London’s Calling

Published as part of the #WM2015 series for The  Chamberlain Files.

According to Janan Ganesh, 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 ‘knowledge economy’ 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.

In a weary manner, Ganesh also offers a number of arguments on how attempts to rebalance the ingrained inequities economy have consistently failed: essentially inferring even if we wanted to say no to London’s dominance, we can’t. Ganesh contends that regional rebalancing has enjoyed widespread consensus and political will, the pet project of many from “Hezza to Prezza”, yet has consistently failed to produce the desired results of the span of half a century.

This picture will be largely unrecognisable to anyone familiar with localism. The post-war consensus has been one of increasing central control, rather than regional rebalancing. The Distribution of Industry Act 1945 was a policy that initiated an ingrained bias that created granted the capital effective control over city rivals: the effect was that London essentially neutralised cities such as the Chamberlain family’s mighty ‘city-state’ of Birmingham as an economic and political powerhouse in it’s own right.

Ganesh offers Thatcher’s managed decline policy for Liverpool in the 1980s as an episode of natural decline to only be scuppered by the ‘political will’ of the ‘regional rebalancing’ consensus and is inferred as a failure. The irony about Ganesh’s claim is that Heseltine’s subsequent interventionist policy actually worked. When done correctly and earnestly, with money behind it, regional rebalance is far from the litany of failures Ganesh outlines, but result in regeneration and mutual economic prosperity.

If localism has failed, it is because when regions demand a fair share, such as with Heseltine’s single pot, we get a thimble. Localism has failed not because of London’s natural dominance, but because more often that not, there is no appetite from national politicians reluctant to give powers over to regional authorities. London is the better horse to back as both politicians and the city benefits from a virtuous circle.

Accepting the tautological ‘historical progress’ argument that London is naturally predominant presented by Ganesh would mean allowing our economy to become perilously top heavy and damagingly unequal. The rest of England needs to recognise it must fight seriously in order to rest any power and wealth back from London in great measure. Otherwise Detroit offers a worrying example of how geo-political and economic division can create huge human cost. The economic divide has become so great in America that states are literally the victims of wealth inequity and a top-heavy economy:

“[Bankruptcy of States] is roughly analogous to a Wall Street bank drawing a boundary around its bad assets, selling them off at a fire-sale price, and writing off the loss.  Only here we’re dealing with human beings rather than financial capital. And the upcoming fire sale will likely result in even worse municipal services, lousier schools, and more crime for those left behind…”

The consequences of allowing to London to become England’s only metropolis would result in dramatic and irreversible human cost: it entrench ambivalence by those in London of the north and hang the sign ‘closed for business’ around the north for any serious economic powers. Those in the regions need to realise that they are in a fight, and a fight that they are losing. Do we want Liverpool and Birmingham to become satellites to London, living museums of a time gone by, or do we want to revive our cities and create a truly competitive nation?

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