The truth about London’s “white flight”

A fall in London’s “white British” population does not mean the city is now “majority-migrant”.

London remains a majority-white and majority-British-born city. That was what the 2011 census found. But you may be surprised to hear it, since London now being "45 per cent white British" was one of the most prominent headlines of the 2011 census. Loose discussion of the finding has created a misleading meme. The 45 per cent figure has been received by many ears as suggesting that the capital is either “majority-minority” or “majority-migrant”. Neither is true.

The census facts are clear: our increasingly diverse capital is 60 per cent white and 63 per cent of Londoners are British-born. 

Overall, three-quarters of Londoners are British citizens, and under a quarter are foreign nationals.

But a discussion which conflates ethnicity and nationality risks misleading people about both dimensions. The official census media briefings prominently flagged up the 45 per cent figure on its own as a "key finding", without ensuring what it does and doesn't mean about how white or British London is was understood. By separating them out, we can better understand what the 2011 census data actually tells us about London and how it is changing:

63 per cent of Londoners were born in Britain

The census shows that the population of London is 63 per cent British-born, with over one in three born abroad. This 63 per cent British-born; 37 per cent foreign-born" finding is a more accurate way to capture the scale of migration in London. This also shows the increased pace of migration more accurately: the London population was 27 per cent born-abroad in 2001, and it is now 37 per cent.

Making the "45 per cent white British" statistic the headline claim is to see the salient contrast as between "white Britons" and "ethnic minorities, immigrants and foreigners (as immigrants include both British citizens and foreign nationals). That would seem to depend on the outdated premise that non-white Britons, including those born here, are not viewed as being as authentically British as their white fellow citizens.

Fortunately, the idea that British identity depends on white ethnicity is regarded as a very un-British idea by very broad majorities white and non-white Britons alike. You will find very few people who think Jessica Ennis or Ian Wright are less British than they are, because they are mixed race or black rather than "white British".

The inference that a city which is less "white British" must be less British flies in the face of the well-established evidence that non-white Britons have, on average, a somewhat stronger sense of British identity and allegiance than white Britons. Major studies have repeatedly found this; and the media have repeatedly reported it as a surprising and counter-intuitive finding. 

The population of London is 60 per cent white

"White British" Londoners are now a plurality, rather than a majority. If anybody is interested in ethnicity, the "whiteness" of the capital city , then the census demonstrates that 60 per cent of those resident in London are white. There is a white majority in London once the ethnicity of the Irish and the Americans, the French and the Poles who live and work in the city is taken into account. None of Graham Norton or Terry Wogan, Rolf Harris or Kylie Minogue, Arsene Wenger or Ulrika Johnson are likely to have made any contribution to the white British census score.

Three-quarters of Londoners are British citizens

Of the third of Londoners born abroad, many have become British too. The "foreign-born" 33 per cent will also include some Londoners like Boris Johnson, who were British from birth, though born abroad, in New York in his case. (So the Mayor is included in the "white British" 45 per cent but not in the British-born 67 per cent. The children of soldiers posted abroad helped boost the German-born category to fifth non-British country of birth, for example). 

Others were not born British but chose to become British. Again, the British tradition is that all citizens count as fully and equally British, including those like Prince Phillip and Mo Farah who were born abroad. Across England and Wales as a whole, around a third of those born abroad have been here more than twenty years,arriving across the decades between 1950 and 1990. 

This census release reported that 24 per cent of Londoners hold non-British passports. However, this will also include some who are dual nationals, and who are British too. There is a promise to include in "subsequent releases from 2011 census ... a more complete indicator of migration status since, for example, British citizens can be born abroad and other people living in the UK who were born abroad can acquire British citizenship".

The census data published so far does not reveal the precise proportion of Londoners who are British citizens. It shows that over 70 per cent of Londoners hold a British passport, but the 8 per cent of Londoners who do not hold a passport will include many British citizens too. (This gives London the lowest proportion of non-passport holders in the UK, compared to 22 per cent in Wales). However, in the meantime, data does exist elsewhere. The findings from the 2011 Labour Force Survey data show that foreign citizens made up 19 per cent of the population of outer London, and 27 per cent of those in inner London. The University of Oxford Migration Observatory calculates that, overall, that would translate into 22 per cent of London residents being foreign nationals.

The census snapshot captures much temporary as well as permanent migration

The headline census figure that 7.5 million people resident in England and Wales were born abroad and that half arrived in the last decade. That reflects the historic rise in migration over the last decade, as every report has stressed. What has been seldom explained is how and why those raw figures will also tend to exaggerate the increase. 

The census is a "snapshot". It tells us about the usual residents of England and Wales on one night in March 2001. That snapshot approach means that it cannot easily convey one of the biggest changes in immigration patterns over the last decade: a sharp shift towards temporary rather than permanent migration.

We tend to think of the "Ellis Island model" of immigration: you arrive, with your suitcase, and settle for good. But the changes in travel and communications that have made migration easier have made it easier to go back too. 72 per cent of migrants to the UK now come for less than five years, as the Migration Observatory at the University of Oxford has reported. A majority of those classed as "long-term" migrants (here for more than 12 months) say they intend to stay for one or two years.

The census "snapshot" captures the scale of migration, but not this challenging new dynamic of increased churn.

While half of the foreign born-residents currently in England and Wales have arrived in the last ten years, most of them will not stay, while a proportion will settle and become British. Indeed, hundreds of thousands of those recorded in the census almost two years ago will already have gone; others have arrived, and again most will later leave, while a significant minority will settle, become British and see their children become "us" too.

Londoners shopping on Oxford Street. Photograph: Getty Images

Sunder Katwala is director of British Future and former general secretary of the Fabian Society.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation