Good transport links will be the foundation of new homes for London

Not enough of these. Image: Oli Scarff/Getty.

The latest in the Future of London series, presented by Transport for London.

This time: how can we solve the capital’s housing crisis?

Ask a random group of Londoners what is the biggest challenge for the city and most will agre: housing. People are increasingly being priced out of inner London, and “generation rent” are wondering if and when they will ever be able to get on the property ladder. Recently, we’ve even heard stories of young Londoners relocating to Berlin, where property is cheaper and globally mobile jobs are available.

The problem is being compounded by population growth. London now has 8.6m residents – more than at any time in its history – and is predicted to reach 10m by 2030. That gives the city a monumental challenge: building the homes to house 1.4m more inhabitants when there’s already a housing crisis.


The city has a housing target to build 49,000 homes a year. Meeting that target means building 4,000 homes a month, or one home every 10 minutes.

The next mayor, elected in May 2016, will have to work round the clock to solve the housing crisis. If they don’t, it could cost the economy £35bn over the next 10 years.

The next mayor isn’t going to put a hard hat on, get their shovel out and build the houses themselves, but they will have a good toolbox with which to work. In the UK, London’s mayor has unmatched powers over strategic planning and, crucially, an integrated transport network, to unlock land for development. If combined with a clear vision and leadership from City Hall and supported by national government, London can deliver the homes Londoners need.

One of the pressing questions is deciding where the houses should be built. Mayoral hopefuls are looking at options including building outside the city’s boundaries, capitalising on opportunity areas, densifying parts of inner London and developing town centres in outer London. They are also looking at using parts of public sector-owned land to create homes.

Connecting homes with jobs

For each strategy considered, the next mayor will also need to look at effective transport links, which are fundamental to unlocking housing potential and to London’s economy.

The most productive workers in the country work in central London. The firms they are employed by need to recruit from a wide pool of candidates, with many commuting from across the South East to work there. Seventy-nine per cent of workers in central London travel into work by train, and they travel further than commuters across the rest of Britain.

But the jobs they do are often globally mobile, making the imperative of providing affordable homes even more pressing. Seventy-three per cent of London businesses think that the current housing shortage poses a risk to the city’s economic future. Firms looking for global headquarters will consider risks like that when they look at locating in London.

Economic activity unlocked by Crossrail 2 would deliver a sum more than sufficient to pay half of the scheme’s costs

Meanwhile, firms locating in outer London will also expect their employees and customers to be able to access them easily. This requires an effective road network and connections for people cycling, walking and using local bus services.

Good transport links are therefore vital to unlocking the developments which are needed to address the housing shortage and maintain London’s competitiveness. Crucially, the housing they unlock can help to fund the transport schemes themselves.

Under the capital’s control

The planned extension of the Northern line, running from Kennington to Battersea, is being funded in part by the developers building on the land around it. The area is expected to deliver 16,000 new homes for London. A further 24,000 homes could be built around Old Oak Common, an area set to benefit from improved links on the London Overground and High Speed 2 lines, while new bus and cross-river rail links could unlock 11,000 new homes at Barking Riverside.

Another scheme that could be part-financed by Londoners is Crossrail 2, with the capital funding more than half of the cost of the scheme. Economic activity unlocked by Crossrail 2 would deliver billions of pounds of net additional tax receipts, a sum more than sufficient to pay half of the scheme’s costs. It could support 200,000 new homes across London and the South East, deliver transport and regeneration benefits, and support around 60,000 jobs across the UK during construction.


With the equivalent of two full Tube trains of people being added to London’s population every week, the city cannot afford to let Crossrail 2 sit on the drawing board. If Crossrail 2 is given the go ahead, work could start by 2020 and be finished by 2030. 

London’s next mayor will have the powers to unlock new housing, and will undoubtedly have a strong mandate from voters to do so. By integrating new developments with the existing transport network, improving links and ensuring that the right financing for projects is in place, the next mayor can deliver thousands of new homes.

But their capacity to push forward and finance schemes like Crossrail 2, which could transform housing supply across the city, still lags behind competing cities like Berlin.

To catch up, giving the mayor more powers to plan for the long-term and secure funding, could transform the city – and have a dramatic effect on whether Londoners will face the same challenges in years to come. 

The future of London series is supported by Transport for London, and commissioned by CityMetric. You can see the other articles at the following links:

"What will the capital look like in 20 years time?" The powers the capital needs to thrive

"Data helps us provide better transport": an interview with Shashi Verma, TfL's Director of Customer Experience, about big data and new methods of payment

 
 
 
 

“Stop worrying about hairdressers”: The UK government has misdiagnosed its productivity problem

We’re going as fast as we can, here. Image: Getty.

Gonna level with you here, I have mixed feelings about this one. On the one hand, I’m a huge fan of schadenfreude, so learning that it the government has messed up in a previously unsuspected way gives me this sort of warm glow inside. On the other hand, the way it’s been screwing up is probably making the country poorer, and exacerbating the north south divide. So, mixed reviews really.

Here’s the story. This week the Centre for Cities (CfC) published a major report on Britain’s productivity problem. For the last 200 years, ever since the industrial revolution, this country has got steadily richer. Since the financial crash, though, that seems to have stopped.

The standard narrative on this has it that the problem lies in the ‘long tail’ of unproductive businesses – that is, those that produce less value per hour. Get those guys humming, the thinking goes, and the productivity problem is sorted.

But the CfC’s new report says that this is exactly wrong. The wrong tail: Why Britain’s ‘long tail’ is not the cause of its productivity problems (excellent pun, there) delves into the data on productivity in different types of businesses and different cities, to demonstrate two big points.

The first is that the long tail is the wrong place to look for productivity gains. Many low productivity businesses are low productivity for a reason:

The ability of manufacturing to automate certain processes, or the development of ever more sophisticated computer software in information and communications have greatly increased the output that a worker produces in these industries. But while a fitness instructor may use a smartphone today in place of a ghetto blaster in 1990, he or she can still only instruct one class at a time. And a waiter or waitress can only serve so many tables. Of course, improvements such as the introduction of handheld electronic devices allow orders to be sent to the kitchen more efficiently, will bring benefits, but this improvements won’t radically increase the output of the waiter.

I’d add to that: there is only so fast that people want to eat. There’s a physical limit on the number of diners any restaurant can actually feed.

At any rate, the result of this is that it’s stupid to expect local service businesses to make step changes in productivity. If we actually want to improve productivity we should focus on those which are exporting services to a bigger market.  There are fewer of these, but the potential gains are much bigger. Here’s a chart:

The y-axis reflects number of businesses at different productivities, shown on the x-axis. So bigger numbers on the left are bad; bigger numbers on the right are good. 

The question of which exporting businesses are struggling to expand productivity is what leads to the report’s second insight:

Specifically it is the underperformance of exporting businesses in cities outside of the Greater South East that causes not only divergences across the country in wages and standards of living, but also hampers national productivity. These cities in particular should be of greatest concern to policy makers attempting to improve UK productivity overall.

In other words, it turned out, again, to the north-south divide that did it. I’m shocked. Are you shocked? This is my shocked face.

The best way to demonstrate this shocking insight is with some more graphs. This first one shows the distribution of productivity in local services business in four different types of place: cities in the south east (GSE) in light green, cities in the rest of the country (RoGB) in dark green, non-urban areas in the south east in purple, non-urban areas everywhere else in turquoise.

The four lines are fairly consistent. The light green, representing south eastern cities has a lower peak on the left, meaning slightly fewer low productivity businesses, but is slightly higher on the right, meaning slightly more high productivity businesses. In other words, local services businesses in the south eastern cities are more productive than those elsewhere – but the gap is pretty narrow. 

Now check out the same graph for exporting businesses:

The differences are much more pronounced. Areas outside those south eastern cities have many more lower productivity businesses (the peaks on the left) and significantly fewer high productivity ones (the lower numbers on the right).

In fact, outside the south east, cities are actually less productive than non-urban areas. This is really not what you’d expect to see, and no a good sign for the health of the economy:

The report also uses a few specific examples to illustrate this point. Compare Reading, one of Britain’s richest medium sized cities, with Hull, one of its poorest:

Or, looking to bigger cities, here’s Bristol and Sheffield:

In both cases, the poorer northern cities are clearly lacking in high-value exporting businesses. This is a problem because these don’t just provide well-paying jobs now: they’re also the ones that have the potential to make productivity gains that can lead to even better jobs. The report concludes:

This is a major cause for concern for the national economy – the underperformance of these cities goes a long way to explain both why the rest of Britain lags behind the Greater South East and why it performs poorly on a

European level. To illustrate the impact, if all cities were as productive as those in the Greater South East, the British economy would be 15 per cent more productive and £225bn larger. This is equivalent to Britain being home to four extra city economies the size of Birmingham.

In other words, the lesson here is: stop worrying about the productivity of hairdressers. Start worrying about the productivity of Hull.


You can read the Centre for Cities’ full report here.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and on Facebook as JonnElledgeWrites

Want more of this stuff? Follow CityMetric on Twitter or Facebook