Love London by all means - but dont forget about the rest


By Mike Emmerich

What’s good for London is good for the UK, right? Well yes, but that’s not the whole story.

Advocates for further devolution and public investment for London can point to myriad statistics which show how reliant the rest of the country has become on the capital. The latest ONS figures show that London produced a £26.6bn fiscal surplus (just over £3,000 per head) which is redistributed to fund public services in struggling regions. And if by ‘struggling’ we mean anywhere receiving more in public spending than it raises in tax, we can include every single region outside London and the wider South East.

And with London’s GVA running at about 170% of the UK average, it’s easy to make the argument that investment in London delivers a bigger bang for the buck.

But is that healthy? Quite apart from having all our eggs in one basket (even if laid by a seemingly indefatigable golden goose), do we really want to create a ‘city state’ economy supporting an increasingly barren hinterland?

Transport infrastructure is perhaps the most egregious example of the gulf in largesse. Including Crossrail, London will receive nearly £1,900 per capita for transport projects between 2016/17 and 2020/21, compared to £289 in the North West and £247 in Yorkshire.

So it’s hardly surprising that Transport Secretary Chris Grayling’s near-simultaneous cancellation of electrification of the TransPennine route between Manchester and Leeds, while giving an apparent green light to the £31bn Crossrail 2, stuck in the craw of many north of the Watford Gap.

But it wasn’t just a PR gaffe. Quite simply, it appears ignorant of the clear benefits that can accrue from investment in regional economies backed with sustained political commitment.

The latest Cebr report on city economies shows that Manchester’s economy has grown an impressive 9.1% since 2014, with Leeds growing at 8% - both ahead of London’s 6.9%. It can’t simply be coincidence that these cities’ strong growth in sectors including life sciences, financial services and digital technologies has quickened since the advent of George Osborne’s Northern Powerhouse drive.

It remains to be seen what effect city-region devolution and metro mayors will have, but the examples of London and Scotland show that growth strategies tailored to local strengths can reap dividends.

But to continue harnessing the benefits of agglomeration to fuel broad-based growth, we need to focus on the fundamental enablers. In the context of a national industrial strategy, this might lead us to consider that connectivity between cities in the North and Midlands, combined with greater control over skills and planning, should take a higher priority than further turbo-charging of London’s growth engine.


Mike Emmerich is co-founder of Metro Dynamics, a consultancy specialising in city growth, and author of the book Britain’s Cities, Britain’s Future.