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Robert Neill MP

Sir Robert Neill MP - London’s economic health is important for the whole of the country

Bob Neill MP
November 5, 2021

After Sadiq Khan criticised the Chancellor's Autumn Budget for "taking London for granted", Sir Robert Neill MP argues that London requires economic funding just as much as anywhere else, with any negative impact on the capital likely to be felt nationwide. 

I rather agree with the American author Henry James' famous assessment of London – that is, that it isn't always "agreeable, or cheerful, or easy, or exempt from reproach. It is only magnificent." For while our capital has its fair share of problems, some significant, there can be no doubt, it is indeed magnificent.

One of the most diverse and successful cities on earth, steeped in history, teeming with culture, and remaining not just an economic behemoth, but a global symbol of openness, tolerance and creativity too, it is an achievement we should be both enormously proud of and unabashed in celebrating. And yet, for some time, there has been a growing reticence to do so, hardening in recent years to an almost active shunning of our capital as if it were an outlier needing to be brought down a peg or two. As the London Chamber of Commerce and Industry's Chief Executive, Richard Burge, recently commented, London appears to be the "villain" of the Government's levelling-up narrative. Regrettably, last week's Budget will have done little to debunk that accusation.

Like a child fallen out of favour and written out of the will, London's near complete omission from the Chancellor's statement was notable. It received two paltry mentions – one, rightly commending it on being the best place in the world for green finance, the other remarking that its transport system should be replicated in other cities, something I don't disagree with either. Unsurprisingly, a closer inspection of the Spending Review also confirmed that London will be receiving a considerably smaller chunk of the levelling up fund compared to other regions, with it having been earmarked just £65 million compared to the North West's £232 million or the East Midlands' £203 million. This approach is misguided on two counts.

First, London's economic health is important for the whole of the country. It produces nearly a quarter of the UK's economic output and roughly 30 per cent of the nation's economy-related tax take is generated in the capital. In short, the golden egg this goose lays fills the Treasury's coffers. Its tax surplus helps prop-up and drive growth in the rest of the country and when it does well, the whole of the UK prospers. Any impediments to London's advancement, be they contrived or through complacency, would be a gross act of cut of your nose to spite your face short-sightedness.

Despite its financial difficulties, Transport for London alone supports nearly 60,000 jobs outside the capital, with 60 per cent of its investment being in other parts of the country. Its trains are built in Derby, its steel rails manufactured in Scunthorpe, and its signalling produced in Redditch. We need to ensure London remains globally attractive and a source of inward investment as that cash is ultimately redistributed across the UK. If London loses its shine, the impact will be felt nation-wide.

And second, although it may be politically expedient to characterise London as a metropolis inhabited solely by fat cat city slickers whose privilege knows no bounds, that is a notion blind to the reality that there is real deprivation across our capital, including in comparatively affluent constituencies like mine. In fact, London has the highest rate of relative poverty in the UK, not to mention the highest levels of unemployment and homelessness of any region. It has been hit particularly hard by COVID-19 and the capital's boroughs now face the prospect of recuperating tax losses of £400 million over the next two years.

Levelling up is a noble aim, and one I wholly support, but as previous rebalancing attempts have shown, London's success cannot simply be transposed from one region to another through central government diktat. Frankly, we will be throwing good money after bad if we follow the same wilful misperception that deeply engrained inequalities, be they in Lewisham or Leeds, can be resolved solely by creating a new park here or doing up a high street there. Important as these aesthetic improvements are as part of a broader, holistic strategy, something far more ambitious is needed, and that begins with devolution.

After all, much of this palpable resentment towards London is, I believe, a hangover from Brexit, which was not just a rejection of unelected officials in Brussels, but of Whitehall's bureaucrats and the City's bankers too. I was an ardent remainer, but it's clear that a feeling of alienation and distance led people to wanting a repatriation of powers, not just to Westminster, but directly to the regions as well. Subsidiarity in the truest sense of the word.

Devolution and levelling up are, then, inextricably tied. Only by granting greater flexibilities and powers to locally elected leaders, which in turn will create incentives to develop local economies, invest in infrastructure and reform key public services, can we truly redistribute wealth and opportunities. Disparities will be made worse by doing exactly the same thing in lots of different places, which is why regional leaders must be able to manoeuvre their own chips.

The irony, of course, is that the Greater London Authority has both led the way on the devolution front, and since its inception, via the London Finance Commission (set up by the then Mayor of London – Boris Johnson – and reconvened by the current incumbent, Sadiq Khan) also brought forward a series of proposals on how more accountable, transparent and effective government can be achieved. Most have been roundly rejected, no doubt because they challenged Treasury orthodoxy too much. Again, a missed opportunity which should be revisited.

I am, admittedly, biased. I am a Londoner born and bred and have represented London government, in one form or another, since 1974. Nor I am oblivious to the risk that supporting London will be construed as unfair to the rest of the country. What is certain, though, is that a far more nuanced, evidence-based discussion should replace the divisive rhetoric that wrongly pits one area of the country against the next. We are, in the end, all striving for the same.

Bob neill

Sir Bob Neill is the Conservative MP for Bromley and Chislehurst and Chair of the Justice Select Committee.

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