A City Under Pressure

September 10 2013 London & the World Part three: a city under pressure SUPPORTEDBY www.ft.com/london-world 2 FINANCIAL TIMES TUESDAY SEPTEMBER 10 2013 FINANCIAL TIMES TUESDAY SEPTEMBER 10 2013 3 London and the World | Overview London and the World | Overview CONTENTS The capital takes the strain in times of austerity London has fared better than much of the UK, but it is not immune to the impact of cutbacks – and also faces unique challenges. By James Pickford 2 OVERVIEW Despite its strengths, the capital is under Cuts to local authority budgets pressure in the wake of the financial crisis 4 POPULATION have left councillors facing Employers say attempts to cut migration could keep out the people London needs invidious choices on funding 6 HOUSING How much impact are foreign buyers having on the property market in the capital? benefit claimants decline since April 2011. But 7 AFFORDABLE HOMES Barnet’s claimant levels went up by 45 per cent, Traditional models of home ownership may and Newham and Haringey showed rises of 41 become a thing of the past, campaigners say per cent and 21 per cent. 8 EDUCATION Private rented property has become more The equivalent of 200 primary schools will be expensive over the period, and research by the needed by 2017 following a new baby boom Centre for London think-tank shows that rental 9 FREE SCHOOLS costs as a proportion of household income have Can the government’s new educational model increased from 21 per cent in 2001-02 to 27 per create places where they are most needed? cent in 2010-11. The proportion of people renting 10 OFFSHORE FINANCIAL CENTRES privately in the capital has risen to 25 per cent, The City’s relationship with overseas tax up from 18 per cent two years ago. havens is under ever-closer scrutiny The government says that London’s local 11 OPINION authorities received an extra £50m to help those Green party leader Natalie Bennett calls for affected by the housing benefit cap. But the a fundamental rethink on how London works councils would like to see the capital treated as a special case, with a higher cap to offset its greater housing costs. CONTRIBUTORS While councils have largely directed their NATALIE BENNETT is the leader of the criticism of public spending cuts at central Green party government rather than City Hall, Mr Johnson HANNAH KUCHLER is an FT journalist has not escaped the effects of tighter funding. FEARGUS O’SULLIVAN is a freelance Local authorities have attacked the mayor over journalist his plan to cut £28.8m from the fire service JAMES PICKFORD is the FT’s London and budget over two years, with the closure of 10 fire southeast correspondent stations and the loss of 14 fire engines and 552 HELEN WARRELL is the FT’s public policy firefighting jobs in the capital. correspondent (education and home affairs) Eight Labour-led councils have written to Eric Pickles, communities secretary, to try to overturn it, and said they would seek a judicial ILLUSTRATIONS review if the decision went ahead. It has even NICK LOWNDES prompted objections from Tory-run councils, such as Westminster and Kensington & Chelsea, where fire stations are to close. Special reports editor Michael Skapinker Londoners are not behind Mr Johnson: a Editor Hugo Greenhalgh YouGov poll in July showed 61 per cent against Lead editor Jerry Andrews the cuts, and 69 per cent believed they would Production editor George Kyriakos threaten public safety. Sub editors Richard Gibson, David Scholefield On infrastructure and spending – City Hall’s Picture editor Michael Crabtree biggest budgetary responsibility – the mayor has Art director Derek Westwood fared better. In its comprehensive spending Head of project delivery Rachel Harris review in June, the government cut Transport Head of strategic sales Patrick Collins for London’s grant by 12.5 per cent, to £1.6bn in Head of B2B & World Reports Robert Grange 2015-16. But fears of threats to Tube upgrades, road safety improvements and an ambitious cycle scheme proved false after ministers All editorial in this special report is produced by pledged to hold capital investment at the FT. Our advertisers have no influence over, or £1bn a year in 2015-21. prior sight of, the articles or online material. Tony Travers, a local government expert at the London School of Economics, OR ALL ITS RELIANCE ON greatest between boroughs and the government. Ravi Govindia, London Councils’ executive says: “Transport has not financial services, London’s Cuts to local authority budgets have left member for adult services, says: “While we The pioneer with the lamp been subject to anything economy has shown remarkable councillors facing invidious choices on funding, support the [Care] Bill, we are concerned that like the pressures imposed strength in the years following including that for activities they are statutorily councils will have to pick up the tab if it goes THE LIVES BEHIND THE BLUE PLAQUES on local government.” the banking crisis. It has put obliged to provide, such as rubbish collection and ahead as planned without first taking into COMMEMORATING SOME OF LONDON’S EMINENT These questions will be more distance between itself and adult social care. account London’s circumstances – particularly RESIDENTS. FIRST: FLORENCE NIGHTINGALE brought to the fore in two the other regions of the UK in London Councils, the umbrella organisation the high cost of residential care.” big tests of public opinion terms of output, and extended its for the city’s 33 local authorities, says a funding It is unclear whether Florence for London politics over the lead against the national average in household gap of £907m will open by 2018 because of the HE APPLICATION OF UK-WIDE Nightingale would have next two years: borough Fincome, employment rates and productivity. With rising cost of adult care. One-third of councils’ policies to London’s distinctive flourished in a National Health elections in 2014 and the general a broad-based economy and highly skilled labour funds are spent on adult social care, and this is economy creates other difficulties. Service tightening its belt. After election in 2015. Video force, the capital has cemented its status as the expected to grow as the population ages during The government is introducing being used by the government Mr Travers says the Labour party Gerard Lyons, chief engine of the UK economy. the next decade. The organisation has also changes to the benefits system, as a heroic figurehead for British efforts was likely to make “small gains” in the This has not left it unaffected by cuts in warned that the capital’s local authorities would Tcapping the total amount that a household can in the Crimean war, she raised the then borough elections, but questioned the view that economic adviser to the government spending designed to reduce a face further costs of £877m by 2019-20 to receive at £500 a week. Londoners pay about lavish sum of £45,000 to found a nurses’ London was a city that habitually votes Labour mayor, debates affordable daunting budget deficit. But the impact has accommodate government reforms to the care £1,400 a month for a two-bed property, against a training school at St Thomas’ Hospital, with in national polls. The party has seen big revealed itself in ways that reinforce the system. Under the plans, any care costs above a national average of £665, so more capital dwellers facilities that now seem spartan but were increases in its London vote share since 1997. housing with Toby Lloyd, contrasts between the capital’s economy and lifetime limit of £72,000 are expected to be will be caught by the cap. excellent for the time. She went on to But the “London Labour lead” is relatively new that of the regions. This has led to calls for carried by councils. Concerns have surfaced that the policy is revolutionise British nursing, despite being in historic terms, and by no means guaranteed. Shelter’s head of policy London to be treated differently by national But the costs of residential care are highest in pushing low-income groups out of central London confined to bed in her house in South Street, “The big challenge for Labour in 2015 is to hold www.ft.com/ policy makers – not least from its Conservative the capital. This means the proportion of people to the outer boroughs, which in turn puts Mayfair, almost crippled by an undiagnosed on to those people,” he says. mayor, Boris Johnson. paying for residential care in London could reach pressure on their provision of essential services. case of the bacterial disease brucellosis. Tensions over spending – and arguments over london-world If deficit reduction has exacerbated the 27 per cent, compared with 3 per cent in areas of Islington, Camden, Kensington & Chelsea and Feargus O’Sullivan the capital as a “special case” – are unlikely to PHOTOS: GETTY; BLOOMBERG; ANNA GORDON tensions in London politics, friction has been the UK where it is far cheaper, the report said. Westminster have seen the number of housing recede soon from London’s political debate. 4 FINANCIAL TIMES TUESDAY SEPTEMBER 10 2013 FINANCIAL TIMES TUESDAY SEPTEMBER 10 2013 5 London and the World | Migration An open or shut case Is the push to restrict immigration keeping out the very people the capital needs? By Helen Warrell ORE THAN ONE IN three Londoners were born outside the UK, and last year it emerged that white ethnic Britons are, for the first time, a minority in the capital. A decade-long surge in the numbers of Indian migrants, among Mothers, has contributed to London’s diversity.

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