The Mayor’s Economic Development Strategy for London December 2018 Date THE MAYOR’S ECONOMIC DEVELOPMENT STRATEGY FOR LONDON Copyright Greater London Authority December 2018 Published by Greater London Authority City Hall The Queen’s Walk London SE1 2AA london.gov.uk enquiries 020 7983 4000 ISBN 978-1-84781-708-2 3 Contents Mayor’s foreword 5 Executive summary 8 1. Introduction 29 2. The state of London’s economy 43 3. A fairer, more inclusive economy 59 4. Creating the conditions for growth 99 5. Supporting London’s sectors 155 6. Working together to achieve the Mayor’s vision 221 Glossary 231 THE MAYOR’S ECONOMIC DEVELOPMENT STRATEGY FOR LONDON 5 Mayor’s foreword London is one of the richest cities in For centuries, our city has been a global the world, yet despite our economic centre of trade and commerce, attracting strengths, our city is home to some investment, ideas and talent from around of the poorest neighbourhoods in the the world. This long history means that country. Almost two in five Londoners today London is not only a lynchpin of today live in poverty – a shameful the global economy, but the best place situation, which is not only damaging in the world to do business and to start the life chances of many Londoners, and grow a new company. but is having a detrimental effect on economic growth. Our entrepreneurial spirit, reputation for dynamism and openness to When I stood to be the Mayor of London, collaboration gives us a crucial edge I said I wanted all Londoners to have the over international rivals. And our same opportunities that this city gave to economy’s firm foundations and core me and my family. And I am as passionate underlying strengths – such as our as ever about building an economy that favourable time-zone, language, highly delivers for everyone and leaves none educated workforce, cosmopolitan of London’s communities behind. culture, iconic public transport system, world class universities and respected This Economic Development Strategy legal and financial institutions – help to is about taking a fresh approach to guarantee our continued success by economic development. I’m clear, giving investors the support, confidence inequality is not inevitable and tackling and services they need to conduct it can actually lead to greater economic business in our city. prosperity. So, in this strategy, I set out my plans to create a fairer, more inclusive city with an economy that works for all Londoners. THE MAYOR’S ECONOMIC DEVELOPMENT STRATEGY FOR LONDON These strong foundations mean that So this strategy sets out how we can I’m optimistic about our economic achieve and foster ‘good’ economic prospects, but there’s no question our growth that doesn’t come at the expense city faces major challenges ahead. Brexit of disadvantaged Londoners, our air is causing huge uncertainty for many of quality, natural environment, employment London’s businesses, as well as those standards or social integration. I want to overseas thinking of investing in London. continue to improve the conditions that And a failure to secure a good deal in allow businesses to flourish and thrive. negotiations with the EU for our future But my overarching goal is to further trading relationship would deal a hammer enhance London’s competitiveness blow to our economy - hitting the and create a business environment that poorest and most vulnerable the hardest. is not only friendly – in terms of being That’s why, as Mayor, I will continue to conducive to investment and growth – press the Government to secure a deal but also fair, where all companies play that protects jobs, growth and prosperity. by the rules and where all Londoners stand to benefit. For more than a thousand years, London’s economy has prospered By channelling investment into key areas, because of our openness to people and equipping Londoners with the skills, our willingness to trade with partners education and training they need to across the globe. Whatever happens, participate in the modern economy, and as the UK prepares to leave the EU, it is by investing in infrastructure and offering imperative we stay true to this tradition targeted support to certain sectors – and show how now – more than ever – like tech, life-sciences, the night-time our city both remains open for business economy and the capital’s creative and is ready to seize new opportunities. industries – I believe we can deliver on this vision at the same time as helping But Brexit is only one of our challenges. London’s businesses go from strength London’s housing crisis, weak to strength. On top of this, by promoting productivity growth, wage stagnation, innovation and the adoption of cutting- a lack of adequate infrastructure edge digital technologies across our investment and levels of inequality economy, we can raise wages and all threaten to put a brake on our productivity across all business sectors. economic ambitions and create a more divided city. The latest research shows that inequalities in income and wealth ultimately damage economic performance. 7 With greater collaboration between the public sector and the private sector, we can ensure our city has the housing, transport, infrastructure, technology, jobs and skills we need for everyone to prosper in the 21st Century. As Mayor, my aspiration is to ensure the proceeds of growth are more evenly shared and to make every Londoner feel like they have a stake in our economy and our society. By facilitating this kind of sustainable growth, we can improve the quality of life for many Londoners and increase opportunities for people to fulfil their potential. I want London to remain the best place in the world to do business, while placing much more emphasis on the general wellbeing, health and happiness of Londoners - this should always be the ultimate goal of any economic growth and development. Sadiq Khan Mayor of London THE MAYOR’S ECONOMIC DEVELOPMENT STRATEGY FOR LONDON Executive Summary London is a diverse and growing city - Meanwhile, London’s environment, and in terms of its people, and its economic especially its air quality, is under threat, make-up. Our city is often ranked putting people’s health and wellbeing at the most economically competitive risk. While London’s economy continues city in the world; our transport and to grow, it, like other economies, will communications networks, legal, political need to make the transition to a low and regulatory frameworks, alongside carbon circular economy in order to our rich mix of specialisms create a help address global environmental complex and unique ecosystem for challenges including climate change, business. Thanks to this and our vibrant depleting natural resources, and cultural life, openness, tolerance and pollution. The Mayor wants London to diversity, we are able to attract talent play a leading role in this transition and and investment from across the world. aims to ensure London’s businesses and workers are able to live healthier lives Yet, despite these strengths, many and benefit from the growing market Londoners do not share in the proceeds opportunities this represents. of growth. Maintaining a good standard of living is becoming harder, with wage The Mayor, Sadiq Khan, wants a growth remaining flat, forcing many prosperous and sustainable economy1 Londoners into poverty or debt. Many that works for all Londoners – one of our young people are growing up in which neither opportunity nor without access to the opportunities achievement are limited by gender, that the previous generation enjoyed. ethnicity, sexuality, religion, disability, place of birth or background. He wants The prospect of Brexit is causing business and entrepreneurs to feel uncertainty and anxiety for business supported to grow and innovate, and and investors, as well as the million EU to enjoy the certainty of knowing that citizens who have made their home in London will remain globally competitive our capital. and open to business. This strategy sets out the Mayor’s vision for London’s economy and calls on everyone with a stake in London’s future to help him make it a reality. 1 For evidence relating to how sustainability relates to positive economic growth, see Viguie and Hallegatte (2012), ‘Trade-offs and synergies in urban climate policies’. 9 A FAIRER, MORE INCLUSIVE World class education ECONOMY Although children in London generally have better educational outcomes Creating a fairer economy – one which than their peers in the rest of the works for all Londoners, and in which UK, compared to other global cities, no one finds themselves locked out especially in East Asia, we are falling from opportunity – is central to the behind. Our skills system does not cater Mayor’s mission. An economy in which adequately for the needs of learners the talents of some Londoners are or employers, with insufficient support not fully realised is not only unfair, in particular for the growth in technical it is wasteful and inefficient. skills that our economy needs. The more Londoners that have the opportunity to make the most of their The Mayor will work with schools, talents in tomorrow’s economy, the colleges and other partners to: faster our new industries can grow and prosper. There is some evidence that • increase the take-up and quality of more equal economies could do better early years education; in the long-term - with more stable and • develop a coherent and accessible quicker growth over longer periods - careers information, advice and than economies that have higher levels guidance offer; of inequality2. There is also evidence that they are safer, healthier and • break down gender stereotypes and happier places3. address other inequalities; and • lobby for sufficient funding to continue Fairness and inclusion sit at the to improve outcomes for all pupils and heart of this Economic Development to meet local childcare needs.