The Tories are pushing the wrong message about London

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Good morning. A two-for-one in today’s newsletter: some thoughts from me about the Conservative party’s changing relationship with the UK’s capital, plus a scoop from George Parker about a new job for Downing Street’s spokesperson.

London Calling

One of the choices that the Conservative governments have made since 2010 is to increase the amount that London pays out in fiscal transfers to the rest of the country. George Osborne and Boris Johnson negotiated away Transport for London’s £1bn a year grant and TfL is now responsible for three-quarters of its own capital spending. (This compares to its equivalents in the West Midlands, which has 53 per cent of its capital costs met by the government, Greater Manchester, which has 78 per cent, and the Liverpool City Region, which has 100 per cent of its costs covered.)

Like everywhere else in the UK, London was given a transfusion of borrowed money to keep it afloat during the pandemic and its aftershocks. Here’s the latest data from the ONS showing how the net fiscal balance (the difference between expenditure and revenue) of each region and country changed between 2021 and 2022. As the chart shows, London is once again the region with the highest fiscal surplus per head (the bigger the negative number, the bigger the surplus).

I used the word “choices” quite deliberately earlier, in that you can fairly argue this is either an achievement or a blunder depending on your perspective. But given that the Conservatives are at least nominally in the business of getting re-elected, their messaging should be that it was a success. Not, as you would think from much of their messaging, that it has been a failure.

Tory ministers are in a war of words with the Labour mayor Sadiq Khan and the capital’s transport authority, after TfL received just half of the £500mn it requested from central government to fund upgrades and service improvements to the world’s oldest metro. Philip Georgiadis and Jim Pickard’s excellent write-up is here. But the part that caught my eye is this statement from the transport minister Huw Merriman:

We have invested billions into the capital’s transport system in recent years. This investment must be well managed in a way that doesn’t unfairly burden the pockets of taxpayers and motorists.

This message — one that is made even more stark by the statements released by Mark Harper, Merriman’s boss at the DfT, and Susan Hall, the Tory mayoral candidate in London — is that the capital has been the recipient of excessive largesse and is the victim of financial mismanagement by Khan.

None of these things are true and it is not a good idea for the Conservatives to say so. In my experience travelling the country talking to voters, Londoners don’t believe it and find it irksome, while people outside London do believe it and see it as a betrayal of the government’s promises on “levelling up”.

What the government should emphasise instead is that TfL is on course to meet its day-to-day costs and is well-run. Ministers should highlight that they have shifted money away from the capital’s transport network, not towards it. (You can even, perfectly reasonably, spin this as a validation of Osborne and Johnson’s decision to do away with the grant if you want!)

One reason why the Conservative party is not doing this, as one minister put it to me, is that the party’s default tone towards the capital is generally “You’re dumping me?! I’m dumping YOU!” following London’s drastic shift away from the Tories in recent years. This precludes the government from arguing that it has made positive changes in London to the benefit of the country as a whole.

This is going to be the policy subtext to the row the Tory party is going to have in opposition: in 1992 the Conservatives did better in London than they did in the country as a whole. In 2010 they finished very narrowly behind Labour in the capital. In every election since they haven’t been at the races.

That has big implications for the choices the Conservative party needs to make to get re-elected on everything from tax-and-spend, to immigration, to climate change, to transport funding and more besides. But the party is far from happy about that. It doesn’t help that so much of the rank and file is actively in denial about this as well as about the condition of the capital and the UK.

Changing Blains

George Parker has a scoop about a Downing Street move: Max Blain, Rishi Sunak’s official spokesperson, is to join the communications company Portland, where he will join other Number 10 exiles including Labour’s Alastair Campbell.

Blain has the battle scars of having worked as head of comms at the Department of Health at the start of the pandemic, before moving to Number 10 in April 2021 to act as Boris Johnson’s mouthpiece during the Covid-19 and Ukraine crises.

In May 2022, Blain apologised to journalists for “failings” regarding the Partygate scandal, “both in terms of what happened and in terms of how it was handled”.

He was, however, well-regarded by many lobby journalists, who accepted that Blain faced the drawback of working for a prime minister who was often only on nodding terms with the truth.

Portland now claims to have hired staffers from No 10 from every PM since Tony Blair. Blain will be succeeded by David Pares, currently head of comms at the Treasury. (George Parker)

Now try this

My column is very much not about Christmas — unlike my musical choices this week: I have been enjoying Bob Dylan’s “Christmas in the Heart”, Run-DMC’s “Christmas in Hollis”, Ray Charles and Betty Carter’s excellent version of “Baby It’s Cold Outside” (the definitive performance of the song that has never been matched), and of course “Fairytale of New York”, a song that is particularly bittersweet this year. Jude Webber’s excellent obituary of Shane MacGowan, the Pogues’ frontman, is here and I’ve added all those songs to the Inside Politics playlist.

Top stories today

• Sunak distances himself from Mone | Rishi Sunak has become embroiled in a row with Michelle Mone, a Conservative peer, over her role in a medical equipment company that won more than £200mn of state contracts during the pandemic. Meanwhile, Sunak’s problems grew yesterday when it was announced that Conservative MP Miriam Cates was under investigation by the parliamentary standards watchdog over allegations she caused “significant damage” to the reputation of the House of Commons.

• £64bn settlement for local councils ‘bitterly disappointing’ | English councils will be forced to raise taxes and cut frontline services to avoid effective bankruptcy, local government networks have said, as they criticised a new funding offer from ministers.

• Levy up slowly | The UK has announced plans to introduce a carbon border tax by 2027 to try to protect British manufacturers and to match similar measures in the EU, but industry has urged ministers to move faster.

• UK-US trade pact in the ditch | US President Joe Biden has quietly shelved plans for a “foundational” trade agreement with the UK ahead of the 2024 election — following Senate opposition and disagreements over the scope of the deal, Politico’s Graham Lanktree revealed.

This article was updated to correct the singer of “Baby it’s cold outside” as Betty Carter.