In my opinion, the diversity and flexibility of London’s economy are two of the key reasons for its success and status as a World City. London’s economy is not based purely on a handful of key business sectors but on a complex, constantly evolving, clustering of inter-related economic activities. While the financial and professional services sector is London’s biggest in terms of both the number of jobs it supports and the economic value it generates, it’s also a world leader in education, health, retail, tourism, leisure, and information and communication. In fact, London has 15 different business sectors with at least 115,000 jobs each!
London’s economy has changed significantly over the past three decades, with a particular decline in manufacturing. However, there are still thriving manufacturing sectors within London, producing a wide range of products. These tend to be located in outer London locations, due to better affordability and access to the national road network.
The rise of online retailing and the increased demand for fast delivery times has led to growth in the warehousing and logistics sectors. These sectors are also typically located in outer London boroughs and further enhance the diversity of London’s economy. This diversity provides employment opportunities for Londoners of all levels of skills and qualifications, and enables London’s economy to be remarkably resilient in the face of economic cycles and structural changes.
I believe that safeguarding and further enhancing the diversity of London’s economy is crucial to maintaining London’s competitive advantage on a global scale. This requires careful planning on a number of levels: the provision of appropriate infrastructure; the supply of a diverse and skilled labour force; the provision of a legal, tax, and political environment that encourages business investment and entrepreneurship and finally a planning system that provides businesses with a suitable supply of employment land and premises.
While there is widespread recognition of the economic importance of investing in infrastructure and skills, I believe that we often overlook the important role of the planning system in ensuring a diverse and flexible business base. This is particularly the case in London, where high demand for residential properties is leading to a significant reduction in the supply of commercial land.
Changes to permitted development rights legislation, allowing the conversion of business premises to housing without the need for the normal planning procedures, is resulting in a significant reduction in the amount of available commercial space. While much of central London has been exempted from permitted development rights until May 2019, most outer London locations enjoy no such exemption. This risks pushing businesses out of London as the supply of commercial floorspace declines, reducing choice and pushing up commercial rents and land values.
The continued prosperity of London requires diversity in its economic activity. Central London alone cannot accommodate the full spectrum of a truly diverse economy so, in order for London to be future proofed, the outer Boroughs need to be more than just commuter suburbs. They must be able to accommodate a diverse range of employment types, particularly those that are not feasible in central London. This will not only safeguard the diversity of London’s economy, and therefore its resilience, it will make London a more sustainable and attractive city for its residents and visitors.