However hard we may try, the North-South divide will never close

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The Independent Online

May I say gently to my colleagues who run newspapers and who direct broadcasting stations that the economic superiority of London and the South East over the rest of the country is not a fresh discovery. There has been a north-south divide, or, more accurately, a division between London and everywhere for 600 to 700 years.

When Daniel Defoe observed in 1725 that "London circulates all, exports all, and at last pays for all", he was repeating an old truth. I sometimes feel as Defoe did, especially when I contemplate the subsidies paid to agriculture, that "if it were not for London, the land must lie waste and uncultivated, the cattle run wild".

As an economic area, London reminds me of the United States. It is immensely resilient. Sure, it has bad times (most recently in the Seventies) but it always comes back and soon seems stronger than ever.

The first industrial revolution, for instance, passed London by. The capital couldn't harness steam power on a large scale because it didn't have plentiful coal supplies. The early railways were constructed in the North of England not the South.

London also lost its substantial shipbuilding industry to northern yards in the 1860s, when wooden vessels were superseded, because it was uneconomic to situate iron works along the lower reaches of the Thames. Yet at the time London was easily the largest industrial city in the world with a workforce of 1.1 million. It wasn't just a place for clerks, porters, cabmen and housemaids. London made things in profusion. What was it to do?

The answer now appears rather shaming. Instead of steam-driven machines, it used sweated labour. The old apprenticeships were ignored, traditional wage rates for skilled artisans were disregarded and manufacturing processes were subdivided so that they could be carried out by unskilled people at home or in small workshops. The process would be supervised by a "sweater" or "garret master". The old, proud crafts had been de-skilled.

By means such as these, London continued to be a great manufacturing centre. Indeed, if you peep through the windows of some sheds in the East End today, you will find the same system still in use.

The next big test was the great depression of the Thirties. London managed to avoid the disaster. Unemployment was half the national rate. Looking at the reasons, perhaps you would say it was luck rather than contrivance. None of the big British banks collapsed, as they did in Germany, Austria and the United States. The City of London was safe. Between 1911 and 1938 its workforce rose by more than 40 per cent. Likewise, having missed out on the first industrial revolution, London didn't suffer when it fell apart.

Moreover, London's industries were mainly aimed at domestic consumers. They made washing machines, radios, even cars. Ford, for instance, moved from Manchester to Dagenham during the period. Of the new factories opened in Britain at that time, London accounted for 80 per cent of them. Its old industrial weakness, the lack of cheap power, had been overcome by the arrival of electricity.

Perversely, London's relative success began to be seen as a national problem. The city was, I think bizarrely, blamed for the difficulties of the depressed areas. A Royal Commission was set up in 1937 to examine the social, economic and strategic disadvantages of the growing concentration of industry in London. In fact it found no evidence that London had benefited at the expense of other regions. Nonetheless, for the next 40 years, government policy was to encourage industry and commerce to move out of London, and to some extent, at least as far as government activities are concerned, it still is.

Then came a terrible 10 years, the 1970s. Two of the ancient supports for the city's prosperity rapidly collapsed.

Manufacturing jobs were suddenly lost in their hundreds of thousands. The high cost of factory space; inconvenient transport facilities as compared with regions close to the new motorway networks; labour shortages; inflexible planning regulations, all these conspired suddenly to dislodge big manufacturing companies, and with them their smaller suppliers. Greater London accounted for 18 per cent of the UK's manufacturing workforce in 1961, but the proportion was down to 8 per cent in 1982.

At the same time the Port of London, which at the turn of the century had handled more trade by value and volume than anywhere else in the world, suddenly vanished as containerisation left the old dock system stranded. Its demise was more sudden, more brutal than even the death of the Lancashire cotton industry.

However, London has recovered well. Deregulation has led to an expansion of the financial sector. Tourism has grown strongly. The entertainment and media industries have boomed. In short, the new informational economy has found a natural home in the capital. Where once workshops contained seamstresses huddled over their stitching, now it is computer programmers peering equally short-sightedly at their coding. Writing of the mediaeval period, Stephen Inwood says London's success was founded on its excellent position on the tidal reaches of the Thames, its large population, the skill and capital of its merchants and alien residents and the stimulus of royal and aristocratic demand. These factors, it seems to me, are still present, albeit in different forms.

Rather than the Thames there is Heathrow, the world's busiest international airport. London's population remains large and has started to expand again. Skill and capital are still abundant, and its substantial foreign communities are a source of strength. What shall we substitute for royal and aristocratic demand? Surely the wealthy City professionals with their huge bonuses, dotcom millionaires, entertainment celebrities.

London will go on being the big wheel which drives the entire British economy. The North-South divide will never close. I turn to Defoe again: "To have one great and capital city in a kingdom is of much greater advantage to it than if the same number of people dwelt in several places."