When I published the Conservative Economic Policy Review in 2007 it drew attention to the much faster growth rate recorded in recent years in London compared to the rest of the UK. Labour’s devolution and regional policies did not succeed in even arresting the economic underperformance of the UK outside London, let alone narrowing the gap between London and the rest.
The ONS figures for gr0wth since then show more of the same. The period 2007-11 saw London grow by 12% (nominal Gross value added) compared to just half that, at 6%, for the rest of the UK. The CEBR and other forecasts are for London to continue outperforming in the period 2014-19, with their estimate showing London accounting for one third of the total likely growth for the UK as a whole.
No-one can deny Labour did direct much larger sums of public money to places away from London. They moved public sector activities including much of the BBC outside London. They gave substantial devolved powers to Scotland, and some to Wales and Northern Ireland. They imposed additional taxes on financial and property activities concentrated in London. None of this balanced the growth or achieved the aim of faster growth outside the capital.
I am all in favour of trying new policies, and extending old ones, that might help stimulate more growth outside London. I am happy for more of the public sector to move away from the busy city hub of our nation. What I am not happy about is the idea that London’s growth is wrong, needs to be stopped, or is unhelpful to the rest of the country. We should be pleased that we have one of the world’s great cities, that it attracts money and talent from abroad, and that it pays substantial taxes to contribute to the national public spend.
The other evening I returned from speaking in Lincolnshire to Kings Cross at 11.15pm. The Victoria line train I took back to Westminster was standing room only for part of the journey. Last week I spoke to a business dinner about our EU relationship. When I left the restaurant in the West End at 10.30 pm it was difficult walking on the pavement for all the people out and about, and the buses went by completely full. London is bursting with energy and activity, and is generating large numbers of business opportunities.
Brought up as a teenager in Kent, I looked to London for my future. I went there as often as I could afford the train fare. As a schoolboy and as a student I wanted to enjoy museums, exhibitions, galleries, external lectures, music and theatre and the rest whenever possible. I always assumed I would get a job in London. London is still a beacon to many in our country, a place of opportunity and interest.
The problem we face is not that London grows too much, but that some other parts of the country grow too little. The problem is not that wages are higher in London, but that they are lower in some other places. Many people with businesses outside London do come to London from time to time to add to their orders and customers. London is not a threat to the prosperity of the rest of the country, but an opportunity to enhance it.