Did London get 'levelled down' in last week's budget?
We ask the mayor's former policy director
In last week’s budget announcement London was largely conspicuous by its absence. Apart from the shout out Rishi gave us for being the “best place in the world for green finance” the only other mention London got was when the chancellor talked about wanting to give other cities in the UK “London-style transport settlements”.
The immediate reaction from the mayor was the kind of one you’d expect from someone who’d just listened to the government talk about his city’s transport system as a gold standard while also ignoring pleas for the funds it needs to survive past the first couple of weeks of December.
Sadiq’s statement talked about how the budget “takes London for granted” and “fails to deliver the support and investment London and the rest of the country desperately needs to recover from the pandemic.” That feeling was echoed by Claire Harding, the Research Director at the Centre for London think tank, who wrote a quick opinion piece for City AM the next day, arguing that “before we give London’s transport to the rest of the UK, we should fix it here first”.
All of this raises a whole bunch of questions. Like, is it really a binary choice? If other areas are ‘levelled up’ does London have to be ‘levelled down’? Is London really being ‘shunned’ or ‘taken for granted’? Is there a political motive behind all this? Does the rest of the country really not like London? And will there be any Tube and buses left come Christmas?
To try and answer some of these questions we got Nick Bowes on the phone. Nick is the Chief Exec of the Centre for London as well as the former Director of Policy for Sadiq Khan, and he very kindly gave us a few minutes of his time while he walked between appointments.
Hello Nick, thanks a lot for doing this. I guess the first question is a wider one: is what we saw in the budget yesterday a case of London being deliberately shunned or ignored and, if it is, is that the government sending some kind of signal to the rest of the country?
So I think there’s two things going on. One’s political and one’s economic. I’ll start with the political. We’ve got a situation at the moment where the governing parties’ parliamentary arithmetic does not rely on London. So as often happens with our parliamentary system there’s a focus on a handful of seats and at the moment those are the red wall seats and they will be the battleground for the next election.
So the whole thing is through the prism of those red wall seats and it just means London is of political insignificance on a national level at the moment. But I think it’s slightly worse than that, in that there are votes to be won in bashing London, and that’s a bad thing for London because politicians from both main parties are courting votes by looking like they’re tough on London. And if that’s rhetoric that’s fine, but not if it’s rhetoric that hardens quite quickly into actual public policy.
The economic thing that’s happening comes from the attitude that London has done really well for thirty years and London will continue to do really well regardless. This assumption that we’ll just keep on growing is, I think, a naive and dangerous one for two reasons.
One is London has been hit harder by the pandemic than any other region in the country economically. Unemployment’s higher, more people have been furloughed, and its recovery is more sluggish than anywhere else. Second, it’s wrong to assume that London will just continue to grow. It’s not that long ago that London looked like it was in permanent decline, so I think we’ve just got to be careful about blindly assuming that London will be successful under its own steam and it actually needs some public policy support for once in a generation.
The other thing we’ve noticed is London being lumped into this kind of homogeneous entity when it’s actually one of the most socially diverse and economically fractured places in the country. Is that something that you see happening?
I’m from Rotherham in South Yorkshire, and when I go back to where my family lives and I talk about London, one thing I’ve noticed over recent years is that the kind of rhetoric towards London has become increasingly hostile. But there’s also this assumption from some that everyone in London is ‘rich’ and there are no problems here.
I remember having a conversation with someone about some ONS data about the most income deprived boroughs in Britain. Lewisham is where I live in London and Rotherham is my home borough and they’re broadly in the same place in the list of the most income deprived boroughs in Britain. When I mentioned that to people I know in Rotherham they just did not believe it. They said “No way, that’s not true. No one’s deprived in London!” So I think we've got a job to do to actually find better ways of talking about the scale of the problem in London, because just throwing data at them isn’t going to persuade them. I think we’ve got to find more persuasive ways of talking about it and tell the story better.
I was in the city this morning at a conference in the Guild Hall and I mentioned to some colleagues that we were less than a mile away from some of the most deprived communities in Britain, when we were in the middle of probably the richest square mile in the world. That’s the juxtaposition you get in London, that really harsh severe contrast. Just because you can see prosperity out of your kitchen window, like Canary Wharf or the Shard, doesn’t mean you have access to that opportunity.
There are big barriers in London for many, many people to be able to make the most of what the city has to offer. And at the moment I think that debate gets ignored, because it just assumes that because you're never more than a couple of miles away from thousands of exceptionally well paid jobs you couldn’t possibly be poor.
The Centre for London is working on a Levelling Up London project right now. Why do you think that’s an important thing to do? And what are some of the insights you’ve seen coming out of that research already (we saw you tweeting some stuff this morning)?
So we did some polling on London people’s attitudes to the country levelling up. What we found is that Londoners are generally supportive of levelling up. But when you start to push them a bit harder on what that might mean if certain policy agendas are pushed through, then they become less supportive. So, for instance, if you ask Londoners “Are you still supportive of levelling up if it means London ends up being poorer?” then they become considerably less supportive.
We also found that almost half of Londoners thought the rest of the country didn’t like the city. For me that’s a real problem, because I’m from the north so I have a foot in both camps and I think that not liking each other and fighting over resources etc… It doesn’t bode well for that fabric of the nation or the social fabric of the country overall.
It’s interesting when you ask people what kind of thing makes a difference. Some of the things they thought could make a difference were politicians maybe being a bit more generous to each other, but also giving London much more power over its own affairs. There was a strong appetite for more devolution to the mayor and local authorities and that’s something we’ve seen in quite a lot of polls in recent years as a way of making things happen that are the most appropriate or will have the biggest impact on the city.
I'm sure if you ask that in the rest of the country there would be a similarly big appetite for devolution and I think that’s right and proper. I don’t think you’re ever going to be successful in levelling up if you try and do that from Whitehall. It’s got to be about empowering local decision making in communities and giving them meaningful devolution including fiscal powers so that they can tailor their responses to their local circumstances. And that’s the same whether you’re in Lewisham, Liverpool, Leicester, Leeds… But I think London gets left out of that a little bit because of this attitude that London doesn’t have any levelling up advantages, when clearly it does.
Let’s talk about TfL before we have to let you go, because one of the big things that got left out of the budget yesterday was London’s public transport, so we’re still in the dark about what’s going to happen beyond December 11. But that whole issue is so much more complex and knotty in terms of what can be done. Is there a workable solution do you think?
It is a very thorny issue and the discussions about the future of TfL are not taking place in a vacuum. We live in a democracy so there’s always going to be an element of political debate of course. I think the problem we have though is that TfL has always been very reliant - perhaps over reliant - on fare revenue. Which is not a problem until it is a problem and fare income is not coming in anymore.
So if you want to look at the travel levels in London at the moment the Tube is still only at about 60% of normal numbers at the moment (it’s higher at the weekend interestingly) so there’s still a big shortfall of where revenue would normally would be, and there's no sense at all - because no one's got a a crystal ball - about when it might get back to where it was pre-pandemic, assuming it ever does get back to where it was pre-pandemic.
So there’s going to continue to be a revenue shortfall and I guess one of the arguments that decision makers and politicians in London will make is as long as we’re in that period of recovery that revenue support gap will continue to be need to be filled by central government, because ultimately they’re the only ones who’ve got the pockets deep enough to do that.
So one issue is that the system might never recover to where it was, snd there’s also a capital problem in that none of the discussion about TfL funding at the moment is asking the question about how do you manage to expand the network. At the moment, there’s no sense as to what's going to happen because that does rely on the government, it always has done. And there's some big capital projects due. New signalling on the Piccadilly Line, new trains on the Central Line, new trains on the Bakerloo Line. And that’s just upgrading the existing network, that’s before you even get to the Bakerloo Line extension, the DLR extension, Crossrail 2!
At the moment there’s no sense as to how any of those things are going to be funded. And London hasn’t got the financial capabilities to fund them itself without fiscal devolution, so it’s always going to have to be a conversation with government.
TfL is a world class transport network. People come from all over to marvel at it and, as you saw in the budget, the selling point to the rest of the country for transport investment (long overdue investment by the way) was that they’d get a “London-style” transport system. Why is it badged as that? Because we’ve got a fantastic network. We’ve got integrated ticketing, contactless pay-as-you-go, we’ve got a rail concession model that is now the model for the national rail network. The list goes on! All the things that have been successfully done in London.
When there’s uncertainty over the long-term funding and uncertainty over investment in the network, you start to worry that it’s losing that innovativeness and the system starts to deteriorate. You know yourself how reliant the public is on public transport and how, without it, it becomes very difficult to get about. Look at what some of the business groups have been saying. They’re very agitated about the future of TfL because they know that it starts to effect them when they can’t recruit staff.
It’s more than just the transit authority in London. It’s a driver of economic development, it’s a driver of regeneration, it’s an innovator. And if it can’t do those things then the city just stops. That's the argument that needs to be landed with the government: that this is about money that’s going to allow London to fire on all cylinders.
If you look at the money that was announced yesterday it was all money for capital projects. That's really good because those cities need that. The government is more reluctant to put money in that subsidises public transport. I think that a lot of the money that London needs over the coming months and maybe the coming years is to help subsidise the transport system. In 2011 TfL was getting nearly a billion pounds a year from the treasury to help subsidise the costs of running the network. That was phased out and by the time the pandemic came TfL was getting no subsidies.
So I can see why that’s difficult, because it does mean revisiting decisions that have been taken before; like the decision to get rid of the subsidy. But London is in a very difficult position, and it needs some support. So either that money is found one way or the other or the alternatives are the networks start disintegrating and you start undoing all the great progress that’s been made over the past twenty years.
If you want to read a bit more about all this, then the Guardian’s Economics correspondent, Richard Partington wrote a great article in which he takes a trip on the District Line to highlight “London’s struggling economy”.
You can read more about the Centre for London’s Levelling up London project here. We’ll be checking back in with them towards the end of the year to see how it goes.
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