Thread by @ChrisGiles_

Who subsidises whom in the UK?

A much argued question with some clear answers

1/ on.ft.com/3b4Sr6Q

Sunak now faces pressure to lower tax on the Red Wall northern seats because they say they are unfairly treated on tax, paying too much and on spending, not getting the transport spending of London

Eg Miriam Cates, new Tory MP for Penistone and Stocksbridge

2/

There are now loads of funds for levelling up
- the towns fund
- the levelling up fund
- the shared prosperity fund
- changes to the green book for investment

You’d have thought that London and the South East had been partying on the backs of northern tax revenue

3/

But no, it’s not true - never has been and the subsidies from London and the South East to the rest of the U.K. have grown substantially since 2010

4/

The pandemic has seen levelling down, with the capital having the disproportionately large increases in UC and furlough, complicating the levelling up story further

5/

And median living standards (net incomes after housing costs) are below the UK average in London too.

So there is a disconnect between GDP figures and living standards.

The capital’s streets aren’t paved with gold
6/

So, if Londoners, on average, aren’t rich and heavily subsidise the rest of the country, what is going on?

Answer: There are many more working age people in London, and a big chunk of the rich.

And the UK state redistributes from these groups to others

@TorstenBell

7/

Also wise words from Tony Travers on the futility of looking at regional spending levels looking for unfairness

8/

It does mean looking to create more dynamism, more graduates, more easy career paths outside the South East for people. That probably means big cities action, not a focus on seeking future prosperity (pretax) from small towns

See @thomasforth

ENDS