In a previous life, as a wet-behind-the-ears student, I got the train to Portcullis House for a day interning at Andy Burnham’s office while he was Shadow Secretary of State for Health. A Labour grandee had passed away, so I only talked to him briefly, awkwardly offering my condolences, after which we headed to a meeting with party apparatchiks eulogising about the NHS. While Andy was shooed away for media appearances, his team talked extensively to me about the fashionable book of the day – The Spirit Level. This was still a time when teenage pregnancy was considered a major societal problem.
While Burnham’s gravitas has sometimes been in question, he’s on the more likeable end of politicians. He knows his strengths and embraces his ‘king of the North’ persona. To quote Jim Hacker, he talks in clichés till the cows come home.
He preposterously claims that people from the North and Midlands are treated as second-class citizens. This is obviously deranged, but also incredibly popular. Despite being from a middle-class background, he channels a “brassed-off”, working men’s club anti-Thatcherism with effortless panache. Maurice Cousins accurately notes the sheer artifice of Burnham’s media persona; a perfectly nice but conventional Westminster insider counter-signalling the London bubble to the tune of “One day like this.”
But one should not be too critical. Burnham has shown himself to be something of a live player, using a mayoralty to revive what looked like a doomed attempt to take over the Labour Party. While Burnham’s predecessors, like Howard Bernstein, had risen up through the local council administration, he moved sideways as a former MP and has cultivated a brand he simply didn’t have when he was wrestling Diane Abbott for single digits in 2010. Matthew Bowles from Prosperity hits the nail on the head, pointing out that Burnham’s great strength is his establishing himself as an avatar for an insurgent North on the political stage.
This is something Farage also has – his being the representative for the bourgeois rump of the South East. It is also something Starmer lacks. Our embattled Prime Minister grew up in Reigate, but to the average punter, he could have sprouted from anywhere. The poor bugger is not even loved in central London amongst Westminster establishmentarians. His biggest cheerleaders have been marginal media figures and has-beens like Paul Mason, Tom Baldwin and Matthew Stadlen. Meanwhile, all the mischievous up-and-comers at the New Statesman have been actively championing Burnham for months.
Burnham has taken a major risk to stand in the Makerfield by-election. It seems this was the only seat where the incumbent MP, high-flyer Josh Simons, was comfortable enough to go out and look for another job. Assuming Burnham wins, however, he would stand to be the clear favourite to replace Keir Starmer. PM Andy could seriously disrupt Reform’s hope of a majority, and possibly even win the next election. While one is personally unconvinced by Manchesterism, the dislike towards Reform could lead a large number of liberals and Greens to hold their noses.
Burnham’s industrial policy is the same as Keir’s
Burnham’s platform includes a number of things, including public ownership of utilities, challenging austerity and supporting welfare spending. But one of his big tilts is towards “reindustrialisation”, a word I am somewhat fond of. He contrasts this with the deindustrialisation he alleges began in the 1980s.
As a bit of a reindustrialisation fetishist, I would define the term this way. The level of economic output related to manufacturing and production should grow substantially, and it should grow as a share of national output. What is more, reindustrialisation should be defined by increasing capital investment in equipment, machinery, buildings and infrastructure to improve overall industrial capacity. Ideally, this should also mean a drop in the goods trade deficit, so as to help engineer an end to the current account deficit and improve the net international investment position. This should be measured by growth targets, with clear aims outlined. Questions would arise as to whether reindustrialisation necessitates more domestic ownership and the establishment of national champions, or could be done primarily through supply-side reforms.
Now, we already have a national industrial policy, but it does not operate under this framework of reindustrialisation. Rather, it covers eight sectors totalling 35% of employment, with the majority of jobs being in services with low productivity per worker.
Burnham’s own Manchester-centric reindustrialisation agenda, as outlined in his talk with the IFS, is far more like the current government’s policies than a clear plan for reindustrialisation as defined by yours truly. Rather than a clear focus on manufacturing, there are five sectors versus the national government’s eight, including:
Advanced manufacturing & materials
Digital, AI & creative tech
Health innovation & life sciences
Green industries / clean growth
Professional & financial services
If the purpose is reindustrialisation, why is professional services lumped in, when, as a sector, it is already doing fine? The reason is simple. Burnham’s industrial policy, like that of the government, is not concerned with import dependencies, industrial capacity or export competitiveness, but with the sprinkling of government largesse across the widest possible criteria. As an example, a liquid air energy storage facility in Carrington is getting over half its £300 million in funding from the National Wealth Fund.
The ‘Atom Valley’ plan is more up one’s street, but could suffer the same challenges as the Tees Valley cluster. In the latter’s case, BP’s initial plan for a huge blue hydrogen plant was ditched for a data centre. Atom Valley, like Tees, is being earmarked for quite nascent and even speculative energy technologies, including small modular reactors and fusion. While these are interesting, they don’t make sizeable differences to overall industrial capacity. At present, nuclear fusion research is something of a luxury prison for idle physicists.
Now I am an advocate of targeted grants for capital equipment, but for the express purpose of growing the capital stock to expand intermediate manufacturing capacity. This is distinct from throwing money at exotic innovation-coded markets with little proven go-to-market. What we have with Manchester industrial policy, as with national policy, is a smorgasbord of grants, loans and skills programmes to scatter across disparate stakeholders, with no real target for industrial capacity.
The potential differentiator between Burnham and Starmer is his willingness to consider the renationalisation of water and energy. It might well be the case that privatisation in these sectors has been suboptimal. I must admit I don’t see much hope for a massive nuclear buildout without the state taking the lead. But there is not yet enough detail on these plans to judge them.
Manchester is growing, but not via industry
The credibility of Burnham is intertwined with the supposed overperformance of Manchester itself. The city has indeed performed quite well, growing 17% between 2017 and 2023 in inflation-adjusted GVA, while for the country it was 6%. This growth has to be caveated. Greater Manchester’s GVA per head growth is not particularly different to the wider UK.
Figure 1: Gross value added (balanced) per head annual growth rates (current prices): Source.
Looking at GVA growth per head, we have a small degree of convergence with England as a whole.
Figure 2: Gross value added (balanced) per head of population at current basic prices: Source.
Digging deeper, some of the headline growth is debatable. Economist Paul Swinney has done a rather good post questioning the dubiously high productivity growth in Manchester since 2019. He argues quite convincingly that much of the growth is due to statistical errors and undercounting the man-hours of the self-employed. Much like the rest of the country, the median wage in Manchester was lower in 2023 than it was in 2006. The City is not detached from the wider stagnation of the UK as a whole. During most of Burnham’s reign as mayor, from 2019 to 2023, the average wage growth rate was 1%, but -3.6% for the top 80th percentile.
Figure 3: Greater Manchester real wage growth 2019-2023 by percentile. Source: Paul Swinney via ONS.
Manchester might be doing well relative to the country in terms of growth. But there’s also the composition of growth, and here we struggle to see a link between Manchesterism and any serious prospect of renationalisation. Since 2017, Manchester’s GVA has grown 17%, but its manufacturing has just grown 5%, in line with the UK.
Many manufacturing sectors are in clear decline. Transport equipment was the same in 2023 as it was in 2017, and half of its GVA level in 2000. Overall, manufacturing is 8% of Manchester GVA in 2023; similar to that of the country at large. In terms of growth, the story of Greater Manchester is exactly the same as that of the UK.
Figure 4: Manufacturing GVA index for the United Kingdom and Greater Manchester: Source.
Of course, why would it be any different? There is no lever to make manufacturing in Manchester more competitive than in the UK. The energy prices are the same, the various taxes, whether they be carbon or business rates, are the same. The challenge from global overproduction from Asia makes investment attractiveness very low in Manchester and in the country at large. Unless a region is bequeathed enormous manufacturing subsidies in the form of defence spending, it’s hard to see how it can diverge from the national story.
When looking at Manchester’s real growth, it chimes very neatly with Britain’s early 21st-century growth story. This makes it all the more strange for Burnham to claim “Manchesterism is the end of neoliberalism.” Based on the sectors that grew, neoliberalism seems to be thriving in Manchester.
High growth sectors from 2017-2023 include:
Publishing activities - 204%
Telecommunications - 165%
Legal and accounting - 104%
Office administration and business support activities - 59%
Of course, none of this growth is bad per se, and indeed, telecommunications covers many important things like fibre-optic networks and data centres, where Manchester has performed well. Interestingly, the sectors Manchester is most known for, sport and music, have been stagnant in GVA terms.
Figure 5: Manchester’s Creative Economy. Source.
I don’t think this is bad. It just reinforces my belief that the government shouldn’t really be concerned about the creative economy one way or the other. Of course, this is wishful thinking, what with Westminster strong-arming the English National Opera into relocating to Manchester in 2022.
Manchester has been doing a New Labour rerun
To refocus, the growing sectors in Manchester have been growing in Britain since the turn of the millennium, relative to production. It seems perfectly possible that Manchester is just absorbing the demand for these services, which would, were it not for constrained planning and lack of housing, be in London.
And this is where Manchester appears to have been successful, in following the same pattern of governance that New Labour did, even as Burnham tacitly repudiates that period. James Breckwoldt’s well-written essay on Manchester’s relative success confirms that a liberal housebuilding strategy and a desire to attract foreign direct investment were the key ingredients to the City’s success. It also makes clear that, relative to Britain’s other regional cities, Manchester had been reasonably well-run by longstanding figures such as Graham Stringer, Richard Leese and Howard Bernstein before Burnham got the mayoralty. Manchester arguably confirms to us that having a more liberal attitude towards building houses is a good thing for agglomeration, as if that needed repeating. It also confirms that having continuity in leadership over long periods is a good thing.
But this does not offer many clues for how we might correct our economic course beyond getting slightly closer to the European average on houses per capita. Manchester is praised for its welcoming attitude to FDI, but Britain is already a giant as far as foreign direct investment (FDI) goes. Our inward FDI stock is the second largest in the world behind the U.S. It is like when Rejoiners insist returning to the EU would somehow be a giant growth bonanza, as if Britain is not already a trade-intensive economy with minimal barriers. Sure, Brexit has been rocky, and FDI is helpful, but none of this targets the deep pathologies of the British economy.
These include a chronic current account deficit, a negative international investment position, incredibly low business investment and poor productivity, alongside a terrible mass immigration strategy and a corresponding trend in internal migration away from productive areas towards the countryside. All this feeds into a wider problem of expanding budget deficits and higher borrowing costs required to pay for them.
On the matter of deficits, Burnham appears cavalier. There is no acceptance of a trade-off between investment and entitlement spending. The incisive Marlowe has explained the contradiction of demanding higher spending and not being in hock to the bond markets here, so I won’t bother repeating it. There is a worthwhile argument about the need for public investment, and I am much more sanguine about state expenditure on big projects than most, but it has to be married with a hard dose of fiscal discipline.
Ultimately, Burnham’s reindustrialisation plan, today, amounts to today’s industrial policy framework with added charisma; not a serious plan to change Britain’s political economy. This is not to say it cannot be refined and improved. Josh Simons might prove his worth as an advisor, but this is all work that has yet to be done.
An interesting and timely question! I hope you don’t mind some reflections based on my experience at Manchester and Sheffield. In my five years at the University of Manchester, from 2020 until my retirement last September, I handled relations between the University, the city and the combined authority, and was quite closely involved in discussions about GMCAs economic strategy. I was an inaugural board member of the Atom Valley Mayoral Development Zone, and contributed to developing that strategy. Burnham was strongly committed to that project and stayed personally involved. While AB very much gave credit to Sir Howard Bernstein and Richard Leese for their part in the resurrection of Manchester’s city centre, his political priorities were moving towards spreading that economic success to the outlying boroughs - not least because his mandate was very much a whole GM vote. North East Greater Manchester - Rochdale, Bury and Oldham - have some of the weakest regional economies in England, with very low productivity and a whole host of other social issues; AB’s home turf of Wigan and Leigh is a little stronger, but not much.
If Manchesterism is anything, it is Richard Leese’s doctrine that there’s no point talking about wealth redistribution if there’s no wealth to distribute, so economic growth has to come first, and I think AB has internalised this. What Rochdale, Bury and Oldham need is more high productivity private sector businesses. Knowledge intensive business services work for central Manchester, but that’s a city centre, agglomeration story, hence the need to focus on manufacturing, and the motivation for the Atom Valley development.
How does one actually re-industrialise? My perspective on this is shaped by my time at Sheffield, where I saw the success of the University of Sheffield’s Advanced Manufacturing Research Centre (AMRC) in rejuvenating the manufacturing economies of Sheffield and Rotherham. The measure of that success is significant new inward investment in high value sectors - the Rolls-Royce turbine blade factory, the Boeing factory making aircraft components, the McLaren factory making composite sports-car components. We’re also seeing some of the more traditional firms expanding - Sheffield Forgemasters, now MoD owned, significantly expanding its facilities for forging components for submarines, Special Melted Products, now with Taiwanese investment to expand production of high value parts from speciality steels and other alloys.
AMRC did have a catalytic role in all this. It was founded as a collaboration between a university academic and a local SME making tools, who realised they needed to raise their game if they were going to be able to sell to primes like Boeing and Rolls-Royce. As someone interested in machine tools you will appreciate the fact that their original technology development was to optimise the process of machining titanium, increasing the throughput by more than an order of magnitude. It was this advance that Rolls-Royce cited in their decision to build a factory in NE England rather than Singapore.
AMRC works because it allows firms to test out new manufacturing technologies at industrial scale, using industrial machine tools. But we realised that innovation wasn’t enough, and to build an advanced manufacturing cluster you need skilled people, so an important part of the story was building an apprentice training centre. This has to operate at a high enough standard to have the trust of Rolls-Royce & Boeing, but it also is open to local engineering firms to use to, which I think has a significant effect on raising standards across the whole local manufacturing sector.
The AMRC experience was very much in our minds in planning the strategy for Atom Valley - helped by the fact that the major landowner in Atom Valley was Haworth Estates, who also owned the Rotherham Advance Manufacturing Park. Economic incentives matter, of course, so the argument that we have to use to convince them is that building a high value manufacturing cluster will bring them a bigger land value uplift than the default option of a logistics/warehousing park.
It seems to me that if you want to grow the high value manufacturing sector there are three possible routes, all of which should reinforce each other. You support the existing business base, both through helping them access innovation and skills, and through helping them find the right premises, with the right infrastructure, to expand into. Despite its overall weak economy, there are good manufacturing firms in Rochdale, Oldham and Bury. You can go into a Victorian weaving shed, and find a bunch of looms weaving advanced materials like Dyneema and carbon fibre into high value technical textiles; one of the UK’s few remaining semiconductor fabs is located in Oldham. You can attract international firms operating at the technological frontier, as Sheffield did with Boeing. Or you can support spin-outs and start-ups to grow in the UK (rather than seeing them disappear to Germany or Taiwan or California, as so often happens now).
So this is the plan for Atom Valley. It’s main selling point is that it is a very large and attractive development site, big enough for a gigafactory, with a commitment from local government to allow construction, supporting that with grid connections, road access, and building all the associated necessary infrastructure (including new housing and transport links). The University of Manchester is supporting that by running an innovation centre, focused on the translational research needed to support industry, in Rochdale, and we’ve built much closer links with the local FE colleges, to build the skills system that a more productive manufacturing economy will need.
As you observe, advanced materials and manufacturing isn’t the only sector prioritised in GM’s economic plans. Digital and AI already is a very strong sector for Manchester. The history of this is interesting, as it does hark back to the days of Cottonopolis - the rag trade produced catalogue selling, that turned into e-commerce, and from there to AI. Life sciences reflects the historic strength of the chemical industry in Manchester and Cheshire - this took a blow from the move of AstraZeneca to Cambridge, but manufacturing remains in Macclesfield (One should remember that pharma itself is a high value manufacturing sector - I think much of the uptick in manufacturing GVA share in Denmark comes from Ozempic). As for professional and business services, I’m a strong believer in the Eoin O’Sullivan “Black box of manufacturing” theory, that increasing manufacturing share also creates increased demand for high value services like R&D, design and marketing.
This is all difficult and I’m not going to claim that success is guaranteed. But there is some genuine commitment from GM, and it absolutely fits into Burnham’s political priorities of bringing prosperity to the outlying towns of the conurbation.
Interesting post. As someone who had a ringside seat at Manchester’s deindustrialisation - my dad worked in the textile industry in the 1970s - I have a lot of sympathy for the underlying thesis but I think that you have to give modern Manchester credit for making the most of its strengths rather than trying to create a lost industrial past. I too would like to see manufacturing GDP rise but in the meantime we will need to rely on other sectors for badly needed growth.