London is unfairly favoured over the rest of the country Economist Fred Harrison highlights the bias towards London to the point that it is a black hole for
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, May 24, 2010
London is unfairly favoured over the rest of the country
Economist Fred Harrison highlights the bias towards London to the point that it is a black hole for investment at the expense of the rest of the country.
"we see that public expenditure on a per capita basis is more than twice invested in London than other regions in the transport and housing sectors."
"thanks to the tax system - that there is an automatic bias in directing investment towards London."
Transport infrastructure projects are assessed on a DfT "good value for money" calculation. Value for money category - Benefit to Cost Ratio - Prospects For the Projects Poor - less than 1 - None Low - Between 1 and 1.5 - None Medium - Between 1.5 and 2 - Some but by no means at all High - Over 2 - Most if not all Even a 1 to 1.5 would be considered for London. Merseytram is 1.5.
"[London] in the growth years, makes a net contribution to the public coffers between 2 billion and £9 billion. This is disingenuous. The calculation ignores the capital gains that flow from public spending. Public money invested in London yields huge gains in the private sector - in the appreciation in capital assets - that far exceed the financial subsidies that are transferred to the regions."
"Per capita London is 30% more productive on average - 17% per employee. When taking transport and housing into account that is 30% of more taxes raised is taken into the equation."
London is more productive because of higher investment in schools and transport. So, the automatic bias towards London is a treadmill of London investment.
"The productivity gap in increasing rather than narrowing."
"If the London property market is overheating, the chancellor may put up the national interest rate, yet property is not overheating in the north east and they suffer because of the raised interest rate."
"The boost to London's infrastructure out of the public purse overspills to higher land values, which translates to easier financing arrangements for entrepreneurs who secure an advantage to their competitors in the regions."
The new Crossrail eastern ticket hall for Bond Street Station will be at 18-19 Hanover Square, W1. Transport for London bought this building via a Compulsory Purchase, in Dec 2009, which is a few square metres really, for over £35 million. The owners, Portland Estates, estimate the valve at £60 million and are going to a tribunal.
All Liverpool needs is a few hundred million to get Merseyrail's tunnels and up and running and maybe a lot more for the money. Other cities can equally forward similar cases. The government is prepared to pay £60 million for a ticket hall in London while others get the crumbs, if any are thrown of course.
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