Tag: London

Past caring

Let’s start with the good news, such as it is. The immigration white paper published on Monday re-affirms the government’s commitment to a “fair pay agreement” to improve the terrible pay and conditions faced by care workers. This cannot come soon enough, but whether it will be sufficient, alongside withdrawal of the social care visa, to avoid a social care staffing crisis is another question.

London is at the sharp end, as the Skills for Care dashboard shows. The capital has the highest care worker vacancy rates in England: 11 per cent compared to an average of eight per cent across the country, with vacancies highest in the “independent” sector (that is, not directly employed by the NHS or local authorities), which accounts for four fifths of the city’s 250,000 adult social care workers.

These include workers in care homes, nursing homes and ‘domiciliary’ carers who visit mainly elderly clients (precise numbers are hard to come by, but around 60-70 per cent of adult social care clients are over 65) in their own homes to help them with food, getting dressed, washing and personal care.

London’s care workforce is older than elsewhere and includes more foreign nationals: 54 per cent are British, compared to 73 per cent across all England and 80 per cent-plus in the north. Workers directly employed by London local authorities are paid an average of £15.52 per hour, but these are only a small minority.

Those in the independent sector receive an average of £11.54 – little more than their counterparts outside London and substantially less than the London Living Wage of £13.85. Lastly, and these factors may all be connected, London’s care workers are far more likely to be employed through an agency and on zero hours contracts.

So, if a staffing crisis hits, London will be in the front line. A fair pay agreement may help over time, but if there are vacancies across the country during a transition period, London’s care workers may vote with their feet, seeking better pay and conditions beyond the M25.

But – and I don’t think this point is made enough – it’s not just about pay. The best care workers I have met are those who feel a genuine sense of vocation. As well as the patience, gentleness, and physical and emotional strength to deal with frail bodies and failing minds, these carers genuinely love the work they do, looking past the difficulties to take pride in looking after other humans. We shouldn’t exploit their calling with poor wages. But I’m not sure a pay boost, together with some general gesticulating towards economically inactive people, is enough either.

Setting that to one side, how would a 20 per cent pay rise (based on raising the average to London Living wage) for London’s care workers be funded? Though local authorities only employ a minority of care workers, they generally pay care costs for anyone with assets of less than £14,250 and a proportion of costs for those with up to £23,250. (Hammersmith & Fulham Council is one of the few local authorities not to apply a means test for domiciliary care and day care).

In London around 70 per cent of people in care homes and 85 per cent of those receiving care at home are local authority-funded – some of the highest proportions in the country, reflecting the relative poverty of London’s older people. Given growing demand from an aging population, national insurance rises and adult social care overspends mounting up every year, boroughs would struggle to pay an extra 20 per cent on care home and care agency fees. And it doesn’t look as if the government is inclined to pay them more.

For those paying fees themselves, an increase in costs might mean quicker draining of capital reserves (and recourse to local authority support), or attempts to cut back on spending. But cutting back on care provision could be a false economy. Battling on, as many older people are inclined to do, can raise the risk of accidents at home and send more older people into hospital. Finding enough carers to provide short-term “re-ablement” support for them when they leave hospital is already a challenge. Shortages of care staff will likely mean longer hospital stays for “medically fit” older people – adding to pressure on beds, and often resulting in worse health when they do leave.

Alternatively, family members could be asked to do more, as Conservative ministers have occasionally suggested. But is it right or economically sensible to ask people (generally women) to leave careers at a time of peak earnings to become full-time carers? Families need to be involved in care but abandoning other plans to become a live-in carer for elderly parents, as many women of my mother’s generation did, is not going to work for everyone.

The whole thing is a mess, and is going to become messier as the population ages. Yes, we need to improve pay, conditions and esteem. And yes, we probably should enable some continued immigration for the care sector. But the whole system needs a rethink. It’s not new to say this. There have been plenty of reviews (the Casey Review announced earlier this month is the latest in a long line), and more or less sensible ideas for caps on care costs, for compulsory insurance policies and for levies on estates. But all have been shot down or proved electorally toxic.

The problem is, as the Financial Times’s Stephen Bush observed this week, “at any given time, most people are not experiencing the care crisis”. And when we stop experiencing it, we don’t want to think about it any more. I don’t really want to think and write about it. My parents no longer receive care and I hope it’s a few years before I need to. But we need to find a better way. What we have now simply isn’t good enough, and I fear it’s about to get worse.

Hard lessons about soft power

On holiday recently in George Town, on the Malaysian island of Penang, I visited the Khoo Kongsi “clan temple”, a semi-fortified compound that testifies to the difficult history but also the success of Malaysia’s ethnic Chinese population. One room there is lined with brass plaques commemorating the successes of local children at universities – in Singapore, in Australia, at Oxford and Cambridge and in London. Soft power, written on a temple wall.

Debates about tightening the graduate visa, which allows its holders to work in the UK for two years after graduation, tend to focus on the consequences of reducing international student numbers for university finances and the UK economy. Falling foreign student numbers would be deeply damaging for both. London and its universities would be particularly hard hit. There were more than 200,000 foreign students in London in 2022/23, nearly 30 per cent of all those in the UK. University College London and King’s College London alone had 44,000 foreign students between them.

Losing even a small proportion of these, whose fees help bridge the funding gap for domestic students, would deal a further blow to balance sheets that are already buckling, following eight years of frozen tuition fees. There would be a direct hit for the economy too: research has estimated that foreign students in London are worth £10 billion to the UK.

But in the long term, the damage could go deeper. The UK is probably the world’s leading exporter of higher education, relative to the size of its economy. We export around £28 billion of education services, the vast majority of which are at university level. The sector makes up just under 10 per cent of service exports. The United States of America, our main competitor, exports around $50 billion (£37.5 billion), despite having an economy almost ten times larger than the UK’s. Higher education is one export sector in which the UK is genuinely world-beating, and London is the nation’s shopfront and brand leader.

It wasn’t always like this. The capital didn’t even have its own university until 1825. But agitation for more modern and accessible education – “the people would learn and must be taught”, as one pioneer proclaimed – led to the establishment of University College London, King’s and the University of London in short succession. These radical new institutions triggered a period of rapid growth in higher education at home and abroad. By the end of the 19th Century, examinations for “external” University of London degrees were being taken in centres across the world, from Mauritius to Malta.

As Britain decolonised after World War II, newly-independent states established their own universities (some with support from University of London). Demand for external study was expected to fall: University of London closed its external programme in the late seventies. But appetite for London degrees persisted. Today, 150,000 “transnational” students are studying in their home nations for London university courses, with around 40,000 of them on University of London programmes.

The reputation that drives demand for London degrees attaches to London itself, as well as to specific courses and institutions. That’s why so many UK and international universities have established a presence in the capital. And, despite its unaffordability, London is repeatedly identified as the best student city in the world.

While some people who come to the capital to study may settle here, most return home. But soft power persists: if students had a good experience here (or studying remotely for London courses) this will further bolster the city’s and the country’s reputation and influence. Today’s students are tomorrow’s decision-takers, on international trade and investment and in politics. In today’s world of shaky alliances, the 58 world leaders who studied at UK universities are a diplomatic asset, each one a potential ally in tackling global challenges such as climate change and security.

Panicked debates about immigration obscure the huge benefits – financial, cultural and diplomatic – that foreign students bring, and risk creating a “hostile atmosphere” that could drive them away. There are abuses in the system, and universities and regulators should address these. But responding to specific frauds by imposing blanket constraints on a UK success story seems perverse.

This is a moment when many international students will feel nervous about studying in the US, given reports of deportations and increasingly aggressive policing of immigration, and many US students, too, seem to be looking to the UK. This is the time for extending a welcome and building on our strengths, not erecting barriers that could be as self-defeating as Trumpian tariffs.

First published by OnLondon.

Who needs remote control, from the City Hall?

This is a big year for London government anniversaries. The London boroughs are celebrating their 60th birthday this month and the Greater London Authority (GLA) will be 25 in May or July, depending on whether you choose the date of the inaugural elections for a Mayor of London and the London Assembly in May 2000 or the formal “vesting” of powers that took place in July of that year.

By way of a birthday greeting, London Councils has proposed joining the Mayor’s party by establishing something similar to the mayoral “combined authorities” that operate elsewhere in the country. In Greater Manchester, West Yorkshire, the West Midlands and the seven other mayoral combined authority areas, a directly-elected metro mayor presides over a council of local authority leaders and mayors and needs to secure its agreement for budgets, strategies and plans.

In London, a council of 34 members – the Mayor and the capital’s 33 local authorities – would be unwieldy, so London Councils has proposed a “combined board”, comprising the Mayor and its own 12 “executive members”, a party-proportional cross-section of council leaders holding specific Londonwide remits. This board could take decisions on “relevant powers and funding”.

Such a change would be a big deal, perhaps bigger than London Councils is admitting. The GLA model of a strong executive mayor and a scrutinising assembly was specifically designed to minimise overlap with borough remits. Although this principle has been eroded over time – for example, by giving the Mayor more powers on housing and land – establishing a London Mayoral Combined Board suggests something rather different.

For a start, it would call into question the role of deputy mayors. The original Greater London Authority Act (1999) gave Mayors limited powers to appoint staff. Ken Livingstone used these powers to appoint senior advisors on economics, housing, transport, the environment and other relevant policy areas.

Under Boris Johnson these were renamed “deputy mayors” (there is also a “statutory deputy mayor”, a London Assembly member appointed to succeed a Mayor unable to continue in office). If there was a deputy mayor for housing and a London Councils executive member for housing, who would speak for the Mayoral Combined Board on the issue?

A similar issue arises with the London Assembly. London Councils argue that there would be no change to the Assembly’s role, but this doesn’t feel right. As well as scrutinising the Mayor, the Assembly signs off his budget and strategies and has other powers which, though quite modest, give it authority and influence which can be significant, if judiciously used.

Were the Assembly to continue in its current form under the London Councils proposals, there would be a situation in which a (directly-elected) Mayor proposed a budget or strategy to be first agreed by a Mayoral Combined Board (representing 32 elected boroughs plus the City of London Corporation) and then passed to a (proportionately elected) London Assembly for confirmation.

This would seem to be an onerous exercise in triple-handling and a recipe for disputes over mandates and remits. But if the Assembly lost those powers it would lose much of its bite. In which case, why not replace it with a borough grouping like the Overview and Scrutiny Committee in Greater Manchester?

In such respects, the London Councils plan is more radical than it might appear to be at first glance. But most importantly of all, is it a good plan?

London Councils argue that London’s current arrangements have become anomalous in the new devolution order. With mayoral or other strategic authorities set to be established across England, London’s “could become the only upper-tier council leaders in the country without a formal say over the decisions of their region’s Strategic Authority”.

It is true that London’s arrangements are different, but so is London. The Devolution White Paper published in December appears to acknowledge this. It pledges to apply an integrated financial settlement for London “while retaining pe-existing bespoke London arrangements…[and] existing ways of working with London Councils”.

Ironically, Sir Sadiq Khan has gone a lot further than his two antecedents in working closely with the boroughs. The recent London Growth Plan was developed in partnership with them, building on the work of the jointly-chaired London Recovery Board and London Partnership Board during and after the pandemic.

Mayoral strategies and budgets are all subject to consultation with the boroughs, but there are some areas where the Mayor has, by design, an independent and overriding role. The main example is powers over planning policy, where borough local plans must reflect London Plan policies (following consultation) and the Mayor retains a right to take strategic decisions over the heads of individual boroughs. (The White Paper, by the way, pledges that all metro mayors will receive similar powers, which seems hard to square with the “collegiate” model of combined authority government.)

It is true that Greater Manchester has prepared a joint plan, Places for Everyone, which was adopted last year. But the document took ten years to finalise, one borough (Stockport) withdrew from the process, and the plan has been criticised as merely drawing together unambitious local housing plans rather than seeking to take a strategic – and sometimes disputed – view of need and opportunity.

But maybe there’s a bigger picture approach that might be taken to reform in London. Perhaps new arrangements could be devised that would allow London’s boroughs to have greater formal involvement in the development of the city’s economic strategies and plans, but also enable the Mayor to have more say in overseeing and co-ordinating council services and regulatory functions – from licensing to social care to street cleaning.

It might also be an opportunity to look again at the structure of the boroughs themselves. One thing that the West Midlands and, to a lesser extent, Greater Manchester have is a single local authority overseeing the whole of the core of the cities they serve. The LSE’S Greater London Group suggested such an authority for London to the Herbert Commission in the early 1960s, but this was not followed through when the 1965 reforms were put into place.

The Greater London Authority has already outlived the Greater London Council by five years. While few would wish to repeat the chaotic and politically-motivated abolition of the GLC, the 60th and 25th anniversaries may be a time for reflection on how well current set-ups are serving London. But whether the London Councils proposals are a basis for a new settlement, a contribution to a more far-reaching debate or destined to be just a footnote in London government history remains to be seen.

First published by OnLondon.

Where will they go to, the robotaxis, when we’re asleep in our beds?

The Automated Vehicles Act 2024 received royal assent on 20 May last year, but was rather overshadowed by a rain-soaked Rishi Sunak announcing, two days later, that he was calling a general election. While the Act leaves a lot of detail to secondary legislation (an explainer by Scarlett Milligan of 39 Essex Chambers  is helpful), it sets out a structure for regulating the use of self-driving cars, which could see them on Britain’s roads as early as next year, according to a Department for Transport press release.

The year 2026 is suddenly very near, and it seems unlikely that regulations will be in place by then. But there have already been London trials of autonomous vehicles – in the Queen Elizabeth Olympic Park and in Woolwich – and Waymo self-driving taxis are commonplace in several US cities, including San Francisco, where the urban environment is as almost complex as London’s. This particular future seems to be drawing closer.

You can debate whether self-driving cars (more likely to operate as “robotaxis” than as individually-owned vehicles, for the next few years at least) are a good thing. Advocates say they could reduce accidents and congestion, and offer liberating point-to-point transport for people who are currently excluded by price, location or physical conditions – a case argued in an excellent blog by James O’Malley, which set me thinking about what abundant robotaxis would mean for London.

Not everyone is so positive. Sceptics argue that robotaxis could divert people from healthier walking and cycling, lead to more sprawl, congestion and pollution, reduce social interaction, and undermine the viability of mass public transport. Transport for London’s 2019 position statement takes a fairly guarded view, pointing to the Mayor’s strategic priority – that 80 per cent of journeys should be made by walking, cycling and public transport by 2041.

Progress towards that target has been slow: around 63 per cent of journeys were made by walking, cycling and public transport in 2023, a level that has barely changed over ten years. But in any case, it seems to me that readily-available and cheap robotaxis would be very attractive to people – including those who do not like walking, cycling or using public transport, or are not able to use those ways of getting around.

So, unless the government chooses a highly restrictive approach (essentially banning autonomous vehicles), the question becomes one of what policies cities such as London should adopt in order to manage their impact on urban mobility, on the built environment and on public health.

At the moment, it costs more – in time and money – to use Waymo taxis than to use Ubers in San Francisco, but that gap is likely to narrow and reverse as the technology improves; McKinsey estimate that by 2030 in the US the cost per mile will be little more than  using your own car. If the cost fell that low or further, the challenge for public transport systems and for urban streets would be acute. People could switch to robotaxis en masse – causing gridlock and stripping London’s trains and buses of paying customers (even if gridlock would eventually choke demand).

One inevitable policy response to the arrival of autonomous vehicles is the (much discussed and much can-kicked) introduction of road user charging. As my former colleagues at Centre for London have suggested, this could be targeted so that using roads (and robotaxis) is made more expensive where journeys can be easily made by public transport, walking or cycling, and cheaper in places where those options are not available, and for people to whom they are not accessible.

Switching from car ownership to robotaxi use could also potentially free up road space. Car ownership is already declining faster than car use in London, and abundant robotaxis could accelerate this, with many privately-owned cars disappearing from kerbsides and suburban driveways, opening up new public spaces across the city.

But where would the robotaxis go, while we’re asleep in our beds? A dystopian, polluting and congesting, scenario would see empty cars cruising London roads until summoned by passengers, like electric Marie Celestes. A better option would be to place limits on empty circulation, and to provide local parking hubs with charging facilities and waiting space.

This would require some adaptation of existing car parks (which could hold many more cars if no human drivers needed to get in and out), and perhaps transport hubs being incorporated into new developments; again, Centre for London has undertaken research in this area.

From a public health perspective, you might go further, requiring or incentivising most users to walk to a transport hub to pick up a car, rather than to expect door-to-door service. This might be too nanny-ish for some tastes. But not only would it incorporate a (minimal) level of walking into most journeys, it would also discourage people from using cars for shorter, walkable or cyclable, trips.

The 20th Century city was shaped by private car ownership. If robotaxis become commonplace, their impact on the 21st Century city could be just as great. Policy action will be needed, and soon, to make that impact positive.

First published by OnLondon.

Fade to Grey (Belt)

Last week, Angela Rayner gave Marks and Spencer permission to demolish and rebuild their flagship Marble Arch store, in line with plans first submitted to Westminster City Council in February 2021. In between those dates, the proposal was considered by Westminster and by Sadiq Khan (both of whom approved it), by a public enquiry and by Michel Gove (who overruled them all and turned it down), by the High Court (which overturned Gove’s decision) and by Rayner (who gave the go-ahead). Whatever view you take of the proposals, these layers of decision-taking and months of delay cannot be right – the reconstruction phase of the Notre Dame project took less time.

Against this backdrop, you can see why the Deputy Prime Minister has announced major reforms of planning this week – a consultation on planning decision processes on Monday and now a new National Planning Policy Framework. The consultation paper proposes a national “scheme of delegation” to ensure that more planning decisions are taken by planning officers, rather than by planning committees. The paper also proposes smaller strategic committees to agree documents such as opportunity area planning frameworks, and seeks to beef up training for planning committee members.

The proposals have been widely welcomed as a helpful act of streamlining, which reduces the risk of capricious committee decisions to reject proposals even when they are in line with local planning policy. Such refusals may lead to amendment and a new application, or to appeals to the planning inspectorate, but cause delay and incur cost either way.

For some commentators, this approach is also a helpful first step towards a “zoning” process that shifts the political focus from considering individual applications to agreeing policies and design codes. “Shouldn’t we be aiming for a system which makes [planning committees] redundant entirely?” architect Russell Curtis asked. If proposals comply with policies and codes, they can go ahead with minimal paperwork, though agreeing local plans and policies would become more complex and contested were they to give an automatic green light to compliant proposals.

As ever, London is a bit different. The capital already leads the way in delegating planning decisions and in processing applications fast. The most recent government stats show that in the year to June 2024, 97 per cent of decisions were delegated to officers, more than in any other region. Some boroughs delegated nearly all decisions.

London boroughs work fast too, deciding an average of 93 per cent of major applications within government-mandated deadlines (or other deadlines agreed with applicants) in the two years to June 2024, compared to 90 per cent or fewer in other regions. The capital also has lower rates of decisions being overturned on appeal than most other regions. The system works efficiently.

But it is not enabling the homes London needs to be built. London planning authorities turned down more applications than in other regions: 20 per cent across the capital compared to 15 per cent across England, and as many as a third in some outer London boroughs. Total application numbers are for around 60,000 homes per year, and their number has fallen by a third since 2016, significantly faster than in other regions.

This fall off in planning activity and low rate of approval feed off each other – if it is difficult to get planning permission in London, some developers stop trying or look elsewhere. London’s problems look like problems of policy as well as process.

That is where the new National Planning Policy Framework (NPPF) comes in. It confirms binding targets for local authorities across England. London’s new target is around 88,000 homes per year. That’s higher than the 80,000 target proposed after the general election, but lower than the 99,000 target that the Conservative government set in 2020 (though in 2022 the Conservatives also made targets “advisory”). It is, nonetheless, a huge jump from the current London Plan target of 52,000 homes per year, let alone the average 38,000 net additional homes built over the past five years.

The big policy change in the NPPF is its very careful relaxation of Green Belt rules. The Framework says that if a council is unable to meet its target through using previously developed land and densification, and if it is unable to collaborate with a neighbour to plug the gap, then it can consider using Green Belt land.

It must first look at previously developed land in the Green Belt, then at “grey belt” land which does not strongly contribute to the Green Belt’s core purposes – checking unrestricted sprawl, preventing urban areas merging into each other and preserving the setting of historic towns.

Other rules, relating to affordable housing, new and enhanced green space, design quality and infrastructure provision, still have to be followed, and land that is protected for special scientific interest or outstanding natural beauty, as a “local green space” or as part of a national park is excluded.

Even with all those caveats, the new policy makes London’s edges ripe for review. The definition has helpfully moved on from an aesthetic focus on “poor quality” Green Belt (which may be in entirely the wrong place), to considering whether Green Belt land actually does what it is meant to do.

On the face of it, a lot of the inner Green Belt within Greater London could meet the criteria for consideration: there’s still plenty left to separate London and surrounding towns, and a managed release is not unconstrained sprawl. But governance and geography are tricky: some of the boroughs facing the biggest shortfall don’t have much Green Belt land, and even when they do the land may not meet the government’s tests.

That could be a recipe for mess and disagreement but could also be the opportunity for a metropolitan solution. The Mayor could work with boroughs to marginally redefine London’s edges, to share the load of housebuilding, and to plan for urban extensions that make the most of existing and new infrastructure.

Could that happen? Khan opposed Green Belt reviews in the past (when a Conservative government would have vetoed them anyway), but times have changed. Khan’s 2024 manifesto was silent on the Green Belt, and a London-wide review would be a good way of demonstrating the value of a Labour Mayor to a Labour government, and vice versa.

But Green Belt extensions will not solve all of London’s housing delivery problems. London needs more planning permissions and more building, including of the around 300,000 homes that already have permission. But a viability crisis is holding back both. Former Southwark leader Peter John has argued that affordable housing requirements without sufficient grant subsidy are stifling development in some cases, and pushing up prices of market homes to enable cross-subsidy in others: “a vicious circle of non-affordability is made worse by demanding ever higher levels of affordable housing without some other grant subsidy being provided.”

Other commentators, such as Beacon Partnership’s Steve Beard, have argued that it is the sheer weight of design, carbon offset and infrastructure obligations imposed in London that is making schemes unviable. Centre for Cities’ Ant Breach argues that the London Plan duplicates local plans and suppresses development, pointing to the London Plan review commissioned by the last government, which found “persuasive evidence that the combined effect of the multiplicity of policies in the London Plan now works to frustrate rather than facilitate the delivery of new homes, not least in creating very real challenges to the viability of schemes”.

Given London’s slowing rate of housing delivery, and its stock of permitted but stalled developments, these arguments should be taken seriously. Are the policies that worked in a boom, when rising prices washed away the costs of planning obligations, also the right ones for when house prices are stagnant and delivery is stuck? After the financial crisis, quantitative easing, a cheap pound and open borders helped fuel a property boom, but these engines have fallen silent.

At the same time, affordable housing provision has become increasingly dependent on market housing. Around 50 per cent of affordable housing in London is now delivered as a planning obligation, so when private housebuilding slows, so does affordable housebuilding. Recent Greater London Authority (GLA) analysis shows the impact of this. In 2023, 38 per cent of the homes granted planning permission in London were affordable – a total of 11,725 units. In 2015, only 26 per cent were affordable, but this totalled a higher 14,000 units.

If a system based on cross-subsidy has stalled both affordable and market provision, either policy or funding need to shift. London has an urgent need for more affordable housing, so lowering targets too far seems perverse. But 35 per cent of something is still better than 50 per cent of nothing.

Alternatively, higher grant levels would enable boroughs, housing associations and private developers to build more affordable homes. A recent Centre for Cities report suggests that the government’s £500 million Affordable Homes Programme (administered by the GLA within London) would need to triple in size to get public housebuilding rates back up to their mid-20th Century levels. A tall order, but maybe one that could be justified as an investment to save on long-term housing benefit and temporary accommodation costs.

Finally, central government should recognise that it too needs to be part of the solution. Successive governments’ accumulation of policy prescriptions (including new duties such as “biodiversity net gain”) represent a tax on development, adding to those imposed by local and regional government.

Everything is introduced for good reason, but maybe the time has come for an open discussion of where other policies and stakeholder interests are strangling the government’s declared growth imperative. And, to end where we started, if an application has been considered by London’s elected local authorities and by its Mayor, does Whitehall really need to have a go too?

First published by OnLondon.

Housing in London – every cloud has a cloudy lining

There’s a German word, “dunkelflaute”, which translates as “dark doldrums” – periods when there is no wind or sun to generate electricity (making you reliant on coal and Russian gas, if you happen to have shut down all your nuclear power plants). London’s housing market seems to be facing dark doldrums at the moment: prices are stuck in a rut, residential planning permissions are at half the level they were five years ago, and transaction volumes and new building have slowed to a crawl.

Property prices in London shot up after the financial crisis, but have risen far less dramatically since 2016, as a result, property analyst Neal Hudson suggests, of tougher regulation of residential mortgages and more taxation of property investment. The market boomed briefly from 2020 to 2022, but has fallen back since then. According to the Nationwide Building Society’s index, average prices were ten per cent higher in 2024 than eight years earlier, but that is a 15 per cent fall once inflation is taken into account.

After decades of soaring prices, surely cheaper housing is good news for somebody? The Nationwide data show that the average price paid by a first-time buyer in London is now less than nine times median earnings, the lowest ratio for ten years. Rental affordability also seems to be improving, with government figures showing average rents taking up around 40 per cent of median income of renting households in 2022/23, compared to 57 per cent in 2016/17.

But neither of these figures tells the whole story. To paraphrase Withnail, living in London is becoming cheaper for those who can afford it, but remains prohibitively expensive to those who can’t.

Cheaper houses are only cheaper if you don’t need to borrow money. For first-time buyers, rising interest rates have gobbled up any savings from price falls: in 2020-22 Nationwide calculated that mortgage payments accounted for around 50 per cent of first-time buyers’ take-home pay.

Rising interest rates pushed that up to 66 per cent at the end of last year, though it has fallen back to around 60 per cent since then (a similar level to 2016). And, even with lower prices, London buyers still need to find deposits of £110,000 – a gargantuan sum for anyone without blockbuster bonuses, access to the Bank of Mum and Dad, or at least somewhere to live rent-free (and possibly holiday and fun-free too) while they scrimp and save.

As Paul Johnson of the Institute for Fiscal Studies recently observed, this means that anyone without wealthy parents or somewhere to stay rent-free will find it much more difficult to move into their own property in London and to enjoy everything the capital offers.

This might not matter if the Levelling Up dream of excellent jobs everywhere had been realised. But it hasn’t, and London should be able to offer opportunities for all, not just those lucky enough to have been born within the M25.

Apparent improvements in rental affordability also obscure a less positive reality. Government figures show that between 2016/17 and 2022/23, rents fell from 57 to 40 per cent of household income for people renting. But for someone earning median wages in London, rent fell from 59 per cent to 53 per cent of gross earnings over the same period – a significant drop, but much smaller than that implied by the official figures.

Why have renters’ household incomes increased faster than median wages? It could be a result of an increasing number of renting households having more than one earner, or maybe lower earners being squeezed out of the private rental market altogether.

Every cloud has a cloudy lining. If stagnant house prices are not doing much for renters or first-time buyers, they are doing even less for housebuilding. In 2023/24, around 32,000 dwellings were added to London’s housing stock, the lowest level since 2014/15, when the city was still emerging from the financial crisis. These include conversions and changes of use (including the dwindling number of office-to-residential conversions). And only 33,000 new residential units were given planning permission in 2023/24 – way below the peak of 80,000 plus each year between 2014/15 and 2018/19.

When prices fall, housebuilding slows, almost as a thermostatic reaction. Developers base their business plans on a range of projections, including changes in house prices and build costs. If prices go up faster than costs, building goes ahead. But in a stagnant market with high construction inflation, plans are paused or slow-pedalled.

After the financial crisis, housing associations were able to take up some of the slack, completing an average 7,000 homes each year in the five years from 2008/09. But their output in the past five years has been half that, as the need to fund safety improvements and squeezed grant levels have reduced capacity. Local authorities have started building more, completing 3,000 units in the past two years alone, but there is still a gap.

The dark doldrums cannot last forever. Interest rates are forecast to fall next year (if not as fast as previously predicted), which may help more first-time buyers to take advantage of lower prices. In addition, while provisional figures for housing starts in 2023/24 are the lowest since 2020/21, construction economist Noble Francis has observed that brick deliveries, a good leading indicator for housebuilding activity, were 21 per cent higher in October than a year earlier.

There is also Deputy Prime Minister Angela Rayner’s shake-up of planning, heavily trailed in interviews and newspaper pieces last weekend. Will this be enough to treble London’s house building rate in order to achieve its 80,000 homes a year target? What other changes might be needed? Watch this space.

First published by OnLondon.

Back to work

Londoners have been slow to get back to their desks compared to workers in other large cities, according to Return to the Office, the latest report from think tank Centre for Cities. Why is that, does it matter and what can be done?

The report’s polling, carried out in June, finds that central London office workers are spending an average of 2.7 days per week in the office, less than their counterparts in Paris, New York and Singapore, though pretty similar to those in Sydney and Toronto. As in  those other cities, their office days are concentrated in the middle of the week, with London showing the sharpest drop-off on Fridays, when just 40 per cent are traveling in to work.

London’s sluggish return is explained by two main factors, the report suggests. On the management side, London bosses seem more reluctant than those in other cities to specify when workers need to be in. And while workers and bosses alike value the chance to develop relationships and collaborate in person, London’s workers particularly also appreciate the cost savings and time flexibility offered by working from home – more than those in other cities.

The Centre for Cities findings reflect those of the King’s College Policy Institute’s London Returning survey of 2022. This found that most London workers felt positive about being in the office, but that 80 per cent said that avoiding the commute, its costs and its time demands was a good reason to continue working from home.

London government has sought to address this issue through the “Off Peak Friday” trial that ran from March until May on Underground, Overground, DLR, Elizabeth line and some National Rail services. It led to a modest increase in commuting on Fridays, but awareness and take-up was limited. Speaking at the Centre for Cities launch event on Tuesday evening, Deputy Mayor for Business Howard Dawber said City Hall was still mulling the outcomes of the trial.

However, while London commuting costs are high compared to most of the other cities in the study, I suspect the bigger problem lies outside the capital. On commuter lines beyond Sadiq Khan’s control, both expense – despite the paltry savings offered by flexi season tickets – and chaotic performance, worsened by rolling strikes in recent years, make a trip to London a pricey roll of the dice.

These costs and inconveniences may explain one area where London bucks the trend: in London, unlike the other cities, younger workers were spending most days in the office and saying they work most effectively there. They are also the workers most likely to live in London, while many older ones commute in from the Home Counties – a trend that was accentuated during the pandemic – or at least used to. Anyone who has joined an online call with younger workers balancing laptops on washbasins in shared flats with iffy WiFi while older workers dial in from their immaculately-restored half-timber country cottage may understand why the former are keener than the latter to get back.

At the launch event, panel members Dawber, Kat Hanna (Managing Director at Avison Young) and David Wreford (Partner at Mercer) agreed that the return to the office seemed to have plateaued in London, and that the pandemic had accelerated and intensified trends towards more flexibility. But there was less consensus among panellists and audience members on whether this was a good thing, and about what if anything could be done about it.

A fundamental question was, against the backdrop of government’s “Growth Mission”, how does hybrid working affect productivity? Intriguingly, Return to the Office finds that most workers could see individual productivity benefits from working at home, but were concerned about the long-term impacts on skills, pay and promotion prospects, all of which affect organisational productivity. The skills gap could particularly affect younger workers, unable to learn from working alongside more experienced staff, if the latter continued to stay home for most of the week.

The evidence on productivity is still emerging and tentative, though face-to-face interactions and proximity are the lifeblood of the agglomeration benefits that cities offer – even if these apply more for some teams and some sectors than for others. The report recommends that more research be done on the productivity impacts of hybrid working, but the risk is that we will only know the impacts when looking in the rear-view mirror; that we won’t know what we’ve got till it’s gone. So we need to make some informed judgement calls and watch for early signs of long-term effects.

In the meantime, more flexible working patterns were transforming working life for people with caring responsibilities – generally women, who the London Returning survey found were more positive about working from home and more reluctant to be told to work more days in the office. Reduce flexibility and these workers might once again be excluded from the workforce. The Mercer research confirmed this, Wreford added: women were most likely to switch or stay in jobs as a result of flexible working incentives, while men were more likely to be motivated by financial rewards.

Furthermore, while parts of central London’s economy were struggling with new work patterns, suburban areas might be thriving (though ONS analysis suggests local spending patterns have returned to their pre-Covid levels). And Hanna observed that a broader shift to mixed use might strengthen central London’s offer as a place of leisure, as well as work: “It’s called the Central Activities Zone; that doesn’t tell you what those activities need to be.” While peak hours Tube use remains below 2019 levels, evening and weekend riderships are already higher, suggesting that London’s offer to visitors – short and long distance – is stronger than ever.

Finally, what, if anything, should be done to change the situation? Mayor Khan wants central London to be busy, Dawber said, but can only offer incentives and encouragement. British bosses are reluctant to impose tougher “back to the office” mandates according to the polling, and government policy is pointing in the direction of more flexibility, not less.

So, is this the much discussed “new normal” – neither citypocalypse nor a snap back to the heady days of February 2020? It may be an equilibrium for the moment, but perhaps not a stable one. As panellists noted, climate change and artificial intelligence may dramatically change where, how and by whom office work is performed in the future. We may be only at the beginning of a period of rapid change.

First published by OnLondon.

Right on target, most direct?

Perhaps the most noteworthy aspect of Angela Rayner’s housing announcement on Tuesday was its tone. Revealing the surprise reduction in London’s annual target, from 100,000 to 80,000, the Deputy Prime Minister said this was “still a huge ask, but I know it is one that the Mayor is determined to rise to and I met him last week about this”. Warm words and a sense of common cause and deals to be done, rather than brickbats, blame games and bunker mentalities. It may be just a honeymoon, but it’s a refreshing change.

What of the changes themselves? Are they an acknowledgement of London’s persistent failure to fulfil its potential or a token of a more reasonable ambition? The first thing to note is that London’s target is still more than twice the capital’s historic delivery rate – averaging 38,000 homes in the three years to 2022/23 – and requires a much higher jump from these rates than is expected from any other English region. It also represents more than two per cent of existing stock being built every year, which, as Jim Gleeson shows, is a much bigger ask than in any other region. London contains 16 per cent of England’s population, yet is still being asked to contribute 22 per cent of its new housing.

The reduced target should not be seen in isolation either. As Nick Bowes has observed, the new housing targets reflect the challenges of accommodating London’s population growth within its boundaries – challenges that were noted by London Plan inspectors ten years ago. South East England’s annual target has risen by the same number as London’s has fallen, with particularly sharp rises in some areas on the capital’s periphery.

The new targets could be said to reflect the reality of London being part of a southern conurbation, rather than a city alone. It will be interesting to see whether the New Towns Taskforce proposes urban extensions that straddle the M25 to help meet this combined need, and to see how London and surrounding local authorities might work together on these.

There are some anomalies within London too. Targets have been halved for the eastern boroughs of Tower Hamlets, Newham and Barking & Dagenham, even though these areas have been the policy focus for London’s growth for two decades and accounted for more than 20 per cent of its new homes in the last three years. On the other side of town, Kensington & Chelsea’s target has trebled, reflecting the impact that high house-price-to-earnings ratios have on how targets are generated.

We can expect these quirks to be ironed out as city-wide targets are fed through to borough targets in the new London Plan. The bigger question is whether London has any chance of actually building 80,000 new homes a year. Recent indicators show that build rates are still struggling to recover to pre-pandemic levels. Registrations of energy performance certificates for new homes, usually taken as a leading indicator of housebuilding, numbered 36,000 in the year to June 2024 and have been falling since 2021, though may have started to turn round in the past six months.

The big problem, as On London recently reported, is not planning permissions – London has planning permission in place for 300,000 homes – but the money, materials and muscle to build them out. The government has had less to say about this so far. There is a reference in the Rayner’s speech to allowing the Greater London Authority more flexibility within its Affordable Homes Programme, but this only helps supply a small proportion of homes in the capital.

In the medium term there may be more policy support and more money. Funding for infrastructure and affordable housing might be found as fiscal conditions improve, skills shortages may ease and changed perceptions may bring more investment to London and the UK. The National Planning Policy Framework consultation also starts to grapple with one of the knottiest issues in development: how the land market can be better managed to stop inflated value expectations making development unviable.

Meanwhile, London’s housing affordability challenges persist. The lowered housing target has been criticised, including by some of the YIMBY activists who have been the loudest cheerleaders for the government’ town planning reforms, but it is a nod towards realism about the scale of the task facing London.

Maybe the Mayor, boroughs and government can join forces with developers to double London’s building rates. It’s a Herculean task, but the will to work together is there, even if resources remain sparse. When London gets near to building 80,000 homes a year, then we can start debating whether 100,000 would be a better target.

First published by @OnLondon.

Boomer Boom Bang-a-Bang

London’s population reached a historic high of 8,945,300 in the middle of last year, according to new estimates released by the Office for National Statistics. After slower growth at the end of the 2010s and a slight decline between 2019 and 2021, the number of people living in the city rose by 0.9 per cent – around 75,000 – between 2022 and 2023, the fastest growth rate since 2015-16.

Does this suggest that London has escaped the twin shadows of the Covid-19 pandemic and Brexit and is returning to its turbo-charged growth of the late 2000s and early 2010s? Well, maybe and up to a point.

Certainly, the capital has defied some of the more apocalyptic predictions that emerged during lockdown – of the age of cities stuttering out in an “urban doom loop”. But it is still growing more slowly than other UK regions and metropolitan areas, most of which grew by one per cent or more in 2022-23. London’s growth rate is in fact more like what other regions were experiencing ten years ago, when the capital’s population was surging by 100,000 or more every year – a growth rate of up to 1.4 per cent.

London is also growing a bit more slowly than experts forecast. The mid-2023 estimate is very slightly lower than that of the most cautious Greater London Authority (GLA) population projection, which was based on the 2021 Census and projecting forward the slower growth trends from 2017-21.

Borough patterns suggest a mixture of recovery and longer-term trends. In some places, the return to growth looks like a post-pandemic rebound. This is most notable in Camden, which saw one of the steepest declines in population at the beginning of the pandemic but has now more than recovered, with 2.9 per cent population growth between 2020 and 2023.

But there appear to be broader trends operating too. Hillingdon, Tower Hamlets and Newham have each shown persistent growth, adding at least four per cent to their populations between 2020 and 2023. On the other side of the equation, Lambeth, Lewisham, Haringey and Waltham Forest all have populations that remain two to three per cent below their pre-pandemic levels.

Even if London’s growth has slowed, its population dynamics remain distinct from those of other parts of England and Wales. The capital continues to see much higher international inward migration (around 154,000 in the year to mid-2023) and domestic outward migration (130,000 in the same year) than other regions.

The capital’s population is also buoyed by natural change – the surplus of births over deaths – which accounts for growth of 50,000 in the year to mid-2023. Meanwhile, across England and Wales this has dwindled to nothing or gone into reverse, with as many people dying as being born for the first time in 42 years.

London is still younger than average (both a factor in and a result of its natural growth rate): its median age is 35.9, compared to 40 or older in every other region in England and Wales. The age groups that have seen the fastest growth since the pandemic abated (2021) are people in their twenties and in their sixties. However, longer-term (since 2011) the twenty-something population has declined, and the fastest growth has been among Londoners in their fifties and sixties – maybe those who lucked out by buying property in the 1980s and 1990s.

International comparisons suggest that London is not alone in its population growth patterns. Slow recovery is the norm following Covid, and other large northern hemisphere cities were already seeing a slowdown before 2020. US Census Bureau estimates suggest that in 2023 New York City’s population was still six per cent below its April 2020 total, though population loss is slowing. Paris has also seen a long-term decline, largely as a result of falling birth rates, which accelerated during the pandemic.

Cities have not gone away, but their slow recovery perhaps reflects the unexpected “stickiness” of changes in working habits and a sedate return to international migration patterns. If that is so, London’s slow growth may just be a delayed bounce-back. Comparisons with the GLA projections suggest this might be the case: those projections modelled growth slowing in 2022-23, whereas in fact it speeded up.

It may also be that growth is constrained as the cost of living in the capital remains sky-high and London struggles to meet the London Plan’s housebuilding targets, let alone the more ambitious goals suggested by the last government and think tanks such as Centre for London.

This should be a cause for guarded optimism. If policy and delivery are constraining growth we can turn that round, adopting the “Get Britain Building” mantra of the new government. London can build its way back to sustainable growth as a liveable and exciting destination for UK citizens and international visitors – provided of course that other measures, such as arbitrary immigration restrictions, do not stifle the UK’s world city.

First published by @OnLondon.

Get Britain Building Again…again

The 2024 Labour manifesto stands in curious contrast to the Conservatives’. Rather than wacky suggestions for turning inner London into Paris, we have a document with more than 130 mentions of “change” but tantalisingly few specifics about how this change will be realised. A Labour government “will introduce effective new mechanisms”, “will strengthen”, “will take steps to ensure”, “will review”, “will work with partners to drive”.

You have to think/hope that the Labour front bench has some idea how they will actually achieve these aims, but they are certainly not telling us what they are – understandably so when they are riding so high in the polls and staring down queasily at the rocks below.

On housing, the target of 1.5 million new homes over the next Parliament is 100,000 less than the Conservatives have pledged to “deliver”, but still way ahead of build rates in the past 25 years. With the exception of a crowd-pleasing stamp duty surcharge for foreign buyers there is not much detail, but the manifesto does sketch out some of the bottom-up carrots and top-down sticks that will “get Britain building again”.

These carrots and sticks are presented as working together in single-minded pursuit of Labour’s mission to “kickstart economic growth”, but you can see some internal tensions. There will be more money for planners, but also tougher sanctions where local plans are absent or outdated. Communities will shape housebuilding, but a Labour government will intervene where necessary. Development will be “brownfield first”, but there will also be a “strategic approach” to Green Belt designation and release. There will be new towns, but planned and built in partnership with local communities.

There is a commitment to “exemplary development” and a careful pledge that, in some cases, compulsory purchase prices will be based on “fair compensation” rather than on the values that could be achieved once planning permission is granted. The Levelling Up and Regeneration Act introduced limited provision for this at the discretion of the Secretary of State, so Labour would presumably extend this. A wider application will be particularly important for new towns or planned urban extensions in the Green Belt, where unknown speculators are rumoured to buy up options on “strategic land” in the hope of untold rewards if planning permission should ever be granted.

Metro Mayors and combined authorities will be given a role in planning for housing growth, perhaps modelled on the powers that the Mayor of London has today. This looks like a good way of bridging between the central and local priorities, but could also create clashes between elected Labour Mayors and an elected Labour government. Sadiq Khan has already taken a stronger line against Green Belt development than the Labour leadership does, and the London Plan has been criticised by Michael Gove’s department for overloading developers with planning obligations. There are good reasons to be optimistic about what Khan can achieve with a Labour government, but there may still be storms ahead.

Renters will get protection from unfair Section 21 eviction and arbitrary rent rises (as promised but not delivered by the Conservatives). In addition, the manifesto pledges “the biggest boost in social and affordable housebuilding in a generation” – somehow achieved with existing Affordable Homes Programme funding – and to reduce the scope of Right-to-Buy.

The flagship policy to help first-time homebuyers – a mortgage guarantee scheme to reduce the deposits needed – is not described in any detail. However, if it is anything like the one introduced by the current government in 2021, it will have limited impact in London: buyers still need to put down a minimum five per cent, which can easily be £20,000 or more in the capital. Recent government statistics show that the scheme was only used by around 1,500 London first-time buyers (with an average household income of £95,000) between April 2021 and September 2023, fewer than any other English region. The deposit gap will remain a huge challenge for many Londoners.

This general election campaign has been odd in many ways, and the main parties’ manifestos underline this. The Conservatives’ document reads like a challenger’s – full of shiny, eye-catching initiatives gleaned from think tanks and special advisors. By contrast, for all its change-y vibes, Labour’s is cautious, sensible and careful not to leave a flank exposed to enemy fire, but with some inherent tensions half-glimpsed beneath the surface.

Serious discussion of London and its problems is absent from either manifesto (Labour only mention the capital twice: once as a case study voter’s workplace and once as the party’s postal address), but this may not be a bad thing after a decade when the capital has been used as a general purpose scapegoat for everything from regional inequality, to Brexit division, to populist discontent. Maybe that type of debate feels a bit beside the point given the challenges the whole country faces today. It would be good if we could use this election to move beyond it.

First published by OnLondon.