The State of Britain

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A significant uplift in the capital’s exports and the City imports £14.5bn of services compared with £219m in Barnet

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HMRC has published the latest regional trade figures which show exports and imports for 2019. Given the time period this data reflects Brexit uncertainty rather than Covid 19 turmoil. 

In the year to December 2019, the overall value of UK trade in goods exports increased by 2.1% to £346bn compared with the same period in 2018. The overall value of imports increased by 0.3% to £483bn.

There was an increase in the annual export value in London along with five of the 12 UK ‘regions’. The capital’s exports increased by 17.2% or £6bn to £44bn which was 13% of the UK total.  

The leading regional exporter remained the SE with £46bn with Northern Ireland the smallest at £9bn. The best performer in percentage terms was London, with Yorkshire & The Humber falling by 6.3%.

There was an increase in the annual import value in London along with five of the 12 UK ‘regions’. The capital’s imports increased by 12% or 8bn to £73bn which was 15% of the UK total.

The biggest regional importer was the SE at £98bn and Northern Ireland was the smallest at £8bn. In percentage terms London added 12% compared with Scotland which reduced imports by 7%.

The USA was London’s largest export market with miscellaneous manufactured articles the best export. Most of the capital’s imported goods came from China with machinery and transport equipment the biggest import.

Services

This month the ONS published data on regional services imports for 2017. The biggest component of services imported into the UK was £51bn of travel. This was 28% of the £181bn UK total imports of services.

London imported £60bn of services value in 2017 of which £15bn was finance activities. The biggest importer of services was London with Northern Ireland importing £1.6bn.

At a local level, the largest importer of non-travel services into the UK was Camden and City of London at £14.5bn, almost double the next largest importer which was Westminster at £7.9bn. Of the 167 local areas, the Western Isles of Scotland imported the least amount, £21m, with Anglesey next at £31m.

As stated above, in the capital the City imported £14.5bn of non-travel services compared with £219m in Barnet.

The data on services exports was released by the ONS last year which showed London exporting £117bn of services which compared with Northern Ireland at £2.9bn.

Other data

The ONS has also published the latest regional construction sector data to December 2019 which again reflects Brexit uncertainty rather than Covid 19 turmoil. Compared with the previous quarter all parts of the UK recorded a decline with London posting a 1.8% drop to £9bn.

The biggest decrease in the UK was 4.6% in the West Midlands; the SE was best with a 0.9% fall. Within construction though 6540 new houses were completed in the capital, an increase of 20% on the previous quarter.

More pre-pandemic data from the ONS showed unemployment in the capital was 12,000 higher at 218,000 between December and February; the uplift of 0.2% took the rate to 4.5%. Northern Ireland had the lowest rate of 2.5% with the NE the highest at 5.6%, the UK rate was 4%.

The South East had the highest employment rate at 80.1% which compared with 76.7% in London where 4.7m are employed; the UK rate was 76.6%.

London’s average property price increased over the month by 0.2% to £476,972. The uplift took the annual increase to 2.3%. In comparison, UK prices dropped by 0.6% to £230,332 during February, an annual growth rate of 1.1%.

Highgate and Edmonton are the wealthiest and poorest areas of the capital, productivity in London is high but the city’s productivity growth is very mixed

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The ONS has published average household disposal income estimates for England and Wales in 2018. The incomes shown are after tax and housing costs are taken off.  The analysis has shown that 87% of local areas had an average household income of between £22,500 and £39,200; within this over a third were between £28,000 and £33,600.

Of the 50 areas with the highest total incomes, 41 were in London, with the lowest incomes more widely spread geographically across England and Wales. The North East, East England, London, and the South East had no local areas in the bottom 50.

The wealthiest area in England and Wales was Mickleover in Derby with incomes of £52,200 and the poorest was Highfield North in Leicester with £12,500. The two areas are 30 miles from each other and ranked 7200 places apart.

The wealthiest area of the capital, which just pipped Kensington and Chelsea, was Highgate, with £51,600. This ranked the area 2nd out of the 7,201 areas recorded. The poorest area of London was the Edmonton area of Enfield with £18,300. This area was ranked 6,949 out of the 7,201 areas recorded.

Unlike most regions of the UK, output per hour in the capital is way above the UK average. Productivity in London was 32% above the norm which unsurprisingly ranked the city top in the UK. The SE and London record high levels of hours worked and their high productivity pulls up the UK average so much that all other regions fall below it.

The ONS has now released data for a longer period and at a subregional level. This gives further insight into London’s performance.

Perhaps the most useful is the 2018 results for the 44 enterprise regions in the UK which comprise the 38 English local enterprise partnerships (LEPs) and six enterprise regions in Scotland, Wales and the border regions.

The SE’s Thames Valley Berkshire LEP had the best productivity (in terms of hours and jobs) in 2018 at 35% above the UK average whereas the West Midland’s Black Country LEP at 24% below was the worst.

Eight of the 44 enterprise regions in the UK recorded productivity above the UK average; at +32%, London’s LEP was ranked second.

In terms of productivity growth between 2010 and 2018 the Coventry and Warwickshire LEP was top with growth of 16%. Twelve economic regions recorded productivity levels lower in 2018 than 2010. The worst performer was the SE’s Buckinghamshire Thames Valley LEP which saw productivity drop by 11%.

Productivity growth in the capital was +1.4%, which ranked London 28th.

All of the capital’s five subregions recorded productivity above the UK average. Inner London – West was top with +48%, with Outer London – East bottom in the city with +12%.

On districts, led by Tower Hamlets (+75%), nineteen of the London’s economic regions recorded productivity above the UK average. Only two dropped below the UK average, with Hackney and Newham recording the lowest productivity at -6%.

The growth in hours between 2010 and 2018 in Inner London – East was 37%, beating the capital’s other subregions, with Outer London – West and North West the lowest, recording 16%. In UK terms these levels of growth were in the top ten of the country’s 41 subregions.

If the increase in economic output is also factored in, then the sub regional performances are mixed. Outer London – West and North West was ranked 1st in the UK with growth of 12%, Inner London – West was placed 10th with growth of 10% and Outer London South was 26th with grown of 2%. In comparison, Outer London – East and North East was ranked 40th, only beating Inner London – East, which saw productivity decline by 10%, the most in the UK.

More data from the ONS showed unemployment in the capital was 3,000 higher at 224,000 between November and January; the slight uplift left the overall rate unchanged at 4.5%. Northern Ireland had the lowest rate of 2.4%, with the North East the highest at 6.2%, with the UK rate at 3.9%.

The South East had the highest employment rate at 80% which compared with 76% in London where 4.8m are employed; the UK rate was 76.5%.

London’s average property price decreased by 1.1% to £476,588, which took the annual increase to 1.4%. In comparison, UK prices decreased by 1.1% to £231,185 during January, an annual growth rate of 1.3%.

London top of the UK growth, productivity and earnings rankings but surprisingly productivity growth is slower than Scotland

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For the 12 months ended December 2019, a nowcast published by the Economic Statistic Centre of Excellence (‘ESCoE’) on a rolling 4 quarter basis, has estimated that the capital’s growth has increased from 2.3% to 3.3%. ESCoE is a partnership of research institutions and the Office for National Statistics (‘ONS’).

This ranked London first (previous ranking also first) and suggests the capital has retained its top position relative to the other eleven parts of the UK. Over the same period UK growth was 1.4% and growth in the East Midlands (ranked twelfth) was 0.1%.

The latest official ONS figures for an earlier period are similar. Following its first publication of quarterly GDP estimates for the regions in September 2019, the ONS has now published its third estimate for London the other eight English regions, and Wales. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

These stats are for the period six months before the ESCoE estimates shown above and compare GDP in the quarter ended June 2019 with the same quarter a year earlier. These more volatile figures showed London grew by 4.5%, up from 4.2% growth the previous quarter. This maintained the capital’s first place out of the twelve UK ‘regions.’

UK growth over the same period was 1.4%. The NW was the worst performer and contracted by 0.7%, one of three ‘regions’ in the UK to suffer a decline.

In the same report, the ONS’s figures highlighted that the standalone quarter to June 2019 was poorer for the capital than the previous quarter. London’s economy grew by 1% in April to June 2019, following growth of 1.6% in January to March 2019.

In this period, the star performers in London were the wholesale/retail trade and finance industries which grew by 5.2% and 4.7% but the transportation/storage industry fell by 3.5%.

Overall the services, agriculture and production sectors grew by 1.1%, 0.6% and 0.3% respectively but the construction sector fell by 1.7%. London has experienced strong growth in the production sector relative to 2017 while construction has continued to fall since Quarter 3 (July to Sept) 2017.

Productivity

Unlike most regions of the UK, output per hour in London was above the UK average. Productivity in the capital was 31.6% above the norm which was the best in the UK.

London was one of two regions that had productivity above the UK average in 2018; the other was the SE at +9.1%. These regions record high levels of hours worked and their elevated productivity pulls up the UK average so much that all other regions fall below it. Wales was furthest off the average at -17.2%.

London was also first in the rankings in terms of output per job. The capital’s 40.5% compared with Wales at -18.2%.

In terms of growth in output per hour, six regions of the UK expanded. London was ranked sixth as output per hour grew by 0.5%. At 2.3% growth was fastest in Scotland and the biggest contraction was in Yorkshire and the Humber at 2.5%. UK average growth was 0.5%.

Sectorally, productivity in non-manufacturing production and agriculture was better than expected but manufacturing disappointed.

On average, in 2018 the UK economy produced about £35 of value for each hour worked, with finance and insurance top at c£69 per hour compared with accommodation and service activities productivity at c£17 per hour.

Labour

More data from the ONS showed unemployment in the capital fell by 10,000 to 213,000 between October and December; the drop of 0.3% took the overall rate to 4.3%. Northern Ireland had the lowest rate of 2.4%, with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.1% which compared with 75.5% or 4.8m in employment in the capital; the UK rate was 76.5%.

In December, average earnings in London fell by £25 to £805 per week the highest in the UK; the lowest average earnings of £530 were recorded in the NE.

In the UK overall, average earnings grew by 2.9% or by 1.4% after inflation. After adjusting for inflation, regular pay is now at its highest level since 2000, whereas total pay (which includes bonuses) is still 3.7% below its peak in February 2008.

Housing

London’s average property price increased by 1.6% over the month to £483,922; the uplift took the annual increase to 2.3%. In comparison, UK prices increased by 0.3% to £234,742 during September, an annual growth rate of 2.2%.

London continues to bankroll the UK, house prices still stalled and London Power launched

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In the ONS’s estimate of regional public spending and regional tax revenues in 2019, London had a surplus of £38.8bn, the biggest in the UK and a larger surplus than the £33bn recorded in 2018.

On a per person basis, London’s surplus was £4,369, higher than the £3,752 recorded in 2018. This was the largest per person surplus in the UK whereas Northern Ireland had the biggest shortfall at £4,978.

The capital was one of three areas of the UK to run surpluses, along with the SE and the East of England. The West Midlands and the North East were the two regions in the UK to increase their net fiscal deficits over the year; the other seven regions reduced their shortfalls.

At a national level, the UK had a deficit of £623 per person which splits into deficits of £68, £2,713, £4,289 and £4,978 for England, Scotland, Wales and Northern Ireland respectively.

Public spending in London was £123bn or £13,826 per head, an increase on the 2018 figure of £121.8bn. This was the biggest spend in the UK; Northern Ireland had the lowest at £27.9bn or £14,821 per head. Total government spending was £853bn or £12,835 per head.

London collected £162bn in taxes in 2019, the largest contribution to the Exchequer, this compared with the lowest contribution of £18.5bn which was from Northern Ireland. Overall the state raised £811.3bn or £12,213 per head in taxes, an uplift of £34.1bn or £461 per head compared with 2018.

More data from the ONS showed unemployment in London fell by 11,000 to 214,000 between September and November 2019; the drop of 0.3% took the overall rate to 4.3%, still the joint second highest in the UK. Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%.

The South West continued to have the highest employment rate at 79.8% which compared with 75.6% in London. The UK employment rate was 76.3%.

London average property prices fell by 0.5% during November 2019, the drop to £475,458, reduced annual growth to 0.2%. In comparison, UK prices increased by 0.4% to £235,298 an annual growth rate of 2.2%.

Away from the stats, staff costs at City Hall under Boris Johnson’s final budget for 2016-17 were £36m, while the proposed budget for 2020-21 under Sadiq Khan proposes £65.5m. Headcount has risen during the four-year period from 897 in 2016 to a proposed 1,300 by 2021.

A spokesperson for the mayor said extra responsibilities which have been devolved to the mayor will mean more costs. Opponents of Mr Khan suggest bureaucratic inefficiencies.

Mr Khan has had to deal with Brexit uncertainty but Mr Johnson had to guide the capital’s economy post-financial crash. It’s still too early to gauge which mayor will have the best record on London’s economy, but increasing the number of bureaucrats and economic growth tend not to go hand in hand.

A new energy supplier for London, backed by City Hall, has been launched. London Power is not a London Assembly owned business although the exact details of the deal between the Mayor and Octopus Energy are not known.

Highlighting the problems which can occur when the state gets involved in energy businesses, Bristol City Council owned Bristol Energy lost c£10m last year. Bristol Energy was set up in 2016 to provide ethically sourced, low-cost power and return a profit for Bristol taxpayers; instead the venture has so far soaked up £37m of public funds. Nottingham council owned Robin Hood Energy has likewise required taxpayer bailouts.

The objectives of London Power are to keep energy bills low rather than make a profit. If any profit is made, City Hall will invest this into community projects. 

On jobs, Facebook will create 1,000 new roles in London over the course of 2020.  Most jobs will be technology-focused, with roles in software engineering, product design and data science. It will take Facebook’s UK workforce to c4,000.

The firm has decided to invest more in policing online content so most of the new roles will be in Facebook’s ‘community integrity’ team, which designs tools to monitor posts on Facebook’s platforms including Messenger, Instagram and WhatsApp.

London tops the 2018 growth league, Hounslow and Richmond sees the highest regional growth, Lambeth declines and house prices continue to fall the most in the UK

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Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its 2018 full year estimate of economic activity by UK country, region and local area using gross domestic product.

The figures showed the London economy grew by 2.0% in 2018, up from the 2017 growth rate of 1.6%. This placed the capital first (2017 ranking seventh) out of the twelve UK ‘regions.’

The UK and England growth rate in 2018 was 1.4%. Growth in Wales was 1.3%, Scotland grew by 0.9% and the Northern Ireland economy shrank by 0.5%.

Within the city, the Hounslow and Richmond economy grew the fastest at 6.1%, followed by Bromley at 4.7% and Kensington, Chelsea, Fulham and Hammersmith at 4.2%. Across the UK, the highest annual growth of the 179 local areas was in Falkirk at 10.5%.

Six areas of the capital saw their GDP decline in 2018. Lambeth recorded the biggest drop at 5.8%, followed by Harrow and Hillingdon at 1.7% and Bexley and Greenwich at 1.5%. In UK terms, the lowest annual growth of sub national areas was in Mid and East Antrim at -10.1%.

GDP per head growth of 5.4% to £61,899 was seen in Hounslow and Richmond although at £395,309 Camden and the City of London was top in the capital. GDP per head fell by 6.3% in Lambeth to £40,870.

In terms of UK extremes, GDP per head in Camden and the City of London was top and six areas of London were in the UK top 10. The lowest in the UK was £15,034 in Ards and North Down. These figures are a guide and are influenced by commuter flows.

In 2018, key drivers of the London economy were mining and quarrying 6.2%, professional/scientific/technical activities at 6.1% and wholesale/retail up by 4.1%. Those areas that did not perform well were water supply services down by 9%, transportation and storage 3% and arts/entertainment declined by 1%. Overall the services sector grew by 2.4% whilst construction fell by 0.6% and production by 3.9%.

The 2018 performance of the capital’s enterprise partnership was also highlighted by the ONS. Of the UK’s 45 development bodies, the London Enterprise Panel was eleventh in the UK (2017 ranking 26th) with growth of 2.0%.

More data from the ONS showed unemployment in London dropped by 4,000 to 221,000 between August and October 2019; the drop of 0.1% took the overall rate to 4.5%, the second highest rate in the UK.  Northern Ireland had the lowest rate at 2.3% with the UK rate at 3.8%. The highest rate was 6.1% which was recorded in the North East.

The South West had the highest employment rate at 80.8% which compared with 74.8% in London. The UK rate was 76.2%.

The capital’s average property price fell by 1.7% during October 2019 to £472,232, which took the annual fall to 1.6%, the biggest drop in the UK. In comparison, UK prices fell by 0.7% to £232,944, an annual growth rate of 0.7%.

The Capital’s economy tops the ‘regional’ growth rankings but unemployment is the joint second highest in the UK, and house prices continue to fall

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On transport, the deputy chair of the HS2 review panel and critic of the project, Lord Berkeley, says he has been given no opportunity to influence the final HS2 report. Lord Berkeley, a civil engineer who worked on the construction of the Channel Tunnel, was appointed when Transport Secretary, Grant Shapps, launched the review in August.

The Department for Transport would not confirm when the Oakervee review will be published, but it seems likely that this will now be after the election.

The new £88bn HS2 railway line would run from London to the West Midlands, Manchester and Leeds. Trains on the London to Birmingham route would be 400m-long, have up to 1,100 seats and would be capable of reaching speeds of up to 250mph. They would travel as many as 14 times per hour in each direction and cut London to Birmingham journey times from one hour 21 minutes to 52 minutes.

Also on rail, figures released by Virgin Trains show more people travelling between London and Glasgow by rail rather than air. The record level was driven by a 6% year-on-year increase in the number of passengers travelling, c718,000, up from c244,000 a decade ago.

FirstGroup and Italian firm Trenitalia, are to take over the running of the route from December, replacing Virgin, which was barred from bidding. In the latest National Rail Passenger Survey, of the 25 operators in the country, Virgin was ranked second.

Also on the trains, Crossrail will be delayed until 2021 and Europe’s biggest infrastructure scheme is set to go another £650m over budget. The route, to be known as the Elizabeth Line, was originally due to open in December 2018. The cost of the project could reach £18.25bn, more than £2bn over the original budget.

The Stats

Following its first publication of quarterly GDP estimates for the regions in September, the ONS has now published its latest estimates for London, the other eight English regions, and Wales, for the year to March 2019. GDP figures have been available for the UK since the 1940s, for Scotland since 2002 and Northern Ireland since 2013.

The figures showed London’s economy annually grew by 4.2%, up from 2.3% the previous quarter. This placed the capital top (previously fourth) out of the twelve UK ‘regions’ with Yorkshire and The Humber bottom at -0.3%. Propelled by a drive to meet the original March 31st Brexit date, UK growth over the same period was 2.2%.

The ONS figures also showed that growth in London’s economy accelerated in the quarter to March 2019. The capital’s economy grew by 1.2% in January to March 2019, following a contraction of 0.1% in October to December 2018.

In this period, the finance industry grew by 1.9% and made the largest positive contribution to growth whereas the manufacturing industry fell by 2.2%. Overall, the service sector added to growth whereas output in the production sector contracted.

Estimates published by ESCoE last month for the year ended September 2019, a more recent period than the ONS figures, ranked London top (previous ranking also first) with growth of 2.3%, which suggests the ‘region’ has had a good summer relative to other parts of the UK.

Using this metric, UK growth was 1.45%, which compared with growth in the South West of England (bottom) at 0.41%

More data from the that ONS showed there was no change in unemployment in the capital which remained at 222,000 between July and September; an overall rate of 4.5%, the second highest in the UK. Northern Ireland had the lowest rate of 2.5%, with the UK rate at 3.8%. The highest rate was 5.9% which was recorded in the North East.

The South West had the highest employment rate at 81.0% which compared with 74.6% in London; the UK rate was 76.0%.

In September, average earnings in the capital were down by a pound to £830 per week, this was the highest average earnings in the UK. The lowest average earnings of £527 were recorded in Wales. In the UK overall, average earnings grew by 3.6% or by 1.8% after inflation.

London’s average property price fell by 0.1% over the month to £474,601, which took the annual decrease to 0.4%, the biggest drop in the UK.  In comparison, UK prices fell by 0.2% to £234,370 during September, an annual growth rate of 1.3%

Londoners are happier than they were but are still the most miserable in the UK, the importance of creative industries to the capital and the wider UK economy highlighted

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Unemployment in London increased by 17,000 to 225,000 between June and August, the uplift of 0.4% took the overall rate to 4.6%, the second highest in the UK.

The South West continued to record the lowest rate at 2.4% with the UK rate at 3.9%. The highest rate was 5.8% which was recorded in the North East.

The South West also had the highest employment rate at 81.0% which compared with 74.2% in London. UK employment was estimated at 75.9%.

London average property prices fell by 1.3% to £472,753, this took the annual decrease to 1.4% which was still the biggest drop in the UK. In comparison, UK prices grew by 0.8% to £234,853 during August, an annual growth rate of 1.3%.

The ONS’s Personal Well-being (or Happiness) Index has ranked London top out of the 12 UK ‘regions’ in terms of improved happiness since the last survey. Overall though, the Northern Irish were still the happiest in the UK with Londoners still the most miserable.

Development

Research by the London Chamber of Commerce has indicated firms continue to have problems recruiting staff and that one in three companies are seeing increased wage demands.

More positively, the survey of more than 500 firms also found around one in five reported an increase in exports, domestic orders and sales in recent months.

Growth in London was 2.3% in the year to June 2019 according to the latest estimates from ESCoE, the best performance nationally (out of twelve UK ‘regions’)

Business investment is also up but the Chamber warned this may be as part of Brexit preparation spending, rather than the underlying strength of the economy. The Extinction Rebellion protests will also impose some economic drag on the capital’s economy.

This month the World Trade Organisation gave the US permission to impose taxes on £5.8bn of goods it imports from the EU. It is part of the US response to EU subsidies given to planemaker Airbus.

Consequently every Savile Row suit sold to the US faces a new export tax of 25%. As well as men’s woollen suits, cashmere knitwear and malt Scotch whisky are also hit.

To a degree the weak pound and the number of US visitors coming to London to shop for luxury goods should mitigate against the new tariff.

Large areas of London will be upgraded from copper cables to full fibre optics using the Tube network and public buildings. New fibre optic cabling will be laid along TfL tunnels to create a ‘fibre backbone’ across London.

The £10m of funding to subsidise the cost to providers of laying cabling will come from City Hall’s Strategic Investment Fund. The funding adds to £15.4m from London Councils for west and north London, and £8.5m for central London from the Department for Digital, Culture Media & Sport.

Insurance broker Aon is the latest financial firm to announce plans to move its parent company’s jurisdiction of incorporation to Dublin due to Brexit. As with many firms though, the New York-listed insurer will keep its operational headquarters in London and its reporting requirements or listings will not change.

A GLA commissioned study has revealed London’s creative industries generate spending of £40bn per year within the supply chain. The creative industries are already known to boost London’s economy by £52bn.

The Creative Supply Chains Study found that about half of the £40bn is spent in education, architectural, engineering and computing services and that 40 per cent of suppliers are located outside of London.

Employment in the creative industries is growing four times the rate of other areas of the economy; every job in London supports an additional 0.75 of a job across the supply chain. In total, 267,500 people are working in the industry in London.

The provision of affordable workspace and ensuring businesses can work together in clusters is an issue highlighted in the report. Six Creative Enterprise Zones across the capital to help create jobs, training opportunities and affordable workspace will be created.

Transport

CBI London, West Midlands, East Midlands, Yorkshire and Humber, the North East and North West regional directors have urged the government to build the HS2 rail project in full.

However, a paper by the Adam Smith Institute, also released this month, claims that HS2 will deliver limited benefits and that some direct trains from London to the North could go.

The Institute recommends instead, upgrading existing routes with new signalling, doubling the number of tracks, reopening mothballed lines, building new sections of railway and targeting bottlenecks at key junctions.

The Department for Transport’s independent review is rumoured to be considering shortening HS2 to end at Old Oak Common in north-west London rather than tunnelling into central London. Transport for London (TfL) believes ending the line at Old Oak Common would put huge pressure on Crossrail.

A new £25m fund for low income and disabled Londoners will also offer motorists up to £2,000 for scrapping any older, more polluting vehicle ahead of the planned expansion of the mayor’s Ultra Low Emission Zone up to the North and South Circular roads in 2021.

City Hall already runs a £23m fund for micro businesses, sole traders and charities wanting to scrap older vans.

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

Reading Time: 4 minutesThe 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.

Transport
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%.

London tops the national growth league but the capital’s house prices drop the most in the UK, and all change on some train routes but not others

Reading Time: 4 minutesGrowth in London was 2.3% in the year to June 2019 according to estimates from ESCoE. Growth matched the previous quarter suggesting the capital’s economy is stalling. London had the best performance nationally (out of twelve UK ‘regions’) with Northern Ireland at 1% the worst. The national growth rate for the same period was 1.5%. With the UK economy contracting by 0.2% in the quarter, minimal growth in London compares favourably with most regional economies which have shrunk.

Unemployment in London increased by 8,000 to 222,000 between April and June, an uplift of 0.2% to 4.5%. The South West had the lowest unemployment rate at 2.7%, the North East had the highest at 5.3%, with the UK rate at 3.9%. The South West also had the highest employment rate at 80.5%, which compared with London at 74.7%; the UK rate at 76.1% is the joint highest since comparative records began in 1971.

In June, the capital’s average earnings increased from £762 to £831 per week, the highest average earnings nationally. The North East had the lowest at £537. In the UK average earnings grew by 3.7% or by 1.8% after inflation.

The capital’s average property price increased during the month, the 0.7% rise to £466,824 reduced the annual price drop to 2.7%. In comparison, UK prices grew by 0.7% to £230,292 during June which left the annual growth rate unchanged at 0.9%.

Lots on London’s trains this month. First, the competition to operate the South Eastern franchise has been cancelled. The current incumbent, Southeastern, has been given a five-month extension to run the route between London, Kent and parts of East Sussex until April 2020. Go-Ahead runs South Eastern with Koelis through their joint venture Govia. A Department for Transport spokesperson said the decision to cancel the competition followed concerns that continuing the process would lead to additional costs to the taxpayer. The franchise was put out to tender in November 2017, and again last year before being cancelled by new Transport Secretary, Grant Shapps.

FirstGroup and Italian firm Trenitalia were, however, awarded the West Coast Mainline (‘WCM’) franchise this month. The firm replaced Virgin Trains to take over the running of the West Coast Mainline route, connecting London Euston to Glasgow Central, from December. Virgin Trains was barred from bidding. The new contract will operate in two phases. The first will run from 8 December to March 2026, when First Trenitalia will operate the existing InterCity West Coast services. The second phase will run from March 2026 to March 2031, when it will operate the HS2 high-speed rail service. Given the HS2 project has been put under review, this may have to be changed even before First Trenitalia starts operating the trains. The firm said its £117m investment would mean 56 Pendolino trains refurbished, more reliable free Wi-Fi, better catering, and more than 260 extra services each week by 2022. Virgin’s WCM partner, Stagecoach – which refused to take on pensions risk – has won the right to a judicial review of the decision to block it from bidding. Unlike other franchises, Virgin is consistently rated highly by Londoners. In the latest National Rail Passenger Survey, of the 25 operators in the country, it was ranked second.

The government has announced a review of HS2, with a decision promised by the end of the year. With £7.4bn already spent, Transport Secretary, Grant Shapps, has refused to rule out scrapping it entirely. Phase 1 of the development between London and Birmingham is due to open at the end of 2026. In July, the current chairman of the project warned that the total cost could rise by £30bn to £86bn, putting the project’s value for money into question.

In the air, London City Airport’s Draft Master Plan outlines expansion plans up to 2035, with 40,000 more flights a year to meet growing demand. The airport’s public consultation into the plan has heard from the London Assembly’s Environment Committee, which raised concerns about plane noise. About 750,000 people are currently overflown by planes heading for the airport.

A report by an All-Party Parliamentary Group (‘APPG’) of MPs which looks at post-Brexit Funding for the nations and regions has found that the UK would receive additional EU funding in the 2021-27 spending round. Three additional sub-regions Lincolnshire, South Yorkshire and Tees Valley & Durham are likely to slip below the threshold of 75% EU average GDP per head that would qualify them for ‘less developed region’ status, but no part of London has yet fallen below this level.

Additionally, the EU has proposed that ‘transition region’ status should be extended to cover all regions with a GDP per head between 75-100 per cent of the EU average, compared to 75-90 per cent at present. Seven additional sub-regions are likely to slip below the threshold of 100% EU average GDP per head, qualifying them for ‘transition region’ status. Outer London South falls into this category, as well as East Wales, East Anglia, Greater Manchester, Leicestershire, Rutland & Northamptonshire, North Yorkshire and South Western Scotland. It is not clear how much extra funding these areas would have received from the EU, or but €50 per head over the next EU spending round would equate to £560m.

The UK government has promised to replace EU funding to the regions with a new UK Shared Prosperity Fund. If the new sub regions are added, the APPG calculates this amounts to c£1.8bn pa, on top of the c£2.2bn pa already committed as part of Local Growth Fund. Integrating the Local Growth Fund into the UK Shared Prosperity Fund could be problematic. The Local Growth Fund allocates funding to LEPs via competitive bidding whereas the allocation of EU funds uses a fixed formula

London average property prices fall the most in the UK and Transport for London starts tracking all phones on its network

Reading Time: 3 minutesUnemployment in London decreased by 9,000 to 209,000 between March and May, a decrease of 0.2% to 4.3%. At 2.6% the South West of England had the lowest rate and at 5.6% the North East had the highest rate in the country. The UK unemployment rate stands at 3.8%.

London average property prices were the worst performing in the UK and fell by 2.5% to £457,471 during the month which meant annually prices dropped by 4.4%. In comparison, UK prices increased by 0.1% to £229,431 during May which reduced the annual growth rate to 1.2%.

In its review this month of the 38 Local Enterprise Partnerships (LEPs) – the private sector-led partnerships between businesses and local public sector bodies that support local economic growth – the Public Accounts Committee of the House of Commons found that from 2015-16 to date; £9.1bn of taxpayers’ money has been awarded to LEPs through three tranches of Growth Deals. London, with one LEP, has received £435m, the north of England, with 11 LEPs, has received most of the funding at £3.4bn (38%), and the East of England, with three LEPs, has received the least with £703m.

The Ministry of Housing, Communities and Local Government considers the population of an area as well as the strength of the LEP’s strategic economic plans and projects when deciding Growth Deal allocations. There are no overlapping LEP areas in London which means the capital will be able to bid for funds from the Government’s proposed Shared Prosperity Fund, which will replace EU structural funding after Brexit. The Ministry does not to evaluate the Local Growth Fund which means it has no understanding of what impact spending through LEPs has on local economic growth. The latest growth figures for the city from ESCoE showed growth at 2.7% which compared with the UK average of 1.5%.

The 24 Enterprise Zones designated in England in 2011 to improve economic growth had created 17,307 jobs by 2017 instead of the forecast 54,000 jobs by 2015. BBC-commissioned research conducted by think tank charity Centre for Cities also found that in two areas the number of jobs had fallen. Enterprise zones offered cheaper business rates, superfast broadband and lower levels of planning control. According to the research 741 jobs were created in the London Royal Docks Zone, the 9th best performing zone in England. The cost of the scheme is disputed, with The Ministry of Housing, Communities and Local Government claiming £101m, £215m less than the BBC’s estimate of £316m+. The Ministry also disputes the methodology used in the research. A further 24 Zones were created in 2016 and 2017.

On transport, Transport for London (TfL) has started using its wi-fi start collect mobile phone data as commuters move about the network. Data was collected anonymously from 5.6m mobile devices during a four-week pilot in 2016 which revealed the potential for huge efficiencies and improved customer experience. The data will enable TfL to deploy staff to busy areas and message commuters at every stage of their journeys, suggesting different routes to avoid overcrowding or disruption, less busy trains and short cuts within stations. For example, the pilot project revealed better ‘platform management’ at Euston cut transfer times between the Northern Line and the Victoria Line from five minute to one minute as commuters took different routes. TfL has also announced plans for mobile users to have 4G access across the Tube network. The Jubilee Line will be the first to benefit, with the eastern half to get full mobile connectivity on both platforms and tunnels from March, the rest of the network should be enabled by the end of the year. There are already 260 wi-fi-enabled stations on the London Underground and on TfL rail services. The project is expected to require 1,242 miles of cabling with engineers working weeknight shifts to minimise disruption to passengers.

On development, London’s Mayor, Sadiq Khan, has advised planners to reject proposals for a new skyscraper dubbed ‘The Tulip’. In April, the City of London Corporation approved the 305m tower proposed for Bury Street, beside the Gherkin tower but the Mayor said it would harm the skyline and had few public benefits. The applicants have the right to appeal directly to the Secretary of State for Housing, Communities and Local Government within six months.