Of course London is no longer an English city, but the rest of the country needs it more than ever Jeremy Warner
https://www.telegraph.co.uk/business/2019/05/30/course-london-no-longer-english-city-rest-country-needs-ever/?li_source=LI&li_medium=li-recommendation-widget
It was, I suppose, inevitable that John Cleese should get it in the neck for restating the blindingly obvious – that London is no longer an English city. The former Monty Python and Fawlty Towers star was only telling a truth that has long been recognised by foreign tourists, and indeed by just about everyone else with a modicum of worldly awareness.
If you want a picture postcard caricature of what most people think of as England, you are much more likely to find it outside the capital than within the bounds of the M25. London is a global city, with more in common with New York and the other great metropolises of the world than much of its own hinterland.
This is not a particularly new phenomenon; as early as the thirteenth century there are recorded complaints of London as an unrecognisable city, back then on account of supposedly being overrun by Moors. Today they come from all over the world; in my particular borough there are apparently more than 50 spoken languages. We have become a veritable tower of Babel.
To point this out is, however, to invite a tirade of condemnation from all the usual suspects. How dare Mr Cleese say that multicultural London is not England.
Time to get real. On so many levels, it is manifestly obvious that London is a world apart from much of the rest of the country, right down to the great Brexit divide, where support for leaving the European Union is at its highest outside the capital. Most Londoners would by some margin prefer to remain.
But unpalatable though it may seem to the regions, they need London, today more than ever. This is plainly an undesirable state of affairs, but it is also undeniable.
Analysis by the Office for National Statistics – published this week – finds that London, the South East and the East of England are the only UK regions producing a fiscal surplus, that is contributing more in taxation than they receive in public spending. The reverse is the case virtually everywhere else.
Fiscal transfers of this sort are of course part of the fabric of the nation state, but in Britain they are particularly extreme. At one end of the spectrum we have London, contributing slightly more than £17,000 of taxes per head last year; at the other are Wales and the North East at not much more than half that. The gap between taxes and spending is at its most extreme in Northern Ireland, with a fiscal deficit of nearly £5,000 per head last year.
Inevitably, these differences become self perpetuating. London’s critical mass acts as a magnet for talent and investment from the rest of the country, sucking the lifeblood from all around. It is obviously outrageous that a city as big as Leeds should still have no mass transit system – the only city of comparable size in Europe without one – while London enjoys the massive investment bonus of Crossrail, but also entirely excusable.
London’s much higher levels of growth require extensive investment in infrastructure to keep up. Yet it also entrenches the relative lack of competitiveness elsewhere. George Osborne’s “Northern Powerhouse” was a good idea in theory, but is struggling in practice and has yet to make noticeable inroads into these differences.
In conversation with one of London’s most high profile foreign investors the other day, I asked about Brexit and he remarked that, for him, it was a definite negative. A no-deal Brexit would be particularly hard to take in view of its likely impact on sterling and access to European markets.
This is a common London view, but it also sets up an interesting dynamic if the rest of the country forces such an outcome on a reluctant Westminster, captive as it is to the London consensus. London has grown rich on the status quo, but the rest of the country arguably needs a revolution to restore lost pride and economic power.
For London to remain a focus for global capital and talent, it is going to have to find some way of compensating for the loss of its attractions as a European gateway. At a corporate level, even the Netherlands are these days tax competitive with Britain. Out of necessity, therefore, a hard Brexit is highly likely to drive a low tax, deregulatory agenda. Certainly any further attempt to soak London’s wealth will see it fast drain off to other jurisdictions.
Some Conservative leadership candidates appear to embrace this logic, but amid the gathering tsunami of undeliverable promises and policy suggestions, virtually nothing is said about how to pay for it all, beyond raiding the overseas aid budget and abandoning HS2. In attempting to reconcile high welfare spending with low taxes, these expenditures already seem to have been promised 20 times over.
Britain’s yearning for change makes our time somewhat equivalent to a pre-revolutionary moment. Whichever way the battle goes – Left or Right – the regions that voted so heavily for Brexit may just have to get used to life beyond the London teat.
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