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3 November 2020

From the NS archive: The prize that awaits Livingstone?

15 November 1999: Who runs London may be more important than you think. After long decline, the capital is booming, sucking in wealth and population.

By Paul Wallace

When Ken Livingstone, former leader of the Greater London Council, took up the post as the first Mayor of London in 2000, the capital was, after a period of decline, booming once again. In this piece, from November 1999, Paul Wallace emphasised the importance of the new mayoral position. “The new mayor will become a national figure to rival the most senior of cabinet ministers,” he wrote, a statement which came true: our current Prime Minister is of course a former mayor. Wallace also foresaw the striking contrasts that would continue to grow between the capital and the rest of the UK, concluding: “Stand by for political upsets ahead.”

***

London skyline’s new landmark, the giant Ferris wheel, is an apt metaphor for an extraordinary stage in the city’s history. After plunging for half a century, London’s population is climbing again. The repercussions won’t be confined to the capital.

Batten down the hatches for storms over housing that will make current disputes pale by comparison. Stand by for a sharpening of regional knives and a battle over regional subsidies.

Above all, prepare for a London that packs an electoral and political punch to match its economic and financial weight. The new mayor will become a national figure to rival the most senior of cabinet ministers. No wonder Tony Blair is keen to prevent Ken Livingstone from winning so choice a prize.

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London’s demographic regeneration started at the very time that the Greater London Council received its death sentence. By the early 1980s, the capital’s population had been in free-fall for half a century, dropping two million from its peak in the 1930s. Deliberate policies to decant urban populations into new towns, together with an erosion of London’s industrial base, had caused a haemorrhage in numbers. By 1981, the headcount for Greater London had fallen to under seven million, one-fifth lower than in 1939.

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But in the mid-1980s, the numbers started to creep up. In the 1990s, the increase has accelerated. Last year, the population of London – which accounts for less than an eighth of the UK’s – rose by 65,000, almost a third of the total national increase.

Today, London’s population stands at 7.2 million and a forecast prepared by the London Research Centre for London Transport envisages an increase to 8.1 million by 2016. London has moved into a virtuous circle of growth, sustained by mutually reinforcing economic and demographic forces.

Start with the economics. London holds some trump cards in the fastest-growing sectors of the economy. Through the City, it occupies a key position in burgeoning international financial services. Through its rich historical heritage, it benefits from the growth in tourism. Through Heathrow, it is a world travel hub. Add to this strengths in media and communications and you can see why the past few years have been good ones for the London economy.

Now turn to the demographics. London acts like a turntable. It sweeps in young people, who move in from the rest of the country and from abroad. It spins off older people, who usually move out to the surrounding south-east and beyond.

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As migration flows have increased in the past 20 years, the effect has been to make London’s population progressively more youthful. With proportionately more women in their peak childbearing years, the number of births has not started to fall as it has done in the UK. Indeed, London’s natural increase – the balance of births over deaths – accounted for half that of the total for England and Wales in 1997

London’s more youthful population helps to explain why the trains are now so crowded and the decaying public transport system is so overstretched: the peak users of the Underground are in their 20s and early 30s. The sheer size of London’s young population acts as a magnet to employers hunting for workers in the prime working ages of 20 to 45.

The capital is where it’s at, in cutting-edge industries such as e-commerce and fashion. Not only can it draw upon the growing numbers of London residents, but it can also suck in labour resources from an economic hinterland that stretches further and further afield.

Increasingly, that hinterland extends beyond national boundaries. Later this month, the Government Actuary’s Department will publish its latest national population projections, incorporating a big increase in net international migration – immigrants less emigrants – from 65,000 to 95,000 a year. Since London has been attracting half of net international migration, we can expect further substantial population growth in the years ahead.

But where will all the new arrivals be housed? Over the past few years, the number of new homes built in London has been running at around 17,000 a year. But, according to John Hollis of the London Research Centre, underlying population growth implies an annual requirement of 30,000. Furthermore, there is a chronic mismatch between where people want to live and where surplus land is available; demand for extra accommodation is most acute in the west of London, while supply is most abundant in the east.

In the past, London could house its overspill in the surrounding suburbs. But the rest of the south-east is itself facing a huge demand for extra houses. A recent report from government inspectors appointed by John Prescott came up with a housing provision for the years up to 2016 which was over a third higher than the baseline set by Serplan, the regional planning body.

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On this score alone, London’s new mayor will be in the hot seat, because one of his principal tasks will be to draw up planning guidance for the capital. Leafy London boroughs will resist attempts to direct further increases in housebuilding their way, while councils in the surrounding south-east will be up in arms over any attempts to dump them outside London.

Another source of tension will be over the allocation of public funds from central government. At present, on conventional calculations, London is a net contributor to the Treasury, while other parts of the UK benefit from big subsidies. But if London’s population is growing substantially, then this will require heavy investment in its transport infrastructure, tilting the balance of public funding towards the capital.

Rapid growth in London will rekindle calls for a regional policy. Attempts to direct businesses and people into economically weaker regions are now largely written off as a failure; businesses that cannot locate in the south-east will try elsewhere in the European Union. Despite these objections, the politics point to a revival of regional policies to try to achieve more balanced growth throughout the country.

In this new political ball game, the contrast between London and the rest of the country will become ever more striking thanks to the capital’s unusual demographic trajectory. Not only is London more youthful, its population is far more diverse than the UK’s. A quarter of the population is composed of non-white ethnic minorities; and if you add in white minorities such as Cypriots and Irish groups, the minority share rises to over a third.

This distinct electorate will have greater weight in the country, as parliamentary seats come into line with the shifting demographic composition of the UK.

At the moment, Scotland has the same number of MPs as London, even though its electorate is a fifth lower. Scotland’s MPs will be culled from 72 to 58 when the electoral boundaries are redrawn in the next parliament; by contrast, the number of London MPs will eventually rise to 80 or more if the city’s population continues to grow as forecast.

London’s growing demographic salience points to a crucial fault-line in Labour’s internal politics. Cosmopolitan London is the spiritual home not just of Cool Britannia, but of New Labour. The knowledge economy is alive and ticking in the City, if not in the metal-bashing redoubts of the Midlands and the north.

Back to the Ferris wheel. The view is spectacular but the ride is stomach-churning. So, too, with London’s demographic rollercoaster. Stand by for political upsets ahead.

Read more from the NS archive here. A selection of pieces spanning the New Statesman’s history has recently been published as Statesmanship (Weidenfeld & Nicolson)

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