The capital faces three big challenges to its future growth.
It was no coincidence that at party conferences held in three of the UK’s largest cities – Manchester, Birmingham and Glasgow – the fringe event programme was bursting with debates, panels and roundtables focusing on London. The capital’s challenges are easily overlooked in the face of a political culture obsessed by the notion of a North-South divide – one in which, as our report earlier this year indicated, London is either seen as a an accomplished feat or a bitter threat. While in relative terms, London is clearly outperforming every other city economy in the nation – and by some measure – we must not ignore the fact that it also faces many significant hurdles, with the potential to undermine its future growth.
These are the three big challenges for London’s future that consumed attentions at party conferences:
At the Conservative Conference event, former Mayoral candidate Steven Norris highlighted the enormous disparities in economic output and socio-economic standing between the East and West of London, stressing how easy it is to forget that London is home to six of the poorest boroughs in England. That’s why, as Labour Mayoral hopeful David Lammy underlined, any strategies for growth must also address how to make the capital more affordable and accessible for lower-paid workers.
It will surprise nobody to hear that one of the biggest drags on London’s affordability is the high cost of rents and house prices, and that housing was singled out at all conferences as the biggest issue threatening London’s future success. It’s not just a problem for the people who live and work in London, particularly those on low pay, but also for the businesses based there, who are increasingly citing housing costs as an issue impacting their capacity to attract and retain talent.
And yet, neither party offered more than scant detail on how the housing supply London so critically needs will be delivered, or – in the case of Boris Johnson’s intermittently serious speech – pegged too much hope on brownfield land, which cannot possibly address the full shortfall. The consequences of all this tip-toeing around the housing issue could be dire for London.
A hot topic at party conferences – and at many London-focused events we have hosted and attended this year – was the thorny issue of local government finance. There was consensus at all three conferences that London needs to have greater control and responsibility over its finances, and particularly over its capacity to fund infrastructure and development.
Chief Executive of the London Chamber of Commerce and Industry, Colin Stanbridge, shared the frustration of the capital’s businesses in having to spend “an awful amount of time lobbying Westminster, when they should be lobbying the Mayor”. In a city allowed to retain only seven per cent of its taxes – compared to New York’s 50 per cent – grievances can hardly be expected to be solved at a local level. Both Labour and the Conservatives indicated in principle support at the conferences for a greater level of devolution around Business Rates, and the Liberal Democrats went a step further, with Danny Alexander endorsing the London Finance Commission’s recommendations around property taxes – though whether either of these will be achieved in practice, or to a transformational level, remains to be seen.
Given London’s substantial successes and its strong role in driving national growth, there is a strong economic case to be made for giving it additional freedoms and flexibilities to further improve its performance. We need London to keep doing what it does best – growing highly skilled, dynamic and internationally competitive sectors – and ensure it has the capacity to address its infrastructure, housing and skills challenges head-on. But with such economic underperformance in so many other UK cities, London both needs to be seen to benefit other cities, and it needs to be making demands in partnership with other cities, as it is starting to do in the ‘City Centred’ campaign for the Core Cities.
London must accept that it is not only the economic, but the emotional argument that must be won. Its unique position within a highly centralised state can at times make it seem out of step with other UK cities – indeed, the calls we heard at many fringe events for greater connectivity with Europe and a softer line on immigration highlighted just how much its standing as a truly global city sets it apart. But while its opportunities and challenges are distinctive, this is also true of many other large cities in the UK, all of whom are currently hampered in their efforts to address their specific local problems.
The fact remains that London won’t win the debate on city-level devolution by going it alone. The capital must work with other cities to ensure it’s not alone in calling for more powers; doing so will better spread the arguments for devolution, and also its benefits. Ahead of the election, London must move beyond its drive for independence and spread a message of ‘we’re all in this together’, positioning themselves as just one voice in a movement towards a stronger urban Britain.
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