One of the oddest statements made by a Lib Dem in 2013 was surely Vince Cable saying that London was “draining the life out of the rest of the country”’.
Odd not just because Vince is MP for a London constituency but because he was so clearly wrong – far from draining the life out of the rest of the UK, London is a huge contributor. The most obvious way is financially: London subsidises other parts of the UK which would have higher taxes or less public spending without the benefits of the London dividend.
This subsidy is in large part through the huge amounts of income tax paid by London residents, and partly by taxes like stamp duty: 40% of all stamp duty is paid by London. If we succeed in introducing the mansion tax it will fall almost exclusively on London.
London, along with New York, Tokyo, Shanghai and Paris is one of the few World Cities which combine economic strength in depth with an attractive lifestyle, stable government and good travel links. Across a whole range of industries — fashion, the arts, legal services, tourism, financial services, media, consulting and increasingly the digital economy — London is a world leader, and being a world leader enables its residents to pay huge taxes. It will be leading the growth the country needs into the next election.
Apart from being wrong there are two problems with comments like this from Vince (and of course he is not the only person to say such things). The first is that it ignores the many problems that London, despite its economic success, still has, such as the very high levels of poverty which urgently need attention.
The second is that as business secretary, Vince should be doing his best to strengthen the London economy – reinforcing success so that London can provide more help to the rest of the UK.
That doesn’t mean that the Coalition Government should not be helping the rest of the UK — of course they should (and are). Prosperity is not a zero sum game in which if London wins somewhere else in the UK loses.
But the choice for a firm like Survey Monkey who recently announced they were creating 60 jobs in London is not between London and Hull – it’s between London, Dublin, Frankfurt and Singapore.
Vince should be focusing on how we can replicate the economic success of London elsewhere. London is a liberal (small ‘l’, alas) city, multicultural, multilingual and bursting with entrepreneurial energy. What lessons can the rest of the UK learn from the success of London and what do Liberal Democrats in Government need to do to ensure that the UK’s great asset continue to generate wealth and taxes to the benefit of the whole country?
* Simon McGrath is a councillor in Wimbledon and a member of the board of Liberal Reform.
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47 Comments
Simon, might I suggest Fred Harrison’s “Ricardo’s Law: House Prices and the Great Tax Clawback Scam”. It shows, IMO quite well, how in spite of the tax contribution of London, eventually most of that wealth returns to London in the form of higher, and untaxed, asset prices concentrated in London and the South East.
Of course if Vince had been read it, he would be able to promote the solution, as a vice-president of ALTER especially! 🙂
This bloke clearly doesn’t have a clue what Vince was talking about. Does he honestly believe someone as knowledgeable as Vince wouldn’t be aware that London contributes more per capita in tax? That a great deal of the stamp duty paid in the UK is from London. I doubt Vince is unaware of such basic stuff. It’s obvious to anyone with half a brain that he was talking about something else. The brain drain from the rest of the country. There is a total lack of high skilled private sector jobs in the provinces. The reasons for this are complex. It means many of the most able who could drive the economy in the regions forward, end up in London.
Our economy is dominated by financial values and the financial centre is obviously London. London takes the most able talent in the same way the top football teams do. It’s perfectly obvious that the smaller teams suffer as a result and are less competitive. This skills element needs to be admitted. We here again and again how London is a global city dependent on global talent. Well much of that talent comes from the rest of the UK. I think an acknowledgement of what that leaves behind in the rest of the country would be helpful.
Oh, yawn, another “London is great for the UK” article from someone who doesn’t understand economics.
The fact is the rest of the country cannot compete with London’s vastly better city-level, national level, and international level infrastructure. Because of this, business, finance and capital all tend to flow out of the rest of the country and towards London. London contains 10% of the UK’s population but draws in substantially more than 10% of the UKs activity.
When a company, let’s say a supermarket chain called “Sesco”, bases its headquarters and all of its higher management and finance staff in London, it means that the turnover and sales taken in in the 90% of the country that isn’t London flows towards London to pay the higher management salaries of the staff at HQ. On top of that, the higher land and rental costs in London mean that profit made in stores outside London has to be taken to London to finance those extra costs. Also, the pensions, assets, and other capital that the chain owns are based and managed in London, and all the knock-on benefits of this accrue to London, not to the 95% of the country that provides the 90% of the retail cash-flow into Sesco.
^ “90% of the country that provides the 90% of the retail cash-flow into Sesco.”
Yes London represents a brain drain for the rest of the country. But the solution to that is not for London to do worse, but for the rest of the country to do better.
The Manchester/Leeds/Sheffield triangle, given decent transport links between the three (of which the Northern Hub is a start), could become a real engine of the north, draining some brain back.
96% of public arts funding is spent in London. London does not provide 96% of tax receipts.
Over 90% of of public spending infrastructure spending is spent in London and the south-east. Even with the rest of the south-east, the region does not pay that much in tax.
The Olympics,
London is subsidising the rest of the country? Sorry, you’re having a laugh.
I suggest Mr McGrath comes up north for a while – he might see things a bit differently.
Some of the answers of course lie in regional policy. Pity the coalition government abolished most of the already inadequate regional policies that were in place when it took over, and is slowly having to struggle to get it going again.
It doesn’t help when one key department (CLG) is proud to say is doesn’t believe in regions.
Tony Greaves
Parliament needs to move out of London and I think it would be better for Londoners too. With the Palace of Westminster sinking now is a perfect time to do it.
Simon McGrath is Chair of Merton Lib Dems.
Whilst there have always been some strikingly good people amongst Merton Liberal Democrats and there have been some very good local councillors elected in a couple of wards over the last 50 years, I don’t think even their present chair, writing in a personal capacity, would claim the prize for the most successful exponent of Liberal philosophy or electoral success in London.
I do not agree with everything that Vince Cable has said and done but his record of political success is Premier League stuff. On the evidence of his piece in LDV today Merton’s LibDem chair is still struggling to achieve a place in the Isthmian League.
Well, to quote the Daily Mail, “The top 1% of earners will pay … almost 30% of all income tax in 2013-14. Up from just 20% a decade ago as richest shoulder more of the burden”. I love that “shoulder the burden” touch. Of course, the rich also earn and keep an appallingly disproportionate share of the national income, even more than they pay in tax, and much more than they did ten years ago. “Shouldering the burden” indeed!
http://www.dailymail.co.uk/news/article-2451686/Top-1-earners-pay-THIRD-income-tax-year.html
And it’s the same with London. Yes, London pays a lot of tax. That’s because London drains out of the UK economy a great deal more in financial revenues – thanks Mboy and others for detailing just how many ways it does that. The centre thrives, massively, at the expense of the periphery. Tax redistribution is nowhere near effective enough to compensate. Salmond could yet win his gamble by hammering home that truth.
There are a lot of voters outside London. Most of our target seats are outside London. Nobody else seems to be very keen to promote regional policy. Er, might I have found a policy line that could genuinely restore the popularity of the Lib Dems? I fear the answer is “Yes in theory, but of course the decisive voices all spend most of their time in the Westminster bubble, so they won’t go for it”.
@Joe Otten
Exactly right. Alas, transport infrastructure spending is directed overwhelmingly towards London. A case in point: try driving between Manchester and Sheffield – it’s an absolute joke. Northern Hub will at least make some small improvements to public transport, but it’s a tiny investment compared to say Crossrail.
” Of course, the rich also earn and keep an appallingly disproportionate share of the national income, even more than they pay in tax”
Disproportionate to whom?
Depends whether you see taxation as enabling essential services, or a device to act as a social equaliser…
I am for the former, and recognise that all deciles pay pretty much 30% of income according to the ONS, which in the case of the very rich is far in excess of any gov;t services they will use.
I find myself in the unaccustomed position of agreeing with Simon McGrath, at least in that London’s growth is not a zero sum game with the rest of the country, and that the capital’s small ‘l’ liberal attitudes do indeed help its economy; anywhere with a more ‘drawbridge up’ attitude will do worse.
But on regional policy I think the government is slowly and possibly accidentally groping its way to quite a good approach.
The old regions were not natural economic units, they were too large and artificial. For example, urban south Essex, where I grew up, has nothing whatever in common with rural Norfolk yet they were lumped in the same region. Nor did these regions command public support. Even the north east, relatively geographically coherent, voted against a regional assembly when asked.
But we are now seeing governance units evolving based on city regions, which are more natural economic areas. The gathering pace of cuts makes the survival of England’s two tier local government system questionable where it still exists, and in some places councils are coming together of their own volition in everything short of actual merger.
Its not such a big step from these developments to thinking that England might get devolution of powers to city regions and/or travel-to-work areas before long and that local economies should benefit from this.
I think people are misunderstanding Simon’s article. All he is saying is that London is an asset to the UK, and we shouldn’t be seeking to rein in London in order to improve the rest of the country.
Joe Otten
So glad you said it. I would disagree that the particular triangle would be the one I would choose I would probably have two northern infrastructure hubs split on either side of the Peak district Sheffield/Leeds based on the east and Liverpool Manchester on the west both taking in all the nearby centres. Those should give you sufficient critical mass.
Eddie Sammon
I agree with relocating Parliament out (my preference would be to Manchester) but why stop there. The legal system could do with relocating lots out the Supreme Court, the majority of the Court of Appeal and High Court activity could be focused elsewhere (how about Liverpool).
You can have an ‘attractive lifestyle’ if you live in London, New York, and Tokyo? Maybe if you’re mega rich. Not if you earn the average wage.
I agree with Simon and others that if the rest of the UK is to become as productive as London it will not be because London becomes less economically successful but because other regions will emulate its success.
I think the slightly separate issue about public institutions being so heavily London-based is interesting. As mentioned above there is certainly no reason why the Supreme Court, for example, should not sit in Manchester (say). My experience is that the BBC relocation to Salford has been successful in regenerating that area, and it’s a model other parts of the public sector should copy.
@ Will Mann
You don’t think someone on the average wage can enjoy a good lifestyle in London on an average wage? I was there for a year as a student and lived very happily indeed on the equivalent of the average wage.
“Opinion: Vince is wrong about London” – If he is, he is hardly in a minority here is he Simon?
Some excellent posts from fellow Liberal Democrats who apparently believe that wealth and power should not be concentrated in the hands of the few living mainly in the capital! Genuinely heart warming stuff.
I for one would build ‘HS2.1’ from Liverpool to Hull and link up the major towns and cities along the way. As it stands HS2 will only perpetuate the dominance of the greater London area and increase the size and impact of its power and property bubble. Needle anyone?
Nick Thornsby informs us :
“I was there for a year as a student and lived very happily indeed on the equivalent of the average wage.”
Seriously Nick?. Can you not see, how much out of touch that statement is? There are people trying to bring up a family on half of an average wage. But let’s recap on your statement. Nick Thornsby managed to struggle along, in London, for a year, on an allowance equal to an average wage. How off world, is that statement?
It’s becoming more and more clear that Liberalism is morphing into a young privileged Metro Liberalism, that simply doesn’t get that there are people struggling outside the economic gated community of London and the South East. It’s just a pity you people can’t float off London and the SE into space, and call it Elysium, where you wouldn’t have to deal with those grubby poor people and the inconvenience of disgruntled voters.
@ John Dunn
Will did not say that a family could not live comfortably in London on an average wage – he said nobody can. I think, from personal experience, that that is incorrect
It’s important to note that the average wage is not the same as the lowest wage. I don’t doubt that the minimum wage is inadequate to live comfortably in London even as a single person without dependents.
That is why I would like to see a genuinely liberal response to the low-pay problem, as set out here: http://www.liberalreform.org.uk/coalition-and-beyond/a-new-deal-for-poor-workers/
@Nick Thornsby You could live reasonably comfortably in London on the average wage – if you are renting a room or small flat and have no family responsibilities. But most people expect to start a family and buy a house. In London, that is patently unaffordable at present, as the average house costs 15-20 times the average wage.
PS I understand the difference between the minimum wage and the average wage.
Let’s get onto rebalancing national institutions away from London (but not gutting it), it’s a thoroughly liberal cause and might even make houses and rent more affordable!
I agree to not wanting to bash London or exploit it as a tax cow too much.
Regarding what can the rest of the country do to learn from London? So far I fail to see past all the national institutions, plus being home of possibly the global language (in my opinion the strongest reason for being in the centre of the EU).
Just because London is a huge contributor to the economy doesn’t mean that it’s not simultaneously draining the economic and cultural life out of the regions. You don’t need to wish London raised to the ground to recognise that this country is far too centralised for anywhere’s good. I think the country would benefit hugely from moving things out of the capital – including parliament. London would survive, and it might even take a little of the pressure off property prices / rents. But the gains to the regions would be fantastic.
Simon asks “What lessons can the rest of the UK learn from the success of London?” I’d say the most obvious is that an overwhelming concentration of political, economic, media and cultural power is pretty much a guarantee of success when competing with almost anywhere else in the UK. Those cities that have come closest to achieving something similar – Bristol? Manchester? Edinburgh and Glasgow? – have used combinations of these factors to make their cities competitive and attractive.
London would survive – and continue to prosper – without many of the functions it currently has (look at New York, for example). But the rest of the country would gain massively if London didn’t suck so much talent, money, labour and creative energy out of so many other places.
What’s more, many of those things could be improved if they were done elsewhere: if political power was located outside London we’d be bound to see a less London and Southeast-centric politics. In the long run everyone would gain.
The disapproval of Simon McGrath can only enhance Vince’s reputation as an authentic voice of Liberal Democrats.
I think there is an obsession with the public sector in this debate. Only 20% of us work in the public sector. What is going to rebalance the UK towards the regions is getting the *private* sector to expand outside London.
The big problem with our regional cities is that unlike Germany, for example, they are not the home of prospering, growing, high-paying, export-driven companies.
Simply shoving more public sector jobs into these regions unthinkingly will just compound their dependence on the public sector. This is what Labour did, papering over the cracks of its failure to deal with the underpinnings of growth, that is skill and education levels and infrastructure. The results of that strategy are plain for all to see.
If we can rebuild the private sector in the UK regions, with specific, targeted support for the underpinning conditions for success, it will do far more good than plonking down some token public institutions in places that have no particular geographical relevance to their function.
Furthermore, I think the devolution debate within the English regions is going to develop further beyond Labour’s failed initiatives in the past. Devolving from Westminster will be a far more effective way of tackling over-concentration of power than simply moving the UK parliament to some arbitrary location hundreds of miles away from the most populous area of the UK. How much cost and disruption would that cause? Loads, I bet.
As a Londoner, I am fed up with people using the debate over regional imbalances as a stick to beat London with. Of course we attract talented individuals. London is a world class city that attracts talent from across the world, not just the UK. Sorry for being so successful. Our apologies.
What we need is to be making our regional cities more attractive to skilled workers and to raise the skill levels locally. One of the big problems facing our regions is educational under-attainment, which acts as a major brake on growth. Unless we tackle these underlying problems, long neglected under both the Tories and Labour, any amount of public spending will not remedy the UK’s imbalances.
much to like in RC’s two recent posts, including:
“Simply shoving more public sector jobs into these regions unthinkingly will just compound their dependence on the public sector. The big problem with our regional cities is that unlike Germany, for example, they are not the home of prospering, growing, high-paying, export-driven companies.”
“the devolution debate within the English regions is going to develop further… Devolving from Westminster will be a far more effective way of tackling over-concentration of power than simply moving the UK parliament to some arbitrary location hundreds of miles away from the most populous area of the UK.”
He is also correct to reject the labour style attitude is that the solution is to cripple london, rather than make the regions more successful.
@ RC
I’ve written about the London imbalance a couple of times of LDV – its a shame that these sorts of debates often fall into ‘Londeners vs rest of UK’ battle lines. I love London, visit often and would have probably moved there many years ago, but prefer the North of England and being local to family. London is a massive asset for the UK.
The issue for me is when government policy perpetuates the growth of London and the South East, often to the detriment of other areas. As Steve said above the lions share of arts funding ends up in London (see http://www.theroccreport.co.uk/) as does much of our major infrastructure expenditure (HS1/HS2, Crossrail) and even National Lottery grants.
Government policy should be focused on taking government investment out of London and into the regions, where we’ll get more value for money and get multiplier effects on the regional economy. £50,000 arts funding shaved off some of our huge London arts institutions and put into a regional town could make a huge difference to that local area. I applauded Labour’s policy of moving civil service jobs out of the capital and we should be continuing that trend where possible.
RC 3rd Jan ’14 – 9:25am
RC, your comment here seems to be evidence of the all too common nostrum “public sector bad, private sector good”.
Such a viewpoint used to be exclusively Tory ( and right wing Tory at that). It now seems to be shared by allsorts of people.
I can offer as examples two public sector initiatives to move jobs out of London. I pick these examples because I had a personal albeit fringe involvement..
The first was the establishment of a large computer operation in the Newcastle area by DHSS. This took place under both Lbour and Tory administrations and was not a matter of political controversy between parties. It was successful, provided decades of work in civil service jobs in an area that needed jobs, saved governments money, boosted the local economy, relieved the overheated jobs and housing markets in London.
The second was the move to Leeds of the top level of Department of Health civil servants who had responsibility for managing they NHS. This took place under the Thatcher /Major governments. Successes were similar to the first example.
RC, you do not quote any real world examples but simply make assertions which accord with your prejudices about the public sector and your perspective of the Labour Party.
Will you concede that the suggestions for government to move public sector jobs stems from the fact that government has the direct power to do that simply and efficiently?
Will you also admit that inducing the private sector to agree to anything which does not provide an immediate fast buck to their London-based executives is not so easy?
@ JT – “Will you concede that the suggestions for government to move public sector jobs stems from the fact that government has the direct power to do that simply and efficiently?
Will you also admit that inducing the private sector to agree to anything which does not provide an immediate fast buck to their London-based executives is not so easy?”
I will certainly concede both of those points, but what RC is also true.
@RC
“Devolving from Westminster will be a far more effective way of tackling over-concentration of power than simply moving the UK parliament to some arbitrary location hundreds of miles away from the most populous area of the UK.”
But it is presently in an arbitrary location miles away from the centre of population of the UK. The centre of population for Great Britain lies somewhere in the triangle between Birmingham, Leicester and Derby (see http://en.wikipedia.org/wiki/Center_of_population#Great_Britain). Half the population of England lives in the North and Midlands. There is no logical reason for parliament to be located in its current far-flung, isolated, location.
Besides, it would be good for London to move all those civil servants out, thus reducing London’s dependence on public sector jobs and allowing the private sector to compete for the best workers.
Thnaks for the comments. As a couple of people have said my point was that we should be supprting London and the Regions.
@TonyGreaves: “I suggest Mr McGrath comes up north for a while – he might see things a bit differently.” Can you give us a clue of what I might see differently ? I guess I would see a lot of public spending financed by taxpayers in London and the SE.
@John Tilley :I have no idea what point you are making.That Vince should never be criticised?
@David Allen – how is London draining from the rest of the UK ? can you give us some evidence please ?
“I guess I would see a lot of public spending financed by taxpayers in London and the SE.”
But it would pale in comparison to the public spending financed by taxpayers across the country that you would see by opening your curtains.
Sorry Simon, I hope it wasn’t my post that sparked off so much criticism. It wasn’t intended as such. I just wanted to flag up the counter argument put by Fred Harrison that what subsidy London and the South East make toward the rest of the country more than returns to London in the form of economic rent. That’s *not* good news, for anyone, as it makes London/SE even more unaffordable, but it shows where excess money gets sunk – into land values. Using land values as the dominant tax base would prevent this.
Simon, London as a drain: (1) a recent report on Arts Council funding found that £86 per head is spent on London projects, compared to a tiny £8 for the rest of England; (2) the City relies heavily on creaming off money from our pensions and savings (hear last summer’s “How you pay for the City”, Radio4, on Radio Player). And of course being the seat of government and the BBC means automatic metropolitan bias in all sorts of ways which are not appreciated by those in the media, politics or the BBC, all of which are institutionally metropolitan
I am surprised to see people suggest that moving public sector institutions away from London won’t have much of an effect and that we should focus on building the private sector out of London instead. The problem is that free private sector companies are choosing to locate around the public institutions – if anyone wants to mix with powerful people in finance, law, the arts, charity or politics then they pretty much move down to London or locate their business there. We need to not locate everything in one place.
Broadly I think Vince has raised an important issue. My gripe about it is that the dominance of London is partly due to the awful centralization of power in the UK which has progressively got worse. Local authorities in the UK get 80% of their cash from Whitehall and, for example, the spending plans of Manchester or Midflesborough are micromanaged in the extreme by civil servants in London. Initiative is really stifled outside London and Whitehall takes a different more relaxed attitude to London-wide spending details. But what to do about it ? Wisely when the Brits designed the post WW2 constitutional set up in W Germany they established strong regions and autonomous regional capitals… trying to avoid the over-centralisation which contributed to Hitler’s rise. But we went the opposite way from the 1970s. But to propose some kind of hindrance to London as a remedy is to risk punishing success. The remedy is to reduce such centralization and allow more local control. Let us liberate the regions to compete more effectively with London and with cities outside the UK. We used to have a strong policy of local autonomy … the centerpiece for more local autonomy was local taxation. There is no good reason why local taxes cannot raise more than half local spending….still allowing for transfers from rich to poor areas. However Vince is strongly opposed to such a policy I understand. Someone may correct this perception. I hope so.
“@David Allen – how is London draining from the rest of the UK ? can you give us some evidence please ?”
Start by reading Frank Booth (post 2), who lucidly explains the brain drain. If all the smartest people have gone to London in search of the best opportunities, you’ll struggle to get a successfully competitive business going in the provinces.
Then read MBoy (post 3), who explains how the high salaries paid to London staff must be extracted from profits made in the provinces. Bankers’ bonuses are similarly paid in London from income raised throughout the nation. When City hedge funders make share dealing gains by buying cheap and selling back dear, who makes the corresponding losses? Why, the pension funds, municipal and private investors from all around Britain, of course.
Then read Steve (post 6) on arts funding and the Olympics – same story again.
It’s a massive indictment of Londoncentric politics that we do not have a party – excluding the SNP and Plaid – that stands up strongly for the rest of the nation. Those who argue that we can revive the North without doing anything about London are trying to push a string uphill. Trying to create a successful northern hub is pretty much doomed to failure, all the while we allow London to drain away finance, people, culture and infrastructure.
As for regional policy – Spare us a sterile argument about public versus private. Shifting civil servants northward, which Labour did, was neither a waste of effort nor a full solution. Shifting infrastructure spending and incentives for private business northward is the other half of the answer. It’ll only work if we do both. It’ll only work if government recognises the enormity of the task it faces to restore a decent balance between London and everywhere else.
(And, before Matthew Huntbach writes in about this – Government must also recognise that it is the excessive wealth in London that needs to be more fairly distributed country-wide. London also has large pockets of poverty, and those areas need to be protected.)
To add a postscript to David Allen’s comment above (which I absolutely support), and join in preempting Matthew, I suspect that dealing with the imbalance in the economy that makes London as a whole a sink for the nation’s wealth would in fact benefit the poorer parts of the region’s population, as much of the problem for the London poor derives from the excessive land costs that are themselves the result of the economic imbalance that makes those with property in London so rich.
I never thought about devolving power to the regions as a way to reduce inequality. I’ve always been uneasy with devolution because it complicates the legal system, hence my preference to move parliament, but I now see devolution as another tool in the box.
I used to work in London and will probably be moving back there, so I have no vendetta against it, I just don’t like what you get for your money there and feel sorry for the people who have to do the essential low paid jobs.
The RDAs were abolished by Vince on his watch. They were seen to be unaccountable, untransparent, unelected quangos spending vast amounts of tax payers money. Instead we get LEPs – unaccountable, untransparent, unelected, quangos etc. Proper devolution with ‘real powers’ and an elected assembly however might just work. How about it Liberal Democrats?
Funny that: I thought if this country had not been sacrificed, stripped of its pension levels welfare levels, free Higher Education, and lost well-paid jobs and youth employment and the ability of the poor to eat well as real wages declined. This has happened by transfering money into the “great London Financial sector” on the grounds than that this sector would have collapsed now(instead of next time). We face further disaster because the Coalition has failed to separate retail from speculative banking, and failed to reign-in the destruction of viable firms by banks (Google up RSB GRG for an account). What we are discussing is not politics here,but politicing. The time has been wasted . We have failed to set up bank-payments systems not controlled by the fortunes of the big banks,failed to set up public banks that survive these collapses,failed to look at alternative payments and banking structures and so on, failed to take effective control of banks the tax-payer owns, and driven the economy into a finacialised mess where public service means private profit and only losses are nationalised! We have left the Sovereign People at the mercies of the financial oligarchy when there was no exceuse for so doing.
.
I think finance is the elephant in the room here. Your local banks in the regions are nothing but mini cyphers for head office in London. Mervyn King mentioned how regrettable it now was that local banks no longer had much of a relationship with businesses in their own area. We all still deposit our savings in the banks, to see it all go into the giant casino based you know where. Germany, of course, has a much more effective local banking system.
London has a lot going for it but I don’t think it’s quite the magnet people make it out to be. I know from leaving University that not everyone was desperate to go there but so many of the good job opportunities were based there, so it’s where people went, sometimes grudgingly. We also need to acknowledge the darker side to the capital. Of course many global financial firms have located there. Because of the talent of Londoners? In part maybe. But also because of a lax regulatory environment that wouldn’t be tolerated in many other countries. How did that all turn out?
I got into an argument with someone recently when I said the mining industry was in terminal decline under Thatcher for economic reasons that you couldn’t realistically expect the government to do anything about. His response was ‘Well what about the banks.’ I had some sympathy with him.
Comparing tax and spend might give the impression that London is subsiding the rest of the country but don’t forget that the billions in public subsidy for the banks flows, almost exclusively, to London and don’t forget that it’s London’s much vaunted financial sector that has dumped our economy and public finances into such a state.
Not to mention the toxic effect that London’s dysfunctional property market has had on the rest of the country as unearned wealth slops out of the capital and drives local people out of the property market in many of the country’s most picturesque regions.
Simon challenges “@David Allen – how is London draining from the rest of the UK ? can you give us some evidence please ?”
How about Help to Buy ?
I live outside London and have an income just below the national average. My taxes are used to provide a subsidy to someone in London, earning ten times as much as me, to buy a house costing six times as much as mine. I am subsidising London. Why ? Please provide the economic case for it.
Before you start Simon – unemployment is lower here than in London.