LONDON is a magnet for talent – there is little doubting that. But it is also a city with an underlying weakness that should be recognised as a danger to the capital’s competitiveness. That Achilles’ heel is London’s chronic housing shortage, an issue that is all too rarely framed in terms of business and competitiveness. Our research, Moving Out, commissioned in tandem with global construction consultancy Turner & Townsend, suggests this could be a serious oversight.
When polled, a majority of employees said they find it difficult to pay rent or mortgage costs and work in London. Of particular concern is the group of employees aged 25 to 39, with 70 per cent reporting that they struggle with the cost of their rent or mortgage.
There is a real danger that we will fall into the trap of believing London’s ability to attract the brightest and best will remain its trump card. Rather, two out of five of those struggling to pay housing costs said they would consider quitting the capital to work elsewhere for that very reason. That number rises to almost half in the coming years if prices keep going up as they have done.
The lesson is simple and stark: people will cross counties and countries to work in London, but they have limits. At some point in the none-too-distant future, their desire for reasonable-sized living space, or a sensible commute, may very well trump their desire to be a part of London.
For a world-leading city that owes much of its success to the service sector and knowledge-based industries, losing a tranche of professionals – particularly in the 25 to 39 year-old bracket – would be disastrous.
Companies are not ignorant of this; three quarters of businesses polled for Moving Out warned that London’s housing supply and costs are “a significant risk to the capital’s economic growth”. Two out of five firms who responded already say they are concerned about the impact these costs are having on their ability to recruit and retain staff.
We are starting to see firms react to this. Yesterday, KPMG announced its employee benefits package would now include measures to help staff get a foot on the London housing ladder. Simon Collins, the firm’s UK chairman, said home ownership in the capital was “fast becoming a fairytale for all but society’s wealthiest”.
But KPMG is in a minority – our research showed that three-quarters of firms do not provide any such assistance. But it is not a huge leap of faith to say that there could soon be a day when housing costs become part and parcel of employee benefit strategies – for those firms that can afford it.
What happens to smaller companies, educational establishments, and others who can’t afford to raise salaries to keep pace with housing costs or somehow subsidise staff accommodation is another matter.
With the average property now costing above £500,000 in the capital, we must address the issue of housing supply urgently if London is to remain attractive to the dynamic, resourceful and creative people who make it a world-leading city.
Baroness Valentine is chief executive of London First. Moving Out can be downloaded at londonfirst.co.uk