Growth 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