Politics: London overshadows regions in fight for funds

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The Independent Online
THE Government spends far more on Londoners than on the residents of any other English region. Contrary to the received wisdom that the capital benefits less than the rest of the country from public spending, the first-ever official figures breaking out expenditure per head in London show that the hand-out is almost as high as for Wales and Scotland.

The new estimates, published by the Government ahead of the 7 May London- wide referendum on an election for mayor, show that "identifiable" spending per head amounted to pounds 4,228 in 1995-96. The average for England was pounds 3,754, with the rest of the south-east and the eastern region well below average but none of the others coming anywhere near the London total.

In the same year, the figure for Wales was pounds 4,452, Scotland pounds 4,682 and Northern Ireland - always higher - pounds 5,211.

Part of the explanation for the London premium lies in the fact that the Treasury has allocated to the capital all of the money spent on areas that also benefit other regions. Examples include the full bill for the big teaching hospitals and all of the subsidy to London Transport even though patients and commuters living elsewhere, especially the rest of the south-east, also gain.

Education is another area of higher levels of spending in the capital, where class sizes are lower than elsewhere, and the cost of teachers' pay and student grants and loans higher.

The other reason for the discrepancy is that London also suffers from pockets of enormous social deprivation. As reported in The Independent on Friday, it contains 64 per cent of the 1,370 estates identified by the Government in its bid to end social exclusion.

So spending on housing, for instance, amounts to an average of pounds 102 per Londoner compared to just pounds 4 in the affluent south-east and pounds 52 in the north-west.

Demand for housing support is higher and the cost of meeting it more expensive than anywhere else in England. Even so, the figures, contained in the annual statistical analyses of public expenditure published by the Government, could prove controversial.

Not only does London face its mayoral referendum, but the amount by which England subsidises Government expenditure in Wales and Scotland has become an issue in the devolution process.

The high London figure will provide ammunition to those who argue against any future changes to the traditional "Barnett formula" setting a high level of spending for Wales and Scotland based on their per capita incomes in the mid-1970s.

Northern Ireland saw spending per head increase by 5.2 per cent in the latest year for which the figures are available.