London’s separateness from the rest of Britain becomes more pronounced every year

London has always been different from the rest of the country. But in recent decades the differences have widened to the point that, economically and socially, the capital now has little in common with the rest of Britain. The city may be hosting the Olympics in July, but none of those attending should kid themselves that they have visited Britain. London has effectively left the UK; it belongs instead to a loose international federation of global cities united by their economic dynamism and cosmopolitanism and the people who flit between them.

This leads to a big problem: Londonitis. The politicians, civil servants and journalists who make up Britain’s governing class have had their world view shaped by living in the capital and its wealthy satellites. They run one country, but effectively live in another.

The priorities of the people they know are often different: London is the only part of the country where polls show that improving public transport is seen as more important than reducing fuel duty. The problems of Britain are often invisible to Londoners. Even during the debt-fuelled boom, we had around five million people on out-of-work benefits. But places like inner Rochdale, where 73 per cent are on benefits, were simply out of sight and out of mind for the Londonised political class, who live in the parts of the city where unemployment is zero.

People talk about politicians living in the ‘Westminster bubble’. But the real bubble is London itself. Unusually, all our elites overlap in one place. London is effectively New York, LA and Washington all rolled into one — the capital of finance, culture and politics.

Of course, London has always been a place apart. Even in the 17th century, visitors noticed how the inhabitants of the metropolis walked faster than people in other towns. Visiting the city in the 1720s, Voltaire was stunned by what he saw in the Royal Exchange. ‘There the Jew, the Mahometan and the Christian transact together — as though they all professed the same religion, and give the name of infidel to none but bankrupts. The Presbyterian confides in the Anabaptist, and the Churchman depends on the Quaker’s word. At the breaking up of this pacific and free assembly, some withdraw to the synagogue, and others to take a glass.’ All were united in the Londoner’s preoccupation: generating wealth.

But while London was always a bit different, it was a difference of degree, not of kind. In the late 1970s you would have struggled to argue that London was a successful world city. The population had shrunk relentlessly since the 1930s. This was unsurprising, as it was unclear what the city was for. It was the clapped-out capital of a recently collapsed empire. After the first world war, New York had taken its place as the financial capital of the world. Rundown townhouses in Notting Hill were squatted — and not by hedge fund billionaires. It was a shabby, defeated city, brilliantly captured in The Long Good Friday, in which the rat-like gangster Harold Shand picks over the ruined wilderness of London’s abandoned docklands.

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We all know about what happened next. Mrs T and the Big Bang. Yuppies then hipsters. Russian oligarchs and Polish builders alike have moved to London. Like the turning of the tide on the Thames, people started to flow back into the city — which will soon have the biggest population in its history. A rash of new skyscrapers — the Shard, Gherkin and Cheesegrater — line the sky like a bar chart in physical form, documenting the resurgent progress of the city.

London isn’t just bigger but richer too. When Tony Blair came to power in 1997, he promised to help lagging regions and close the north-south divide. But since then, the average Londoner has gone from being 66 per cent richer than the rest of the country to being 91 per cent better off. Soon Londoners will be twice as rich as the rest of the country. Zoom in further and the disparities are starker. In inner west London, economic output per head is £110,000 a year. In an important sense, these people are not living in the same country as the inhabitants of Gwent or the Wirral, whose output is just a tenth of this. To Londoners, paying £400 extra for energy to go green might look like a small price to pay. In the rest, of the country, it doesn’t.

Last month, the EU named London as far and away the richest of all the 271 official euro-regions — a fifth richer than its nearest rival, Luxembourg. If you flew in to City airport, visited Canary Wharf, and flew out again, you would think Britain was a tremendous economic success story. But London is like a Potemkin village for visitors; its population does not represent the UK at all. Years of trying to help the regions keep up, with quangos and development agencies, have failed not just because their policies are duff. They have been trying to fight the overwhelming gravitational attraction of the capital.

The wealth is quite simply a result of the people inside the city. Half of working-age people in inner London have degrees, which is true for just a quarter in the rest of the UK. People who live in council houses in inner London are more likely to have a degree than the average person on Merseyside. Take away council house tenants, and two thirds of Londoners have a degree — the best-educated workforce in the world. The education gap with the rest of the country has more than doubled since 1997.

Immigration is said to have changed Britain, but far less so if you exclude London from the picture. Outside the capital, just 8 per cent were born abroad (34 per cent for London, on a par with New York). It is only 5 per cent in Wales and the North East, and these places now feel like different countries. Most of London’s primary school children speak a foreign language at home, and the city’s nurseries have become a kind of United Nations for toddlers.

The American author Bill Bishop has documented how there is a ‘Big Sort’ going on in the US, as like-minded people flock together and the country polarises into homogenous enclaves, which are increasingly divided by religion and politics. In the UK something similar but different is going on, as highly educated people and immigrants gather in London. These two groups only really meet when, late at night, highly educated office workers are still hammering away at their computers while the (migrant) cleaner tries to hoover around them. Both work epic hours, but their pay and lifestyles are worlds apart in every other way.

Every city has its rich and poor areas, but London can combine extremes of both in the same streets. When property prices are high enough, only two groups can afford to move in: the rich, and migrants who are prepared to cram several people into each room. In one house on the street where I used to live in Pimlico, migrant workers slept six to a room in bunk beds. In the otherwise identical house next door, a single family rattled about in a gorgeous mansion. This ‘under-housing’ (as it is known in the jargon) would reach its logical conclusion each summer when three friendly polish builders would come and camp out in our street. They were extremely tidy, and as I walked home late at night I would pass them — with their sleeping bags neatly laid out in a row — cooking around a little primus stove.

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But could it all go wrong for London? It’s not hard to see how. Hostile EU regulation and the rise of new rival centres could stop London’s financial heart. The downside of having a mobile, globalised population is that they can leave as quickly as they arrived, especially if the government taxes their income at 52 per cent. In the era of what John Kasarda has christened the ‘aero­tropolis’, no global city can hold its own for long with ai
r links as poor as London’s. A report last year found that Britain may be losing up to £1.2 billion a year due to a lack of direct flights to emerging markets: there are already 1,000 more flights a year to China’s three largest cities from Paris and Frankfurt than from Heathrow.

Politicians may complain about imbalance — and inequality within the city, not just in the country. The left-wing academic Danny Dorling claims that the richest tenth of Londoners have 273 times as much wealth as the bottom tenth. For each tube stop you travel east of Westminster, life expectancy falls by a year. But the rich parts of London help everyone. The city normally contributes £1.20 for every £1 it receives in public expenditure, meaning that between 9p and 19p of each pound of a Londoner’s tax revenue was exported to the rest of the country. This is money that a broke government can ill afford to turn down, by viewing London’s size or wealth as a problem.

In fact, letting London get bigger is the solution to its most pressing problem: the million extra residents the city authorities expect to arrive in the next 15 years. If London is going to remain a nice green city, the so-called greenbelt which prevents it from expanding outwards has to go. (In reality the greenbelt is not so green: Heathrow airport is part of it, for example.) New tube and rail lines are needed so that people can live in the suburbs they like, but enjoy the benefits of the city.

London could grow much bigger, and wealthier too. The brilliant US economist Ed Glaeser has shown that the bigger a city is, the more it boosts the productivity of the people living in it. Specialisation is greater, competition and economies of scale increase, and ideas and innovation spread faster. ‘Clusters’ of specialist firms form: doctors famously gather in Harley Street, but London also has advertising, legal, financial and technology clusters. In the modern ‘knowledge economy’ these factors are more important than ever, which is why the whole world is urbanising. The top 600 cities in the world contain just 20 per cent of global population, but create 60 per cent of global GDP.

Polls show that Britain’s political class has reached a new peak of unpopularity in recent weeks. People don’t believe politicians understand them anymore, and think they all live in ‘another world’. They may be right: London has become another country.

The Austrian novelist Joseph Roth wrote that Berlin in the 1920s had become so metropolitan that it ‘now exists outside Germany, outside Europe. It is its own capital.’ This sums up London in 2012: not British, nor even European but — as Boris Johnson once put it — a 21st-century empire state, the Rome of the globalised empire. The view from Westminster Bridge is just as stunning as when Wordsworth wrote his paean, but the vista has been transformed by new skyscrapers, standing like futuristic alien architecture. Economically, culturally and socially, London has now left Britain behind, blasting off from the rest of the nation like some vast UFO. Its inhabitants need to remember those who have been left behind.

Neil O’Brien is director of Policy Exchange. He discusses this article on The Spectator’s new podcast, ‘The View from 22’, available through www.spectator.co.uk/podcast

This article first appeared in the print edition of The Spectator magazine, dated