London is ruining the UK
In the 1970s it was decided to make London a world mega-city. The rest of the country greatly assisted in paying for this as money was poured into the infrastructure of London and the surrounding south east towns. The rest of the country was largely ignored leaving a collection of 3rd rate, underprovided, cities in comparison. Even the HS2 lines are all planned to slant back to London - London will be the prime beneficiary.
[B]London receives twice the level of public money pumped into it than elsewhere. [/B]Then there is the increased land values and rents created in the city emanating from the public money. This is never in the figures. The fringes of London also benefit from all that.
The south whines that the north of England get direct government jobs claiming they are paid for out of their taxes. The south east has taxes spent on them, but indirectly in infrastructure (mainly transport like rail) to the point it is twice of everywhere else. Economist Fred Harrison goes into it.
The advantage of the infrastructure spending is that it is permanent and creates economic growth. A region with top quality infrastructure is less likely to be directly affected by sweeping government cuts. This convinces the southerners they are propping up the rest of the UK, when they are not.
In the North East they have cried out for an extra lane on the A1M that runs through the region, as this would create economic growth. They are still waiting. The same with Liverpool in expanding the Merseyrail metro and having a station built at the airport. Birmingham is the largest city in Europe without a rapid-transit rail network, while London has one of the largest in the world.
The volume and quality of the infrastructure in the south east ensures all will gravitate towards them - paid for mainly by taxpayers of all the UK.
Another point that makes the south easterners wealthy is the exceptional value of the land. The land values were created by public spending in infrastructure. The economic growth created soaked into the land and crystallised as land values. This value is tapped into by the landowners, small and large, in the region making them far more wealthy than the rest of the UK.
The south east (excluding London) is the world's 20th largest economy, is also propped up by taxes from all over the UK. The south east is wealthy from the fall out of London.
Economist Fred Harrison highlights the bias towards London to the point that it is a black hole for investment at the expense of the rest of the country.[INDENT][B][I]"we see that public expenditure on a per capita basis is more than twice invested in London than other regions in the transport and housing sectors."[/I][/B]
"thanks to the tax system - that there is an automatic bias in directing investment towards London."
[/INDENT]Transport infrastructure projects are assessed on a Dept for Transport "good value for money" calculation.
[FONT=Arial]Value for money category | Benefit to cost ratio | Prospects for the projects[/FONT]
[FONT=Arial][B]Poor[/B] | less than 1 | None[/FONT]
[FONT=Arial][B]Low[/B] | Between 1 and 1.5 | None[/FONT]
[FONT=Arial][B]Medium[/B] | Between 1.5 and 2 | Some but by no means at all[/FONT]
[FONT=Arial][B]High[/B] | Over 2 | Most if not all[/FONT]
Even a 1 to 1.5 would be considered for London.
[B][I]When the value for money calculations were introduced in 2004, the Strategic Rail Authority head, Richard Bowker, stated that all outside the M25 will get little.[/I][/B] Boy he was right.
Harrison:[INDENT]"[London] in the growth years, makes a net contribution to the public coffers between 2 billion and £9 billion. This is disingenuous. The calculation ignores the capital gains that flow from public spending. Public money invested in London yields huge gains in the private sector - in the appreciation in capital assets - [I][B]that far exceed the financial subsidies that are transferred to the regions[/B][/I]."
[/INDENT]Harrison:[INDENT]The reason capital is not so readily invested in the North is that the privileged aggregation of rents at the centre [London] creates benefits such as the public subsidies to transport, and the opportunity to claw back one's tax payments as capital gains. This set of incentives encourages the financial institutions to concentrate close to each other in these areas. The cumulative effect is bias towards the centre [London].
[/INDENT]The infrastructure of Docklands was paid from central taxes - about 1/3 of the total of Docklands. A whole advanced elevated metro was built for it, while Liverpool's docks, which closed down the same year as Londons, rotted.
Harrison:[INDENT]"In addition to private money, the people of the south east also relied on the expenditure of public money"
"The unequal distribution of opportunities is primarily to do with the bias in taxation and public spending. Not the defects in transport systems or the superior talents of the people of the south east."
"[U]The subsequent lopsided evolution of the economy was due to a flaw in the business model[/U] that was employed to fund the investment of capital in infrastructure."
[/INDENT]Harrison:[INDENT]"One illustration of the favourable tax treatment directed at Docklands, which was deemed necessary to expand the commercial space available for insurance and banking corporations. £3.4 billion was invested in the Jubilee Line extension to Canary Warf, while other centres of high population (such as Liverpool) were denied a few hundred million pounds for the metros they needed."
[/INDENT]Harrison:[INDENT]"The Thatcher government decided in 1980 that London's Docklands should be redeveloped. Its primary tool stood justice on its head. Instead of imposing public charge on vacant land - to force it into new uses [this also stops land speculating and financial crashes] - the government created an enterprise zone. One of the privileges was exemption from property taxation".
"The result was predictable. Tax relief was capitalised into higher land values, and families which for generations had made Docklands their homes were pressurised out of the area. Those who did not own land were the losers. The windfall gains did enrich some people. Arnold Fulton purchased a plot of land in a derelict corner of Docklands for £650,000. Developers pursued him fending off their offers until he took £30 million".
[/INDENT]All rail and road projects were directed from central government. The update of Wembley stadium station had subsidies. The Olympics got a hell of a lot. The M1 from the M25 to Milton Keynes was uprated. The cost of the uprating would open Liverpool's needed urban Outer Loop line and even more.
Harrison:[INDENT][LIST][*]"A higher proportion of public spending in the regions is committed to welfare benefits to people who are rendered unemployable by payrole taxes. Those state subsidies are necessary to keep people alive. Unlike investment in (say) a new metro system, they do not produce windfall gains in the land market".[*][B][I]"In London, however, a higher proportion of public money devoted to improving the quality of transport and schools.[/I][/B] This raises the productive capacity of the population working in the capital. The spin-off takes the form of capital gains to land owners. And that means Londoners are more able to claw back the taxes they paid to the exchequer, leaving them with higher disposable incomes to be spent in the retail sectors - which, through the multiplier effect, gives a further boost to the London economy".[/LIST]"The productivity gap is increasing rather than narrowing. It accelerated further during the height of the Dot.com boom. This is not primarily due to the natural trends within the economy, but the conjunction of costs and benefits prescribed by government through taxation."
"If the London property market is overheating, the chancellor may put up the national interest rate, yet property is not overheating in the north east and they suffer because of the raised interest rate."
"[B][I]The boost to London's infrastructure out of the public purse overspills to higher land values, which translates to easier financing arrangements for entrepreneurs who secure an advantage to their competitors in the regions.[/I][/B]"
[/INDENT]Everything is stacked towards London and the south.
[B]London receives twice the level of public money pumped into it than elsewhere. [/B]Then there is the increased land values and rents created in the city emanating from the public money. This is never in the figures. The fringes of London also benefit from all that.
The south whines that the north of England get direct government jobs claiming they are paid for out of their taxes. The south east has taxes spent on them, but indirectly in infrastructure (mainly transport like rail) to the point it is twice of everywhere else. Economist Fred Harrison goes into it.
The advantage of the infrastructure spending is that it is permanent and creates economic growth. A region with top quality infrastructure is less likely to be directly affected by sweeping government cuts. This convinces the southerners they are propping up the rest of the UK, when they are not.
In the North East they have cried out for an extra lane on the A1M that runs through the region, as this would create economic growth. They are still waiting. The same with Liverpool in expanding the Merseyrail metro and having a station built at the airport. Birmingham is the largest city in Europe without a rapid-transit rail network, while London has one of the largest in the world.
The volume and quality of the infrastructure in the south east ensures all will gravitate towards them - paid for mainly by taxpayers of all the UK.
Another point that makes the south easterners wealthy is the exceptional value of the land. The land values were created by public spending in infrastructure. The economic growth created soaked into the land and crystallised as land values. This value is tapped into by the landowners, small and large, in the region making them far more wealthy than the rest of the UK.
The south east (excluding London) is the world's 20th largest economy, is also propped up by taxes from all over the UK. The south east is wealthy from the fall out of London.
Economist Fred Harrison highlights the bias towards London to the point that it is a black hole for investment at the expense of the rest of the country.[INDENT][B][I]"we see that public expenditure on a per capita basis is more than twice invested in London than other regions in the transport and housing sectors."[/I][/B]
"thanks to the tax system - that there is an automatic bias in directing investment towards London."
[/INDENT]Transport infrastructure projects are assessed on a Dept for Transport "good value for money" calculation.
[FONT=Arial]Value for money category | Benefit to cost ratio | Prospects for the projects[/FONT]
[FONT=Arial][B]Poor[/B] | less than 1 | None[/FONT]
[FONT=Arial][B]Low[/B] | Between 1 and 1.5 | None[/FONT]
[FONT=Arial][B]Medium[/B] | Between 1.5 and 2 | Some but by no means at all[/FONT]
[FONT=Arial][B]High[/B] | Over 2 | Most if not all[/FONT]
Even a 1 to 1.5 would be considered for London.
[B][I]When the value for money calculations were introduced in 2004, the Strategic Rail Authority head, Richard Bowker, stated that all outside the M25 will get little.[/I][/B] Boy he was right.
Harrison:[INDENT]"[London] in the growth years, makes a net contribution to the public coffers between 2 billion and £9 billion. This is disingenuous. The calculation ignores the capital gains that flow from public spending. Public money invested in London yields huge gains in the private sector - in the appreciation in capital assets - [I][B]that far exceed the financial subsidies that are transferred to the regions[/B][/I]."
[/INDENT]Harrison:[INDENT]The reason capital is not so readily invested in the North is that the privileged aggregation of rents at the centre [London] creates benefits such as the public subsidies to transport, and the opportunity to claw back one's tax payments as capital gains. This set of incentives encourages the financial institutions to concentrate close to each other in these areas. The cumulative effect is bias towards the centre [London].
[/INDENT]The infrastructure of Docklands was paid from central taxes - about 1/3 of the total of Docklands. A whole advanced elevated metro was built for it, while Liverpool's docks, which closed down the same year as Londons, rotted.
Harrison:[INDENT]"In addition to private money, the people of the south east also relied on the expenditure of public money"
"The unequal distribution of opportunities is primarily to do with the bias in taxation and public spending. Not the defects in transport systems or the superior talents of the people of the south east."
"[U]The subsequent lopsided evolution of the economy was due to a flaw in the business model[/U] that was employed to fund the investment of capital in infrastructure."
[/INDENT]Harrison:[INDENT]"One illustration of the favourable tax treatment directed at Docklands, which was deemed necessary to expand the commercial space available for insurance and banking corporations. £3.4 billion was invested in the Jubilee Line extension to Canary Warf, while other centres of high population (such as Liverpool) were denied a few hundred million pounds for the metros they needed."
[/INDENT]Harrison:[INDENT]"The Thatcher government decided in 1980 that London's Docklands should be redeveloped. Its primary tool stood justice on its head. Instead of imposing public charge on vacant land - to force it into new uses [this also stops land speculating and financial crashes] - the government created an enterprise zone. One of the privileges was exemption from property taxation".
"The result was predictable. Tax relief was capitalised into higher land values, and families which for generations had made Docklands their homes were pressurised out of the area. Those who did not own land were the losers. The windfall gains did enrich some people. Arnold Fulton purchased a plot of land in a derelict corner of Docklands for £650,000. Developers pursued him fending off their offers until he took £30 million".
[/INDENT]All rail and road projects were directed from central government. The update of Wembley stadium station had subsidies. The Olympics got a hell of a lot. The M1 from the M25 to Milton Keynes was uprated. The cost of the uprating would open Liverpool's needed urban Outer Loop line and even more.
Harrison:[INDENT][LIST][*]"A higher proportion of public spending in the regions is committed to welfare benefits to people who are rendered unemployable by payrole taxes. Those state subsidies are necessary to keep people alive. Unlike investment in (say) a new metro system, they do not produce windfall gains in the land market".[*][B][I]"In London, however, a higher proportion of public money devoted to improving the quality of transport and schools.[/I][/B] This raises the productive capacity of the population working in the capital. The spin-off takes the form of capital gains to land owners. And that means Londoners are more able to claw back the taxes they paid to the exchequer, leaving them with higher disposable incomes to be spent in the retail sectors - which, through the multiplier effect, gives a further boost to the London economy".[/LIST]"The productivity gap is increasing rather than narrowing. It accelerated further during the height of the Dot.com boom. This is not primarily due to the natural trends within the economy, but the conjunction of costs and benefits prescribed by government through taxation."
"If the London property market is overheating, the chancellor may put up the national interest rate, yet property is not overheating in the north east and they suffer because of the raised interest rate."
"[B][I]The boost to London's infrastructure out of the public purse overspills to higher land values, which translates to easier financing arrangements for entrepreneurs who secure an advantage to their competitors in the regions.[/I][/B]"
[/INDENT]Everything is stacked towards London and the south.
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