HE financial year draws to a close, and with a degree of stability in financial markets, we can now think about the longer-term future of the City and London’s financial services.
The findings of the City of London’s latest research report, published in partnership with London First and the City Property Association, highlight the importance of keeping an eye to the future.
Delivering Power: The Future of Electricity Regulation in London’s Central Business District anticipates that, without investing in infrastructure to meet future needs, London’s future economic growth risks being compromised.
The Greater London Authority estimates that, by 2032, central London will benefit from around 20 per cent growth in employment and will require up to 3m square metres of new office floor space – the equivalent of twenty seven buildings the size of the Shard.
Electricity distribution companies have limited incentives to invest in anticipating demand. Current investment tends to be reactive rather than proactive. This clearly raises genuine concerns over supply, but also over the constant disruption to our lives through what seem to be permanent roadworks.
Network operators need more incentives, and protection from the added risks inherent in forecasting demand, if they are to get ahead of the demand curve.
If we are to keep up with our competitors, greater flexibility must be built into the network, for example through investment in capacity in selected substations, or by installing spare cable ducting in anticipation of where it is most likely to be needed.
These initial investments would speed up the delivery of power supplies to new developments. It would also reduce the scale of roadworks required to connect them, alongside accompanying disruption, making life easier for everyone – from buses to cyclists.
Development is a sign that the City is alive and growing, and well-planned provision now will facilitate growth and minimise disruption for years ahead. A “just in time” approach to power provision won’t do.
International competitiveness isn’t all about tax and regulation. While London has many competitive advantages, we need to ensure we have efficient and effective infrastructure to maintain our position. Business needs to be confident about its access to power networks and modern technology like high-speed broadband and 4G networks.
The development of technologies like 4G and other forms of effective, long-distance communication will influence how working life is conducted, and may influence future demand for office space; so estimating demand remains hazardous. Utilities need to take more risk and we will have to pay for that, either through higher charges or government insurance.
The report’s publication and recommendations are timely, coming ahead of talks between UK Power Networks (the distribution network operator for London) and Ofgem, which will decide the regulatory framework and level of investment for 2015-2023.
There is obviously no magic bullet to resolve these issues, but there is equally no doubt that key players must continue to work closely together to ensure that the future needs of business are met, that the City continues to shine brightly as a global financial centre – and that our desktop technology comes on and stays on when we want it to.
Stuart Fraser is the policy chairman at the City of London corporation.