Devolution is the key to boosting economic performance across the country and tackling “London-centrism”. That was the clear message as thank tank Centre for London this week launched its London, UK report on the increasingly fraught relationship between the capital and the rest of the country.
“London’s economy is crucial to the rest of the UK,” the report concludes, boosting jobs and investment across the regions and nations and, by running a “fiscal surplus”, effectively subsidising them to the tune of £32.6 billion in 2016/17.
But the capital’s dominance is also perceived as fuelling division, with London, eight times the size of the UK’s second largest city, Birmingham, seen as too powerful a magnet, getting more than its “fair share” of resources, sucking in investment and talent and making life harder for other areas.
While survey findings show 77 per cent of non-Londoners agreeing that London contributes a lot or a fair amount to the UK economy, just 16 per cent recognise any significant benefit in their local area. Meanwhile, the polarised Brexit debate has highlighted differences and sometimes misconceptions – London’s households are poorer on average than the rest of the UK after housing costs – alongside a media conflation of “London” and “Westminster”.
“Hyper-centralisation” is the key problem, said Professor Tony Travers, director of the London School of Economics London research team, speaking at the report launch. “The persistent perception at the core of government that politicians at sub-national level could not be trusted to govern their areas properly.”
The devolution call was supported by Yorkshire MP Caroline Flint, co-chair of the Northern Powerhouse All Party Parliamentary Group. “The big issue is about how we devolve power and decision-making and funding,” she said. Successive governments had failed to address regional inequalities, said Henri Murison, director of the Northern Powerhouse Partnership. “We need powerful city regions. If you are closer you make better policy.”
And City Hall policy chief Nick Bowes reiterated London Mayor Sadiq Khan’s devolution call. “People’s views of Westminster are twisting their view of London,” he said. “But it’s a common cause. People in Bermondsey are as remote from Westminster as people from Barnsley. City Hall is three stops from Westminster but sometimes it feels like 300 miles. How are going to break the logjam?”
The report, written by On London contributor Jack Brown, calls both for London’s leaders to continue to make the case for further devolution, and for central government to appoint a cabinet minister to reboot the policy. “The UK must see more power devolved to a local level, with decisions taken as close to those who they affect as possible, in London and across the country,” it says. “This would not only enable the UK’s distinct localities to better shape policy to suit their own particular needs and specialisms, but will also help to reduce the sense that regions are competing for one ‘pot’ of funding, and lessen the impact of the perception that national government has a ‘London-centric’ mindset.”
The report also underlines the need for continued investment, particularly in transport. The government’s current “lock-step” commitment both to London’s Crossrail 2 and to Northern Powerhouse Rail is vital, it says. “Neither regional growth nor infrastructure investment across the country need be a ‘zero-sum game’. Growth in London does not need to come at the expense of other parts of the country.”
Leaving the EU heightens the urgency, with forecasts predicting regional economic divides getting worse, and Leave-voting regions expected to be worst off. Murison concluded: “We have to change now as there is no other option. Post-Brexit, the idea that the country can live on London’s credit card any longer is not sustainable.”