London needs more than £35 billion of investment in its five biggest infrastructure projects, according to a recent Mayor of London-commissioned report by Greenwood Strategic Advisers, Mind the Gap. But this investment could boost the UK’s economy by nearly £34 billion a year by 2050, and increase HM Treasury’s tax take by almost £10 billion a year (over the same time frame).
Plugging this investment gap, the report argues, is therefore vital, both for London and for the UK as a whole. Failure to invest would result in a less prosperous and productive London, and less tax money raised for the national purse, to redistribute and invest across the country. Put like this, funding these projects sounds like a no-brainer.
But is this the only gap we need to watch out for?
The perception of a ‘gap’ or divide between London and the rest of the UK is just as concerning. Research by the Centre for Cities and Centre for London in 2014 found that only 24 per cent of UK adults felt that London had a positive effect on their local economy; 64 per cent felt that political decisions were too focused on London. Recent Yougov analysis found that nearly a third of Brits have an unfavourable overall view of the capital. As part of our ‘London and the UK‘ project, I’ve been travelling the country, speaking to political, business and cultural leaders about how we can bridge this divide between the capital and the rest of the country, to the benefit of both.
There has been a great deal of discussion about how infrastructure spending is distributed around the UK, and particularly in the case of rail. Differing approaches to measuring regional investment, time frames, and the inclusion or exclusion of local government and private money, have come up with different results. For example, the government claimed that there was more per capita spend planned for the North than the South (including London), and others, including IPPR North, argued that London is to receive over two-and-a-half times as much funding per person than the North of England in the years following 2017.
But the dispute over the figures is not as important as the perception of imbalance. The very fact that a regional approach to measure investment has been adopted is evidence enough of a problem. London is seen by many as a distinct and self-interested place, sucking up investment as well as talent and focus, rather than the capital of a united nation. The Yougov poll mentioned above also found that, of the almost one third of UK citizens found to hold unfavourable views about London, 80 per cent believed that the capital ‘gets more than its fair share of public spending’.
Perhaps more surprisingly, even amongst pro-Londoners, a narrow majority still agree that this is the case. It has also been argued that London’s current dominance is the product of years of historic over-investment, while ‘roads and railways outside the capital have been left to rot.’ The poor timing of positive announcements by national government regarding Crossrail 2 last year, coinciding with cancellations of several rail projects outside the capital, has only helped to build a divisive narrative.
London is actually a significant net fiscal contributor to the rest of the UK – regularly ‘paying in’ between £10-20 billion a year more in taxes than it receives in public investment – but this is not in itself enough.
The Brexit debate has also made its mark: some parts of the UK that voted most strongly to leave the European Union were among the greatest recipients of EU funding. Economic arguments alone clearly have their limits.
A change in tone is now detectable in the capital. The Mayor of London’s press release for Mind the Gap, called for national infrastructure spending to be increased, emphasising that UK investment should not be seen as a ‘zero-sum game’ between regions. Jasmine Whitbread, chief executive of London First, added that, ‘the problem isn’t that government has over-invested in London, it’s underinvested across the UK.’
Our research is looking at how London is perceived outside of the capital, and seeking new ways for its institutions to collaborate better with the rest of the UK. Bridging the gap between London and the rest of the UK is essential, and must be addressed by boosting the country as a whole, rather than bringing London down. This subtle change of messaging by the Mayor, and by London First, is a welcome step in the right direction. In an increasingly polarised and partisan global political climate, we’re looking for further ways to ensure that the UK grows together, and not apart.
Jack Brown is Senior Researcher at Centre for London. Follow him on Twitter.