Oxford and Cambridge are too small
Two weeks ago few people had heard of Tempsford, a sleepy village of 600 people in rural Bedfordshire. But it is located handily at the intersection of the east-coast mainline, which runs between London and Edinburgh, and a proposed Oxford-to-Cambridge railway. That made it an ideal spot for a new town and railway station, suggested a blog by Kane Emerson and Samuel Hughes, a pair of researchers, in July. On January 29th the chancellor, Rachel Reeves, announced that—hey presto!—Tempsford would be built.
It was just one example of the speed with which the chancellor has suddenly been backfilling Labour’s growth agenda. In a speech laden with bulky projects, Ms Reeves also revealed that she had bounced her cabinet colleagues into approving a third runway at Heathrow and would back redevelopment around Old Trafford, the stadium of a Manchester football team. Most significant, however, was the idea of turning a swathe of south-central England into “Europe’s Silicon Valley”.
The plan, dubbed the Oxford-Cambridge Arc (see map), is not a new one. But it is a good one, because it correctly identifies what Britain does well—and what holds the country back. Although Ms Reeves has come to it late, she has a better chance of implementing it than anyone before her.
Oxford and Cambridge have some big strengths. The two university cities outstrip most other innovation clusters on scientific publications and patent applications. They have a high share of bright, young graduates, many of whom want to build the companies of the future. They are home to buzzy biotech and artificial-intelligence startups.
Yet they punch below their weight because they have not been allowed to grow. “The region is astonishing per capita but small in scale,” says Rachel Wolf of Public First, a think-tank. Oxford is the bigger of the two; its population is still only 160,000, and just 35,000 more than it was in 1980. Homes cost 14 times the average salary, making it hard for firms to hire. Lab space is another big constraint in both cities. Some new developments have eased the pressure, but new sites are scarce.
To see this self-defeatism at work, consider Oxford’s Ellison Institute of Technology, set to be one of the largest startup incubators in Britain when it opens in 2027. Backed by £130m ($160m) from Oracle’s co-founder, Larry Ellison, it will have 30,000 square metres of lab space, along with clinics and supercomputers. But planning and environmental restrictions have made it “just a complete nightmare”, says Sir John Bell, an Oxford immunologist leading the project. “We had the Environment Agency chasing frogs up and down.”
It is hard to imagine Mr Ellison dealing with such problems in America. More widely, says Sir John, there is a “content and complacent” attitude in the cities with their rich histories. Locals ask: “Do we really need a new rail line?”
Compare that with Boston, San Diego or the Bay Area. Innovation clusters in those cities are much bigger and more productive. They benefit from bringing together lots of workers who can swap ideas. Although housing is not always cheap, people have places to live and businesses space to grow. A large ecosystem encourages risk-taking; if a company fails, people quickly find another. The GDP of the Boston metropolitan area is almost ten times that of Oxford and Cambridge combined.
Ms Reeves hopes to emulate these successes. Silicon Valley and Tempsford may seem worlds apart, but the idea is not fanciful. On top of the strengths of Oxford and Cambridge, Milton Keynes, which would be on the rail line, is a growing hub for tech and defence firms. All three cities are also connected to London, still a global centre for financial services. Modelling by Public First suggests that Oxford, Cambridge and Milton Keynes could contribute an extra £14bn ($18bn) a year to GDP by 2035 if the cities could count on more skilled workers and higher R&D spending.
The chancellor has focused on two big problems that have thwarted progress. One is transport. Oxford and Cambridge are only 66 miles (106km) apart, but it takes two-and-a-half hours to make the journey by train, via London, or a similar amount on patchy local roads. A plan for a dual carriageway was scrapped in 2021. Ms Reeves says she will support east-west rail, including the station at Tempsford; the first trains are due to be running by 2035. Around £7bn for the project, which involves both upgrades and new track, is expected in the spending review this summer. That will upset some Labour MPs, who will no doubt argue that the money should have gone farther north instead, to places like Leeds .
The other problem is housing. Ms Reeves has floated a sketchy “zoning scheme”, which would create a presumption in favour of housebuilding alongside railways. Designed well, that could lead to a surge of construction. Michael Gove, the Conservative minister who was steering the Arc until the election, argues that densifying Oxford and Cambridge is also critical. They have been throttled by green belts for decades, while NIMBYs have blocked infrastructure. Ms Reeves has approved new reservoirs serving both cities. To seriously increase building within the city limits, she will need to work with development corporations, says Mr Gove.
There are other challenges. The Oxbridge cluster will need skilled workers, which could come into tension with the government’s plan to reduce immigration. A lack of access to growth capital remains a constraint. Many in startup circles think the government should go further in cajoling pension funds to invest in equities. Ms Reeves does not yet have all the answers. But Labour is well-placed to build the Arc because it is far less beholden to the voters who oppose homes and infrastructure. “The politics are just much easier,” says Ms Wolf, who was previously a Tory adviser. “Labour should have no problem with letting the diggers loose in the shires.” ■
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