There are a number of separatist groups around the world that want to secede. Their motivations are varied. In some cases there is a desire to preserve a cultural and linguistic heritage as is the case of the Parti Quebecois. The PQ advocates national sovereignty for the province of Quebec and secession from Canada coupled with a move to give the French language primacy. However in last Monday's provincial elections Quebeckers appear to have grown weary of the secession issue and gave the separatist movement its lowest share of the vote since the 1970's.
In other circumstances the motivation for secession can be economic. Take the Lega Nord in Italy for example. This independence movement exploited the resentment against a central government in Rome that wasted the resources collected predominantly from northern Italian taxes. The party claims to represent the interests of small and medium-sized industries in the North of the country that form the backbone of the Italian economy and rails against governmental bureaucracy, pork barrel spending and corruption.
On this basis it is a testimony to the tolerance of the people of the South East of England that a regional movement has not taken root there. Let me explain. Oxford Economics produced a study on the staggering scale of the fiscal contribution of London, the South-east and East Anglia. In 2004/05 these three regions generated a budget surplus of £30bn, while the rest of the UK ran a deficit of £58bn. Per head Londoners made a net fiscal contribution per head of £1,740, while the net transfers to Scotland was £2,120 per head, to the North-East of England £2,590 per person, to Wales £2,870 and Northern Ireland £3,720.
There is also a huge divergence in a region's dependence on public spending. In the South-East corner of the UK public spending accounted for only 37.7% of the region's GDP, which is similar to those levels seen in Australia, Japan, Switzerland and the US. However in the rest of the UK, spending was 53.6%, comparable to levels seen in France. Moreover in the North-East of England, Wales and Northern Ireland levels of government spending as a proportion of output comfortably exceed Scandavian levels and bear comparison with the Socialist utopias of yesteryear. In the North East the figure is 63%, Wales 64% and Northern Ireland an astonishing 72.5% . Notwithstanding these huge fiscal transfers the gap in relative prosperity of the South East compared with the Northern and Western fringes remains. For example, per capita income in London at £24,100 is 75% higher than in Wales. The overall picture is then of a prosperous corner of the UK on which a larger number of economically weaker regions are dependent.
And that's not the end of the story. The UK can be divided into two roughly equal parts by drawing a line from the Humber estuary to the mouth of the Severn. At the last election there were 22.3 million registered voters in the South East region and 21.9 million in the North West area. But despite having 400,000 less voters, the North West is represented by 337 MPs nearly 10% more than 308 MPs that represent the South East corner. To put it another way the average constituency size in the North West was 65,000 compared with 72,000 in the South East. Meanwhile the areas where public spending as a share of GDP was high returned Labour MPs 72% of the time with 41% of the vote. Yet in areas where public spending was proportionately low Labour MPs had a 37% success rate with 30% of the vote. In other words a region addicted to high public spending voted in a Labour government while the other region pays for it. "No taxation without representation" was the rallying cry of advocates of American independence, perhaps the time has come for a secessionist party of the South East of England. The author is a Londoner who lives in the North.
Regards,
Brian Durrant
for The Daily Reckoning Australia
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About the Author
Brian Durrant has a Masters degree in economics from Cambridge University, followed by nearly 25 years' experience in the City. In the 1980s Brian worked with Tim Congdon in the economics department of stockbrokers, L. Messel & Co. And in the 1990s he was Head of Research at GNI, the leading futures and options broker, specialising in exotic options strategies in foreign exchange markets.
