A couple of weeks ago, when coronavirus was still a dot on foreign horizons and no one was expecting the London Mayor and Assembly elections to be postponed (let alone for a year), On London convened a discussion on the theme of the capital’s future relations with the rest of the UK, hosted by Arup at its Fitzroy Street offices. Participants included representatives of leading organisations concerned with property, housing, transport and infrastructure and with interests encompassing both the capital and other parts pf the country, along with senior policy makers and academics.
The conversation, which took place before the recent budget, was chaired by me, On London editor Dave Hill, and also attended by contributor Charles Wright, who has long experience of London governance and politics both as a participant and an analyst and reporter. The event was held under the Chatham House Rule, which means neither the other participants nor their affiliations can be revealed without their blessing, though views expressed can be shared anonymously with others, including On London readers. The following is a summary of the main points that were made:
- The conversation about London and the rest of the country has clearly changed now that the new government is talking about “levelling up”. Calling that government “anti-London” might be an overstatement and the fact that the Prime Minister seems to “get” infrastructure gives grounds for optimism. But there is definitely a need to make the case for London’s economic importance to the whole of the UK more strongly.
- However, we should probably re-think how we articulate that case. Insisting that London is “the greatest city in the world” does not go down too well in Leeds or Manchester, makes it harder to justify maintaining our current share of the spending cake, and does a disservice to the many Londoners struggling to make ends meet. The political challenge is the largest London has faced for 20 years. Heathrow has been effective at making the case that it is a “national airport”, rather than a London one, and is at the heart of the UK economy.
- The “left behind” argument is not new in relation to ex-industrial towns in the North of England. These issues have been around since the coal mines closed in the 1980s. It became apparent then that new employers would invest in regional cities but not the towns nearby.
- Devolution is needed if the problems of those towns are to be addressed, but Whitehall civil servants have historically been reluctant to give away much of their power over much of England – even though they are often not best placed to make many sorts of decisions. A senior official in charge of tax devolution has himself stated that he doesn’t really believe in it. Underinvestment across the UK has been endemic. There’s plenty of money for raising investment levels to the OECD average. The Treasury has historically thought that spending on infrastructure is a largely a zero sum game and has tended to favour revenue expenditure because it plays well with voters.
- London competes with New York and Tokyo, rather than other UK cities – imagine not just the UK but the whole continent of Europe without a truly global city. Damaging London isn’t going to help anyone because we need to keep generating money for the rest of the country. You don’t make the Welsh football team better by damaging Gareth Bale.
- It is important to be clear what is meant by devolution. You have to distinguish fiscal transfer from real fiscal power. Mayors in the United States are aghast at how things work here, with money taken from localities into the centre and then given back. What passes for a devolution debate at the moment talks about devolution of pots of money, not real powers to raise taxes and over education, skills and local transport planning. Yes, investment in new trains is needed, but what is vital is to give cities the tools, the power, the authority to do what is needed in their areas.
- Businesses can play a major part in “levelling up”. In Northern Ireland, public spending comprises 75 per cent of its GDP. The public sector is too large. In London, public spending is only 29 per cent of GDP. We need to understand the need for the private sector to be allowed to flourish. There is potential for more build to rent homes catering for graduates in cities in Manchester, Leeds and others in the North of England. The jobs are there but not the homes.
- “Levelling up” should mean focussing on cities, the productivity problems of the regional ones and a major reform of the planning system with a view to boosting housebuilding in London. The relationship between London and other cities should be about co-existence and mutual support. Just as London’s productivity supports the rest of the UK, boosting productivity in the North can benefit London. There is a lot of consensus among big city Mayors about what needs to be done. When they address common realities a lot of the party politics disappear.
- It should be remembered that London too has been through hard times quite recently, with post-war depopulation and government tax policy restricting office development, resulting in “hollowing out”. The problem now is that, politically, there’s not much in it for the Tories to do anything about London. The money that’s available will be going to the “red wall” areas. In reality, though, there is enough money to invest everywhere in all the things that are needed. Yet it has become more difficult to get money into London, which is formally excluded from pretty much all new funding streams. The government doesn’t want to be seen to be spending money in the capital.
- Education systems and their performance are one of the clearest examples of a genuinely “north-south divide”. There is clear evidence that migration has driven up school standards in London. Yet it looks as if London and the south east will derive more benefit from post-Brexit immigration rules than the Midlands or the North, which will lose out. And one of the best things to bring about “levelling up” between regions would be to facilitate population growth in those areas.
- The new, post-election political climate might undermine the case for devolution, because the government will want to be seen to be rewarding towns where there are new Tory MPs. The current debate is partly pitting all cities against towns and the countryside, including with media descriptions of Manchester as “too successful”.
- There was a debate about the Treasury’s “Green Book” criteria for assessing the value of projects requiring public investment. A platform upgrade for Manchester Piccadilly station was described as “essential” for the city, but as failing to pass the Green Book test. It was argued that, even so, a more general pursuit of strategic objectives is also part of Green Book appraisals and that political decisions are a larger problem. There was agreement that devolution could help break this logjam and meet pent up infrastructure demand. For example, if Manchester had its own money and sufficient powers it would have its own Green Book and wouldn’t have to wait for Whitehall to let it do what it knows should be done. And in a very centralised system everyone has to fight for cash. But Chicago does not have to compete with New York in order to invest in Chicago.
- There was strong agreement on the need to push back against sloppy comparisons between London and elsewhere in the UK, such as analyses suggesting London gets preferential treatment in terms of transport spending and media depictions of London as “emptying out” or as a place of nothing but glass towers gleaming in the sun, which mean people elsewhere in the country don’t know there is significant poverty and disadvantage. It was observed that most businesses in the North see London not as an enemy but as a good thing for them.
On London is hugely grateful to Arup for hosting this event and to all those who took part. If and when normality overcomes COVID-19, further gatherings of this type to discuss major London issues will be convened.
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