After a good bout of rich bashing, it is time for the politicians to move on to some London bashing. After all, London is much richer than the rest of the country. It can’t be fair. London should pay more to the rest, and the rest should be given bigger favours to stem the tide of London’s success.
In the Economic Policy Review I wrote with my Committee in 2007 I pointed out that the London economy had grown 41% between 1998 and Q3 2006, the UK economy by 27% and the Scottish economy by just 16%. This large outperformance of London has continued in the troubled years since.
Why should this be? London has benefitted from substantial inward migration of talent and money from abroad. It has been host to the very successful financial and business service sectors. It has offset some of the damage of inadequate UK bank finance for property after the crash by the strong flows of foreign money into its market.
Some now say that London is doing damage to the rest of the UK, sucking up too much of the talent and wealth. They do not seem to appreciate that London is crucial to the financing of the rest of the country. The recent collapse in financial service and banking profitability has been one of the reasons tax revenues are disappointing, after years of relying on large tax revenues from this successful sector. High earning teams shifting arboad is another part of the low tax revenue problem. If London loses this business it is unlikely Leeds or Bradford, Manchester or Stoke will pick it up. It will more likely vanish to Hong Kong, Shanghai and Singapore.
Much of the world’s wealth and progress is coming from the rise of vast and energetic cities. In China it is the move into the cities which is fuelling the growth. In Western Europe the Paris basin is far more prosperous than most of the rest of France. Around the world growing and successful vast cities are locked in competitive struggle for the world’s rich, and for the world’s creative, financial and industrial talent. These cities are asked to help support the populations closest to them in their nation state or federation.
It is important to keep one of the world’s large cities here in the UK to help pay the bills. There may be all sorts of issues over who comes and what they expect, but there would be one thing worse than having a city like London on our doorstep – not having one. I am all in favour of more jobs, more enterprise and higher living standards throughout the UK. I just do not think that bashing London will help bring that about. Using London is a brighter means of spreading the good news.