London: a brief history

Although population size is perhaps the crudest measure of a city’s success, London was indisputably the primary global urban centre for a significant portion of its history. For around 100 years, during the nineteenth century and at the beginning of the twentieth, London was the largest city in the world. Until recently, the most dramatic change in London’s fortunes had come with the death and destruction of the Blitz. The war’s aftermath, however, also had other profound impacts – not least the creation of the welfare state and the publication of the Abercrombie Plan. In the decades that followed, certain factors – including slum clearances, the growth of the train network, mass car ownership, industrial and regional policy, and rising living standards – combined to redistribute London’s population to the burgeoning suburbs and then to the home counties beyond.

These changes built a discontinuous megacity in southeast England with the capital at its heart. Local government structures evolved in response, and in 1965 the city’s boundaries expanded with the creation of Greater London. It was to be governed by the Greater London Council (GLC), swallowing chunks of the home counties, replacing London County Council, and dissolving the ancient county of Middlesex. Greater London was subdivided into 32 boroughs, bar the ancient City in the historic centre. Nevertheless, Greater London’s population declined. Eventually, the GLC fell foul of national government and was abolished in 1986 1985 – indicative perhaps of a wider slump in the city’s fortunes and reputation.

In the 1990s – little remarked on at first – Greater London’s population began to grow again. The city’s prospects were transforming thanks to the deregulation of financial services, a growing freedom of movement across Europe, a new fashion for city living, and collaboration between local authorities and businesses to think smartly about London’s future. London was thus reborn as a “World City”. Eventually citywide civic government was re-established, led by a new Mayor of London, which in turn boosted the city’s fortunes.

Since then, London’s population and global prestige have boomed. As well as being the UK’s political capital, London has become one of a handful of elite global cities, the hyper-productive central nodes of an increasingly interconnected global economy. Against the current of the UK’s century-long relative economic decline, London managed to harness the benefits of big city life to become a highly prosperous centre for global financial services, law, consultancy, life sciences, education, and cultural production. Hospitality and entertainment are also a significant part of its success, with galleries, nightclubs, theatres and restaurants that draw people from across the UK, Europe and beyond. This constant flow of people – tourists, students, workers and residents – has in turn enriched the city and fuelled its global “soft power”.

London’s current challenges

Nonetheless, London’s success in the many global city league tables can mask deep social challenges. The city has persistently high levels of general poverty and child poverty – the highest of any UK region by some measures. Housing costs are a major factor in pushing people into poverty. The capital has more homeless people and people living in temporary accommodation than the rest of England combined, ⁴ and rising house prices have driven rapidly growing wealth inequalities. These compound systemic disadvantage for Black and other ethnic minority Londoners – who are paid less, are more likely to be unemployed, and are less likely to own property.

The city as a whole has also suffered from growing pains as its population once again reached and then surpassed its 1939 peak. Roads are congested, air quality is poor, and many neighbourhoods have become run down – even as some prosperous and regenerated districts enjoy new amenities and public spaces. While the city has lower direct carbon emissions than other UK regions, it has a mountain to climb to achieve the Mayor’s target of net zero carbon emissions by 2030.

Finally, the city’s position in the nation and in the world is less assured than it once was. London has always been viewed with mixed feelings by other parts of the UK, but in the last few years tensions have worsened, fuelled by caricatures of London as a city comprising only “metropolitan elites”. The growing importance of the London economy to UK tax revenues has been matched by growing resentment of the capital’s perceived cultural and economic dominance, and national politicians have vied with each other in pledging to divert resources and attention from London.

Despite these pressures, London’s global reputation remains strong, buoyed by its cultural offer, openness, talent pool and business environment. London’s assets – its built heritage, transport network, business clusters, diversity, creative dynamism, geography, and legal frameworks – remain compelling. But the city’s previously unassailable position as the “leading global city in an age of global cities” has been tarnished by the cost of living, pollution, and the uncertainties surrounding new trade agreements and immigration rules following the UK’s departure from the European Union.

At the outset of the London Futures project, the question we posed was whether London could continue to seize opportunities and prosper while also addressing its stark inequities. Other challenges to be addressed included the climate emergency, new technologies, changing global trade and power structures, and an ageing population. We concluded the London at a Crossroads report by detailing the major challenges we saw ahead (see Table 1 on the next page).

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London’s possible futures

The coronavirus pandemic has introduced new questions and uncertainties where London and other cities are concerned. Amongst other worries, fresh doubts have been raised about:

• The future of major cities themselves.
• Whether London will return to economic and population growth.
• The future of office working and central business districts.
• Closed borders and suppressed tourism.
• Health security and resilience.

London’s future is as uncertain as any time in living memory. The city’s economic recovery from the pandemic is not assured; nor is its standing in the world, or its path to net zero. We have no guarantee the city will be fairer, safer or more resilient to future shocks. London’s population growth, so strong in recent decades, looks likely to drop – and could even reverse. London’s governing settlement is also fragile, and for the first time in a generation devolution could be weakened.

In London at a Crossroads we delved into some of these uncertainties, including a set of potential scenarios for the city. In this chapter we explore them further.

Will the population grow?

London’s population has grown considerably over the last 200 years ⁶. Growth has been both a consequence and a cause of the capital’s success as an innovative global city. Before the pandemic hit, the consensus view was that the coming decades would see a continuation of the last 30 years of growth – although the nature of it would be affected by Brexit ⁷.

Population projections are notoriously difficult to get right, ⁸ not least because population flows are sensitive to policy changes as well as multiple other external factors. The pandemic has compounded this difficulty. Since it began, some commentators have asserted that London’s population could decline – with foreign workers returning to their home country, and British citizens deciding that if they don’t have to go into the office they might as well live somewhere quieter and cheaper ⁹. Real-time population data is difficult to find and use, but at the time of writing, there is some evidence (albeit disputed) that some foreign-born Londoners moved abroad during the pandemic. On moves within the UK, there is much anecdote but little evidence ¹⁰.

What happens next will depend on whether London retains its economic, cultural and social draw for new Londoners – as discussed in Chapter 1. Our city has a very high population churn, driven by both international and domestic home moves. For domestic migrants, there is a pattern of young people moving to London in their teens and early 20s for work or study: some settle for life, and others move back after a few years or decades. ¹¹ The signs are that although post-pandemic life will be different, the appeal of London to younger people in particular will persist.

Policymakers have scope to influence what happens to London’s population. Most directly, they can cut investment in London, resulting in fewer jobs and worse public services, driving people out of the city. This would hit London’s poorest residents hardest, many of whom were already living in very difficult circumstances before the pandemic pushed unemployment claims to their highest for many years.

If London’s population shrinks, Londoners could suffer in other ways too. Lower-paid Londoners in service jobs would lose out if their wealthier neighbours were no longer around to buy groceries, takeaways and haircuts.

People who use public services would suffer: many services are funded per capita, and operating costs don’t usually fall proportionately to the number of users. Attempts to decarbonise would suffer, as the relative green success of cities depends on their ability to provide public transport and housing at an efficient scale.

What direction will the economy take?

According to projections produced by the Greater London Authority, the growth in employment that London has experienced in the last 30 years is expected to persist during the next 30, albeit at a slower pace ¹². The GLA expects little change in the sectors driving employment growth: the professional services, information and communication, culture and hospitality sectors will continue to expand, while the decline in public administration jobs and some industry (such as manufacturing) is expected to continue – though not as pronounced as before.

These are headline trends only: within each sector and sub-sector there are likely to be variations ¹³. These projections are based on trends and very broad categorisations, so they will miss the innovations and political decisions that could lead the city’s economy to change course. Few could claim to have predicted in the early 1980s that London would become a global leader in professional services and the creative industries, or have foreseen a boom in its visitor economy. But as we saw in London at a Crossroads, there are major factors that will inescapably shape our future – including decarbonisation, the ongoing digital revolution, and the ageing population. We would now add to those the new push towards social, environmental and governance goals across the private sector, the deeper issues of how business relates to wider societal goals, and a likely pivot toward greater resilience – especially in physical supply chains.

What are the ramifications of the ongoing digital revolution?

Digitally enabled services have been transforming the world of work for decades. Thanks to improvements in Internet access and the pandemic induced mass adoption of collaborative remote working tools, digital services have become essential across most parts of the economy.

This progress in digital connectivity, together with the surge in home working during the pandemic, has cast doubt on the need for many jobs to be located in cities. Yet experience of previous waves of improved connectivity has been that, rather than supplanting the need for personal interaction, they in fact complement it. This suggests that the overall premium placed on being in the heart of a global city such as London is unlikely to change radically ¹⁴. This may be especially so for jobs that benefit from the relational aspects of a location – typically high-complexity, high-collaboration industries such as investment banking, media production and IT.

Conversely, roles that are more repetitive or process-based could see a longer-term drift away from city centres, with more near- or off-shoring. Potentially compounding these effects is the disruption that artificial intelligence (AI) may bring. AI could reconfigure workplaces, automating many routine tasks and providing new services without human equivalents. How far automation will displace current jobs depends on how quickly machine learning, AI and robotics overcome real-world challenges. Centre for London used estimates by researchers from Oxford University on the 52 possible impacts of automation, and found that one-third of London’s jobs have a high automation potential ¹⁵. However, other research suggests rates as low as 10 to 15 per cent ¹⁶.

Overall, London’s job market may be relatively resilient to automation, given the city’s specialisms in higher-value, relationship-rich, non-routine work. In fact, the city could be well placed to see greater rates of job creation. The higher-value services sectors that are concentrated in London are particularly good at seizing the opportunities of new technology, helping them build new offerings that entice tomorrow’s consumers.

How fast will we decarbonise, and how disruptive will it be?

The transition to net zero carbon could fundamentally reshape our economy. Decarbonisation and the allied drive to promote biodiversity and restore nature could change not only our neighbourhoods, parks and public services, but also how we move around and the amenities and entertainments we enjoy. It could affect almost all the businesses and jobs in the city – turning some industries inside out, eliminating others and spawning entirely new products and services.

Quite how these convulsions translate into the jobs that Londoners do is hard to pinpoint. The UK government estimates “green jobs” will grow by 11 per cent per year to 2030 – roughly 10 times faster than the projected average for all sectors ¹⁷. But even with a wider understanding of green sectors and their employment potential, we could be underestimating how wide-ranging the impacts of decarbonisation on the economy will be. Since practically all current jobs are reliant (either directly or indirectly) on carbon-generating activities, many will change or disappear as we move towards net zero.

Will we invest more in resilience?

The pandemic has shone fresh light on our highly interconnected, globalised world. We’ve seen extraordinary international cooperation, but we’ve also seen the fragility of some parts of our economic system. In particular, some governments, firms and supply chains have faltered under the pressure of delivery in extreme conditions. This was in part due to a lack of foresight – but it was also arguably symptomatic of an outlook, across business in particular, that prized too highly the efficiency of production and supply systems. Post-pandemic anxiety may trigger a reaction to this, compounding concerns about open borders and international trade. Governments will almost certainly plan better for disease-related risks, and invest accordingly – which will have opportunity costs, i.e. less investment in other priority areas. Companies may also reorientate towards more resilient operations, leading to greater emphasis on local production, inventories and digital communications – and less tolerance for the “just in time” philosophy that dominated manufacturing and logistics thinking in recent years.

Will London be fairer?

London’s trajectory on fairness in recent times has not been strong (see Chapter 1 for our definition of fairness). As we showed in our London at a Crossroads report, too many Londoners suffer unfairly in terms of basic living standards, education, discrimination, political power, and the impact of our environment. Rather than being a leveller, the pandemic struck the elderly, those with poor underlying health, those in poor housing, and Black, Asian and Minority Ethnic (BAME) Londoners harder. The Black Lives Matter movement and the global explosion of outrage at the death of George Floyd shone new light on racial injustice in the summer of 2020. Londoners were also shocked and deeply angered by the murder of Sarah Everard, and, once more, despite the pandemic, mobilised on the streets to protest at the endemic violence and harassment against women and girls.

Unfairness and inequality, seen so vividly in London, does not tend to self-correct. In the absence of serious and long-sighted countermeasures, it is more likely to deepen. This is typified by London’s housing ownership and distribution, where over the last decades fewer and fewer have owned more and more. Post-pandemic London will only become fairer if the voices of the discontented, disadvantaged and discriminated-against can be amplified, heard, and channelled into meaningful improvements.

The challenges and uncertainties facing London are stark. The capital’s nine million inhabitants need a better city to protect them from pitfalls and iniquities – and to help them connect with each other, as well as those far beyond the city’s boundaries. Done right, their ingenuity and ideas will solve tomorrow’s challenges, as well as inspiring and delighting their children and other future Londoners. In collaboration with organisations, agencies and businesses that have a substantial role in the city, we launched London Futures to help shape a vision for the capital that delivers for Londoners, for Britain, and for the world. The cornerstone of our research has been talking to Londoners about their priorities for the future. In the next chapter, we summarise what they told us.