Rishi’s High Streets fund needs to help London as much as the North

THE 45 Conservative MPs who represent the seats known collectively as the “Red Wall”, through the Midlands and into the North of England, have bonded into a group. Over the weekend they wrote to Rishi Sunak, the Chancellor of the Exchequer, to ask him for lower business rates. It is likely that Mr Sunak will provide a £5billion High Streets fund and grants to retail businesses. It’s politics dressed up as economics and the loser will be London.

The Government’s stated ambition, the objective that will define it once the pandemic is behind us, is that it wants to end regional inequalities. Boris Johnson, the man of the garden bridge and the airport on an island in the Thames Estuary, is a man who likes a grand project. The Chancellor will be expected to find the funds for infrastructure schemes, with the aim of demonstrating to those first-time Tory voters in former Labour constituencies that the Conservatives have their interests, or at least their roads and bridges, in mind.

The danger with the plan is obvious. London and the South-East has for a long time now been the only region which creates a surplus. There is more taxation generated in London than in all the Red Wall seats combined. A lot of the money for the levelling-up programme is generated in London so any redistribution that leaves the capital behind will be counter-productive.

Yet there is an even more stark problem than this, which is that any ambition to level-up to correct regional inequality must now have a London dimension, where the pandemic has found a way of accelerating trends that were hurting already, in the forgotten days long ago when we travelled into town, wandered into shops, ate in restaurants and drank in bars. The most obvious and worrying threat is online shopping, which had already tripled in a decade.

The immediate response to the pandemic, understandably enough, was that activity, such as it was, moved online. There is a poverty effect too. The boroughs with the highest rates of furloughed residents, such as Brent, Newham, Hounslow and Haringey, are also the places with the highest proportions of low-income residents.

London may now also face a labour shortage. The pandemic has caused the exodus of foreign workers that was predicted, but which failed to materialise, with Brexit. More than 700,000 people born outside the UK (500,000 from the EU) left their work between the first and third quarters of last year. Many will not come back.

Maybe the work will not be there to the same extent in any case. According to analysis published by the Mayor’s office, there has been a shortfall of spending by tourists of £11billion over the past year, which is much greater than the loss that derives from the absence of commuters (£1.9billion). The London economy, more than any city in the UK, relies on visitors. One in seven jobs are in the tourist trade and it contributes 12 per cent of London’s GDP.

The politics are running contrary to the economics here. Labour has now become a resolutely Labour city so the politically minded Chancellor may well ignore its claims.

But if levelling-up is more than a slogan under which funds will be channelled to seats marginally won by the Conservatives at the 2019 general election, then dedicated help for hospitality in the capital will be necessary. There are the occasional whispers from Downing Street that the Prime Minister envisages a creative recovery from Covid, ushering in his own version of the roaring Twenties.

It is not, in principle, impossible. Cities are hives of enterprise and ingenuity. The depression of the Thirties hurt the High Street but setting up shop, with loan capital that was readily available at the time, was one of the best ways out of the strife.

Read Peter Ackroyd’s account of the growth of high street commerce in his biography of London and you can see the social history of the capital in the shop window. Perhaps the London High Street will become once again a place of commerce and exchange. Maybe it will return to its origins as people set up stalls, like the one that Jack Cohen took from Hackney Market and turned into Tesco.

Yet none of that will happen by accident. If the city that the Prime Minister once ran from City Hall rises again, he will need to turn his attention to it. The High Streets fund needs to offer as much to Peckham High Street as it does to Darlington.

Leisure, culture and retail help make London a global city. It won’t remain a global city if these sectors decline