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13 May 2021

The Tories’ embrace of the anti-London mood is a danger to the economy

If the north is to succeed economically, the Conservatives must learn from the capital, not denigrate it.   

By David Gauke

If you were to look at the pre-pandemic economic geography of the UK, one place in particular stands out as a success story. London was the economic powerhouse of the country – the greatest financial centre in the world, containing the richest and most economically productive sub-region in Europe, and making a net contribution of £39bn to the public finances in 2018-19.

If you were to listen to the political debate within the UK, one place in particular stands out as being unpopular. London is seen as being unfairly favoured, receiving far more in infrastructure spending than it should, and being out of touch with the needs and values of the wider country.

When politicians from the UK’s nations and cities outside the capital city criticise London it is not just shorthand for the UK government but also aimed at the city itself. The subtext is that London has been enriching itself at the expense of the rest of the UK.

There are big electoral rewards for any politician who can forcefully articulate that they will stand up for their locality against this process, as Andy Burnham, last week (6 May) re-elected as Mayor of Greater Manchester by a landslide, has shown. 

Even more remarkably, Boris Johnson – a two-time London mayor and MP for a London constituency (Uxbridge) – has been able to exploit the public mood. As the public face of Vote Leave he represented an insurgency against what was seen as the “London establishment”, and as prime minister he has placed “levelling up” at the heart of his electoral message. The consequence is that voters in the Midlands and northern England are prepared to support the Tories to an almost unprecedented degree.

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London’s unpopularity is bad news for the capital. The political imperative is to favour other parts of the country, to move resources elsewhere. There would be little parliamentary pushback – there are relatively few Conservative MPs left in London (21 compared to 48 after the 1992 general election) and even if some of those are lost, that could be easily outweighed by further gains in the Red Wall (even if a little inconvenient for the Uxbridge MP). Meanwhile, Keir Starmer is not going to take the political risk of being a stout defender of London, and Sadiq Khan, re-elected as mayor by an underwhelmed London public, has been ineffective in explaining the value of London to the country at large.

This would be a bad situation for London at the best of times and these are not the best of times. Brexit has meant that the City is no longer well-placed to provide financial services to the EU, resulting in some activities relocating. Covid and the likely changes to our working patterns will, in all likelihood, leave London less vibrant and with a hole in Transport for London’s budget that the government might not rush to fill.

It is unlikely that London will be a priority for this government. Nor is it unreasonable to focus on improving the economic outcomes for other parts of the country when we have very high levels of regional inequality.

There are, however, two major problems for the wider economy created by the anti-London mood. First, it is hard to see how the country thrives without a thriving London. Second, there appears to be a reaction against the importance of cities at all. Instead, the emphasis is on towns and a desire for people to “live local and prosper”. Sadly, this is not realistic (or, as Spock might say, logical).

Cities offer the opportunities of agglomeration. Employers benefit from deep labour markets; employees benefit from a greater diversity of employment opportunities. Producers and consumers benefit from bigger markets – proximity brings down barriers to trade. Larger populations allow scope for more social, cultural and entertainment options. The young in particular appreciate that cities can offer greater choices in terms of friends and partners. By and large, cities are where most of the talented and ambitious want to be, at least in their twenties, and good jobs go where the right people are (more than the other way round). All of this means that cities are more productive than elsewhere – and that will continue post-pandemic.

Before “levelling up” we had the Northern Powerhouse. This focused on connectivity and sought to bring together the northern cities and create something comparable to London in terms of a large go-to-work area for educated, economically productive people. As a strategy it was forward-looking, unsentimental and not particularly popular, accused of being too city-focused and not doing enough for towns.

“Levelling up”, in contrast, appears to involve saying that people will no longer need to move to find opportunities as towns, as self-contained entities, will be reinvigorated as places to live and work.

It is going down a storm with the electorate but it will not succeed in reviving the northern economies. The hard truth is that the absence of scale means that towns are only going to be successful on a sustainable basis if they are well-connected to vibrant cities, just as towns in the south east benefit from proximity to a big, dynamic city.

If we want the north to succeed economically – and we should – then rather than denigrating London we should seek to emulate it. Put cities at the heart of levelling up.