How London’s dominance has become ever more entrenched

From Alasdair Galloway:

I found the recent publication of “UK CIVIL SERVICE NUMBERS – INSIGHTS FOR AN INDEPENDENT SCOTLAND” as reported by stewartb in the Tusker (https://talkingupscotlandtwo.com/2020/11/15/uk-civil-service-numbers-insights-for-an-independent-scotland/) particularly interesting as I had just send a letter off to the Herald in reply to weel kent Unionist and Labour die-hard, Peter Russell.

Russell had been critical of an earlier letter alleging that Scotland was contributing to such as Crossrail, the new London sewer (need to be some size that, wont it?) as well as HS2. Russell pointed out that the first two are London projects and thus Scotland does not contribute, and that Scotland secured some economic value from HS2 – a railway for which there are no plans to get anywhere north of Leeds.

Much of this can be shown from Westminster stats – you know the usual stuff – GERS etc. My letter took a different tack, suggesting that the issue was less who was paying for it all (though I agree this is important), but  more the advantages that this gives London in particular, though also, to a lesser degree, the south east.

The Westminster government stats on economic growth (or indeed most measures of economic wellbeing) don’t only put London at the top, but miles ahead of practically any UK region or nation. Moreover – and in the medium to long term, this is even worse – year on year, the gap between London and every other part of the UK gets wider.

Stephanie Flanders, then BBC Economics Editor, wrote in 2013 https://www.bbc.co.uk/news/business-21934564  “Over time, you can see how London’s dominance could become ever more entrenched, with Britain’s “second tier” cities never reaching critical mass”. Perhaps, given the lapse of time, we are there already?

How is that this has happened? Arguably, this is because of how the UK is organized. Please note, I am not suggesting some conspiracy by the London elite (though I wouldn’t necessarily deny it either), but that the problem is the way the UK is organized.

Just think

  1. Where are the most senior Civil Servants located?
  2. Where are most UK National Centres and National Museums?
  3. In which city is the largest number of Company HQs?
  4. Where is the centre of the UK’s financial services industry?

The answer, of course, in each and every case is London.

If we take the point of Stewart B’s article first, he shows London has 20% of the total (91,200) with c.13% of the UK’s population, while Scotland, with about 8.5% of the population, has 10% (45,600).

The issue here, though, is not just whether Scotland has its fair share (on a population basis it would be hard to argue that we don’t), but what kind of Civil Servants? A former colleague – an English one – once ventured the opinion to me that the problem for Scotland was “that the legs are up here, but the brains are in London”. This is confirmed in a number of ways in Stewart’s article

  • around two thirds of government policy makers are located in the UK’s capital.
  • other civil service professions concentrated in London are economics (75%) and communications (53%), while those working on operational delivery are more likely to be outside London
  • HM Treasury (HMT) – perhaps the most important department outwith Downing Street itself has a negligible presence outside London – “97% of its staff are in the capital (excluding those in its executive agencies)”

Stewart also – correctly – cites that “even before regional pay differentials are considered, the government estimates that accommodating a civil servant in London costs more than three times as much as accommodating a regional counterpart”. We’ll come back to that, because there is more.

We mentioned National Centres, so things like the National Theatre, the British Museum, etc etc, as well as the various sporting facilities and organizations that are located in London.

Diageo – which owns a fair-sized chunk of the Scotch whisky industry as well as other types of booze – is HQd in London – Park Royal, so their profits are declared there. Sure, there are regional stats which break this down, but mostly they are estimates. Take a bottle of Scotch, how much value does the HQ in London generate? They might be the marketing gurus who take the product abroad to sell, but let’s face it, if it were not for all the distilleries up here, they would have hee haw to sell. But the profits are declared in London. Contemplate that for how many Scottish establishments with their HQ in London.

Then there is Financial Services, much of which is located at London Docklands, though you will struggle to find a docker there now. Thirty years ago, as places like Canary Wharf were being developed this was described by George Rosie (“Scotching the Myth”) as “the most subsidy-laden patch of real estate in Britain, if not Europe”, assisted to no little degree by 30 years of tax reliefs, as James Mitchell has pointed out.

This might seem odd – not collecting tax, but the point is not to take a year on year view, but the longer view, that in due course once all these nice big buildings are built to accommodate the financial hub of Europe, the money will roll in then at a factor much greater than the reliefs that had been given.

Then there is the Light Railway, the City Airport. Once the infrastructure of London is dragged into view – rather than just admired – and we start asking questions about where the money came from – and remember, for instance, tax reliefs do not count as expenditure – the game that Russell and others play with comics such as GERS becomes obvious. Much London expenditure can indeed be paid for in London – but that is because of expenditure, or tax reliefs, provided by Westminster years ago.

So yes, London creates a good deal of value, and the wealth of the UK, but to argue that it subsidises the rest of us in the way that is claimed totally omits the contributions made to that dominance in the past (eg the tax reliefs for Docklands) and also – or in particular – the distorting effect it has on the UK economy and many other sectors (eg culture).

One instance was when that well known Nat, Vince Cable, observed while Business Secretary in the Lib-Dem/ Tory coalition, that London is a “giant suction machine” sucking in resources of all kinds – human, financial etc – from all over the UK. Stephanie Flanders in her 2013 article spoke to the chief executive of Birmingham City Council, Stephen Hughes, who told her getting rid of London would be a major challenge to big cities like Birmingham. Instead of complaining about those one-size-fits-all policies (usually London’s size), he and his colleagues would have to get on with coming up with their own policies and solutions! Sounds a wee bit like independence that, doesn’t it?

For instance, what is known as “the bedroom tax” reflected a problem in paying Housing Benefit in and around London. With the demand pressures on accommodation in London, landlords were beginning to treat this benefit as a sort of personal piggy bank – putting up rents as and when they pleased with consequential increases on government expenditure.  The problem was not found anywhere else, but we all got the bedroom tax!

With regard to economic policy Flanders suggests policy in the UK would be very different if London were less dominant – less focused on financial services (mostly in London) and more on manufacturing.

Therefore, we need to focus on the consequences of the stats StewartB puts before us. This is not to say that the conclusions he draws are in any way wrong – quite the reverse. However, we need to pose further questions such as

  • How did we get to this situation?
  • What does it mean more widely in terms of how the UK operates?
  • Does London and the south east really “keep” the rest of the UK or does this simply ignore what underlies the data collected. For instance
    • reporting profits at HQ, which disproportionately is likely to be in London
    • the advantages to London of having many National Centres such as Museums and Theatres for income tax and the level of VAT,
    • the income tax base from having a disproportionate number of big earners there – not just the best paid Civil Servants but the upper management echelons of the private sector
    • the concealment of government support through means such as tax relief.
  • And finally, can London’s domination ever be reversed by any government (though it won’t be this one!)?

One final point, if I may. Flanders speaks of second tier cities that will never reach critical mass because of London. In Scotland, they are particularly likely to be Glasgow and Edinburgh. An independent Scotland MUST ensure that Glasgow and Edinburgh do not become our equivalent of the south east. It is essential that places such as Dundee, Perth, Aberdeen, Inverness, Kilmarnock and Dumfries are all able to achieve their potential rather than being squeezed out by Glasgow and Edinburgh.

For instance, why do the most senior civil servants all have to work in Edinburgh. Surely one of the things the Lockdown has demonstrated is that it’s possible for work to be done on a distributed basis (eg Zoom). The Scottish Government made something of a start when, with 1500 jobs to distribute for the new Scottish Benefits Agency, half of them went to Dundee, but the other half to Glasgow. So one and a half cheers.

4 thoughts on “How London’s dominance has become ever more entrenched”

  1. Will read this again later. One thing, the elephant in he room, OIL, Scotland’s stolen £trillions. Why on earth does anyone imagine that the McCrone report was deemed secret and not allowed to be seen for 30 years?
    This is a more recent comment on that dirty stuff.

    Yet to watch this, it’s from 2008.

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  2. The North/South divide. Recognised years ago. London totally congested. Hinders economic activity. Scotland empty. Hinders economic activity. Unequal. The illegal Barnett Formula. Scotland paying for things it does not need. Not having the funds for what it does need for economic growth. Stagnant population. Until Devolution 2000. Population increased. No taxation without representation.

    The Jacobite rebellion, the Clearances, War. Higher unemployment in Scotland engineered by Westminster illegally. Illegally taking Scotland’s revenues and resources. Lying about it and keeping it secret under the Official Secrets Act.

    Thatcher the Barnett Formula to illegally take and misuse Scottish revenues and resources. Ministers sworn to secrecy resigned. The mismanagement of the Scottish economy. The illegal wars. The banking crash. Devolution mitigating Tory cuts for the poorer. More equality in Scotland mitigating the cuts caring for people. SNP governance.

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  3. London sucks the rest of the country, and Scotland, dry. The centralisation, the financialisation – everything about it is designed to keep keep sucking wealth out of the rest of the U.K.

    Here is a good podcast from Mark Blyth interviewing Brett Cristopher about the rentierism economy we have in the uk, part of the neoliberal ideology, it stifles growth, stifles competition and makes us all poorer

    (Not strictly to do with the London problem, but London is just part of the problem)

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