Katie Townsend unpacks the effect of Labour’s initial policy proposals will have on the capital.

On Wednesday 17 July, following a landslide victory, the Labour Party set out their key policy proposals in the King’s Speech. It was the longest speech since 2003 and the second longest King’s speech of all time, totalling 40 policies. What do these brief introductions to Labour’s plans mean for London?

Economic Growth

Labour fronted the State Opening of Parliament by declaring that ‘securing economic growth is a fundamental mission’. This will not be an easy mission to accomplish. To initiate Labour’s ‘decade of economic renewal’, they must consider the productivity problems facing the capital to kickstart wider economic growth.

When London thrives, the UK thrives. London provides £1 out of every £4 to the Treasury. Since the financial crash in 2007-8, productivity in London has flatlined, which has not only increased poverty within the M25, but has also had economic ramifications across the rest of the UK.

Outlined within the King’s speech is a promise to ‘prioritise wealth creation for all communities’. London is home to profound levels of wealth inequality, and equitable economic growth could make a real difference to many in the capital. To illustrate this, you need look no further than the iconic Canary Wharf. This economic powerhouse boasts intense wealth creation – yet it is situated in Tower Hamlets, a borough where every other child lives in poverty.

Labour’s new industrial strategy must provide a range of high-quality, properly paid jobs for those through the UK. Their ‘make work pay’ initiative will be a crucial first step towards achieving this. The policy is set to ban exploitative practices such as ‘fire and rehire’ and zero-hours contracts and will enhance workers’ rights by delivering a genuine living wage.

To do so effectively, Labour have promised in the King’s speech a ‘new partnership with business and working people’. This, in part, will be delivered through the creation of Skills England, a partnership set to upskill the population in line with the needs of local areas and in sectors where skill shortages are limiting growth. It will primarily investigate post-16 education, alongside the Adult Education Fund, to lift people out of poverty through providing them with new skills to unlock new job opportunities.

We hope Labour takes a holistic approach to economic growth. This would ensure health is factored into inactivity, housing is factored into productivity and transport is factored into new economic opportunities. Most notably in London, business, and workers alike struggle with extortionate housing costs, which creates a fundamental drag on productivity and effective investment. Another key policy point for Labour must therefore be to rapidly increase the number of new homes being built in the capital.

Get Britain Building

Economic growth and successful development go hand in hand. Labour have evidenced their commitment to this intersection through the Chancellor’s speech, which built planning reform into economic policy.

For London, however, the necessity to build goes far beyond economic strategy. The capital has underdelivered on housebuilding for decades, interrupted by Brexit and the pandemic, and further constrained by skills shortages and consistent planning issues. 1 in 4 Londoners live in poverty after housing costs. 324,000 Londoners are on the waiting list for social housing. The average rent per household is now £2,129 a month. Housebuilding is socially and economically crucial for the capital.

In the King’s Speech, Labour have promised:

• planning reform
• high quality infrastructure built into new developments
• investments in sustainable technologies

As laid out in the Chancellor’s speech, this is set to include strategic housebuilding on the green belt, as well as a new taskforce of 300 new planners to kickstart a new period of approved planning applications and mandatory building targets. Labour’s overall target is 1.5 million new homes, 400,000 of which are set to be built in and around the capital. This is in line with our estimate that a quarter of the new homes must be built in London.

Centre for London has advocated for many of these policies through recent research and policy recommendations and during our London Housing Summit – particularly that of strategic housebuilding on poor quality ‘grey belt’ areas of the green belt. While these are key first steps, we must also ensure new housing is genuinely affordable. Social housing commitments can be cemented through proper government investment and crowding in private financing.

Railway Nationalisation

No productive economy or urban community can thrive without a functioning transport system. Fast, reliable and affordable connectivity sparks new housebuilding developments as well as increasing access to jobs.

The Kings Speech reiterated Labour’s manifesto commitment to re-nationalise the railways. Great British Railways will inherit contracts as they expire, bringing contracts back into public hands. The Financial Times estimates we might see a third of these contracts under government control within the first year of Labour’s election, and full nationalisation by the end of the Labour government term. In and of itself, this policy does not guarantee improved services. Still, it does give the government more control over the system, jurisdiction over how our trains run, and power over ticket pricing.

In London, to create a faster and more reliable service, Labour should consider devolving power of the Southern train routes to TFL. A similar project completed in 2007 with North and Eastern routes increased ridership by 80%. In Central South London alone it is estimated this would double rail capacity and kickstart the development of 13,000 additional homes.

Improving Water Quality

Private ownership of public infrastructure continues to cause issues outside of the railway network. In the King’s speech, Labour announced tighter regulation of our water suppliers to clean up our waterways.

Thames Water, the private utility company providing water and waste management to 15 million people in the UK, including the whole of London, has had a series of issues over the past decade. City Hall analysis has shown the number of hours in which sewage was dumped into the River Thames has more than quadrupled in the last year. Thames Water has also been fined £104 million due to this pollution of our rivers and a further £500,000 for late-running roadworks. Tighter regulation of this and other water suppliers will have huge impacts on water quality, sewage dumping and leaking pipes if done correctly.

Reform of the Apprenticeship Levy

As a proportion of the population, London has the fewest apprenticeships than any other region in the UK. Apprenticeships act as key drivers of productivity, as well providing access to formal qualifications outside of the formal education system.

Evidence suggests that for every £2 billion spent on apprenticeships, the economy is boosted by returns of £1 billion per year within a decade. Degree level apprenticeships also raise an individual’s productivity in the private sector by 27%, while plugging skill gaps within the public sector.

The Apprenticeship Levy is therefore a vital mechanism for wealth distribution and economic growth. And yet, in London only 26% of levy funds were used between 2018-2020. We hope to see devolution of this levy, to the GLA and fellow mayoral combined authorities, so boroughs can create new apprenticeships schemes to match local needs and skill sets.

Alongside this, we believe that if large institutions cannot spend the proportion of levy they are allocated, the amount they are able to transfer to small and medium businesses should be increased from 25% to 50%. The time limit institutions must spend the levy should also be extended. These reforms of the Apprenticeship Levy could unlock thousands of new apprenticeships in London alone.

Rights for Renters

London is home to over 1 private million renters, who are paying, on average, over 40% of their salaries on rent. The average rent in London has skyrocketed, currently sitting at over five times the rate of inflation in London. While rent and house prices are climbing all over the country, the issue is particularly dire in London.

Meanwhile, 1 in 6 of London’s privately rented flats do not meet the Decent Homes Standard, and no-fault evictions have risen by 52% since last year. This is significantly higher than the 9% rise seen in the rest of the UK.

Rights for renters – through the Renters Reform Bill, an end to no-fault evictions and the extension of Awaab’s Law to the private rental sector – are fundamental to redress the power balance between landlords and tenants in the capital. However, until we can resolve the severe lack of housing stock, it’s likely prices will continue to rise, and the rental crisis will continue to worsen.

Race Equality Laws

London is the most diverse region across England. It is a fundamental pillar of our strength as a city.

Within the King’s speech, Labour have promised the Race Equality Law, to ensure everyone has access to equal and fair pay regardless of their background – ending discriminatory pay. This is a vital law, to end the ethnicity pay gap and ensure diverse talent in the capital is retained and adequately compensated.

Such legislation is especially pertinent given the recent racist outbreaks of violence across the UK. Starmer’s response to this violence has been rapid arrests and convictions for any involvement in the rioting. Yet, much needs to be done by the Labour government to reassure Muslim communities, asylum seekers and the UK population that they will be protected from further acts of violence. London’s and the wider UK’s strength is built from its diversity. This deserves celebration, not violence.

What happens next?

The King’s Speech is an outline of Labour’s ‘first steps’, presenting their immediate policy priorities.

It has since been voted on and passed through parliament. At Centre for London, we’ll be keeping a close eye to see how these policies develop in the next few months.