London has played a significant and arguably oversized role in the United Kingdom (UK) for several centuries. Today, the capital is a thriving world city of almost nine million residents, responsible for nearly a quarter of the national economy. London is the UK’s global hub, attracting business, investment and people from around the world. Alongside the rest of the ‘Wider South East’ (including the South East and East of England regions), its economy is steaming ahead of the rest of the UK, and the gap is rapidly widening.

But this has occurred amidst a climate of national austerity, following a financial crash widely perceived to have arrived in the UK via the capital, where much of the financial service sector is headquartered. Rising Scottish nationalism came close to dividing the United Kingdom in a close-run referendum in 2014. And national government and media are currently focused on the result and ramifications of another divisive poll on Britain’s future place within the European Union (EU). This time, Londoners had a vote – and a majority of them voted with the losing side.

These events have seen increasing debate over London’s economic and cultural role, and whether this represents an unhealthy dominance of the UK. Many commentators have argued that the capital is becoming a ‘city-state’, uninterested in or unable to understand the rest of the country. Opinion polling of those outside of the capital suggests that London does have a perception problem. The age-old critique that the capital’s magnetic pull is responsible for sucking the life out of the rest of the UK has also re-emerged. In 2013, then-Business Secretary, Vince Cable, branded the capital a ‘giant suction machine’, with the Scottish National Party’s Alex Salmond describing London as the UK’s ‘dark star’ the following year. But as Cambridge Professor, Ron Martin, observes: ‘concern over an economy tipped too far towards London is actually nothing new. We have been here before, repeatedly.’ ⁶

The growth of London and its economy has been so powerful in recent decades that it is often forgotten that London was in economic, demographic and physical decline as recently as the 1980s, with parts of Inner London seemingly terminal. Today, despite the tremendous wealth generated in the capital, Londoners are on average less well off than their UK counterparts after housing costs. The strength of London’s economy comes with its own problems; from sky-high property prices and increasing congestion to air pollution and inequality. London’s councils face more than their fair share of challenges.

So London’s future success, and its contribution to taxes and economic activity across the UK, is far from guaranteed. Equally, it is in London’s interests for other regions, cities and towns across the UK to grow. A more economically, politically and culturally balanced nation is in everyone’s interests. London’s government, businesses and other anchor institutions are increasingly working with regional partners to this end. But there is much more to be done.

This report begins with a review of relevant facts and figures about London, Londoners, and the capital’s relationship with the rest of the UK. Chapter 2 reports on the findings of Centre for London’s opinion polling and ‘deep dive’ interviews with decision makers across the UK, in order to establish how London is perceived now, and how this has changed over time. Chapter 3 highlights some of the ways in which the capital is also working with other regions and cities behind the scenes, followed by Chapter 4 which makes recommendations as to how this could be further strengthened and improved upon.

Two annexes add context. An historical overview charts the evolution of rhetoric and policy concerning rebalancing the UK economy away from London, focusing on the postwar years up to the present day. Three international case studies then outline how comparable capital cities in heavily centralised nation states are currently attempting to deal with similar challenges.

This report seeks to correct some misconceptions about London. But it also serves as a reminder to London’s business, cultural and governance institutions that the capital has work to do in communicating that it is not exclusively self-interested, and that it takes its national role as the capital city of England and the UK seriously. Simply stating that the capital redistributes its wealth around the country via taxation is not enough. This report attempts to get beyond the figures and make the case for London’s place at the heart of its nation.