The centre of London is buzzing. The streets are crowded day and night. There are traffic jams at 11pm. The pavements are congested after dinner or the theatre. The shops are busy. There is a wide range of very expensive boutiques in a number of different high street locations. The central London economy has detached from the more humdrum reality in most provincial towns and suburbs. Rents are rising, property values have climbed part of the way out of the 2009 trough, and flats and houses go for incredible sums.
The main reason is that central London is now a very cosmopolitan place. Much of the new money coming in to buy the flats and the expensive clothes comes from overseas. There have been waves of money in the last year from Arab countries where people have been worried by the Arab spring and the Libyan war, from Greece, where rich people have wanted to get out before the euro collapse, and from the usual BRIC countries as successful people decide to diversify their asset base and own a safe home in the west. London makes people feel welcome, and provides that range of culture, shopping, top class property, and international society they want.
One side of me welcomes this. It is great to see enterprise thriving. The best of the retail is brilliantly done. The west end can afford good street furniture, great floral and light displays, wonderfully designed shop windows, and high quality merchandise. The property stock has never been in better condition. The high values encourage owners to spend more on perfecting the space they own, and expanding it wherever possible. If top of the range residential property is worth £2000 to £3000 a square foot, and an owner builds a high quality mansard or basement extension for under £1000 a square foot, there is every incentive to do so if they have the cash to splash.
That is where the other side of me has worries. The truth is very few UK citizens paying high UK taxes can now afford to buy a property in the centre of our capital city. Very few could afford to shop on a regular basis in the exclusive and expensive boutiques and grand stores that populate the West End. As I glance up at the blue plaques on the walls of comfortable London town houses commemorating where previous generations of UK artists, authors, inventors, business people, politicans and others lived , I am looking back on a lifestyle which has gone. Those houses now will be mainly owned or lived in by occasional visitors from abroad, or used by the more affluent institutions as Embassies, offices or smart blocks of flats.
The problem for someone like me who usually welcomes change and is not jealous of the success of others is the question of tax. Many of those who can afford the luxuries and properties of the west end enjoy much more favourable tax arrangements than the rest of us. That is how they can bid the prices of these places to heights we could not consider. London is acting as host to part of the world’s rich elite. They come because we do not make windows into men’s bank accounts. Just as we host Wimbledon for other countries’ tennis stars to win, so we host parts of central London for other countries’ rich to enjoy.
I do come down in favour of carrying on offering central London as our window for the world, our Wimbledon of first choice for the rich and successful. At least we can go and look at how such a society lives. UK ctiizens can make good livings out of providing services and goods to the rich who come. I accept that if we tried to enforce UK taxes on their incomes from out side the UK around the world, they would go somewhere else that was less demanding. By all means end the Stamp duty loophole, and ensure they pay UK taxes on UK incomes and businesses. On balance I think the UK and London is better for this cosmopolitan presence.
Maybe the moral of the story is that lower taxes work and help create and stimulate wealth and income. If Central London can enjoy some benefits from non dom tax status, why not try lower tax rates on income and enterprise for UK citizens living anywhere in the UK as well? Who knows, it might catch on, and generate more tax revenue in total.