Dave Hill: If ‘Boris’ won’t help London help the country to recover, he should let London do it itself

Dave Hill: If ‘Boris’ won’t help London help the country to recover, he should let London do it itself

Let’s go through those big numbers again. Greater London generates 23 per cent of the UK’s total economic output and close to one third of its taxes. Those taxes fund the public sector and its services in the rest of the country to the tune of £35-£40 billion per annum. Put another way, every Londoner subsidises fellow citizens in almost every other part of the UK by an average of just over £4,000 a year.

Apart from London, only the south-east and east of England have less public money spent on them than they produce, and the gap is far, far smaller. A politician once remarked that “a pound invested in London can drive jobs and growth around the country,” filling the order books of building suppliers and train part manufacturers up and down the land. “This shows why the government should invest in London’s future for the good of the whole UK,” the politician said.

The politician in question was, of course, Boris Johnson, holding forth just seven years ago, and the figures quoted above are those of the national government he now leads. We know, of course, that Johnson’s definition of the truth is whatever suits his purposes at the time, but if he has now forgotten – or chosen to pretend – that he never expressed such views, then perhaps his Chancellor ought to remind him.

While he’s at it, Rishi Sunak could delicately point out that, like it or not, the UK’s long-standing dependence on London’s economy has become significantly greater since the financial crisis of 2007-8 and then drag the PM’s limited attention span towards a brand new set of government figures covering 2019, which strongly suggest that post-pandemic Brexit Britain will need its capital city even more if it’s to get back on its feet.

Why? The figures show that as well as attracting massively more direct foreign investment than any other part of the UK, the proportion of that investment that came from nations within the European Union was smaller than that of any other UK nation or English region (see Table 4). In other words, London was relatively less reliant on EU member states for direct investment than Scotland, the West or East Midlands and North West and so on.

That implies in turn that London’s economy, though suffering terribly at present, may eventually weather the impacts of Brexit better than the rest of the UK, increasing still further its economic value to the whole nation as once so fervently expounded by Mayor “Boris”.

The implications for government policy of this already-established and possibly further intensifying national need for a powerful London economy are as undeniable as they are politically inconvenient.

Without it, national economic and social recovery will be slower and all of Johnson’s windy blather about “levelling up” the rest of country to match the capital’s transport networks and productivity will turn out to be even more fatuous than it sounds. The task of lifting everywhere else up looks set to become still bigger. And even as things stand, “levelling up” other regions would cost a ton of money. Where would that money have to come from? You guessed.

Given this, you might have thought Johnson and his ministers would have been doing all they can to help London and Londoners to come powering out of the Covid trauma. Instead, as this website has doggedly documented, they have been doing the capital over with theatrical fervour for well over a year in order to gratify their new Brexit-backing electoral base and cement their conquest of the “red wall”.

The devious, vindictive and score-settling appropriation of Transport for London is just the most pathetic and harmful example, making it next to impossible for TfL to plan and pay for crucial infrastructure for this vast national asset of a global city. We’ve seen the Mayor’s planning powers over-ridden, London weighting removed for Higher Education teaching, infrastructure spending “pivoted” elsewhere, tax exemptions for overseas visitors removed because London is deemed their chief beneficiary, access to “levelling up” funding pots rigged to London’s disadvantage, and London local government left with no choice but to, yet again, plan for some of the deepest funding cuts.

Amid the thrown-together tangle of Johnson’s levelling up speech last week were a few threads of realism: an acknowledgement that London does indeed contain a great number of people who struggle to get by and that felling “tall poppies” would be unwise; even a recognition that Britain is ill-served by being an over-centralised. Yet everything Johnson’s administration has done to the capital has lessened its autonomy and weakened its ability to help the UK as a whole regain its strength. If the government isn’t prepared to help London help the country, the least it could do is stop making it harder for London to do the job itself.

Image from BBC.

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Categories: Comment

2 Comments

  1. Kyle Harrison says:

    But surely all what you say is just evidence of the problem, the UK economy is too centred in London. Yes London does produce a lot of tax revenue but only because so many young people have moved to London, London has a lot of well paying jobs etc… But if some economic activity leaves London, as it is now doing, in the form of people moving to other parts of the country (and taking their salaries with them) then other regions will begin to contribute more in terms of tax revenue.

    You can’t level up Britain, without levelling down London. That’s the harsh reality. If you’re going to have more businesses choosing to locate in Birmingham or Manchester, then that’s a business that might have once chose to base itself in London… I don’t understand this weird desire for London to be a constantly growing city, how big must the city be? 15 million? 20 million? Let’s have a balanced economy, let’s have a smaller (but cheaper) London. Let’s make London more liveable for ordinary people (something it has increasingly failed at over the last 20 years).

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