Imbalanced UK is fundamentally unstable and wasteful

Westminster's Business Secretary, Vince Cable, has hit the headlines today for arguing that "London is a giant suction machine draining the life out of the rest of the country".  In doing so he is simply acknowledging what official UK statistics emphatically confirm - Westminster can’t and won’t fix the unbalanced and London-dominated UK economy.

Analysis by the Financial Times of figures from the Office of National Statistics (ONS) released earlier this month shows that even in the five years since the recession began “London has increased its economic dominance of the UK” and “the north south divide has widened”.

London’s economic output (GVA) per head now stands at 174.8% of the UK average – in a different league even compared to the South East of England and Scotland which place second and third (excluding oil and gas) of the 12 UK regions and nations.

The FT pinpoints the city’s ability to attract highly skilled workers and the fact that it is and will continue to be home to some of the UK’s biggest infrastructure projects – from Crossrail to underground upgrades, HS2 to the Thames Tideway Tunnel – as two key reasons for this growing divide.

As the authors of a recent London School of Economics blog noted that “the economies of London and the South East are not simply driven by market forces, but also heavily underwritten by the State; that this part of the country enjoys preferential access to finance; that it is able to exert a disproportionate influence on government economic policy; and that in London it has a city which has a degree of political and economic autonomy not found in other UK cities”.

This is an issue that affects not just Scotland, but other parts of the UK outside London. We could and should all be able to benefit from London’s economic dynamism. But to do that, we need to generate sufficient economic dynamism of our own.

It’s clear that Westminster just will not make the policy decisions that could allow that to happen. Even in his first major speech as Prime Minister, David Cameron acknowledged:

“Today our economy is heavily reliant on just a few industries and a few regions – particularly London and the South East. This really matters. An economy with such a narrow foundation for growth is fundamentally unstable and wasteful”.

But his government has failed to turn words into action. Lord Heseltine recommended handing £50 billion to English regions and local economic partnerships outside London for regeneration. Instead £2 billion was offered. A National Audit Office report pulished a fortnight ago laid bare the abject failure of coalition efforts to boost local growth in England. Successive UK governments have ruled out transferring meaningful economic autonomy to the nations of Scotland, Wales or Northern Ireland and the No campaign holds out no prospect of anything better.

This imbalance is not new – the LSE bloggers trace the problem back to the 19th century. Neither is it something Westminster is only now aware of. As long ago as 1940, the Government’s Royal Commission on the Distribution of the Industrial Population made clear that

“The contribution in one area of such a large proportion of the national population as is contained in Greater London, and the attraction to the Metropolis of the best industrial, financial, commercial and general ability, represents a serious drain on the rest of the country”.

73 years on, there is absolutely no reason to suppose Westminster will mend its ways. There is only one serious option for rebalancing the UK economy – and that’s a dynamic Scottish economy that only a Yes vote can deliver.

Image by wetwebwork

Economy, Government, Public finances


  • The Westminster Government’s intention to slash welfare spending even further highlights the choice of the two futures on offer at next year’s independence referendum, Yes Scotland Chief Executive Blair Jenkins said today.
  • The Scottish Government has published a detailed document on the opportunities open to an independent Scotland to create jobs, build a more balanced and sustainable economy and make full use of its key assets and resources.
  • David Cameron’s claim that Scotland’s future is a matter solely for people in Scotland rings even more hollow as William Hague heads north to deliver a new anti-independence lecture.
  • With a Yes vote next year we can unlock Scotland's vast wealth and resources and make sure they deliver more for the people living in Scotland, Yes Scotland's Chief Executive, Blair Jenkins, said today at the 2013 Rally for Scottish Independence in Edinburgh.