Labour must not overlook London when it comes to infrastructure spending
The Spending Review saw investment in Scotland, the Midlands and the North but this not come at the expense of London, which is essential to the growth of the entire nation. The infrastructure strategy is a chance to correct the course, says Peter Hogg
As the economic heart of the United Kingdom, London plays an indispensable role in driving national prosperity. Yet, the Comprehensive Spending Review announced last week included implicit cuts and little allocated funding for the city that drives the UK economy, complicating efforts to attract the investment needed to fulfil the government’s growth priorities.
Business leaders across the UK, myself included, are staunch advocates for investment that spans the entire nation. There is a unanimous recognition that Scotland, the Midlands and the North of England urgently require funding to spur economic growth and right the historic wrongs of underinvestment. However, this support must not come at the expense of London, which contributes £43bn in fiscal transfers to the rest of the UK every year.
The government has made its defining objective rapid economic growth, and as the Chancellor rightly noted they have made progress; we boast the fastest growing economy in the G7. Central to this vision is making sure that the British people can actually afford to live within the cities that power our services-based economy, and that means investing in new housing construction and preserving existing social housing units.
This crisis is real: the Trust for London estimates that one in 50 Londoners is homeless or sleeping in temporary accommodation – and, shockingly, as we approach the middle of the third decade of the twenty first century, every school class statistically includes a homeless child. Even for those with stable incomes the cost of living continues to rise exponentially.
London is where the housing crisis is most acute
Under this spending review, the Chancellor is making a £39bn commitment to housing, supporting the Labour government’s commitment to delivering 1.5m new homes under this parliament.
However, it remains unclear how much of this housing commitment will stay in London, where housing is desperately needed. London leads the nation’s housing crisis, and needs dedicated funding to address its specific development needs. This is not only morally right but is economically logical in a city that spends £4m a day on temporary accommodation.
It is also concerning to see that this housing funding is not being paired with the other critical element of urban development and growth: expanding access to world class transport.
While the £2bn four-year funding deal for Transport for London is a positive development, it pales in comparison to the upkeep costs for the nation’s largest transit system, and the absence of concrete investment plans for shovel-ready projects like the DLR to Thamesmead, the West London Orbital, and the Bakerloo line extension is perplexing.
The absence of concrete investment plans for shovel-ready projects like the DLR to Thamesmead, the West London Orbital, and the Bakerloo line extension is perplexing
These transit expansions will accelerate growth, generate new jobs and unlock sites for tens of thousands of new homes. In a growth-first agenda, it would be a major omission to leave these expansions, with robust support from community leaders, without the means to make them a reality.
As Arcadis’ own analysis of the impact of HS2 has shown, there is an inextricable link between expanding transit and driving economic growth. Infrastructure projects have a unique ability to provide family-sustaining jobs while attracting new investment.
The government’s dedicated investment in transit systems in West and South Yorkshire as well as a new rail line between Liverpool and Manchester demonstrates that they know the impact that is possible. Our nation’s investment strategy must support more, not less, transit investments in the communities that need it the most.
The onus is now on the upcoming 10-year infrastructure strategy and industrial strategy to address these investment gaps. It is essential that these strategies provide London with the means to contribute to the continued growth of the nation and provide essential services to their residents.
A thriving London means a thriving UK, and the potential for London to generate growth cannot be underestimated or overlooked in favour of other regions. The government’s growth ambitions can only be realized by leveraging London’s full potential. Let us seize this opportunity to bolster London’s infrastructure, address its housing challenges, and secure its place as a cornerstone of the UK’s economic success.
Peter Hogg is the London City executive at global consultancy Arcadis