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4 January 2016updated 09 Sep 2021 2:05pm

How London turned inside out, and why it matters

The era of the London "donut" is over. 

By Kat Hanna

Whether it be in op-eds on airport expansion, debates on tall buildings or increasingly cramped commutes, Londoners are reminded on a daily basis that our city is growing. Earlier this year, Boris marked London’s population reaching its pre-war high of 8.165 million. But the capital’s growth will not stop there. By 2037, we will have to absorb a population equivalent to Greater Manchester.

But London is not just growing, it is being turned inside out.  And this much less familiar transformation of the social geography of London is hardly less consequential than the city’s growth.

Centre for London’s latest report Inside Out shows that London is experiencing a form of socio-economic osmosis, with outer London experiencing rising poverty rates, while rates in inner London drop. Often thought of as mono-cultural, outer London boroughs have seen the fastest rise in resident born overseas – many now have rates similar to multicultural inner London boroughs. That could have profound consequences for individuals, local communities, London boroughs and London politics.

A successful and inclusive London means understanding the changes that are taking place, and planning ahead for the implications that population change will have on public services. Yet local authorities must deal with two great unknowns; populations that are changing and churning, and drastic cuts to funding for public services.  

Over the past five years, London boroughs have absorbed real terms funding cuts of 44 per cent. If we look at reductions in spending per head, we can see that population growth amplifies the reduction in spending. Quite simply, even where funding has increased in real terms, it has not been able to keep with population growth. The two boroughs with the greatest percentage change in resident population, Tower Hamlets and Newham, have seen some of the greatest reductions in service spending per head – 19 per cent and 24 [er cemt respectively.

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Not only must local authority funding keep up with population growth, certain local authorities are dealing with drastically changing demographic profiles. The challenges and opportunities these changes place on communities are multi-faceted, and go beyond narratives of gentrification and regeneration. Dropping poverty rates in inner East London mask the fact the inner east boroughs still house the highest proportions of children and old people living in poverty in the country. The influx of young professionals into these boroughs further suggests a dilution of poverty rather than a solution to it.

At the same time, outer London boroughs may see an increase in “inner city problems” , associated with younger, less well-off populations, including homeless and growing demands on health services. These changing demographics do not only place a demand on social services and health care, but also on how local authorities spatially plan for growth. Investment in infrastructure, including housing, must take into account the shifting distribution of wealth and poverty in London. Investing in infrastructure which connects outer London to the centre will open up employment opportunities and deliver huge economic benefits, as is highlighted in Centre for London’s forthcoming research on rail devolution in South London.

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Yet across London, it is planning and development departments that have borne the brunt of cuts, with boroughs such as Islington and Hackney seeing expenditure per head drop by some 60 per cent. At the time when spatial planning, economic strategy and building control matter the most, local authorities do not have the resources required.

Admittedly, the Comprehensive Spending Review cuts have been less severe than expected. However, maintaining public services is not just about protecting boroughs from spending cuts – it means ensuring that boroughs have the resources needed to manage population growth. This management is about more than the nuts and bolts of infrastructure and public service delivery. It requires creating and maintaining a sense of place in a time of rapid population change, and against a backdrop of reduced resources. The population we are looking at in any borough in 2001 is not the same as the population in 2011. London is churning. In 2008, just 60% of the people living in inner London boroughs had been there for more than five years.

The challenges that these population changes pose for local authorities would be great in any circumstances, but they are amplified by the cuts they face. Without the funding in place, some may struggle to keep up. The move away from formula-based local authority funding to growth-based may well be a welcome concession to the different demands faced by boroughs, yet it also brings instability, especially in the context of reduced central government grants.

We need to accept that London is growing and plan for it.  But equally, we need to accept that London is changing internally, and we must plan for that as well.

Kat Hanna is research manager at the Centre for London.