London v the Rest: Did Evan Davis find the gap?

March 6, 2014 by
Filed under: Enterprise 

Evan Davis brought the economic geography textbook to life on the nation’s TV screens Monday night, with Mind the Gap (available on iPlayer until March 17th), in which he “asks what the rest of the country can learn from London’s success”. Alex Salmond has recently referenced London as the “dark star of the economy, inexorably sucking in resources, people and energy”, echoing criticisms made by Liberal Democrat Business Secretary Vince Cable, who described the city as “a great suction machine”. Mind the Gap featured sweeping shots of London’s skyline and plenty of insight into the property and infrastructure developments underway, alongside snazzy data visualisation of how London’s exceptional economic productivity and worker density, in a UK context. Oh, and some nice archive footage.

London's influence goes beyond its administrative borders

London’s influence goes beyond its administrative borders

Here are five insights and five oversights from the narrative Evan presented.

At the City Growth Commission, hosted at the RSA, we’re funded by the Mayor of London, London Councils, and the Core Cities. Our role is to influence policies which will ensure that all cities (and the wider metro areas) are able to maximise their growth potential.

Insight

Cities depends on agglomeration economics: the productive benefits that come when people work closely alongside each other between organisations and between industries and sectors. Firms want to be close to other firms to collaborate and compete, stealing staff and ideas and customers and suppliers. It was great to hear about the importance of networks – social as well as digital. As Evan says, “We were told technology meant location doesn’t matter; but it matters more than ever”. The great irony, highlighted by Manuel Castells 20 years ago, is that the more ubiquitous electronic communication becomes, the greater value we recognise and ascribe to in face-to-face interaction.

Jules Birch ‏@jules_birch Mar 3 Funny how ‘networking economics’ concentrates everything in one place when theoretically it shouldn’t matter where you are #mindthegap

Oversight

Few people have been able to define if and when there are downsides of ever-greater concentration and densification start to outweigh the benefits. London is building up, more than out, due to the Green Belt, but is still only half the density of New York City. While I’m not as sure as Ed Cox that of IPPR North “all the evidence shows” that London will overheat and topple over, we didn’t hear enough about the co-dependent relationship between London and other towns and villages across the South. Another aspect of London’s economic geography was conspicuous in their absence: the relationship between migration, diversity and urban growth. As well as economic opportunities, do migrants feel especially inclined to settle in London, because of its size and capacity to host multiple communities? And what about evidence that there is an economic benefit from diversity?

Insight

Agglomeration plays a role in the economics of urban development, for example leading to infrastructure projects to expand transport capacity. Economic success feeds itself: it’s a self-fulfilling positive feedback loop. “You can’t design an ecosystem, it evolves”, said one tech investor in Shoreditch. The best government can do is shine a spotlight in order to “nudge on” these successes. This means, essentially, “there is no formula to copy” – except perhaps bigger is better?

Oversight

It wasn’t clear whether these dynamics are particularly strong in London, now or historically, or common to all large cities. Urban development depends on other factors including political power (such as compulsory purchase – used very differently in China and India), and factors such as the international economic climate and currency exchange rates which make London property a particularly attractive place for those with financial wealth to invest. Furthermore, I wonder if Evan has ever been to Silicon Valley? It’s the most exciting tech community in the world, it got a turbo-charge from federal investment, and one of the least exciting suburban landscapes to explore. Economic dynamism and great urbanism don’t always go hand-in-hand.

Apple offices and empty streets in Silicon Valley. Image credit raneko via Flickr

Apple offices and empty streets in Silicon Valley. Image credit raneko via Flickr

 Insight

London’s leaders want growth, and have won the national argument to invest in growth. “London is the flywheel that drives it” said Mayor Boris Johnson; “the gateway”, which “exports tax and jobs…the better London does the better the UK does”. As Transport for London added: “there are certain sectors which choose locations at an international level; if we don’t get it in London we don’t get it in the UK.”

Oversight

Part of London’s success has been a projection, nationally and globally, as a place where exciting things happen;it’s a city which can represent itself well visually – with plenty of new skyscrapers crammed upona medieval street pattern. But the programme fell into the trap of assuming “London” speaks with one voice At one point Evan Davis claimed that “Londoners have an insatiable appetite to expand”. Do they? As we highlighted in our recent Metro Growth report, parts of Outer London have fallen behind the rate of recent national economic growth, and there is greater variation in economic activity within each UK region, than between them.

Insight

We’re in the middle of the greatest industrial restructuring since industrial revolution, fuelled in part by the ‘Big Bang’ of financial deregulation in 1986. London now has the greatest concentration of “producer services” in the world, and millions of workers are also millions of consumers. Their consumption in turn fuels millions of jobs, locally, in other service industries.

Oversight

That restructuring was in part a political project. Heseltine’s leadership on redeveloping Docklands created space for a second office district and financial services hub in London.

Malcolm Tait ‏@TaitPlanning Mar 3 Getting frustrated with#mindthegap – regional imbalance isn’t just ‘natural’ – it’s shaped by political decisions

Before the 1980s, things weren’t looking so bright. Evan said “London lucked out by having the right industries at the right time”. But, as the Telegraph noted, financial deregulation was a conscious effort to drive employment growth and economic activity. There was no mention of how the financial value that is captured by different types of activities is negotiated between managers, staff, shareholders and those who regulate the economy. In short, London has always been a financial hub; but finance has not always been the economic nexus of the economy, nor such an extremely lucrative profession.

George Eaton ‏@georgeeaton Mar 3 Worth recalling that London’s population fell between 1960s and 1980s. Not a story of inexorable growth.#mindthegap

Insight

There are winners and losers in the process of economic growth. Evan suggested “It’s a much more brutal process than most of us would like”, focusing on the displacement of homeowners on the Heygate Estate. If we want to save national icons like Battersea Power Station from the wrecking ball, we need global investment. But affordability is a concern: “[London] has to watch it, and make sure it is a place open to the nation. It will be tragic if someone from Staffordshire thinks they can’t get a job there because they can’t afford to live there.”

Oversight

Did Evan find the right gap? According to Evan, “everywhere I go in London, I see signs that the city’s success is becoming entrenched”. But Mind the Gap did not consider the gaps between people in London: walk a mile in any direction from the Shard and you’ll see success is not distributed. Like other places, average wages have not kept up with rising prices.

Median hourly earnings excluding overtime of all employees, UK and London, ONS Annual Survey of Hours and Earnings

Median hourly earnings excluding overtime of all employees, UK and London, ONS Annual Survey of Hours and Earnings

Having coffee with Boris at the top of the Shard makes for great TV, but we’d learn something different if Evan had coffee with staff at one of London’s 1500 coffee shops. We saw the gold plated plates of a £39.5m Mayfair house, and Evan remarked at how rising prices for such “prime housing” had endured the recession. It would be equally eye-opening to consider the sacrifices many people are making. Those on low wages in London jobs have economised by converting living rooms in shared housing to bedrooms. The number of overcrowded homes in outer East London grew 41% in the last decade.

Ampp3d ‏@ampp3d Mar 3 This is all lovely so far on#MindTheGap, but food bank usage in London has quadrupled in two years http://bit.ly/Nh36gQ

From pubs to think tanks – people struggling with London’s housing affordability wonder whether these two trends are related, and London’s leading academics have denounced London’s latest housing strategy as woefully inadequate. Meanwhile the deputy director of research at the IMF, writing in the pages of the FT, concludes that “measures that governments have typically taken to reduce inequality do not seem to have stunted growth.”

I am sure we could make compelling TV which considered the relative merits of important policy options for mending the gap: how to use taxes, public spending, regulations like the minimum wage, and public services like education to improve the fortunes of a broader constituency: those in London and across the country. We heard from a recent Core Cities meeting that central government policy has a long way to go be more sensitive to the differences between different places. By contrast, Evan’s cinematic homage to a booming place was perhaps insensitive to the policies which have enabled that growth. Filming the differences between places is a visually seductive way of talking about differences between people.

Before the programme heads North, next week, spend two minutes and give the last word to a Londoner: George the Poet

Jonathan Schifferes is research lead for the City Growth Commission hosted at the RSA (@jschifferes)

 

 


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