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London is different: the government will spend money there

4 December 2013

6:14 PM

4 December 2013

6:14 PM

The chart at the top of this post comes from the government’s National (sic) Infrastructure Plan 2013. (Sic because it is largely a plan for England.) You can find it on page 30. You may notice that one rather large part of England is not listed on this chart: London.

Perhaps that is because the value of infrastructure spending in London comes in at a nifty £36 billion. Or, to put it another way, spending on infrastructure in London is equivalent to the total amount of infrastructure spending in every other part of England save the south-west. And the south-west’s figure is chiefly so high because of a single project: the new nuclear power station at Hinckley Point.

Ed Cox, from the IPPR, tweeted that the per capita spending on transport infrastructure comes out at: south-west £215, north-east £246, Yorkshire and Humberside £303, north-west £839, London £4895.

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Now you may say there is nothing wrong with that and, to some extent, I would agree with you. London has special needs. London also, of course, is the British economy’s greatest engine. And to remain so it needs major improvements to its infrastructure. By their very nature these will be extremely expensive projects. (And a huge percentage of all rail trips are in London.)

All of that is fine. Everyone in the rest of the United Kingdom can, I think, understand all this. We also understand that money earned in London is sometimes redistributed elsewhere.

Nevertheless, you do wonder sometimes. You wonder, for instance, if London’s need is really so much greater than needs elsewhere. Since infrastructure spending is such a vital contributor to economic growth in London, you wonder if it might not also be quite important in other parts of England. You wonder if spending £64 billion in southern England but only £23 billion in the rest of England quite gets the balance right. You wonder how much easier it seems to be to spend money in some parts of the country than in others.

Noting that London enjoys a capital bonus in every sense of the term is not the same as arguing that London has no need for this spending. But, again, the regional disparity is striking. It reminds us, if we needed reminding, that policy-thinking and policy-making are often London-centric to a degree that might be thought both unfortunate and unwise. (Might an east-west high-speed rail linking the great cities of Lancashire and Yorkshire be better for those cities than faster links to London? I don’t know. I only ask.)

It is, I think, sometimes forgotten – at least by folk in politics and the media – how much London benefits from being the seat of government, culture, finance and the press. It is, for sure, a great and glorious city but it enjoys certain institutional advantages denied other parts of England. Not the least of these is an inbuilt – and perhaps hard to avoid – policy bias that makes London’s needs loom especially large in the political imagination.

I wouldn’t go so far as to suggest Londoners are subsidy junkies. That would be unfair and also not quite correct. Nevertheless, the figures are striking.

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Show comments
  • Dougie Blackwood

    You say that London is UK’s engine. This is partly true. Almost every National company, be it Bank, supermarket, engineering or oil has it’s HQ there. All the profits made throughout the UK are posted and listed as made there. As Vince Cable says, London is the suction machine that draws revenue from everywhere else and spends it on itself.

  • Robert Getty

    london contributes 309 billion to the uks entire gdp.

    • Robert Getty

      if anything london is being unfairly exploited to fund scotland northern ireland and wales.

      • Michael Rossi

        How?

      • Elephant

        Apart from the 700 billion pound saving of its economy by Gordon Brown in 2008 when he used taxpayers money to save the banks.All except one or two based in London.

    • pIXL

      Nonsense.
      Taxes paid by every company registered in England & Wales are considered raised in London.
      Taxes paid on profits of such companies ( eg Tesco, Sainsbury, M&S, et etc) as a result of business activity THROUGHOUT THE UK are considered raised in London.
      London is THE MOST HEAVILY SUBSIDISED region in the UK.
      London LEECHES are the problem.

  • HJ777

    I’m not sure that it is the amount of spending that is significant when you compare regions. It is the amount of subsidy over the long term.

    If the extra spending in London will be matched by greater income (from fares, for example), then there is very good justification. However, if it just means a greater transport subsidy per person, then that is a different issue and difficult to justify economically.

  • Redvers Cunningham

    The figures you refer to ignore infrastructure spending on projects covering more than one region e.g. rolling out smart meters (whatever you may think of them) across the whole of England. So your conclusion that spending in London is equal to spending in the rest of England combined, excluding the South West, is probably flawed.

    • Jambo25

      Not that flawed. What figures for general, pan-English spending can you supply?

      • Redvers Cunningham

        The report states the total value of the infrastructure pipeline is £375bn. The report states that the value of infrastructure projects specifically for London is £36bn. The report states that the value of infrastructure projects in specific English regions outside London is £54bn. By my calculation that means £285bn of the infrastructure pipeline is for national infrastructure projects which straddle regions. Hence my slightly unpopular conclusion that the analysis in this article is probably flawed.

      • Redvers Cunningham

        The report states the total value of the infrastructure pipeline is £375bn. The report states that the value of infrastructure projects specifically for London is £36bn. The report states that the value of infrastructure projects in specific English regions outside London is £54bn. By my calculation that means £285bn of the infrastructure pipeline is for national infrastructure projects which straddle regions. Hence my slightly unpopular conclusion that the analysis in this article is probably flawed.

        • Jambo25

          You don’t really know that at all because there is no specific attribution as to where that money is to be spent.

  • Two Bob

    So money is being spent in an area where Brits are becoming a minority. That figures.

    • MichtyMe

      It’s not only the capital expenditure, there are the running costs to subsidise the transportation of the labour from their outlying townships into the city to service its needs.

  • NorthBrit

    London is catching up on years of underinvestment. The tube is absolutely rammed.
    The government can be relatively confident that it will see a return on its investment through increased business activity and reducing time lost in transport gridlock.

    Poorly directed infrastructure spending (e.g. Spain and Japan) hasn’t had great results.

    On the other hand I suspect that the business case for fixing the section of road along Loch Lomond that was single track with a traffic light for 25 years after the road fell into the loch was pretty compelling too.

    • MichtyMe

      Your wonderful SNP government has just done that, a new corniche over the loch to bypass the rock.

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