04Several policy interventions are required to allow parts of the city not currently benefiting from activity in the city centre to do so in the future

What is of crucial importance to note here though is that interventions that help support growth in some areas do not mean that policy should ignore other areas; there should be a range of interventions in them to improve their outcomes, but these interventions should be tailored to the respective roles that they play in the economy. Looking at the characteristics of the four areas in the two cities across a range of indicators show what policy should focus on if these areas are to benefit from any extra prosperity generated in their city centres.

The principle one is skills. People living in areas with lower commuting to the city centre and lower incomes have the lowest shares of residents with a degree of all areas (see Figure 5). If existing residents are to benefit from higher-paid jobs in particular, then there will need to be an improvement in the skills levels that they have.

The offer that different places make as places to live will be another issue to address. The sorting seen across higher and lower income areas is likely a result of the perceived benefits that different places offer in terms of quality of life. Data on the size and the council tax banding of houses gives some insight on this: higher income areas have both fewer houses in council tax bands A and B (the lowest bands) and, relatedly, larger average property sizes. In general, people spend more on housing, the richer they are. Meanwhile crime is lower in the more prosperous areas too. Given this, poor areas are outcompeted by richer areas, for higher-income residents.

To some extent the offer these places make as places to live may change without direct policy intervention as a city centre becomes more prosperous. For example, areas of London such as Shoreditch and Brixton were once very poor areas. As London’s economy has boomed and other neighbourhoods have become less affordable, the appeal of these areas has increased dramatically.

With this greater appeal though has followed concerns around gentrification. Lower-skilled owner occupiers who cashed in on the sharp rise in the value of their home will not have had many concerns about this. But those who left because they could no longer afford to rent there, or those who have been priced out from moving in since will have a different view. This underscores the importance of skills to improve the chances of existing residents from accessing increased prosperity, as well as building more homes to deal with increases in demand to moderate price increases.

Transport is also an important factor. Those neighbourhoods closer to the city centre benefit more than those further away, and in Manchester the run of areas in dark green running along the Metrolink line out to Sale and Altrincham and around the Hope Valley railway line coming in from the south east are likely to in part result from the connections this infrastructure provides to the city centre.

But transport alone isn’t enough to bring about change. Oldham had its Metrolink line open in 2014, but the line hasn’t as yet caused an increase in wages,⁵ which is likely down to three factors: first, it does nothing to address the existing skills challenges faced by people who live in Oldham; second, the wider ‘quality of life’ offer in Oldham, in terms of housing, crime and other measures, isn’t strong enough to induce an inflow of new, higher-skilled residents despite the stronger links, and; third, despite strong growth in recent years, the Manchester city centre economy is still too small to be spreading prosperity this far. If the centre does become more successful, and other areas become less affordable, then Oldham may then see the benefits of its tram line in the same way Walthamstow in north London has become more attractive to high-income incomers.