“Every prime minister realises, a few months into the job, that the levers they’re pulling don’t work as expected”.
These words from former government adviser Sam Freedman, writing just before the 2024 General Election, will probably resonate with anyone who has had dealings with the British state. Faced with the difficulties of delivery, it is easy for governments to pretend to the country – and to themselves – that announcing something is as good as doing something. Refreshingly, though, this government has been clear that the country cannot look to quick fixes to resolve its economic and social problems. Rather – as FGF’s recent Mission Critical 03 report put it – we need “an approach to policy design which explicitly embraces complexity, not one which considers complexity on the sidelines”.
Such an approach takes time. Sometimes, it involves commissioning reviews or publishing strategies. Often – paradoxically – it is both boring and controversial: local government reorganisation and planning reform, for example, are characterised both by their dense technical detail and by the inflammatory media headlines they generate. Undoubtedly, the government needs to get better at communicating complexity, framing its programme in simpler, more immediate terms. But this should not mean shying away from trying to tackle complex problems. The forthcoming Industrial Strategy is a case in point: it will need to inspire short-term economic confidence, but also address the systemic issues holding back UK productivity. While the Industrial Strategy itself is not due until June, we may get an early sense of this dynamic in the coming days – and fittingly, in the country’s most complex city-region – with the publication of the London Growth Plan.
On its second day in office, the Government commissioned city-region mayors to draw up Local Growth Plans, identifying the industry sectors and clusters, constraints and enablers (such as infrastructure or skills gaps) where action would be needed to drive a step-change in productivity, locally and nationally. The approach recalls the ‘Local Industrial Strategies’ championed by former Conservative Business Secretary Greg Clark (now a member of Government’s Industrial Strategy Advisory Council). But Clark’s experience after the change of Prime Minister in 2019 – when both national and local industrial strategies faded rapidly into the background – is a cautionary tale for the government. Strategies are of limited worth unless they are underpinned by a concerted effort to empower and better integrate different parts of the state, civil society and private sector apparatus.
London’s Growth Plan is slightly different to the other Local Growth Plans, responding to the Mayor’s own manifesto commitment, rather than an exam question set by Government. But as the first major city-regional economic strategy to be published since the change of government – and likely the only one that will come out before the national Industrial Strategy – it will be watched with significant interest.
London’s economy is of a different scale to other city-regions: the capital accounts for nearly a quarter of the UK’s economic output, and West London’s economy alone nearly equals Greater Manchester’s in size. As the UK’s global city, London is a gateway for investment, trade and tourism across the country – complementing other city-regions, rather than crowding them out. The capital’s success is in the whole country’s interests.
But this is not always a popular message – particularly when it comes to making difficult choices about where Government’s attention and resources should be directed. In a tight fiscal environment, and with international affairs likely to sap Government’s limited ‘bandwidth’ for months to come, the easy thing to do politically would be to greet London’s Growth Plan with warm words, but no cold cash. In terms of the government’s economic mission, though, this would be a huge error.
Undoubtedly, and by some margin, London is more productive than other places in the UK. But as the Centre for Cities has pointed out, London’s productivity slowdown is the single biggest reason for the UK’s productivity slump post-2007. More meaningful is to compare London’s economy as it is now, to London’s economy as it could be: if it had continued growing at pre-2007 rates; if it had grown in line with its international competitors and comparators; if it was playing its part in delivering on Government’s ambition for the fastest sustained growth in the G7. Through that lens, the case for including London in the scope of a more interventionist, mission-driven industrial approach looks far stronger.
When many of us think of London, we think of the City – the Square Mile, with its expanses of glass and steel, symbolising a region spanning many more miles and many millions of people. In fact it is financial and professional services, mainly in central London, which have been the epicentre of the capital’s productivity decline. But London’s economy has other strings to its bow. Recent research from Centre for London, initiated by Ealing Council and supported by West London Alliance and Imperial College London, explores how the capital is becoming more polycentric, with a rapidly expanding range of opportunities beyond Zone 1.
West London alone holds myriad examples. Alongside being home to Westfield London, White City hosts one of the capital’s hottest innovation districts, driven by the ‘Upstream’ collaboration between Hammersmith and Fulham Council and Imperial College. Old Oak Common and Park Royal bring together one of Europe’s largest brownfield opportunities with one of its largest industrial estates, creating space for industries from film studios to food manufacturing. Brent Cross Town will be home to Sheffield Hallam University’s London campus, a new shop window for one of Britain’s most successful export industries. And this is without mentioning logistics and aviation, which connect much of this activity with the rest of the country and the globe.
London has significant potential for further growth in many of the sectors identified in the government’s Industrial Strategy Green Paper, notably creative industries, life sciences, digital and tech and – perhaps surprisingly to some – advanced manufacturing. Investing in the success of these industries in London is perfectly compatible with, indeed complementary to, the effort to nurture these industries elsewhere. Just as in other parts of the country, the growth London needs will not simply happen on its own. For example, the availability of land for both housing and commercial uses is perhaps the most fundamental constraint facing London’s economy. Densification in areas outside central London will be essential to tackling this, but can only be sustainably achieved by investing in transport connectivity. Schemes like the West London Orbital would catalyse thousands of homes and jobs, but London alone is not in a position to fund them. Alongside other city-regions, it needs a long-term funding deal with Government, and ideally greater freedom to finance investment locally, such as through land value capture mechanisms.
Similarly, and given London’s tech ecosystem, the capital must be central to the government’s vision for AI – but to host the relevant data infrastructure (and indeed to accommodate other energy-intensive industries) alongside meeting wider decarbonisation targets, London would need urgent upgrades to national and local electricity grids. Again, despite London’s size and global importance, it is not empowered to resolve these issues on its own. There are many other examples – from certainty over economic development funding like the UK Shared Prosperity Fund, to greater control of technical skills pathways to support the industries of the future – where London experiences similar barriers to growth as those which exist elsewhere in the country, and needs similar national backing to succeed.
The London Growth Plan will provide the first real insight since the election into how the capital is considering these issues, and how the government might respond in the Industrial Strategy. London is complex – and the rest of the UK’s relationship with London is perhaps even more so. But if Government is serious about its growth mission, this is yet another area of complexity that it must embrace.
