Nick Robinson, BBC Political Editor, December 2010
Surprised? Why? The masters of the universe move in circles
where cynicism is a sign of sophistication.
The double standards are everywhere: privatise the profits, socialise
the losses; what goes wrong is the last lot’s fault, what goes right is all down
to us; introduce a Localism Bill, then use it to set limits to local discretion. The long-awaited discussion on English
devolution turns out to be a discussion on English votes for English laws. Devolution from the centre to the
centre. Westminster, faced with the unpleasant
necessity of discussing devolution, turns inwards and debates instead its own
procedures and party interests.
It’s more than tiresome and we believe the lies less and
less. The Lord Mayor of London insists that she is not a member of
the establishment. If she’s merely a member of the Outer
Party, what is it you have to do to join the Inner Party?
Don’t despair.
Politics does work. If, and only
if, you vote for change and then keep on voting for change. Tony Blair’s government was as centralist in
outlook as any but was forced by inherited circumstances to devolve power to Scotland, Wales
and Northern Ireland. The political dynamic produced one other devolved
assembly, for the one area of England
that needs one least. London.
There continues to be a debate on whether, in a regional
context, the Greater London Authority – the Mayor and Assembly – is the right
answer to the question of London’s
governance. There are many Londons, some smaller and
some larger than Greater London. Other
European capital regions – notably in France,
Italy and Spain – are
larger than the urban area alone. But
for Labour, and for Ken Livingstone in particular, there was unfinished
business left over from Thatcher’s spiteful abolition of the GLC. Putting it back together (but not too
recognisably) was a political priority that also made a lot of sense
administratively. After 14 years of
chaos, Thatcher’s City backers were persuaded that even the return of Red Ken
was better than a decapitated capital.
The result is England’s only regional
assembly. Which creates some interesting
anomalies. Hilary Benn recently coined
the ‘West Ealing Question’ – why can an Ealing MP not vote on buses in Ealing
(a matter devolved to the Mayor) but can vote on buses in Benn’s Leeds constituency?
We might question whether MPs anywhere should be voting on buses or
whether in a properly decentralised country they would find better things to
do. But buses are a good example to use. London was the
only part of England
to be exempted from bus deregulation in 1985: congestion obviously is for the
other man. It’s the only area where the
colour of the buses is specified by the authorities, because London’s iconic heritage must be protected
while that of lesser cities was long ago sacrificed to the free market.
Wessex
and London have
about the same population. So we should
have no difficulty in claiming the same powers.
What might be more of a struggle is to achieve a fair funding formula
that doesn’t favour the capital as present arrangements clearly do. The Barnett formula doesn’t apply to the
distribution of public spending within
England. So London
is free to grab whatever its lobbying can obtain. This is an issue we have covered in a number
of posts, so let’s recap, with a spot of updating and expanding.
London contributes 22% of UK Gross
Value Added, while Wessex
contributes 13%, Scotland 8%
and Wales
3%. Wessex,
with roughly the population of Scotland
and Wales
combined, comes out where we might expect it to be. So why does London
appear to be storming ahead, the economic engine of the UK? Do its workers really go for it that much
harder than everyone else? Any analysis
of what’s going on must question how much of the economic activity that ends up
there has any geographical reason to be there, assuming that it was ever real
in the first place. London’s
economic success cannot be entirely unrelated to its role as the political
capital of a unitary state with access to the taxable resources of the whole UK. Wessex folk even subsidise its
sewers. No doubt we shall subsidise its
defences against sea level rise too until we can take it no more.
According to the National Infrastructure Plan, planned infrastructure
spending per head in London is ten times that in
Wessex. Statisticians argue over just how big
London’s lead over the rest really is – it’s easily pushed downwards by adding
in nuclear power projects whose final customers are many miles away from the
plant – but no-one can doubt that it’s massive.
And it’s set to get worse.
In 2010/11, London, with 15%
of England’s
population, got 34% of public spending on transport. The South West, with 10% of the population,
got 6%. (The South West is the fourth
smallest of the Prescott
zones by population but received the least transport spending per head.) Devolution, linked to a fair funding formula,
could therefore roughly double our money.
Bristol might even get a real metro, with
underground stations and wholly new lines, instead of the toytown version which
is all that can be afforded while London
helps itself to our taxes. Instead of
HS2, we could start to put places back on the rail network for the first time
in 50 years. Places like Gosport,
claimed as the largest town in Britain
without an operational railway station. London is NOT the only desirable
destination on the railways yet national thinking still assumes that it is.
Arts funding – from the London-based Arts Council and DCMS –
is even more scandalous. In 2012/13, London got £69 per
head. The rest of England got £4.60
per head, a ratio of 15:1. The National
Lottery was supposed to correct this geographical imbalance. But what do we find there? £165 per head in London,
£47 per head in the rest of England:
still 4:1.
There’s also a qualitative aspect to cultural funding. If budgets are centrally controlled, they
will deliver the culture that the centre thinks we ought to have, not the one
we choose for ourselves. If quangocrats
in London haven’t heard of Wessex culture
then they aren’t going to fund it, because it won’t tick any of the boxes. A similar attitude rules in planning, where
development is always viewed as having a positive cultural impact. That’s because the new facilities that it can
fund, for cultural products to be displayed or performed, are usually more
measurable in standardised terms than what’s destroyed to make room for the
development.
The Treasury publishes regional data for what it calls ‘identifiable
public expenditure’. That isn’t the same
as public expenditure by region. Things
that go on in London but are deemed to be for
the indivisible benefit of the whole UK
aren’t included, so London’s
share will be an under-estimate. About
14% of spending is ‘non-identifiable’ in this way. It includes debt payments, some defence items
and overseas representation but there are also costs, such as tax collection,
that must have a geographical base within the UK.
It’s this under-reporting that allows Boris Johnson, for
example, to present London as a net contributor
to the rest of the UK
by at least £5 billion annually. If non-identifiable
spending comes to 14% of the total, and that £5 billion is from the fiscal year
2009, when total spending was £634 billion, then 14% (£89 billion) leaves
plenty of room in which to lose a mere £5 billion very easily. We need far better politicians, of course,
but it seems we also need far better accountants, to track what really happens
to all of the ‘non-identifiable’ money that is spent within the UK.
Despite the under-reporting, in 2012/13 London got 107% of
the UK
average spending per head on services.
The South West got 94%, the South East 87%. London
got 135% of the average spent on economic affairs (substantially more than any
other English region), including 184% of the average on transport. It also got 158% of the average on recreation
and culture and 157% of the average on public order and safety. London
exceeded the average in 10 out of the 17 statistical categories in PESA 2014,
Table 9.16. Nowhere else in England was
so consistently well-funded and agricultural spending (15% of average) was the
only category in which London fell below 79% of the average. The South West was well-funded only on agriculture,
defence and environmental protection (presumed to include nuclear
decommissioning) and fell below 79% in 6 categories. The South East did well only on science &
technology and defence and fell below 79% in 8 categories. The high spending in some northern regions –
mainly on employment, health and social protection – can be seen as a measure
not of the UK’s
success but of its chronic failure.
Does this distribution of spending reflect need? Not necessarily, because ‘need’ is itself a
contested idea. If London ‘needs’ more money because its
population is growing and the city is pulling in poor folk from across the
globe then perhaps it should stop. London’s environmental
unsustainability is being paid for by the rest of us who are doing things
right. The more we pay to deal with London’s infrastructural shortfalls,
the more it grows, the more attention it attracts and the bigger the problems
become.
If London
‘needs’ more money because the cost of providing services is higher then the
same applies. Do those services need to
be in London? London’s
high costs are caused by its over-expanded economy relative to its territory. Those who are convinced that regional
assemblies would increase the cost of government should reflect on the lower
property and labour costs that would be payable if more of government were done
outside, and less of it inside, the M25.
Taxation is often presented as simply a class issue but it
has a strong geographical basis that impacts on how daily life is lived in areas
dominated by the affluence over which London
presides. Half of all Inheritance Tax
receipts in the UK come from
London and the
South East. That isn’t necessarily the
result of thrift: much of it will be unearned ‘wealth’ produced by rising house
prices, as government commentary makes clear.
(That the Prescott
zones next in line after those two are the South West and the East of England is
perhaps a reflection of their attractiveness as retirement zones for an ex-London
elite.) In London your house can make more than you do. So no wonder the political pressure to
abolish Inheritance Tax is unlikely to go away.
Labour’s plans for a ‘mansion tax’ have been labelled an
attack on the middle classes, because in central London all house prices are mansion prices,
aren’t they? One estimate is that 85,500
of the 110,000 houses likely to be hit are in London.
Better by far that those provincials pay more than that Londoners should
find themselves a bit strapped for cash, don’t you think?
Well, no. It’s time
we had a property taxation system that adequately reflects ability to pay. Council Tax banding only reaches the
foothills of serious wealth. For as long
as that happens, it means that the most regressive of taxes gives up the ghost
before it has a chance to bite those whose accountants and lawyers can get them
out of paying most other taxes. So London goes on being a
magnet for some of the world’s worst economic psychopaths. The cost of living in London
continues to rise for everyone there – and indirectly for everyone not there so
long as we pay the difference through UK taxation and distorted public
spending patterns. Those spending
patterns remain inevitable without real regional power to hold a
London-obsessed Treasury to account.
The Union works very well for London.
The question the rest of us should ask is what we get out of it. If we don’t like the way the money goes, then
we need to organise politically to get it back.
The inflated weasel needs to feel the press of the pin.
