centre jobs on out of town business parks.
These cities were hit hard by deindustrialisation, and have done well to recover the employment that they lost as a result. But the difficulties they have encountered in creating a city centre that facilitates high value job creation leaves them vulnerable to the global competitive pressures that the UK economy faces.
This is why we call on Government to make city centres a key focus in the National Infrastructure Plan. Our most successful city centres are the most productive parts of the UK economy. And this is likely to become increasingly the case. But if other cities are to benefit from future growth, they too will need to make their city centres more attractive as a location for business.
You can see our full set of policy recommendations in Beyond the High Street: why our city centres really matter.
Previous blog in the series: Why Portas and Grimsey need to think again about why High Streets fail
Next blog in the series: Push me, pull me – the contradiction of policy
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