Jackie Kemp in London's Docklands, The Scotsman 26 November 1995.
| 'The 1.1 mile Limehouse Link, the world's most expensive road, cost up to £450m - three times the original estimate and almost twice the Scottish Office's total roads budget for a year.' Jackie Kemp in London's Docklands, The Scotsman 26 November 1995. | |
It has been five years since Scotland on Sunday's Scotching the Myth investigation looked at how the South-east soaks up government cash. George Rosie and Kenny Farquharson discovered that little has changed.
But while huge amounts of public money continue to pour into the South-east, the MPs of London and the metropolitan press continue to grumble about having to 'subsidise' other Britons (particularly the Scots). The Daily Telegraph rejoined the chorus a few weeks ago with a strong plea to Her Majesty's Government to end '... the entrenched pork-barrel preference enjoyed by Scotland'.
Which is a bit rich. Because it comes from a newspaper perched in the centre of London's Docklands, the most subsidy-laden patch of real estate in Britain, if not Europe. It seems timely to remind the Telegraph leader-writers and Tory MPs of some home truths. As a joint Scottish Television and Scotland on Sunday investigation first pointed out in November 1990 - and which SoS updates today - no part of Britain feeds better from the pork-barrel than London.
Nor does it with such aplomb. So that when the Department of Transport spends more than £450m on one mile of road under Limehouse Basin linking the City of London to the glitzy new Docklands it is because the project is vital 'to the whole British economy'.
Similarly, if the new British Library at St Pancreas is a hundred million or so over budget, it is because the library is an 'asset for the whole of Britain' and therefore well worth the extra.
And if billions are spent extending the Jubilee underground line into Canary Wharf (where the Daily Telegraph has its offices) that is a 'strategic necessity'. Otherwise, the glittering towers sold to us as a triumph of Britain's private enterprise culture will remain half empty. Subsidy is for northerners; London has 'planning'.
The fact is that London and the South-east see only what they want to see. As we reveal today, the Londoner spends more public money than the Scot. And, crucially, there is a £30bn-plus gap between Britain's total public spending and a lesser amount known as 'identifiable" public spending; most of that £30bn is spent in the South-east (and to a lesser extent in the South-west). When this is taken into account, the Telegraph's notion of 'subsidy junkies' takes on a completely new light.
The money is consumed by the huge apparatus of the British state; government offices, government research centres, test centres, research councils, motorways (and motorway improvements), trunk roads, and new rail links. Plus, of course, the defence spending on barracks, aircraft research and development, spy centres, firing ranges etc.
Also, huddled in and around London you will find the bulk of the jobs in the civil service, which is meant to serve us all. The best jobs too. Buried at the back of the current issue of Regional Trends (published by the Central Statistical Office) there is a fascinating little table. It is numbered 13.14 and it shows where the nation's crucial research and development (R&D) money is being spent.
In 1993 the government NHS and local authority R&D bill came to £1.89bn. More than £1.02bn of that - or 54% - was spent in the South-east. Of the £2.2bn spent on R&D by Britain's universities and colleges, more than £1.01bn - or 46% - was spent in the South-east. In other words, about half the money spent on R&D in the whole of Britain is being spent in one economic region - London and the South-east.
More than one economist ascribes the relatively buoyant, high-tech economy of the South-east to this concentration of publicly-funded R&D. As Michael Breheny of Reading University told us, not only does R&D create jobs but 'the jobs are in the high-technology sectors, electronics and aerospace that are regarded as very important to any local economy in the country'.
And then there are the varieties of public spending that never appear in the official figures. The BBC is a good example. The BBC survives by a levy, a tax on the viewing public. In 1994 (the last year for which figures are available) that licence income amounted to £1.75bn. Most of that money was spent in the BBC's great broadcasting centres in and around London.
Nor is that all. The Foreign Office pay the BBC another £175m to run the BBC World Service and to 'monitor' foreign broadcasting stations. All of that money is spent in Bush House in London and elsewhere in the South-east.
And then, of course there are airports. Three of Britain's biggest and busiest airports - Heathrow, Gatwick and Stanstead - are in the South-east. They are major employers. The prosperity of hundreds of firms and thousands of families depend on the airports, both directly and indirectly. But that prosperity comes at a price.
As the privatised British Airports Authority PLC made plain in its annual report, the airports rely on their duty-free shops for their profit. Without that essential tax-break, in effect a subsidy, to airport retailers, the big airports would be running at a serious loss.
Which is why every time the government tentatively suggests that, perhaps, it is time to abandon the duty-free system and let market forces rip, the sturdy capitalists who run Heathrow and Gatwick start to whine like a jumbo jet warming up.
Since our ground-breaking report in 1990, the Scotching the Myth argument has become a recurring feature in the Scottish political debate. Recently it has been used to fend off attacks on Scotland's apparently generous share of identifiable public spending. And in the Scottish Office's recent report on whether or not Scotland pays her way in the UK, the home truths of Scotching the Myth were plainly at the back of the civil servants' minds while they totted up their figures - even though the arguments seldom made it into the final calculations.
Updating Scotching the Myth five years on, the advent of the National Lottery and the extended favours to the London Docklands only serve to further underline the basic case. And the recent availability of figures on government spending in London confirms our suspicions that even before many of the hidden subsidies are calculated, London is the real subsidy junkie.
But there are some small signs that at first glance seem to suggest that things are changing for the better. The massive concentration of Britain's civil servants in London and the South-east is showing signs of slackening slightly. Five years ago 37.6% of all UK civil servants were in the South-east; by this year that share had fallen slightly to 35.3%.
In part, this is due to highly-publicised relocations of some government departments - notably from Customs and Excise and the Army administration. Civil service unions, however, say any further shift will be due to growth in numbers of prison officers around the country rather than Whitehall munificence. And with office space in London now far cheaper than it was in the boom-time 1980s, any further wholesale moves out of the capital will be harder to justify on grounds of cost. London looks like holding on to its unfair share.
Defence spending also shows signs of a shift that might - at first - seem encouraging. In 1988-89 some 41.5% of all UK defence spending went to the South-east; five years later that share had fallen to 36.5%. Similarly, in 1988-89 the South-east had 39.5% of all UK defence-related jobs; five years later it was down to 37%.
Still hogging the picture, but moving in the right direction one might think. Except that the money and jobs have not been distributed evenly throughout the country, they have simply moved to the neighbouring South-west of England - and Scotland's position has actually worsened.
Its share of UK defence-related employment in 1988-89 was 9.5%, a little above Scotland's population share of 8.8%. Five years later it was just 8%. As we await the full effects of Rosyth losing the nuclear submarine refitting contract to Devonport in the English South-west, Scotland's position is not expected to improve.
Other inbuilt and largely hidden benefits to the South-east continue. Such as mortgage tax relief, capital gains tax and tax relief on pensions - a disproportionate amount of these three subsidies goes to the London area and the Home Counties. The Scottish Office expenditure study earlier this year accepted that such relief must be taken into account when looking at the finances of each part of the UK.
Despite the weight of evidence, the myth is proving hard to scotch. Over the last few years, public and private bodies in London have started to link together to lobby against what they see as the capital's unfair treatment. They believe for too long London has been silent as 'its' offices and enterprises are lured out of town. They also believe that London, which holds the HQs of numerous national financial institutions and corporations, pays more in taxes than it receives in benefits and is therefore unfairly treated compared to Scotland, the north of England, Wales and Northern Ireland. The fact that much of the wealth is created in those nations and regions is conveniently forgotten.
The City of London Corporation is now employing tax consultants to make a case for special rates for businesses moving into the square mile. The government is partly funding a professional London promotion firm called London First with an annual budget of £3m.
Prominent businesses and public bodies have formed the London Pride Partnership. Earlier this month, John Gummer, minister with responsibility for London, announced the formation of an advisory panel which means cabinet members will regularly meet key advisors from the London Pride Partnership. They will be making a case for more government investment in the city. The myth lives, and some people want only to perpetuate it. Which makes our task of scotching the myth all the more relevant, important and urgent.
Admittedly, Londoners do spend more per head on the lottery than anyone else, but even if their allocation was pegged to how much they spend on lottery, they would receive £48m less than they do now.
Meanwhile, a decision is due in the new year on whether Wembley or Manchester gets more than £100m for England's national sports stadium. London could soon have yet another win on the lottery.
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