When a City Becomes Too Successful

In November 1965, the British government explained why Birmingham required intervention. Unemployment in the city and surrounding areas had been around 0.6%. Employers were struggling to find workers. Office employment was growing. Something, plainly, had to be done.

The chosen response was to restrain further office development. In the Commons debate approving the controls, ministers described the conurbation’s continued growth as “a threat to the economic balance of the region”.

It is an arresting sentence to encounter in a country that now produces strategies devoted to making its regional cities more prosperous. Birmingham had achieved a condition later governments would spend considerable effort attempting to recreate. At the time, it was considered insufficiently distributed.

The offence was concentration

There was a rationale. Post-war governments faced distressed industrial areas alongside places with acute pressure on housing, land and labour. Encouraging investment towards weaker regions was a legitimate objective. Birmingham’s success did not make the difficulties elsewhere imaginary.

The contentious part was the mechanism. Industrial development certificates allowed central government to control factory development and steer investment geographically. Office controls extended the effort to another kind of employment. Birmingham’s growth was something to be rationed in pursuit of a wider plan.

These were controls, not an absolute prohibition on every new factory or office. But the intention to restrain expansion was explicit. This was not a conspiracy discovered retrospectively by an aggrieved local historian. Ministers explained what they were doing in Parliament.

The economic assumption deserves scrutiny. Prevent a business expanding in Birmingham, and perhaps it would expand somewhere more desirable to the planner. But perhaps it would expand less, invest differently or fail to reproduce the advantages that made Birmingham useful in the first place.

A city’s productive relationships do not necessarily survive relocation as neatly as the dots on a departmental map.

A factory is more than its building

Industrial strength involves suppliers, workers, customers and practical knowledge accumulating near one another. A company may be in Birmingham because several other things it needs are there too.

This does not mean every concentration should grow indefinitely or that regional policy is inherently foolish. It means dispersing activity can change its economics. Moving the building does not automatically move the network.

The Centre for Cities’ historical analysis identifies national policy as one contributor to Birmingham’s later difficulties, alongside globalisation and manufacturing decline. It specifically points to attempts to shift industrial and office activity away.

The office restriction is particularly uncomfortable in retrospect. A manufacturing city beginning to develop more services was being discouraged from expanding precisely one of the activities that might diversify its economy.

That does not prove that an unrestricted Birmingham would have become a second London. It does suggest that limiting its alternatives was a rather confident bet on the durability of what it already did.

Then the economy changed

The kneecapping interpretation captures something real about deliberate restraint. It becomes less useful when asked to explain everything that followed.

Birmingham and the wider West Midlands faced severe industrial restructuring. In their research on rebuilding the city, economists David Bailey and Keith Cowling identify overdependence on automotive manufacturing, inadequate investment and weak productivity among the contributors to decline. They report that the wider area lost around 370,000 manufacturing jobs between 1965 and 1981.

That regional figure should not be mistaken for losses within Birmingham’s municipal boundary. Nor should the dates be treated as an experiment proving that development controls caused each lost job.

The important interaction is between vulnerability and adjustment. Restricting growth is especially questionable when the existing economic base subsequently comes under pressure. A policy intended to relieve congestion can leave a place with fewer routes into its next phase.

The city did not simply stop being industrious. The conditions under which its industry prospered changed, and the transition inflicted losses that an attractive redevelopment could not quickly replace.

Recovery had to be built differently

Birmingham’s subsequent history is not an uninterrupted descent. The city has repeatedly adapted, and describing it exclusively through decline does an injustice to the people doing that work.

Centre for Cities’ 2015 study found that knowledge-intensive business-service employment had nearly doubled since 1981, alongside efforts to strengthen the city centre. Later, HSBC UK opened its Birmingham head office in 2018. This was the UK bank’s headquarters, not the relocation of the entire global group.

There is a certain historical neatness in celebrating office employment several decades after treating its expansion as a problem. The same broad activity travels from congestion risk to regeneration opportunity without changing its essential need for somewhere to put a desk.

Yet a headquarters, however welcome, does not automatically solve unemployment across a city. New jobs may require different qualifications, recruit from a wider area or remain difficult to reach. The relationship between an improving centre and improving lives needs to be built, not assumed.

A skyline can change faster than a household’s prospects. Confusing the two produces excellent photographs and impatient residents.

The council is not the city

The council’s financial crisis has made that distinction harder to maintain. Birmingham’s 2023 Section 114 notices and subsequent intervention became shorthand for the condition of the whole place.

But a local authority’s finances and a metropolitan economy are different things. Neither can be understood solely through the other.

The government’s 2023 intervention memorandum identified serious problems involving equal-pay liabilities, the failed implementation of the Oracle financial system and weaknesses in governance and financial controls.

Those failures cannot reasonably be charged to an office-development order from 1965. Historical constraint does not absolve later leadership. Equally, a council’s failures do not establish that the city’s businesses, universities and residents have somehow ceased to possess economic value.

A serious account has to hold several explanations at once. National policy, industrial change and local decisions interacted. Choosing one villain makes the story easier to tell and less useful to understand.

The danger of improving the map

The wider lesson concerns a persistent temptation in economic policy: treating prosperity as a quantity that can be redistributed geographically by preventing too much of it occurring in one place.

Regional inequality demands action. But restricting an expanding city is not equivalent to equipping another with transport, skills, institutions and the conditions for investment. The first can be accomplished by refusing permission. The second requires building capabilities that may take years to develop.

There are genuine costs to growth, including congestion and pressure on housing. The alternative to restraint is not to pretend those costs do not exist. It is to ask whether expanding capacity would serve people better than suppressing the activity creating the pressure.

Birmingham’s experience does not provide a precise calculation of the prosperity lost to post-war controls. The evidence supports the narrower conclusion that governments deliberately constrained a successful city, and that those constraints formed part of a much larger story of decline and difficult renewal.

That is already enough to make the episode worth remembering. Britain needs more successful regional cities. It should be cautious about responding to one by deciding that success has occurred in the wrong place.

In 1965, ministers worried that Birmingham’s growth might get out of hand. Later generations inherited the task of getting it going again. Somewhere between those ambitions lies a considerable amount of work that might have been avoided.