Central London is a global economic hub that punches way above its geographic weight, generating 10 per cent of the UK’s economic output and attracting millions of tourists, workers and students. In addition, a growing number of Londoners live in the area – and while this diversity is a key part of central London’s appeal, it also comes with some significant challenges.

This report focuses primarily on the Central Activities Zone (CAZ) and its satellite at the Northern Isle of Dogs (NIoD), looking at their recent past, current challenges, and possible futures. It then makes recommendations on how we can help ensure that London’s renowned centre continues to succeed as a place to live, work and visit.

Central London is the heart of London’s economy…

• Despite covering just 2.19 per cent of Greater London, the CAZ and NIoD are responsible for 45 per cent of the capital’s total Gross Value Added (GVA), 40 per cent of London’s total employment, and a quarter of London’s total businesses.
• The CAZ/NIoD also plays an outsized role in the UK economy, housing five per cent of the UK’s businesses, seven per cent of the nation’s employment, and 10 per cent of national GVA within a physical area that covers just 0.01 per cent of the UK.
• The district is also home to world-class clusters of business specialisms across a wide range of sectors, hosting 86 per cent of London’s total finance and insurance jobs, 61 per cent of the capital’s professional, scientific and technical employment, and over half of its information and communication jobs.
• Previous Centre for London research has demonstrated the extent to which taxes raised in London are vital in paying for public services elsewhere in nation, ¹ and that the capital plays a ‘world city’ role as a hub for head offices of multinational corporations that competes with other ‘world cities’, rather than those across the UK. ²

… and it is seeing rapid growth in jobs, residents and visitors.

• Employment in the CAZ/NIoD grew by an average of two per cent annually between 2011 and 2018 – but the district’s population grew at twice that rate.
• Central London’s population swells by as much as 80 per cent each day, as commuters, tourists and other visitors join the capital’s residents in an increasingly busy city centre.
• Numbers of commuters have grown, and tourist numbers are forecast to grow substantially in the coming years.

Poverty and wealth live side by side in the CAZ…

• If the CAZ/NIoD were a local authority in its own right, it would have the third-highest average house prices in the capital.
• However, 37 per cent of dwellings in the CAZ10 boroughs are local authority homes (compared to 8 per cent in London’s other 23 boroughs) – and despite progress in recent years the CAZ/NIoD still contains some of the most deprived neighbourhoods in the country.

… and there is a gap in terms of middle-income Londoners and long-term residents.

• Central London suffers from a lack of intermediate housing, and risks becoming a place increasingly divided between affluent residents and small pockets of social housing tenants.
• Stable, long-term communities play an important “stewardship” role in ensuring that city centres thrive. However, the number of single-person households, short-term residents and young adults living in the CAZ is higher than the London averages, suggesting that the affluent parts of its population are more transient than in the rest of the capital.

Employer needs and employment patterns are evolving…

• The geography of employment is not static, with new clusters emerging around areas of significant redevelopment and renewal, and a “remixing” of sectors in London, with employment growth across the city centre and outside traditional clusters.
• Office space needs are also changing: employers are moving towards flexible workspaces (which trebled in floorspace between 2007 and 2018) and an emphasis on blended work and lifestyle space.
• An increasing number of workers now commute to their main workplace in central London from elsewhere (rising from 1.4 million in 2007 to 2 million in 2018).

… but growing numbers of workers and tourists can put a strain on infrastructure – and on relations with residents.

• Whilst there has been a marked increase in the number of commuters, growth has mostly been accommodated outside of peak hours. This reflects changing working patterns, but also suggests that public transport overcrowding and long commutes into the centre of the city are having an impact.
• While the opening of Crossrail will increase capacity on the network, the sheer number of commuters is likely to put a strain on infrastructure and services.
• Tourists and night-time visitors can also create pressures. While these groups contribute to the district’s economy and vibrancy, there are also pressures related to antisocial behaviour, additional policing requirements, and housing supply.
• Other areas of tension range from pedestrianisation schemes to the management of night-time deliveries.

Challenges for the CAZ include pressures on space…

• Market forces have incentivised residential development over commercial in recent years, though falling residential values are bringing commercial development back to the fore.
• Despite this recent turnaround, office space availability is tight and the development pipeline remains limited.
• The online marketplace for visitor accommodation has also been growing rapidly, with Airbnb listings quadrupling between 2015 and 2018. Listings in central London boroughs are much more likely to be for whole properties rather than single rooms, thereby taking property away from long-term residential occupation.

… as well as issues around environmental quality, inclusive growth and complex governance.

• Air quality, congestion and antisocial behaviour have an impact on residents, workers and tourists alike.
• Local entrepreneurs have trouble finding affordable workspaces, and local shops and other amenities can be squeezed.
• The CAZ contains parts of 10 boroughs which each have different policy frameworks, (alongside joint working through partnerships such as Central London Forward).
• Policy positions (from housing targets to the management of services) can still vary between boroughs; developers and employers report finding it easier to work with some boroughs than others in the city centre.

Recommendations

In order to ensure that central London continues to thrive as the economic hub and the heartland of national life, its elected authorities, and community and business leaders must come together to plan for a future based on four key principles:

• Embrace change. The combination of continued growth and changing requirements means that change is inevitable in the capital’s historic core – if not always easy. A flexible, innovative approach to the use of limited space is essential.
• Think strategically. A shared vision and co-ordinated action across the CAZ and NIoD is needed in order to ensure that the area’s population growth produces stable, long-term communities; that employment growth continues; and that rising numbers of visitors can be welcomed.
• Ensure all voices are heard. Given the unusual and particular stakeholder mix in the CAZ/NIoD, an ever more collaborative culture must be nurtured between London-wide government, local authorities, employers and residents.
• Convince central government to invest and devolve. Central government remains in charge of a great deal of central London life, and the success of central London remains essential to the success of the nation. Central London’s user groups must work together to make the case for central London, to advocate for more control over the district’s fate and finances in the long term – and for more investment from central government to ensure its continued success.

This report also makes three key recommendations on how to apply these principles, with the extent of implementation depending upon feasibility and practicality:

1. The CAZ10 boroughs, Greater London Authority (GLA) and central London’s Business Improvement Districts (BIDs) must work increasingly closely together to develop a clear CAZ/NIoD-wide strategy – from working together to revise the GLA’s strategic guidance for the district, to forming a joint committee to implement and monitor change at a cross-CAZ/NIoD level.
2. These groups must also consider ways to strengthen the role of other central London user groups in forming future plans for the CAZ/NIoD. This could include enhancing the involvement of central London’s BIDs and neighbourhood forums in plan-making; improving transparency in S106/CIL payments; and considering ways for users other than residents and employers to contribute to the district’s upkeep and improvement.
3. All groups must make the case for central London, advocating to central government for more devolution in the long term and for investment in the meantime. Increased joint working will provide the opportunity to speak with a united “central London” voice.