London Mayor Election 2021: What has Sadiq Khan been doing to help the capital’s economy?

London Mayor Election 2021: What has Sadiq Khan been doing to help the capital’s economy?

“My promise if I am re-elected is to focus on jobs, jobs, jobs” – a pledge which has become a mantra as Sadiq Khan has set out his stall ahead of tomorrow’s election for Mayor.

It is a critical issue for the capital, which under Covid has seen both greater job losses than elsewhere – some 300,000 since March 2020 – and a slower recovery, with young people most affected. London now ranks at the top of the UK unemployment league table, with more layoffs expected when the furlough scheme ends in the autumn. 

There were concerns pre-pandemic, too, particularly that one of the wealthiest and most productive cities in the world – often seen as the “economic engine” of the UK and accounting for a third of national output – was not working for all Londoners, as Khan’s 2018 economic development strategy set out.

London remains home to some of the poorest neighbourhoods in the country, with two in five Londoners living in poverty and one in five earning less than the London Living Wage. One in seven Londoners have minimal qualifications, while a third have not progressed beyond A-levels or equivalent. On skills and employment London’s truly is a tale of two cities.

Yet this is an area where the Mayor arguably has less direct power than any other. The GLA Act duty to produce an economic development strategy comes with no teeth, and, as Centre for London points out, adult education budgets devolved last year are spread relatively thin, as is European and government funding allocated by the London Economic Action Partnership, which the Mayor chairs.

Progress has also been patchy in the admittedly long-term development corporation and enterprise zone areas in Old Oak and Park Royal (“where HS2 meets Crossrail”) and the Royal Docks, both designated under the previous Mayor, Boris Johnson.

City Hall’s capacity to influence and improve this major economy is often seen as relying more on lobbying – “banging the drum” for London – and the ability to “convene” and build coalitions, with business as well as with the capital’s wider public and community sectors.

Pre-pandemic, there were grounds for optimism – six per cent economic growth, 275,000 new jobs, unemployment down from six per cent to 4.3 per cent, as Khan said recently. The city was recovering ground lost after the Brexit referendum and the Mayor’s “London is Open” campaign seemed to be working. London remained high on the various lists of global powerhouse cities.

But it’s in the Covid world that the mayor’s “soft” power has come to the fore, through his London Recovery Board set up to “reverse the pattern of rising unemployment and lost economic growth” caused by the pandemic, a shorter-term economic recovery roadmap backed by his London Covid business forum, and, perhaps most significantly, a new focus on “anchor institutions” working together to boost jobs and tackle inequalities. 

 

What has Sadiq Khan achieved?

Back in 2016, Khan proclaimed his intention to be the “most pro-business Mayor London has ever had”. But his economic development strategy promised a “fresh approach” as well. Too many Londoners were left behind, he said, pledging to create a “fairer, more inclusive city with an economy that works for all Londoners”.

A business advisory board and a deputy mayor for business, fintech entrepreneur Rajesh Agrawal, were appointed, and an umbrella “skills for Londoners” programme underlined the new approach.

The first-ever mayoral skills strategy was produced and investment in training providers boosted, including a new academy teaching construction skills, while the focus of the £318 million adult education budget was shifted towards basic skills, with subsidies for the lowest-paid workers.  

Creative industry, estimated to provide one in six London jobs, has been boosted by the establishment of the city’s first-ever Cultural Enterprise Zones and the London Borough of Culture initiative, while £100 million investment has been channelled to small businesses.

London Fashion Week and the Film London agency have received funding boosts, a “Night Czar” is in place to promote the capital’s substantial night time economy, and new protection for riverside wharves is laying the foundations for a boost to freight on the Thames.

Khan’s term has also seen a doubling of the number of London Living Wage employers to more than 2,000, though that still only represents around one per cent of firms employing staff, and his Good Work Standard is yet to be widely adopted. Gender and ethnicity pay gaps remain. And City Hall remains underpowered, in this area as in others, a “relatively new institution with limited powers and even more limited resources”, according to business lobby group London First. 

Careers advice services are fragmented, apprenticeship funding is uncoordinated, and adult education budgets, provided by central government, are now at less than half their 2008 levels, amounting to just £45 per adult Londoner. The capital also seems set to miss out substantially on Community Renewal funding, the precursor to a new Shared Prosperity fund designed to replace the European funding which has significantly benefited London in the past, according to Khan.

And on the wider front, Khan’s London Plan proposals to ensure “no net loss” of industrial space in the city were overturned by Communities Secretary Robert Jenrick, while delays to Crossrail and other Transport for London funding constraints are also putting the brakes on significant potential growth. TfL’s future, critical for London’s recovery, remains currently in the hands of Whitehall. 

 

Going forward

The big reverse has seen London’s unemployment rate hitting 7.2 per cent in the three months to February 2021, the highest jobless rate in the country, according to new figures released last week, with growth remaining well down on pre-Covid levels, and the city’s streets only now beginning to get busier.

City Hall’s initial response has included a £2.3 million “culture at risk” fund supporting struggling venues, £6 million to boost the recovery of the capital’s stricken City and West End, and an initial £10 million “Green New Deal” funding towards kick-starting green job creation.

By laying bare the economic inequalities that have scarred the city, the pandemic may also prove the spur to put longer-term strategy into action. Khan’s Recovery Board, with it representatives from business, London government, key public sector and civil organisations as well as the Minister for London, is setting out a wider shared agenda for economic and social recovery.

There’s plenty of advice, from the Trust for London’s Employment Legal Advice Network calling for a “fairer working London” to London Tech Advocates urging more “meaningful” engagement with high tech businesses and investors.

But as London First points out, major concerns, including public transport funding and re-skilling, cannot be delivered by City Hall alone: whoever is Mayor “will need to work closely with central government in meeting these challenges and in supporting London’s competitiveness needs more broadly.”

In this respect, City Hall’s announcement last month of an “anchor institution” charter under which some of the capital’s largest institutions, between them employing some 500,000 people and spending £73 billion a year in the city, will work together for job creation and training could be particularly significant. 

It’s both a collective approach to recovery that, as London expert Dr Jack Brown, from King’s College, has pointed out, “could prove transformative”, particularly if it can “outlive the political cycle”, and, as Khan says, a positive challenge to government to move beyond current stand-offs and work with the whole city for a shared future.

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Categories: Analysis

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