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The British Bust: How will Manchester renew itself after austerity sets in?

During the last two decades, public-private partnerships spared the city a Rust Belt fate.

Uk manchester redevelopment public private partnership 03 09 2011Enlarge
A view of the Chimney Pots Park terrace houses in Salford, Greater Manchester, in July 2008. The redevelopment of the run-down Victorian-era homes relied on a public-private partnership. (Christopher Furlong/Getty Images)

MANCHESTER, United Kingdom — Manchester is Britain's second city, not by population size, but by sheer energy and a quality it shares with America's second city, Chicago — residents carry a large chip on their broad shoulders, as anyone who has ever watched Oasis perform knows. Mancunians, like most people in the northern reaches of England, revel in their reputation for blunt speaking and hardness. They constantly mock the soft southerners who suck at the teat of London and its financial district.

The people of this city have been on the front line of every up and down in economic history since the beginning of the industrial revolution. The history of free-market capitalism can be read in the city's streetscape: imposing stone temples to imperial commerce; dark, satanic mills and warehouses crowding sunlight off the street; and slick, airy, glassed-in modern office buildings housing knowledge economy workshops. There are also the canals. There are so many waterways criss-crossing the city that Manchester could call itself the Venice of the North, if that wasn't such an arty-farty thing, the sort of appellation soft, southern PR guys might invent.

Overlooking one of those canals are the offices of BDP, Manchester's largest architectural practice. BDP was built by riding the latest phase of economic history: regenerating the city through public-private partnership.

"Local government is not the enemy of business," BDP Managing Director Gavin Elliott said. "Manchester city government has been pre-eminent in driving private sector investment, through public funding."

Read The British Bust, Part I on how the people of Manchester have yet to feel the impact of drastic government budget cuts.

Twenty years ago, Manchester looked like many Rust Belt cities in the United States. The pure free-market economic theories pursued by Margaret Thatcher's government had led to two recessions in a decade, and with its manufacturing hey-day long past, the two downturns hit the city particularly hard. The story in the early 1990s was gun crime. While there was less to the Gun-chester story than met the eye, the grotesque public housing around the edge of downtown was proof of the impoverishment of the city.

Around that time, in typical Manchester fashion, the city's leaders decide to do something brash. They would bid for the Olympics! The first thing that needed to be done was spruce up the town. Public money primed the pump and soon Manchester became a building site. The canals were dredged and the derelict warehouses along them converted to residential apartments and lofts.

Manchester bid for the Olympics twice in 1996 and 2000, and failed each time. Gavin Elliott says that was not important. "You don't always bid to win. The important thing was using the process for capacity building."

For 15 years that strategy worked. The improved infrastructure and built environment enticed businesses to relocate and the private sector grew. Under the Labour governments of Tony Blair and Gordon Brown, there was large investment of public money in building new schools, hospitals and transport infrastructure.

Now that phase of Manchester's economic history is over.

Firms like BDP are having to re-invent themselves. BDP grew in the last decade and a half by focusing on designing schools. Money for those projects slowed when the banking crisis hit and came to a full stop when the Conservative-led coalition government came into office last May. BDP laid off 10 percent of its staff. The firm is looking abroad for commissions. "Five years ago, foreign projects counted for 10 percent of our turnover," said Elliott. "Today that number is 30 percent."

The private sector can be more nimble at reinvention than government. Down at the town hall, a spectacular monument to Manchester's status as the world's pre-eminent industrial city circa 1860, the executive members of the city council are still reeling.

"We were shocked! We were angered," said councillor Glyn Evans, when they found out just how much their grant from the British government was being cut.