(Photo credit: Wikipedia)
According to , the jig is up: it’s time to accept that the UK is London-centred. For Ganesh this is the product of organic processes within the economy, and it in spite of politicians’ best efforts to promote regional rebalancing, they should be “humble” enough give up and accept the inevitable.
Ganesh outlines the hard time London has got in the recent years: “London has not flourished because of favourable treatment by the national political class.” The claim is evidently not the case. London has an expected bias as the nation’s capital. It benefits from money flowing through national institutions and back out to the regions.
Let’s take a national organisation such as the BBC. The Midlands and London raise a similar percentage of the £3.6 billion license fee, around 25% each. Yet the expenditure in the Midlands’ is 2.5% of that figure, where as London swallows 73% of the budget. Simply having the bricks and mortar of national institutions in London has an ingrained bias; it’s hardly a tough lot.
If we cannot begrudge London as a capital for containing our national institutions, we can as a city that has benefitted from the patronage of the political class (and vice-versa) and political agenda.
The focus on globalisation since the 1980s, which has largely benefitted London, is the consequence of deliberate geo-political process. Through legislative pressure and patronage, the city has created for itself the conditions for which the ‘’ of London (financial, legal and professional services) may flourish.
But perhaps as, Ganesh suggests, this centralisation isn’t in and of itself ‘inherently bad’. The coffers of London’s contribute huge amounts to the tax bill and the general wealth of the country. By becoming a market leader in those areas across the world, London is seen as a global hub.
However, the danger of adopting this London-centred, globalisation mentality too readily is that it is demonstrably harmful. By loading up wealth in London, our economy is now too top heavy, so that when ripples of financial crisis in 2008 began to run through the global cities to London, they topple all of our economy not simply the sectors isolated in London.
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Excellent riposte Benjamin! Ganesh makes the classic liberal free market mistake of assuming that all the distortion of the national economy is somehow natural and cannot be challenged without risking damage to the “optimum” running of the economy, whereas you rightly point out that much of London’s dominance is a deliberate political and institutional construction. I would add that anyone who thinks that today’s UK economy is in anything like “optimum” condition needs their head examining. Both governing parties have said that it needs radical rebalancing, both geographically and sectorially. But whilst willing the ends they seem reluctant to will the means.
Governments have the power to strongly influence the shape and direction of their economy, even in this global era, for example by deciding on the distribution of investment or the industrial sectors that should receive most support (as Lord Heseltine points out this is not “picking winners” in terms of individual firms it is simply common sense planning as practiced by most advanced countries).
The distribution of our airport capacity is a classic example – with one lobby giving the impression that there is a natural inevitability that capacity should expand endlessly at Heathrow, ignoring the fact that this is a contrivance of airline and government policy (or lack of it), not a naturally ordained set of affairs. In Germany they take a very different view of the role of government in influencing these key economic drivers and ensure a range of regional hubs.
A recent major research project led by Professor Michael Parkinson (Second Tier Cities in Europe – .pdf ) showed beyond much doubt that the European nations that have a better balance between the economic performance of their capital and second tier cities and a more devolved approach to government and investment, have a better performing economy overall. And this balance will not just occur naturally it must be managed and maintained – totally unco-ordinated free markets will instead generate ultimately inefficient imbalances.
This is not a competition between the other cities and London – of course London has a unique position as a world city and plays a vital role as a motor for the whole economy. The other cities must play an equally important but different role alongside the capital in a range of industrial sectors. But any nation that allows one city or region to develop an extreme dominance of their economy, politics, civic and cultural life will suffer both economically and socially.