The State of Britain

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London continues to bankroll UK plc, welcome efficiencies on the Tube and Edwardian road policies mooted in the City

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Growth in London fell by 0.2% to 2.7% in the year to March 2019 according to estimates from ESCoE. At 2.7% the capital had the highest growth rate in the country, at 0.7% Northern Ireland had the lowest. The East of England was the most improved region of the UK with growth accelerating from 0.9% to 1.9%. The UK growth rate for the same period was 1.5%.

Unemployment in London fell by 4,000 to 214,000 between January and March a drop of 0.1% to 4.4%. At 2.4% and 5.4% the SW of England and the North East had the lowest and highest unemployment rates in the country. The UK unemployment rate stands at 3.8%.

In March, average earnings in London fell to £762 per week; the highest in the UK, whereas Northern Ireland had the lowest of £513. In the UK average earnings grew by 3.3% or by 1.5% after inflation.

London average property prices fell by 0.4% to £463,283 during the month which meant annually prices dropped by 1.9%, the biggest fall in the country. In comparison UK prices dropped by 0.2% to £226,798 during March which cut the annual growth rate to 1.4% although transactions were up by 1.4%.

In its estimate of regional public spending and regional tax revenues in 2018, the ONS concluded that London had a surplus of £34.3bn, the highest surplus in the UK. On a per person basis London also had the highest surplus of £3,905 per person and Northern Ireland had the biggest deficit at £4,939. The only areas of the UK to run surpluses were London, the South East and the East of England. At a national level, the UK had a deficit of £636 per person which split into deficits of £106, £2,452, £4,395 and £4,939 for England, Scotland, Wales and Northern Ireland.

A report by think tank, the Centre for London, has found that the capital and the UK continues to be the top destination to base multinational company HQs. London and the South East have attracted more investment than other world cities since 2003. The report concluded that access to a highly skilled workforce was the main reason why companies choose to headquarter themselves in the city. The think tank warned though,that London’s status could be threatened and may have been affected by Brexit, citing evidence such as the reduced number of business trips to London and business spend falling from £3.24bn in 2015 to £3.07bn in 2017.

The National Audit Office (NAO) claims that Crossrail was driven over its budget and beyond its schedule after management clung to an unrealistic opening date. The overall budget for Crossrail has risen from £14.8bn in 2010 to £17.6bn. Changes to designs and contractors’ delivery schedules cost around £2.5bn between 2013 and 2018, according to the NAO’s analysis. Credit agency, Moodys, estimates the delay will cost TfL around £1bn in lost revenue. When this is added to a £700m reduction in TfL’s government grant and the cost of the mayor’s £640m fares freeze; the scope for new infrastructure projects is limited. The Camden Town station upgrade, Northern Line extension to Battersea and the signalling upgrade to the Piccadilly line have all been delayed. In 2017 new Jubilee and Northern Line trains were also delayed. With TfL in deficit and the delay to Crossrail being paid for with a time extension to the business rate supplement, funding for other projects such as Crossrail 2 & 3, new orbital links for outer London, DLR and tram extensions, seems fanciful.

The first Azuma trains have started running on the LNER service between London and Leeds but it was Greater Anglia’s first class rail users ‘abuse’ of free drinks and snacks at weekends which hit the headlines. The firm said the offer was no longer commercially viable but the deal was still available to first class season ticket holders and customers on weekdays. Virgin Trains and LNER offer complimentary refreshments every day, and East Midlands Trains offers free drinks and snacks to first class passengers from Monday to Friday but provides a complimentary breakfast as part of its first class service on Saturdays. One benefit of the pre-1997 British Rail offering was that at least it was uniformly poor across the network.

From July, anonymous data will be collected from devices as they logon to the wi-fi in more than 260 London Underground stations. A four-week trial in 2016, showed collecting anonymous data helps passengers to better plan routes and avoid congestion or delays. The pilot focused on 54 stations and saw data collected from 5.6m mobile devices. The data helps TfL gain a more accurate understanding of how people move through stations, interchange between services and how crowding develops. The results are far superior to data from ticketing or paper-based surveys. Also the data will be made available for app developers, academics and businesses to create new products and services. Travellers who do not want their data to be collected can opt out by turning off the wi-fi on their devices. Apps will be able to give passengers options to take slower but much less crowded routes where they may get a seat. The economic benefits which could flow from the introduction of transport efficiencies on a network the size of the Underground are likely to be material.

On the roads, a new 15mph speed limit – which could be introduced by 2021 – has been suggested for the Square Mile. If approved by the government, it would be the first area in the UK to have a 15mph limit. It comes after research showed 90% of all journeys made in the City were partially or entirely walked. The City of London Corporation hopes to reduce traffic by 25% by 2030 and 50% by 2044. The City of London has 15 Tube stations, seven Tube lines, eight mainline stations, multiple bus routes and a fast-evolving bicycle network, an enviable transport infrastructure which caters for about half a million commuters. The UK speed limit was previously as low at this in 1903 when it was raised from 14mph to 20mph.

A sharp drop in the capital’s property prices, no more meat at Smithfield after 800 years and ‘the Tulip’ at the last hurdle

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Unemployment in London dropped slightly by 6,000 to 218,000 between December and February; a decrease of 0.1% to 4.5%. The SW of England had the lowest unemployment rate in the country at 2.6% and the NE of England had the highest at 5.6%. The national unemployment rate stands at 3.9% and UK average earnings grew by 3.5% or by 1.6% after inflation.

London average property prices fell sharply by 2.0% to £459,800 during the month, which meant the capital has seen a price drop of 3.8% over the year – the biggest fall in the UK. In comparison, UK prices dropped by 0.8% to £226,234 during April which cut the annual growth rate to 0.6%.

Climate change protesters’ attempt to disrupt travel around London as part of a series of events across the world met with some success although gauging the impact on London’s economy will be more difficult to assess. Extinction Rebellion blocked traffic at Marble Arch, Oxford Circus, Waterloo Bridge, Parliament Square and Piccadilly Circus. There were delays on the Docklands Light Railway and up to 50 bus routes in Central London were diverted.

Some key developments in the capital moved forward this month. City planners have approved the second tallest skyscraper in Western Europe, featuring a viewing platform with transparent rotating pods and internal slides. London already boasts the Gherkin, the Cheese Grater and the Walkie Talkie; the new tower will be called the Tulip but at 305m it is about a metre shorter than the Shard, the UK’s highest building. The tower will be a visitor attraction without any office space and will compete against similar paying attractions in the area like The Shard and the London Eye. Foster + Partners have designed the flower-like building to complement the Gherkin next door which they also designed. Construction would begin in 2020 with the project completed by 2025 if the Mayor of London approves the plan.

Westminster council has approved a £232m strategy to upgrade Oxford Street and the wider area. The council will invest £150m and hopes partners will fund the shortfall of £82m. In 2018, the council declined to pedestrianise Oxford Street which attracts 200m visits a year. The council will initially spend £21m on design, surveys and other feasibility studies.

The City’s historic Smithfield Market will be moved to a former power station at Barking Reach in Dagenham under plans to free up land for housing. It will be the first time in 800 years the market has not been in the City. The development will require a Parliamentary private bill to proceed which is likely to be in November 2020. Barking Reach will consolidate all of the City Corporation’s wholesale markets including Billingsgate and New Spitalfields.

A number of notable transport developments in London this month, especially for motorists from Barnes who drive older diesel vehicles. If Barnes drivers manage to get across the river – Hammersmith Bridge has been closed indefinitely after failing safety checks and will remain closed until refurbishment costs can be met – and then head towards Central London, they will have to pay two daily charges, the Congestion Charge and the new Ultra Low Emission Zone charge which now operates 24/7. The Ultra Low Emission Zone has come into effect in central London – the same area as the congestion charge – and is designed to dissuade people from driving older, more polluting vehicles into the capital.

On the buses, Transport for London has announced a restructuring of London’s bus network aiming to grow routes in outer London while cutting underused services in the capital; 29 of 33 proposed bus route changes will start operating from June. Many central London buses are less than 70% full at peak times reflecting a 12% drop in demand in the last three years. TfL forecasts many bus users will also switch to the Elizabeth Line when it opens in the autumn.

On the trains, Crossrail will now be completed two years behind schedule and will not initially include the opening of Bond Street, one of 10 new stations along the Elizabeth Line; the £17.6bn east-west route which will run between Reading and Shenfield in Essex had been due to open in December 2018. Major tasks to complete before opening the line include; creating and testing software that would integrate the train operating system with three different signalling systems plus trial running the trains over thousands of miles of the completed railway. The cost of the project has risen from £14.8bn to £17.6bn.

Plans to close ticket offices at 51 London Overground stations have been abandoned, although many will have opening hours reduced to two-and-a-half hours per day. An additional £5m funding from London’s business rates has been made available to keep offices open: £1m will be invested in new technology to improve stations, including remote-controlled ticket barriers and trials of video-link ticket machines this summer.

One of the more successful rail franchises is Virgin Train’s 400-mile West Coast Mainline route which connects London to major cities such as Manchester, Birmingham and Glasgow. In the last financial year, the operator carried 688,026 passengers between Glasgow and London, a 29% increase from 2012-13.
In total, nearly 40m journeys were made with the firm up by almost 10m compared with six years earlier. Virgin Trains hopes for 50m annual passenger by 2026, which is when HS2 is due to open between London and Birmingham.

Brexit worries and transport problems persist in the capital, evidence that more Britons permanently leave London than arrive and at last Spurs go home.

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Unemployment in London fell sharply by 22,000 to 207,000 between November and January; the drop of 0.2% took the overall rate to 4.2%. At 2.9% and 5.2% the SW of England and Yorkshire & Humberside had the lowest and highest unemployment rate in the country respectively. The UK unemployment rate stands at 3.9%.

In March average earnings in London increased significantly to a £846 per week the UK’s highest whereas the North East had the lowest of £523. In the UK average earnings grew by 3.4% or by 1.5% after inflation.

London property prices fell by 0.3% to £472,230 during the month which meant the capital has seen a price drop of 1.6% over the year – the biggest fall in the UK. In comparison UK prices dropped by 0.8% during March which cut the annual growth rate to 1.7%. The London market was also slower with the latest figures to September 2018 showing volumes down by 2.8%.

Whilst strike action – on London Trams – never helps economic growth, more significant worries continue over the impact of Brexit. A report by capital markets think tank New Financial says £900bn in financial firms’ assets have been moved out of the UK; this has cost the economy £3bn-£4bn and will likely mean 5,000 staff move, with Dublin benefiting most. The think tank anticipates a 10% shift in banking and finance transactions which would reduce income from tax receipts by about 1%. Dublin won 100 relocations, Luxembourg 60, Paris 41 Frankfurt 40 and Amsterdam 32. It highlighted one bright spot though in that arrangements between regulators in the EU and the UK meant the industry was well prepared for whatever form Brexit took. It estimates the £900bn is broken down into banks moving c£800bn in assets, asset managers c£65bn and insurance companies c£35bn. Brexit is also blamed on a drop in optimism – at the fastest rate since the financial crisis – in London’s financial services industry. The latest quarterly survey from the CBI and PwC – of 84 City firms – said only 10% were optimistic compared with 53% less optimistic.

Of course in UK terms London has a successful economy and compares favourably with other international cities when it comes to economic growth; with expansion of about a fifth over the last decade. Consequently the population of Greater London has grown by 1.1m over this period to 10m. Despite this about 550,000 more Britons left London than moved to it with population growth being driven by the birth rate outstripping the death rate by 790,000 and by international immigration increasing by 860,000; by 2017, 3.6m people living in the capital were born overseas. Most Britons who leave tend to have young families but many stay within commuting distance.

On developments in the capital, Phase 2 of the £1bn Northumberland Development Project – part of Haringey Council’s wider regeneration of Tottenham – completed in March. The development which centres on the building of the new Tottenham Hotspur Stadium also includes 585 new homes, a 180-room hotel and a local community health centre as well as shops and the Spurs HQ and a museum. The stadium has a capacity for 62,062 spectators and is designed to host football and NFL games.

On London transport, the uLEZ or Ultra Low Emission Zone will be introduced from next month; older more polluting vehicles will have to pay to enter the congestion charging zone. The zone will operate 24 hours a day, 7 days a week, every day of the year within the same area of central London as the Congestion Charge. Most vehicles, including cars and vans, need to meet the ULEZ emissions standards or their drivers must pay a £12.50 daily charge to drive within the zone. Tfl hopes to raise £305m from the charges which will go some way to reducing its c£1bn budget deficit. The operating deficit is now forecast to have halved to £500m by the end of 2018/19. The shortfall is down to a cut to the government grant, London Mayor Sadiq Khan’s partial fare freeze, a fall in passenger numbers and the delay to Crossrail. The number of bus passengers continues to decline which means the operating deficit on buses will be £722m; the highest bus subsidy in TfL’s history. Tube passenger numbers have increased by 0.8% but because of the fares freeze income has more or less flatlined. Total forecast income for 2018/19 is £6.66bn, lower than £6.7bn (2015) and £6.76bn (2016). Cycling journeys in central London are at record levels.

Locations have been shortlisted to become one of four off-site logistics hubs for the Heathrow Airport expansion. There were initially 121 applications for the hubs which were reduced to 65. After visits by Heathrow officials the list was further reduced to 18. The winners will be announced early next year with work due to start in 2021. The third runway could be completed by 2026. The hubs will preassemble components for the new developments that will accompany the third runway before transporting them to Heathrow – with the aim of streamlining the construction and minimising the disruption to the airport.

Flybe has announced plans for the first flights between the Isle of Man and London Heathrow since 2002. The airline is to operate a daily service from 21 April using a 78-seat Bombardier Q400 aircraft. At Stansted and Gatwick Wow, Air has stopped flying. The Icelandic airline said it had initially cancelled some flights while completing an agreement with a group of investors over raising new funds but later said all future flights were cancelled.

Finally the Tate Modern has overtaken the British Museum as the top UK visitor attraction for the first time in a decade; Tate Modern’s hit shows in 2018 included a major Picasso exhibition. Almost 5.9m people visited the Tate Modern last year versus the 5.8m who went to the British Museum.