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Last Updated: Friday, 23 June 2006, 07:37 GMT 08:37 UK
London: Capital cash-cow?
Zia Trench
Zia Trench
Politics Show London

Cash and calculator
Is London the UK's cash-cow?

The Politics Show London investigates the claim that Londoners pay out far more tax than they get back.

Showering me with all sorts of complicated statistics and formulas, I am told that we are subsidising other areas of the United Kingdom.

Their figures are these:

  • firstly, that Londoners make up 12% of the population and yet our tax-bill accounts for 19% of government revenue and ...
  • secondly, as a percentage of Gross Domestic Product (GDP) we have much less spent on us than Northern Ireland, Scotland and the north-east of London

Cash outflow?

Statistics start to get worrying when I am told that 15 - 20bn flows out of the capital each year - in subsidies to other regions.

Where is this figure from? London's chamber of commerce, I am told.

I raise an eyebrow, since they are on the same side. Perhaps a more fair estimate is from the London School of Economics that reckons it is about 7bn.

Some people would say that even this is too much.

Business numbers shrinking?

It is not a new argument; there have been grumbles about inequity of public spending for years.

What is new, though, is that looking at VAT figures, for the first time in a decade, there's slightly more businesses in Central London closing rather than opening.

The idea that businesses are struggling, added to the campaign for the 10bn Crossrail train link, added to the fact we have five of the 10 poorest boroughs in the country, all fuel the argument that London should be keeping more of its tax-cash.

On the other hand, we are the economic powerhouse of the UK and as such, perhaps it is our duty to help finance less fortunate regions.

The big question, is not perhaps that we should help the rest of the UK, but by how much?

Also this week ...

The thorny issue of the demise of small businesses on London's high streets.

Keen to do something about it, Kensington council has launched a commission to see what they can do to stop big businesses taking over our high streets.

As rents and rates go up, it is getting harder for small businesses.

The Politics Show asks what can be done to protect communities and independent shops from the big buck?

The Politics Show London

Join us on the Politics Show on Sunday 02 July 2006 at 12:00 on BBC One.

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