A rise in bankers’ bonuses and a cut interest rate for the UK’s richest 5% will go largely to residents of the capital and its environs. The £45bn package is aimed at the rich, corporate profits and boosting land prices and the private housing market. Of the 48 English business zones to enjoy the glory of the Treasury, just 16 are in the north. More seriously, if the cost of the tax cuts is not simply recovered from future tax increases, £35 billion has to be found over the next four years from public spending, according to the Resolution Foundation. With Scottish and Welsh budgets protected by the pro-union Barnett formula, the result is a return to wild austerity in English regions heavily dependent on public funds. Kwarteng and his boss, Liz Truss, clearly believe that Britain’s economic growth depends on London and its main industry, finance. In the quarter century after the Big Bang of the 1980s, this was largely the case. London’s wealth soared to European supremacy and its taxes financed the declining northern provinces. From 2008 onwards this wealth stuttered. While the south-east of England remained among Europe’s wealthiest regions, the gap between it and other parts of the UK widened, making the country the most geographically unequal large economy in Europe. At least Johnson recognized this. To assume that withdrawing even more money to London will reverse this divergence by “trickling down” is intellectually absurd. However, Kwarteng’s budget is glaring. He wants to make London increasingly attractive to wealthy newcomers. He wants to swell his banks, overheat his house prices, build over his countryside and enjoy developers (and party sponsors) turning London neighborhoods into miniature Hong Kongs. It has yet to stop the toxic expansion of Heathrow or end HS2, now little more than a massively subsidized commuter line in London. Such excesses are unthinkable in the north. When a British chancellor waves money in the air, London immediately grabs it. The lameness of rural Britain’s productivity is the biggest structural weakness of the UK economy. Insurer Legal & General now estimates that cities such as Manchester, Newcastle and Sheffield contribute less per head to their country’s economy than even cities in the former East Germany. It is clear that they must be helped to maintain their talent and preserve their quality of life. They need creative urban hubs instead of bleak gentrified investment zones. They must become attractive places to live and move around, not dreary places to leave. The issue is not capital. The British economy needs the rest of the country to reverse decades of decline. For once, London has to take a back seat.
