The plot against Mercia Birmingham was a boom city after the war and might have come to rival London. So why did planners deliberately sabotage its economy?

Back in the 1950s and 60s, the Midlands was booming. Leicester at the time had so many jobs that employers waited at the gates of other factories to poach workers, and even chased up potential recruits who forgot to come to interviews. In the decade to 1964, service businesses around Birmingham grew faster than any other part of the country; in 1961, West Midlands households earned more on average than any other British region, including London and the South East.

But all this was ended by London-based planners, who virtually banned new factories, offices and housing south of Manchester in a failed attempt to rebalance the economy. In 1960, the Government even refused Fox’s Glacier Mints permission for a new factory in Leicester to replace its existing building facing demolition for a ring road. That began the story of Fox’s decline in the city, culminating in its recent controversial decision to leave Leicester forever, and illustrates the profound damage caused to the Midlands and the British economy as a whole.

The Midlands boom was nothing new: ancient pottery shows a manufacturing hub since the Bronze Age, and throughout the Middle Ages it could compete with the south in terms of wealth: in the 14th century, the West Midlands were among the richest places in Europe. William the Conqueror’s favourite, William Peverel, doubled the size of Nottingham soon after the Conquest, and much later Daniel Defoe was to call it one of the most beautiful towns in England.

The area was central to the Industrial Revolution, among its heroes of innovation being Abraham Darby, who smelted iron using Black Country coke rather than charcoal, and James Watt and Matthew Boulton, who began to commercially develop steam engines. But this growth and prosperity would continue into the 20th century, as other industrialised areas of Britain fell into relative decline.

From 1911 to 1954 the West Midlands grew real output per person faster than any other region, to reach the highest outside the South East. Leicester, which dates back to an Iron Age settlement predating the Roman invasion, was by the 1930s the second most prosperous city in Europe; it later had Britain’s first local radio station.

Meanwhile Coventry, which was already a substantial settlement before the Norman Conquest, with a monastery founded by Leofric, Earl of Mercia — although his wife is better remembered for an altogether different reason — was the fifth wealthiest town in England by the reign of Henry VIII, beaten only by Bristol, Newcastle, Norwich and London. Again by the mid-20th century it was booming, with the fastest population growth of any British city both between the wars and from 1950 to 1965. In the 1930s  it was such a magnet of prosperity that two-fifths of its residents were from other parts of the country. In 1953, unemployment fell to 0.8%; a 1959 Times article called it a “powerhouse of technical progress” and “an Eldorado for its workers”.

Birmingham, seen by guidebooks as “the cradle of England’s industrial greatness”, grew from 8,000 people in 1700 to over a million in 1931 — overtaking Manchester in 1861 and Liverpool in 1881. Strongly Liberal and run by Joseph Chamberlain, in 1890 it was described by Harper’s as “the Best-Governed City in the World”. The 1911 Greater Birmingham Act made Birmingham three times the area of Glasgow and twice that of Manchester, Liverpool or Belfast.

The city was famous, above all, for its industry. From the 1600s to the 1800s, enterprising locals dug 35 miles of canals — more than Venice — to carry Birmingham’s huge trade, these barges first powered by England’s uniquely strong shire horses and then by England’s coal deposits.

Between the wars, Birmingham’s products included a coining press for Tibet’s mint, rolling stock for electrified suburban lines of Buenos Aires, and pipelines for oil through Iraq. From 1923 to 1937, its formal working population grew nearly twice as fast as the country as a whole. Historian Lord Briggs wrote that “Birmingham was more adaptable […] and succeeded in retaining its industrial supremacy” even though its initial advantages — coal, iron ore, and limestone — were lost.

The city became a global powerhouse, with the terminus for the world’s first two long-distance railway lines — the Grand Junction railway to the North and Robert Stephenson’s London and Birmingham Railway. It saw the invention of compact cavity magnetrons for radar, and the first design of a practical nuclear weapon. It remained Britain’s most prosperous city after London as late as the 1970s.

But national government saw the success of the Midlands as damaging other regions. The Distribution of Industry Act 1945 sought to stop industrial growth in the “Congested Areas” — the Midlands, East Anglia and the South East — and to push industry to declining “Development Areas” in the North and West. Entrepreneurs had to get an “Industrial Development Certificate” (IDC) before building a new factory.

The 1956 West Midlands Plan even set Birmingham a 1960 target population far lower than its actual 1951 population — so people would have to leave, and industry shrink. The controls made it difficult to regenerate businesses or add new ones, and the economy became less diverse, focused on the motor industry. That left it vulnerable to the recession of the 1980s, which badly affected the Midlands.

The Certificates failed even to work as the planners intended. Of the projects refused, a study found that only 18% instead went ahead in an area approved by the government, and many of those were in the South East. Half of the refused projects were just reduced in size to escape IDC control; 31% of refusals led to closure, reorganisation or abandonment. So IDCs prevented or destroyed several jobs for every job successfully moved.

Those requirements blocked most post-war growth in Midlands factories. But for 20 years, there was no limit on service businesses, and so Midlands entrepreneurs turned to those; despite the planning madness, the Midlands flourished.

From 1953 to 1964, service sector employment around Birmingham boomed, with major British and international banks, professional and scientific services, finance and insurance, adding three million square feet of office space. In the decade from 1951, Birmingham created more jobs than any city except London, with unemployment generally below 1%.

But then in 1964, the Government declared Birmingham’s growth “threatening”, and banned further office development for almost two decades. To add insult to injury to the region, its cities suffered among the worst architectual destruction of that decade, with much of old Victorian Birmingham torn down and medieval Coventry destroyed.

What would have happened without these disastrous policies? The size of a country’s cities normally follows a rule called ‘“Zipf’s law”, by which the second largest city is half the size of the largest, but Britain is an exception. By one estimate, Birmingham should have twice as many people, and Nottingham a third more. Those shortfalls, perhaps also due to years of transport neglect, are staggering.

The deliberate strangulation of the booming industries of the Midlands and other high-wage places by London planners was partly why, in the late 1960s and 70s, we became the “sick man of Europe” as average earnings dropped behind our continental friends and rivals. Adjusted for purchasing power, British spending per head was overtaken by West Germany, France and Italy, and ever since we have been playing catch-up. We have now again overtaken Italy and France, but Germany is still about 17% higher. Germany had no equivalent to IDCs; France and Italy’s were much more flexible.

Blaming bad planning for low growth is no pie in the sky. One of Britain’s most respected economic historians, Nicholas Crafts, says we could raise average annual growth by two percentage points for an entire decade by fixing our planning system: if we had done that earlier, today’s GDP would be more than one-fifth higher. That would mean plentiful jobs with higher wages. We would have more money for education and healthcare.

To grow and overtake Germany again, we need to unleash the Midlands and other regions — giving them more power to grow, with world-class transport. The injustice cannot be undone, but we can free Mercia to regain its former glory.