Jenny Gulliford: For the nation’s sake, the Chancellor must fund London growth

Jenny Gulliford: For the nation’s sake, the Chancellor must fund London growth

The Chancellor will unveil his autumn statement on 22 November. To be delivered against the backdrop of a flatlining economy, it is likely to be one of the government’s last chances to deliver their goal of driving growth ahead of the general election. Unlocking growth in central London – and across the capital as a whole – will be vital to achieving this.

Central London’s economy is strong and dynamic. The 12 boroughs that make up Central London Forward (CLF) are home to three million jobs, and generate a quarter of England’s Business Rates revenue. While some proponents of the “levelling up” agenda claim London’s success comes at the expense of the rest of the country, we know nothing could be further from the truth.

Furthermore, London’s economy is fundamentally linked to local economies across the UK, with every £1 of consumption here generating 24 pence of production elsewhere. When London thrives, the UK thrives too. Yet much more could be done to drive growth across the capital, for the benefit of the country as a whole.

First, the Chancellor should ensure a long-term sustainable capital funding deal for Transport for London. Our transport network is crucial for keeping the capital moving, connected and productive. The current funding deal between TfL and the Department for Transport expires at the end of March 2024.

TfL is on course to be self-sufficient in day-to-day spending by then – a feat not achieved by any other public transport system of comparable size globally – yet it will need ongoing support with capital funding to maintain the network, and to invest in future growth.

The Elizabeth line showed us the transformative impact of investing in the capital’s transport network. We need to see further such infrastructure investment in London – including the extension of the Bakerloo Line – as well as in other regions.

Second, the Chancellor should re-introduce a tax-free shopping scheme to drive the growth of the visitor economy. The UK has become the only country in Europe that doesn’t offer this, putting us at a competitive disadvantage in attracting tourists.

Recent analysis found that, far from costing money, re-introducing tax-free shopping would boost GDP by £10.7 billion, support over 200,000 jobs, and increase Treasury revenue by £3.6 billion.

Third, the Chancellor should take action to drive green growth. One of the biggest opportunities here is retrofit. Three-quarters of London’s emissions come from our homes and other buildings. Insulating these and installing low-carbon heating could mean lower emissions, warmer homes and cheaper bills.

Retrofit is also a massive job creation opportunity – recent analysis commissioned by CLF showed that between 19,000 and 28,000 skilled workers would be needed by the end of the decade to insulate homes and buildings in central London alone.

However, at present this work is progressing at a snail’s pace. National government must increase investment in retrofit, and work with local government to develop local retrofit partnerships so that we can train up the army of skilled workers we will need to do this vital work.

The Chancellor should also recognise the challenges London faces. The levelling-up agenda tended to portray London as entirely, contrasting it with “left behind” regions. But despite the dynamism of its economy, London has the second highest level of poverty of any part of the UK. In addition to tackling inequalities between UK regions, we need to level-up within London.

Central London has long grappled with high levels of joblessness. As nationally-commissioned employment programmes have fallen short in the capital, boroughs have stepped in. Last year alone, London boroughs invested £39 million in our local employment services, supporting over 20,000 Londoners.

We believe local services are better able to respond to the needs of local residents and employers. The Chancellor announced a new employment programme – called Universal Support – in his budget earlier this year. In his autumn statement, he should commit to devolving the programme to local government, so that London’s local authorities can build a system that works for Londoners.

London also faces an escalating homelessness crisis. One in 50 Londoners are now homeless. That means 170,000 people – including 83,000 children – do not have anywhere to call home. As as private sector rents have raced upwards, Local Housing Allowance (LHA) – the amount a household on benefits can claim to cover rent costs – has remained frozen since April 2020.

As a result, just two per cent of properties in central London were affordable last year. The Chancellor should take urgent action to prevent a further surge in homelessness, including increasing the LHA. And with private landlords exiting the market, government should help councils buy back properties, so we can rebuild depleted stocks of social housing.

Frontline services are also at risk as a result of a continued squeeze on local government funding. Since 2010, councils have experienced among the largest cuts in any part of the public sector, and local authorities in London have seen the biggest reductions.

Even after a much-needed increase in spring budget, funding for London boroughs remains a fifth lower than in 2010. The Chancellor should increase it and provide councils with a long-term funding settlements of at least three years.

Jenny Gulliford is Senior Policy Manager at Central London Forward. X/Twitter: Central London Forward and OnLondon. If you value On London and its coverage of the capital, become a supporter or a paying subscriber to Dave Hill’s personal Substack for just £5 a month or £50 a year. In return, you’ll get a big, fab weekly London newsletter and offers of free tickets to top London events.

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