Cities Outlook – the London picture

The Centre for Cities launched its annual Cities Outlook on 24 January in the scenic setting of London’s Living Room at City Hall. Here we take a look at what the report says about London.

Contrary to early predictions that this recession would be a ‘white collar’ one (where cities with high concentrations of white collar workers would be the worst affected), manufacturing and construction sectors were hardest hit. As a result, the likes of Cambridge and Edinburgh saw lower rises in their claimant count than cities such as Hull and Middlesbrough.

The report warns that those cities with large welfare bills will be very vulnerable to deficit reduction activity that will see the welfare budget reduced by around £18bn by 2014 /15 – or 9% of the total bill. Bad news for London perhaps, with an annual bill of £20bn – almost as large as England’s Core Cities put together. Possibly not: London’s welfare bill is small relative to its economy – 8% of 2008 GVA. Compare this with Liverpool where the proportion is 20% and things don’t look so bad. However, cuts to Child Benefit for higher earners and to Housing Benefit (significant due to the city’s high rents) mean that London will still feel the pain.

On the matter of public sector job losses, London will lose the most in absolute terms but, with its strong private sector track record and the fact that public sector jobs represent a fraction of the total jobs in the capital, London’s employment prospects look good compared with other cities. Add to that the high level of skills and diverse industrial base, the capital’s future looks good, in contrast with cities like Swansea, Stoke and Sunderland – cities heavily reliant on the public sector for jobs.

London keeps its place as the UK city with the highest business stock per population in the country – 445.7 per 1000 in 2009 – more than double that of Sunderland. It’s also in the top ten cities for earnings. However it isn’t always the case that large cities offer higher earnings, and Edinburgh is the only other large city in the top ten for earnings.

London fares less well in terms of equality. The capital ranks amongst the ten cities with the highest inequalities (based on the difference between the lower super output area with the highest claimant count and that with the lowest in a city), joined by Birmingham and Glasgow. Cuts to benefits may well intensify this problem. Smaller cities such as Oxford and York tend to be less unequal. Furthermore, economic success does not necessary reduce inequality. On the flipside, low levels of GVA do not guarantee a more equal city either.

But, let’s end on a positive note, London’s per capita carbon emissions are below the UK average – due to it’s industrial structure and higher density and, could it be, thanks to Boris’ bicyclists?