Today the Chancellor of the Exchequer (UK Finance Minister) gave a speech in Manchester which included a proposal for a new high speed rail route. This new section would link Manchester with Leeds on an east-west axis with further links to both Liverpool and Hull, presumably on existing lines. The effect would be to speed up links between the cities in a "Northern Powerhouse" to help generate an agglomeration effect (more of that later).
The line has been dubbed High Speed 3. HS1 is the existing line from London Kings Cross to the Channel Tunnel and beyond. The paving bill for the first phase of HS2 is currently going through Parliament although the final Act will be after the next general election in 2015. That line will go from London St Pancreas (the two London stations are next to each other) to Birmingham. Phase two will see a junction just north of Birmingham with one branch going to Leeds and the other to Manchester. They could be later linked to the main lines between London and Scotland. The proposal for HS3 has come out of the consultations over the route of HS2 where the need for the linking line became apparent.
From the speech (freely quotable under the UK Government's licence):
David Higgins is here with us. He’s chairman of HS2 and his recent report identified the need for better connections between the cities of the north, if we are going to make the most of better connections between north and south. I know the city leadership here in Manchester and in Leeds are working together to respond.
I am saying today: we need to think big.
We need an ambitious plan to make the cities and towns here in this northern belt radically more connected from east to west - to create the equivalent of travelling around a single global city. As well as fixing the roads, that means considering a new high speed rail link.
Today I want us to start thinking about whether to build a new high speed rail connection east-west from Manchester to Leeds. Based on the existing rail route, but speeded up with new tunnels and infrastructure.
A third high speed railway for Britain.
The thrust of the speech is to provide the conditions for an agglomeration effect by speeding up direct personal contact that is essential for a "global city". This is a relatively unfamiliar concept in urban planning but is seen as essential for economic growth. The Paris School of Economics has done a report for Manchester
(.pdf) which includes the usefully simple explanation of the concept:
At their broadest level, agglomeration economies occur when individuals and firms benefit from being near to others.
More on agglomeration and agglomeration economies below the orange cravat.
This is of course a complete about face from the idea that information technology would make such face-to-face contact redundant. It's even more ironic that the various "silicon" valleys, fens, glens and roundabout (London!) are themselves examples of agglomerations. Again from today's speech.
Here are the hard economic facts.
In a modern, knowledge-based, economy city size matters like never before.
In the nineteenth and twentieth centuries, a factory would be located where you could find raw materials, power, and cheap labour.
Today, in a services based economy, what investors are looking for is not a river to dam, but access to a deep pool of human capital.
There is a powerful correlation between the size of a city and the productivity of its inhabitants. The top 600 cities in the world contain just 20% of global population but create 60% of global GDP.
Over recent decades economists have explored all the different reasons why cities raise their residents’ productivity: specialisation is greater, competition and economies of scale increase, ideas and innovation spread faster.
Crucially, cities are also where clusters of successful industry are created - like the financial services cluster in London, or the digital economy of California’s Silicon Valley.
Not so long ago, people thought that the internet might make physical location less important.
But it seems in the modern knowledge economy businesses and entrepreneurial types want to flock together more than ever. To form clusters where they can learn from and spark off each other.
It's important to realize that to generate the effect more than simply an industrial park attached to a university site is needed. You also need the area to have residential, cultural, leisure and sports facilities to attract the most talented in the "pool of human capital" (i.e. places where they can spend their high disposable income). Mega cities like London, New York and Paris provide these. The danger, exemplified by the "London effect" on the UK economy, is that collections of nearby smaller cities in other regions loose out even if they have a total population larger than the megacity and collectively as attractive non-business infrastructures. The agglomeration city becomes a black hole into which the most talented are sucked.
I'll give you the example of how apparently disparate facilities can come together in an agglomeration. Google is to build a new major headquarters in London next door to Kings Cross station. Further up the same road is the British Library which will be a resource for them to digitize. Close by, sharing access, is the Central St Martins campus of the London University of the Arts. Its alumni are world reknowned - if you have an iPhone, the designer trained there. But Google can also interact with graphic designers trained there. Relatively close is Imperial College, the main science and technology university in London. The site is next to the Grand Union Canal, providing both a recreation space and a safe cycle route through the center. There is a main line Thameslink station nearby for commuting to the north and south and the new east-west Crossrail line will add further commuting possibilities (some will perhaps chose to live in the Pas de Calais using Eurostar to get to work). However within the city itself there is access to finance expertise, theaters, art galleries and many different sports facilities - the old Olympic park (now the Queen Elizabeth Park) is a short (high speed commuter) train ride away. The point of course is that although the services could be provided from another city (as London does for Manchester in terms of finance), it's the "bouncing" of ideas between the different disciplines that drives the creativity.
The north of England is traditionally the main manufacturing area and Osborne's concept seems to be that the different specialisms and traditional industries, supplemented by such things as the move of the BBC to Media City in Trafford, Manchester (next to a branch of the Imperial War Museum) and new research facilities concerned with manufacturing like the Graphene Institute can provide the setting in which an agglomeration economy can grow.
While the distances between the stations will mean trains are unlikely to exceed an average 200 Km/hr, cutting journey times from well over an hour to a few tens of minutes will provide increased opportunities to the face to face interaction now seen as essential in growing an economy. What's interesting in UK political terms is that these proposals from a Conservative Chancellor appear to have the strong support of mainly Labour city council leaders. There seems to be a consensus that "Powerhouse North" should be as easy to get round as if it were one city - London is after all a collection of villages and small cities absorbed by the growing center.
This concept does of course make a nonsense of individual cities or states in the USA vying for a particular manufacturing facility or corporate headquarters with the danger that their entire economy could become dependent on a single sector (witness the "Rustbelt").