Boris Johnson on Thursday clashed with Business Secretary Vince Cable after he claimed that London was "becoming a giant suction machine draining the life" from the rest of the country.
The London Mayor, who has previously found himself pitched against the Liberal Democrat over efforts to rebalance the UK away from the capital, dismissed the Business Secretary’s remarks as “rubbish”.
He said: “What a stupefying and ridiculous assertion to make, and this from the Cabinet minister in charge of supposedly growing the UK economy.” The two men exchanged public blows in the increasingly fractious row over proposals for airport expansion in the South East.
Both oppose a new runway at Heathrow. Whilst Mr Johnson has championed the creation of a new international hub airport in the Thames Estuary, Mr Cable, whose Twickenham constituency is directly under the flightpath for Heathrow, has called to develop regional airports – a suggestion which did not feature in Sir Howard Davies’ commission shortlist of future options published this week. It included two schemes for an extra runway at Heathrow as well as building new capacity at Gatwick.
Sir Howard also called for further research into the viability of the so-called Boris Island scheme which is likely to cost up to £112bn. But Mr Cable said the Whitehall commission had not adequately explored the issue of regional capacity.
“One of the big problems we have at the moment - which I don't think the report sufficiently addresses - is that London is becoming a kind of giant suction machine, draining the life out of the rest of the country, and I think more balance in that respect would be helpful,” he told BBC Radio 4's Today.
The two have clashed in the past over the London economy. Mr Cable has attacked bankers’ bonuses as “offensive” whilst Mr Johnson remains a fierce champion of the City of London and the financial services industry.
“This city is the motor of the UK economy, and the gateway to recovery across the country, attracting record levels of overseas investment, all of which is helping, not hindering, recovery. Far from being a drain on the rest of the UK, London is helping to drive job creation and growth outside the capital as well as in it,” said the London Mayor.
Despite figures this week showing that unemployment had fallen in every UK region except London, the South West and Northern Ireland the capital continues to dominate the national economy. The recession in London was shorter and shallower than the rest of the country with its GDP growing twice as fast as the rest of the country between 2007 and 2011.
The London property market increased by £140bn over the same period with price rises once again outstripping the rest of the country. According to the Office for National Statistics Londoners contribute on average an additional £16,000 a year to the Exchequer compared to their fellow Britons.
The Prime Minister’s spokesman on Thursday declined to distance himself from the senior Liberal Democrat’s comments re-iterating his declared promise to rebalance the economy away from its dependence on London and the South East.
However Britain continues to be highly economically centralised. Of the top 20 cities in Europe, seven are in Germany, two are in Spain and two are in Holland whereas the UK has only London.
According to figures from the think tank IPPR North, the Government sends £4,893 per person on transport infrastructure in London compared to just £215 in the South West, £245 in the North East and £303 in Yorkshire and the Humber.
Ed Cox, director of IPPR North said that although both Mr Johnson and Mr Cable were right, the widening void between London and the regions needed to be urgently addressed.
“We are locked into a vicious circle where we invest more in economic development in London than elsewhere. But by not investing in the other major cities we don’t create the jobs and we don’t create the wealth so we need the welfare payments to support the economy. We need to invest more in the cities and we will get the growth that will rebalance the economy in the way that politicians want,” he said.
There are also funding gaps in other areas. An independent report entitled Rebalancing Our Cultural Capital, published in October found that London continues to enjoy the lion’s share of arts funding. Central government spending on arts and culture in the capital amounted to £69 per resident in 2012-13, compared with £4.60 per person elsewhere in England, it found.
Meanwhile figures from the Higher Education Careers Services Unit found that one fifth of all university graduates ended up working in London in 2011/12.
Shadow Business Secretary Chuka Umunna criticised Mr Cable. The MP for Streatham, south London said: “It's no good him talking about regional imbalances when his government dismantled the institutions that were addressing that - Regional Development Agencies - then put feeble substitutes in their place in the form of Local Enterprise Partnerships which they gave no powers too nor appropriate budgets.
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