This is what London needs in the spending review
We need radical action if we’re going to hit the target of building 88,000 homes a year, more powers for the Mayor and improvements to productivity to get London out of the cycle of spending cuts and tax rises, says John Dickie
In less than a week, the Chancellor will fire the starting gun on a series of announcements that will define the Government’s growth mission.
The spending review will swiftly be followed by a 10-year infrastructure strategy and broader industrial strategy as ministers look to prove they are willing to take the tough choices needed to kickstart the economy.
The Office for Budget Responsibility forecasts UK growth will be just one per cent this year before rising to the heady heights of 1.8 per cent by the end of this parliament in 2029.
So improving productivity to accelerate growth must be the key objective if the Government is to deliver sustainable improvements to public services – rather than a vicious cycle of spending cuts, tax rises or both.
As highlighted at BusinessLDN’s recent Future London conference, a key priority to get the capital firing on all cylinders is investing efficiently across three areas: housing, infrastructure and people.
The Government has set London the target of building 88,000 homes a year – some 880,000 homes over a decade. But in the first quarter of 2025, over half of London’s boroughs recorded no new housing starts. Zero. And overall, fewer than 2,000 homes were started across the city.
We need radical action if we are to come close to hitting the target. The regulatory red tape holding back housebuilders needs swift reform, including by streamlining the slow process of the Building Safety Regulator.
The spending review needs to provide the cash necessary to build more social and affordable homes in London.
Leveraging private capital
We also need more innovative ways of leveraging in private capital: the £4m a day we are spending on inadequate temporary accommodation would fund the development of tens of thousands of new homes.
And we need someone to be accountable for driving the delivery of this target. If the Mayor is to carry the can, he needs the fiscal and policy tools to do the job. We cannot continue with blurred accountability between City Hall and the Government, where failure is an orphan.
Following welcome commitments to invest in transport project in the North and Midlands it is now vital that London gets the investment needed to keep the city moving
Secondly, following welcome commitments to invest in transport projects in the North and Midlands it is now vital that London gets the investment needed to keep the city moving.
The Spending Review should provide Transport for London with a multi-year capital funding deal so that it can deliver better services and new routes which will, in turn, unlock housing and economic growth.
Shovel-ready projects
The settlement needs to be at a level which allows shovel-ready projects like the DLR to Thamesmead, the Bakerloo Line extension and London Orbital to get going.
And, again, we need to look at new ways of funding and financing investment. London has a track record of innovation here – such as Crossrail, the Northern Line Extension and the Silvertown Tunnel.
As part of this we need to look at new sources of funding, most obviously land value capture – using the increase in land value that comes from better infrastructure to pay for the infrastructure itself.
And finally, we need to invest in Londoners so they are equipped for the jobs of today and tomorrow.
The capital has the highest unemployment rate in the country. And despite the capital’s workforce being more highly qualified than that of any other UK region, our in-work poverty rate is also one of the highest.
We are in the foothills of a technological revolution, with AI set radically to shake up London’s jobs market.
Our work leading the London local skills improvement plan has brought together educators and employers to set out a roadmap to tackle skilling and reskilling. The Mayor’s forthcoming inclusive talent strategy, and the Government’s skills reforms, must build on this work by engaging closely with employers to deliver a system that is fit for the future.
Success also needs the Government to work with our world-leading higher education sector to establish a clear long-term funding plan. A good first step would be to scrap the misguided plan to hit universities with a new levy on international students, at a time when so many are facing acute financial pressures.
The geopolitical conditions facing Britain are difficult and volatile. But the economic decisions the government makes this month are within its gift.
We will see shortly whether the Government’s rhetoric is matched by its choices. As Britain’s gateway for international talent and capital, London must be at the drive for growth. Because when London succeeds, the UK succeeds.
John Dickie is chief executive of BusinessLDN