To level up, Boris Johnson needs to build homes in satellite towns

A key priority for the government is to revive the fortunes of Britain’s old industrial towns.  Boris Johnson promised to bring jobs and skills directly to these areas, so people no longer need to leave in order to prosper.

The economic revival of regional cities in the past two decades or so has put even more  pressure on the satellite towns which surround them.

The growth and energy of cities such as Leeds, Manchester and Newcastle has created new opportunities for skilled young people in the satellite towns not just to work in the city, but to live there. By moving, they reduce the value of what economists call the human capital of their home towns.  And human capital is crucial to economic growth and productivity.

Manchester is the classic example. Twenty five years ago, there were essentially no private homes at all in the city centre.  Now, 80,000 young people live there, and their numbers are growing.

A fundamental problem for most of the regions of the UK is that they are in a monetary union – we all use sterling – with the high productivity regions of London and the South East.

The lower productivity areas suffer a drain on resources because they are unable to compete on efficiency grounds.  And because they are in a monetary union, they do not have the option of a currency devaluation to help offset this.  So such areas suffer from lower growth of their economies and higher unemployment.

The same thing happens at a more finely grained geographical level.  The satellite towns suffer a drain of productive resources to their high productivity cities in the centres of their regions.

The raft of measures to develop skills in the Queen’s speech are very welcome.  But skills take time to build up.

The proposed shake up to the planning system can have a much more rapid impact.

The changes are intended to make it more difficult for existing owners to block new development schemes.

Though the government’s purpose seems to be simply to increase home ownership, this can actually be a powerful and effective way of increasing the competitiveness of satellite towns.

As published in City AM Wednesday 12th May 2021
Image: James Johnstone via Flickr
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