The 19th century was the odd one out in British history. It should really be called “the long 19th century”, as it seems to stretch almost 150 years from the latter decades of the 1700s to the end of the First World War. It was a time of tumultuous change.
Previously, throughout most of English history, the South was more prosperous than the North. You can see evidence of this in the great parish churches of East Anglia, which were built out of the profits of the wool trade. London, of course, was always the largest and richest city in the land – but in the early 18th century, the next two in terms of population were Bristol and Norwich. The Industrial Revolution changed all that; they were supplanted by the rapidly growing cities of Lancashire, Yorkshire and the Midlands: Manchester, Leeds and Birmingham – while Liverpool became England’s great Atlantic port in place of Bristol.
Something similar happened in Scotland. For most of Scottish history, Scotland looked east to Europe, and north-east to Scandinavia. Edinburgh was established as the capital, and through its port of Leith, became the country’s chief commercial centre along with Aberdeen and Dundee. The 1707 Treaty of Union, which opened England’s overseas empire to the Scots, changed all this. Glasgow flourished thanks to the sugar and tobacco trades with the West Indies and Virginia, and then became the centre of heavy industry. By the end of the 19th century, Glasgow was more than twice the size of Edinburgh. More ships were launched on the Clyde than in Germany, and Glasgow boasted of being “the second city of the Empire”.
But by the middle of the 20th century this process had gone into reverse. In England, London continued to grow, and its economic power was unrivalled. The South and South East flourished, as light industry replaced metal-bashing. The Midlands did well enough, particularly as the centre of the car industry. But the great cities of northern England went into decline. Much the same happened in Scotland. Glasgow declined, Edinburgh flourished and grew; and then, on account of North Sea oil, Aberdeen did likewise, achieving unprecedented prosperity.
None of this was planned. The rise and fall of the north of England and of west-central Scotland were the result of the working of national and international markets. It was the markets, not governments, that made Manchester, Leeds, Newcastle and Glasgow economic powerhouses; the markets, not governments, that made Liverpool and Glasgow great ports. And it was market forces that led to their decline and the present prosperity of London and the South East, Edinburgh and Aberdeen. Indeed, that decline persisted despite numerous Government attempts to arrest it by the injection of public money.
Now, George Osborne, the Chancellor, has revealed an ambitious scheme to achieve the regeneration of the north of England by means of public investment in transport and infrastructure, in education and the provision of facilities for investment in science and technology – and by restoring authority and autonomy to local government, in order to encourage the self-reliance and audacity that characterised municipalities in the 19th century.
Many will be sceptical. We have grown accustomed to believing that market forces possess an irresistible momentum, and that central planning of the economy is doomed to failure. Indeed it often is. But not always. It was central planning of its economy which saw France transform itself from being a predominantly agricultural country in the decades after 1945, the time now remembered by the French as “the 30 glorious years”. So planning sometimes works. In England, some of the New Towns such as Milton Keynes, built after the Second World War, have proved more successful than the sceptics thought likely.
Mr Osborne lays stress on the importance of infrastructure – and in particular of improving cross-country rail in the North. In the modern world, the provision of rail links is almost never left to market forces any more than the building of motorways has been. You supply the infrastructure, and business responds. Conversely, without good roads and railways, businesses will be reluctant to establish themselves where they might be of great social value..
So the Chancellor’s proposals are bold. They are also necessary if the imbalance of our economy is to be corrected. It is laissez-faire liberalism that distrusts the state. Toryism, in contrast, has recognised that there is often a need for the state to intervene in order to restrain market forces, or to correct or adjust their working.
Nevertheless, the hand on the tiller must be light. State intervention is most effective when it seeks to guide the market and work in harmony with it, rather than flying in the face of markets in an attempt to coerce them. And it is possible – or just possible – that Mr Osborne will be lucky, because his timing may be right. The overcrowding and cost of living, especially the cost of housing, in London and the South East may be reaching a tipping point. If so, then the markets may see opportunities for investment and development in the northern cities of England, and in Glasgow and the west in Scotland. Nothing is cast in stone; economies must be flexible if they are to create wealth.
A combination of market interests and intelligent planning may alter the pattern of the economy, and may make the second half of this century more like the 19th century than the last hundred years.