MANCHESTER, wrote Benjamin Disraeli in 1844, “is the most wonderful city of modern times”. Mancunians, known for many virtues but not for their modesty, are not shy to repeat it. But they do have a point. Manchester was arguably the first true modern city. Whereas Bristol was built on the slave trade, and Birmingham on the industry of a thousand tiny workshops, Manchester was a city of enormous factories, supplying cotton to the world. Its ruthlessly competitive entrepreneurial culture became the model of Victorian industrial capitalism.

Of that era, only redbrick warehouses and railway viaducts remain. Yet Manchester is once again setting the trend. Thanks to strikingly effective civic leadership and brash determination, the city has developed an economic and political system which seems to work. It is increasingly being copied. Given a chance, it could become a model for how to cut back Britain’s overweening state and give power to its long-neglected cities.

The world’s first industrial city was also at the front of the line when deindustrialisation swept Britain. During the 1920s and 1930s, it struggled to diversify out of textiles. By the 1960s, Jane Jacobs, an influential American writer, described it as “the very symbol of a city in long and unremitting decline”. Even today, parts of the city remain a wasteland of derelict mills and warehouses. But whereas previous recessions hit Manchester much harder than the rest of Britain, the latest downturn has been deeper in smaller cities. Manchester has weathered the slump relatively well.

A long-term recovery began in the 1980s, thanks to pop music and football, says Dave Haslam, a Manchester-based journalist. A wave of bands such as New Order and The Smiths hit the music scene. The Haçienda, a nightclub sponsored by Factory Records, an iconic Manchester label, became world famous. Meanwhile, Manchester United Football Club started to attract high-spending tourists rather than the tanked-up away fans who would smash up Piccadilly Station on their way home from the game, says Mr Haslam.

An enormous expansion in the city’s student population also helped, especially after 2004, when the two big universities merged. Students provide ready customers for nightlife. In once rundown places such as the Northern Quarter, there are now chic eateries and bars. Many old warehouses have become flats or nightclubs. Between 1991 and 2011 the city centre’s population increased from a few hundred to over 17,000.

More prosaically, “it’s an ideal location for a second office”, says Jon Neale, of Jones Lang LaSalle, a property consultancy. The city’s airport, which added a second runway in 2001, handles 20m passengers per year—Britain’s third busiest. Most recently, the government has invested £540m in the Northern Hub, a series of railway improvements which aim to turn Manchester into a transport centre for the region. All of that contributes to the sense that the city is to become a sort of second London for northern England.

Yet Manchester’s greatest strength in recent years has been in its civic leadership. Whereas many British cities such as Sheffield and Liverpool embraced militant left-wing ideas in the 1980s, Manchester pitched for business. “We were Blairite before Blair”, says Sir Howard Bernstein, the city council’s chief executive. In the 1990s, the city expanded its airport, built a new arena, a velodrome, a stadium, and a new tram system—the Manchester Metrolink. Even a tragedy—the IRA bombing of 1996—was used to further reconstruction. Boldly, the city bid twice to host the Olympics: it eventually settled for the 2002 Commonwealth games.

Since then, the city’s leaders—Sir Howard and Sir Richard Leese, the Labour council leader—have transformed the city’s governance, by bringing on board neighbouring local authorities to agree a strategy for Greater Manchester. In 2009, the city’s leaders created a single transport infrastructure fund, worth around £1.5bn, which is paying for a big expansion of the Metrolink. In 2011, this was followed by the creation of the Greater Manchester Combined Authority, which has taken over control of transport and planning policy for the whole city. Everything is intended to boost growth: for example, unlike in London, there are few restrictions on tall buildings, which helped to spawn a series of skyscrapers.

Now that the British economy appears to be recovering, Manchester is poised to benefit. In a deal with the government agreed last year, some of the tax proceeds of economic growth will be rebated back to fund infrastructure investment. The city’s leaders would like more powers still. Sir Howard points out that since the recession, council spending has been slashed, but welfare and health spending in the city—which are set by central government—have soared. A dose of local control over welfare would get more people into work and so cut the bill, he reckons.

That is an agenda that the coalition government ought to back. Whitehall departments do not like to give up money or control—but Manchester’s success shows that local government can work better than central government. Other British cities are learning from its model. Liverpool and Sheffield are both establishing combined authorities—others are mooted. Birmingham is copying Manchester’s centralised transport budget and its planning policies. If Manchester can win the argument for greater independence, then, eventually, freedom for other big British cities could well follow.