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London and south east pay for rest of UK

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On 13 February 2012


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The two regions contribute most to public spending via taxes, according to new research.


New research claims that London and the south east of England pay for the majority of public spending across the UK.

The two areas provide a net subsidy of 31% to the rest of the UK, says the Centre for Economics and Business Research (CEBR) thinktank. It has produced an annual study of public spending by region as a share of GDP for the tax year 2010/11.

At the other end of the spectrum, Northern Ireland receives a net subsidy of 29.4%, Wales 26% and the north east of England 22.2%.

However, Scotland receives no net subsidy, which has further fuelled the ongoing debate around independence. And using calculations by the University of Aberdeen, the CEBR estimates that revenue and taxes from the oil and gas industry cancels out any subsidy.

Here's how the UK's subsidies break down (the total UK deficit of roughly 10% is subtracted to give the figure in the third column):

Region/country

Deficit

Deficit (compared to rest of UK)

London

10.3%

20.3%

South East

0.7%

10.7%

East of England

-8.4%

1.5%

Scotland

-10.0%

0%

South West

-11.7%

-1.7%

East Midlands

-14.9%

-4.9%

West Midlands

-18.4%

-8.4%

North West

-18.4%

-8.5%

Yorkshire and Humberside

-18.7%

-8.8%

North East

-32.2%

-22.2%

Wales

-35.9%

-26.0%

Northern Ireland

-39.3%

-29.4%

In London, the taxes paid by the population equate to 45% of the city’s GDP, mainly via higher Stamp Duty and the 50p income tax rate.

In effect, one pound in every five paid in tax by people in London is used for public spending elsewhere in the UK.

More: Would a simpler tax system leave you better off? | Treasury ‘didn’t know’ about write-off of £11bn unpaid tax

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