The good city centre guide 1: NEWCASTLE : Extraordinary homes for ordin ary folk

Dead and decaying? Decidedly not. Newcastle is awash with lovely listed buildings, and in an ambitious scheme of urban renewal, hoi polloi can enter t he usual domain of the privileged. Peter Dormer reports It radiates energy, and not just from late-night dancing in the streets The homes have views normally associated with France or Italy

The English make the mistake of associating cities with trouble rather than civilisation. Newcastle, for those whose knowledge of this great Northumbrian city is culled from films such as Get Carter, and television series such as Spender, spells v iolence and urban decay. Newcastle is, in fact, in particularly good shape, an advertisement for the virtues of city living. But it also has a problem that exposes a weakness in our national culture and explains why it is so hard for our cities to be as likeable as they might be.

This is the problem: Newcastle's centre is filled with magnificent Grade I and Grade II listed buildings, mostly neo-Classical and very beautiful, yet many are empty, or only partially used. We do not seem to know what to do with them, or, put another way, we have forgotten how to occupy and profit from our city centres, even one as magnificent as this.

A more confident era than ours would flatten them, because they are uneconomic, and build afresh. That was, after all, what happened in Newcastle in the early 19th century, when Richard Grainger (1797-1861), a brilliant entrepreneur and builder, redeveloped the entire city centre. He built shops, offices, workshops and a shopping mall. He made Newcastle one of the finest Classical cities in Europe.

Why not adopt the Grainger approach today? Newcastle is not famous for its caution; in the Seventies it built itself an integrated railway, subway and road transport system; in the Eighties it coped successfully with a radical change in its manufacturingindustry, creating thousands of jobs, building riverside business parks and promoting tertiary education as an industry - today, one in seven of Newcastle's population of 280,000 is a student.

Newcastle radiates energy, and not just from late-night dancing in the streets, but from its very location. Piled high on the steep northern slope of the Tyne valley, the city is a landscape of dramatic levels woven together by six high bridges across the broad river and by a warren of steep roads and flights of steps along the valley contours. A medieval town with Roman roots, Newcastle was transformed by Georgian and Victorian commercial energy which has been modified, but never destroyed, by 20th-century engineering - civil or social.

After Grainger came the railway, bringing with it a grand Roman station and daring engineering; as Nikolaus Pevsner wrote in his peerless guide to Northumbria, Robert Stephenson's High Level bridge "brought out the precipitous character of riverside Newcastle". Yet the men who built the railways were a ruthless lot and, in Newcastle, their tracks slice through the grounds of the medieval castle, separating the keep from the Black Gate.

Today, we are far too concerned about "heritage" to be so reckless, yet a "heritage" city implies one that has been pensioned off as a tourist ghetto and the collapse of an energetic civic culture into a form of sentimental entertainment.

Yet what does a city like Newcastle do with an inheritance of exquisite, empty buildings? In the Seventies there was little doubt. Shopping Centres, by RI Northen and M Haskoll, published in 1977, says: "In times of economic growth, there is rarely any real commercial advantage in retaining existing buildings, for they will invariably place some severe limitation on the planning of the buildings behind." This was the text Newcastle's planners adopted 25 years ago when Eldon Square was demolished and with it 40 listed, lovely buildings. In its place rose a shopping mall, almost wilfully ugly, yet extraordinarily successful - attracting 33 million shoppers a year, it is truly the heart of the city.

Around this heart, vital organs decay and fail. Grainger would have faced little difficulty, had it made commercial sense, in knocking down what he had built to start afresh. We, however, do not trust our architects or planners. They might be pretty goodat designing one-off railway stations and airport terminals, but would we trust them with a whole city centre?

In any case, the appearance of the city centre Grainger built has a value aside and apart from its lettable value: it is a symbol of the quality of life to be found in Newcastle and a part of the sales pitch with which the city approaches foreign investors. It works; in the past five years, 47 US companies, 34 Japanese, 26 European and 24 Scandinavian have set up business here.

Ironically, the pitching to foreign nationals of Newcastle's Classical heritage has accelerated the decline of the city Grainger built; a report published four years ago found 76 per cent of the 244 surviving Grainger buildings were at risk. The situation is little changed. Those in the commercially unfashionable west of the city decline through low rents and low capital value, while those in the east are being bullied into gradual submission by the sheer demand for corporate space.

In 1993, however, a partnership was set up between Newcastle City Council, English Heritage and local business. Former workshops and offices are gradually being turned into handsome flats; ordinary people on ordinary wages are being encouraged - and are able - to live in a centre that emanates civic pride, a novel concept in contemporary Britain.

Working with housing associations and using an arcane package of grants and subsidies, a six-year progamme of conversion of redundant commercial space into homes is under way. As the programme unfolds, more and more listed buildings will be fed into thistruly civilised process of urban renewal. Those who choose to live in Grainger's Newcastle will enjoy high ceilings, superbly proportioned rooms, an architecture that is usually the domain of the privileged, and the kind of views normally associated with Italy or France.

No car-parking spaces will be provided with these flats as Newcastle is trying to wean itself from over-dependence on the car.

Barratt, the Newcastle-based housebuilder, has done its bit with an absurd executive neo-Georgian estate (289 homes and berths for 130 yachts) a couple of miles from the city centre. St Peter's Basin is sited next to a junkyard. Such idiocy reminds us ofa great flaw of the heritage business: we cannot design for the future, but when we try to design in the styles of the past we are incapable of reproducing the grace and proportions of the Georgian architecture we claim to cherish.

Modern architecture in Newcastle is rarely inspiring, not least because it has been wholly unable to create true urban centres. At its best, it is highly individual (the Byker Wall housing designed by Ralph Erskine, for example); at its most populist it is highly stylised (the Civic Centre, with its crown of bronze seahorses, designed under the direction of George Kenyon); at its worst - the Court House on the Tyne quayside - merely lumpen. The city has yet to match the practical elegance of Grainger.

What Newcastle has done in recent years is to show other cities its determination to provide people with the means and reason to live in the centre of the city. In doing so, it will save its centre from becoming just another slice of "heritage". And there will be even more dancing in the streets.