Levelling up in practice – A focus on Rochdale in Greater Manchester

  • Levelling up

Paul Ormerod, Chairman of the Rochdale Development Agency 

In this piece, Paul Ormerod describes how Rochdale is levelling up in practice and how social science is playing a key role

Rochdale was at the heart of the first industrial revolution and for a while was one of the most prosperous places in the world.

The centre of the main town of the borough is dominated by the magnificent Grade1 listed Town Hall.  One of the finest Gothic buildings in the country, it was designed as a temple to free market capitalism by non-conformist mill owners in the late 19th century.

Now, however, after many decades of relative decline, Rochdale is a poor borough in UK terms.

The Rochdale Development Agency (RDA) is the economic development arm of Rochdale Metropolitan Borough Council.  It is a company and the Council is the only shareholder.

Rochdale is one of the ten boroughs in the Greater Manchester region, which has a population of nearly 3 million.

The region has its own directly elected Mayor and a centralised bureaucracy that form the core of the Combined Authority (CA).  Decision making is a complex interplay between these and the individual boroughs.  Much of the legal power still lies with the boroughs, but collaboration is on the increase. The CA has few powers in statute but major convening power.

I was invited to be Chairman of the RDA in April 2020.

I am an economist, with a strong quantitative background, and was elected a Fellow of the Academy in 2006.  I am also a native Rochdalian.

A key part of my role is to ensure that the RDA has a clear strategic vision.

Ideas which range across the social sciences have been very useful in thinking about this.  They provide a valuable theoretical underpinning to many of the practical steps which we are taking.

The most important part of the RDA’s strategy is based on the view that we need to adopt policies which have the potential to transform the borough.

Such an approach is not without risks.  But it is one which has the active and essential support of the political leadership of the borough. What is clear, from the outcomes of the various boroughs, is that those with decision makers willing to take risks are likely to perform more strongly.

We have also obtained strong support from the Mayor of Greater Manchester and the combined authority of the city region.

This latter support is in part driven by an appreciation that if it is to succeed, “levelling up” needs to take place within regions and city regions, just as much, perhaps more so than it does across regions.

Inequalities in incomes and productivity are on a geographical scale self-similar[1], to use a mathematical phrase.  In other words, they look very similar regardless of the scale.

So, in Greater Manchester, the city centre has boomed.  There is a further growth pole around the airport and neighbouring areas in the prosperous South West of the region.  The boroughs in the North and East – Rochdale, Bury, Oldham and Tameside – lag behind.

The main strategy of the RDA is based upon two concepts in the social sciences.  One of these, that of clusters, is from economics.  The other, the diffusion of innovation and technology, is covered by a range of disciplines.

Alfred Marshall, who founded the faculty of economics at Cambridge at the beginning of the 20th century, developed the idea of clusters.  He defined them as being “concentrations of specialized industries in particular localities”[2].  The concept was developed and refined in much more modern times by the Harvard Business School professor Michael Porter[3].

The advantages of clusters are well documented in the economics and business school literatures.

The vision, shared with the city region combined authority, is to create a mega-cluster of manufacturing innovation focused around materials and machinery in a large area along the M62 motorway, considerably larger than the existing business park which runs beside it in the borough.  This is intended to operate not just on the scale of the city-region, but on both a national and international scale.

Manufacturing does remain a specialisation of the four boroughs in the North East of the city region.  The percentage of their workforce employed in manufacturing is 12 per cent compared to the national average of 8 per cent[4].

Rochdale Council has already committed £15 million towards a specialised building designed to house an advanced machinery initiative.  The National Physical Laboratory has been awarded £22.7 million under the Strength in Places project to support this initiative, based in Rochdale.  Local companies and universities will benefit directly from this. The combined authority intends to develop a manufacturing catapult, focusing on advanced materials, on the site.

The creation of the mega cluster of advanced manufacturing is necessary to the transformation of the economic structure of Rochdale itself and the North East of Greater Manchester.

But the biggest challenge, and the one with potentially the greatest reward, is to ensure that the high-level technology embedded in the cluster is taken up by other manufacturing companies in the area.  (The reach of the area, it should be added, already encompasses companies and universities in the West Yorkshire region).

It is well documented that there are substantial and persistent differences in productivity levels between companies in the same industry, even when the industry is narrowly defined.

The importance of this wide spread of performance is shown by the fact that the United States Bureau of Labor Statistics and Census Bureau has recently developed a new data product, Dispersion Statistics on Productivity, to measure and track it over time[5].

The mega cluster is intended to act as the both the catalyst and the focal point for the diffusion of advanced technology. Diffusion is essential to raise the productivity of manufacturing firms across the area.

We already have some practical policies to promote diffusion and more will follow as the mega cluster of innovation develops.  Again, the insights from a range of social sciences provide valuable insights.

For example, in the past twenty years or so, a great deal of heavily mathematical analysis has been carried out on the concept of diffusion across networks, whether it is ideas or behaviour.  A seminal paper is by the mathematical sociologist Duncan Watts[6], at the time at Columbia University.  There are many useful insights from this technical literature.

But there is a much longer tradition of the study of the diffusion of technology in the social sciences.

Everett Rogers, a professor of communication studies, first published his hugely influential book on the topic nearly sixty years ago[7].  And, arguably, the pioneer of work on diffusion was the 19th century French sociologist and criminologist Gabriel Tarde.

Two of the key elements which influence the diffusion of innovation – more modern, high technology in this case – in Rogers’ approach are the channels of communication and a social system.  Additionally, of course, potential adopters need to consider the costs and benefits of so doing.

Without going into the details, a range of policies is either being developed or actively considered using these ideas.  At its most basic, the RDA ensure that the local mainstream and online media are kept informed of developments and publicise them.

Here are some examples of the policies. A membership scheme is being developed so that SMEs can gain access to services such as specialised software which might be prohibitively expensive for them on an individual basis. Several prominent local SMEs are already using technology which is at the frontier of knowledge, and they can be influential in promoting its spread.  The combined authority is carrying out detailed work on supply chains.

The RDA has promoted collaboration between the very successful local FE college, Hopwood Hall, and local advanced manufacturing companies to develop courses which will meet the needs of these firms and embed the required skills in the local labour force.

Moving to wider aspects, not only is the borough poor, but it is widely seen as such by the residents. A key task therefore does not involve economics at all.  It is to improve the perception of the borough, particularly amongst those who live there or who might consider moving there.

So, for example, in the centre of Rochdale itself, a new complex featuring retail and leisure activities opened just before I became Chairman.  The fact that companies such as Marks and Spencer have located there is seen as a vote of confidence in the borough.

A series of small-scale initiatives is being carried out, such as a participatory mural depicting what Rochdale means to those whose work is exhibited.

Plans are being developed to improve the centres of the two smaller towns in the borough, Heywood and Middleton.

We have not drawn explicitly upon the discipline of psychology.  But I feel it could potentially provide us with further insights in this important aspect of the RDA’s work.

More conventionally, it is well documented in the regional development literature that transport infrastructure is crucial.  The M62 motorway runs through the borough, and a very large business park was developed next to it some twenty years ago.

The site is mainly occupied by vast modern warehouses which employ thousands of people.  A key ongoing task of the RDA is to persuade even more companies to locate there. The pay is in general low, but this matches the skill levels of a substantial part of the existing labour force.

Much more innovatively, a project to build houses and apartments immediately around the borough’s main railway station is well advanced.  The railway provides access to the city but the land around the station reflects what it was built for (industry) rather than residential.

These new houses and apartments are intended to be relatively expensive compared to much of the borough’s existing stock.  They will still be cheap compared to prices in Central and South Manchester.

In the mid-1990s there were virtually no private residences in the centre of Manchester.  Now, 80,000 people live there.  Rochdale station is only fifteen minutes from the centre, and one of the aims of the development is to attract people who work there.  They will bring incomes which are higher than the current average in the borough and create an opportunity for local retail, leisure and hospitality companies to develop.

Similar schemes are planned around some of the other rail stations in the borough (there are six in all).  Heywood, with a population of 30,000, currently has no rail link to Manchester, and a priority is to develop one.

More generally, building high quality housing expensive for the locality is an integral part of the economic development strategy. Currently, 83 per cent of residential properties in the borough are in the two lowest council tax bands, A and B.  This needs to change to boost the local public finances.

No one is under any illusion: “levelling up” is a massive challenge.  And, obviously, it needs to be delivered in practical ways.  But concepts from the social sciences are valuable in helping both to shape the overall strategy and in providing insights on tactical implementations.

 

References

[1] See, for example, Andy Haldane, Making a Success of Levelling Up, presentation to Policy Exchange 28 June 2021, Bank of England
[2]   Marshall, A., 2009. Principles of Economics: unabridged eighth edition. Cosimo, Inc., first edition published 1890
[3] Porter, M.E., 1998. Clusters and the New Economics of Competition (Vol. 76, No. 6, pp. 77-90). Boston: Harvard Business Review

[4] Business Register and Employment Survey, ONS, downloaded from Nomis database 26 August 2021
[5] “Dispersion in Dispersion: Measuring Establishment-Level Differences in Productivity” C Cunnigham et al. September 2020, https://www.bls.gov/osmr/research-papers/2020/pdf/ec200120.pdf

[6] DJ Watts, A simple model of global cascades on random networks, Proceedings of the National Academy of Sciences, vol 99, 9, pp. 5766-71, 2002
[7] Rogers, E.M., 2010. Diffusion of Innovations. Simon and Schuster, first edition published 1962

 

Photo credit: Josh Taylor on Unsplash

About the author

Paul Ormerod is a Visiting Professor in the Department of Computer Science at University College, London (UCL).  He writes a weekly opinion column on economics and related topics for City AM, a newspaper for workers in Central London.  Since May 2020 Paul has been Chairman of the Rochdale Development Agency (RDA) which is responsible for economic development in the Metropolitan Borough of Rochdale, in Greater Manchester.