The State of Britain

A remarkable reduction in deprivation in Tower Hamlets and London is not the ‘dark star’ of the UK economy

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The Ministry of Housing, Communities and Local Government has published its deprivation index which looks at an area’s levels of income, employment, education, health and crime as well as housing services and living environment. Jaywick in Essex, near Clacton-on-Sea, was previously found to be the most deprived in the last two reports in 2010 and 2015 and it has won this unwelcome accolade again. Jaywick is followed by nine areas of the North West as the most deprived in England, Haringey is the first London entry ranked 546th. The Ministry divides England up into 32,844 neighbourhoods averaging about 1,500 residents or 650 households each.

In terms of local authorities, 11% of Hackney was classified as deprived which ranked the borough 78th worst in the UK narrowly beating Haringey which was 84th. The seven areas of the UK which recorded the fastest falls in deprivation in the UK since 2015 were all in London. Hackney, Lambeth, Waltham Forest, Haringey, Islington and Westminster all recorded drops in deprivation of between 6% and 12% but Tower Hamlets topped the table with a remarkable 22% drop. The least deprived area of England is an area near Great Missenden in the Chiltern Hills, Buckinghamshire.

Given the relative wealth of the capital it is no surprise that London has been excluded from the £3.6bn Towns Fund recently announced by the Government which is targeted at regenerating 100 English towns. However, London and the South East were awarded £14.3m as part of a £95m pot to revive historic high streets, with Tower Hamlets, Tottenham and Croyden benefiting.

The Mayor of London, Sadiq Khan, has echoed calls from northern UK mayors and called for greater devolution to the UK’s cities and regions. Giving London greater powers over housing, transport and infrastructure would boost economic growth across the capital, he said. The Mayor made the statement as he launched a new report highlighting London’s contribution to the UK economy. The report, ‘London and the UK, A Declaration of Interdependence’ challenges the assumption that London receives more than its share of funding. Former Scottish First Minster, Alex Salmond, once dubbed London as the ‘dark star’ of the British economy, this narrative which pits London against the rest of the country is rebutted in Khan’s report, which outlines the economic case for how success for the capital means success for the UK as a whole. The statement is difficult to argue with, in its latest estimate of regional public spending and regional tax revenues in 2018, the ONS concluded that only three regions ran a surplus and contributed c£60bn to the Treasury, of this London’s £34.3bn was by far the largest.

Khan also published an interim report setting out the evidence base for his Local Industrial Strategy following the Government’s Industrial Strategy White Paper, which sets out a long-term plan to boost UK productivity. Whilst other parts of the UK would take half of London’s economic growth, the report highlights how growth in productivity in London has stalled since the financial crisis in 2008, leaving significant differences in performance between sectors and areas of the capital.

Given the gradual switch from retailing to leisure on the UK’s high streets, the Mayor’s announcement that Walthamstow High Street has been chosen to be London’s first Night Time Enterprise Zone is a welcome innovation. The pilot, which runs from October to January 2020, will see Waltham Forest Council assist new evening enterprises, create a small fund for existing local businesses to help cover the costs required to host evening activities and encourage local retailers to extend their opening times. It remains to be seen if giving shops and public buildings longer opening hours between 6pm and 6am will prevent the decline of high street retail.

Construction work continues while the HS2 review is ongoing but if HS2 does goes ahead, the first phase between London and Birmingham will be delayed by up to five years, Transport Secretary, Grant Shapps, has confirmed. That section of the line was due to open at the end of 2026, but it could now be between 2028 and 2031 before the first trains run on the route. HS2’s total cost has risen from £62bn to between £81bn and £88bn.

The Stats
For the first time, the ONS has published quarterly GDP estimates for London, the eight other English regions and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013. The latest available figures, which are for the year ended 2018, showed the capital’s economy grew by 2.3%. This ranked the city fourth of the twelve UK ‘regions.’ The East Midlands topped the table with growth of 3.4% whilst at the bottom the South West economy declined by 1.1%. UK growth over the same period was 1.5%.

The quarter to Dec 2018 showed the wholesale and retail trade industry grew by 5.2% and made the largest positive contribution to growth but the financial and insurance industry fell by 4.4% and was a major negative contributor. Overall, the production and services sectors both made positive contributions to GDP but output in the construction sector contracted. More recent estimates (six months later) for the year ended June 2019, published by ESCoE last month, ranked London first with growth of 2.3%, which suggests the capital’s economy has strengthened this year relative to other parts of the UK.

More data from the ONS showed unemployment in London increased by 16,000 to 225,000 between May and July, the uplift of 0.4% took the overall rate to 4.6%, the joint second highest rate in the UK. The South West had the lowest rate at 2.4% with the UK rate at 3.8%. The highest rate was 5.0% which was recorded in the North East. The South West also had the highest employment rate at 80.8% which compared with 74.3% in London. UK employment was estimated at 76.1%.

London’s average property price increased by 1.0% to £477,813, which meant annually prices had fallen by 1.4%. In comparison, UK prices grew by 0.5% to £232,710 during July, an annual growth rate of 0.7%.