It's grand up North

In the beginning was the Angel. And though its creator, Antony Gormley, saw that it was good, there were those among the population of Gateshead who took a dimmer view. Its 169ft wingspan – bigger than that of a Boeing 757 – might interfere with television reception, they feared. And the £800,000 it cost would have been better spent in the town's schools or hospitals.

But that was eight years ago. Today, the 65ft tall Angel of the North has become not just the most viewed sculpture in Britain – with 100,000 people viewing it everyday from the A1 or the East Coast mainline train – it has also become one of the best loved. Its rusty-looking oxidised steel is a reminder of the wreckage of the area's industrial past. Yet from it has been created a figure whose torso is tense with anticipation of a dynamic future and whose wings seem burnished gold by the early morning sun. Such is the affection in which the Angel is held that when Newcastle United set off for the Cup Final four years ago, a huge football shirt, bearing the number of the team's striker, Alan Shearer, was hung by dedicated wags over the vast wings. It was a recognition of how art dignifies a place and conveys a sense of the value of the people who live there.

So you could say it all started with the Angel. For through public art a regeneration has since sparked across the whole of the North of England. Recent days have seen the opening of Daniel Libeskind's shimmering aluminium Imperial War Museum North building, which pierces the sky like a giant shard of bomb-casing between Manchester United's ever-growing Old Trafford stadium and the city's exciting Lowry arts complex.

On Tyneside, a 1950s grain warehouse has reopened this month as the Baltic, a major, new, £46m international centre for contemporary art – a new breed of public art space, an art factory, the like of which the Angel's sculptor Antony Gormley has said Britain has not seen "since before the Reformation". Nearby stands the elegant, new, lyre-shaped Millennium Footbridge, which links Newcastle city centre with the Gateshead site on which the Baltic stands, and where a magnificent, curving building by Norman Foster is now rising to house the £70m Sage Music Centre, which will open next year with three concert halls, a music school and a home for classical and folk music alike.

That is far from all. In Liverpool, the Walker Art Gallery has been revamped and an arts centre opens soon. In Salford, an upmarket mall with shops from Jasper Conran, Paul Smith, Karen Millen has now been added to the Lowry/Imperial War Museum site. In Manchester, the £126m Sportcity complex of venues and athletics facilities is about to open for this month's Commonwealth Games – the biggest sporting event to be held in the United Kingdom since the Olympics of 1948, for which a million tickets have already been sold. In the city centre Urbis, a £30m new glass ski-slope funicular museum, opened two weeks ago, housing an ambitious museum of all things urban from Sao Paolo and Rome to Tokyo and New York; a similar sum has been spent on a four-year transformation of the Manchester City Art Gallery. All across the top half of England, grands projets are opening which give a new sophistication to the conceit that life is grand up North. And yet the Angel was only a symbolic start, the moment perhaps when the idea of regeneration through art seized the public imagination, and became, like football, a barometer of local self-esteem. The roots of the renaissance in Northern spirit go back further, into a complex cocktail of national politics.

There are those who, with grim irony, thank Margaret Thatcher. The popular reaction to 18 years of Tory rule at Westminster was, by and large, to entrench Labour in its control of local government in the North. That, according to Sir Bob Scott – the architect of Manchester's bid for the 2000 Olympics, who has now broadened his loyalty to Liverpool where he is masterminding its bid to become Capital of Culture in 2008 – "enabled strong Labour councils to take long-term views of things".

Then there was John Major's contribution. He founded the National Lottery, which has provided the capital for most of the big schemes. In order to shore up his perilously narrow parliamentary majority, Major ensured the lottery spread its largesse in traditional Labour areas, too – a process that was accelerated under Tony Blair, in whose first cabinet, 60 per cent of ministers came from Northern constituencies. Projects such as the Lowry offered a handy fig-leaf for the £750m cost of the Dome, which was justified on regeneration grounds and yet which was targeted at an already overheated South-east rather than other parts of Britain. They also hoped they would draw attention from the millions being poured into Covent Garden to, in the dry verdict of one arts analyst, "fund the pleasures of London plutocrats".

And yet this was only part of the picture. Dynamic individuals have always been vital to change in the North. That was true in the days of the merchants who built Liverpool, Manchester and Leeds. It was true the last time the North-east was a happening place, under the politician T Dan Smith, now remembered for his role in the Poulson corruption scandal, but who was, in the Sixties, a real powerhouse of energy for Tyneside.

The fruits of the current Northern refulgence are the results of the energy and vision of a handful of key figures whose names are little-known to the general public: local bureaucrats with an entrepreneurial vigour, such as Howard Bernstein, the chief executive of Manchester, and Les Elton, his Gateshead counterpart; intelligent local councillors such as George Gill, former leader of Gateshead, and Richard Leese in Manchester; and visionary plutocrats such as Felicity Goodey, the director of the North West Development Agency who is chair of the Lowry, and Tony Pender, a North-east property consultant who is chair of the Northern Sinfonia and the Sage Music Centre project, as well as a former member of the National Lottery body that hands out arts council grants.

Tony Pender is an instructive example. In 1995, as vice-chair of the regional funding body, Northern Arts, he, together with its then director Peter Hewitt (now chief executive of the Arts Council) and his deputy and now successor Andrew Dixon, produced a strategic plan called The Case For Capital, which they presented to the Arts Council and government just as the National Lottery came on stream.

"We've been fortunate with the timing of the vision," he says modestly. "Two things just fell into place for us: the lottery, and a local authority in Gateshead which had a vision for a regeneration of the area opposite the Newcastle Quays which had new developments of hotels, bars, restaurants, and apartments but no sites big enough for major arts developments. Gateshead offered a magnificent site quite close to the Baltic for the proposed music centre. Then came the lottery-funded Millennium Bridge, which gave the whole thing credibility by joining the two sides of the river."

There was a lot more to it than good luck however. The area had had grand plans in the 1980s but no money to fulfil them. What Pender & Co did was look ahead, see the political opportunities, seize them with a well thought-out business plan, and bring everyone – funders, planners and politicians – together to make the thing happen. "That's the reason it's all happening up there, rather than in London, where everyone is too busy defending their own patch to think strategically," says one senior arts administrator. "Down there, their idea of a business plan is to say: 'We're the South Bank, give us the money'," he adds scathingly.

The sculptor Antony Gormley is in no doubt. "All the clichés are true," he says. "There is a fantastic energy in the North and a general boldness of spirit, which is very refreshing after the etiolated attitudes of London. And the spirit seems to get stronger the further north you go. Gateshead has a particularly inspired council, with some clever strategic thinkers who saw they could use culture as an instrument of regeneration. And what they have produced in the Baltic, as a place where art is originated not merely conserved, is a radical cultural model. There's nothing else like it in the UK."

The secret, according to Bob Scott, is to think big. He may have come only a respectable third to Sydney in the 2000 Olympic bid, but the shift in thinking has borne fruit elsewhere. "We stopped thinking regional and started thinking international," he says.

And it is just as well. All London has offered is the fiascos of Pickett's Lock and the Wembley Stadium redevelopment, where the same amount of public money – £120m – has been wasted as Manchester has spent on the Sportcity which will become the home of Manchester City FC after the Commonwealth Games and part of a development of the English Institute of Sport. The capital's cock-ups could jeopardise Britain's chances of hosting both the 2005 World Athletics Championships and the 2012 Olympics. "The real significance of the Commonwealth Games is not regional regeneration," says Scott, "but that Britain's credibility hangs in the balance. Any future British Olympic bid will be judged on how well Manchester did."

"Thinking internationally is the only option," says Andrew Dixon, the director Northern Arts in Newcastle. "Which is why all the short-listed candidates for the director's job at the Baltic were international figures, and all the artists at the Sage will be of that stature."

But it is not just big thinking that has made the difference in the Northern revival. "There is an understanding that you have to achieve critical mass," says Felicity Goodey, of the Lowry. "Major buildings drive this kind of revival, but not in isolation." Proof of that is to be found in those places where lottery foundations were one-offs, or ill-sited in an ill-judged attempt to make sure that everyone got a slice of the cake. The Earth Centre in Doncaster has recently had to undergo a revamp to revive its fortunes. The Royal Armouries in Leeds has struggled. And the National Centre for Popular Music in Sheffield has shut down in a chill demonstration of the fact that lottery millions and local ambition are not enough to guarantee success. "Some of the early lottery projects had business plans you could drive a coach and horses through," one senior arts insider says.

Instead, success has come where there are sufficient attractions on one site to draw not just day visitors, but those who come for the weekend and spend in local restaurants, bars, shops and hotels. "We've come to see that attractive public spaces between individual attractions are crucial," says Felicity Goodey, the one-time local television presenter who now also chairs the North West Cultural Consortium.

In all of this Leeds is the dog that has not barked. For a city that is now the financial capital of the North, its cultural life is surprisingly subdued. The former Culture Secretary, David Mellor, noted as much at a recent lunch for the Leeds Civic Trust. "Still no decent concert hall," he lamented.

This is odd. Leeds has plenty of the wheeler-dealer smart guys of the ilk of those who have transformed the centres of Liverpool and Manchester ­ Tom Bloxham, the founder of the punk property development company Urban Splash, is the obvious example. (The North-east tends to lack these types; it is still a more gentlemanly, more Old Labour, more socially structured society). Yet Leeds, for all its financial services and retail-sector success, is artistically muted. It has undertaken no major artistic initiatives since the opening of the West Yorkshire Playhouse 12 years ago and still seems to think regionally rather than internationally.

"Perhaps we're a victim of our own economic success," says Peter Connolly, of Yorkshire Design Group, who has been instrumental in the reviving the city's riverside. "Leeds doesn't have so many acres of derelict city-centre land. It doesn't have the right 'deprived status' to get EU money. It is driven by the private sector, and perhaps the council is too busy keeping up with demand to have time for long-term strategic plans. In a smaller place such as Gateshead perhaps it is easier it is to have strategic influence."

Yet Manchester gives the lie to that, say others who are less loyal Yorkshiremen than Connolly. They say that Leeds doesn't appear to be able to think big enough and lacks a dynamic or charismatic leadership. Its rival across the Pennines has that in Howard Bernstein, a chief executive who combines strategic vision with massive personal energy. It was he who masterminded the rebuilding of Manchester after the 1996 IRA bomb devastated the city centre.

Bernstein is a man who fires on many cylinders. In conversation, he swiftly ranges from the transformation of city-centre warehouses into £2m loft apartments to its continuing significance as a manufacturing centre. He talks about how far more designer labels are represented in Manchester than in Leeds; about the importance of independent shops that give character to high streets of chain stores; how business investment is much more diverse than 10 years ago; about the vital role of Manchester airport, now the country's busiest outside London; and about the edge in applied research of Europe's biggest combined university campus ­ which is about to market itself as a world-class university with the coming merger of Manchester University and UMIST.

Once again, the critical combination of strategic planning and pivotal energetic individuals comes across. Bernstein says: "We've had an overall holistic strategic plan for Manchester for 20 years, dealing with economic and social change. It gives confidence to private-sector investors, as does intelligent entrepreneurial political leadership in the council."

Evidence that this is a reciprocal business is clear from the sense of civic responsibility felt by local firms. The city's biggest property magnate, Mike Oglesby of Bruntwood Estates, is a massive sponsor of enterprises such as the Lowry. And when the National Lottery pulled out of funding the Imperial War Museum North, John Whittaker, chairman of Peel Holdings, the company which owns the megaplex shopping mall the Trafford Centre, plugged the gap with a £12.5m donation,the largest single contribution ever to be made by a private enterprise towards a cultural project in the UK.

"What you see," says Sir Bob Scott, "is a complex intermixture of entrepreneurial spirit that is both individual and corporate." The pay-off of that is evident already on the ground. The £35m of European and government money that is invested in infrastructure at Salford Quays has leveraged in £350m in private investment. The £90m of public money spent on the Lowry has brought in a further £300m in private money to the surroundings and created 5,700 jobs, with more than double that in the pipeline. In Gateshead, private housing, offices, bars and eateries are being built between the Baltic and the Sage Music Centre. In Manchester, the £42m spent on the Bridgewater concert hall, the new home of the Hallé Orchestra, has been matched tenfold by commercial development in the surrounding area. East Manchester is expecting a £600m economic boost with 6,000 permanent jobs created from staging the Commonwealth Games. In Leeds, a £150m private-sector development has been approved in the Armouries waterfront district.

And there is something more. The traditional rivalry of the great Northern cities is being tempered by a new spirit of co-operation. On Tyneside, where Newcastle and Gateshead ­ two conurbations divided by a river that once hardly spoke to each other ­ there is now a realisation that what they don't do together won't get done. Liverpool and Manchester, once rivals who rejoiced in the failures of the other, are working together: the Mancunians are supporting the Merseysiders' Capital of Culture bid; the cities have embarked on a joint advertising campaign on the London Underground and, with other cities, have set up a northern development office in the United States to attract investment.

"There is a real change in the air," says Felicity Goodey. "In last five years, there has been a genuine buzz of excitement ­ and not among the chattering classes but among the ordinary people on the street. There's a new sense of regional pride. Nowadays, you even come across Man United fans who are pleased to see City promoted; a place that's the size of Manchester should have two Premiership teams, they say. It's the same sense of confidence from the days of the Victorian cotton merchants, who knew that they were world-class operators and that there was nothing they could not build or do. It's a genuine renaissance of that best kind of Northern bloody-mindedness."