London’s streets aren’t paved with gold but we do help direct investment across the UK

London is often seen as a sponge, taking up crucial state funding, but the capital has some of the highest levels of deprivation in the country, even if it does drive investment, writes Nicholas Lyons

Across the UK, households and businesses are facing a challenging outlook in 2023 amid a cost-of-living crisis. This is just as true in London as it is in other parts of the country. A recent poll found that 77 per cent  of people think living costs are the most important issue facing the capital.

London is one of the most unequal places in the country, with some 2.5 million Londoners living in poverty. This means that the mission to “level up” our economy and create opportunities for all is vital to Londoners just as it is for the likes of Manchester, Liverpool and Newcastle.

But for too long London has been portrayed in this narrative as a sponge soaking up limited financial resources, stunting the growth of other cities. This view wrongly presents London as part of the problem, when in fact it is a pivotal part of the solution.

Last week, the Mayor of London and leaders from across the capital joined me at the Mansion House to discuss this issue. It was clear to all that London needs levelling up as much as anywhere else in the UK. Our streets are not paved with gold.

At the same time, the capital also has a critical part to play in ensuring that vision becomes a reality.

London makes a huge contribution to the UK not just via the taxes and business rates it collects, but also by the investment it attracts, and the projects and industries it funds. For example, a Leeds company was contracted to prepare the city’s sewer networks for the new Elizabeth Line and its trains were built in Derby.

Many people associate the financial and professional services sector solely with London but it is a significant driver of jobs and prosperity across the country. In the decade to 2020, all areas across the UK saw the value of their financial and professional services output grow by between 15 per cent and 49 per cent. And, today, two-thirds of the 2.3 million people who work in the sector are based outside of London.

I’ve worked in the Square Mile for 40 years, and remember when London was seen as a city in decline. Our financial institutions and infrastructure demonstrate our resilience in the face of economic turmoil.

Yet last year, London’s position as Europe’s largest stock market was challenged, albeit briefly, for the first time since records began. This reminds us that the City’s – and London’s success – is not inevitable. If we want our financial sector to continue to be the engine of the UK’s economy, now’s the time for a jump start. The chancellor’s Edinburgh Reforms and the Financial Services and Markets Bill is a welcome step in the right direction.

Of course, a successful City must also play its part in creating a fairer capital. Last year, the City of London Corporation submitted plans to Parliament to relocate the historic Billingsgate and Smithfield markets to a purpose-built site in Dagenham Dock. Around 42 acres of industrial land will be transformed: stimulating the local economy and bringing around 2,700 new jobs to the area. Meanwhile, the City Bridge Trust awards around £28 million each year to support disadvantaged communities across London.

The objectives that sit behind levelling up are more relevant now, than ever. But the narrative needs to change and caricatures of London must be cast aside. Instead, the capital should be included in levelling up as this mission cannot succeed without a thriving London.