A young woman started work in London this week and her starting salary is the same figure paid to her aunt when she first moved to the capital after college in 1985.
A relative of mine was recently offered his first paid job in journalism in London. His salary – £16 000 – is around the same as I first earned when I moved here in 1993 to work on the GP magazine Pulse.
The woman told a panel discussion I attended on Monday night that if the salary paid to her and thousands of other lower paid workers was slightly higher, the increased tax they paid might make us slightly less reliant on the City for the prosperity London enjoys.
The event, held at the British Library, discussed bankers and bonuses and asked what the City had ever done for London. Is the square mile, as entrepreneur Luke Johnson claims, a “fragile state,” something to be nurtured and protected, or is it responsible for making the City unaffordable for thousands of key workers such as teachers, doctors, nurses, and bus drivers?
Should we be worried by rival economies based in Shanghai or Bangalore, or when hedge fund managers threaten to quit London, as they often do (see this search result page from the Financial Times if you don’t believe me) ?
According to Johnson, who abandoned medicine and became an entrepreneur, London’s vibrancy is reliant on the City. The bonuses paid to bankers (they’re set to receive £7bn this year, according to forecasts by the Centre for Economics and Business Research today), get spent in shops, restaurants, bars. Neighbourhoods get gentrifed, keeping builders and plumbers in business.
The financial crash was caused not by City profligacy, he argued, but by the highly regulated US mortgage market. Only the drug industry is more highly regulated. Moreover, the UK banks bailed out by the British taxpayer (Bradford and Bingley, Northern Rock, Royal Bank of Scotland, HBOS) were based not in London, but in Edinburgh and other provincial cities. The former government socialised the risk, but privatised the return.
Earlier that day Johnson had locked horns with fellow panellist, the protest singer Billy Bragg, on the BBC’s Today programme. Bragg blamed Margaret Thatcher and Tony Blair for peddling the myth that Britain can have world class public services and a low tax base, storing up debt for future generations.
Bragg is sanguine about a City-less London. Paris is not a world financial centre, and offers its citizens an enviable quality life, he told Johson. Ditto Amsterdam, which was once a world financial centre before it lost the crown to London.
But is the City a more humane place following the financial crisis? One audience member offered a glimmer of hope. Bosses at HSBC agreed to sacrifice some of their salaries so colleagues on the minimum wage now at least earn a “living” wage. She didn’t specify what a living wage in London is. I doubt it’s £16 000.