Monday 12 September 2016 6:45 pm

The future of London: Is the city edging towards independence?

It is increasingly easy to characterise London as a “city state”. Its scale, wealth and multi-dimensional differences (as compared to the rest of the country) mean it has more in common with New York or Toronto than with Yorkshire or Scotland.

The creation of the office of mayor of London, a glamorous Americanised form of government, makes such differences all the more obvious. London is unique and, arguably, alien to the rest of the UK. The Brexit referendum, where London produced a 60:40 Remain vote, compared with the 48:52 UK-wide Leave outcome, hugely reinforced this perception of difference.

The city’s population will soon pass 9m, with official projections suggesting it will reach 10m or even 11m by the 2030s. Population density is 10 times higher than the next highest region. It has more residents than Scotland and Wales combined and produces well over a fifth of the UK’s GDP. About 40 per cent of its population was born outside the UK and about 40 per cent are non-white. The city’s tax payments considerably exceed its total of public expenditure: £10bn to £20bn of its taxation each year is “exported” to the rest of the UK.

Given this wealth, productivity and scale of difference, could London go it alone as a city state? Might it make sense for the rest of the UK if somewhere so unrepresentative of it were no longer influencing its government, values and economic system? Might Hong Kong or Singapore be better models for London?

Could Hong Kong be a model for London to emulate? (Source: Getty)

The more London’s population and economy expand, the greater the propensity of (at least some) people elsewhere in the country to resent it. It is perceived to “suck in” resources and talent. It benefits, we are often told, from a disproportionate share of investment. Footloose global capital settles there, creating glittering clusters of skyscrapers owned by rich foreigners. Business, government, culture and the media all have their headquarters in the city. Anything this successful causes the British to worry. London’s apparent success compared to many other parts of the country was seen (by at least some people) as part of the rationale for the UK’s Brexit vote.

Read more: Crisis, what crisis? You can see Brexit everywhere but in the statistics

Most of the time, Londoners accept that their city will be attacked for flourishing so ostentatiously. But there is a parallel alternative narrative, which includes important truths, about the cost of housing, growing inequality and the standard of living faced by many London residents. House-building lags population growth in the capital, while the rising cost of renting or buying a home has reduced many households’ disposable income.

Because London is not currently a city state, it cannot access the full yield of its own tax base to seek to address the challenges of inequality and poverty faced by many of its inhabitants. Chancellors remove part of the capital’s massive tax-take to fund public spending in other parts of the country. High-end homes in Kensington and Chelsea and Westminster pay a large proportion of UK stamp duty, but the cash yield is not used locally to help those with housing need.

Kensington and Chelsea
Stamp duty receipts in central London don't stay in the capital (Source: Getty)

If London were partly or wholly independent of the UK, it seems likely the city’s political leaders would use a chunk of its large tax yield to increase the amount of “affordable” housing. The resources could certainly be used to clear ex-industrial sites for housing and to pay for the infrastructure needed to allow development.

The London median voter would alter the way public spending was used, partly because the bigger and more densely-populated a city, the greater its dependence on trains, buses, sewers, utilities and housing. There would surely be less consumption and more investment.

There are excellent arguments for giving London (or Greater Manchester or Birmingham/West Midlands or other city regions) greater control over their own resources. But would other parts of the country really want to be rid of their super-charged capital?

In reality, London and the rest of the UK are substantially intertwined. Despite being a “global city”, most of the capital’s trade links are with the rest of Britain. Over 60 per cent of the city’s population are UK-born and many who were not adopt the inclusive word “Londoner” within hours of arrival. People from all over the UK live in London, including 90,000 born in Scotland, 54,000 in Wales and 33,000 in Northern Ireland. Without London’s (and the South East’s) tax “surplus”, the rest of the country would face a huge budget deficit.

Londoners Enjoy The Warm Weather
"Londoner" is an instantly inclusive label (Source: Getty)

The outer border of London is the same length as the one between England and Wales: could London be more welcoming to migrants (with a London-only visa, for example) while the rest of the UK reduced migration? This possibility has been raised since the Brexit result. It would be hard, but not impossible, to differentiate trading and taxation rules between, say, Harrow and Watford. Nevertheless, many symbols of British and English nationhood are located in or near central London: remember St Paul’s in the Blitz.

The capital may look more and more like a city state, but it and the rest of the country will stick together. Like a successful and rich relative who has left the provinces for the big city, London can be seen to have “moved on”. But in reality, family ties still bind. Despite ancient rivalries, contemporary competition and occasional envy, “city state” London and the rest of the country have little choice but grudgingly to get along.

This is an extract from The Future of London, published by Bright Blue and Localis. and

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.