Giles Fraser: Checks and balances in the City

by
18 November 2009

IN MOST countries, the location of the government and the location of the main financial centre are sep­arate. The United States has Wash­ington and New York; in Germany, it is Berlin and Frankfurt. But London is different. Like a fried egg with two yolks, London combines both the centre of govern­ment and the financial centre in one larger urban metropolis. The City of Westminster and the City of London nestle up against each other like two giants.

The fact that London is also the name for a 600-square-mile conur­bation can obscure the existence of the almost independent city-state that is the City. The Square Mile has its own form of government, all but untouched by the 19th-century municipal reforms that trans­formed local government every­where else. Officials are elected through busi­nesses rather than residents.

The City has its own police, and its own powerful Lord Mayor, welcomed at last Saturday’s spectacular Lord Mayor’s Show. Sure, when the Queen comes to visit the City, the Lord Mayor welcomes her and offers his sword in an act of supplication. But the very fact that such an act needs to take place says something about the history of the place. It is not insig-nifi­c­ant that the financial muscle of the City decisively sided against the Crown during the English Civil War.

Most of us recognise that it is the unusual checks and balances of power within the British consti­tutional settlement that have made us stable, free, and wealthy for centuries. That is why I am a convinced monarchist and a believer in the Established Church. Likewise, despite the quirkiness of the way the City works, there is much here to defend.

But that defence has its limits. The Government is seeking to change the rules that apply in the financial world with respect to bankers and bonuses. Many of us are furious that the eye-popping losses of many banks somehow became a problem for you and me. We want to stop such losses building up again. That probably means better regulation.

For centuries, the City has defended its right to freedom of trade, and repelled those who would interfere with its activities. Now would not be the time for the City to think in these terms, however. It would be a serious mis­calculation for the City to respond to pub­lic outrage by invoking its indepen­dence and defiantly raising the drawbridge.

If the City is to continue to play an important part in the life of this country, it needs fully to understand that something seismic happened with the recent financial crisis. Through Parliament, the rest of the country demands that it take serious­ly its responsibilities to the common good. Things have to change.

The Revd Dr Giles Fraser is Canon Chancellor of St Paul’s Cathedral and Director of the St Paul’s Institute.

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