Katie Townsend breaks down the key points of the 104-page London Growth Plan.  

The London Growth Plan has just been published. The Mayor’s latest strategic document sets the framework for sustainable, equitable economic development of the capital over the next 10 years. So – what does the Growth Plan say?  

Ambition sits at the heart of the latest Growth Plan. It sets out four targets:  

1. A 2% rise in productivity per year, which – if achieved – would expand London’s economy by an estimated £107bn in 2035, increasing pre-tax income for Londoners by an average £11,000 and contribute an additional £27.5bn to the Treasury. 

1. Raise earnings for those with the lowest incomes, specifically increasing real household weekly income (after housing costs) of the lowest “20% of Londoners by 20% by 2035”.  

1. The plan recommits to London’s target to be net-zero by 2030, with the promise to accelerating plans to meet this major milestone.  

1. Increase London’s standing as a global city, growing London’s services exports by an average of 6% per year.  

These are major commitments in the context of London’s current performance . Since the 2008 financial crash, London’s productivity has stagnated. 

Figure 1: Output per hour, actual and if it had grown at the compound annual growth rate
of 1997-2007 from 2007-2021

 

Meanwhile, between the housing crisis and the cost-of-living crisis, we’ve seen wealth gaps widen and London’s poverty rates jump when accounting for housing costs.

Figure 2: Proportion of households in poverty, before and after housing costs 2021/22

 

For London to achieve net-zero carbon emissions by 2030 won’t be easy – or cheap. The GLA estimates it would need to invest an estimated £75 billion across London in warmer homes and climate resilient infrastructure to reach this ambitious target.  

So – within this context – how does the London Growth Plan aim to achieve its goals?  

Strategic Planning 

This may seem obvious. A strategic economic plan aims to… strategically plan. However, the Growth Plans covers vast topics across the full scope of city policymaking, including housebuilding, new transport infrastructure, supporting specific sectors and services, and skills policy. This includes a series of new maps, visibly displaying economic clusters by sector, strategically significant housing developments and regionally important major infrastructure projects. These maps are worth taking a peak at yourself – and we’ve even listed out the page numbers in the appendix to save time scrolling. 

And it doesn’t stop there: there are also a series of commitments to additional strategic plans which will evolve from the London Growth Plan.  

These include a new Inclusive Talent Strategy, placing an employer-led skills system at the heart of efforts to plug the skills gaps across many of London’s sectors. Sitting alongside skills policies is a new Business Support Strategy, looking to bolster the Small and Medium Enterprises (SME) through increased productivity and access to finance. This Business Support Strategy aims to scale up London’s SMEs so that they can reach global markets.  

In total, six additional strategies or frameworks are set be published by the GLA in the next year, to support the Growth Plan. These strategies will run alongside strategic support provided for local economies in outer London, such as the West Tech Corridor.  

Money, money, money 

The Greater London Authority are putting their money where their mouth is by releasing a series of new funds, while also highlighting the impact of existing funding pots . Each pot functions differently, but they all work to unlock resources for public services, private businesses or pilot programmes which form part of our economic infrastructure.  

The Growth Plan commits to three entirely new funds, and explores the possibilities of a fourth. A new skills fund is expected in autumn 2025, aligning with the Inclusive Talent Strategy. Meanwhile, the Business Support Strategy will be released alongside a new fund to provide “loan and equity funding for high-growth SME’s”.  The initial investment into this fund for SMEs is set at £20m, but the GLA aim to bring in £100m of additional private investment.  

Other monetary incentives include utilising money and resources already in public hands. As discussed in our own report Making use of local authority assets, local governments manage billions of pounds worth of pension funds and handle billions in procurement contracts. London’s anchor institutions alone have awarded £2.7bn of contracts to smaller and diverse-led businesses. The London Growth Plan formalises pre-existing use of public money into a formalised strategy – looking to harness the powers of public procurement policies and formalise the use of pension pots for local investment.  

Meanwhile, the GLA are working alongside the British Business Bank to build on their track record of investing publicly owned pension-pots into local growth with the London Government Pension Scheme. This seeks to explore the possibility of developing a new innovation investment fund, which would grow highly productive London businesses. Currently, the pot stands at about £250m.  

In 2022, Centre for London estimated London’s local authorities manage pension funds worth a total of £48 billion. If the GLA can continue their track record of success, scale-up investment, and define social value priorities for this pot of money, this could have major implications for productivity and equitable growth in the capital. 

Infrastructure  

Growing the economy is all about people. For growth plans to be effective and equitable, Londoners need to be able to travel around the city, live in affordable homes and spend their money in their local areas.  

Some significant comments on infrastructure with the London Growth Plan include:  

• The re-iteration of the necessity for new transport infrastructure in the capital. The Bakerloo line extension features most prominently, but Docklands Light Railway, the West LondonOrbital and safeguarding the route of Crossrail 2 are all mentioned.  

• Plans for rent-controlled homes for key workers, as outlined in the Mayor’s manifesto, are set to start in the next year.  

• Increased funding for stronger neighbourhood policing, including the re-iteration of 500 new staff in every borough.  

• A £20m fund specifically for High Streets and Places, working alongside the GLA’s Opportunity London initiative to revitalise the capital’s high streets.  

Can the GLA do everything?  

The answer here is simple. No. But this is explicit in the London Growth Plan. In each section, GLA clearly lay out their own jurisdictions, as well as the legislative powers which remain in the hands of national government and key partners such as London Borough Councils, private businesses, the NHS and many more. 

Building on this, the Plan puts several key asks put to national government. These fall into three key categories – rationalising funding, additional funding, and devolution.  

Currently, the GLA receives funding from multiple grant pots from national government, often with tight controls placed on how money is spent. Skills policy is a clear example, where there are more than separate four funding streams all working towards the same output – upskilling the London population. In the Growth Plan, GLA request this is rationalised into a “single, coordinated programme which responds to London’s specific needs.”  

There are places where the Growth Plan calls for additional funding from central government– although specific figures are hard to find. From increased funding for adult education, to additional investment in affordable housebuilding in the capital, the message is that national government will need to commit funds if they wish to see London succeed.  

Devolution, by way of a request for political ‘freedom’ is by far the most significant ask within the Growth Plan. Some requests are structural, such as devolving suburban transport routes to TFL to aid the ‘metroisation’ of our railway stations – essentially making Southern Routes run more regularly, like the London Overground lines. For more information on how this would work, read our report Turning South London Orange. In other cases, it’s about granting London new powers to raise finance,  London could borrow against future growth to invest – already a tried and tested method, leading to the self-funding of the Elizabeth line.  

Finally, there are some carefully worded asks for fiscal devolution – such as the ability to retain the profits from London’s growth to re-invest, including asks for greater retention of business rates a, borrowing against future tax income to fund investment and creating tax incentives for investment in specific places. 

For the Growth Plan to succeed, fiscal devolution is vital 

These asks are varied, and would be significant next steps in “devolution is an evolution” as Matthew Pennycook described it recently.  

However, London’s devolution deal – now 25-years-old –  grants very limited control over the capital’s finances to London’s government. The majority of funding comes from national government grants. To enable the capital kickstart this new era of growth, London needs a new, comprehensive devolution deal, prioritising fiscal devolution.  

This could include control over Council Tax, with the ability to reform this outdated and inflexible model, 100% retention of business rates, which would provide a financial buy-in to local growth for local councils, and a single-integrated settlement (as provided to other Mayoral Combined Authorities) to give budgetary control to the Mayor of London.  

The London Growth Plan is a strong first step towards strategic economic development, but to truly unlock a new era of green, fair and global economic prosperity, that will benefit London and the rest of the UK, Westminster needs to trust City Hall to handle its own finances.   

Appendix 

Maps visible in the London Growth Plan 

• Productivity and export by sector – Page 47
• Financial, professional and business services technology – Page 53
• Creative Industries and technologies – Page 56
• Internationally significant visitor destinations by spend – Page 60
• Innovation/ Frontier Economies – Page 66
• Strategically important housing led developments – Page 86
• Regionally important infrastructure – Page 87
• International rail journey times from London – Page 88

Strategies 

• Inclusive Talent Strategy
• Business Support Strategy
• City Innovation Strategy
• London Infrastructure Framework
• Towards a London Plan,
• An action plan for London’s nightlife

Funds

• A new fund to plug the skills gap
• A new London Tech and Inclusive Growth fund to provide loan and equity funding for high-growth SMEs
• Explore a large-scale intervention on SME finance with the British Business Bank and others in the responsible finance sector
• Explore an innovation investment fund, anchored by London’s two Local Government Pension Scheme pools.
• Invest in a new quantum tech incubator in partnership with London universities
• Warmer Homes London to start funding work to retrofit homes for vulnerable Londoners
• A new High Streets Fund of £20m for boroughs to invest in improving local areas