London doesn't deserve to keep all the tax raised in the capital

Updated: 
Nighttime view of LondonAs a Londoner I should be pleased that mayor Boris Johnson is planning to lobby the prime minister and chancellor to keep my taxes in the capital, but this protectionist measure is terribly short-sighted.

Johnson has said he wants tax revenue raised in London to remain in the capital and spent on better public services. In the 2009/10 tax year London contributed £99 billion to the UK economy in taxes and got back £94 billion through public spending.
The £5 billion discrepancy has been lower than usual thanks to the economic downturn, experts say typically Londoners' net contribution is minus £10 billion to £20 billion each year.

Of the tax paid by Londoners, an average of £2,500 per person is spent outside of the capital, or £1 in every £5 earned in the capital is spent outside of it.


This may seem like a huge amount and many people ask why London should subsidise the rest of the country – this is essentially Johnson's argument. But he seems to be forgetting that London, far from being a 'cash cow' for everyone else, already has more money thrown at it than any other area.

Recent examples include £10 billion for the Olympics, £4 billion for Heathrow's fifth terminal and don't forget the huge Crossrail project that is in progress.

Johnson believes that it is better to spend a pound in Croydon than a pound in Strathclyde in the belief that money spent in the capital benefits the rest of the country.

However, all Johnson is trying to do is make London even more elitist. Yes, there are parts of the country that are being propped up by the capital because they are suffering financially.

And why are parts of the country suffering? Because of the City.

The banks created the financial mess we're in at the moment, but areas outside of the capital have suffered a proportionately worse fate than those in London, which still boasts a buoyant housing market.

Areas outside of the capital are much more likely to rely on the public sector for work and are seeing their jobs cuts and areas fall into poverty.

By withholding even more money Johnson is effectively saying that even though London got us into this mess, it doesn't want to help get us out.

I'm sure Johnson's plan will be a vote-winner, who doesn't want more money to be spent on their area, but Londoners need to think outside the capital and understanding just how different life is outside of the M25.

More stories

SPONSORED FINANCIAL CONTENT