Many of you have pointed out in your responses to yesterday’s blog that London has always been richer than the rest of the country. There have always been rich people who want to congregate near to the royal court or to the seat of government, rich people who want to enjoy the culture and society of a large city, people who come to London as it is by far the best known city in the country. There used to be many Englishmen who did well out of royal favour by being at court.
London has always been more than the capital, drawing benefit from that. After all, Washington and Brazilia are governing centres, but they play poor second fiddles to New York and Rio. London has managed to be a large commercial and business centre, as well as a capital city. It used to have a great deal of industry. As a contributor has reminded us, 1930s London saw flourishing light industry in iconic buildings along the great arterial roads into the centre. It was the UK’s number one port, with plenty of wharves and port related industry and distribution. It lost its lead to better located places with deeper water like Felixstowe and Dover. Industry declined or migrated.
More recently it has transformed itself into primarily a business services and financial service centre. Indeed, so successful has this development been, that on most measures it is the best of all such centres in the world, or runs as joint top with New York. It also sports an important media, fashion and cultural hub, and offers great facilities for leisure and tourism. In other words, London the port and London the industrial centre have passed over to London the world business centre. London has reinvented itself, has moved with the times, has allowed thousands of entrepreneurial changes to completely transform the landscape and the nature of the jobs on offer.
Instead of much of the UK being proud of London, and enjoying her success, it all too often produces jealousy or demands that London be taxed into changing her ways. Jealousy is a powerful political emotion at the best of times. It can become an all crushing political emotion at times of stress or recession. The current jealousy of financial services, banking and the leading centre of them in the UK is driven by the fact that rewards now are so much higher relative to the rest of the country, than were the rewards of the light industry and port activities, as well as of the smaller business services of previous eras. I of course agree that the banks should not have been bailed out, and that bankers in bail out should not be paid large salaries. Most of the financial services industries and other business services sought and received no bail out, and paid good incomes out of their own revenues and profits.
Today the same money will buy someone a bedsit flat in the centre of London as buys a five bedroom detached house in my constituency just 40 miles out of London.This is a bigger gap than there used to be in property values. The latest Sunday Times Rich list shows that a person now needs to be worth more than £72 million to qualify in the top 1000, whereas the top 100 in Scotland goes down to £50 m and the top 250 in Ireland to £33 million. All these figures are considerably higher than a decade ago, whereas UK GDP is still 4% below the 2007 peak. The level of income of the top 50 has risen from a minimum of £600 million ten years ago, to £1400 million today.
726 of the top 1000 made their own wealth. The rest inherited. There are computer entrepreneurs, fashion success stories, popular artists and musicians, hedge fund founders, and industrialists. London and the south east accounts for 529 of them , including all but one of the top ten. The only one not in London in the top ten, the Duke of Westminster, owes much of his fortune to the 300 acre family Mayfair and Belgravia estate.
The picture we see of London through this snapshot is of a world city attracting some of the richest and most entrepreneurial people there are. Because there are now world brands and world markets for successful artists, footballers and the like, they make so much more money. London acts as a magnet for talent and cash. It then becomes very dear for anyone on a normal UK salary. Does the UK wish to carry on hosting the world’s rich and successful, or do we wish to turn our back on London’s success as a world city? Is dislike of riches a necessary driver of policy in a democracy? Should it be directed against pop stars and footballers as well as against hedge fund managers and top lawyers?