London must invest in infrastructure now or plan for decline

New pre-Election report by London First identifies £1.9 trillion in economic benefits from properly prioritised and funded investment in the capital’s infrastructure. 

Antony Oliver
24 March 2015

Twitter FacebookLinkedIn

Print

Topics 

Planning

Attachments 

London First - Investing for Growth

London must embrace the choice between investing in infrastructure and so reap the benefit of jobs and growth or face a future of managing decline as the city struggles under the pressures of a rapidly increasing population. 

According to a new report by business lobby group London first, a £1.9 trillion prize awaits should the capital opt to properly fund and prioritise vital investment in transport, communications, housing, water and power with the UK also benefitting from significant returns to the Treasury.

"With a projected 100,000 additional people living in the capital every year, London now faces a stark choice. Do we plan to support jobs and economic growth – or effectively plan for decline?" Jo Valentine, London First

However, with London’s population set to grow from the current 8.2M to beyind 10M in 20 years,  failure to invest, warns the report, will see the capital become less attractive as a place to visit, live or work, public dissatisfaction increase and international competitiveness is hit.

 “Fulfilling London’s growth potential would bring significant benefits to London and the UK,” says the report. “Illustrative modelling undertaken by KPMG suggests that if infrastructure investment enabled an increase in London’s GVA growth rate from the historic trend of 2.5% to 3.5%, this would yield an additional £1.9 trillion to the economy in present value terms. Of this, around £650 billion would be raised in additional taxation alone.”

The report, London’s Infrastructure: Investing for Growth, was produced in advance of the annual London First Infrastructure Summit tomorrow (Wednesday 25 March) at which the Greater London Authority will also publish its 2050 Infrastructure plan for capital (for report click here). 

The London First report calls for:

•       the Mayor and GLA to translate its 2050 Infrastructure Plan into a prioritised and integrated housing and infrastructure investment programme, focused on those projects that will drive higher economic growth.

•       central government to not only maintain London's transport grant funding at least at current levels into the 2020s in this summer's forthcoming spending review, but to go further by providing London with the funding, powers or other guarantees that will enable London to invest for growth.

•       the business community to play a part in funding the infrastructure that's needed, to speak with a coherent voice on priorities, and to hold infrastructure providers to account as a quid pro quo for the funding provided.

Baroness Jo Valentine, Chief Executive of London First, said the report was timely following the Budget and highlighted the Chancellor’s assertion that the UK recovery requires investment in both London and a ‘Northern Powerhouse’ in which he pointed out: 'We can't pull the nation up by pulling London down'. 

“We now need to invest in the transport, housing and wider infrastructure critical to making the capital a great place to live, work and visit. Chris Griggs, British Land

Baroness Valentine said: “This report shows that politicians must not forget the importance of investing in London. Low interest rates mean the capital has a once-in-a-generation opportunity to invest in infrastructure.”

She added: "With a projected 100,000 additional people living in the capital every year, London now faces a stark choice. Do we plan to support jobs and economic growth – or effectively plan for decline?"

Chris Grigg, chief executive of British Land and the chair of the London First working group in charge of developing the report added: “London is growing at a rate not seen for a hundred years or more.’

“We now need to invest in the transport, housing and wider infrastructure critical to making the capital a great place to live, work and visit. Enabling growth in the capital will help maximise our national economic potential, delivering jobs and opportunity for the entire UK,” He said

In his introduction to the report, John Dickie, director of strategy & policy, at London First pointed out that London’s infrastructure investment programme 

The programme needs to have a long-term horizon, but also to be responsive to the changing circumstances and needs of London’s economy. And it needs to be funded. This report argues that investment in London will pay for itself.

“We now urge government to work constructively with London’s civic and business leaders to deliver the infrastructure this great city needs,” Investing for Growth report.

So as we approach a general election – and in London next year a Mayoral election – we need our political leaders to act on the conclusions set out in this report from London business, and to go for growth.

Holding London back will hold back the UK as a whole. Enabling growth in the capital will help maximise our national economic potential, delivering jobs and opportunity for the entire country.

In producing its London 2050 Infrastructure Plan the GLA has estimated that investment in the infrastructure identified could raise London’s GVA growth by one percentage point to 3.5% a year.

Analysis of the proposals by Arup estimates the cost of the GLA’s proposal in the GLA’s plan at £750bn billion but concludes that the return on investment would be £2.50 for every £1 spent.  

“We now urge government to work constructively with London’s civic and business leaders to deliver the infrastructure this great city needs,” concludes the report.