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Cities Outlook 2015 looks at the performance of UK cities over the past decade, and it’s striking to see just how much London has grown since 2004. Population and jobs growth set London apart from other UK cities, both in rate and scale. But, the capital’s governance through the Greater London Authority (GLA) also makes a difference, and it is these differences that have helped the capital to cope with the pressures of growth.
First, let’s look at what the latest numbers tell us about London’s growth.
Population. In the last decade, London added almost 1.1 million people to the city. That means the Capital accounts for one in every four people added to the UK’s population.
Jobs. Between 2004 and 2013, London has also added about 770,000 jobs. And it’s not just the sheer number of jobs available that defines the city’s success. It’s the variety of jobs too, giving people unrivalled choice in the careers they want to follow. This, in turn, makes the capital a more attractive place to live.
Businesses. The number of businesses in London has increased by a third, the second-largest increase of all UK cities since 2004. This means that there are now 116,000 more businesses in London than a decade ago.
So, what role has the Greater London Authority played in encouraging, responding to and managing this growth?
London councils and the Greater London Authority have a different settlement with Government than other UK cities; they have more powers, more financial freedom, and the ear of Whitehall. The 2007 GLA Act granted the Mayor additional powers over housing, skills, waste and the environment, and the functions of the Homes and Communities Agency were transferred to London in 2010. Taken together, this means London is better equipped and empowered than other UK cities to meet the challenges that come with the kind of rapid economic growth the Capital has experienced over the last decade.
Over the long term, population and jobs can only grow as quickly as the city’s housing, transport and planning system can keep up. London’s jobs growth has been underpinned by (and constrained by) the ability of London councils and the GLA to encourage housing building, improve transport and commuting networks, and develop the skills of residents.
Transport for London and additional investments in the London transport network have been vital in allowing the city to keep growing. Such investments are only possible because TfL can regulate the local bus system, has control over fares, and can borrow against them to invest – powers that most other UK cities do not have.
This has allowed them to:
Because transport works in London, it makes it easier for people to find the right job and for businesses to find the best workers, both of which drive growth.
The Mayor is also responsible for strategic planning in London. The London Strategic Plan provides a coordinated approach to planning across the city, which makes it an easier place to do businesses and should allow for more housing growth.
However, while the population has boomed since 2004, house building in the capital has not kept pace. This has pushed up prices and made London a less affordable place to live. Housing affordability (the ratio of the average salary to the average house price) rose from 9.5 in 2004 to 15.7 in 2014. Despite London being one of the ten least affordable cities to live in, the capital is not in the top cities when it comes to a proportional increase in house building during the period.
Giving cities more power is not a fail-safe route to growth, and it would be wrong to attribute London’s success over the last decade to its governance and leadership structures. But when thinking about what the data in this year’s Cities Outlook tell us about the pressures facing the capital, there is a strong case for devolving additional fiscal powers to London. Allowing the Mayor to raise and retain more income locally – as his international counterparts are able to – could make a big difference to delivering the housing, transport and skills investment London needs to thrive in the years ahead.
Senior Consultant, City Economics at Arup
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