HS2 - the wealth will 'suck out' to London, not 'trickle-down' to the North

It looks like the future - but which way does the wealth travel? High speed trains in Taiwan. Photo: Ben via Flickr.
It looks like the future - but which way does the wealth travel? High speed trains in Taiwan. Photo: Ben via Flickr.
Supporters of HS2 assert that it will cause prosperity to trickle down from London to the entire North of England, writes Tony Payne. But economic theory and hard experience tell us that the reverse is more probable - that it will help London to 'suck out' northern wealth.
When fast growth occurs in one part of an economy, it is just as likely - in fact more likely - to "suck out" enterprise, investment, people and ideas ...

Over the years I've written a lot about global north-south issues. Yet until now, I've never said a word about the same divide within England, my own country of birth and residence.

But the two overlap. Theories of global development can help us understand regional divides closer to home.

In the global context 'north' and 'south' have always been contested concepts. They sought to capture what has long been deemed to be an important binary distinction between modernising and backward areas, between developed and developing parts of the world, between rich and poor countries.

The language has altered over the years, but the core idea has persisted and was given its "north-south" expression most famously on the cover of the Pan edition of the Brandt Commission report of 1983.

This depicted a Peters Projection of the globe with a red wavy line running along the US-Mexican border, through the Mediterranean, across the southern perimeter of the USSR and then dropping sharply downwards to sweep up Australia and New Zealand with the USA, Europe and the USSR into the developed, so-called 'north'.

In Sheffield, we know that we are located in the north of England. This is a matter of geography. You can argue, as Owen Jones has recently done, that "the north-south divide is a myth - and a distraction", highlighting the obvious reality that the divisions of power and wealth in England actually play out in much more complicated ways.

A once-in-a-century chance?

But no-one can deny that northern England is a different part of the country from southern England and that sometimes you have to travel between the north and the south. This is what brings us to trains and the vexed matter of the HS2 project.

On 28th March The Guardian published a letter signed by the political leaders of eight major northern cities - York, Liverpool, Derby, Nottingham, Sheffield, Newcastle, Manchester and Leeds.

It called upon all the main political parties to commit definitively to the HS2 project, to champion it and to focus on its delivery. What's really interesting, though, is the reasoning the leaders advanced.

HS2, they wrote, is "a once-in-a-century chance for our cities to realise their enormous potential and to make an ever greater contribution to the wider prosperity of the UK".

Growth, jobs, productivity ...

The high speed rail project, they claimed, offered "growth", "jobs", "prosperity", "a step-change in productivity", all of which had to be grasped "at the earliest opportunity if our country is to remain a global leader".

When fast growth occurs in one part of an economy, it is just as likely - in fact more likely - to "suck out" enterprise, investment, people and ideas ...

In short, the big city northern leaders take the view that HS2 will bring hugely significant economic advantages not only to their cities but also to the North of England as a whole.

Indeed, their support is now widely proclaimed by proponents of HS2 and presented as a key argument in its favour. The key questions therefore become: why do these northern leaders think this and are they right?

The Emperor has no clothes

I've been looking since at some of the official representations made by the HS2 lobby and can't actually find much said in an explicit way about the political economy supposedly underpinning the project.

But, even so, I think I can see what the unspoken argument is. I recognise it as the spatial equivalent, if you like, of the 'trickle down' notion that has long sat at the heart of theories of development.

The idea is essentially that wealth and prosperity will somehow just 'spread out' from core centres of economic production, however defined, to other geographic zones that are - and this is critical - well connected to the cores.

The problem is that this generally does not happen as easily and as automatically as supposed. Even the pro-free-market Institute of Economic Affairs is not convinced.

East Kent and Doncaster

It has recently released a report that looked at East Kent (as a beneficiary of HS1) and Doncaster (as the possessor of a fast rail link to London for several decades) and showed that these places have hardly witnessed extensive economic regeneration as a consequence.

What's more, this is not surprising from the perspective of development theory. As long ago as 1957 the eminent Swedish economist, Gunnar Myrdal, argued that when fast growth occurs in one part of an economy, it is just as likely - in fact more likely - to "suck out" enterprise, investment, people and ideas from less fast-growing regions with which it is connected. He described these as "backwash effects", not "spread effects".

Myrdal himself was quite an orthodox economist, but his argument about the potential draining effect of growth on some regions linked up powerfully with a whole school of more radical development theorists who went on to argue throughout the 1970s and 1980s that core-periphery relationships in the global economy benefited cores, not peripheries, and were in fact designed precisely to do so.

But what about South Korea?

You may ask whether these various theories of dependency and forced underdevelopment have not been undermined by the fast growth and development of so much of East Asia over the past few decades.

The answer is yes, in the sense that many of the theories exaggerated the periphery effect by asserting that it determined development, rather than simply being a necessary condition.

But also no, as many of these countries managed to engineer their own development and re-orient their ties with the Western core. They did so by setting up "developmental states" to plan their various routes to growth and development in strategic and sustained ways over several decades. They didn't just seek to improve their connections to the core parts of the global economy.

The lesson for the leaders of England's northern cities is surely clear enough. Even the IEA got it partly right in arguing that they should focus on improving infrastructural links between northern cities, rather than to London.

More broadly, they should work together to think through and insist upon the establishment of a Northern Development Agency with the capacity to plan the integrated development of the North of England as a coherent regional economy.

They ought also to be moving on with this with urgency, because, whatever happens in the Scottish referendum in September, the political position of the north within England will thereafter be even more exposed and vulnerable than it is at present.



The Conversation

Tony Payne is Director, Sheffield Political Economy Research Institute (SPERI) at the University of Sheffield. He does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article. A version of this article also appears on SPERI's website.