London, the South East and the East of England are economic success stories, together accounting for just under half of the UK’s economic output. But they urgently need greater collaboration to respond to the housing crisis and other challenges and opportunities of growth, while supporting other UK regions. This is according to a new report published today by Centre for London and the Southern Policy Centre.

The report, Next-door Neighbours – Collaborative Working Across the London Boundary highlights a number of ways in which the economies and populations of London and the Wider South East are integrated and interdependent:

• Strong economic ties: In 2016, there were 900,000 people commuting into Greater London (a 30 per cent increase on 2004), holding 16 per cent of London’s jobs, and earning £70bn worth of wages.
• A connected transport system: Oyster cards can now be used at nearly 60 stations outside London, and that number is set to rise.
• Shared services and amenities: Nearly 5 per cent of the school places offered by Surrey County Council for 2017-18 were to children living outside the county

The regions also share significant challenges – in meeting housing and infrastructure needs for current and future growth, and providing a good quality of life for all residents – many of whom risk being pushed into poverty by high housing costs. The report highlights:

• Rising cost of living: The areas with greatest increases in the numbers of residents commuting to London between 2002 and 2016 have also seen their housing market become less affordable for residents who work locally.
• Meeting house building targets: Wider South East local authorities will need to deliver over 150,000 homes every year of the next decade – 59 per cent of England’s assessed housing need, according to a draft government assessment.
• Providing infrastructure for growth: Essex, Kent, West Sussex and Surrey are facing infrastructure funding shortages ranging from 30 per cent (Kent) to 60 per cent (Surrey) – totalling £10bn by the 2030s, while in London, Crossrail 2 was budgeted at £30bn in 2014 prices, and has only made up for small proportion of the infrastructure funding gap.

Together, Centre for London and the Southern Policy Centre recommend:

• London and its neighbours should develop a vision for the future, a shared understanding of the challenges they face and a strategy for joint action.  (Vision is a way to make that conversation happen.)
• The Wider South East Group, along with other key stakeholders such as LEPs, should explore how to strengthen the Wider South East strategic partnership as a forum for dialogue to voice these shared interests.
• The government should recognise the need to address the Wider South East’s challenges comprehensively — potentially through replacing the Minister for London with a new senior portfolio charged with taking an overview of the Wider South East. (Govt can help rather than hindering by sending the right signals, seeking joint bids and allocating ministerial role.)
• The government should consider how national infrastructure decisions, the local government finance system and other funding mechanisms can take better account of the Wider South East’s needs.

Richard Brown, Research Director at Centre for London said:

“The Wider South East is the hub of the UK’s economy. As commuting flows increase and business connections multiply, the region’s future economic success depends on London and its neighbours stepping up their commitment to working together.

“The London Plan sets a framework for collaboration, but we believe partners need to go further, by developing a shared agenda for action, and considering a more formalised structure, recognised and supported by government.”

“The Southern Superhub needs to take its place alongside the Northern Powerhouse and Midlands Engine.”

John Denham, Chair of the Southern Policy Centre said:
“Our proximity to London has a significant impact on central southern England. Councils and communities around the capital see it as both an opportunity and a threat. This report shows that our futures are intertwined, and suggests how all parties can work together for the benefit of people across the Wider South East.”

Jules Pipe, Deputy Mayor for Planning, Regeneration and Skills, said:

“Whether it is demand for housing, the need for better transport infrastructure or responding to the rising cost of living, there is no doubt that London, the South East and the East of England face very similar challenges. It therefore makes perfect sense for us all to work together as we face these pressures head-on.

“We also need a major increase in investment across the entire UK, along with greater devolution to regions because they’re best placed to serve the infrastructure needs of their communities and deliver ongoing economic prosperity.”

“We can already see the transformational impact of Crossrail along the length of its entire route, not just in the capital. Crossrail 2 would have similar impact and be a fillip for jobs and growth across the south of the country.”

John Furey, Deputy Leader at Surrey County Council, said:

“With London and the South East being key parts of the engine that drives the national economy, only by working more closely together on the big issues we face will we continue to boost economic prosperity, address population growth and secure infrastructure funding – whether that’s to create thousands of additional school places, champion Crossrail 2 for the extra capacity it would bring or build much-needed new homes. This report makes a very useful contribution to setting out how that could be done.”

Councillor Rob Humby, Executive Member for Environment and Transport at Hampshire County Council said:

“The Wider South East is a significant contributor to the national economy, and it’s important that recognition is given to the economic relationships London has with its neighbours, its commuting partners.”

“I would want the government to commit to a more even funding distribution for transport beyond London’s boundaries to support the economic contribution the South East represents; as well as properly consider the issue of  London’s neighbours taking on the capital’s housing pressures.”

“We are already working with our neighbouring authorities to impress on government the importance of investing in effective transport infrastructure which is essential for the future prosperity not only of Hampshire and the South East, but also the whole country. As we balance the increasing need for more housing with quality of life for Hampshire residents, I welcome this initiative and look forward to working ever more closely together with partner authorities on these significant issues.”

Dr Mike Short CBE, Chairman of Enterprise M3 Local Enterprise Partnership, said:
“Our LEP area, which encompasses parts of both Hampshire and Surrey, is internationally focused with the largest number of foreign owned companies in the UK outside of London and a relatively high level of exports – amounting to £14.6 billion in 2015. The proximity of our area to London is integral to this economic strength and we need to collaborate to effectively harness opportunities associated with our interconnected economies.”

“Collaboration with London is also essential to plan ahead and deal with challenges related to our economic ties. Transport and housing infrastructure requirements, in particular, need to be fully understood and met for our area to adapt to London’s growth. For instance, about 20,000 people moved from London into the EM3 area in 2016 and around 13% of the EM3 resident workforce commute to the Greater London area.”