Autumn Statement – London is number one, and it hurts

No alarms and no surprises in this Autumn Statement. A wise choice perhaps at the end of a year that has had a few too many.

We knew that London, native habitat of the Metropolitan Elite (whatever that means), wouldn’t be a major beneficiary of this latest round of tax and spend. The Chancellor noted in fact that ‘for too long, economic growth in our country has been too concentrated in London and the south east’ and that progress in other cities must be accelerated to try to bridge the gap – at least he didn’t suggest dragging the capital down.

What London did get was rather more by the back door, as a result of the Government’s devolution agenda and the national need to address the housing crisis. There will also be more to come in the form of the Housing White Paper, the recommendations from the National Infrastructure Commission, the next Public Private Partnership projects and of course two budgets to look forward to next year as the Chancellor recalibrates the Treasury’s schedule. Ironically Hammond will double up on the big set pieces before honing the timetable down to just one in the Autumn from 2018.

Devolution

Arguably, the big win for the capital is the devolution of the Work and Health Programme and the adult education budget. This was hinted at last week by Deputy Mayor for Planning, Regeneration and Skills, Jules Pipe, at the London Conference as he spoke about the need to link the capital’s workforce strategy with its planning strategy. For a place to grow it needs homes, jobs and people with the right skills to do those jobs.

This subtle but significant shift hopefully heralds further movement on this front, specifically the devolution of the skills budget for 16-18 year olds, and gives the Mayor a little more of the power he needs to insulate the capital from the impact of Brexit on our multicultural workforce. Post-referendum, this has been the big campaign push from the Mayor’s Office and Sadiq will likely be taking today’s announcements as a modest success but one that represents only a small fraction of his wish list. Fiscal devolution (particularly property taxes – weren’t we supposed to get an announcement on Stamp Duty reform today?) and more powers over health services and the justice system remain at the top of that list. Equally, London Councils was hoping to receive more support for adult social care. Our growing and aging population is more and more dependent on our increasingly stretched local authorities and this is an issue that won’t go away, let’s hope it’s addressed in at least one of next year’s budgets.

Housing

The Mayor has also lauded the Greater London Authority’s (GLA) ‘record-breaking’ affordable housing settlement. £3.15bn over the next five years is impressive, compared to the £1.07bn that Boris got for 2015-18. The money also comes with a relaxation of the rules over how Sadiq can spend it – it can be used for low-cost rent, London Living Rent and shared ownership homes. The impact of this will undoubtedly be explored in the Supplementary Planning Guidance (SPG) due for publication next week. We are expecting that this will include a new definition of ‘affordable housing’ to include this mix of tenure; a vital change if we are to address the needs of all Londoners, especially those in the growing private rented sector.

Transport and Infrastructure

Sadiq has expressed disappointment that there was nothing about devolving suburban rail services to Transport for London and there was presumably some frustration about the lack of progress on Crossrail 2 as well. Indeed, the sole mention of Crossrail 2 in the full statement is a dig at the lack of business case to date (we hear there is no love lost between Sadiq and Transport Secretary Chris Grayling). If we’re being optimistic, we could take comfort in the message about transport funding needing to better ‘support housing growth’ and this tallies with Crossrail 2 MD Michelle Dix’s recent narrative about CR2 being as much a developer as a rail company. She might end up with some housing money for her new trains. But if we wanted to feel hard done by, then this is the sector to dwell on. Money and news here might come later, perhaps via the NIC, but it was a pointed omission today.

Widening our gaze a little, the 20% increase in Research and Development money is surely good news for the capital and its world-leading universities, especially as they are feeling vulnerable in the face of Brexit and the potential loss of their European funding. Same goes for the focus on digital infrastructure; it was reported just yesterday that London is 26th in a league table of connectivity in Europe’s capital cities. Turns out we’re not good at everything.

Over the coming weeks LCA will be analysing today’s announcements alongside the Housing white paper and SPG from City Hall. We will cover it all along with the rest of the month’s London news in the next edition of LDN - London in Short – sign up here to make sure you receive it.

As always, we hope you found this analysis helpful and interesting, do let us know if you have any comments or questions.