Trickle out works: inequality in Greater Manchester.

Tom Forth,

One thing I’ve noticed since moving to Manchester a year ago is how many people are both proud and worried about the city centre.

“It’s booming”, “look at the flats shooting up”, “are they affordable?”, “we don’t want to be like London”, “all the money gets spent in the city-centre”, “but what about the left-behind towns?”. Listen and you’ll hear it.

City leaders, citizens, and civic society groups are very concerned about regional inequality. The fear is that Manchester city centre, which spreads across to neighbouring Salford and Trafford, is pulling ahead while everywhere else is left behind.

Economists and sociologists worry about the push for agglomeration benefits at the expense of equality. The Centre for Towns operates out of a shed in the region urging policy makers to think beyond growth in cities.

But what does the data say?

Regional inequality in Greater Manchester: Trickle out is working.

We can boil down spatial inequality to a single measure using a formula called dispersion . It’s a pretty simple formula and it works well for Greater Manchester, a region which has good data for its ten local authorities.

So I calculated regional inequality for GVA (similar to GDP, a measure of how much value is produced in an economy) and GDHI (a measure of income, a measure of where that value goes and where it is available for people to spend).

The big result is clear — spatial inequality of income has fallen in Greater Manchester in the past two decades, while spatial inequality of production has risen.

Spatial inequality of income has fallen in Greater Manchester in the past two decades while spatial inequality of production has risen.

How has spatial income inequality reduced?

The single measure of spatial income inequality is useful, but it doesn’t tell us much about how spatial income inequality has reduced in Greater Manchester. To do that we need to look at the average income in each of the ten boroughs and see how that has changed.

Stockport and Tameside's rise from middle-income to high-income boroughs has caused the recent uptick in spatial income inequality.

The most obvious result is that average incomes have converged. While Trafford and Manchester remain the most prosperous and least prosperous boroughs respectively, the gap between them has reduced. This trend drove the reduction in spatial income inequality that we saw up to 2014.

But then incomes in Trafford and Salford went up suddenly, and Stockport and Tameside cemented their transition from middle-income boroughs within Greater Manchester. As recently as a decade ago incomes in Stockport and Tameside were on a par with places like Bury and Wigan. Today they are significantly higher.

The surprising fact to many in Greater Manchester will be that, when measured in terms of people’s incomes, Manchester’s relative success over the past two decades has been slight and has contributed to decreased regional inequality in GM. The driver of increased spatial income inequality in GM in recent years has been the success of Stockport and Tameside.

But all the good jobs are in the city-centre now!

We just explored the origins of falling spatial income inequality in Greater Manchester by looking at individual boroughs. We can do the same to explore the origins of increasing spatial inequality of production in Greater Manchester.

Economic activity in Greater Manchester has centralised in the three city-centre boroughs.

The story here is clear. The economies of the central boroughs of Manchester, Salford and Trafford, have grown faster than outer and Northern boroughs.

A clue to the origins of this increased spatial inequality is seen in the data for Stockport and Tameside. While we saw earlier that income in these boroughs has risen substantially, we now see that the level of production in them has declined. Tameside’s economy, once middling, is now the weakest in Greater Manchester.

This change is most probably due to commuting. As Stockport and Tameside have transitioned to being commuter areas for central boroughs, their local economies have shrunk. But their populations, many bringing home city-centre salaries every day, have grown richer.

What about the towering flats, filled with new elites, looking down on the rest of us?

A penthouse four bed flat in the soon-to-no-longer-be tallest building in Manchester will set you back £3.5m . For that you get five private car parking spaces, so you don’t have to pick between your Ferrari, your Porsche, or your Range Rover.

This feels pretty obscene to me. One of the advantages of the English preference to move to the country when rich is that far fewer people can see a £3.5m four bed home in Cheshire than a huge tower in central Manchester. But are such luxury city-centre flats inhabited by new financial elites common? Or are they very rare exceptions?

Local authority data doesn’t tell us much about financial elites and where they live, but the ONS produce a dataset that does. The Small Area Income Estimates splits Greater Manchester into 346 neighbourhoods called MSOAs, and estimates the average household income in each.

This lets us look at which neighbourhoods of Greater Manchester have residents with the highest and lowest average incomes. I’ve decided to look at the top 10% and the bottom 10%, 35 MSOAs each.

There are more elite neighbourhoods in Bolton than there are in Manchester.

The vast majority of the new tall blocks of “luxury flats” are in Manchester and Salford. So if they were being filled with new elites we would expect those areas to have more representation among the elite areas of GM than before. They don’t.

The data shows us that the majority of elite neighbourhoods in GM are in just two of the ten boroughs: Trafford and Stockport. Stockport’s recent transition to being a borough of prosperous commuters shows up clearly in this data, with at least three new neighbourhoods joining the elite of Greater Manchester.

Far from glass towers of elitism, the number of elite neighbourhoods in Manchester has actually fallen in recent years, taken over by Bury and Bolton. East Didsbury, notably not in the city centre, is the only neighbourhood of Manchester secure in its elite position.

At the other end of the table the result are stark. We know from work by Open Data Manchester that Manchester remains the most deprived local authority in England and Wales. And sure enough it has far more neighbourhoods in the poorest 10% than any other borough.

But what about towns?

Although we don’t always agree, I am a big fan of the work that’s being done by Centre for Towns on the same issues as I have explored in preparing this piece.

That’s why I want to respond to their inevitable response of “what about towns?” in advance.

This is an important question. The local authorities of Greater Manchester are not the same as the towns and cities of Greater Manchester, even though they often share the same names. While Leigh may be in Wigan Local Authority, you’d only need to watch one Rugby League game between the two towns to understand that they are definitely not the same place.

Most of the data that I’ve shown so far is only available by local authority, and I think that there is real value in the analysis that I’ve done. But I also think that there is extra value in looking more closely at villages, towns, and cities.

First of all, you need to understand what they are. So I’ve taken the House of Commons Library definition of Villages, Towns, and Cities, and drawn them in Green on top of a map of Greater Manchester’s ten boroughs in Black.

The local authorities of GM (black) and the village, towns, and cities of GM (green).

Then, using the small area income estimates data that I mentioned above I have calculated the average income in each village, town, and city.

Prosperity generated in the city centre trickles out to outer towns and villages extremely effectively.

There are downsides to this method. We can’t look at changes except since 2012, and we can only look at spatial inequality of income, not production. But it does show us something importantly different from analysis at local authority level.

First of all we see that the core towns in otherwise prosperous boroughs are often very poor. While Salford Local Authority is second only to Trafford for high income, the town of Salford is second only to Oldham for low income. The wealthy residents of Salford local authority live in Walkden, Worsley, and Swinton, not the town of Salford itself.

Looking at Greater Manchester as a whole we see a consistent pattern. Core towns and cities like Manchester, Salford, Bolton, Oldham, and Ashton-under-Lyne have low incomes, regardless of whether they are booming centres of production (Salford and Manchester) or not (Ashton and Oldham).

The prosperity generated, increasingly in central Greater Manchester, is even more increasingly taken home each night by commuters from outer boroughs, but more specifically it is taken home not to the large towns and cities of those boroughs, but the small towns and villages within them.

Many economists are worried that “trickle out” — the idea that the centralisation of GM’s economy would generate growth that would benefit outer areas too — isn’t working. But this data suggests exactly the opposite.

Prosperity is not just trickling out, but flowing out. Prosperity is flowing more than ever from the cities of Manchester and Salford to the towns and villages of Altrincham, Marple, Uppermill, Mossley, Hale, Worseley, Ramsbottom, Denshaw, and Standish. My worry is not that trickle out isn't working, but that it might be working too well.

What’s next?

Work on inequality is never done. There is so much more to look at, so many more people to speak to, and much better data to collect and analyse. This work poses just as many extra questions as it answer and I already have so much more to write about. I will continue to explore and write about it here. But 1600 words is enough for one day.

 

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