Paying the price

Saying that Londoners are underpaid may not win many votes outside the M25, but persistently low pay is a huge problem for the capital and its citizens.

One way of looking at this is to compare Londoners’ salaries to the benchmark set by the London Living Wage (£10.85 in 2020/21), which is calculated as a rate that meets “everyday needs”. The chart below compares this benchmark to London’s 10th and 25th percentile pay rates – that is, the highest pay for the bottom 10 per cent and bottom 25 per cent of earners respectively – for sectors where there are enough workers to enable reliable estimates.

The chart shows where London’s low pay problem is concentrated. Twenty-five per cent of workers in retail, hospitality, admin support (jobs like security guards), social work (bundled with better-paid health jobs above), and entertainment were being paid less than the minimum hourly rate needed to live in London in 2020. Hospitality wages are particularly low: more than 60 per cent of workers in that sector were paid less than the London Living Wage.

There are two other things worth noting. Firstly, low pay may be a national problem, but it is more acute in London. Loughborough University research on “minimum income standards” indicates that Londoners in different household types need between 20 and 60 per cent more than people in other UK urban areas to afford a decent quality of life.

London jobs do pay a wage premium, but this is less than 10 per cent at the bottom end of low-paid sectors such as hospitality, security, residential care work and construction. In other words, the workers who most need the wage premium to live in London are also those least likely to get it.

Second, London’s lowest-paid sectors – industries such as food production (one of the lowest paid manufacturing sub-sectors), hospitality and social care – are some of those with the most acute labour shortages at the moment. (Others shortages, such as of HGV drivers, are complicated by the need for specialist training and licences.) They are also the sectors which have been most dependent on overseas workers in recent years.

The issue of labour shortages is hitting the news – and supermarket shelves – right now,  though some suggest the problem will solve itself over the coming weeks, as the distorting effects of pandemic support measures are removed. The furlough scheme, which has been accused of keeping workers in defunct jobs, rather than pushing them to look for new ones, ends next month. But it has been winding down for a while – the number of furloughed jobs in London halved between the end of February and end of June (though this is a slower rate of decline than other English regions) – while labour shortages have persisted or worsened as the economy has re-opened.

The other element of pandemic support has been the temporary £20 per week increase in Universal Credit (UC). More than a million Londoners were claiming UC in June 2021, three times the number two years earlier. Some of these are people who are out of work, but nearly 400,000 are working Londoners whose pay is simply not adequate to their needs. The removal of the £20 per week increase in UC, also due to take place at the end of next month, might encourage some non-working Londoners into employment, but will also push more working Londoners into poverty.

If people won’t be forced back into low-paid jobs by the removal of state support, can we look overseas instead? As border restrictions relax, London may once again attract workers from around the world, though the new immigration regime will prevent new arrivals for working in some of the city’s most crisis-hit sectors. 

But by debating how we can use imported labour and benefit subsidies to fill jobs that don’t pay enough, perhaps we are asking the wrong questions. Beyond the question of basic morality, coronavirus has exposed the precariousness of this approach to staffing our shops, bars, restaurants, building sites and care homes. Low pay may even be holding back innovation, as the Resolution Foundation recently observed, and hence productivity growth.

London’s economy is likely to change dramatically in coming years as the long-term impacts of the pandemic combine with the impact of technology and action on climate change. To be ready for these changes and the opportunities and disruptions they will create, London needs to pay workers better (as proposed by my former colleagues at Centre for London) or find smarter ways of doing their jobs. We can no longer afford low wages. 

Originally published by OnLondon.

Reheating London’s hospitality industry

 [First published in OnLondon, 29 December 2020]

After Boris Johnson’s election victory in December 2019, some of his supporters heralded the approach of another “Roaring Twenties”. 

With hindsight, it was an unfortunate analogy, for the 1920s boom followed the devastation of World War I and an influenza pandemic that killed 50 million people worldwide. But the comparison has stuck, and as we look nervously but hopefully into 2021, even sober-minded think tanks such as the Resolution Foundation are deploying it, predicting a boom in deferred expenditure, particularly in the hospitality sector, once vaccines have enabled social mixing to return to something like normal.

Anecdote bears this out, as those friends who are still in work discuss which restaurants and bars they will visit – we are all planning to get “lit up in London”. But the capital’s hospitality sector is a lot more than the subject of lockdown fantasies. Over the last ten years, employment in the sector has grown by 40%, which is faster than any other apart from professional services, IT and communications. 

This growth is driven by and supports London’s global role. Spending by overseas visitors forms a major chunk of London’s exports, and it is London’s cultural offer – from nightlife to galleries to restaurants – that helps the city to retain its position at the top of global surveys, such as this year’s Global Power City Index, published by Tokyo’s Mori Memorial Foundation. Hospitality isn’t the froth on the top of “serious” sectors, such as financial and business services. It is foundational to them.

And as we lose the advantages of access to the European Single Market, these “soft power” assets will assume ever more importance in bringing the world to London, enabling us to play our part in “Global Britain” – another phrase that has taken a battering in this year of mutating viruses, lockdowns and travel bans.

But hospitality has been hit hard by the coronavirus crisis. The sector accounts for around 25% of current furloughs (compared to less than 8% of jobs), and has seen the most substantial job losses of any industry. And the outlook is grim: recent national surveys suggest that almost 30% of pubs and bars are pessimistic about surviving into the spring. London’s pubs and restaurants had a particularly tough year, with visits to the city centre dramatically reduced even during the summer period of relaxed restrictions.

As ever, the situation is complicated by Brexit. London’s hospitality sector is particularly reliant on foreign workers, with overseas nationals comprising around 50 per cent of the workforce. New immigration rules will make it far harder to employ foreign nationals in hospitality. Managers and a few specialist roles such as chefs are classified as “skilled” and therefore eligible for work visas but, bar staff, waiters, baristas and other hotel and kitchen staff are not.

Furthermore, the coronavirus crisis appears to have triggered the type of exodus that many were predicting (but failed to materialise) after the EU referendum in 2016. More than 700,000 people born outside the UK (around 500,000 from the EU) left employment between the first and third quarters of this year, according government surveys. Most appear to have left the country (or at least the survey sample) entirely. They may be biding their time until London re-opens, or they may stay away.

So, come the great unlocking, London’s hospitality sector may be in the unhappy situation of experiencing business closures and labour shortages at the same time – just as the city is trying to renew its global appeal. There may be an opportunity here for unemployed young Londoners to pick up the slack. But that is likely to put – long overdue – upwards pressure on wages and working conditions, which may in turn threaten the viability of pubs and restaurants facing higher food costs and already financially scarred by the coronavirus winter.

London will re-open, and its restaurants and bars will once again buzz with life, as they fill with people from across the city, the nation and the world, underpinning London’s status as a global meeting place. But recovery will be tough for the hospitality sector, and it could need almost as much support as during the long winter of coronavirus closures.

Can the Centre hold?

 [Published by Centre for London, 9 July 2020]

Central London can seem curiously friendless in political debates – too metropolitan for national politicians but not resident-focused enough for local and regional authorities. But Central London’s economic recovery is essential to the capital and the UK as a whole, and it is currently exposed to a unique and highly toxic cocktail of risks.

London’s Central Activities Zone (the core commercial and office districts of the West End, the City and their fringes) makes an outsized contribution to the national economy: recent Centre for London research indicated that it generated 10 per cent of national economic output in an area covering just two per cent of London.

But the area’s importance extends beyond the dry data of economic output. Central London is the anchor of the UK’s tourist industry, and the epicentre of the mix of shops, restaurants, museums, clubs, bars, universities and theatres that sustains the UK’s soft power, drawing international students, businesses and workers year after year. Global London is the heartland of Global Britain.

In previous crises, central London has sometimes suffered, but bounced back. In the early 1990s recession, inner London lost manufacturing and manual jobs and saw sharp rises in unemployment, but by the middle of the decade, the service sectors were growing in compensation, with vacant commercial premises in areas like Shoreditch taken over by a new generation of start-ups. And after 2009 employment growth hardly faltered, as central London’s economy was buoyed by quantitative easing and international investment, and emerging sectors such as cultural industries and fintech began to grow as traditional financial services employment stalled. This resilience has bred resentment in other parts of the UK – some of it perhaps justified – but London’s success as the UK’s gateway to the world has been a force for good.

This time it could be different. London’s city centre emptied out faster and deeper than other UK urban centres when lockdown started at the end of March, partly reflecting the higher proportion of jobs – predominantly higher paid professional and office worker jobs – that could be undertaken from home. Lower paid workers in hospitality and retail also stayed home, but mainly on furlough in the short term – many will be wondering if they have jobs to return to. Anyone who has been into central London recently will have noticed how empty its streets remain, while life returns to more residential neighbourhoods.

The question of how many workers will come back to central London offices, and how quickly, is still an open one. For every elegy to the end of the office, there is an equally confident hymn to the social and productivity benefits of teams working in the same place, the spillover and innovation benefits nurtured by proximity. But it does seem that the lure of central locations may be diminished for some employers.

This storm might be weathered on its own, but combining a reduction in office workforce, with a sharp slowdown in domestic and international tourism, and a public transport system with heavily constrained capacity could be deeply damaging. Central London needs people, the throng of workers, shoppers, residents and tourists. Its retail, hospitality and cultural industries serve and entertain the world; they cannot survive on the area’s 330,000 residents alone. The tax breaks and discounts announced by the Chancellor yesterday may be a boost to neighbourhood pubs, cafés and restaurants across London, but they won’t bring crowds back to Zone 1 on their own.

Weakening central London’s visitor and commuter economy as a result of short-term shutdowns and slow resurgence over the coming months could store up deeper problems in the future, permanently undermining London’s soft power and global reach – the things that bring students, tourists and investors to the UK in the first place – as well as endangering the viability of the district that accommodates 40 per cent of London’s jobs.

So central London is particularly at risk, and damage to its economy could reverberate across the country. What can be done?

The first thing is to enable people to get back to central London as quickly as is compatible with managing the risks of coronavirus resurgence. At the height of the epidemic, Londoners were told to stay away from public transport, and that message has struck home. Now that face masks are mandatory, and infection rates much lower, a cautious return to public transport should be encouraged – not least as evidence from international studies and modelling of the spread of the virus in London in March indicate that public transport is not a major source of outbreaks. As Andrew Adonis has suggested, staggered working hours, clarity on cleaning standards and a change of messaging from the Mayor could all help bring people back into central London.

Getting people back on the tubes and buses will help, but will not be enough to make up for the loss of tourism and potential loss of workforce. It is likely that more targeted help will be needed, in particular for theatres, gig venues and other performance spaces. The West End accounts for 60 per cent of annual revenues for UK theatres, so allowing it to wither would be a body blow to the industry nationally.

The government’s new support package will help support cultural institutions while live performance is limited, but distributing cultural vouchers across the country could also play a part once theatres and other venues start to re-open (perhaps following the approach being tried out by Andrew Lloyd Webber). ‘Helicopter culture’ would be a gift in tough times to UK audiences, while drawing people back into city centres across the country, where attending a play or performance could be accompanied by food, drink and even shopping.

A return to public transport and support for entertainment might help sustain London’s centre as the virus recedes and tourism revives, but there will inevitably be shops, cafés and pubs that fail, and office space that is surrendered as firms reconsider their spatial needs and their employees’ appetite for remote working. There may be a case for allowing some growth in residential development: central London’s residential population has grown sharply in recent years but is still way below what it was in the 1930s. However, all the logic of business clustering, and the sunk costs of decades of infrastructure investment, argues that London should sustain a strong business core.

Rather than surrendering London’s business core, boroughs, the Mayor and government should work together on incentives to enable new enterprises to flourish, as they did in previous recessions. While rents are falling – and being linked to turnover in many cases – business rates are anchored to rental values from 2015 and so remain prohibitively high in many parts of central London. In the long term, business rates need reform, but in the short term, tax breaks for start-ups could include business rate discounts or holidays, and capital allowances for investment in office and shop fit-outs – an enterprise zone for the city centre.

Getting cross about central London – the crowds, the tourists, the prices, the pollution, the bustle – is a pastime that most Londoners can normally share with people across the country. But diluting its punchy and sometimes chaotic vitality would be a tragedy for the whole nation. London will bounce back in the long term, but may need some help over coming months as it faces a perfect storm of challenges.

London’s left-behind places

[First published by onlondon, 5 March 2020]

London is an economic powerhouse, accounting for 23 per cent of the UK economy with only 13 per cent of the UK population. Productivity figures released last week show that four of the ten most productive UK districts (in terms of economic output per hour worked) are in the capital: Hounslow, Tower Hamlets, City of London and Westminster.

But this is not the whole story. Other London boroughs, such as Haringey and Lewisham, appear much further down the list, among “left behind” places such as Blackburn, Stafford and Rhondda Cynon Taf. And while UK productivity grew by about 21 per cent between 2008 and 2018 (not accounting for inflation), it fell in Newham, Barking & Dagenham and Merton, and barely moved in Lewisham.

A slowdown in productivity growth in high performing places would not be a huge surprise: growth is harder to achieve when you are already operating at high productivity; the gains you can squeeze from marginal increases in efficiency are much less impressive than those that can come from new enterprises in regenerating areas.

This – alongside the bigger issues of the financial crisis – probably explains why the City of London’s productivity shrunk more than any other UK local authority’s over the decade. But it doesn’t explain some of the other changes. Productivity surged by more than average in some Inner London boroughs that were already doing well: Camden, Kensington & Chelsea, and Hammersmith & Fulham. The boroughs where productivity fell, on the other hand – Newham, Barking & Dagenham, and Merton – were struggling to start with. London’s economy is becoming more and more concentrated in the city centre.

Struggling Outer London boroughs are not uniformly poor any more than northern towns are, but these productivity figures reflect the very different economic lives lived by rich and poor Londoners. Each borough will have wealthy residents, whose economic activity shows up where they work, not where they live. Their economic fortunes are in sharp contrast to people working in precarious and low-paid employment locally, whose labour is reflected in these local figures. These may not be “left behind places”, but some of the people living in them have every right to feel marginalised.

This dichotomy – between a globally competitive city centre and a struggling periphery –raises questions for local, regional and national policymakers. London’s suburban centres and high streets are being hollowed out by the same forces of retail restructuring as town centres across the country.

But the light of London’s central business district can leave its hinterland in shadow when it comes to government policy. Nowhere in London was among the 100 places invited to bid for £3.6 billion ‘Towns Fund’ last year. How can Outer London’s centres adapt and revive, supporting enterprises and services that will bring commercial and community life – and better productivity and wages – back to London’s suburbs and London’s suburban communities? Centre for London’s forthcoming project on Outer London centres will be focusing on this issue.

There is a broader point too. London is a rich city with a lot of poor people in it, having higher poverty rates than any other UK nation or region after housing costs. Being poor in a rich area does perhaps offer opportunity (though this is debated), but it can also add to stress when local services don’t meet your needs, as explored in a recent report by the Southern Policy Centre.

So the government should be cautious about rushing to refocus spending on “left-behind places” at the expense of thinking about the people and communities who are struggling – even if they are doing so within eyesight of central London’s temples of global trade.

S H O P P I N G (Sept 2018)

[Originally published OnLondon, 30 Sept 2018]

What are Londoners like? Judging by recently released experimental Office for National Statistics data on spending patterns, we are a surprisingly healthy, even ascetic bunch. We each spend around £25,000 each year, 30 per cent more than people across the UK as a whole. But we spend much more on fish and fruit and less on cigarettes and alcohol; more on gym memberships, less on consumer goods. What do these figures really tell us about life in London?

The data suggest some patterns that will be familiar to every Londoner.  We spend an outrageous amount on housing, which accounts for more than £10,000 of the average Londoner’s expenditure every year – twice as much as the UK average. Transport spending is around £2,500 per year across London and the UK alike, but Londoners spend 60 per cent of that sum on transport services such as tubes, buses and taxis, while 70 per cent of average UK transport spending goes on buying and maintaining private vehicles.

The focus on services as opposed to goods is a common thread, and probably arises from a mixture of lifestyle choice and necessity. Modern consumption, we are often told, focuses on experiences rather than on accumulating “stuff”, which is lucky for Londoners, given the insecure tenure and Lilliputian accommodation that many have to put up with.

Londoners spend nearly 30 per cent less than others in the UK on recreational durables – cameras, hi-fis, TVs etc – but more on recreational and sporting services (gym memberships and tickets), and on hotels and restaurants. We don’t have the space for giant TVs or time to watch them, but we do have the almost limitless possibilities of London on our doorstep. The one item of home furnishings that Londoners do spend significantly more on is cutlery and glasses – even the most bijou flat can accommodate a David Mellor teaspoon.

But other aspects of the figures prompt questions. Why do Londoners spend so little per head on vices such as drinking, smoking and gambling (while level-pegging with the rest of the UK on drugs and prostitution)? Wouldn’t you expect a young city with packed bars and pavements to be spending more? Is it simply that Londoners are too hard-up?

That may be part of the answer. But London is not one thing, and there is no such person as an average Londoner. The city that celebrates hedonism and liberation is also the UK’s most religious place. The city with the biggest lesbian, gay and bisexual population is also the city with the lowest proportion of births outside marriage. The millennials who foreswear alcohol or meat for reasons of health or expense live alongside those who do so for religious or cultural reasons.

London mixes conservatism and liberalism in its society as much as in its politics. Diversity and openness to the world make London a city where anyone can live the life they choose. The spending patterns of Londoners illustrate how these myriad lifestyles can contrast but also overlap with each other. Full data below.

Come bouncing back

Boris Johnson will be banging the drum for the capital with his accustomed panache as he visits Boston and New York this week. That’s not surprising: London has a great story to tell.
But, while we are quick to celebrate London’s gravity-defying recovery from the last recession, we still do not fully understand it. At an LSE London lecture last week, Professor of Human Geography Ian Gordon sought to redress the balance by asking why the capital did not just survive the 2007 financial crash; in its wake, it actually thrived.

It’s a multi-billion dollar question, not least because London looked pretty vulnerable as the crisis unfolded. Unlike previous recessions, which had hit the Midlands and north harder, the early 1990s recession had its greatest impact in London, reflecting a shift from manufacturing to “speculation” (broadly-defined, to include housing and stock markets as well as knowledge-intensive activity).

A lot of people (including Gordon, and me) expected the years after 2007 to be a re-run, or worse. Instead, between 2007 and 2013, employment in five central London boroughs rose by 23 per cent, a faster annual growth rate than in the period running up to the crash, though unemployment rose across London, and job number recovery rates in the rest of the capital remained at much the same level as the rest of the UK.

Gordon reflected on whether there were structural features of London\’s economy that helped it survive. He also asked whether there were policy biases in terms of public and private investment and cutbacks, and whether the programmes of economic intervention (bail-outs, guarantees and quantitative easing) had features that favoured London.

The first two factors certainly contributed something. Structurally, the devaluation of the pound by 25 per cent between 2007 and 2009 could have helped tourism and investment (more on this below). What’s more, businesses fought to retain skilled workers , who are disproportionately located in London. And London’s economy was well-equipped to continue to supply luxury goods to rich individuals whose wealth was relatively unaffected by financial vicissitudes (the “plutonomy model”, named after the CitiGroup reports of the mid-2000s).

There were also policy biases towards London. The 2012 Olympics and Crossrail were big capital projects sponsored by government, which boosted the ability of London construction services firms to sell their skills overseas. There is some evidence that firms headquartered in London were quicker to lay off branch office than head office personnel, too.

But these factors shrink in significance, Gordon argued, compared to the sheer weight of financial intervention. He cited Andrew Haldane of the Bank of England in valuing the guarantees given to banks as equivalent to a subsidy of £100bn in 2009 alone (through their reductions in the cost of borrowing).

Meanwhile, quantitative easing was designed to divert nervous money away from safe bonds into more risky and productive investments – but, coupled with low interest rates, it encouraged a surge in equity prices. (Some went to emerging markets in search of even higher returns.) The FTSE 100 index rose from a low of less than 4,000 in 2009 to nearly 7,000 today – around the level of its 2008 high – delivering great returns for many investors.

But the job growth in the five boroughs studied (City of London, Westminster, Islington, Tower Hamlets and Hackney) was not restricted to financial services. It was also in property, real estate and engineering, tourism, hotels and restaurants, public services, and creative and digital businesses.

Some of the growth in professional property and engineering activity can be attributed to the big capital projects, and the confidence that London’s 2012 success created. Growth in creative and digital businesses includes not only Tech City (about which Gordon was sceptical), but also IT support to increasingly tech-driven financial services. Finally, a buoyant stock market does much to help the higher end of the restaurant business: witness the profusion of £100 per head openings around the hedge-y hotspots of Mayfair.

Going beyond Gordon’s careful analysis, it’s also worth asking what part London’s booming property market played. The devaluation of the pound did little to boost tourism in the short term (visitor numbers did not return to their 2007 levels until 2012); but it did make London a safe haven for overseas investment.

Much of this investment went into property, and particularly the prime central London market, where 60 per cent of purchases by value were by overseas buyers in 2007-11. And after a brief slowdown in 2008, prices recovered fast, rising by 45 per cent across central London by 2013.

But, unlike prices, transaction volumes remained stubbornly low; they fell by about 40 per cent in 2007, and have remained pretty low ever since. In other words, buyers\’ money was flooding in, but sellers weren\’t responding; the market has failed to regain its pre-crash liquidity.

Investors wanting to increase their exposure, or to invest gains made in the stock market, had limited options for new purchases. So many chose to extend or dig down, creating catacombs of wealth in London’s most desirable streets – and contributing to the growth in employment in construction, engineering and allied trades.

So, the recovery in London’s economy, or at least in job numbers, has been focused on a very small area of the city. Perhaps more significantly, it could be seen as based on the wealth of a fairly small section of the population, and their spending habits, from underground cinemas to Michelin-starred restaurants.

This influx and expansion of wealth in central London may or may not be a good thing in itself – it has generated employment for a lot of Londoners, but its impact on property prices and the cost of living has stretched far beyond central London. And we shouldn’t become complacent about what it means for the future.

Gordon suggests that, just as this unique set of circumstances cushioned London in the downturn, they are also amplifying a speculative upswing. Central London may not have escaped the recession by means of our extraordinary civic virtue and vigour, by the discovery of some magic formula that has “abolished boom and bust” (remember that?).

Rather, he suggests, it may have prospered through a happy co-incidence of circumstances that has papered over the cracks. A change in interest rates, or exchange rates, or a crash in property prices could also have amplified impacts – equally and oppositely.

How London’s economy will fare longer term is a matter for crystal ball-gazing, not secure prediction. But we owe it to ourselves to reflect more rationally and systematically on whether London has achieved such apparently gravity-defying success through luck or good judgement. Those answers may be helpful if – when the tables turn.

City sickness?

Originally published on CityMetric on 19 January 2015

The Centre for Cities’ City Outlook 2015, out today, tells a story of continuing success for the capital. Since the mid-1990s, the capital’s population and economy have been growing in tandem, and the city quickly regained the economic ground lost in the early 2000s and in the last recession.

Over the past ten years, in fact, London’s population has grown by 1.1m. The number of private sector jobs in the city have risen by 650,000, and the number of businesses by 115,000. The growth in population is greater in absolute terms, but the economic indicators are rising more quickly. London’s economy is growing faster than its population.

The sector that grew fastest, accounting for one third of London’s net new jobs over the past decade, was “professional, scientific & technical activities” – a sector which includes professions such as law, engineering, architectural design and accountancy, as well as management consultancy, advertising, and research & development. London’s economy is increasingly dominated by knowledge-intensive, highly-skilled businesses.

Growth in these sectors is the holy grail of economic development, and something to be celebrated – but it presents challenges, too. Firstly, like other UK cities, London has stubbornly persistent levels of unemployment – the claimant count increased by 40,000 (around 25 per cent) over the decade, despite the growth in job numbers. The jobs being created are not in the sectors that are easily accessible to people with low skills levels. At the same time, entrepreneurs in London’s growth sectors are complaining that finding people with the right specialist and generic skills is one of the biggest problems they face in seeking to grow their businesses.

London also faces a growing affordability crisis, particularly in housing costs. Demand for new housing has outstripped supply by a factor of three: in the decade when London’s population grew by more than a million, its housing stock grew by less than 300,000. Combined with the popularity of property – even unoccupied property – as an asset for investment, this has fuelled spiralling house prices, with the average house costing more than 30 times the average wage in super-prime central London boroughs.

This affordability crisis is pushing many Londoners on modest incomes, including people in entry-level jobs in London’s growth sectors, out of the inner city to places where property costs may be cheaper. But high transport costs still inflict a heavy toll. The Centre for London’s report Hollow Promise called these people, earning less than average but above the benefits threshold, ENDIeS: people who are employed but with no disposal income or savings.

There is also evidence that some are moving even further afield than London’s suburbs: commuting from outside London grew by about ten per cent between 2001 and 2011, and recent reports showed that young Londoners are moving away from the capital in record numbers. In 2012-13, indeed, there was a net outflow of 22,000 30-something workers. This is leading to resurgent populations and job markets; but is also putting pressure on housing in other southern cities like Oxford, Cambridge and Brighton. These are seeing London-esque gaps between house prices and earnings, in part as a result of local wages lagging behind the house prices that London commuters can pay.

Taken together, housing affordability and skills are two of the capital’s biggest challenges, as reflected in business group London First’s recent London 2036: an agenda for jobs and growth report. Unless we build more housing and other infrastructure, and invest in our skills base, London’s long-term position as one of the pre-eminent world cities could be threatened.

Does this matter? For better or worse, London’s success over the last decade has been built on its appeal as the destination for skilled workers, from the UK and beyond. This has resulted in a skewed economy, for sure. The distribution of resources, talent and infrastructure has been meant a north/south (or, more accurately, an SE/rest of UK) divide.

But a more balanced economy could also be a less prosperous one. Talent has been concentrated in London, a pre-eminent global city; the alternative is not that we have multiple global cities, but that we have none, and that a big chunk of the business coming into the UK disappears.

Knowledge intensive businesses are not sentimental or nationalistic; with the right infrastructure in place, they can easily sell their services across borders. What they depend on above all is a highly skilled workforce; they will operate from whichever cities can offer them this workforce at competitive rates.

London offers not only the critical mass of high-skilled workers, but the infrastructure and the cultural energy which attracts the biggest, and most lucrative, international employers. Over the last ten years it has become increasingly important to the country’s economy. But if London continues to become unaffordable to everyone but the richest and the luckiest, it will lose the skills that have supported its growth, and growth across the UK.

Some firms may follow the talent to Birmingham or Bristol, and many would welcome that type of rebalancing within the UK economy. But a large number of firms would move to Berlin or Barcelona – and we will all lose out.

The UK’s regions may have lost out from internal migration, but they shouldn’t necessarily welcome the tide turning against the capital. Economically, at least, the affordability crisis in London could become a big problem for all of us.