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Why ‘luxury flats’ do not ‘push out’ London’s poor (and why we still need to build for low-cost rent)

Recent studies of the effects of new market housing in urban localities suggest its impacts are not as some believe
Dave Hill

Among the more religious received wisdoms of recent years is the belief that if new homes for full market sale are built in a part of London, poorer resident are “pushed out” as a result. Such developments, routinely denounced as “luxury flats” even when they are, in reality, perfectly plain, are characterised as if they were settler villages – fortresses of an invading bourgeoisie destroying once blissfully contented “working class space”.

I parody, of course, though not that much. In particular, I parody the populist politics of what I call the Protest Left, although appalled Conservatives and conservationists sometimes embrace the same formula. The seemingly rival tribes find common ground in thinking all commercial property development is bad – perhaps especially bad if financed by those modern folk devils “rich foreign investors” – and the resulting homes too expensive for “local people”.

The trouble with all this, which for years has done a roaring trade in academia, upmarket liberal media and on the conference merry-go-round, is that, like all populism, it reduces a complex situation to a set of good-versus-evil slogans. These acquire a self-perpetuating momentum which, if it gets into politicians’ heads, can heighten London’s multifarious housing problems rather than reduce them.

A new housing research note from City Hall shines a searching light on this realm of foggy outrage. Compiled by the Greater London Authority’s James Gleeson – @GeographyJim as he is known elsewhere – it is very much not a polemic, and my need to point this out stems from my slight unease about recruiting it, up to a point, to my bad-tempered mission to persuade people to stop congratulating themselves for not thinking hard enough.

The note succinctly summarises seven recent studies of what happens to housing affordability when new homes are built – in particular what happens to it in the immediate vicinity of those homes in the short term. “There is already evidence that increases in the supply of housing bear down on housing costs in the long term,” Gleeson writes in his executive summary, emphasising that this applies if all other factors are held equal. This new research explores how they affect the cost of housing in people’s own backyards soon after its completion.

Gleeson finds “a number of consistent findings” in the seven studies which, using new and more precise forms of data, variously look at situations New York City, San Francisco, Helsinki, parts of Germany and estate regeneration schemes in London.

One such finding is that “building new, market-rate homes makes other housing more affordable”, not the other way round. This happens because, as the note explains, the new homes tend to be bought by local people with high incomes, which very likely entails them selling their previous home to another local household with less money.

This can be the start of a virtuous “chain”, which reaches down through the income layers and gives people near the bottom a better chance to move into somewhere better. It also has a local “supply impact”, changing the neighbourhood supply-demand balance and reducing buying prices and rents accordingly.

That is not the whole picture. Gleeson stresses that although the studies show that building new market-rate housing “increases the availability of homes affordable to low-income households”, it does not do so “as directly as building social housing and other kinds of affordable housing”. There really is no substitute for that.

His other topline caveat is that “the geographical distribution of market-rate housing supply matters”. The studies show that if market-rate homes are “focused only in low-income areas” it can indeed lead to “localised increases” and to “potentially increasing gentrification pressures”.

Furthermore, new housing can prompt improvements in local amenities such as restaurants and even bring about reductions in crime. Changes of this kind, Gleeson writes, can “generate enough increased demand to the second-hand housing stock in the area to outweigh the supply impact of new homes and therefore push up prices and rents”.

Even so, if demand for high-cost new homes goes unmet, “it is primarily low-income households that lose out,” Gleeson concludes from the studies.

That is a far cry from the righteous certainties of anti-gentrification protesters, whose seemingly unshakable premise is that if market-rate new housing is built anywhere in London, such “luxury flats” can only ever be bad for those in the neighbourhood who can’t afford them, and will inevitably result in their “displacement” or, more emotively, their “social cleansing” from the area.

In reality, it seems, the less well-off Londoners usually have more to gain from new market-level housing appearing on their patches of the city than they have to lose.

Read the whole GLA housing research note here (including links to the individual studies). If you value On London and its writers, become a supporter or a paid subscriber to Dave Hill’s Substack for just £5 a month or £50 a year. X/Twitter: On London and Dave Hill.

Categories: Analysis
Tags: gentrification, Greater London Authority, housing

John Griffiths: Bartholomew Fair revival continues Square Mile Destination City campaign

The City Corporation is continuing its bid to broaden perceptions of the area and attract more visitors
John Griffiths

Bringing a modern twist to a festival which dates back to the 12th Century, the City of London’s revival of Bartholomew Fair is the latest pitch in its Destination City campaign to capture a share of the growing number of visitors now returning, post-pandemic, to the capital.

Originally a three-day gathering for trading cloth and other goods which coincided with the 24 August feast of St Bartholomew, the event grew to become London’s preeminent leisure fair, lasting for a couple of weeks and attracting visitors and acts from across the country.

An eclectic mix of the traditional and the modern is at the heart of this year’s revival. It will run each Thursday to Saturday during the period from 31 August to the 16 September and aim to drive significantly increased footfall and visitor numbers to different parts of the City.

The evening before the first of main festivities – flood-lit performances on the façade of St Paul’s by leading vertical dance company BANDALOOP – Bartholomew Fair 2023 will officially open with a nod to tradition in the form of a ribbon-cutting ceremony and public disputation in West Smithfield at the church of St Bartholomew the Great

Ribbon-cutting, now commonplace, was begun at the original cloth fair by the then Lord Mayor of London. Encapsulating both the fair’s historic origins and its new beginnings, artist Damien Hirst has designed a special ribbon for the current Lord Mayor.

The first disputations took place at the church in the Middle Ages and were the forerunner of parliamentary debates. The motion for this year is: “This house believes that the love of money is the root of the nation’s evils.” There will be high-profile speakers from the City, politics and the church. The Bishop of London will chair.

Destination City uses the strapline “where it happened; where it’s happening” to convey how, by fusing the old with the new, the City of London Corporation intends to shift public perceptions of the Square Mile, so that it is seen as a place to enjoy culture and leisure time as well as the home of financial services.

John Griffiths is a City of London Common Councillor for the Ward of Castle Baynard and a member of the City’s culture, heritage and libraries committee. Tickets to the 30 August event are available from the church website and Eventbrite. If you value On London and its writers, become a supporter or a paid subscriber to publisher and editor Dave Hill’s Substack. Thanks.

Categories: Culture
Tags: City of London, City of London Corporation

Richard Boffey: Young Londoners’ impressive A Level results bode well for the capital’s high skills economy

The city will need millions of graduates between now and 2035 to meet demand, making their appetite for higher education especially welcome
Richard Boffey

Last Thursday marked a major milestone for the thousands of Londoners receiving their A Level, BTEC, T Level and other vocational and technical results. The class of 2023 have shown great perseverance and dedication to complete their studies despite cancelled GCSE exams, spiralling cost pressures and wider disruption to their schooling. They can be very proud of their attainments. The fact that almost one in three of London’s A Level cohort obtained an A or A* is all the more remarkable given the circumstances in which those grades were achieved.

The university admissions data for London tell a similarly positive story. Over 60,000 Londoners have secured a university place to date through the university and college admissions service (UCAS), with many weeks still to go during which thousands more will no doubt accept places. The numbers in London appear to have bucked the national trend, at least insofar as they have remained broadly in line with 2022. whereas they have fallen in other regions of England, as was predicted to due to changes to grading.

This is positive if not altogether unsurprising. Demand for university places among young Londoners has, after all, proven remarkably resilient in the wake of the pandemic and now amid the cost of living crisis. London Higher’s research, based on polling of the “Covid cohort” in late summer 2021, showed that the experiences of lockdowns, remote education and campus closures had done little to deter them from pursuing a place at university.

More recently, University College London’s COVID Social Mobility and Opportunities (COSMO) study, which is tracking the Covid cohort nationally to understand the pandemic’s impact on their future aspirations and life chances, found them to be more motivated than older generations to progress to higher education. For young Londoners university remains the destination of choice.

This should be welcome news from the perspective of the capital’s employers. Research suggests there will be 2.3 million vacancies at graduate level in the capital between now and 2035, and this demand for skilled talent can only be met if university entry rates remain at or above their current level. The Westminster government has a role to play here. Recently introduced proposals to impose student number caps on higher education courses (especially targeting programmes in the creative arts, humanities and social sciences) entirely disregard the needs of London’s economy, and must be urgently rethought by the next government if it is serious about improving productivity.

Employers would hardly disagree. Kingston University London (pictured) recently surveyed businesses across the country for its Future Skills report and found that the skills they say they need most are the higher-level critical thinking, team working and problem-solving abilities that sit at the heart of all undergraduate curricula – not just those in so-called “high priority” or STEM (science, technology, engineering and maths) subject areas.

We don’t yet have the data on university admissions for London by subject, but if admissions patterns broadly track 2022 trends (as they have done in other respects), we can expect nearly 40,000 UK students to be progressing to courses in the arts, humanities and social sciences in the city. These students represent a major part of the solution to its skills challenge. Their securing a university place should be celebrated as such.

Of course, we only have partial results data at this stage and there are a number of other trends to keep a watchful eye on as the clearing cycle progresses. For instance, it seems that the examinations regulator Ofqual’s “glide path” back to pre-pandemic grading has disproportionately impacted students from lower-income and underrepresented backgrounds, though we don’t yet know the extent of this. Some of this week’s media coverage has picked up on evidence of growing regional disparities, with London and the South East pulling away from other regions in rates of top-end attainment. How this has played out in London with respect to the attainment profiles of different groups of Londoners is not yet clear.

Similarly, we don’t yet know the exact destinations of the London cohort progressing to higher education, or who missed out – either on their preferred place or on a place altogether. UCAS says 91 per cent of university applicants nationally secured either their firm or insurance choice. If that is reflected in the capital, thousands of Londoners will be without a university offer.

This raises important questions about the higher education sector’s ability to absorb high rates of demand in a way that ensures all students, not just the most privileged or highest-attaining, can benefit from the opportunities afforded by university. By extension, we need to ensure enough is being done to signpost school and college leavers towards the full range of study pathways available in London, including vocational and technical routes, which have an equally important role to play in delivering on the Mayor’s Skills for Londoners vision.

We can expect to learn more, then, about the implications of A Level results day for London – and especially for social mobility in London – as clearing progresses. But in the meantime, we must congratulate students on their outstanding results in the face of considerable adversity. And we should look ahead with optimism to the future role they will play in sustaining London’s high-skill economy.

Dr Richard Boffey is Head of AccessHE, the widening participation division of London Higher. X/Twitter: London Higher. If you value On London and its writers, become a supporter or a paid subscriber to publisher and editor Dave Hill’s Substack. Thanks.

Categories: Comment
Tags: education, higher education, London Higher, schools

Dave Hill: London still props up UK economy as ‘levelling up’ balloon deflates

The flagship agenda of a struggling government was always going to fall short and its anti-London attitudes have not helped
Dave Hill

The Observer reports that a backlash is brewing among “red wall” Conservative MPs. They fear that “levelling up” is winding down. A micro clause in the accounts of the Government Property Agency, responsible for managing the civil service estate, says “two hub projects” have been dumped, one in Newcastle, the other in Birmingham. The Goliaths of the Northern Research Group have expressed alarm. The government has called for calm – fear, not, the hubs are coming! But what difference would they really make?

“Levelling up” has always been more of a “Boris” balloon than a serious attempt to reverse decades of economic decline in the north of England and elsewhere and, in the process, to reduce national dependency on London. We can debate the public finance case for spending less on office space in central London and investing in Tyneside instead. We can accept that some good has come from building a Treasury block in Darlington. There has even been some decent devolution to the West Midlands and Greater Manchester under deals struck earlier this year. But have foundations been laid for a long-term, regional rebalancing act that would strengthen city economies across the country beyond the capital?

Not terribly. Moving departmental jobs around the map has been tried many times before but, as the Institute for Government has confirmed, the benefits are limited. And a Commons committee has criticised “a boosterish approach” by the current administration, with no evidence to back up boasts about achievements or estimates of the effects of closing offices in smaller towns “where the economic impacts are likely to be more acutely felt”. The Levelling-up and Regeneration Bill is still plodding through Parliament. The further north you go, the further behind London top grade A-level achievement falls.

Meanwhile, here in the big, bad capital, two large themes have endured through all the traumas since the 2019 general election and before. One is that without our resilience and power, the rest of the country would be struggling even more. Buffeted by Brexit, hammered by the pandemic, and hurt by the cost of living just like everywhere else, London is nonetheless bouncing back. The latest indicator, from the National Institute for Economic and Social Research, is that “real wages” here will rise faster than anywhere else. Visitors are returning, office space is in demand and public transport use continues to revive. Even before the end of Covid, London’s economic output was back on the up while everywhere else it was still down.

All that is in spite of the other large theme – national government’s deliberate degrading of London out of arrogance and electoral expedience. The impoverishment of poorer boroughs has been going on since 2010, as the Institute for Fiscal Studies has shown – a long-running background story whose importance dwarfs the higher profile “levelling up” pork barrel performances that have discriminated against London too. When the pandemic plunged Transport for London into crisis, PM Johnson’s most dedicated creeps and control freaks made emerging from it more difficult. Showboating interventions in the London Plan have enjoyed a revival, with Michael Gove signalling his intention to save Tory marginal seats if he can.

This meddling and posturing does no one any good: not London, especially poorer Londoners, and not the rest of the country either. The government now seems interested in London only as an aspect of managing its own decline. The likely next one might not be London’s friend either. But the old mantra is still true – you cannot “level up” this country by bringing its capital city down.

X/Twitter: On London and Dave Hill. If you value On London and its writers, become a supporter or a paid subscriber to Dave’s Substack for just £5 a month or £50 a year.

Categories: Comment
Tags: "levelling up", Conservatives, Devolution

Richard Brown: A death metal night in Heaven

The venerable Charing Cross club still offers a rich range of music in a unique and welcoming environment
Richard Brown

Is it “black metal” or “death metal”? I am never quite sure of the difference, but the air thrums with blast-beat drumming as we descend into Heaven. Tonight we’re here for the metal, but as we pass the security staff, I am briefly transported back to my 1990s, when optimism and alcoholic lemonade fuelled countless nights of terrible dancing and occasionally-effective eye-catching under the arches of Charing Cross.

Heaven is now a venerable London institution. The club, buried in the vaults under the station concourse, was a gay clubbing trailblazer when it opened in 1979. It was established by Jeremy Norman – entrepreneur, wine merchant and chairman of Burke’s Peerage – drawing on his experiences at New York’s The Saint and Studio 54. Through the Eighties and Nineties, Heaven hosted iconic gay nights such as Fruit Machine, alongside pioneering techno clubs like Paul Oakenfold’s Rage and gigs by everyone from New Order to Throbbing Gristle to Stereolab.

Owned today by Jeremy Joseph, promoter of G-A-Y, Heaven continues to mix it up. The cavernous vaults, which hold 1,000 people, have rainbow flags fluttering in the strobe lights as Flemish trio Wiegedood blast the crowd. The thing about death metal (or black metal) is you need to lean into it, like a stage diver trusting in the mosh pit.

Immerse yourself in the propulsive sound and let the melodies emerge – chiming chord progressions like Keith Levene’s on early Public Image Limited, or angular shreds of Sonic Youth noise. The lyrics are screamed in classic black metal (or death metal) style. Are they even in English or are they Flemish? It’s hard to tell, but given the band’s pledge, on their website, that their new album “focuses on the filthiest and most disgusting parts of human nature”, this may be a blessing.

As I buy a couple of cans of Red Stripe in between acts (a very fair £5.45 each, but decanted into disposable plastic glasses – boo!), Wiegedood bassist Levy Synaeve chats amiably with fans. For all the decibels and corpse-paint, metal audiences are some of the friendliest you could meet. The fashion may be divergent, the headbanging heavier and the flirting dialled down, but metal gigs can create the same euphoric sense of community and celebration as gay clubs.

Chicago’s Russian Circles are the headline act. They are “post-metal”, which seems to mean no vocals – probably a good thing, for reasons already stated – and  their music builds from languid harmonies, to motorik krautrock rhythms, to thundering slabs of guitar. It’s loud for sure, and Heaven’s sound system lets the bass re-arrange your internal organs without losing clarity and force higher in the register. But there is a lightness of touch to Russian Circles that eludes bellowing leviathans like Metallica. Their performance is captivating and enthralling.

Let’s be honest: I doubt anything I write will convert you to black (or death) metal, or post-metal, if you are not already a fan. But Heaven is place that bears (re)visiting, whether you prefer your repetitive beats from a DJ’s decks or a hairy Belgian’s drum-kit. It has the atmosphere and heritage absent from most purpose-built venues, but clean toilets, friendly staff and reasonably-priced drinks too.

After a fierce hour, Russian Circles leave the stage and the house lights come up. Heaven has to freshen up, apply lippy and re-open for its Monday stalwart, Popcorn. As we leave, I am almost tempted to turn round and join the queue to go back in. But I have a train to catch, and I’m not 25 any more.

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Categories: Culture
Tags: Charing Cross, culture, Heaven

Centre for London report tells worsening London housing story

The capital's dedicated think tank has painted a troubling picture of rising rents, homelessness and insufficient supply
Charles Wright

Soaring rents, rising homelessness and demand far outstripping supply – London’s boroughs, City Hall and others have been chronicling this growing housing crisis in the capital. Now a new report from the Centre for London think tank, published today, provides more compelling evidence that the need for action is urgent.

Entitled Homes Fit for Londoners: London’s Homes Today, it sets out a bleak picture. Fifty per cent more people are sleeping rough in London compared to a decade ago, and more than 300,000 people are on council waiting lists for social housing. The boroughs are struggling to provide temporary accommodation for the increasing numbers of homeless people who qualify.

An acute shortage of social housing – council waiting list numbers topped 33,000 last year in Lambeth and Newham alone – has seen private renting double this century to account for 29 per cent of London’s homes, with 49 per cent owner-occupied and a declining proportion, 22 per cent, in the social rented sector.

High rents mean more Londoners pushed into relative poverty too – 27 per cent compared to 22 per cent nationally. Median monthly private rents of £1,200 compared to £680 in England as a whole are seeing private renters in the capital spending a greater proportion of their income on rent than in any other English region – 40 per cent compared with 26 per cent.

Half of London’s homes were built before 1945, which may contribute to the startling fact that two in five Londoners have experienced damp or mould in their home in the past year. In addition, 11 per cent of London homes are overcrowded, as against four per cent in England overall.

It’s a dramatically variable picture too. Five per cent of homes in Richmond are overcrowded, but 22 per cent are in Newham. In Tower Hamlets, less than a third of homes are owner-occupied. In Havering the figure is 70 per cent. White British Londoners are more than twice as likely as black counterparts to own their home, and two-thirds of the city’s nine million people now live in outer London, suggesting a “hollowing out” of the centre.

Many Londoners endure conditions that are “increasingly insecure, unsafe, and further away from the city centre,” the report finds. “If we don’t provide Londoners with the affordable homes they need to live in the city, the key workers who keep London running will have no choice but to leave.”

While new homes are being built – 37,000 net additions in 2021/22, the second highest figure of any region, just below the South East – the proportion of affordable homes, at a fifth of total supply, continues to fall short. The report welcomes Sadiq Khan’s recent boost to council home building, but warns of a long way to go to address current demand. Khan himself last week called for extra government cash to “kickstart a slowing housing market” and keep affordable housing programmes on track in the face of escalating cost pressures.

But for too long, said Claire Harding, interim chief executive at the centre and co-author of the report, politicians had been complacent about the lack of decent homes for Londoners. “Too many Londoners are living in poor housing and being forced into poverty as a result,” she said. “As our research shows, this is especially true for people from disadvantaged and minority communities.”

Alongside a wide-ranging review of policy options, the report argues for a step-up in partnership working, with policymakers collaborating with businesses, housing developers and investors to find broad solutions rather than addressing parts of the crisis only. “Progress in building more affordable homes can only be achieved through big thinking about long-term solutions,” said Harding.

Centre For London’s own big thinking, setting out its package of policy proposals, will be published this winter.

X/Twitter: Charles Wright and On London. If you value On London and its writers, become a supporter or a paid subscriber to publisher and editor Dave Hill’s Substack. Thanks.

Categories: News
Tags: Centre For London, housing, social housing

Dave Hill: Conservatives need positive, pro-London policies to defeat Sadiq Khan

Negative campaigning and stoking core vote ire will get the Tories only so far
Dave Hill

Sadiq Khan will probably win next year’s mayoral election, but a surprise triumph for Susan Hall can’t be ruled out. Her current odds of 5/1 feel too short – an overreaction to Uxbridge, maybe – but were I into betting, the 7/1 of a few weeks back might have appealed. The Tory candidate is, for now, best known for insulting a reality TV contestant, for backing Brexit, for egging on Donald Trump, and for an unflattering Evening Standard front page photo. She represents a party that has been losing ground in London for years. But even so…

Hall has some big, clear themes to work with. The ULEZ expansion furore will fade, but a follow-up attack line about a larger road user charging “plot” is already in formation, and she will do all she can to stoke disquiet about the Met and crime. On housing and planning, expect Hall to be strident, in line with Michael Gove, about protecting the Tory suburbs from development, especially in the form of tower blocks.

Her “war on woke” positions will find an audience too: there are more Londoners with socially conservative values than widely thought, including among groups with whom the Tories have been making progress. Indian Londoners, for example, have become more receptive to the party, as Bob Blackman MP has shown in Harrow East. Hindu mistrust of a Muslim candidate informed Zac Goldsmith’s notorious “tax your jewellery” ploy against Khan in 2016. It was crass and pathetic but it might have struck a chord.

All of the above suggest that Hall, a long-serving Harrow councillor, will attempt to revive the 2008 Boris Johnson “doughnut strategy”, which zoomed in on a range of outer London discontents. That would be logical. But it won’t be enough.

For one thing, the doughnut isn’t as blue as it was, with Labour taking power in once marginal boroughs and eroding long-time Tory strongholds. For another, Hall isn’t Johnson, possessing neither his celebrity nor what was seen back then as his raffish, anti-politician charm, which transcended party lines. An aggressively negative core vote strategy might help salvage a less than crushing defeat for Hall. But if she and her party are serious about winning, they will need to reach beyond an aggrieved, anxious but shrunken Tory base. What options do they have?

Being a woman makes Hall a novel runner for a major party in a London mayoral race. She will surely make the most of that, playing the practical female “common sense” card and in so doing hoping to give Khan a novel problem. Her public manner might need working on, though: it’s one thing to go on Talk TV and agree with a like-minded presenter that Khan’s “an absolute disgrace”, but it’s another not to appear more Mrs Slocombe than Mrs Thatcher to the mainstream.

Were I advising her – something as likely to happen as Rishi Sunak revealing that he’s actually been Britney Spears all along – I would suggest some judicious distancing from Tory national policies. Hall rails against Khan blaming the government for his and London’s problems. But while this can be repetitive, it’s also true: a new Institute for Fiscal Studies report showing that London’s local authorities have been discriminated against, along with cities generally, in favour of Tory areas is just the latest evidence of the capital and its people taking second place, certainly since the 2019 general election.

Is Hall prepared to put the city she aspires to lead before the discredited party to which she has been so visibly loyal throughout its 13 years of selling London short? A less deferential tone might strain credulity, especially in view of her stubborn apologism for the excesses of “Boris”. But a credible would-be London Mayor must be willing to speak up for London when it is being done down by Whitehall and Number 10. Like Khan, Hall should make clear that London needs more money for affordable housing and the Met, and a proper long-term funding deal for Transport for London. If nothing else, breaking rank with Sunak’s wounded, London-slighting regime would help her get a hearing.

The Tories’ unpopularity is a huge problem for Hall, but Londoners have shown before that they can ditch party loyalties when deciding who to support for Mayor: Johnson easily outpolled his party in London elections (the “Boris bonus”) and Ken Livingstone both triumphed as an independent and slipped behind Labour in terms of first preference votes in 2012. Khan will have to combat voter fatigue with him – he’s seeking a third term following a second that has been hard going. Tory claims that he is wildly unpopular strike me as attempts to keep their spirits up, but some Labour supporters might be disillusioned or apathetic.

If Hall can combine revving up what survives of hardcore Tory outer London with converting or suppressing parts of Labour’s London coalition, she will be in the game. It won’t be easy for her, though, so staunch has been her backing for her party nationally and so stereotypically a suburban Tory does she appear. The Conservatives in London are conducting a review of their operation in the capital. It will be interesting to see if and how it influences Hall’s campaign.

X/Twitter: On London and Dave Hill. If you value On London and its writers, become a supporter or a paid subscriber to publisher and editor Dave’s Substack for just £5 a month or £50 a year.

Categories: Comment
Tags: Conservatives, Metropolitan Police, Sadiq Khan, Susan Hall, ultra low emission zone

Richard Brown: Institute for Fiscal Studies reveals mixed London public spending picture

The think tank's study shows some boroughs faring well, but many Tory-voting areas outside cities faring best
Richard Brown

To misquote Hunter S Thompson, “Levelling up is hard to know because of all the hired bullshit”. Is “levelling up” about the north-side divide, about regional infrastructure, about social inequality or about “London-centrism”? The concept is so slippery that there is plenty of space to pick your own perspective. So it’s a relief when the august Institute for Fiscal Studies (IFS) sheds some light on how money is being spent around the country.

Its report on public spending, published this week, looks at allocations for health services, police, local government, public health and schools across England – in total, around £245 billion in 2022/23. This is where the real money is. Spending on these services dwarves, for example, the £3 billion of Levelling Up Funds provided to England in the first two rounds.

The report breaks down spending by 150 local authority areas (with an interactive map), analysing expenditure per head but also as measured against need. At first glance, the capital’s boroughs fare relatively well, with six in inner London – Camden, Hackney, Islington, Kensington & Chelsea, Southwark and Westminster – among the ten highest-funded areas, each receiving more than £5,000 per head alongside Blackpool, Knowsley, Liverpool and Middlesbrough.

There are, of course, good reasons why spending in London is higher. For a start, wages, which make up around 45 per cent of NHS spending, 50 per cent of local government spending and around 75 per cent of police spending, reflect the city’s higher living costs. London weightings added to wages (seven per cent for police, 2-20 per cent for NHS workers, and 3-18 per cent for council staff) are set accordingly. So, you would expect higher costs in London for equivalent staffing and service levels elsewhere.

There’s a bigger issue too: the figures are based on 2021 population estimates. We know that London saw a sharp fall in population during the pandemic, and this was particularly acute in central London. The IFS shows how different spending per head would be if the calculation used 2020 estimates instead (which would also be more in line with the estimates used to allocate funding). It would fall by an average of £160 per head across London boroughs, and by more than £1,000 per head in Camden and Westminster. Mid-year estimates for 2022, due out next month, will give us some indication of how far London’s population has rebounded.

All that said, it’s no great surprise that urban areas in general spend more: they have higher levels of deprivation and higher levels of need (with a few countervailing areas such bin collections, where rural authorities spend more). This is why central government funding is allocated according to complex formulas intended to reflect need (and the cost of delivering services) as well as population levels. The IFS team has updated these formulas – the government has not done so for ten years – and compared them to spending per head.

Here the picture is a lot more mixed for London. The capital receives slightly higher funding relative to need for NHS services, though this is largely attributed to the differences between the GP registrations used to allocate NHS funding and the much lower 2021 ONS population estimates. Funding for the police is slightly lower than need, but not as low as it is in other large urban areas. But London’s local government looks very under-funded. Nine out of the ten councils with the biggest relative funding gaps are in London, forming an arc stretching from Barking & Dagenham to Hounslow.

Defunding deprived urban areas is at least partly the result of political choice. As Centre for London and the IFS have explored, cuts in central government funding for councils during the 2010s were applied as fixed percentages, which hit urban areas – with higher need and more dependency on grants rather than Council Tax – particularly hard. As the IFS report observes, needs assessments for local government have not been updated for a decade. But this too is a political choice.

You could conceivably argue that urban areas, which tend to vote Labour, have been over-funded in the past. The Prime Minister hinted at this at an event in Kent (funding eight per cent above relative need) last year when running for the Conservative Party leadership. In fact, the IFS report shows a swathe of well-funded local authorities in the Conservatives’ deep blue Home Counties and midlands heartlands.

Whether this is the result of reasonable policy or low politics is a matter of opinion. But you have to ask if it makes sense in the light of the government’s own proclaimed policy of building in city centres, including London’s. Cutting back public services in city centres, while seeking to grow their populations, does not seem like a sustainable approach to growth, let alone to “levelling up”.

On X: Richard Brown and On London. If you value On London and its writers, become a supporter or a paid subscriber to publisher and editor Dave’s Substack for just £5 a month or £50 a year. A few refinements were made to this article on the morning of 17 August 2023.

Categories: Analysis
Tags: "levelling up", Centre For London, Institute for Fiscal Studies