Blog Post

Seven challenges facing central London

The future of London’s city centre is at risk. We outline the challenges that policymakers must overcome to ensure its continued success.

This blog was written prior to the coronavirus pandemic and may not account for new challenges that have arisen during these unprecedented times.

When you think of central London, what comes to mind? Big Ben. Oxford Street. Office blocks. Central London is iconic, partly because it plays many roles. It is a cultural hub, a tourist destination, a home for businesses and residents alike.

The city centre’s many successes are well documented. Its resident population is growing faster than the London average, it is a workplace for two million employees, and hosts more than 30 million visitors each year. It may be just 0.01 per cent of the UK’s total land size, but it is responsible for 10 per cent of our economic output.

It is the envy of cities around the world.

However these successes are a double-edged sword. Scratch the surface and you will find a number of complex challenges which, if not responded to, risk undermining the future of the capital’s centre.

Our recent research identified seven major challenges:

1. Deprivation

Central London – like the capital as a whole – is an unequal place. The district’s growing population is accommodated in some of the most expensive housing in the country. In November 2019, the average house price across London’s 10 central boroughs was £130,000 higher than the Greater London average. But there are also pockets of deprivation too. As the area develops, there is a risk that these residents will become increasingly isolated: local shops will become unaffordable, job opportunities will become out of reach and the cultural offer will begin to alienate. More must be done to help residents access existing employment opportunities and afford to stay in the area – and to ensure that local facilities cater to their needs.

2. Short term population

Central London’s residents are also demographically different to those of the wider city. Compared to the London average, the Central Activities Zone (the CAZ – comprising roughly the West End, City of London, South Bank and Canary Wharf – and their immediate surroundings) is home to a higher-than-average proportion of single person households, short-term residents and people in their 20s and 30s. This suggests that many live in the area for a relatively brief period of time (as students or at the start of their career) then move out in pursuit of more space and lower housing costs as their life situation changes. With this fluctuation there is a risk that long-term residents, who play an important “stewardship” role in central London, could be replaced by more transient residents who have less of a stake in the area’s continued success.

3. Demands on space

With limited space in the capital’s centre, land values are exceptionally high. This makes buying central London property a tough proposition, and often prices new entrants out of the market. There are also specific issues around the balance between residential and commercial uses. The CAZ was previously exempt from the government’s “permitted development” policies, in place since 2013, which allow office space to be converted to residential without planning permission. This exemption expired at the end of May 2019, but the 10 boroughs within the CAZ issued planning directions to continue the policy across the district. Whilst these policies have helped to protect business functions located there from extensive residential development, there are still some concerns about the levels of available and appropriate office space in the area.

4. Changing nature of work

The rise of coworking spaces has also put further pressure on infrastructure in the city’s core. The nature of office-based work is changing rapidly, but despite the rise of flexible hours and remote working, office demands in the CAZ are likely to be “more, but different.” Trends towards open-plan, flexible space and breakout areas offer the potential to intensify use of office space – and with microbusinesses and startups also on the rise, there is growing demand for affordable and coworking space. However, central London’s historic built environment, much of which is either formally or informally treated as a heritage asset, can make adaptation of this space challenging.

5. Brexit

Renegotiating the UK’s relationship with the European Union is a national issue but it has significant impacts for central London businesses. They are more likely to employ foreign nationals and are therefore more concerned about the impact of leaving the EU than those throughout the rest of the capital. Important central London sectors such as construction and hospitality are also more reliant on EU workers than the national average.

6. Tourism

Despite a slight recent drop-off in visits to central London’s attractions, it remains the centre of the city’s tourism offer in terms of overnight stays and tourist spend. While these visitors contribute substantially to the district’s economy, their presence can also bring challenges – including increased strain on infrastructure, antisocial behaviour (especially in residential areas) and increased policing costs. This is particularly true for late-night visitors to central London’s bars, clubs and pubs, whereby the associated costs are borne primarily by employers and residents within the district. Airbnb use presents further challenges to the housing market, and can be an inefficient use of space which is already in short supply. Visitors and daily commuters also do not have any formal say in central London’s governance or future and so can be underrepresented in local decision making.

7. Environmental concerns and sustainability

The largely historic built environment of the CAZ makes adaptation to modern or environmentally friendly standards expensive and difficult. There has been some progress on “green roofing” for example (a target set in the London Plan), but successive measures have failed to substantially address congestion and air quality. Industrial land for freight consolidation has also been lost at a faster-than-planned rate in and around the CAZ. This means that freight often has to travel further to central London – contributing to congestion and making consolidation of deliveries more difficult. Left unchecked, environmental problems will harm central London’s competitiveness as a place to both live and work.

If poorly managed, a combination of the challenges outlined above could foreseeably lead to a situation of relative decline for central London.

Ultimately, residents, workers and tourists alike seek a vibrant, clean, accessible, and affordable city centre but tackling these challenges – many of which cross over borough boundaries – requires a change of approach. Those with an interest in central London’s success need to strengthen cross-district strategic action, involve more voices in the conversation and speak up with one voice for the city centre. Our new report, Core Values: The Future of Central London, has recommendations for how policymakers can work together to ensure the future of the city’s centre.

READ OUR REPORT: The future of Central London


Navneet Gidda is a Communications Officer at Centre for London. Follow her on Twitter.