London is in a class of its own when it comes to job creation, income levels and economic dynamism. The gap between London and the rest of the country grew substantially under Labour and has continued to grow under the Coalition. Instead of trying to think up new ways to tax London or to discourage it, maybe we should study its success a little more and see how other great cities in the UK could do the same. We should want to narrow the gap by the rest improving, not by seeking to damage London’s success in financial services, banking and property.
A recent study by the Centre for cities shows that London increased private sector jobs by 5.7% between 2010 and 2012. Birmingham at 2.2% and Manchester at 2% were also positive, whilst jobs were declining in Glasgow, Sheffield ands Bristol. Edinburgh, Liverpool and Brighton were also successes with higher rates of job creation.
London excelled at business formation. There were 76 business starts up per 10,000 people in London in 2012 compared to a UK average of 42. Sheffield at 29, Nottingham at 30 and Newcastle at 30 were particularly low. 47% of London’s population have high level qualifications compared to a national average of 34% and just 23% in Liverpool. London has 463 businesses per 10,000 people com-pared to just 175 in Sunderland and 203 in Plymouth.
These differences resulted in London enjoying average workplace earnings of £684 a week compared to a UK average of £502.Sheffield at £444 and Nottingham at £452 were much lower.
The message from the figures is clear. If you want people to earn more and for the community to be more prosperous, then it has to be open to talent, keen on encouraging higher educational attainment, and above all has to be friendly and open to enterprise. London’s success owes something to inviting talent and money from abroad, but it also provides an environment for many talented and well educated UK people to set up businesses and earn good money.
Urban centres like Reading, Oxford and Cambridge are doing something similar. We need to kindle the same enthusiasms in those cities which are struggling. Success comes from a high rate of new business formation, not just from a few major investors from abroad. London has the highest incomes, the highest value added, but relatively low public spending per head. It is the success of the private sector that marks London out from most of the rest.
Cities which do best usually have a central focus to their activities. Oxford and Cambridge do well based on the importance of their universities. They are now spinning off knowledge and technology based companies from their universities. The civic leaders of the great Northern cities have to work with the private sector investors and companies they have on what else they need to do to make their environments more attractive to entrepreneurs and larger inward investors. I am interested in your thoughts of how other cities can develop specialities as London has in finance and business services, to power their growth.