Central London will play an important role in enabling the government’s ambition to rebalance the UK’s economy, but it must not be taken for granted.

This is according to a new report by think tank Centre for London, which calls for additional powers over business rates and raising tourist taxes to help sustain the district’s contribution to the country.

The report, Core Values: The Future of Central London includes new analysis of business and employment data from the Office for National Statistics and illustrates how the city’s centre (defined as the Central Activities Zone and Northern Isle of Dogs) remains at the heart of the UK’s economy:

• It includes seven per cent of total UK employment (more than two million jobs) in 2018 – the area is home to six times as many jobs as residents;
• It accommodates five per cent of the UK’s businesses (147,275), within an area that covers than 0.01 per cent of the UK’s landmass; and has proven resilient in the face of recent political uncertainty. Between 2011 to 2018, employment has grown by an average of two per cent a year – with this growth rate continuing following the 2016 EU Referendum.

But the report emphasises that the government must not take the success of central London for granted, especially as it negotiates a new trade deal with Europe and works to rebalance the UK’s economy. It cautions that the challenges facing the district – from overcrowded public transport and clashes between its different functions and users, to pockets of extreme deprivation and a lack of affordable housing – risk undermining its future.

The report finds that these challenges are compounded by a system of fragmented governance with much of central London life dictated by central government. Its direction is also set by the Mayor and 10 different boroughs, each of which have different approaches across a wide range of policy areas. The report, therefore, suggests that there is an urgent need for a “clear vision and stronger co-ordination” between the boroughs, the Greater London Authority, the district’s 16 Business Improvement Districts, and community groups, building on the work of Central London Forward.

The report calls on government to devolve fiscal powers – specifically, giving them the ability to retain business rates and to raise a visitor levy in central London to mitigate the pressures that can accompany high-density tourism. The report also recommends that London leaders must work to ensure that its cultural offering and business expertise is accessible to the rest of the country, as part of a wider programme of fiscal devolution to cities and regions across the UK.

Dr Jack Brown, Research Manager at Centre for London, said:

“There is a widespread assumption that central London’s sizeable economic contribution means that its continued success is all but guaranteed. But there is a great deal of change afoot, requiring careful management.

“Continued growth, in population, commuting and tourism, is likely to lead to further pressures on infrastructure and clashes between the many different groups that use central London. And not everyone shares in the district’s economic success: there are also ‘left behind’ communities in our nation’s capital – even within the city centre.

“As the new government looks to rebalance the economy – it is vital that they acknowledge the role that central London will play in achieving this laudable and important aim.

“Like other cities, towns and regions across the UK, central London needs more control of its own destiny, with devolved powers to raise and spend to suit local needs.

“But until this is granted, central government must commit to investing in projects like Crossrail 2, and central London’s various layers of governance must work closely together to ensure that the district continues to thrive. Both capital and country are relying on it.”

Ruth Duston OBE, OC, Chief Executive of the South Westminster Business Alliance and MD of Primera Corporation said: 

“London is the engine room of the UK economy, and while more growth and investment across the country must happen, it cannot be at the expense of the capital. This report demonstrates the significant contribution London makes and the value of its unique and world class assets, it also rightly highlights some of the challenges we face. Collective action is the key, and BIDs can play a vital role here. We already help bring the public and private sectors together, but we can be more ambitious. This is about driving ambitious agendas together to add value and deliver ‘good growth’ for all. I look forward to working with colleagues to help bring some of the important report recommendations to fruition.”

Alexander Jan, Non Executive Chair at Bee Midtown and Chief Economist at Arup, said: 

“As this report points out, central London is a remarkable centre of economic, cultural and residential activity. With the advent of Crossrail, it is imperative that we facilitate the growth that this remarkable new railway can deliver.  This means councils working together to allow for good growth in employment floorspace and housing.  It also means that businesses and business improvement districts must continue to work with their communities to ensure central London remains a thriving centre for all.”

Charles Begley, Executive Director, London Property Alliance, said:  

“Central London is an important engine of the capital and country’s economy: it supports six million jobs, is a global centre for culture and commerce, and importantly, is home to over 300,000 residents. The continued success of London’s key business district will be vital to a strong ‘UK plc’ and for supporting good growth for cities and towns across the UK.”

ENDS

Notes to Editors

About Centre for London

• Centre for London is the capital’s dedicated think tank and a charity. The Centre publishes research and holds events to deepen understanding of London’s critical challenges and advocates for policies that would make the city fairer.
• This report was funded by Major Sponsor Capital & Counties Properties PLC, Supporting Sponsors Bee Midtown, London Property Alliance (CPA/WPA), The Northbank BID.

Defining central London

• This report defines ‘Central London’ as the Central Activities Zone (CAZ) outlined the London Plan – alongside its “satellite” at the northern part of the Isle of Dogs (NIoD).

Data sources

• Jobs – Based on Centre for London analysis (by Lower Super Output Area) of data from Office for National Statistics (2019). Retrieved from Nomis.
• Businesses – Based on Centre for London analysis of Office for National Statistics, UK Business Counts (local units by industry and employment size band), by Middle Layer Super Output Area (MSOA).
• GVA – Figures produced the Greater London Authority, Economic Evidence Base for London 2016.