London’s Economy

You have missed a good debate, Mr. Hancock, led by the hon. Member for Hendon (Mr. Dismore), who has set out a case that almost all hon. Members have echoed. He made two central points. First, that London makes a wider contribution to the national economy and secondly, that the basic elements of its success are its openness to trade, investment and migrant labour, and the ability to develop clusters in relation to financial services and culture. I happen to disagree with the hon. Member for Ealing, Acton and Shepherd's Bush (Mr. Slaughter) about the rather pungent but brief contribution of the hon. Member for North-West Leicestershire (David Taylor) on metro-centricity. Although brief, it was an important contribution, which reminded us of what everyone else may be thinking. I was reminded of that last week when I travelled outside London the day after the statement was made about the Olympics. The provincial newspapers were dripping with venom about the amount of money that must now allegedly be contributed to London. We need to be aware of that dimension to the debate. I agree with the broad thrust of the arguments, but we need to be a little more self-critical about what is said on London’s behalf. I read the Oxford economic forecasting study on London’s fiscal contribution and it does not actually say what several hon. Members said it did about a net contribution of £13 billion. It says something rather different: that there are a wide range of estimates from £5.8 to £20 billion. The figure would be at the lower end of that if we looked at London residents as opposed to people who work in London and live somewhere else. All sorts of heroic assumptions are made in the report about how to allocate public expenditure and, clearly, there is a net contribution, but let us not dwell on that issue too much. When I lived in Scotland for some years, I was lectured on how Scotland supported the rest of Britain through north sea oil. I do not think that we should become drawn into the same kind of syndrome. The second qualification to the argument is that we need constantly to remember is that there are vast disparities within London. It is not simply a matter of London versus the rest of the UK, as emphasised by the hon. Member for Hackney, South and Shoreditch (Meg Hillier) and other hon. Members. There are two kinds of disparities. The first is the co-existence of extreme poverty and affluence in and between boroughs. Indeed, in parts of east London, there is the extraordinary phenomenon of high levels of unemployment existing a mile or so from the most successful financial centre in the world. As someone who has lived in developing countries for a number of years, that situation strongly reminds me of the enclave economies of such countries where mines and commercial agriculture sit alongside impoverished areas. London has many of those characteristics.