The politics of The North versus London help no one

Governments have to make choices between competing interests, but appeasing regional grievances at the expense of the greater good would be unwise

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The government’s fast-approaching comprehensive spending review is being previewed in assorted ways, including with stories that areas “outside south-east England” will receive “billions of pounds of extra spending”.

The telling of this story bears the ingrained insinuation that such monies, being “extra”, will demonstrate a recognition that a regional “rebalancing” needs to take place away from the part of the UK London sits at the heart of. After all, London is rich and “gets everything”, doesn’t it, leaving everywhere “outside south-east England” poor?

Not true, of course, although to say so in public is to dive into a rip tide of grievance, moral outrage and parallel worlds. Furious come the tirades, complete with miss-the-point graphs, about tax spend “per capita”. Pungent are the claims, complete with maps stitched from hubris, that, released from the leech of England, the Braveheart spirit would soar free.

Thick and fast flow the denials of hardboiled fiscal facts that taxes raised in London (and the wider south-east) have been subsiding the rest of the UK for decades, no matter how hard any government has tried to change those facts with this or that regional programme or “levelling up” wheeze.

Look at it this way – if, unlike regular readers over several years, you don’t already.

Close to a quarter of the entire UK’s economic output comes from Greater London, in particular from the City, the West End and Canary Wharf. Don’t take it from me, take it from the Office for National Statistics.

Over a fifth of tall UK public sector revenue – government income, of which taxes are a major part – is raised in Greater London, which covers one third of one per cent of the UK’s land mass and contains about 13 per cent of its people. During the tax year ending 2023, £216.4 billion out of the UK’s £1,029.3 billion of such revenues were raised in London, or £24,000 for every Londoner. Don’t take it from me, take it from the ONS.

Yet only £172.8 billion, equating to £19,500 for every Londoner, was spent in London in that tax year. In other words, London and Londoners as a whole contribute more than they receive. Don’t take it from me…

Meanwhile, in the North West of England, region of Liverpool and Manchester, less money is spent per person – £17,300. However, the North West also raises less than London does – far less at only £12,800 per person.

It’s a similar story with the West Midlands, containing Birmingham, with the nation of Scotland and with everywhere else except the South East (and, almost, the East).

How come London gets more spent on it per person (“per capita”) than other places? Is it because London gets preferential treatment, as some say? No. In large part, it is because everything in London is more expensive – in some cases vastly more – than everywhere else. It costs more to fund services, to build houses, to pay for just about everything.

So, how come London and Londoners generate more than they have spent on them? Because without the “net fiscal surplus” London (and the south-east) comes up with, year after year after year, everywhere else would have it harder. They don’t have surpluses. They have deficits. They need London to help them out.

That isn’t bragging. It’s not complaining. It is just saying what’s true, and will remain true for a long time to come. And, no, that does not make it a good thing. On the contrary, the concentration of national economic power in London, a state of affairs that has existed since long before Margaret Thatcher turned up and hurried some of it along, is widely recognised as problematic. What should be done about it?

The first thing not to do is what a certain sort of person in the North, in the Midlands and in Scotland do, which is to hide from reality behind bluster, bravado and fixed false beliefs.

If we’d had something like Crossrail, the argument goes, big multinationals would be moving north. Don’t think so. A less attractive London would, instead, prompt closer looks at Paris, Berlin or New York. (And, by the way, London effectively paid for the Elizabeth line by itself).

Scottish Nationalists habitually insist that their country’s potential to thrive economically if independent is concealed by revenues from North Sea oil and gas being attributed to London because that’s where the sector’s head offices are. Not so.

No, no, no. What’s required are proper solutions: remedies for the long term whose starting point is reality. That means dumping the populist concept of “north-south divide”, which poisons and deceives, and accepting instead that there is wealth north of Watford and hardship in Westminster.

It means recognising that the economies of the capital and everywhere else are interdependent and linked, not inherently hostile rivals.

And it means accepting that unless London’s economy is kept strong, in part through public investment in transport, housing and local authorities that currently can barely cope, the new railways that northern cities have wanted for years won’t be built because there won’t be the money to pay for them.

That’s how progressive redistribution works. But the goal must be to move away from it, to make the rest of the country more productive and self-sufficient.

For national government, that means carefully-targeted, sustained support for all major cities and regions, tailored in partnership with devolved government leaders, who are allowed to get on with their jobs. It means rejecting half measures designed to wean Runcorn off Nigel Farage. And it means resisting any urge to slight London, by crowd-pleasing word or investment deed, which would amount to the same foolish thing. The politics of The North versus London help no one.

London is sometimes likened a goose that lays the nation’s golden eggs. Starve the goose, what do you get? No goose. No eggs.