The reality of the Northern Arc

Posted on: 2 May 2025 by Ian Wray in Blog

The ‘Northern Arc’ is a uniquely important area of national economic potential and performance. It has many of the positive economic and labour market characteristics of the ‘golden triangle’ (Oxford, Cambridge, London) – but without the almost insoluble problem of housing unaffordability. This part of the North is more than capable of ‘winning’ - but risks being overlooked.

The Northern Arc: counter proposal to the OxCam Arc

In a speech delivered in in Oxfordshire on 29 January 2025 the Chancellor of the Exchequer confirmed her commitment to economic growth and to the expansion of the OxCam Arc (the zone between Oxford and Cambridge, including Milton Keynes) as ‘Britain’s Silicon Valley’ with large scale investments in research, transport, housing and infrastructure, alongside other massive transport investments elsewhere in the south of England including a new Thames Crossing [1]. Recently the Chancellor has further underlined her support for the OxCam Arc, welcoming a private sector proposal for a huge new US owned theme park (Project Nectarine) in Bedfordshire [2] – although it remains to be seen how mostly low skilled jobs in the tourism sector will contribute to an economic ‘Silicon Valley’.

My response was to make a counter proposal – the Northern Arc, focused on south Greater Manchester, north Cheshire and south Liverpool City Region. In a Heseltine Institute blog on 4 February 2025, I argued that this area had unique importance and economic potential in the north of England - with the added and compelling advantage that within or near the Northern Arc, unlike Oxford or Cambridge, young highly skilled individuals and families would be easily able to afford to buy their own house [3].

Aside from the housing costs constraint, it would appear to be a high risk and unbalanced national economic strategy to put all the eggs in one southern basket. In the increasingly uncertain international context London’s role in international finance may weaken; Cambridge has failed to deliver its only substantial development opportunity (Cambridge Airport); Milton Keynes is largely developed out; and Oxford’s development capacity is seriously constrained. A balanced portfolio, developing what is in effect a second string, if not a subsidiary capital region, would seem wiser.

In parallel, the Northern Arc framing has been picked up by the metropolitan mayors for Greater Manchester and Liverpool. On 12 March 2025 at the MIPIM international property conference in France, Andy Burnham, mayor of Greater Manchester, set out his vision for a 'Northern Arc' linking Manchester and Liverpool with a new high speed railway line. The Greater Manchester mayor told investors that the area from Merseyside to the Pennines would deliver more economic growth to the UK than the southern equivalent Arc from Oxford to Cambridge [4].

Findings from Manchester University’s Spatial Policy and Analysis Laboratory

How soundly based is the Northern Arc concept? Greater Manchester has commissioned consultants to provide an evidence base. They have yet to report, but we can learn much from comparative GIS mapping research carried out by colleagues in Manchester University’s Spatial Policy and Analysis Laboratory for the UK2070 Commission, published in 2023 [5], as well as some other recently published sources. The researchers, Professor Cecilia Wong and Dr. Wei Zheng, have created an up-to-date socio-economic atlas of England, mapping key indicators of economic performance and potential, often down to detailed local authority areas [6].

Wong and Zheng mapped a GVA per hour worked index for 2020, a commonly used indicator of productivity. This shows that the Northern Arc zone has the same productivity levels as the ‘golden triangle’ (Oxford, Cambridge, London), with percentage growth between 2015 and 2019 showing the same pattern. The same is true of the compound annual growth of GVA from 2015 to 2019. An index of ‘place competitiveness’ from 2015 to 2021 uses a shift share analysis to assess to what extent employment change was related to the area’s previous economic mix or structure, as opposed to locally differential place competitiveness factors (such as a dynamic local business operating well in an unpromising market).

This index demonstrates that the Northern Arc performs just as well on place competitiveness as the golden triangle and much better than many parts of the south east of England. It has high representation in information and communication technology, alongside a greater number of life sciences companies than any location beyond the ‘golden triangle’ (London, Oxford, Cambridge).

The picture is repeated in transport connectivity. Together Manchester and Liverpool airports (some 25 miles apart) have by far the highest share of international scheduled terminal passengers outside the south east (2021 data). Commuting flow maps based on 2011 census data show the densest patterns of job commuting for any area outside the south east, reflecting agglomeration economies from the close proximity of two very large metropolitan labour market areas. This is particularly so for what Wong and Zheng refer to as ‘high flying’ employees.

There was a poor showing on GDP for R&D (2019 figures), where the high figures in London and the south east have been bolstered by high levels of public sector spending in higher education and in government research institutes. This is reflected both in a ‘research market share index’ in 2021 and the share of R&D expenditure in 2019. The same is true of transport investment which has been limited and poorly coordinated [7].

As one might expect, the favourable economic mix, high levels of scheduled air passengers, high levels of GVA and GVA growth (plus the presence of several leading universities) are reflected in some of the highest levels of skills outside the south east of England. These are comparable with most parts of the golden triangle, as measured by the percentage of working age population with a higher national diploma (a vocational qualification), university degree or higher-level degree (i.e. the NVQ4+ standard). There is a particularly high skill level in the two core cities, Liverpool and Manchester. Especially in Cheshire this is accompanied by relatively low proportions of workers with no qualifications. Overall, the Northern Arc has high levels of educational attainment and relatively low levels unqualified workers. High levels of workers without qualifications tend to be concentrated in the North East of England, parts of Yorkshire and Humberside and Lincolnshire.

The high level of skills in the Northern Arc is complemented by better health, with clear implications for growth and productivity. In Cheshire and south Greater Manchester life expectancy at birth for females and for males mirrors levels seen in the south east of England.

To what extent do the characteristics of the Northern Arc extend over the Pennines to the Yorkshire cities of Leeds and to Sheffield? The answer appears to be relatively little. Leeds shows a high growth rate in GVA, but the areas between Manchester and Leeds, the Pennine moorlands and valleys, Oldham, Rochdale, Kirklees and Huddersfield, do not. Compared with Cheshire, South and West Yorkshire has little employment in life science companies, and Leeds airport has a low total of international scheduled terminal passengers. Research carried out in the 2006 found ‘little evidence of cross Pennine purchases of services or goods’, compared with strong interactions and joint work between Liverpool and Manchester [8]. Better transport links across the Pennines could certainly strengthen the economy of the Northern Arc, Leeds and Sheffield - and some of the communities between Manchester and Leeds could take on a greater commuting role. But the areas of greatest significance and potential lie west of the Pennines, not east. This includes the North West’s considerable national significance in the defence sector, which may be poised for growth (discussed in an earlier paper [9]).

Insights from metadata and social capital

Intriguingly this pattern is revealed in recent research using Facebook data to act as a proxy for the US social scientist Robert Putnam’s concept of social capital. Putnam postulates that places where people mingle beyond their usual social circles fare unusually well on a wide range of indicators. Researchers at Harvard University have analysed 6 billion Facebook friendships [10]. Analysis of their data by a research partnership including BIT, the RSA, Stanford University and others suggests that Britons are more likely to mingle than Americans and that higher levels of mingling in adults from lower status backgrounds are associated with greater trust in others, higher happiness and higher incomes. Communities with higher rates of friendship between low-income and high-income individuals have higher rates of upward mobility. Low-income children who grew up in the top 10% of the most economically connected local authorities in England earn 38% more per year on average (£5,100) as adults, relative to low-income children in the bottom 10% of local authorities.

Mapping this data for the whole of Britain demonstrates high levels of economic connectedness across nearly all of the south of England. Beyond the south there are only two important areas of high economic connectedness – in the rural retirement communities of Yorkshire and Cumbria, largely in National Parks; and in the Northern Arc, especially in Cheshire and south Greater Manchester, extending into West Wirral in Liverpool City Region.

Residential desirability and mental maps

One final issue deserves discussion: residential preference, especially amongst the young and skilled. It is an issue of compelling and overriding importance since it helps to drive the availability of future highly skilled labour. Anecdotal evidence including the rise of super commuters [11] (travelling much longer distances but less frequently) suggests a significant change in residential preference, connected with the rise of working from home. It appears that one reason for GCHQ moving some operations to Manchester is the relative ease of recruiting skilled young techies, for whom London is too expensive and Cheltenham (the existing HQ) too dull.

Young skilled people with young families have essentially been locked out of many southern housing markets. To give a specific example, a family sized terraced house in Cambridge, at the heart of the OxCam Arc, is currently on the market for £1.3 million. A similar sized property in New Brighton on the Wirral (an unfashionable but stable coastal residential town) is on the market for less than £300k. It would give easy access, via the rail network, to four city centre labour markets: Manchester, Liverpool, Preston and Chester.

Government’s intention for the OxCam Arc is to increase housing provision. But Oxford and Cambridge are small places. The population of Cambridge is a little over 140,000, of Oxford 160,000. If local political objections were ignored and these university cities were doubled in size, which would be a challenging objective, they would remain small places. A decade hence, even if the current government’s ambitious house building targets are achieved, the bulk of the UK's housing stock will be in exactly the same places that it is today.

There appears to be no up-to-date research on residential preference. In the 1970s economic geographers looked at residential desirability, producing what they referred to as mental maps. Based on surveys of young people, these produced residential perception surfaces – effectively contour maps of residential desirability. A striking feature of the maps was a fall away in residential desirability for young people from the south of England with distance from London. But there were two significant outliers: the Lake District; and Cheshire and south Greater Manchester (the Northern Arc). Both were areas of high desirability [12].

The Northern Arc: capable of winning

Taken together the data demonstrate that the Northern Arc has many of the positive economic and labour market characteristics of the South of England. It is in many respects a unique component in the economic geography of the North and of the UK as a whole. These characteristics are highly distinct from those of areas formerly dominated by heavy industry and coal mining, in Yorkshire, the North East and industrial Lancashire. To some extent this may reflect the area’s internationalist and trading economic history. Essentially, there was no coal mining in Liverpool, Cheshire or south Manchester. Liverpool and Manchester were centres for national and international trade in the cotton industry and Britain’s former Empire. Consequently, individual enterprise was possible, with low economic barriers to entry in businesses in trading and deal making. According to historian A.J.P. Taylor ‘Manchester is the last and greatest of the Hanseatic towns – a civilization created by traders…’ [13]. In other words, here is a deep-seated business, cultural and entrepreneurial culture.

Two crucial issues have been identified in this paper. First, the ability of young skilled households to get a foot on the housing ladder – which is easily possible in or close to the Northern Arc. Second, the Northern Arc’s high representation in information and communication technology, alongside a greater number of life sciences companies than any location beyond the ‘golden triangle’ (London, Oxford, Cambridge).

A central problem remains. Investment in south east England is seen as dependable; whereas other places are not. This appears to reflects a deep-seated Treasury belief that backing what are perceived to be existing winners is much lower risk than trying to achieve turnarounds. Taken together the data demonstrate that the Northern Arc has many of the positive economic and labour market characteristics of the South of England – but without the problem of housing unaffordability. The new evidence suggests this part of the North is more than capable of ‘winning’, as the emblematic turnarounds in Liverpool and Manchester city centres - from centres in decline to destinations of choice – powerfully attest.

Ian Wray is honorary professor in Liverpool University’s Heseltine Institute for Public Policy, Practice and Place and professorial fellow in Manchester University’s School of Planning, Property and Environmental Management. He was chief planner, Northwest Development Agency, 2000-2010, and was lead author for the North West’s first regional economic strategy in 1999.

[1] https://www.gov.uk/government/news/reeves-i-am-going-further-and-faster-to-kick-start-the-economy

[2] https://www.ft.com/content/5eb3b18c-d961-45b3-bbdf-30db2588676f

[3] https://www.liverpool.ac.uk/heseltine-institute/blog/thecaseforthenorthernarc/

[4] https://www.greatermanchester-ca.gov.uk/news/northern-arc-linked-by-a-liverpool-manchester-railway-could-match-oxford-cambridge-growth-potential/

[5] UK2070 Commission Go Local: The socio-economic landscape of combined and local authority areas in England, Cecilia Wong and Wei Zheng, February 2023 

[6] In following this discussion, the reader will find it helpful to refer to the following charts in Wong and Zheng: Figures 2, 3, 4, 5, 6, 8, 10, 11, 14, 16, 19, 20, 21, 28, 29

[7] An achievable strategy for North West rail investment is discussed in this UK2070 Commission paper by Steer, Thrower and Wray https://uk2070.org.uk/wp-content/uploads/2025/02/Why-Rail-Projects-need-a-Regional-Plan-FINAL-Edited-250211.pdf and in condensed format https://www.greengauge21.net/re-setting-the-north-wests-rail-needs/

[8] Strengthening the Evidence Base of Key Economic and Spatial Strategies in the North West, NWDA Contract 00083, University of Manchester, University of Liverpool, July 2006

[9] The Defence Dividend and the Northern Arc, Ian Wray 

[10] Social capital in the United Kingdom: evidence from six billion friendships 

[11] https://www.peoplemanagement.co.uk/article/1879631/supercommuters-rise-%E2%80%93-employers-better-support-them

[12] Ronald Abler, John Adams and Peter Gould (1971), Spatial Organization, Prentice Hall, New Jersey p. 526

[13] A J P Taylor, Manchester, in Essays in English History (1976), Pelican