London Thrives despite Gordon

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Byline: SIMON JENKINS

GORDON Brown hates London.

Gordon Brown loves London. As a stern Scot, the first Mr Brown regards the capital as a place of licentious iniquity, full of fat-cat bosses, Tory expense accounts and private schools. He despises the London Tube, regarding it as a sort of Presidential Palace for Ken Livingstone and his cronies. Now he has taken an axe to London's finances.

In this year's Budget settlement, the capital received the lowest Exchequer grant in England, forcing Tory councils to push up taxes by a staggering 45 per cent in Wandsworth and 28 per cent in Westminster. The average for England as a whole is 13 per cent.

Under Labour, London's share of public spending has steadily declined. I can almost hear the Chancellor cry: "Let the sleazeballs eat cake."

Nor is that all. For six years Mr Brown has persecuted private employers with more taxes and regulation. Despite yesterday's minuscule relief for small businesses in the Budget, this month's increased national insurance contribution and added maternity costs will savage small firms with younger staff, which predominate in London.

Stamp duty hits London's more expensive houses hardest. Fewer of London's poor can claim working family tax credit, because its threshold is fixed nationally and does not reflect the capital's higher living costs.

Yet for all this effort, Mr Brown cannot stop himself from doing London good. He expands public spending, which means more civil servants, mostly in the capital. Each night the Evening Standard classified pages are stuffed with jobs in Mr Brown's new agencies and quangos.

HE throws money at hospitals, schools and universities, and finds 90 per cent of research grants going to the magic triangle of Oxford, Cambridge and London, mostly London. He refuses to back down on Tube privatisation or Crossrail, yet finds them costing him an astonishing u750 million in consultancy fees. This money has not bought a single new train (which might be built elsewhere), but has vastly enriched City accountancy and law firms.

One let slip that it had been making u20,000 an hour for the past three years out of Mr Brown's Tube. If there are no marble floors at Oxford Circus station it is because the taxpayer is busy installing them at Pricewaterhouse and Freshfields, courtesy of Mr Brown.

The Chancellor's infatuation with privatisation has led to billions of pounds being transferred from the public sector nationwide to the City of London.

Some 20 per cent of the gross value of public-sector projects is said to go in profits and fees passing through the capital's finance houses. The Private Finance Initiative may be getting a thumbs down at the grass roots, but it opens champagne bottles in London's corporate finance departments.

Nor is that all. This month, the Chancellor again increased the cost of giving someone a job. Every time he tightens his red tape round employees he throws workers out of formal jobs in the North and Midlands, where manufacturing predominates, and forces them to go where they can find new work, mostly in London's service sector. …