Transcript London and the uk economy - New Economy : New Economy

London and the UK economy
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LONDON AND THE UK
ECONOMY
Michael Ward
Manchester
Commission for the New Economy
20 November 2013
London and the UK economy
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London and the UK economy
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CONTENTS
Work in progress…
More questions than answers…
• Headlines
• London’s economy
• Which London?
• Population
• The finance sector and the world city
• London in Britain
• Manchester
• London, Manchester and the network of European cities
• Towards a policy agenda
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HEADLINES
“London’s economy outperforms the rest of the UK”
Telegraph, 13.03.13
“London has never been this important to the UK economy”
City AM, 14.03.13
Population growth in London “double the rest of the UK”
Evening Standard, 18.10.13
“London’s economic boom leaves the rest of the UK behind.”
Guardian, 23.10.13
London property “has become a global reserve currency for the
super-elite”
New York Times, 09.13
London and the UK economy
WHAT IS GOING ON?
• What is happening?
• Does it matter?
• What are the implications for other cities?
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London and the UK economy
REGIONAL GVA: I
NUTS1: regional GVA per head UK map, 2011
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London and the UK economy
REGIONAL GVA: II
Per capita GVA indices by region, workplace based, 1995-2011
1995
1997
1999
2001
2003
2005
2007
2009
2011
UK
100
100
100
100
100
100
100
100
100
England
101.8
102.3
102.5
102.6
102.6
102.5
102.4
102.4
102.3
London
152.7
156.8
159.1
158.8
160.0
164.5
167.1
174.1
170.7
Inner London
247.7
257.4
260.7
261.8
266.5
278.0
284.5
305.4
298.9
Outer London
94.5
94.8
95.7
92.8
91.2
90.7
90.5
88.5
87.5
E England
95.5
96.4
96.2
96.1
96.4
96.9
96.0
92.7
92.7
South East
102.4
104.7
106.0
107.3
107.7
106.8
107.2
106.1
107.2
North West
90.2
88.4
88.3
87.8
87.0
85.9
85.2
84.7
85.1
GM South
107.2
111.9
113.8
113.6
112.2
109.4
108.6
105.8
GM North
71.2
69.9
67.8
66.8
66.5
65.4
62.7
63.2
(Source: ONS Regional GVA statistics, NUTS 2 and NUTS 3, 2012)
London and the UK economy
WHICH LONDON? I
The Square Mile and the 1964 Boundaries
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London and the UK economy
WHICH LONDON? II
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London and the UK economy
POPULATION GROWTH: I
Population fell to 1980s:
1931
8,098,942
1941
7,987,936
1961
7,781,342
1981
6,608,513
And then rapid growth resumed:
1991
6,887,280
2001
7,172,036
2011
8,174,000
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London and the UK economy
POPULATION GROWTH: II
London’s Population Growth, actual and projected, 1971-2016
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London and the UK economy
POPULATION GROWTH: III
Recent projections:
Population:
 2011 Census: 8.17m
 2016: 8.5m
 2021: 8.8m
 2026: 9m
 2031: 9.1m/10m ONS
Employment:
 2031: 4.7m
By 2031 there could be:
 1.2 million more Londoners (to 8.82m)
 0.8 million more households
 0.7 million more jobs
 4 million more trips per day (2023)
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London and the UK economy
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THE DECLINE OF MANUFACTURING
London manufacturing jobs, 1971-2026
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THE TRANSFORMATION OF THE
FINANCE SECTOR
• The Square Mile is not what it was…
• Big Bang
• A club no more
• Canary Wharf
• Wimbledonisation
“Wimbledonisation - the notion that Britain is the winner even if none
of the economic players are actually British - became official dogma.”
(Robert Peston, 2009)
• Manhattanisation
London and the UK economy
NOT JUST BANKS…
Other London sectors growing:
• ‘Finance and business services’ – insurance, law,
accountancy, consultancy
• Property and real estate – architects, engineers,
surveyors, agents, developers
• Creative, media and digital
• Silicon roundabout
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London and the UK economy
MANHATTANISATION: I
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London and the UK economy
MANHATTANISATION: II
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London and the UK economy
MANHATTANISATION: III
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THE WORLD CITY NARRATIVE
• Emergence after Big Bang of:
“a new agenda to develop London as a world city; London was acquiring
new international functions and these must be championed and
supported, underpinned by improved infrastructure, amenity, and quality
of life. London’s competitors were seen as New York, Tokyo, Paris, and
just before 1992 and the Single European Market, the emergence of
Frankfurt, Brussels, and Berlin was seen as striking.”
(Demos, 2012)
• Mission of London First:
“keeping London as the world’s best city in which to do business.”
(London First,2013)
• World city narrative rapidly endorsed by business, government,
and first 2 London Mayors. But completely new as London
policy.
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GLOBAL FINANCIAL CENTRE
• London the leading world financial centre (GFCI,
September 2013)
• But New York, Hong Kong and Singapore not far behind
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LONDON IN BRITAIN: I
Public policy 1945-70: decentralise and disperse
• Barlow
• Abercrombie
• Reith
• Location of Industry Policy
• New and expanded towns
• London office ban
Policy consensus linking central and London government.
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LONDON IN BRITAIN: II
The old conventional wisdom.
The Barlow Report:
“London acts as a continual drain on the rest of the
country both for industry and population, and much
evidence points to the fact that it is already too
large.”
(Report of the Royal Commission on the Distribution of the Industrial Population, Cmd
6153, 1940)
London and the UK economy
LONDON IN BRITAIN: III
Public policy since 2000: accept growth and invest to
match it
Origins:
• Long term decline of manufacturing
• 1977 Inner Cities White Paper
• 1986 Big Bang
• Urban Task Force
• Restoration of London government
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LONDON IN BRITAIN: IV
The new conventional wisdom.
The London Plan:
London now the only English region with a strategic plan
“The only prudent course is to plan for continued growth. Any other
course would either require fundamental changes in policy at national
level or could lead to London being unprepared for growth. The
projections we have used are not targets, and for the most part it is not a
question of choosing growth. There is no policy to decentralise
population within the UK, and it does not appear that this is likely to
change in the near future.
(The London Plan, 2011)
Population, employment, and housing growth to be contained in
1964 boundaries
The London settlement makes this a decision for London.
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LONDON IN BRITAIN: V
What next?
The London Finance Commission:
• “London’s growth is important for the economic health of the whole country,
and it is therefore vital that it is not impeded by a failure to meet its demand for
infrastructure.”
• Recommends: “Relaxing restrictions on borrowing for capital investment while
retaining prudential rules and simultaneously devolving the full suite of property
tax revenue streams.”
• “Full suite” = council tax, business rates, stamp duty land tax, annual tax on
enveloped dwellings and capital gains property development tax, including tax
rates and authority over all matters including revaluation, banding and
discounts.
• “100 per cent of business rates should be devolved to London government.”
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LONDON IN BRITAIN: VI
The UK’s emerging asymmetrical federalism:
If the London Finance Commission proposals are accepted:
• London, Scotland and Wales will all have tax and spend
powers
• Other cities will have City Deals
• Contrast between:
 London (and Wales + Scotland): freedom to raise revenue and set
priorities
 Rest of England: freedom to spend revenue raised by central
government
“No other equivalent administrative and political structure in the
democratic world that matches it.”
( D Hames, British Venture Capital Association)
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…AND MANCHESTER? I: 1984-2013
Manchester’s strategy - from dirty old town to brainy city:
• Airport
• Universities
• Regional business centre
• Research and innovation
• Cultural centre
• Urban transport
• Public realm and design
But reinvention is not the same as changing the city’s
relative position
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MANCHESTER II: 2013-2020
“It is clear that twenty-first century cities like Manchester
need to do better just to stand still. We need to anticipate
what is coming and be much bolder.”
(Draft Greater Manchester Strategy 2013-2020)
New approach:
• Science
• Internationalisation
• Low carbon
• Creative/digital/media
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MANCHESTER III
• “What is at stake is not just the immediate outcome. Each
one of these towns has transformed itself over one or
more decades. But changing their relative position, in the
urban system of which they form part, is much slower –
from fifty years to more than a hundred.”
(DATAR, Quelles metropoles en Europe, 2012)
• Manchester’s transformation achieved through:
 Strong and consistent civic leadership
 Dynamic private sector
 Support of central government
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EUROPEAN CITIES: I
The notorious blue banana – 1989 diagram showing an
urban corridor of industry and services stretching from
northern England to northern Italy.
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EUROPEAN CITIES: II
Recent studies of comparative roles of European cities:
• DATAR 2012
• Clark & Moonen 2013
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EUROPEAN CITIES: III
DATAR analysis of European cities:
• Two cities stand out: Paris and London
• Both dominate their countries
• Brussels in a category of its own – but neither France nor
Britain has a city in the next 2 categories (diverse
metropolitan centres, and metro port cities
• DATAR puts Manchester in category of cities dominated
by industry
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EUROPEAN CITIES: IV
Clark +Moonen/Brookings (Europe’s Cities in a Global
Economy):
• 2 ‘world cities’ – London and Paris
• Emerging world cities – Istanbul & Moscow
• Manchester as a revived post-industrial city
• Emergence of Cambridge as a science city
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London and the UK economy
EUROPEAN CITIES:V
Classification of European cities (DATAR,2012)
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London & Paris
2
Brussels
3
Diverse metros
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Metro ports
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Science led
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Business led
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University led
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Services led
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Industry led
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Tourism led
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Commerce led
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Agricultural/mining
London and the UK economy
EUROPEAN CITIES:VI
Revived post industrial cities (after Clark/Moonen):
• Attributes:
 Gateways to regional market
 Mix of services, retail and science
 Higher education
• Priorities:
 Build international HE Economy
 Attract & retain entrepreneurs
 Leverage sport & culture
 Improve rail/air links
• Examples:
 Manchester, Barcelona, Lyon, Warsaw
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THE ISSUES FOR THE UK
• Will (can) London retain its pre eminence as the world’s
•
•
•
•
leading financial centre?
What would be the implications (for London, for the rest of
UK) of ceasing to be no.1?
Are London, and the whole country, prepared to bear the
downside of being the global financial centre? For
example, for the London housing market?
How sustainable – socially, environmentally – is London’s
forecast future growth?
Is rebalancing the economy still on the agenda?
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PESTON’S QUESTIONS
During the recent recession there was a lively debate about whether
the UK had become too dependent on the City.
Two concerns raised:
• “ whether it was good for the happiness and cohesion of Britain to be so
dependent on an industry where huge disproportionate rewards go to small
numbers of individuals, significantly widening the gap between rich and
poor?”
• “and whether the British economy would be more stable and reliable as a
wealth generator if it was less reliant on debt-fuelled growth and more reliant
on manufacturing and tradeable services other than finance?”
“Mr Carney's appointment and his subsequent testament of faith in the
City implies that the government has more-or-less given up on a
fundamental rebalancing and reconstruction of the British economy
away from banking.” (Robert Peston blog, 31.10.13)
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TOWARDS A POLICY AGENDA:I
City Growth Commission posing the right question:
“What are the key benefits – for the economy, investment,
innovation, productivity and public finances – of shifting to a multipolar growth model, in which our major cities are key players in the
nations’ economy?”
• Relationship between London and UK cities not a zero
sum game
• Neither conflict nor harmony inevitable
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TOWARDS A POLICY AGENDA:II
Policy instruments:
• Planning – time for a National Spatial Strategy?
• Environment – Foresight study on land use
• Urban policy – need for an explicit focus on key cities
• Federalism – rebalancing government. Status quo not an option
• Government – location of institutions, not just jobs
• Taxation – central and local
• Time for a constitutional convention?
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ACKNOWLEDGMENTS
Thanks to:
Julian Dobson
Michael Edwards
Robin Murray
for their comments on a draft of this presentation.
They are not, however, responsible for any errors of fact or
judgment.
www.michaelwardconsulting.co.uk