London and the South East already vastly subsidise the rest of the country. The answer is to liberate the North, not seize southern wealth
Daily Telegraph 01/07/26
Andy Burnham is not so much King of the North as Slayer of the South. His government will fail, but not before inflicting immense damage on London and the Home Counties. He will ruin all that remains tolerable in our troubled nation, without fixing any of its pathologies. He will confiscate what little wealth southerners have been able to cling on to in the face of punitive taxation, stagnant wages and declining house prices, while failing to meaningfully spread opportunity to northerners.
His gimmicky No 10 North, his pledge to spend much of his time in Manchester, his bogus “devolution” dedicated to unleashing dysfunctional bureaucrats to waste even more of the South’s tax pounds will prove to be a calamity. He is coming for southern homes, investments and income via his land value tax, death tax, higher capital gains tax, “mansion tax” and other levies, all of which target the most productive, hardest-working people.
Every major piece of extra expenditure – Burnham’s new layers of officialdom, Sir Keir Starmer’s subsidy to EU students, pay rises to resident doctors, the £5bn black hole in the defence budget – will be paid for overwhelmingly by southern English taxpayers, who are already being bled dry.
Only London and the South East regions enjoyed a net fiscal surplus in the 2023 financial year, contributing more to the exchequer than taking out of it; all other UK regions pocketed more than they paid out. Without London and its hinterlands, massive, immediate cuts to the NHS, pensions and welfare would be required in the rest of the country.
London’s nine million inhabitants generate £216.4bn in revenues for the exchequer, against £194.4bn for the 15.7m residents of the northern regions (North East, North West and Yorkshire and the Humber).
Southern England combined (London, the South of England, the East of England and South West) generates £557.1bn in revenues, is in surplus, and accounts for more than half of the total £1.029tn raised by the UK.
Burnham, like Rachel Reeves, cannot see a golden goose he doesn’t want to cook. There were 299,000 additional-rate (45p) taxpayers in London out of 651,000 in southern England overall, 73 per cent of the UK total of 893,000 in 2023-24, according to the latest HMRC figures.
What will happen if they leave, or retire early? Manchesterism won’t save us. There are just 19,000 additional rate taxpayers in Greater Manchester metropolitan county – fewer than 23,000 in the London borough of Wandsworth alone. For all of its skyscrapers and free buses, there are only 3,000 45p taxpayers in Manchester itself, the epicentre of Burnhamonomics.
As I’ve written, there has been progress in Greater Manchester but no more than in many other places, and any talk of a “miracle” is based on faulty statistics or confusing urban regeneration with sustainable growth.
The North pays relatively little income tax, stamp duty, capital gains tax, inheritance tax, private school tax or corporation tax; the new wealth taxes that Burnham’s team is contemplating will fall almost entirely on the South. Raising those levies is tantamount to geographical class warfare, a vibes-based attack on the South, a dog whistle to northern class warriors, a clobbering of a super-productive subset of Londoners and residents of Berkshire, Buckinghamshire, Essex, Hertfordshire, Kent, Surrey and Sussex. Burnham’s Land Value Tax should be renamed the Southern Garden Tax.
For all their wealth, London and southern regions suffer from numerous pockets of extreme deprivation. Challenges include integration, welfarism, anomie and worklessness. Living costs are sky high. Congestion is rife after years of limited investment in anything other than a handful of commuter rail schemes. Water and energy shortages loom.
Many London high streets – away from uber-fashionable or gentrifying areas – are in crisis. London is home to a large proportion of low-skilled migrants, many in social housing. There is a homelessness crisis. Many coastal towns in the South are a tragedy. Jaywick, in Nigel Farage’s Clacton constituency in Essex, is shockingly impoverished, as are parts of Cornwall.
Zero-sum thinking and tall poppy syndrome pervade this discussion. London and its economic region are not too rich: they have underperformed since the financial crisis of 2007-2008 when compared to other top cities around the world, from Singapore to Miami to Houston, partly as a result of Labour/Tory social democracy, over-regulation, over-taxation and running down infrastructure to spend more on the NHS and welfare.
The problem is that the rest of the UK is too weak, too unsuccessful: we should simultaneously aspire to a renewed boom in London, as well as a rebirth of the rest of the country, allowing the North to close the gap as part of a tide that rises all boats.
London’s renaissance began in the 1980s, fuelled by the Big Bang, competition, globalisation, free-market reforms, tax cuts and stock market privatisations. The recipe was simple: private enterprise created a large number of well-paid financial and professional services jobs.
These more than compensated for the post-1960s collapse in manufacturing and shipping. The Docklands, once a wasteland, became home to these new industries, as did central London, from the City to the West End.
Devolution did not cause any of this. The reverse is true: Margaret Thatcher had to abolish Ken Livingstone’s loony-Left Greater London Council and Canary Wharf bypassed local politicians. The rest of the UK’s failure is the mirror image of London’s success: industrial output slumped in the North and elsewhere, but new industries and foreign investment did not compensate. Net zero has destroyed much of what was left.
The “London-style” solution, therefore, must be to unleash private-sector growth in the rest of the country – services, biotech, robotics, energy, drones, defence, high-tech manufacturing and so on. It is not to adopt the failing Sadiq Khan’s post-2000 model of devolution, which is damaging, not helping London.
Instead of wasting southern money on benefits and subsidies, the answer is to slash northern taxes on capital to close to zero, to use Brexit freedoms to build a gigantic tax haven, to cut planning rules, to deregulate the labour market, to impose welfare reform, to focus on education. This will never happen under Burnham, who just wants to punish the South to pay for his municipal fantasies.
Our incoming prime minister needs to read Ayn Rand’s Atlas Shrugged: “Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce.” Burnham should beware a southern tax revolt, for it will be explosive when it comes.
Comments
Post a Comment