Angela Rayner, we are told, has worked out with Rachel Reeves how much money her department, which covers housing and local government, will have for the next few years. It needs to be a big, beautiful deal.
The Deputy Prime Minister wants 88,000 new homes a year built in London, a huge chunk of her five-year national target of 1.5 million. The figure lies far beyond the highest hopes of anyone in the capital’s housing sector. Major public investment will be vital to getting anywhere near it. Meanwhile, some of London’s boroughs are at financial breaking point, as the costs of homelessness push them towards the red.
How much will London be given in the Chancellor’s spending review as a whole? Word from City Hall is downbeat. In contrast to the mood at last week’s BusinessLDN conference, our old friend a “source close the Mayor” is pessimistic, warning the Labour government against a “return to the damaging, anti-London approach of the last government, which would not only harm London’s vital public services, but jobs and growth across the country”.
Perhaps we’ll get a nice surprise come Wednesday. But the mood in London government seems gloomy about even the Docklands Light Railway extension to Thamesmead getting funded, a project that could lead to as many as 30,000 new homes being built on either side of the Thames in the east. It would cost £1 billion or so. Yet Reeves has pre-announced £15 billion for transport infrastructure schemes elsewhere, apparently content in the knowledge that, if they ever happen, they will represent worse value for money.
“It will simply not be possible to achieve national growth ambitions without the right investment and growth in our capital,” says the City Hall source. That isn’t hubris. It is repeating a basic fact of UK economic life that every mote and pot plant in the Treasury knows to be true, but which, if the direst rumours turn out to be correct, is in danger of being ignored.
Is an ostensibly pro-growth national government going to sacrifice maximising it on the altar of appeasing voters in the North and Midland, those currently drawn to Nigel Farage’s false prospectus? Please say it isn’t so.
London’s productivity growth has flatlined since the 2008 economic crisis, yet the capital remains by far the most productive UK region, contributing close to a quarter of UK economic output from a tiny fraction of its land mass, exporting tens of billions in tax revenues to the rest of the UK each year, and supporting businesses far beyond its boundary. For example, TfL has just contracted an engineering firm in Glasgow.
A nation struggling to recover from 14 years of ruinous cuts and reckless economic experiments cannot afford to neglect the engine room of its economy. Ensuring that its inhabitants are safely, healthily and affordably housed, including those too old, too young or too ill to work, is the most fundamental kind of care and bedrock to its resilience. Yet more than a tenth of homes for rent in London fall short of the minimum Decent Homes Standard, and every primary school classroom in the city contains, on average, at least one homeless child – that’s around 90,000 children in all.
This cannot go on. In a Talk About London podcast, Antonia Jennings, chief executive of think tank Centre for London, has described housing as “the umbrella challenge for London”, relating directly to all the city’s other big challenges – health, decarbonisation and, yes, productivity. In a letter to housing minister (and London MP) Matthew Pennycook, BusinessLDN, supported by a long and varied list of housing sector businesses and providers, says that lack of new supply is “putting a massive strain on local public finances” but also on the capital’s employers, “with the high cost of housing acting as a barrier to recruitment and retention”.
There is no single solution to London’s chronic housing problems, but public investment in “affordable” supply, from social rent to low cost home ownership, tops every list. To fail to provide it in major amounts would be indefensible, inexplicable and economically alarmingly inept.
OnLondon.co.uk provides unique, no-advertising and no-paywall coverage of the capital’s politics, development and culture. Support the website and its writers for just £5 a month or £50 a year and get things that other people won’t. Details HERE. Follow Dave Hill on Bluesky. Photo: New homes on Woodberry Down, Hackney.