London is a phoenix-like city. It has reinvented itself time and again, rising from the Great Fire, the Plague and the Blitz. Compared to those, Brexit is a mild cold.
The capital now needs to renew itself once again. It produces 22 per cent of the UK’s GDP and 30 per cent of its tax revenue. But it provokes as well as provides. Some Leavers voted as much to end London’s hegemony as to leave the EU, and Vince Cable once labelled the city a “suction machine” hoovering up the UK’s resources.
London also has deep structural challenges: the possibility of a brutal Brexit, a relentless housing and infrastructure deficit, and enduring inequality. The capital’s renewal is necessary for the good of the whole UK. Properly empowered and connected to other major cities via HS2, London could be the engine that galvanises overall UK growth.
We can take inspiration from London’s energetic and ingenuous response to the 1666 Great Fire. Achieved without modern technology, it was an astoundingly joined-up and effective enterprise. Taxation was targeted to fund and incentivise rebuilding, the first mass charitable appeal was launched, employment laws were relaxed to attract workers back to London, and special development zones were created.
We can renew London in a similar way today. To make that happen, we need evidence-based policies rather than political ideology:
1. A Good Brexit for London
First rule of the farm: don’t kill the golden geese. London must lobby for the balance between migration control and UK-EU free trade to be struck sensibly. Otherwise the lessening (or loss) of Single Market access might compromise London’s revenues, just when the UK needs them most. Likewise on movement of workers. London’s vibrant tech sector, with its global workforce, may not thrive if coming to work here becomes too bureaucratic.
By 2030, there will be over 10m Londoners and we need to build more than 40,000 new homes a year to house them. This is more London homes than have been built in any year since World War II. Like all its predecessors since 1980, this government has privileged owner occupation. This is driving in one gear.
London’s (and the UK’s) housing shortage can only be cured by a multi-tenure solution. Build to rent (and sell) and social housing both have leading roles to play. But we should also consider the tenure that dare not speak its name: council housing. The UK’s housing crisis has been successfully addressed most often by policies embracing council house building. London authorities could be empowered to borrow and build council homes again. If modular technology is used, thousands of homes that last 100 years or more could be delivered cheaply and quickly.
Boroughs must also be incentivised to hit house building targets, provide clear affordable housing guidance, and increase density. Central Barcelona is four times denser than central London, with no obvious loss of beauty or amenity.
New York lost its status as the number one global city because its transport links didn’t keep up with its growth. London must avoid this trap. The UK could follow the French example, with public and local authorities clubbing together to issue infrastructure bonds for strategic projects. Public infrastructure bonds might be preferable to more quantitative easing and would arguably leave a much longer legacy.
They could play a role in funding, for example, Crossrail 2, Tube upgrades and – more widely – the essential HS3 to link Liverpool, Leeds, Manchester and Newcastle. Only once those cities are comprehensively integrated by HS3 can a Northern Powerhouse fully emerge. All the UK’s urban centres should be helped to create an interconnected multi-city economy on the German model. London can lead the way.
4. Airport Capacity
To adapt Oliver Cromwell, in the name of God make a decision! London needs to know whether the much debated new runway will be at Heathrow or Gatwick and Brexit should not delay that decision. As Boris Johnson has said, most of Britain’s problems aren’t caused by Brussels. This one definitely isn’t and it needs resolving now.
Wherever the Brexit deal’s balance falls, London needs a stable and predictable tax regime to attract the world’s best companies and people. Our approach to corporation tax, stamp duty and bank levies must incentivise businesses to locate and remain in London. Inward investors should not be seen as potential tax targets, but as important contributors to UK growth.
6. Closing the Inequality Gap
In London, prosperity and poverty are intimate neighbours and some of the city’s boroughs are among the UK’s poorest. Helping London’s poorer citizens should be a priority for all Londoners. We should work with the mayor to provide skills training and apprenticeships, and support disadvantaged schools and areas. The authorities should consider allocating business and other local taxes to regenerating the capital’s most deprived areas.
7. Empowering London
London only keeps and spends 26 per cent of its own revenues – compared to 82 per cent for Paris and 69 per cent for New York. We should consider returning to London the powers taken from it in the 1980s, thereby giving the capital the tools it needs to solve its housing and infrastructure crisis and close the inequality gap. It will hopefully also be given a strong voice in the soon-to-begin Brexit negotiations. After all, it represents one fifth of the UK economy.
Whenever history has closed in, London has become more open. London should stay faithful to this generous tradition and begin an inspiring programme of renewal. This great global city can then help revitalise the whole country.
Eversheds are sponsors of the Museum of London’s Fire Fire exhibition.