Barrow in Furness, the town that went from boom to bust

Dangling into the Irish Sea from the tip of the Furness Peninsula, it was the arrival of the railways that transformed Barrow into one of the world's industrial powerhouses. Huge steelworks and thriving shipbuilding yards turned the Cumbrian seaport from a sleepy collection of farmsteads into a Victorian boom town.

Its population reached a peak in 1951 but since then numbers have been slowly declining. In yesterday's census results Barrow recorded the largest fall in residents of any local authority in England and Wales.

The number of people living there dropped by 3,000 – down 4 per cent since 2001 to 69,100. The decline stems from sharp cuts in defence spending following the end of the Cold War which hit the region's submarine-building industry hard.

But yesterday locals said Barrow was beginning to turn a corner. In recent years people may have been forced to move away in search of work, but there are now signs of industrial optimism and growth.

"We have had concerns about our young people leaving and not returning. And we have been trying to get the right jobs to attract them back to the area," said the Labour council leader Dave Pidduck. "But the industrial position looks pretty stable."

Many of the jobs in Barrow are now highly skilled. Work is continuing on the Astute-class nuclear submarine and the town will be the base for the construction of the "Successor class" – part of a £328m contract recently awarded by the Ministry of Defence to BAE Systems. There is also considerable offshore wind energy development and the Government wants to build a new nuclear power plant at Sellafield despite the decision to close the Thorp reprocessing facility.

Other parts of the North-west – which as a region reversed previous declines to record a 4 per cent rise – were hit by population flight, the census showed.

Despite declines in some parts of Merseyside, Liverpool reported population growth over the past decade of 5.5 per cent while Manchester registered an increase of nearly a fifth, taking the number of residents to more than 500,000 – the fastest growth since records began.

The North-east and the North-west were the only two regions not to experience population increases since 1981, with both seeing slight falls up until 2001. Eden in Cumbria in the North-west has the lowest population density with just 25 people per sq km.