
It’s not that London is too big, but that other large UK cities are too small - edward
http://blogs.lse.ac.uk/businessreview/2017/06/09/its-not-that-london-is-too-big-but-that-other-large-uk-cities-are-too-small/?utm_content=buffer44588&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
======
hacker_9
As someone who lives in the UK, visiting London is like visiting a different
country. Sometime's I'm amazed just how 'better' everything looks and is. You
can clearly see that this is where all the money is funneled into. It even has
it's own subway covering the whole city! Where is this sort of commitment to
anywhere else in the UK? All that really happens is all the money is poured
into London, it then slowly expands, and as HS2 is proving, to the detriment
of everyone else.

~~~
ptype
Nonsense. London is a net taxpayer for the UK [1], hence the periodical
discussion of establishing an independent city state (which will not happen
IMO). Instead of being jealous of London, the rest of the UK would be better
off realising that London competes with other global cities and that the
success of London benefits UK (but sadly instead they voted for Brexit) [1]
[https://www.theguardian.com/business/2017/may/23/uk-
budget-d...](https://www.theguardian.com/business/2017/may/23/uk-budget-
deficit-grows-to-more-than-10bn-as-people-spend-less)

~~~
dredmorbius
And what rents does that tax-paying capacity derive from? Extracted from whom?

~~~
nine_k
Global trade? Production? Tourism?

~~~
Silhouette
More like farming, harvesting of other natural resources and electricity
generation, long-distance transport infrastructure, warehousing, and actual
housing for many of the people who commute into London every day to provide
vital labour but can't afford to live there.

London makes a lot of money because it's dominated by high-return service
industries, most famously the financial sector based in the City. It includes
relatively little in the way of production, manufacturing and storage, which
don't scale as well but are obviously essential to everything else being
possible.

~~~
_benedict
Farming? Are you mad? It contributes as little as 0.5% of the country's GDP.
What other natural resources are being "harvested" to enrich London so much?

The _vast_ majority of London commuters live in Greater London, so its housing
is largely provided for by itself. Even if you assumed _every human being_ in
the "commuter belt" travelled to London daily, the GLA would still account for
~73% of the population, and this is plainly an absurd assumption.

While London may not contribute as much manufacturing, it still manages ~6% of
the UK's manufacturing output. At the same time, just _retail_ in London
produces almost as much for the economy as rUK manufacturing.

Your whole thesis is laughable. You seem to be upset that the poorer parts of
the nation can trade with London to provide it goods and services. Should you
not be upset at the farming, storage and transportation rUK "harvests" from
abroad? This dwarfs London's "harvesting" of rUK.

London itself has nothing to do with profits from this trade being unequally
distributed. Westminster, sure, but London? No.

~~~
Silhouette
_Farming? Are you mad? It contributes as little as 0.5% of the country 's
GDP._

Not everything is about GDP. You belittle farming, but without food to eat,
Londoners would not be generating a lot of economic output at all.

The original point here was that London generates disproportionate tax
revenues, but only because it is home to more scalable service industries and
relies on the less lucrative but essential supplies and infrastructure from
elsewhere.

 _What other natural resources are being "harvested" to enrich London so
much?_

Almost none of the UK's electricity supply originates within London, even if
we take that to mean Greater London.

London also has no major sources for fuels.

 _Your whole thesis is laughable. You seem to be upset_

Why would I be upset about anything? I only commented that London is able to
generate disproportionate tax returns because it's service-based and relies on
the rest of the UK for support. That's not a "thesis", it's a simple economic
fact, and everything I've mentioned in support it of is readily verifiable for
the price of a Google search.

~~~
_benedict
_and relies on the less lucrative but essential supplies and infrastructure
from elsewhere_

As does rUK, with rWorld. As do most UK cities with rUK. Similarly with
farming; London _and rUK_ can (and do) fulfil a significant quantity of their
demand from abroad; it is possible to fulfil more.

I do not belittle farming, but trading for food does not equal "extracting
rents" as the OP you were responding to requested, and nor does farming
constitute a huge industry rUK is somehow being defrauded of the profits for.

 _Almost none of the UK 's electricity supply originates within London_

Energy production is not a natural resource. The only "rUK" resource we input
is Gas, but it's not clear how much of rUK can claim to be losing out here.
Most of rUK would not be the natural "owners" of this resource, and - again -
it is traded on the open market, so can be fulfilled from elsewhere.

 _Why would I be upset_

To rephrase/reconsider: you seem to somehow confuse trade with rent
extraction, unless you simply did not read the OP's point of contention you
were contributing to.

If this were to be true, rUK would be one of the world's worst perpetuators of
this form of wrong, given its greater dependency on rWorld in exactly the
manners you describe.

~~~
Silhouette
We just seem to be quibbling over how we interpreted the points other posters
were trying to make about prioritisation for London and rents now, which I
don't think is going to get us anywhere, so perhaps we should just agree to
disagree on this one.

~~~
genofon
no, what eh was saying (correctly) is that even if it's true that London need
to import the things you listed from other countries it would not make a big
difference in his prosperity. For example it's laughable that you mentioned
farming, as UK heavily relay on imports already and the sector constitutes
only 0.5% of the GDP. So basically London would be better off without the rest
of the UK

~~~
Silhouette
Let's be clear about a little factual detail first: the UK is 76% self-
sufficient at producing home-grown food (DEFRA, March 2016). While we also
import a significant amount of food, and this is useful for both variety and
the security of the food supply, the majority of what most of us eat most of
the time was grown in the UK.

But even if you can give that up and you have enough supply to import all your
food from elsewhere in the world, how are those imports going to get into
London? There's limited spare capacity for freight ports on the Thames. Even
if you could finish the London Gateway -- which isn't actually in London
anyway, and you probably couldn't build anything like it further in -- and
significantly expand its capacity from what is currently planned, you'd still
need the warehousing and logistics to go with it, and then you'd need all the
staff to build and maintain and operate all of this, and then the supporting
infrastructure and services to go with those staff. That's an awful lot of new
space and new relatively low-paid workers to fit into your hypothetical newly-
independent London, just to make up for not having land-based supply of food
and drink.

So again, as I have said repeatedly, London is only disproportionately strong
economically because it is primarily based on high-margin service industries
and relies on the rest of the UK to supply much of the low-margin
infrastructure it needs for the basic operation of a city that size. You can
argue over whether that beneficial financial arrangement is literally rent-
seeking, but certainly the economic effect is similar: London currently
benefits disproportionately from the UK's public spending and government-
supported infrastructure, but that spending and infrastructure development is
only possible because of what is also going on elsewhere in the UK.

------
sw00pur
All I've heard about London from fellow expats is: 1) it's laughably
expensive, and it forces you to spend a big part of your salary just for a
room in a cramped apartment unless you want to live hours away from your
office, 2) it's a hellhole full of scum.

~~~
irpapakons
Ok, I know I might be relatively lucky, but just to provide a different
anecdote: I spend 34% of my take-home income to live in a big studio in a
leafy neighbourhood with Edwardian houses, 35 minutes from work door to door
taking the tube, next to 2 parks. I'm pretty happy. Like all big cities London
has better and worse neighbourhoods and the experience you get living in them
varies greatly.

~~~
Nursie
34% to live in a studio sounds ludicrous to someone paying 25% to live in a
townhouse (in a smaller city in the south).

~~~
switch007
Yes... Perhaps it's because so much other housing is so expensive in London,
relatively many other properties can look like a bargain

------
gregdoesit
The outlook of London (and the rest of the U.K.) will likely change
dramatically as the hard Brexit looms closer. A major advantage London had was
access to the 500M large European labour market - which will close with
Brexit, making London less competitive and attractive to Europeans than
before.

~~~
irpapakons
We know very little about what the Brexit agreement will look like. As long as
high paying jobs exist, nothing stops highly skilled European people from
continuing to get them, even if that involves a bit more bureaucracy.

~~~
bad_user
The problem is highly skilled Europeans can also get those jobs elsewhere.
Berlin, Amsterdam, Paris, Dublin, Munich, Stockholm, Copenhagen, etc.

And if somebody is willing to suffer through bureaucracy and be humiliated in
that process, for a city that has an insanely high cost of living, then why
would people go to London instead of San Francisco or New York?

The problem with leaving the EU is that the EU provides competitive advantages
and opportunities that are now going to be gone.

Plus that referendum is signaling to me, an European, that I'm not wanted
there. Oh and I'm also a Romanian and we've been used as scapegoats in the
UK's anti-immigration campaign. Don't think that I'm going to forget that
easily.

~~~
user5994461
>>> Berlin, Amsterdam, Paris, Dublin, Munich, Stockholm, Copenhagen, etc.

All cities that have another language than English, and don't have a quarter
of the jobs in London.

>>> San Francisco or New York?

It's impossible to get VISA to live and work in the USA, for an European.
Americans don't seem to realize how closed their country is.

~~~
petagonoral
You do realise Dublin is in Ireland and they speak English natively.

Also, one can easily live in Berlin with just English (as long as you don't
need to interact with government too much)

------
PaulRobinson
Here's my take as a Mancunian, now living in London, whose career also took in
trying to help the Manchester tech scene in various forms.

Some years ago I was involved in various projects to help make Manchester and
the wider North West "the Silicon Valley of Europe". Yorkshire had similar
programs. No doubt Germany, Italy, Estonia, Spain, they all have very same-ish
intentions. The deal is they all go to the European Development Fund, say
"Hey, look at this impoverished area, give us some money and we'll do things
to lift them out of the doldrums!", and each programme has limited success.

Over five years ago I was offered a job in London and moved. It worked out for
the best. I realised quite quickly the London market was prepared to pay me
quite well in comparison to the Manchester market.

I went back to Manchester after a few months and met with directors, founders
and entrepreneurs and explained how they could make Manchester the Silicon
Valley of Europe without any EDF funding or major programmes. The solution was
quite simple:

Pay the best rates in Europe.

They looked aghast as I explained: if you want the best companies, you have to
have the best people and processes as well as the best ideas. To attract them,
you have to compete with the best salaries. Sure, you can hire "good enough",
but then you must realise you are going to get "good enough" people, and that
might be the difference between a lifestyle business and running a unicorn.

Either way, the differential between Manchester and London was too high. I was
a CTO of a company paying graduates what Manchester firms were prepared to pay
Senior Developers. In fact, I actually saw one firm advertise for a CTO at a
rate that I would be hard pushed to recruit for in London as a junior
developer role.

The directors explained to me this was unthinkable: their business model
relied on the cheaper costs of doing business in Manchester, that they
provided a cost-effective solution to what they perceived as the "London
madness". I told them to watch and wait and see: London would continue to leap
ahead, Manchester would flounder, and they would all see the problem ahead of
them.

I even told other developers they should move. "Too expensive" they told me.
OK, the rents are high, it's true. But I can earn 2x-3x as much as I can in
Manchester down here, and my food, entertainment and other ancillary costs are
no more than 1.5x-2x what they would be in Manchester: in real terms as a
percentage of income, living costs in London are actually lower. And in one
interesting case - heating bills - the temperatures being 1C-2C warmer down
here meant that my bills were literally pound-for-pound cheaper.

Everybody told me I was wrong, that the cheaper economies of Manchester led to
higher living standards, to better companies, to companies more likely to last
than the "silliness" of London.

We're five years on. The data suggests that I was right, everybody I spoke to
in Manchester was mistaken, and London continued to outgrow and eat everything
in sight. Until last June and the Brexit referendum, where the non-
Metropolitan majority decided to shoot the economy in the foot in resentment
of the Metropolitan-elite's successes.

There is much we need to do to prepare for the future, but I sense the answer
remains the same:

Pay. People. More. Money.

It has consistently worked in every territory it has been tried in, in part
because in the past the local circumstances allowed for high incomes due to
the unique proposition of the area. We're now working in a global industry
where people can work anywhere.

If you want to catch up to California, steal their people by paying them at
least the same salaries. If you want to catch up to London, do the same.

~~~
fnord123
>If you want to catch up to California, steal their people by paying them at
least the same salaries. If you want to catch up to London, do the same.

Salary is probably the prime component that people use in their interpretation
of quality of life. It's a raw number so you can make trivial comparisons. But
you can probably steal people away from London and the Bay Area if you offer a
better QoL across the board.

Manchester can never do this because of the shitty weather. Barcelona,
Amsterdam, and Côte d'Azur are probably the only places in Europe suited to
take over.

~~~
PaulRobinson
Manchester weather is better than you'd think, and within an hour you can be
in the Lake District, Snowdonia, Pennines/Yorkshire Dales or Peak District
depending on which direction you head.

Yes, it's not as sunny as Barcelona. But it's not the torrential hole that
most people imagine. It actually rains more in the Bay Area, particularly in
San Francisco as a total rainfall, it's just that in Manchester the number of
days it rains are higher.

~~~
fnord123
It's not just the rain and the spit that just hangs in the air. It's also the
depressing overcast skies.

[http://www.manchester.climatemps.com/precipitation.php](http://www.manchester.climatemps.com/precipitation.php)
[http://www.san-francisco.climatemps.com/precipitation.php](http://www.san-
francisco.climatemps.com/precipitation.php)

Hours of sun vs cloud for Manchester is a big deal. In the winter you only
have 8 hour of possible light and the ~90% of it is covered by clouds.

------
stuaxo
As a developer in London I take issue with "skilled workers who would be paid
relatively well wherever they live".

Yes, I could do python contracting outside of London, but there aren't nearly
as many.

Most of them pay less and would need to take ones further away (so need a
car).

While I like London, I would love to move out but there isn't enough well paid
work for my skillset to justify it.

~~~
chatmasta
I'm a US citizen freelance developer living in the UK (not London) and
freelance is the only way I can justify living here. It seems like tech jobs
in the UK (and EU generally) pay almost half as much as in the US, so by
taking a job here I'd be leaving money on the table. From what I can see, the
tech jobs all pay £45k on the high end, whereas similar roles in the US would
be $110-120k. I haven't done all the calculations of differences in living
costs / etc, but it seems like a stark difference in pay.

What is your experience with this apparent discrepancy?

~~~
bob_roboto
I've heard this magical number of 45k for software engineers a lot since I
came to London. I'm on 60k, without being overly specialised and not working
for the financial industry either. Most of the jobs that are being sent to me
by recruiters say 60k-80k so I really don't know where these 45k jobs are? I'd
really like to know. Having said that, being Swiss, the salaries in London
still make me angry. At home I'll get 90k-100k (GBP) and taxes in Zurich are
half of what they are in London. All things considered I made twice as much as
here. On the plus side you get to live in a pretty cool city which is nice
while you are still young and don't have any responsibilities.

~~~
antouank
Really? You think you can "easily" get 90-100k and also pay less taxes than in
the UK? Sounds exciting. Can you point me to those jobs?

( I'm seriously asking, want to know where to go after I leave the UK )

Also, look at contracting in the UK. Tax is less than 20%, and day rates can
go pretty high if you learn how and where to look.

~~~
bob_roboto
If you have a degree and 3+ years of experience, you'll find a lot of these.
Just check on Glassdoor, it lists the average as 90k GBP. From the top of my
head the following should pay above average

Finance: UBS, Credit Suisse, Swiss Re

Consulting/Services providers: Deloite, IPT, TI&M, Even Accenture pays decent
if you have a few years of experience, Stemford Consultants (that's more
contracting though, but pay is certainly more than 100k)

Tech: Google, Microsoft, Swisscom, Avaloq (the last two are arguably not tech
:p)

My problem with contracting is that it's often not too interesting and I also
really appreciate a good social work environment. If I can have both, I'm in.

~~~
praulv
Out of interest, what makes you think UBS is above average? I interviewed
there recently and the emphasis was "our benefits are remote working and life
work balance" \- which is HR speak for low salary (though I do appreciate
both).

~~~
bob_roboto
I really don't like UBS, but my friends there all make +/\- 120k CHF (might be
that my conception is wrong though and that is average). In addition to that
they get to "buy" up to two weeks of vacation which means they can go away for
7 weeks a year (plus whatever overtime they can compensate).

~~~
praulv
To be clear, I meant UBS in London - I assume you're referring to UBS Zurich.
It's quite common for Zurich offices to have a +20% cost of living adjustment
vs London, so that figure equates about 80k GBP adjusted which is about in
line with what most IB perm devs will make.

------
thriftwy
I guess it's same with Paris in France, Buenos Aires in Argentina and Moscow
in Russia. With notable exceptions of Germany and Italy to lesser extent.

Of course you would want people and jobs to be spread more fairly, but it's
just not what happens in a post-industrial market economy.

------
fractalwrench
The claim that public transport investment is relatively even across the UK
doesn't seem right. Anecdotally it has always seemed that London has had a lot
more investment in infrastructure, and figures from the IPPR think-tank say
that the spend is about £1,500 greater per capita in London compared to the
rest of the country.

Is there any evidence to backup this claim within the article or have I
misinterpreted?

~~~
Brakenshire
The IPPR figures come from a limited dataset, most of the difference is down
to Crossrail (£15bn over 10 years), but for instance Network Rail has a £3bn a
year infrastructure budget, Highways England another £3bn, plus the other
strategic road authorities in other parts of the UK, the local authorities
that manage all local roads, most of that spending is not covered.

