Monday, 3 December 2012

The South East Myth

I've often heard this sort of thing, in the past, even from someone in Wales, but it's good to see it in print so I can finally dissect it...
Sick and tired of subsidising folk from the rest of the country?
You belong to a select club – the club of the hard-working, clever and creative people living in London and the South East who single-handedly are giving the rest of the nation a standard of living they can’t, or won’t, create for themselves.
The problem here is that it depends what is meant by the word "subsidising". Unemployment benefit? Income support? Absolutely. People in the South East are subsidising the rest of the country.

But, let's consider the word more broadly, in terms of the transfer of wealth around the country. Not just unemployment benefit and income support, but every single time that someone pays tax to the exchequer, where it goes.

So, let's start with the easy stuff like arts, where the 12.5% of people in London receive 32% of the UK's arts subsidies. Then there's lottery money that was spent on building the Dome, the renovation of the Royal Opera House.

We could move onto the £3bn in subsidy that London Transport receives each year. There's also other transport subsidies in recent years like Crossrail, St Pancras and HS1.

Then the £11bn on the Olympics, the major museums, the embassies (and all the security jobs for them).

Then there's the subsidy for higher cost government jobs that comes from the rest of the country, via London weighting which means that Londoners get cash from the rest of the country.

Then there's the bill for housing benefit for London. Now, you might say that Kelvin McKenzie doesn't get housing benefit, but the thing is that many of the people who serve him in shops, restaurants or whatever else do. Therefore, it's still a subsidy.

Then we can consider just how much of government is in London, from parliament, to Whitehall to numerous quasi-governmental bodies and quangoes like the FA and the BBFC.

And all of this subsidy creates jobs, and distorts the economy towards the South East. A parliamentary lobbyist is going to be based near parliament. They're going to take a minister out to a fancy restaurant near Westminster, not Pitlochry. A government launch is going to use London-based caterers, not Liverpool-based caterers. National newspapers are based in London because they need to be near to parliament. If parliament moved, so would the national newspapers.

On top of that, a lot of this feeds into the South East. The people working in London often live less than an hour away. Companies serving governments or people with government contracts are often no more than an hour away (you can move programming to India, but you can't move things like user liaison).

I've worked with people all over the country: Glasgow, Manchester, Cardiff, Wiltshire, Bristol, Reading, London, Southampton and Exeter, and honestly, the people in the South East aren't any smarter. The best software teams I've worked in have been in rural Oxfordshire which is barely on the edge of the South East (and I think it's because they get a lot of fresh meat graduates).
It has become fashionable for all parts of the UK to seek home rule. I support Scotland’s desire to go it alone, not least because I would be delighted to get them off the payroll.
Why should the good people of Guildford have to fund the unhealthy habits of Glasgow? So the Southern Party might even include in its manifesto home rule for London and the South East.
I once tried to explain this to someone calling for Welsh rule, that all this UK government departments that had been placed in Wales no longer would be as they currently are. Wales would still need a DVLA, but it wouldn't be serving Wales and the rest of the UK. The number of jobs would shrink.

If the South East split off, the BBC wouldn't get £4bn of money, most of which flows through London. It would get around £1bn. The other £3bn would be spent on a UK BBC outside.

And that's why people in London with expensive housing should pay more tax. Because those values aren't created by them being clever, they're created by government spending money there.


  1. A well written post explaining things very clearly. You could also mention that London and the South East is not self-sufficient in electricity or water either.

  2. Indeed. The Thames Water customers outside of London pay for the demands of London. It's why the South East needs to be depopulated.

  3. Excellent post.

    I would also add my argument about the "South East Bubble" being strongly driven by London being the place where the government/banking "cartel" pump money into the economy. Imagine if I (in Northampton) started a large counterfeiting operation. It would naturally draw commerce towards Northampton, at the expense of other regions, without actually producing anything at all, like a kind of regional Keynesian stimulus. I think this is a major contributor to the South East effect.

  4. Ian B,

    I've not quite worked out the connection between government and banking locations, especially as other countries have their government and major financial cities in different places.