Is the growth of London good news for the rest of the UK?

 

The BBC’s film on Monday night about London’s economy was a good discussion of an important issue. It showed the dynamism and growth of London well, from the hi tec cluster around Old Street to the redevelopment of Euston, from the new London Gateway deep water port through to Crossrail.

Large cities do attract large amounts of investment and talent when they have the right framework of tax, regulation and transport to make themselves attractive to the footloose and entrepreneurial of the world. On balance the BBC argued that the rest of the UK benefitted from London’s success. They showed people commuting over long distances to obtain better paid jobs. They showed large companies like Google attracted to London by the people and the opportunities in the capital. The general story showed that nothing succeeds like success.

London has its critics elsewhere in the country. Some say London gets too much of the nation’s public investment, citing Crossrail and tube investment in recent years. Yet if you look at public spending per head in total London is at the bottom of the table for the UK, falling way behind the North East or  North west of England. My recent visits to other cities around the country demonstrate substantial public capital investment in  trams, trains, and new public buildings outside London, as well as the much higher levels of revenue spending.

The proramme did not consider the amount of tax London pays. Given the much higher incomes enjoyed on average in London, London does contribute far more on a per capita basis than other parts of the country to the general taxation totals. The ability of London to entice in the rich and famous from around the world, and to provide offices for many high paying companies, does ensure much higher tax revenues for the UK as a whole.

Some seem to think there is a given lump of  private investment for the UK and that London takes too large a share of that. As Mr Davis argued, London is in competition with other large cities around the world. If a company or rich investor decided he did not like London, he would probably go to New York or Shanghai or Hong Kong. Manchester and Birmingham would be less likely on his list of places to consider.

Mr Davis made a good comparison with the nineteenth century when the industrial north contributed relatively more to UK GDP, income and tax than it does today. It then provided an additional motor to London for the UK economy. It would be good indeed to recreate such success elsewhere in the UK to complement London’s achievement. Having a successful London is not an obstacle to success elsewhere, as the nineteenth century showed. We need to show skill in harnessing London’s success to help generate more growth in our other cities as well. Oxford, Cambridge, Edinburgh and Milton Keynes show that you can do so from a smaller base.

 

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50 Comments

  1. arschloch
    Posted March 5, 2014 at 6:08 am | Permalink

    “… the right framework of tax, regulation and transport to make themselves attractive to the footloose and entrepreneurial of the world.’ With regard to transport that is probably correct if you are making the comparison to somewhere like Lagos or Calcutta. However more seriously big trans national corporations are bound to be attracted if you can get away with paying virtually no corporation tax. Though most frightening of all is the City putting it around that we really do not bother with regulation here in comparison to Wall St. If you want to rig the FOREX market (see DT article on the BoE’s role here) or LIBOR just come here, at worst it will be the minions who get a slap on the wrist. Here is a WSJ article written by former Mayor Bloomberg and US senator from New York Chuck Schumer complaining about “our regulatory bodies are often competing to be the toughest cop on the street, the British regulatory body seems to be more collaborative and solutions-oriented.”. So all in all London’s success is built around a lack of tax, lack of regulation and if you cock it up the tax payer will come and bail you out.

    http://online.wsj.com/news/articles/SB116234404428809623

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10623966/Bank-of-England-drawn-into-forex-rigging-scandal.html

  2. Posted March 5, 2014 at 6:22 am | Permalink

    London, Shanghai,Hongkong, New York – are all places which are pretty open to immigrants and attract a large number. Please read today’s City AM column by Allister Heath. I wish you sometimes made a positive comment about immigration instead of pandering to UKIP.

    • Anonymous
      Posted March 5, 2014 at 4:14 pm | Permalink

      What on earth are you talking about, Patryk ?

      Mr Redwood barely ever mentions immigration and when he does it is never in the negative.

      Reply I have often mentioned immigration and have explained the need to restrict it. I have both written on it as a special subject and have talked about it in relation to housing and public service provision.

      • Anonymous
        Posted March 6, 2014 at 4:33 pm | Permalink

        Reply to reply: I have to go back to Jan 8th to find a comment from you mentioning immigrants directly – this relating to a post on stagnant UK wages where you say nothing more than “Labour inviting 5 million new people to come here has helped depress wages.” (or to that effect)

        You make three almost identical one-line comments among lists of powers you’d like repatriated from the EU “If we wish to regain control of our borders…”

        Four very short and reasonable comments on the subject on the subject of border control and only one of them directly mentioning immigration – this among lengthy daily postings numbering around 60 over that time perhaps. This despite immigration being the #1 issue being taken with doorstep canvassers and certainly a much spoken about subject in general.

        The recent post on the cost housing, for example, didn’t mention the impact of migration at all.

        Clearly Patryk would like to keep this a taboo subject. I think he was being unfair and inaccurate by accusing you of being negative about migration and pandering to UKIP.

        Neither New York, Shanghai nor Hong Kong have open borders and offer free healthcare, schooling and welfare to anyone who can get there.

        Reply Immigration is the one subject where I have taken up concerns of bloggers with the Minister, and posted Ministerial replies, recognising its importance. I have consistently supported reducing inward migration, and have campaigned for proper NHS charging of visitors, and the ending of benefit tourism in the EU. I have also in the past written about the effect of rising n umbers of people on housing and infrastructure. As with other main preoccupations of bloggers like the EU I write about it when there is something topical or new to say, but do not simply repeat things I have written before, as that would make the blog boring for regular readers. My view stays the same unless I advise of a change, so I do not spell out my views on everything each morning!

        • Anonymous
          Posted March 6, 2014 at 4:39 pm | Permalink

          “You make three almost identical one-line comments among lists of powers you’d like repatriated from the EU “If we wish to regain control of our borders…” ”

          Should read:

          In three other postings you make identical one-line comments among lists of powers you’d like to see repatriated from the EU “If we wish to regain control of our borders…”

          This year you have only mentioned ‘immigrants’ once. Hardly banging on about the subject as Patryk would have us believe.

    • ian wragg
      Posted March 5, 2014 at 4:28 pm | Permalink

      Yes and the immigrant population which services the capital are the only ones who can afford to live their as they get in work benefits and live several to a room.
      The indigenous population have to commute or are excluded on the grounds of cost.
      Make companies pay a decent wage and stop in work benefits and maybe the rest of the population could get a look in.
      Not bad when an ( wo4rd left out ed) asylum seeker with 4 kids can demand a taxpayer fubded house in Kensington.

  3. Mike Stallard
    Posted March 5, 2014 at 6:58 am | Permalink

    The dear old government here in Wisbech, Cambs, is chugging along. The Education has been transformed under the Coalition. The river banks in this fenland town have been raised and flooding prevented. Even the road system is being improved.
    Meanwhile private initiatives provide new retail outlets which are springing up along with a huge Mall and Cinema. And we have lots of factories for people to work.
    Our little town has been transformed.

  4. Richard1
    Posted March 5, 2014 at 7:18 am | Permalink

    The programme also didn’t go into why areas such as the north of England (+ eg parts of Scotland) have seen such a decline. The answer of course is the dead hand of the state. Huge swathes of heavy industry were nationalized by post war Labour govts. The result, as anyone should expect, once the market mechanism is no longer at work is eventual collapse due to loss of competitiveness. Just like in the Soviet Union. London benefits from a low state / GDP ratio in spite of being the seat of govt.

    Perhaps emergency measures such as creating enterprise zones with low or zero capital taxes are needed to kick start economic activity in the areas destroyed by socialism.

    • lifelogic
      Posted March 5, 2014 at 5:43 pm | Permalink

      “The answer of course is the dead hand of the state.”

      Indeed

      Further the 50% overpaid & pensioned state sector is even more relatively overpaid in remote northern areas. It kills enterprise dead with tax, regulation, planning, competition for labour, expensive eneryg – indeed many in the state sector have killing industry and innovation virtually as a job description.

    • uanime5
      Posted March 6, 2014 at 9:40 pm | Permalink

      The answer of course is the dead hand of the state. Huge swathes of heavy industry were nationalized by post war Labour govts.

      Care to provide some example of these nationalisations.

      The result, as anyone should expect, once the market mechanism is no longer at work is eventual collapse due to loss of competitiveness.

      I though it was because the capitalists realised they could make more money by outsourcing these jobs.

      London benefits from a low state / GDP ratio in spite of being the seat of govt.

      Care to explain how London has less state than any other city. Make sure you explain exactly how other cities have more state than London.

      Perhaps emergency measures such as creating enterprise zones with low or zero capital taxes are needed to kick start economic activity in the areas destroyed by socialism.

      They tried this in the past. All it resulted in was companies relocating in the low tax areas but no increase in the total number of jobs. These companies also left after the tax cuts ended leaving these areas just as poor as before these tax cuts were implemented.

  5. Gary
    Posted March 5, 2014 at 7:26 am | Permalink

    “The proramme did not consider the
    amount of tax London pays.”

    Oh that old canard of devious half-truth.

    London grows as financialization of the economy grows and as the financial industry grows and as productive manufacturing is killed off.

    As the money changers print money(oversupply/inflate) the price of money(rates) fall. The resultant inflation falls outside of the CPI basket as the price of gilts, properties and energy are inflated. They tell us there is no inflation. Businesses that finance capital at a certain rate soon find they are uncompetitive as rates fall and new businesses finance at a lower rate, and the new businesses also fail as rates fall further and new entrants finance at an even lower rate etc.

    This destruction of capital as rates fell steadily has been going on for 40 years after the gold standard was abandoned and the usurers printed money without restraint. The financiers got fat and the manufacturers died.

    Tax was LOST overall, but sold to us as a victory. London, they tell us, pays tax!

    • Jennifer A
      Posted March 5, 2014 at 3:46 pm | Permalink

      In 2013 135 companies (including ICI) were sold into foreign ownership – only 50 were acquired from foreign ownership. Doubtless most of these decisions were made in London – as were decisions on overseas aid and contributions to the EU.

      Is growth in London good for the rest of the UK ? It’s probably the reverse that is true. And this growth is probably as temporary as it is unsustainable (as Kenneth R Moore rightly says a few comments down.)

      The decisions to turn vast areas of Britain into welfare wastelands were mostly made in London and most of those firms lost long after Mrs Thatcher had tamed the unions (in answer to another commenter who blames unions for the de-industrialisation of Britain.)

      • Jennifer A
        Posted March 5, 2014 at 3:50 pm | Permalink

        After the net sale of 80 odd companies (and vast amounts of our housing stock) it is unsurprising that a lot of money is swilling around London and it looks prosperous – on paper if not in reality (doctors unable to afford homes built for milkmen ?)

    • REPay
      Posted March 5, 2014 at 3:52 pm | Permalink

      The finance did not kill off manufacturing. That was a combination of strikes and mediocre management! Today private businesses in the north are squeezed by the state – both in terms of taxes and by having to compete for skilled people with a highly paid state sector.

      • Jennifer A
        Posted March 6, 2014 at 6:59 am | Permalink

        Repay – What of industries that have been lost in the last 15 to 20 years ?

        Where are our expensive energy policies made up but by a remote London elite ? Our dredging policies for that matter.

        • libertarian
          Posted March 6, 2014 at 9:34 pm | Permalink

          Dear Jennifer

          The UK is the 7th largest manufacturing nation in the world UP 2 places. Manufacturing has changed drastically in the last 40 years. If you ACTUALLY look we have a very healthy manufacturing base. The reason that it contributes a lesser % of GDP than in the past is because in the last 40 odd years we invented ( mostly in the UK I might add) the entire digital revolution which is a service industry with massive service exports.

          You ask about industries lost in the last 20 years but fail to mention the new ones that have been created. I’m afraid that like everything else industry is subject to the laws of evolution, selection and survival of the fittest. The once great naval cannonball industry, the wool industry along with buggy whip makers have succumbed to history. We now manufacture more than 70% of the worlds mobile phone components.

          This may come as a shock but there are more industries than just manufacturing and finance. Both are now parts of the service sector as a lot of the value of manufacturing now lays in software and IP and product design and licensing

  6. Mark B
    Posted March 5, 2014 at 7:40 am | Permalink

    In answer to your headline – No !

    And it is not good for London or the home counties either.

    The Government and the Civil Service is just too London centric. I think it would be a good idea for the Parliament to move elsewhere, perhaps Newcastle. Give the much neglected North of England a bit of shine and some bragging rights. You never know, it might attract a bit more investment and actually help people.

    Do some good for a change.

  7. John E
    Posted March 5, 2014 at 8:41 am | Permalink

    If it was possible to build infrastructure in the rest of the country then that might see some growth.
    Imagine Reading (and Wokingham) if a proper Thames road crossing could get built instead of being blocked for 50 years by Nimbyism.
    And look at the ongoing debacle with the A303 around Stonehenge limiting connections to the South West.

    • Denis Cooper
      Posted March 5, 2014 at 2:57 pm | Permalink

      Even without that “proper Thames road crossing” the population of Wokingham has roughly trebled since 1951:

      http://www.wokinghamsociety.org.uk/history

      I remember comparing a recent OS map with one from the 1970’s and the expansion of the built-up area was staggering.

      The population of the UK has increased by about 30% since 1951, so clearly the population growth for Wokingham has been hugely disproportionate; if it had grown just in line with the growth of the UK population it would now be about half what it is actually is, about 15,000 instead of 32,000.

      • alan jutson
        Posted March 6, 2014 at 9:14 am | Permalink

        Dennis

        Absolutely correct about Wokingham.

        Now not a market Town with some open space between it and other towns, but an urban sprawl joined to Bracknell, Winnersh, Earley, Reading,

        Central Government forced the area (under John Prescott directive) to accept thousands of more houses, and the Council have themselves added to the problem.

        We now have an infrastructure that cannot cope at peak times in the day with all of the traffic.

  8. alan jutson
    Posted March 5, 2014 at 8:51 am | Permalink

    You outline the very reasons why HS2 will bring traffic into London for business, not the reverse which has been outlined.

    Who would want to travel from a high cost of living area, to a lower working wage area with fewer opportunities for advancement.

  9. Lifelogic
    Posted March 5, 2014 at 9:02 am | Permalink

    ” Having a successful London is not an obstacle to success elsewhere.”

    Indeed not quite the reverse but what is an obstacle is Cameron and Clegg’s policies of :- expensive religious energy, a culture of litigation, daft employment laws, over taxation, non functional banking, OTT planning and regulation, the EU, anti business Clegg and Davey ……….

    I see Cameron is now promising “further” reductions in spending as he insists they are more than a turnaround team of accountants. If only they were!

    There is no such thing as governments money only hard working people’s money! Does he think he is Lady Thatcher now?

    Dave is simply no good after, nearly 4 years of tax, borrow and piss down the drain almost everywhere, mainly on Green Crap, HS2, soft loans to the pigis and endlessly more government & EU, 299+ more taxes, IHT ratting and then saying things like this now.

    No one will ever believe you are other than what you clearly are: A ratting, tax increasing, tax borrow and piss down the drain, fake green religion, pro EU, pointless war fighting, lying, Libdem.

    Until you cancel the absurd HS2 and wind/PV subsidies, fire Davey and Clegg and de-rat on IHT no one sensible will even consider trusting anything you say.

  10. Kenneth R Moore
    Posted March 5, 2014 at 9:35 am | Permalink

    For me the most important point made in the film, ignored by John Redwood’s rose tinted commentary, is that London’s growth is totally UNSUSTAINABLE.
    JR’s greatest failing, like all politicians, is his failure to grasp or even recognise the power of the EXPONENTIAL GROWTH FUNCTION. 1.3% annual growth is terribly high.

    Why is London described as ‘successfull’ so often by commentators like JR. By many measures of success, other than money, London is in decline. London was a far far better and happier place to live in 1996 or 1986 or 1976 for that matter in my view.

    Declining social integration, increasing crime, booming propery prices locking people out of the capital and the misery of gridlocked rail lines and roads, horrid modern glass buildings everywhere….

    To be fair Evan Davies touched on this – already the population predictions used to justify Crossrail look hopelessly out of date . An extra tube train full of people A DAY arrive in London. Stations regularly closed because they are dangerously overcrowded.
    But when we keep patting ourselves on the back saying isn’t London wonderfull, nothing will be done.

  11. Bert Young
    Posted March 5, 2014 at 9:50 am | Permalink

    I note that Alec Salmond believes that the success of London has a detrimental effect on the rest of the country and that diversifying its concentration of skills and wealth would be beneficial to other parts of the country . I found in the past that when the , so called , ” centres ” spread to other places , the ability to spot weaknesses and the time lag in decision taking , was a drag on performance and , hence , results ( the ” Divisionalisation of ICI was a typical example ) ; the supervision of key staff and decision takers was always essential to get the best results and to keep an organisation on course with its aims . When companies extended into other countries and markets , of course it was necessary to absorb differences and cultures into objectives ,however the time lags still left its marks. So , spreading and diversifying from centres has a downside and the concentration in London is bound to remain . Modern technology and communication have developed , changed and speeded up decision taking , but , the old adage still applies – ” when the cat’s away , the mice will play “.

  12. Brian Tomkinson
    Posted March 5, 2014 at 9:59 am | Permalink

    Growth here is certainly essential for the EU, as we read in today’s Daily Mail under the headline: “Anger as Europe demands an extra £2.5 billion from Britain to plug ANOTHER blackhole in the EU’s budget”
    “Britain could be forced to hand an extra £2.5billion to Brussels to help plug a massive black hole in the EU budget, it emerged last night. In a dramatic admission, EU Budget Commissioner Janusz Lewandowski said Brussels overspent its budget by an astonishing £20billion last year.
    Mr Lewandowski, who blamed the situation on late invoices, said the cash would be taken from this year’s budget in the short term. But officials conceded it was almost certain to lead to a request for a bailout later this year, making a mockery of claims that the EU budget has been brought under control.”
    Another of Cameron’s faux claims exposed.

  13. Larry LowTax
    Posted March 5, 2014 at 10:38 am | Permalink

    The programme did not consider tax much at all. Which is rather ridiculous omission on he makers part; specifically the under taxation of foreigners and their massive property investments.

    Its no surprise that the Mega rich buy property in London; when they are encourage here by the ultra-low property taxes that only they enjoy.

    Evan Davis marveled at the £39 Million flat; but this falls into the same council tax band as a modest family house in the sticks, of about 1% of its value ( £390,000.)

    Its a pity that the rest of the country cannot benefit from 0.0001 % taxes on their property wealth. Then we just might see a boom elsewhere.

  14. David Hope
    Posted March 5, 2014 at 10:41 am | Permalink

    I thought it was an interesting show overall. I didn’t entirely agree with the view of it all being spontaneous, for example the tech sector at old street.

    I am a strong believer that to see what is going on you have to follow the money! Many computer science and engineering graduates are attracted to London because software in finance pays more than double what it does elsewhere. A lot of the new startups are a result of people who earned some money in finance then wanted to do something different (also the financial sector helps the funding of said startups).

    Surely a good part of London’s growth is based on the growth of finance which in turn is based on the cheap credit policies of the Fed and BoE, the ending of Bretton Woods etc.

    The show was right to point out there is no central plan that can suddenly make Sheffield or Newcastle as successful. Where all you need is an office (not say a large industrial plant) you are more likely to place that in the capital. However, I think there is still much that can be done.
    1. Cheaper energy would help manufacturing in northern cities.
    2. Simple tax and regulation can help produce more small companies around the country rather than consolidating big ones based in the capital – and also would reduce the big accountancy and law firms eating up a lot of GDP!
    3. Normal interest rates here (and in america) and the promotion of saving could well allow some rebalancing away from consumption and boost manufacturing.

    • forthurst
      Posted March 5, 2014 at 3:15 pm | Permalink

      “I didn’t entirely agree with the view of it all being spontaneous, for example the tech sector at old street.”

      There were software houses operating in that general area over 30 years ago in the era of the minicomputer. The big pull then would be the same as now, namely, it’s a lot cheaper than the West End or the City, lacking either fleshpots or iconic buildings, downmarket but relatively well located.

      Much like Thames Gateway built on the old Shell Haven oil refinery, therefore a potential deep water port: it is well located not becaue it is convenient for London, as Southampton and Felixstowe are not particularly convenient for anywhere, but because it is very close to the northbound M25.

      It was good to see the ‘iconic’ eyesore and complete waste of space, Battersea Power station, was to be rebuilt; can JR confirm that that was another decision taken by a House full of loonies at full moon?

      Having watched it to understand the topic of the day, I think it was up to the BBC’s normal standard; plenty of Art, Sciences, ‘tech’, but not a bankster in sight , or functioning architecture, for that matter; so well balanced, not.

  15. Max Dunbar
    Posted March 5, 2014 at 10:59 am | Permalink

    As you say, London is not an obstacle to growth elsewhere.
    Glasgow was known as the Second City of the Empire during the 19th century and was renowned for its vast production of high quality industrial products, some of which still survive and can be seen in museums including the Transport Museum and Summerlee Industrial Museum next to the river Clyde. Browsing through magazines and commercial periodicals from Glasgow’s industrial past one realises that the city and its associated towns of Motherwell and Wishaw were busy and successful right up until the end of the 1950s. The 1960s saw misguided government interference and intervention on a large scale in parallel with increases in militant unionism and the rapid decline of your Party in Scotland.

    Glasgow could be restored to some semblance of its previous commercial success but this is unlikely to happen in the near future as long as the city, and Scotland at large, continue to be run by parties fundamentally opposed to business and private enterprise.

    • Denis Cooper
      Posted March 5, 2014 at 3:44 pm | Permalink

      Glasgow was the Second City of the Empire when we had a global Empire and basically anywhere in the country was at the heart of that Empire, and especially if it was a coastal city with excellent harbour facilities.

      Instead we have been reduced to being part of Barroso’s “non-imperial empire”, and as much as self-deceiving politicians like to rabbit on about being “at the heart of Europe” we never have been and never will be, we have always been and always will be on the western periphery; and like Liverpool Glasgow finds itself on the wrong, ie westerly, side of the island, and to compound that Glasgow it is also in the wrong, ie northerly, part of the island.

      Interestingly, the calculated geographical centre of the EEC/EC/EU has shifted with successive enlargements, but has been in Germany since 2004:

      http://en.wikipedia.org/wiki/Geographical_midpoint_of_Europe#Geographic_centre_of_the_European_Union

      Also interestingly, checking up I find that last July when Cameron was in the Kazakhstan capital Astana idiotically provoking the Russians by saying that he wanted the NATO-backed EU to stretch from the Atlantic to the Urals he was in fact already east of the Urals, and 1200 miles further east than Stalingrad where the Soviets stopped the German advance in the winter of 1942 – 3.

    • uanime5
      Posted March 6, 2014 at 9:48 pm | Permalink

      Glasgow could be restored to some semblance of its previous commercial success but this is unlikely to happen in the near future as long as the city, and Scotland at large, continue to be run by parties fundamentally opposed to business and private enterprise.

      Given that Scotland has the third highest GVA in the UK (second highest considering oil and gas revenues) it’s clear that the parties running Scotland are good for business.

  16. Neil Craig
    Posted March 5, 2014 at 11:38 am | Permalink

    I agree with Milton Friedman that most economic errors derive from the belief that the economic pie is of a set size and more for one means less for others. Economic growth is far more flexible than any such division. So good for London is not bad for others.

    However much of London’s growth is due to it being the centre of government where big company leaders are able to schmooze with top civil servants. This is neither replicable nor in the national interest. I would be interested in more ideas about how other regions could replicate London’s success, without the benefit of being the seat of government. The recent report on this pretty much limited itself to the advantages of having a powerful mayor (but presumably not a foolish parasite like Livingston) which is OK as far as it goes.

    • uanime5
      Posted March 6, 2014 at 9:49 pm | Permalink

      I agree with Milton Friedman that most economic errors derive from the belief that the economic pie is of a set size and more for one means less for others.

      Unless this economy has an infinite amount of money and resources more for one does mean less for others.

  17. behindthefrogs
    Posted March 5, 2014 at 12:30 pm | Permalink

    The real worry is why the area surrounding your own constituency that twenty years ago was considered the main high tech area for computers in the UK can no longer be regarded as such. Part of the problem is down to the failure of the education establishments in the area to provide the high level of training required. Those of us who employed staff in the area found it impossible to recruit locally trained staff and as a result moved departments to other areas.

    • REPay
      Posted March 5, 2014 at 4:00 pm | Permalink

      “Part of the problem is down to the failure of the education establishments in the area to provide the high level of training required.”

      The main purpose of public schooling in the UK is not to educate but to make people more equal. In this it has succeeded admirably, as the dearth of publicly educated people, relative to their numbers, in senior positions shows. This is a triumph for the NUT and the education establishment. I am afraid a hi-tech sector requires children to do difficult subjects such as mathematics, physics and chemistry (the later now combined as science) which might challenge their self-esteem.

      I think Mr Gove is doing his best to reverse this, but probably any refroms will unwind when Labour are back in power in 2015. Much easier to attack the private sector than improve the public sector.

      • uanime5
        Posted March 6, 2014 at 9:53 pm | Permalink

        In this it has succeeded admirably, as the dearth of publicly educated people, relative to their numbers, in senior positions shows. This is a triumph for the NUT and the education establishment.

        Alternatively senior positions are restricted to those with the right connections rather than skills.

        I am afraid a hi-tech sector requires children to do difficult subjects such as mathematics, physics and chemistry (the later now combined as science) which might challenge their self-esteem.

        Care to explain why pupils in state schools take these subjects. Could it be because it doesn’t challenge their self-esteem?

        I think Mr Gove is doing his best to reverse this

        How are free schools that don’t have trained teachers going to reverse a problem caused by companies refusing to train people?

  18. Leslie Singleton
    Posted March 5, 2014 at 12:43 pm | Permalink

    If public spending on London is (very) low and tax receipts are (very) high, both per caput, I struggle to see how there can be too much to talk about

  19. margaret brandreth-j
    Posted March 5, 2014 at 2:27 pm | Permalink

    John this is perhaps the most biased piece you have written. My trips to London havn’t revealed a superior quality in any way .

  20. Mark
    Posted March 5, 2014 at 2:45 pm | Permalink

    I’m not sure where you get your spending data from, but PESA Table 9.15 shows London clearly has the highest government spending per capita in England.

    North East £9,389
    North West £9,180
    Yorkshire and the Humber £8,539
    East Midlands £7,984
    West Midlands £8,398
    East £7,785
    London £9,613
    South East £7,565
    South West £8,171
    England £8,491
    Scotland £10,088
    Wales £9,740
    Northern Ireland £10,623
    UK identifiable expenditure £8,745

    Reply As a proportion of GDP it is low, and in relation to taxes raised it is low.

    • forthurst
      Posted March 5, 2014 at 5:25 pm | Permalink

      “Reply As a proportion of GDP it is low, and in relation to taxes raised it is low.”

      As the fiilm made clear, a significant proportion of those that work in London commute from dormitories up to two hours travel away. It would not be clear therefore why all the tax generated in London should be spent there rather than in the locations which supply the skilled labour, as opposed to large areas of London which are host to those who are a drain on the taxpayer.

      • bigneil
        Posted March 5, 2014 at 11:26 pm | Permalink

        In a similar way to the Olympics – paid for by all taxpayers – -what %age of the taxpayers got to see them live in person -and what %age will use the facilities now – I would think a very very small amount, but Londoners will not be bothered as Notherners are only classed as people to be taxed.

  21. Edward2
    Posted March 5, 2014 at 3:17 pm | Permalink

    You mention Birmingham and Manchester in your article and both cities have also prospered recently, if not on the same scale as London.
    Both have seen redeveloped shopping centres, large scale residential property development in their centres and large scale office development.
    In Birmingham and Manchester there has been excellent canal side re-development.
    There are areas of deprivation in both cities where poverty and unemployment is a stubborn problem but progress is slowly being made after the traditional industries died out in the eighties.
    There are now a number of former London based companies in Birmingham and Manchester who have relocated and have saved money by doing so.
    So I feel there is a benefit via the spin off from London’s growth and success.

  22. miami.mode
    Posted March 5, 2014 at 4:21 pm | Permalink

    You say that London has the lowest public spending per head but how on earth can this be accurately calculated.

    Pension contributions are allowable against income tax and are often filtered through London by Stock Market investments or gilt purchases. Is this public spending or at least a percentage of it?

    You have previously indicated that HS2 is basically for travel into London and I gather that the bulk of Network Rail spending is in the south east – generally I imagine for easier access to London.

    Quangos, National Lottery money, tourism via public museums etc all count and the additional tax generated should be considered as a return on investment.

    I am not against the success of the capital, but there must be a host of hidden subsidies – a bit like the LibDems 3 million EU jobs.

  23. The PrangWizard
    Posted March 5, 2014 at 4:37 pm | Permalink

    It is the duty and responsibility of each village, town, city and county to make the most of what it has and attract whatever new business it thinks it needs by dint of its own efforts and determination, and to make itself more attractive than its competitors. It should not expect its problems to be solved by others. Everyone has their own.

    I remember in the early 1970’s in north-east England where I was born and brought up a group of Labour politicians whined endlessly about how the area, particularly Newcastle on Tyne, was badly treated by the ‘well off’ south. They did believe that others owed them a living, for all I know many still do.

    By contrast in 1975 I moved for work to Manchester. It was in a sorry state, more brutally it was ‘the pits'; that year must have been its worst. It seemed to pick up after that, someone there must have ‘seen the light’. By 1995 when I retired it was a considerably different place.

    • Alan Wheatley
      Posted March 6, 2014 at 9:20 am | Permalink

      The weakness of your Para 1 is that local authorities are not masters of their own destiny. They are increasing the local agencies for the implementation of central government policy.

      I hear that the planning authority for Upon on Severn have recently granted planning permission for development on a flood plane. Everyone knows this is nonsense, but the planning authority also knows if they refuse they will be overturned on appeal, at considerable cost, because the developer has government policy on its side.

  24. Lindsay McDougall
    Posted March 6, 2014 at 3:15 am | Permalink

    This BBC vision of London and the rest of the UK points to HS2 being a very expensive commuter train, designed to facilitate regional managers travelling to London to touch their forelocks to senior management.

  25. Excalibur
    Posted March 6, 2014 at 5:45 am | Permalink

    It is characteristic of human behaviour that talent coalesces to the centre.

  26. Alan Wheatley
    Posted March 6, 2014 at 8:53 am | Permalink

    I thought the programme informative and well balanced. I look forward to Part 2 next week.

    The thing not address was the advantageous starting point that London enjoys simply because it is the capital. That means that many institutions, such as Parliament, have to be in London. And that means many other activities have also to be in London, or at least have a London presence. And all these need support support services.

    Where government can and should be far more helpful to “the rest” is by acting with an understanding that what is good for London is not necessarily good for the rest of the country. So, for instance, rules on waste disposal that are relevant in London, where there is lots of rubbish and no space to put it, do not apply in North Yorkshire where the council already owns many large holes that would swallow up all their rubbish for the foreseeable future at much less cost than demanded by recycling.

    My big suggestion for the growth of the whole country is to scrap HS2 and spend the money on very high speed broadband throughout the whole country – to everywhere there is a telephone. We should stop cherishing the old ideas and aspire to a new world where much communication can be done from the comfort of your office, or living room. That way all parts of the country can benefit from government spending on a major infrastructure project.

    Reply There is plenty of local government and government quangos and departments in northern cities.

  27. uanime5
    Posted March 6, 2014 at 9:57 pm | Permalink

    The proramme did not consider the amount of tax London pays. Given the much higher incomes enjoyed on average in London, London does contribute far more on a per capita basis than other parts of the country to the general taxation totals.

    So because people in London pay themselves higher salaries they pay higher rates of taxation. Are you advocating everyone else in the UK paying themselves higher salaries so they’ll pay more in taxation? If not then it’s pretty much impossible for other regions to pay as much as London in taxation.

    As Mr Davis argued, London is in competition with other large cities around the world.

    Yet in other countries they have several cities competing for business, rather than just the capital.

    We need to show skill in harnessing London’s success to help generate more growth in our other cities as well.

    If London’s success is due to it being the capital; having parliament, the civil service, bank of England, and the City; and having a large number of company head offices located here then how exactly are other cities going to copy this success?

    • Lindsay McDougall
      Posted March 8, 2014 at 3:55 pm | Permalink

      So do we move parliament and Whitehall to Birmingham, mimicking the USA split between New York and Washinton DC?

  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
    Published and promoted by Thomas Puddy for John Redwood, both of 30 Rose Street Wokingham RG40 1XU
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