The State of Britain

London continues to bankroll the UK, house prices still stalled and London Power launched

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, London had a surplus of £38.8bn, the biggest in the UK and a larger surplus than the £33bn recorded in 2018.

On a per person basis, London’s surplus was £4,369, higher than the £3,752 recorded in 2018. This was the largest per person surplus in the UK whereas Northern Ireland had the biggest shortfall at £4,978.

The capital was one of three areas of the UK to run surpluses, along with the SE and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; the other seven regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in London was £123bn or £13,826 per head, an increase on the 2018 figure of £121.8bn. This was the biggest spend in the UK; Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

London collected £162bn in taxes in 2019, the largest contribution to the Exchequer, this compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes, an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in London fell by 11,000 to 214,000 between September and November 2019; the drop of 0.3% took the overall rate to 4.3%, still the joint second highest in the UK. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%.

The South West continued to have the highest employment rate at 79.8% which compared with 75.6% in London. The UK employment rate was 76.3%.

London average property prices fell by 0.5% during November 2019, the drop to £475,458, reduced annual growth to 0.2%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

Away from the stats, staff costs at City Hall under Boris Johnson’s final budget for 2016-17 were £36m, while the proposed budget for 2020-21 under Sadiq Khan proposes £65.5m. Headcount has risen during the four-year period from 897 in 2016 to a proposed 1,300 by 2021.

A spokesperson for the mayor said extra responsibilities which have been devolved to the mayor will mean more costs. Opponents of Mr Khan suggest bureaucratic inefficiencies.

Mr Khan has had to deal with Brexit uncertainty but Mr Johnson had to guide the capital’s economy post-financial crash. It’s still too early to gauge which mayor will have the best record on London’s economy, but increasing the number of bureaucrats and economic growth tend not to go hand in hand.

A new energy supplier for London, backed by City Hall, has been launched. London Power is not a London Assembly owned business although the exact details of the deal between the Mayor and Octopus Energy are not known.

Highlighting the problems which can occur when the state gets involved in energy businesses, Bristol City Council owned Bristol Energy lost c£10m last year. Bristol Energy was set up in 2016 to provide ethically sourced, low-cost power and return a profit for Bristol taxpayers; instead the venture has so far soaked up £37m of public funds. Nottingham council owned Robin Hood Energy has likewise required taxpayer bailouts.

The objectives of London Power are to keep energy bills low rather than make a profit. If any profit is made, City Hall will invest this into community projects. 

On jobs, Facebook will create 1,000 new roles in London over the course of 2020.  Most jobs will be technology-focused, with roles in software engineering, product design and data science. It will take Facebook’s UK workforce to c4,000.

The firm has decided to invest more in policing online content so most of the new roles will be in Facebook’s ‘community integrity’ team, which designs tools to monitor posts on Facebook’s platforms including Messenger, Instagram and WhatsApp.