London is the lodestar of the UK economy – but it has an image problem
According to a newly released report, it’s time for London to shed its uncaring image and show the rest of the UK a little love. The Centre for London’s London, UK: Strengthening ties between capital and country, is a timely reminder that the city is not only a global hub, but the lodestar of the British economy.
Given how vital London’s success is to the nation’s economic health, it’s a bit dispiriting that perceptions about the capital can be so negative. Anyone familiar with British culture will not be surprised that Londoners have an image problem, with “arrogant” and “insular” among the most popular descriptions in polling of non-Londoners.
Perhaps more surprisingly given how cosmopolitan the city is, Londoners tend to be less socially liberal than the rest of the country, a fact the researchers put down to the higher levels of religiosity in the city compared to other parts of the UK.
The idea of a city of untrammelled wealth is also well wide of the mark. For though there are undoubtedly a lot of rich people, London also has the highest child poverty rates in the country and Londoners have less disposable income than the national average once housing costs are taken into account.
On the plus side, people all over the UK do seem aware of how important the capital is to the economy. Some 77 per cent say the city contributes “a lot” or a “fair amount” to the British economy. There appears to be little truck for the idea that weakening the UK’s prime asset will somehow make the rest of the country better off. As a respondent from the Glasgow Chamber of Commerce puts it pithily: “What would life be like if London didn’t exist? Would we all be ten times bigger? Or would the UK just be a lot smaller?”
It’s curious, though, that only 16 per cent of the same respondents said they thought London had a positive impact on their own local area. That finding may tally with a perception that though it may be a driver of economic growth, London is also getting more than its fair share of resources. Another illuminating finding was that for more than one in five outside the capital, London is not just a city, but a byword for Westminster, with all the negative connotations that surround it.
The idea that London gets more than it deserves, while popular, is somewhat unfair, given that Londoners contribute more than £32bn a year more in tax than they take in public spending. The figures are also skewed by the fact that providing services in London and the south-east is considerably more expensive than in other parts of the country. Far from being a vacuum for public money, London is the golden goose, generating cash that is vital for the rest of the country.Of course, the idea of London as a vortex is not helped by the presence of shiny, big ticket infrastructure projects such as the Millennium Dome, the Olympic Park and, when it eventually opens, Crossrail.
The report’s author, Jack Brown, has a few suggestions for how to foster more cohesion between capital and country. One idea is a “London is Yours” campaign, aimed at spreading love for the capital beyond the M25. Another is intercity exchanges, so school kids from different parts of the country can interact with each other and forge a sense of common identity. He also suggests job swaps for civil servants and London museums sharing cultural wealth by loaning out exhibits around the country.
Interestingly, there wasn’t much interest in another oft-raised proposal — moving institutions out of London to spread jobs around the country. Even when given the option of ten different institutions to move away from the capital, some 40 per cent of those surveyed ticked “None of these – I don’t think moving anything out of London would make the UK fairer”.
Another point that shines through Brown’s work is the extent of over-centralisation in Britain, a phenomenon which affects London just as much as the rest of the country. The city may have had a mayor for some time, but his discretion over spending remains remarkably limited. As we have pointed out before on CapX, only about five per cent of tax revenue in the UK is raised at a local level, perpetuating the sense that the regions are at the mercy of Whitehall bureaucrats.
Instead of talking endlessly about taxing and redistributing money to benighted parts of the UK, we ought to be talking much more seriously about redistributing power, especially the power for local areas to set their own tax rates and be held accountable for the revenue they spend. There is little point in taking back control from an impersonal centralised bureaucracy in Brussels if they are simply going to be handed to an impersonal centralised bureaucracy in London.
Happily, as the Centre for London point out, the beginnings of this kind of work are already happening. The election of new combined authority mayors in 2016 was a start on the road to greater regional self-determination. Brown also points out that London businesses and cultural institutions are already working well with other parts of the UK. That this is happening organically should also be celebrated — as Brown rightly says “rebalancing is too important to be left to Whitehall and Westminster alone”.
This kind of cooperation, along with the new network of regional mayors will hopefully also be the first step on the road to improving economic performance outside London and the south-east, where productivity was 50 per cent higher than in the rest of the UK between 2006 and 2016.
The model for post-Brexit Britain, then, should be one of
