Download 4.1 Key Issues for Investment in People

Sustaining Success - London’s Economic
Development Strategy
Assembly Consultation Draft
October 2003
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Foreword – Ken Livingstone, Mayor of London
TO BE ADDED IN SUBSEQUENT DRAFT
Foreword – Honor Chapman, Chair of LDA
TO BE ADDED IN SUBSEQUENT DRAFT
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Contents
1. Strategic Context and Role of the Economic Development Strategy
This chapter sets out the Mayor’s vision for London and addresses strategy
consistency, crosscutting themes and implementation. It also explains the rationale
for intervention in economic development and clarifies the role of the wider public
sector and the London Development Agency.
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2. Overview
This section sets the London economy in context, outlines the major economic
issues facing the capital and identifies the key themes and areas of intervention
suggested by this strategy.
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3. Investment in Infrastructure and Places
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This chapter outlines key issues, objectives and actions relating to London’s
infrastructure and area regeneration.
4. Investment in People
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This chapter covers key issues, objectives and actions relating to improving
workforce skills, tackling barriers to employment and reducing labour market
disparities.
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5. Investment in Knowledge and Enterprise
This chapter sets out the key issues, objectives and actions relating to innovation,
business support, sector development, international trade and inward investment.
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6. Marketing and Promoting London
This chapter outlines the key issues, objectives and actions relating to the
international and domestic promotion of London as a world-class destination for
tourism, culture, investment and learning.
7. Implementation
This section summarises the resources and investment available to support
economic development and regeneration in London. It also explains the
organisational arrangements and delivery vehicles for implementing the strategy.
8. Action Plan
Appendix 1 Statutory Framework for the Preparation of the Strategy
Appendix 2 LDA Sustainable Development Principles
Appendix 3 LDA Target Framework
Appendix 4 London’s Sub-Regions
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1
Strategic Context and Role of the Economic Development Strategy
The Economic Development Strategy is part of a suite of Mayoral strategies designed to deliver the
Mayor’s vision for London, set out at the start of this document. The Mayor’s vision is to develop London
as an exemplary sustainable city based on three balanced and interlocking elements: strong and diverse
economic growth; social inclusivity to allow all Londoners to share in London’s future success, and
fundamental improvements in environmental management and use of resources.
The Mayor is required by law to produce eight strategies1 that set out how he intends to deliver the vision
set out above. The issues covered by these strategies are:

Spatial Development;

Transport;

Culture;

Ambient Noise;

Air Quality;

Waste Management;

Biodiversity; and

Economic Development.
The Mayor’s Spatial Development Strategy, known as the London Plan, provides the spatial policy
framework for all of the strategies and has six key dimensions.
1. Enable London to accommodate its expected growth within its existing boundaries - this entails
ensuring the best possible use is made of London’s land through denser patterns of development
and encouragement of mixed use of sites, while protecting open spaces and the Green Belt.
2. Steer growth to parts of London where it is needed most and can be accommodated most
effectively. The Plan identifies East London – and the Thames Gateway area in particular – as
having first priority for development, regeneration and investment, introducing a new scale and
quantity of development and accommodating a substantial proportion of the city’s expected growth.
It also considers where London has the most capacity for further development across its five subregions – in the Central Activities Zone (CAZ), opportunity and intensification areas, town centres
and in strategic employment locations. It seeks to forge links between these and regeneration areas
containing London’s most deprived neighbourhoods.
3. Sustain and develop the roles of central and inner London, the suburbs, and the city’s network of
town centres.
4. Achieve targets for providing new housing – particularly affordable housing – which is badly
needed to meet the needs of London’s current and future population, to give more people access to
homes they can afford and, as a result, help reduce the costs faced by residents and businesses.
London’s housing market is not working. House-building is at an historic low and people on low to
middle incomes simply cannot afford to live and work here. Some sections of the community, and
some places, have been excluded from London’s growth and from adequate housing. If this problem
is to be tackled, it will be necessary to make the most of opportunities for including homes in
mixed-use developments.
5. Ensure London is an attractive, well-designed and green city by achieving the wider environmental
sustainability of a growing London, tackling problems of poor air quality, excessive noise and
waste, and improving the city’s liveability for all its residents and businesses.
6. Provide the infrastructure – transport, social provision, telecommunications, gas and electricity and
water and sewerage - essential to supporting London’s continued growth.
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All strategies are available from the Greater London Authority (www.london.gov.uk)
In addition to the statutory strategies the Mayor has also chosen to develop a range of other policy
initiatives covering tourism, children and young people, childcare, energy, alcohol and drugs, rough
sleepers, domestic violence and poverty.
1.1 Consistency Across Mayoral Strategies
There is a legal requirement that the Mayor should consider the need for consistency between each of his
statutory strategies, and with national policies and international obligations. As detailed above the Mayor's
London Plan provides the integrating framework for each of these strategies. The London Plan takes as its
starting point the fact that London is forecast to grow significantly between now and 2016 and that for this
growth to be managed and accommodated there is a need for significant new investment in London's
infrastructure and public services.
The Economic Development Strategy supports this message by focusing on the objectives and actions
required to sustain London’s success and to ensure that London's economy is able to capitalise upon this
forecast growth. In this way, all of London's businesses, workers and residents will be able to benefit from
more equitable and sustainable economic development.
Other Mayoral strategies identify areas where the LDA has a role to play in facilitating the delivery of their
policies and proposals, although the LDA’s resources alone are insufficient to deliver the objectives of these
strategies in their entirety. Where the LDA is able to support direct actions contained within other
Mayoral strategies this will often be achieved through the detailed development and implementation of
LDA programmes, dealt with as part of the preparation and implementation of the Agency's Corporate Plan
and Programme Investment Plans. Consequently, this strategy does not list each of the policies and
proposals contained in other Mayoral strategies unless they directly relate to one of the Economic
Development Strategy’s core objectives at a strategic level. It does, however, seek to identify connections
between the Economic Development Strategy and other strategies.
1.2
The Role of the London Development Agency
The LDA has a unique status, as both a functional body of the Greater London Authority (along with
Transport for London, the Metropolitan Police Authority and the London Fire and Emergency Planning
Authority), and as one of the nine regional development agencies (RDAs) operating across England.
This means that this strategy has to reflect the priorities and purposes set out in the legislation establishing
the GLA as well as the RDA Act. The principal purposes of the GLA are to:

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Promote economic development and wealth creation in London.
Promote social development in London.
Promote the improvement of the environment in London2.
The legislation also sets out three cross-cutting issues that have to be taken into account in preparing and
implementing strategies:
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
Promoting health of people in London
Contributing to achieving sustainable development in the United Kingdom
Securing equality of opportunity for all people3
In addition, the statutory purposes of RDAs are to:
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Greater London Authority Act 1999, section 30 (2)
GLA Act 1999, sections 30(4) and 33
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Further economic development and regeneration;
Promote business efficiency, investment and competitiveness;
Promote employment;
Enhance development and application of skill relevant to employment;
Contribute to sustainable development.
RDAs, including the LDA, are required to produce and keep updated a regional economic strategy to
improve economic performance and enhance their region’s competitiveness. The statutory framework for
the production of the London Economic Development Strategy is detailed in Appendix 1.
The Economic Development Strategy is intended to set the strategic economic context for the whole
region. The LDA has a critical role to play in facilitating the delivery of this Strategy. Recognising that
the LDA is not a universal provider of economic development services or investments across London, the
Agency seeks to help London to achieve this in the following ways:
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Leadership with ideas - there are many players involved in London’s economic development and
the LDA has a key strategic leadership role to play in building consensus around the city’s priorities
and in co-ordinating collective efforts to deliver this agenda.
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Direct impact through resources - the LDA is committed to focusing its own resources on areas of
greatest opportunity and need, and where there is potential for development. It is funding a range
of initiatives across London, many of which are highlighted in this document.

Adding leverage from its partners - wherever possible, the LDA will seek to attract other public
and private sector resources to address our shared priorities and maximise our combined impact.
The Government provides approximately £300 million per year to the LDA to implement the strategy, but
this represents only a small proportion of total economic development and regeneration expenditure in
London. It is therefore essential that the objectives and actions contained in this strategy can also be
supported by all those organisations directly involved in funding activities linked to the development of
London’s economy including the London Boroughs, the Learning and Skills Councils and Business Link for
London.
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1.3
Cross-Cutting Themes
A central objective in reviewing the strategy has been to ensure the cross-cutting themes mandated by the
GLA Act are built into the analysis of London’s economy and that each the actions identified for the LDA
and partners make a positive contribution to their realisation. The actions listed within the document
include some specifically targeted at achieving the environmental and social aspects of sustainable
development, health and the needs of equality target groups4. Others will directly address the economic
aspects of sustainable development and some, by their nature, will have a strong focus on the needs of
equality target groups, such as interventions to reduce youth unemployment or secure the regeneration of
deprived areas. All actions will be subject to appraisal and monitoring to ensure that they address the cross
cutting themes.
More detail on the definitions and approach the LDA has adopted in relation to each of the cross-cutting
themes is presented below5.
Sustainable Development
The London Development Agency has been working to
ensure that sustainable development is central to all of
its activities. Its approach is based on mainstreaming
sustainable development across all activities.
The revision of the Economic Development Strategy
provides an opportunity to further embed the principles
of sustainable development, based on work undertaken
both internally by the LDA and by the London
Sustainable
Development
Commission
(LSDC),
including the LSDC’s Sustainable Development Framework
for London which sets out the Mayor’s vision for the
‘world class’ London of the future.
‘Economic development that
underpins the vision of London
as a sustainable world city for
current and future generations
by delivering social progress,
environmental protection and
the
sustainable
use
of
resources.’
LDA definition of sustainable
economic development
The approach to sustainable development encompasses the three basic dimensions of sustainability –
economic, social and environmental6 . It is also important to consider how choices made in respect of
economic, social and environmental development in London contributes to sustainable development in
neighbouring regions and the UK as a whole. The LDA has also developed nine sustainable development
principles against which the key elements of this strategy and its implementation will be tested (these are
detailed in Appendix 2).
The LDA’s priority equality target groups are: women; black and minority ethnic people; children and young people;
older people; disabled people; lesbian, gay, bisexual and trans people; and people from different faith groups
5 During the Assembly and Functional Body consultation the LDA will be commissioning independent impact
assessments on each of the cross-cutting themes.
6 See www.sustainable-development.gov.uk for details of UK priorities on sustainable development and
http://www.london.gov.uk/mayor/sustainable-development/sustainable_development_commission.jsp for details of
the London Sustainable Development Framework
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Health
Income, employment and quality of life are key
determinants of the health of individuals. Likewise, a
healthy workforce contributes to a healthy economy.
The health sector is also an important economic sector
in London in its own right. It employs almost 300,000
people and is responsible for 4per cent of London’s
GDP. It is therefore a significant contributor to wealth
creation, often in deprived areas.
‘Health is a state of complete
physical, mental and social wellbeing and not merely the
absence of disease or infirmity.’
World Health Organisation
The impact of the LDA’s and other partners’ activities can impact on health in a number of ways and it will
be important to assess and quantify (where appropriate) the impact of this strategy on the health of
Londoners. They key dimensions of this are:
 Direct impact of LDA activities on health
Some activities can be expected to have a direct impact on the health of groups or individuals. This is
likely to include most large scale area regeneration programmes and may, in part, include the provision
of health facilities. Promoting urban design which optimises health benefits for local communities is of
paramount importance.
 Indirect impact on health
Activities can also have an impact on identified determinants of health, such as employment, transport,
housing and community development.
For both groups of activities, the LDA and its partners will consider the likely health impact of activities
and, for major regeneration activities, require health impact assessments of proposals. The London Health
Commission (LHC), the Mayor’s advisory body on health matters, has already funded the development of
health impact methodologies and will work with partners to implement these.
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Equality of opportunity
London’s diversity is one of its greatest assets. It is
important that this is recognised and that there is
equality of opportunity across the capital. The GLA
Group7 has adopted a Group-wide vision to become an
equalities champion and leader in:
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Promoting equality;
Challenging and eradicating discrimination;
Providing responsive and accessible services
for London;
Ensuring our workforce reflects the diverse
population of London.
Legislative changes, such as the Race Relations
(Amendment) and Disability Discrimination Acts, as
well as the new European Employment Directives,
provide an opportunity for change in both the public
and private sectors. In addition, there is a need for a
re-focus across London’s partners to address
institutional discrimination and ensure greater
community cohesion.
‘Equality: the quality or state of
being the same in quantity, or
measure, or value, or status;
parity, fairness, impartiality.
This is applied by seeking
equality throughout all of the
processes involved in economic
development in the capital,
ensuring fairness in terms of
strategy, delivery and the
outcome of ensuring all
Londoners are able to benefit
from economic regeneration in
the region.’
LDA Equality Framework
The LDA has already implemented a number of key actions to ensure that Equality and Diversity is
addressed within the core activities of the Agency, including:
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Equality targets set in all ‘people’ and ‘business’ related outputs.
Equality and diversity is one of 6 key criteria within the project appraisal process.
Specialist equality projects developed to address the specific needs of equality groups.
Race Equality Scheme developed and published.
Equalities Impact Assessment process developed for all programmes.
When Should the Public Sector Intervene in Economic Development?
The public sector should only intervene where there is a clear need to be addressed, and where intervention
is likely to be effective – where a recognised market failure is being addressed or in order to ensure social
equity. This applies as much to economic development as it to any other area of public policy. In general
terms, there are four areas in economic development where the market performs poorly on efficiency
grounds and where there is a clear justification for public sector intervention.
First, The public sector has a responsibility for the provision of what economists call public goods (things
that can only be provided to everyone, like street lighting). If we apply this to the development of the
London economy, it is clear that London’s economic development and regeneration agencies have an
important role to play in ensuring adequate and accessible provision in a range of key areas, and especially
in the transport infrastructure. The public sector also often needs to invest in basic infrastructure before
the private sector itself will invest. The LDA’s efforts to remediate and bring forward contaminated land in
east London and the Thames Gateway is a good example of this kind of activity.
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Following completion of the Equalities for All Review, GLA Group, Final Report, March 2002
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Second, it is important that the public sector promotes or counteracts positive and negative side-effects
(‘externalities) of economic activity that are not taken into account by private firms and individuals.
Examples include the localised employment impacts of a factory closure. London’s very success creates a
range of external costs for the economy as a whole. This is clearly seen in the costs that result from
London’s high levels of congestion and environmental pollution. London is leading the way in dealing with
some of these external costs through the congestion-charging scheme.
Third, market failures in the field of economic development are also the result of businesses, residents or
workers having insufficient or imperfect information upon which to base investment, development, training
or career decisions. Examples include firms that may lack the information to bid for public sector contracts
or market information relating to a range of services they need; individuals who may lack the information
necessary to search effectively for a job; businesses lacking the management skills required to successfully
spin off technology from university research efforts; or banks lacking the information needed to determine
the creditworthiness of a small business.
Fourth, the public sector may need to respond to co-ordination failures arising from complex developments
or institutional fragmentation. Failures in co-ordination can happen for many reasons. For example the
public sector has a role in helping firms in fragmented sectors to create stronger networks. Activities
might also involve getting the public sector to work together to concentrate on the specific needs of a
particular area, for example, by assembling sites or doing joint marketing and promotion - things that often
would not happen if it was left to individual businesses.
In terms of achieving social equity, the public sector may be required to tackle barriers that prevent
individuals from fully participating in the market economy. London’s low employment rate and high child
poverty are its two most pressing social problems. These include an inability to upgrade skills and
qualifications or to access affordable childcare, and direct or indirect discrimination because employers
recruit in ways that are not open to all. The public sector is also needed to provide security for those who
are unable to derive an adequate income from the market: all households need an adequate level of income if
they are to participate in society. The public sector may be required to intervene to ensure that economic
activity is broadly spread or to create opportunities where the market itself either will not address the issue
unprompted or would only do so over an unacceptably long timescale.
Once a case for intervention has been made, there is a need to determine who intervenes, how, and at what
level. In some cases, national level measures might be most appropriate - using the tax system, for example,
to deal with negative environmental impacts, say, or to alleviate child poverty. In others, things can be
done at a London-wide or local level. Congestion charging is an obvious example. Helping parents to get
jobs is another. Regional partners, such as the LDA, also have an important role to play in seeking to
influence national government.
It is also important to realise that public sector interventions can be counterproductive, and so the possible
impacts of policies and proposals need to be carefully thought through. The large number of public agencies
working on economic development and regeneration in London can actually hinder their ability to achieve
their aims. Employment, skills and business support is a good example. There is no single agency that has
responsibility for these issues. Indeed, those agencies that are responsible often do not even share the same
targets.
The public sector also suffers, as do many other sectors, from lack of knowledge. This means that the public
sector should be wary of substituting itself for the market, seeking to plan outcomes in ways that are best
left to the market. There is a clear risk of this occurring in attempts to forecast and plan for skill shortages
on anything but a highly strategic level. Similarly there is a risk of misplaced interventions in the fields of
skills and training, business support, and provision of accommodation if public supply of services needlessly
replaces a market for these services where demand is subsidised by the public sector.
The effectiveness of public sector interventions may also be hampered by regulatory restrictions applied to
particular initiatives. Obvious examples of this include the rules governing Regional Selective Assistance
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or State Aid guidelines. As a result, even where public sector agencies have correctly identified a market
failure that they may wish to address, they may be unable to respond.
Finally, the style of intervention is important. Although it can be justifiable to intervene in ways that run
counter to market trends, this will only be justifiable where the resources and powers to act are sufficient to
make a difference. With most of the strong and deep-seated trends identified in this strategy this is unlikely,
and approaches that work with the grain of the market will tend to be more successful.
1.6
Implementing the Economic Development Strategy
Recognising all of the above it is clear that if this strategy is to be delivered it will need to be implemented
with the full range of agencies and organisations involved in economic development and regeneration in
London. This will require partnership working, to address the key themes. This will combine formal joint
target setting, such as with the Regional Skills Partnership, and ensuring that these targets and priorities
are mainstreamed into agencies’ formal business planning processes.
Many of the activities proposed by this strategy will need to be delivered over the longer term, however,
progress can be made in the medium term as the actions feed into the corporate planning processes of all
partners.
For its part, the LDA will incorporate the strategic priorities into: the annual Corporate Planning process
through which we allocate our funding; our Programme Investment Plans, which set out the detailed
proposals for each of the LDA’s programmes of activity, and into the Project Appraisal Process through
which funds are allocated to individual projects8. Activity is monitored on a quarterly basis against our key
targets and objectives so that adjustments can be made to ensure that we continue to address our priorities9.
Given the need to prioritise activities the LDA will look to supplement the market efficiency and equity
tests above with additional criteria and support activities that are:
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Evidence based or innovative pilots;
Backed by stakeholder buy-in;
Targeted and focused;
Deep and sustainable;
Outcome and impact oriented;
Designed to promote and deliver the widest possible participation in the economic development
and regeneration of London.
While there is much that can be done within the envelope of London’s existing economic development
expenditure, should it be appropriately directed, to achieve the objectives set by this strategy, and indeed
the other Mayoral strategies, it is clear that there is a need for an increased commitment from national
government to key areas of infrastructure provision and supporting activity. As the GLA’s case for London
work confirms sustaining London’s global position will require continued and considerable investment and
that this must be seen as a national priority10.
The following section of this strategy, supported by the economic analysis detailed in Volume 2, provides
an overview of the London economy and, based upon this, identifies the areas for intervention around which
the remainder of the strategy is constructed. This is followed by an analysis of each of these areas and the
objectives and actions required to bring about London’s future economic prosperity and success.
These processes are described in more detail in the Resources and Implementation chapter.
The LDA’s current target framework is set out in Appendix 3
10 Investing in London: The Case for the Capital, GLA (2001)
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2
Overview
London is one of the world’s great cities in every sense. It is enjoyed and prized as such by its inhabitants. It
is also an irreplaceable economic asset for the whole UK.
London is Europe’s, and to an important extent the world’s, greatest financial centre, rivalled only by New
York and Tokyo. But London contains a higher proportion of internationally oriented firms than either
New York or Tokyo and is uniquely internationalised. The health and competitive position of the entire UK
economy is therefore bound up with that of London. A weakening of London’s competitive position in the
international economy cannot be compensated for by other parts of the UK.
London’s position as a unique economic region in both the UK and Europe creates substantial strains as
well as opportunities. London’s growth in population and jobs is not matched by any other major European
city – stretching the city’s infrastructure, putting upward pressure on costs, and threatening environmental
damage. Large parts of London’s businesses are directly linked to the international economy and therefore
under constant and strong pressure from competitors in other countries.
London’s necessity and ability to compete internationally gives it a highly productive economy – average
productivity per person is 20 per cent higher than in the rest of the UK. This high productivity is aided by
the closeness and density that generates clustering and agglomeration benefits for many kinds of business.
But this context also allows costs in the city to rise, creating significant problems for firms which find it
hard to compete for the same resources. In such an environment, driven by high value added industries
under strong competition it can be difficult, for example, for those without adequate training to successfully
enter the labour market. London’s dramatic economic success has therefore been accompanied by levels of
unemployment higher than the UK average and levels of social deprivation that are unacceptable in fields
such as child poverty, frequently in their disproportionate effect on the city’s ethnic minority populations,
and in significant areas of the capital.
In such an economic context London cannot strategically compete by offering low value and low wage
activities either against other parts of the UK or in the context of increasingly globalised competition. The
city’s overall economic prosperity, and above all that of its population, depends on investing in companies
and people that can compete in a high productivity and high value environment. The common feature of
the most successful economic sectors and firms in London is that they are high productivity and high value
added.
London has therefore maintained its traditional international competitiveness in financial services, where
productivity is 40-50 per cent higher than in the rest of the UK. London has strengthened it position as a
global centre for the creative industries – including media and media related businesses, fashion, music, film
and books, which now provide more jobs than strictly defined financial services do. Widespread centres of
activity throughout London are involved in business services – law, accountancy, management consultants
and IT for example. Although low value manufacturing in London has declined significantly, high value
manufacturing, often related to scientific, creative and design fields, remains one of the city’s most
important industries. The highly skilled and diverse population of the city has made it the greatest centre of
leisure, cultural, retail and entertainment industries in the UK, and this has added to its historic heritage to
help sustain its position as the country’s premier tourist destination. While internationally oriented
financial sectors remain concentrated in the centre of London these other high value added industries and
firms are developing in a widespread fashion across the city.
In many cases global business and financial strength is built on the ability to provide a number of local
concentrations of activity, whether of lawyers around the Inns of Court, software support in Islington, or
creative and leisure industries in wide areas of the city. These benefits of concentration derive from their
ability to offer choice to both workers and employers, to build specific markets and to generate spillovers of
knowledge and techniques. Such benefits apply just as much to those who provide sandwiches as to
investment bankers and to all industries in between. One reason why cities have become major centres of
investment and activity is because the economy is going through a period of renewed technological change
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with the incorporation of ICT into more products and the higher design, creative and personalised
presentation of services and products. These trends will continue as people seek a more individual and
environmentally sustainable life style.
A successful city, in particular one with the unique characteristics of London, can generate a virtuous circle
of higher wages and productivity, which apply across a whole range of businesses. Firms within a
particular industry will be more productive where they have to face up to the competition of proximity to
other businesses. This will also have the effect of increasing wages as firms bid for the skilled workforce
they need. Concentration itself generates competition and produces innovation as much as openness to
international competitors does. The resources generated create not only higher living standards but can be
ploughed back into environmental protection and improvement. This virtuous circle is a key element in
promoting the productivity growth which government rightly sees as crucial to UK future performance.
But the strains that have, and will be produced, by this economic environment in London must also be
confronted. Shortage of infrastructure and housing has increased upward pressure on what is already a high
cost environment. In a high value added/high productivity/high cost environment only those with skills,
and who increasingly frequently re-skill, can find a secure place in the labour market. Failure to sufficiently
address investment in infrastructure, skills, and facilities to allow people to work, such as childcare, has led
to severe pockets of unemployment and poverty in the capital that also deprive Londoners of real equality of
opportunity. These are simultaneously socially unjust and weaken the city’s economy. Poverty and underinvestment in turn worsen environmental pressures in the city.
In the competition for the resources that are needed to do businesses, it is only the high productivity, high
creativity firms who are likely to really thrive. The pressure to improve productivity is constant, and the
boundary between those likely to continue to thrive, and those under severe pressure, is increasingly
moving upwards. These trends indicate the imperative to invest effectively and continuously in every
physical aspect of the city and in its people. Equipping the city, and all its people, to succeed in this high
productive and high value environment, and to do so in an environmentally sustainable way, is the central
thrust of this Economic Development Strategy as with all other mayoral policies.
Infrastructure must be a priority
Enabling the virtuous circle which is possible requires investment. Pressure on infrastructure has
intensified, both in terms of transport and concerns about environmental quality. Essential services have
come under pressure too, both in terms of delivery and the ability to house key workers. London’s high cost
base reflects its value to the highly productive firms that are located there. But London’s success has also
resulted in rapid population growth and an increase in overall full time employment of 8per cent over the
period 1982 to 2002. These increases have resulted in growing pressure on London’s infrastructure,
especially its transport systems and housing. Declining average travel speeds, diminishing travel reliability
and shortages of living and work-space are bound to eat into London’s productivity. This presents policy
makers with a straight choice: either to allow London’s productivity to decline slowly over time resulting in
a possibly permanent loss of competitiveness; or to invest in London and maintain its world class status.
This strategy sets out the case for this investment – that carefully-targeted spending on London will make
a substantial contribution to delivering national as well as regional priorities: the objective announced by
the Chancellor of the Exchequer of ensuring a high-productivity UK economy with high levels of
employment, delivering sustainable communities, regeneration of the Thames Gateway and balanced
development of the south east of England, tackling problems of social exclusion and child poverty and
environmental and sustainable development aims and targets. If this investment is not made, the UK as a
whole will suffer; without a successful capital the country cannot compete effectively in a global economy.
The deep-seated trends identified here present those concerned with London’s economic development with
some stark choices, particularly in view of the limited scale of the resources available (described in more
detail later in this strategy) and of the powers to intervene in the market. The strength of the forces
remaking the London economy is so great and well-established that any effort to reverse them is unlikely to
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succeed. We need a careful analysis of the position and a sober appreciation of what can be done to ensure
the kind of economic success the city needs if the Mayor’s vision is to be realised.
Inequalities
Not everyone has benefited equally, or in some cases at all, from London’s success. London has the second
highest rate of unemployment among English regions, together with low rates of employment and
participation in the labour market. Particular problems are faced by some black and minority ethnic groups,
disabled people and by households with children, including, though by no means exclusively, lone parent
households. This, in turn, contributes to high levels of poverty and deprivation. Indeed, London has the
highest proportion of children living in poverty, after housing costs are taken into account, in Great Britain.
London also has a greater share of deprived wards than any other region, except the North East – 37.3per
cent in London compared to 49.7per cent in the North East measured by the Index of Multiple Deprivation
(IMD) 11. Not only is the existence of such depths of deprivation alongside such wealth a moral reproach, it
is also a waste of resources that London and its economy just cannot afford. Experience has proved that we
cannot simply encourage growth and hope its benefits will trickle down. There is a need for a proper
analysis of the causes of poverty and exclusion and for positive policies to deal with them, which builds
upon the work already undertaken by the GLA in this area. A key priority is tackling the complex mix of
issues that create barriers to the fuller participation of too many Londoners in the city’s work and life, an
issue that is explored in chapter 4 of this document.
These problems have to be seen against the background of the global and other forces described earlier.
The high costs of working and doing business in London act as a brake on firms’ ability to employ workers.
Driving down this cost base is key to boosting employment, and this will require investment in London’s
physical and social infrastructure – in transport capacity, in the homes, education, childcare and health
facilities the city needs.
No market will ever function faultlessly, however. Effective actions to overcome longstanding problems of
social and economic exclusion and discrimination will also be needed. This will include consideration of
issues such as: the lack of suitable and affordable child care; deficiencies in the benefits system that make it
actually disadvantageous for people to enter employment; the need to encourage greater diversity in all our
workforces; ensuring Londoners have the training and skills required to compete, and that those seeking
work are provided with the information and support they need. If some sectors are being forced out, those
currently employed in them will need help and support to move into sectors that are more likely to succeed
in London’s evolving economy.
The consequences of growth also need to be addressed: a larger, younger and more diverse population will
make new and distinctive demands for social infrastructure like education, health and childcare. Issues of
this kind would be challenging anywhere, but in a city as large and complex as London, they are
particularly acute.
Spatial, environmental and resource implications
If economic change has had varying results for London’s people, it has also impacted differently on the
places where they live and work. While the more globally oriented sectors have tended to concentrate in
central London, others have grown across the city as a whole, and places that have relied on less successful
parts of the economy have continued to do less well. The whole city is influenced by the forces referred to
earlier, such that if finance and business service firms in central London do badly, local economies in other
parts of the capital will suffer too.
London has to be seen as a complex whole, made up of distinct but inter-related areas, places and
communities. Some of these will require support and investment to address the legacies of the past,
including dereliction and contamination, and to help position and market themselves to compete. As we
11
For further information see the GLA report ‘Capital Divided’
14
have seen, a major challenge will be to accommodate the population and employment growth forecast for
London. The London Plan sets out the spatial strategy required to do this, including regeneration of large
areas of East London, the development of smaller areas of opportunity, a focus on where more intense
development is appropriate across London as a whole, and support for the city’s network of town centres. It
also outlines planning policies to address some of the fundamental issues raised here – reducing the cost
base by ensuring an adequate supply of land for development, and delivering more (and especially
affordable) homes. Making the most effective use of land and other scarce resources in delivering
sustainable communities is a key theme of this strategy.
A vital aspect of London’s continued success will be the quality of its environment. Economic growth is
simply unsustainable in all meanings of the word unless, alongside social and economic dimensions of
sustainability, issues of environmental quality and efficient use of resources are addressed. Poor air quality,
excessive noise and waste clearly impact on quality of life 12 . The high value-added sectors on which
London relies will not thrive in places with dirty streets and a poorly maintained public domain. There is
also a growing environmental services sector, which has potential to contribute to London’s competitive
edge and help it address some of the issues the city faces. Other businesses must be encouraged to act in
ways that help ensure our city’s environmental integrity as well. This document outlines the principal
actions that will be taken on these issues.
These issues suggest the priorities for this strategy
The context described here not only shapes what we should do; it also indicates the ways in which we should
do it. Resources are at a premium, and the powers of a Regional Development Agency and its partners are
limited. We have to take a clear view of when intervention is sensible and effective, and the form it should
take. In a number of places in this Strategy, therefore, we identify areas where economic development
interventions in the past have not been successful in delivering desired outcomes. Among the more
significant reasons for this is that services are not designed and delivered to meet the real needs of the
intended beneficiaries. So an important theme of this Strategy is that, as far as possible, we should establish
and be responsive to the needs of London’s firms and people, and fashion our actions accordingly. The
information we have about business concerns, for example, bears out the analysis presented in this section.
The European Cities Monitor13 suggests that the most important factors businesses take into account when
deciding where to locate are: availability of qualified staff; quality of life considerations (which are
increasing in importance), communications and costs.
This Strategy is a plan for action for all those involved in London’s economy and concerned with its
success. It highlights the actions the LDA itself will take14 and it sets out the directions in which the LDA,
and the GLA Group as a whole will seek to work with others in the public, private and voluntary sectors
over the period covered by this strategy. Its underlying principle is that progress in improving social
equity and inclusiveness for all Londoners, in tackling problems of social exclusion, improving the
environment and making the city a good place in which to live, work, play and visit are inseparable from the
city’s continued economic success. While economic growth will not deliver these benefits by itself, they will
simply be impossible without it. And sustained growth, in turn, will be impossible without addressing them.
Making these linkages is where the need for economic development, and for this Strategy, comes in.
This strategy therefore seeks to:


build on London’s strengths – including its social diversity, the range and scale of its markets, its
high income and productivity focus;
identify opportunities - such as the scope for marketing, building on success and ways of making
best use of existing assets;
These issues are discussed in more detail in the Mayor’s environmental strategies, in particular Air Quality,
Ambient Noise and Waste Management.
13 European Cities Monitor, Cushman and Wakefield, Healy and Baker, 2002
14 The detail of this will be set out in annually produced, three year Corporate Plans
12
15


address existing weaknesses - of high costs, social exclusion, poor environments and pressure on
infrastructure;
address looming threats – loss of competitiveness, poor liveability, declining overall welfare and
increasing social polarisation.
This strategy argues that carefully targeted spending on London will make a substantial contribution to
delivering national as well as regional priorities by:






contributing to the Chancellor’s objective of ensuring a high-productivity, high employment economy;
delivering sustainable communities15;
regenerating the Thames Gateway;
achieving a balanced development of the south east of England;
tackling problems of social exclusion and child poverty;
meeting environmental and sustainable development aims and targets16.
In the light of the analysis set out in this section, and the evidence contained in Volume 2, four major
themes have been identified:




Investment in London’s infrastructure and places: against the background of London’s growth,
delivering new physical, social and environmental infrastructure to reduce the city’s cost base;
ensuring sustainable communities with adequate and affordable housing and the other services and
facilities they require; reducing reliance on in-commuting from neighbouring regions; regenerating
places that face problems of social and economic dislocation and deprivation.
Investment in people: effective action to help people overcome the barriers that prevent them from
playing a full part in, and benefiting from, London’s success; ensuring the city’s growing high value
sectors have the skilled workforce they need to compete and grow.
Investment in knowledge and enterprise: finding effective ways to help businesses and communities
prosper and compete; building on the creativity and imagination of London, its people and its
entrepreneurs.
Investment in the promotion of London: to ensure that what the city can offer people and businesses is
understood, supported and valued.
Under these headings, we set out areas for action and intervention that can offer real levers for change
between now and 2016 – proposals that partners are asked to endorse, support and, crucially, help to
resource, thereby ensuring the benefit that London’s economic success already brings to the UK economy,
its businesses and people is maximised. The focus here is on issues of genuinely strategic importance, and
on actions that will effect change at city-wide level – including mounting an innovative, world-class bid to
hold the Olympic Games in 2012; supporting the creative industries (the city’s fastest-growing economic
sector); addressing the environmental issues that are so important to all London firms and people, and
developing exciting plans for marketing and promoting London as a place to live, visit and do business.
Running through this document is an emphasis on the vital importance of investment in people and
businesses, and in the infrastructure they need to create and maintain London’s comparative advantage in
higher value activities. Without this, the city and the country cannot thrive, and the economic, social and
environmental cost, for both London and the country as a whole, would be incalculable. With it, and with
the coordinated action of everyone concerned with London’s future, a durable and inclusive contribution can
be made to the success of the city and the country as a whole.
See Sustainable Communities: Building for the Future, ODPM, 2003
See www.sustainable-development.gov.uk for details of UK priorities on sustainable development and environmental
protection.
15
16
16
3
Investing in London’s infrastructure and places
For London’s economic development potential to be realised, there is a need for significant investment in
both its infrastructure and its places. As we have seen, the Mayor’s London Plan sets the strategic policy
context for this investment. The Plan explains what has happened in London over the last thirty years to
reverse historic trends of population decline, and to alter fundamentally the city’s economic base. It sets out
growth projections for the period to 2016, showing an increase in population of 700,000 and 636,000 new
jobs. Against that background, it sets out a land use planning strategy to manage and influence these
market and demographic forces so that growth can be accommodated where it is most appropriate and is
needed most.
This chapter deals with the specific economic development actions and investments that are needed to help
London, its areas and communities address the economic forces and meet the challenges of population and
employment growth. These are designed to help London make its fullest possible contribution to national
and regional Government objectives to deliver sustainable development of London, south-east England and
the country as a whole.
3.1
Key Issues for Investment in Infrastructure and Places
This chapter looks at investment in London’s infrastructure and places. In relation to infrastructure, the
focus is specifically on physical aspects. The provision of social infrastructure and support is also needed, of
course, and this is dealt with in later chapters.
Infrastructure
The London Plan objectives
outlined earlier can only be achieved
the provision and maintenance of
quality, modern
infrastructure,
including:


17
Investment in Infrastructure and Places SWOT Analysis
(See charts 4.1 – 4.36 in Volume 2 Evidence Base)
Strengths
 London possesses an integrated network allowing
movement of people, goods and knowledge. Real
and virtual connectivity ensures London is central
to growth in the UK and a major global hub.
 Existing growth clusters close to areas identified
as areas of need.
with
high
An accessible transport
network, making London
easy to travel around, giving
Weaknessesaccess to jobs and
 London is a victim of its own success, as well as
opportunities, particularly
under-investment and the historic absence of
for those living in deprived
effective city governance. The resulting imbalance
areas, opening up places
between the supply of and demand for all types of
needing regeneration, and
infrastructure is already impacting on economic
performance, as demonstrated by increased journey
supporting the kind of
times and the pricing out of key workers.
intensive, mixed-use
 Second highest levels of air pollution amongst
development encouraged in
major cities.
the London Plan17.

Some communities are excluded from active
A communications system
participation in the labour market by spatial
(particularly
broadband)
factors, including inadequate public services and
enhancing
connectivity
infrastructure. These serve to compound other
throughout the city and
disadvantages.
providing all Londoners and
London businesses with the
opportunity to make the most of information and communications technologies.
This issue is dealt with in more detail in the Mayor’s Transport Strategy
17





A supply and range of
homes sufficient to meet the
Opportunities
needs of all Londoners,
 The further integration of markets, particularly in
enabling those at every
the financial and professional services sectors, offers
opportunities for London’s most productive
income level to continue to
industries.
live and work in the
18

Pressure on the city’s resources encourages the
capital .
adoption of innovative solutions. These include the
A wide and varied supply of
following: reclamation of major brown-field sites;
commercial property, and
introduction of congestion charging; change in the
other premises, to meet the
management of London Underground, and CrossRail
needs of London’s varied
- all of which will have a major impact on transport
businesses at prices they can
and working in London over the medium term.
afford19.
 New technology will enable the dispersal of
knowledge workers, a possible response to an
A
high
quality
overburdened transport system.
environmental
 Juxtaposition of deprivation and success in an arc
infrastructure: parks, open
around the City of London. Mixed development
spaces, waterways and other
offers a holistic and sustainable approach to the
opportunities
to
enjoy
difficulties these areas face.
London’s natural heritage,
so important to the city’s
Threats
quality of life and economic
 Infrastructure bottlenecks persist due to a lack of
success20.
skilled labour, funding and poor strategic planning.
An accessible environment
Economic cost base pushes more SMEs out of
complying
with
the
London. Investment by rivals reduces London’s
requirements of Part III of
comparative advantage. For example, investment by
rival European airports could threaten Heathrow’s
the
Disability
supremacy.
Discrimination Act by 2004.

Weak institutional capacity and lack of funding
A safe and secure system of
threaten investment in areas of need. Out-migration
delivering
key
utilities
escalates, resulting in a loss of mixed communities
ensuring that Londoners
and regeneration opportunities.
and London businesses have
access to reliable and diverse sources of energy, water supply and wastewater services.
In virtually all these cases, the current reality is that London is suffering from years of underinvestment –
to the extent that the state of London’s transport system and shortage of affordable housing are regularly
mentioned by businesses as major impediments to the city’s competitiveness.
It is all too easy to consider the physical improvements required in isolation, but the type and timing of
infrastructure provided, and the way it is delivered, can also have important economic and social policy
implications. It is important to ensure:



environmentally sustainable design, procurement and construction practices, including local
employment and training opportunities;
that infrastructure schemes genuinely contribute to development of sustainable communities,
incorporating features and standards that optimise health and other benefits, particularly to
excluded communities and equality target groups;
that infrastructure and other development initiatives are coordinated, to help support growth and
ensure that residents and businesses have convenient access to the services and facilities they need.
The London Plan sets a target of 23,000 new homes each year to 2016, of which half should be affordable
The London Plan indicates that capacity may be needed to accommodate some 560,000 extra office jobs by 2016
20 These issues are dealt with in more detail in both the Mayor’s environmental strategies and the Culture Strategy
18
19
18
Places
London is a complicated patchwork of areas and neighbourhoods that often do not respect administrative
boundaries and which play different parts in the economy of the city as a whole. In many areas, there is an
urgent need to tackle major problems of deprivation and social exclusion as part of local Neighbourhood
Renewal strategies. The London Plan identifies a number of areas where there is the opportunity for
regeneration and new development which can both help to address these problems and contribute to
meeting London’s need for new homes and space for businesses. To achieve the full regeneration potential
of some areas, linkages with adjoining authorities and development agencies will be necessary.
The Government's Sustainable Communities Plan announcement in February 2003 and the subsequent
progress report in July 2003, represent a major challenge for all stakeholders committed to the capital's
future economic, social and environmental well-being. The most high profile of these is regenerating
London's growth areas in Thames Gateway and the Upper Lee Valley. Major investment in basic
development infrastructure is required to support and sustain homes for new communities, along with
essential social and economic infrastructure. The Government's announcement of £133m in July 2003 for
London from the Thames Gateway and Growth Areas budget represents an important initial step in
meeting that challenge. But further challenges exist in the disadvantaged areas in London, often co-located
in the opportunity areas identified in the draft London Plan, where different kinds of intervention will be
required to help deliver sustainable regeneration.
The London Plan looks at each part of London, and identifies six different types of places that have direct
relevance to economic development and regeneration. These are detailed below:






Twenty-eight opportunity areas capable of accommodating substantial numbers of
new jobs (at least 5,000 in each case) or homes (at least 2,500 each), or a mix of the two.
Fourteen areas for intensification which can support a greater density of employment
or housing, but at a lesser scale than in opportunity areas.
Areas of regeneration covering the most deprived 20per cent of wards in London, with
high levels of unemployment and social exclusion.
London’s network of 1,400 town centres, covering centres of international importance
(e.g. the West End), metropolitan centres (e.g. Croydon), major centres (e.g. Brixton),
district centres (e.g. Acton) and local or neighbourhood centres.
London’s suburbs, covering two-thirds of London’s total land area and providing a
range of employment and other opportunities, and opportunities for more intense
development, particularly in and around town centres.
Sixty-two strategic employment locations providing for London’s strategic industrial
requirements, covering locations for industry and warehousing.
The Plan uses the five Learning and Skills Council sub-regional areas of Central London, East London and
the Thames Gateway, West London, North London and South London, as a spatial framework, although it
recognises that their boundaries are not always relevant to economic development, and should be treated as
permeable 21 . The LDA has also adopted them as bases for coordinating regeneration, investment and
development.
Each sub-region will make an essential and distinctive contribution to London’s economic and social
development. To deliver the targets and priorities set out above will require concerted action by the LDA
and partners, tailored to meet the particular challenges posed by each area. In already established locations
with good accessibility, development is likely to be largely market-driven (this is most likely in the Central
Activities Zone 22 and, to an extent, in opportunity areas like Canary Wharf). In others, without the
Further details on the composition and priorities for each of these sub-regions can be found in Appendix 4
The Central Activities Zone is the area within the Central and East London sub-regions designated in the London
Plan as being the focus for finance, specialist retail, tourist and cultural uses and activities.
21
22
19
infrastructure and/or critical mass of investment to drive a property market sufficiently robust to support
development, public sector intervention may be required. A number of locations will fall between these
extremes, requiring some infrastructure investment and other steps to promote growing market interest.
The strategic employment locations cover almost 60per cent of London’s 7,000 hectares of industrial
land and fall into two categories. The largest, preferred industrial locations, are intended to accommodate
firms that do not require the highest quality locations. The remainder are industrial business parks,
catering for firms needing better surroundings. Both vary in quality. Some have received recent
investment, while others have had little improvement, suffer from poor accessibility and are under pressure
from other uses. Each will require an appropriate response in order to cater for London’s strategic
employment needs.
Outside these designated areas, there is a need for a managed approach to the protection, release or
enhancement of sites once used for employment, based on a realistic view about the likelihood of reuse.
Other uses properly located – such as housing – are not necessarily the enemy of jobs and economic
development.
Town centres have seen an increasing concentration of jobs in recent years. Many of them have significant
capacity for development. With appropriate management and planning policies promoting mixed uses, they
can help support a virtuous circle of jobs and homes, provide a range of employment opportunities, and
support an environmentally sustainable pattern of development.
These approaches will be set out and explained for each sub-region. Sub-regional economic strategies will
be developed as part of the sub-regional development frameworks being developed to coordinate
implementation of the London Plan.
It is also necessary to consider the River Thames, an important - and underused - asset. It provides an
opportunity for environmentally-friendly freight access to the centre of London, provides opportunities for
tourism, leisure and recreation, and serves as a powerful landmark that can be used to help support
regeneration and other economic development initiatives. The LDA will work with other parts of the GLA
Group, relevant boroughs and other stakeholders to ensure the potential presented by the River (and the
other waterways in the city) is optimised through, for example, supporting the retention of freight
interchanges on the Thames and implementation of the blue ribbon network policies outlined in the London
Plan.
It is critical that there is a clear approach to prioritising areas for intervention. This will help avoid
problems associated with too many regeneration initiatives being inadequately targeted. In the past, this
led to resources being applied in a ‘scattergun’ way and having little impact on the fundamental issues of
reducing deprivation and improving London’s overall competitiveness. It is essential that interventions in
future are on a scale sufficient to reach critical mass, and help to support and promote sustained
improvement. Area priorities should be based on the three themes of regional significance, need and
opportunity, and should be judged against the following criteria:





Whether intervention would provide regionally significant opportunities within a tightly
defined location.
Whether it would offer the potential to attract new investment and development on a
regionally significant scale.
The opportunities to accommodate new business development in sectors of regional
importance.
The scope to support creation of healthy and environmentally sustainable communities,
providing affordable housing, good quality environments and access to transport.
The potential for additional employment and other regeneration benefits to deprived
communities.
20

The degree of integration with existing and projected transport and other infrastructure
developments.
This is the approach that has informed the identification of priority areas in the LDA’s Corporate Plan and
these areas will remain the focus of the LDA’s area programme over the current corporate planning
period23. Further thought will be given to ways of refining it, in consultation with partner organisations, to
ensure that scarce resources are used in ways that maximise delivery of strategic policy objectives in this
Strategy, the Mayor’s London Plan and Transport Strategy, and other mayoral policies and strategies.
The LDA additionally has powers to acquire and manage land. This is expensive both in terms of time and
money, and therefore use of these powers will be prioritised in the same way as other forms of intervention.
It is likely that they will be deployed primarily to support projects of city-wide importance, such as the 2012
Olympic bid and the regeneration of the Thames Gateway, and to support delivery of key objectives, such
as meeting housing targets. They will be deployed to support other objectives outlined here that may be of
more sub-regional or local importance – such as strengthening town centres and consolidating strategic
employment locations - as resources allow.
London’s investment in infrastructure and places should ensure environmental sustainability of new
developments through promotion of sustainable construction and design, green procurement methods and
maintaining London’s biodiversity. In addition major infrastructure projects should contribute to the
development of sustainable communities and incorporate best practice design standards that optimise health
benefits and maximise the positive impact of new developments on disadvantaged areas and ensure that
they address the needs of equality target groups.
The environment sector employs about 140,000 people, more than either printing & publishing or television
and radio. London has particular strengths in the built environment (including architecture, construction,
property, research and academia), the green knowledge economy (a large research base, several highly rated
and internationally respected universities with strengths in this area, institutions such as Kew and the
Natural History Museum), HQ functions (not just for commercial enterprises, but government agencies, the
voluntary sector, international charities etc), eco-business services (technical and management consultancy,
integrated multi-disciplinary consultancy and in particular, environmental law) and recycling. The sector
has a key role in improving the quality of life of Londoners and improving business productivity through
increased energy efficiency and green procurement. The Mayor has set a specific target for the creation of
10,000 environmental jobs in London.
The Role of the LDA
In relation to investments in infrastructure, the LDA will continue to work with partners to:



Maximise investment in infrastructure improvements that will have economic development
benefits of city-wide or sub-regional significance (such as Cross Rail and the Thames Gateway
Bridge).
Help deliver new infrastructure, through land acquisition and management, and other steps.
Develop programmes and initiatives to supplement new infrastructure, to help ensure that
economic and social benefits are maximised.
Additionally the LDA will work with partners to ensure that its area-based interventions:

23
Ensure that new urban developments are designed in ways that promote good health and access to
high quality services, help reduce crime and embody the highest possible environmental standards.
Further information on existing area priorities can be found in the LDA’s Corporate Plan for the 2003-2006 period
21


3.2
Are carried out with increased and more effective direct consultation with the businesses and
communities likely to be affected, maximising participation of local residents, firms and other
interests.
Ensure the best possible use is made of scarce land resources through encouraging more intensive
development, mixed uses and use of sites for a range of purposes.
Objectives
In light of the above four key objectives have been identified:

Support the objectives of the London Plan;

Deliver an improved and effective infrastructure for London's future growth and development;

Support the delivery of an adequate supply of commercial property and homes;

Promoting the development of a healthy, sustainable and high quality urban environment.
22
3.3
Actions
The following table indicates the actions required to deliver these objectives:
Support the objectives of the London Plan



Develop, implement and build capacity of sub-regional partnerships to deliver
London Plan through sub-regional frameworks
Using land acquisition powers to facilitate economic development where appropriate
Ensuring co-ordinated delivery in Thames Gateway
Deliver an improved and effective infrastructure for London's future growth and
development

Making the economic, social and environmental case for major projects such and
Cross Rail and Thames Gateway Bridge

Maximising the economic benefits from investments in infrastructure and the
implementation of the Mayor's Transport Strategy

Addressing construction sector labour shortages in order to avoid delays to key
projects
Support the delivery of an adequate supply of commercial property and homes







Ensuring a good supply of housing accessible to all incomes levels
Develop a framework to enable intensification of development leading to increased
densities on brownfield sites and work to support increased rates of housing
development in priority sites across London and especially in the Thames Gateway
Ensure that London retains essential employment sites while facilitating changes of
use in appropriate locations
Promoting the development of a healthy, sustainable and high quality urban
environment
Ensure development of regeneration expertise and sharing of best practice through,
for example, the establishment of a Centre of Excellence in Urban Regeneration
Develop and implement initiatives to improve design and management of public
spaces and invest in London's natural environment and open spaced including
considerations of energy efficiency, sustainable design and construction practices
Support improved public services including policing and public safety, street
cleaning, noise and waste management
Take action to encourage developers and all businesses to adopt environmental goods
and services and launch a campaign to encourage better environmental performance
from the business community
23
4
Investment in People
London’s population is its most important economic asset, and long-term economic growth will need to be
based on the energies and skills of London’s resident workforce. However, achieving sustainable growth
will depend crucially on how London addresses the deep-seated problems of labour market disadvantage
which affect large sections of its population, and which have led to the capital having one of the lowest
employment rates in Great Britain.
A strategic approach to London’s labour market needs to start from recognising the features that make
London distinctive. These include:






4.1
The openness of London’s labour market to domestic and international migration.
The diversity of the capital’s population.
The distinctive profile of demand for labour in London.
The combination of strong economic growth with low levels of employment, particularly affecting
households with children.
The disparities in employment between groups.
The existence of very large concentrations of economic disadvantage, particularly in the eastern
areas of central London.
Key Issues for Investment in People
Investment in People SWOT Analysis
(see charts 5.1- 5.29 in Volume 2 Evidence Base)
London’s working age population has grown by
325,000 since 1991 and currently stands at 4.7
million. The GLA’s latest round of demographic
projections indicates that the capital’s working age
population will grow by 580,000 by 2016.
Strengths
 A highly skilled and diverse pool of labour supported by
education services which are capable of delivering high
quality education, from primary through to post
graduate.
Weaknesses
At the time of the 2001 Census there were 3.2m
 Exclusion of many from the labour market through lack
London residents with employment 24 , with an
of skills and the high cost of work, with a
estimated 700,000 people commuting into London
disproportionate effect on some black and minority ethnic
to work every day. The openness of London’s
groups.
labour market to new arrivals and commuters is
 The costs of work comprise of childcare, transport and
one of the capital’s most distinctive features and a
the effects of the ‘benefit trap’, which appear to be more
key factor contributing to its economic success.
acute in London. This, combined with buoyant demand
Domestic and international migration patterns
for skilled labour, heightens inequality, as demonstrated
contribute to maintaining London’s relatively
by levels of child poverty - the highest in the UK.
Opportunities
young age structure, as those moving in tend, on
 The growing premium placed on skills and knowledge
balance, to be younger than those moving out.
plays to London’s comparative advantage. Better
Forty three per cent of London’s total population
utilisation of a broader range of London’s human capital
is aged between 20 and 44, compared with 35 per
will improve the city’s productivity. Its diversity
25
cent in the UK as a whole . These flows of
becomes a more valuable asset as London engages with
population allow London’s employers to draw on
the world economy.
labour and skills from the rest of the UK and
Threats
internationally.
 Continuing polarisation of the labour market and
concentration effects in Inner London exacerbate
London is the most ethnically diverse place in the
deprivation. Resulting social stresses and crime threaten
UK. Twenty nine per cent of the capital’s population, andthe41quality
per cent
ofofitsallchildren,
belong to a black or
of life
Londoners.
minority ethnic group. London’s distinctiveness will continue to increase, as black and minority ethnic
24
25
Census 2001 Key Statistics
National Statistics Focus on London 2003
24
groups are expected to account for 80 per cent of the forecast growth in London’s working age population
to 2016.
The pattern of demand for labour in London is distinctive, with higher skilled and higher paid jobs
accounting for an increasing proportion of employment. In 1991, 39 per cent of those employed in London
were in managerial, professional and technical occupations. By the end of the decade this had risen to 45
per cent. This trend is expected to continue as higher productivity activities expand. At the same time, the
cost of business space in the capital reduces the commercial viability of some types of lower productivity
activity. Those lower productivity activities that cannot relocate elsewhere because they serve local
demand, such as in retail and catering, often remain viable on the basis of wages that are very low by
London standards. Another distinctive feature of London’s labour market is relatively low levels of parttime working, which have had a particular impact on women’s employment in the capital.
Despite strong economic and employment growth over the 1990’s, the proportion of the working age
population in employment in, London is one of the lowest in Great Britain. And there are extreme
disparities in labour market outcomes between people living in different types of household, between
different groups and between areas of London.
Lack of employment in London is particularly concentrated among households with children, contributing
to the capital having the highest rate of child poverty in Great Britain. After housing costs, 35 per cent of
London’s children live in poverty, rising to 48per cent in inner London, compared to an overall average of
30per cent in England. Nearly a quarter of all households with dependent children in London have no adult
in employment, compared with 16 per cent nationally. In contrast, households without children in London
(excluding pensioner households) are no more likely to be without employment in London than elsewhere.
The disparity in employment between households with and without children in London is unmatched in any
other area in England and Wales. London now has a lower employment rate for women than the country
as a whole (having historically had higher employment rates for women), and this is primarily due to lower
than average employment among women with children. Lack of affordable or suitable childcare has been
identified as a key barrier to competing in the labour market26.
London’s overall low level of employment compounds the labour market disadvantage experienced by
different groups within the working age population. Unemployment rates are around twice the London
average for the black, Pakistani and mixed groups and nearly three times the average for Bangladeshis.
Thirty two percent of Pakistani children, 36 per cent of black children and 40 per cent of Bangladeshi
children are living in workless households. In some cases the disparities between different ethnic groups
are more pronounced in London than in the rest of England and Wales; what makes London particularly
distinctive is the proportion of its population affected by these disparities.
There are also disparities between groups of different ages and disability status. 11 per cent of disabled
Londoners were unemployed in 2001/02, and only 44.4 per cent were in employment. Among disabled
black and minority ethnic Londoners, 18.6 per cent were unemployed in 2001/02. Labour market
disadvantage not only reflected in disparities in employment status. Earnings for disabled Londoners and
black and minority ethnic workers are also far lower than the London average, and the gender pay gap in
London is more pronounced than at national level27
At the broadest level, differences between areas of London can be grasped by comparing Inner and Outer
London. For example, the unemployment rate in Outer London in 200/01 was 5.5 per cent, almost identical
to the national rate, while in Inner London it was 9.5 percent28. There are, of course, striking differences
between areas within both Inner and Outer London: Inner London includes some of the wealthiest and
some of the most deprived areas in the UK, and Outer London includes many areas of severe disadvantage.
Every borough in London includes at least some clusters of low employment. However it needs to be
For further detail see the Mayor’s Draft Childcare Strategy
GLA Disabled people and the labour market (2003) p.22
28 Mayor of London London Divided (2002) p.111
26
27
25
recognised that disadvantage in Inner London is not confined to ‘pockets of deprivation’ but extends across
a vast area of Central and East Inner London, north and south of the river.
London’s low levels of employment are a result of a complex and interacting set of factors that accentuate
the challenge London faces. Among these factors are the fact that high housing costs in London make
many lower paid jobs impractical for many people, especially if they have dependents, the shortfall to some
extent being made up by younger domestic and international in-migrants without dependents; the high
costs of business space within the city, impacting on both the pattern of demand for labour and earnings
levels; the lack of flexibility in much employment across the capital, discrimination and the inherited effects
of past discrimination; lack of affordable childcare; levels of educational attainment which are low in
comparison with the demand for highly skilled labour which characterises London’s labour market; and the
fact that ‘benefit traps’ which make lower paid unemployment unviable for many households are
accentuated in areas of high housing costs.
Within the context of this Economic Development Strategy, there is a need to ensure that there is adequate
investment in both the skills necessary for London to sustain its unique pattern of growth and in the social
infrastructure needed for all of London’s residents to participate in the labour market. Interventions
therefore need to be based on four interlocking aims:




Improving the skills of the workforce.
Tackling barriers to employment.
Reducing disparities in labour market outcomes between groups.
Addressing the impact of concentrations of disadvantage.
Improving the skills of the workforce;
London’s long-term economic development depends on the availability of a skilled and specialised
labour force, with continuous improvements of skills and qualifications both for those currently in
employment and those seeking work. At the same time, it is essential that Londoners at all qualification
levels have access to employment opportunities with realistic prospects of career progression.
It could be argued that London can continue to meet a large part of its skills requirements through
domestic and international migration, as it has always done. However, this would be complacent and
unrealistic. Migration has always been, and will continue to be, one of the main forces shaping
London’s economy and society. However it cannot be assumed that London can continue to draw on
other areas to meet the shortfall in its own supply of skills ad infinitum, particularly when large sections
of the resident labour force are not in employment
26
Tackling barriers to employment
A range of factors can make entering or re-entering employment exceptionally difficult. The extra
costs associated with employment, such as childcare, can cancel out the increase in income from
working, particularly for households with children. Poor transport links can also restrict access to the
labour market. In addition, the interaction between different elements in the tax and benefit system can
erode gains from employment, particularly in areas of high housing costs such as London.
Uncertainties about entitlements, and problems in the administration of benefits can make entering
short-term employment risky.
In addition there is a need for the further development of active labour market approaches, including
transitional employment and intermediate labour markets, to improving pathways to employment and
of targeted interventions to make mainstream labour market interventions, such as Welfare to Work,
more effective in the London context.
Reducing disparities in labour market outcomes between groups
Disparities in labour market outcomes between groups arise from the interplay between a complex
array of factors, and it is important that interventions to improve outcomes are designed and delivered
in full recognition of this.
Discrimination, including the long-term effects of historical discrimination, is one of the key factors in
explaining poor outcomes for many black and minority ethnic groups. Factors specific to certain
groups, such as language or family structure, can also influence outcomes for members of these groups.
London's refugees and asylum seekers also face a number of specific barriers concerning language,
difficulties in obtaining recognition for non-UK qualifications and concern among employers about the
legal status of potential employees. People with disabilities and older workers face specific barriers to
the labour market29.
The lack of information about these issues urgently requires addressing, so an informed analysis and
action plan can be produced and implemented; this will be a key priority for the LDA, working with
partner organisations. There are also specific issues relating to access to employment, and treatment in
the workplace, experienced by members of different faith groups and sexualities that need further
research with a view to preparing action plans to address them.
At the same time, differences between groups are also driven by problems which while not confined to
those groups have a more marked impact on them due to such factors as age structure, household type
and social class. For example, London’s ethnic minority groups have a particularly young age
structure, and problems associated with youth employment will therefore tend to increase disparities
between these groups and the white population.
The objective of reducing disparities between ethnic groups therefore depends not only on policies and
interventions that are specifically designed for particular groups but also on measures designed to
address the range of factors that drive disparities.
There is also a need to look at barriers affecting other equalities target groups, however there is currently a paucity
of data for many of these groups
29
27
Addressing the impact of concentrations of disadvantage
There are clear and marked differences in labour market outcomes between areas in London,
particularly between Inner and Outer London. While there are pockets of deprivation in every
borough, the concentration is in Inner London. This pattern is driven and reinforced by selective in
and out-migration and has a clear impact upon school attainment and employment chances.
Concentrations of disadvantage arise because of housing market conditions, the location of social
housing and to other historical patterns. These contribute to worsening the chances for already
excluded households and individuals in the area, through loss of services, poor school performance, lack
of access to credit, poor local employment opportunities and so on. Regeneration policy to date has
done much to improve the chances for some residents in these areas, but it has had less effect on
concentration because the beneficiaries move on and are replaced by another cohort of the excluded.
This implies that addressing the impact of concentration is an ongoing process until such time as the
factors creating concentration effects are changed. As noted in the previous chapter, long-term,
concerted efforts, working closely with local communities, are required to address these issues.
4.2
Objectives
On the basis of the above the follow objectives have been identified:

Improving the skills of workforce

Tackling barriers to employment

Reducing disparities in labour market outcomes between groups

Addressing the impacts of concentration of disadvantage
4.3
Actions
The following table indicates the actions required to deliver these objectives:






Improving skills of workforce
Supporting training for those re-entering employment after period of inactivity and
promoting progression through models such as the NHS Skills Escalator
Promoting and improving links between employers and schools including the
provision of work related information, advice and guidance
Making the case for increased educational resources to help raise attainment in
London's schools
Making the case for increased flexibility in the provision and design of training and
qualifications and piloting market based approaches to training provision
Supporting training for those re-entering employment after period of inactivity and
promoting progression through models such as the NHS Skills Escalator (an
initiative intended to develop skills and career development of NHS staff).
Tackling barriers to employment
28





Improving access to, affordability and availability of childcare
Raising the awareness and promoting take up of Working Families Tax Credit.
Making the case for improvements to the tax and benefit system to improve the gains
from employment for lower paid workers in London
Encouraging the expansion of flexible and family friendly employment practices in
the public and private sectors and linking supporting employers with potential
employees
Active labour market approaches to developing pathways to employment
Reducing disparities in labour market outcomes between groups





Monitoring and evaluation of all mainstream labour market programmes and policies
to ensure that the benefit to disadvantaged groups in London is proportional to the
level of disadvantage they experience
Targeted interventions to address the specific barriers to the labour market faced by
particular groups
Explore ways of recognising qualifications amongst migrant populations
Develop and implement a mayoral campaign to tackle discrimination and
institutional racism in the workplace and to ensure that London's employers are
ready to implement Part III of the DDA
Develop a London wide employment brokerage service for disabled people
Addressing the impacts of concentration of disadvantage




Ensure that existing and planned housing developments lead to balanced healthy and
sustainable communities
Ensure that planned housing development is linked to employment opportunities and
includes transport infrastructure and childcare provision
Tackle peer group effects by working with education authorities to address
concentrations of disadvantaged pupils in schools
Increasing the availability, relevance and uptake of services for young people in areas
of disadvantage
29
5
Investment in Enterprise and Knowledge
London is a key business location as shown by a wide range of indicators including the overall level of
economic activity per capita, the growth of VAT registered businesses in London compared with other
regions in recent years, the number and variety of European headquarters located in London. The number
of VAT registered Business in London grew by 15.6per cent in total between 1994-2002. The next fastest
growing region was the south east at 7.3per cent over the same period.
The enterprise and energy of London’s black and minority ethnic communities is a critical component of the
region’s long-term growth and prosperity as a world city. Although establishing precisely the number of
black and minority ethnic-owned enterprises in London can be difficult, recent surveys have suggested that
there are between 70,000 and 100,000 30 and there are high rates of business ownership among these
communities. It is clear that these make a substantial contribution to the city’s economy, forming a part of
international networks which span the globe.
Many of the activities required to support London’s businesses are described in other sections of this
Strategy. These include:



Supporting the London Plan, delivering an effective infrastructure, ensuring an adequate supply of
commercial property and homes, promoting the overall quality of the urban environment.
Helping London’s current and future labour force to improve educational qualifications and skills.
Ensuring that London continues to attract and retain people from across the UK and the world - by
making London an exciting city with a high quality physical environment and excellent public and
private services.
This chapter focuses on a number of additional factors that prevent firms performing as efficiently and
effectively as possible and that may justify intervention by the public sector.
5.1
Key Issues for Knowledge and Enterprise
Average company size in London differs from the rest of the UK, with a significantly higher share of
employment (nearly 60 per cent as against about 45 percent in rest of UK) in large firms (200+
employees). Nevertheless small and medium sized companies remain the largest group by far in terms of
numbers of firms. Many issues relating to knowledge and enterprise are related to the age and size of
firms. The rest of this chapter is therefore divided into barriers facing: small and medium sized businesses;
issues relating to larger businesses including inward investment and business retention; and sector
specific issues.
See, for example, the results of the London Employer Survey, or the forthcoming LDA/BL4L survey on business
competitiveness in London
30
30
Small and medium-sized business support
Generic support Small and/or young
firms in London often face a number of
barriers which are related directly to
their size and/or age. Key issues facing
these firms include difficulties in
covering their costs while revenue
streams are still building up or in
obtaining adequate finance in order to
expand. Many of these barriers are
generic to small businesses wherever
they are located. They arise because it is
expensive for lenders to obtain good
information about the credit worthiness
small firms. Young firms lack credit
history. Both small and young firms
often lack collateral. For these and other
reasons issues, small firms have
difficulty obtaining finance to cover cash
requirements or funds to invest to grow.
Another set of issues confronts
businesses that are beginning to grow –
the point at which they may start to take
more employees, or move into larger
premises. It is at this point that they
may start facing regulatory or
managerial issues smaller concerns do
not, or have particular financial,
insurance and legal needs.
These problems are exacerbated for
those firms operating in sectors where
income streams are uncertain or volatile
(e.g. life sciences, creative industries or
Information
and
Communications
Technology), where returns may be both
uncertain and volatile, where product
portfolios are poorly diversified and
where finance is lacking to enable firms
smooth their income streams. Other
problems arise in the area of spin-offs
from academic research - e.g. in life
sciences - where academic entrepreneurs
may lack commercial skills or where
academic institutions may be illequipped – or lack incentives – to enable
commercial entrepreneurs to develop
academic and research outputs into
marketable products.
Firms in London face an additional
problem because of the relatively high
Investment in Knowledge and Enterprise SWOT
Analysis
(See charts 6.1- 6.24 in Volume 2 Evidence Base)
Strengths
 Above average share of employment in hightechnology services relative to other world cities.
 Proximity between existing world-renowned
clusters, such as higher education institutions, life
sciences, pharmaceuticals and creative industries
offers scope to share knowledge both informally
and formally.
 Science and design based sectors; ICT and green
sectors; tourism.
 High rates of inward investment.
Weaknesses
 Lack of appropriately skilled workforce for many
firms.
 Underfunding by employers of workforce training.
 Market failure in public provision of vocational
skills and other business needs.
 Lower survival rates across all sectors due to
higher costs of operating in London
 Weak links between management objectives and
workforce development is a particular issues in
micro businesses.
 Relatively low research and development
expenditure leads to low numbers of patents and
new products.
Opportunities
 Improved understanding of the opportunities from
innovation can lead to greater scope for
commercialisation of London’s research activities.
 Improve access to finance for start-ups by
overcoming information barriers between lenders
and borrowers.
 Redevelopment of the Thames Gateway to
establish new industrial sites for SMEs - can help
alleviate the adverse impact of high property prices
in London.
 Legislation at European, national and regional
levels is driving the environmental agenda.
 Maximising the untapped potential of many
excluded BME entrepreneurs offers large potential.
 Improved performance of business support services
through increased use of market based
mechanisms.
 Strengthened sectoral image, marketing,
communication and leadership.
Threats
 London’s capacity to foster enterprise is thwarted
by persistently high costs and other barriers facing
SMEs and firms in high-risk sectors.
 Global investment diverted to competitor cities,
with faster growing clusters and better domestic
and international transport links.
 Difficulty of recruiting and retaining workers
across all sectors as house prices become
prohibitively high and congestion not tackled
of
on
to
31
cost base they face. This appears to be reflected in the low survival rate of London’s small and medium
sized businesses relative to other regions. A second issue facing small businesses is their lack of market
power relative to larger firms. This exacerbates the problem of higher costs, particularly for start-ups.
There is already a significant level of public sector funding concentrated on general business support in
London. This activity is primarily funded by the Small Business Service via Business Link for London,
the LDA and London Boroughs and is delivered by many local agencies. A London Business Support
Strategy has been developed by the London Business Support Network31 with the following objectives:





Understanding the customer and greatly increasing market penetration.
Eliminating customer confusion.
Ensuring highest quality.
Ensuring support services are customer focused.
Aligning funding with strategic priorities.
Implementing this strategy will be an important step toward rationalising the sometimes confusing and
uneven provision of publicly funded business support. Further steps are needed with new measures to
ensure that businesses can choose the services they need from a range of providers including suitably
accredited private sectors providers and plentiful information to guide businesses about the choices they
face.
Trade According to the London business survey carried out by the LDA and Business Link for London,
international trade is an important consideration for less than 10 percent of London’s firms. This may
partly reflect the fact that London has a relatively low share of employment in traditional exported goods
sectors such as manufacturing. However, although solid data are lacking, trade in goods and services
undoubtedly represents a significantly larger share of London’s wealth creation. The implication is that
trade is important for relatively few firms and these tend to be large companies.
The International Trade Strategy for London (developed by Trade Partners UK (London Region))
suggests that there are a considerable number of London firms failing to exploit their full international
potential. Although these consideration apply to both small and large firms, several barriers - such as
poor market information – represent a particular hurdle for smaller firms. The strategy puts forward a
number of priority areas to improve the level of engagement. These include:




Developing skills to maximise the trade performance of London’s firms.
Delivering high quality international trade information and advice that is accessible to London firms.
Developing a partnership for joint working and collaboration for delivering London’s international
trade services.
Developing international strategies for London’s high growth sectors and clusters to promote a
balanced regional economy.
The TPUK strategy will be delivered through an International Trade Forum (LDA, Business Link for
London, LCCI and Trade Partners UK), which will agree an action plan and time frame for
implementation.
Workforce Development and Higher Level Skills A further key pillar of enterprise policy comprises
workforce development and higher-level skills. The recent survey of businesses conducted by the LDA
and Business Link for London found that lack of appropriately qualified staff was identified by 20per cent
of respondents as the single most important barrier facing firms.
The London Business Support Network is an informal network of the key organisations that either influence or
provide business support across all the boroughs of London. For further information see ‘Equipping London’s Small
and Medium Sized Businesses to Grow – The London Business Support Network Action Plan 2003-2006’.
31
32
Public support for workplace skill development is warranted for a number of reasons, to help individuals
make informed choices and to tackle barriers in relation to their learning and to help firms link their
training and personnel development needs to their business plans. In relation to firms, the London
Framework for Regional Employment and Skills Action has a five point plan to address the issue,
including: a sector based approach to skills development; addressing the image deficit faced by some
sectors; measures to address the specific problems facing Small and Medium Sized Enterprises;
encouraging employers to value workforce development, and addressing discrimination in the workplace.
More recently, the Government has published its skills strategy in the White Paper, ‘Realising our
Potential’. Among other things, this calls for greater flexibility in the delivery of skills, with a greater say
for employers in the allocation of public funds. This is an encouraging step, but as with business support
services, it needs to be complemented by further liberalising the regime. Too many employers have a low
opinion of the quality and flexibility of existing public providers. This, in part, reflects the bureaucratic
restrictions under which providers have to operate. At present, Further Education colleges, for example,
are unable to respond effectively to employer demands for skill development as and when they arise
because of Government rules on funding and accreditation.
As noted in the previous chapter, many of the LDA’s equality target groups are concentrated in lower
waged and lower skilled sectors of the economy. Their ability not only to get jobs, but also to progress to
higher level employment by gaining skills while in work, will play a central part in tackling poverty and
making London’s labour market operate more efficiently.
Innovation Innovation involves creating new products and services and is central to London’s
competitiveness. Perversely, on conventional measures of innovation London is one of the least innovative
regions in Europe. This is largely due to the fact that London’s innovation is in knowledge-intensive
service sectors, where product and process are hard to quantify – unlike in manufacturing, where patents
can be easily recorded.
Innovation, of course, is not the preserve of small business. Indeed some of London’s market leaders - e.g.
in the pharmaceutical sector - are also leading institutions for research and development. However in
terms of market failure and hence the areas where public sector intervention is warranted - for many of
the reasons cited above - this tends to be concentrated among small businesses, often in areas associated
with London’s higher education and research base.
National Government recognises the need to promote innovation. London’s approach, as detailed in the
London Innovation Strategy, is to:



Create a culture of innovation in all of London’s organisations.
Harness London’s world-class knowledge base to benefit London’s businesses.
Encourage and enable London’s businesses to innovate.
In practice, highly innovative entrepreneurs need a package of support consisting of the elements already
mentioned above, namely: finance, suitable premises and know-how/mentoring. There are successful
examples of such industrial ‘campuses’ in London and elsewhere and there is scope for rolling these out
more extensively.
Larger firms: Inward Investment and Business Retention
London has for some time been the market leader for inward investment amongst large European cities.
In 2002, according to Ernst and Young, London received 120 projects compared with about 60 in the
Paris region. London is also an important location for international headquarters, with over 30 percent of
Fortune Global 500 companies located in here. As the international economy becomes more competitive,
particularly with the UK being outside of the Euro currency area, it is essential for London’s ongoing
success that London continues to be regarded as the City in Europe in which to do business. This will
33
require a continued focus on the fundamentals – London’s workforce, infrastructure, quality of life, cost
base and regulatory environment – but also, as described in the following chapter, effective promotion and
marketing.
The London First Centre has been selected to deliver inward investment services for the period 20032006 and to focus on the following goals: improving investors’ knowledge of London’s sub-regions;
strengthening the after-care service available to investors, and targeting global markets with a view to
increasing the share of London’s black and minority ethnic workforce benefiting from inward investment.
An increasingly important element of regional business support are the programmes designed to focus on
the needs of strategic businesses that are large employers in the local economy. The object of this work is
to identify at an early stage problems faced by the businesses concerned and attempt to address before the
firm makes a decision to relocate out of the economy. This is a particularly important function in London
where a majority of employment is in large firms and where changing global conditions makes these firms
susceptible to relocation. There are two main components of the work. First the provision of information
to firms about possibilities for resolving problems relating to employment, premises, transport etc; second
coordination among public sector agencies concerned with the delivery of relevant services to ensure a
joined up, uniformly high quality service.
Sectors
There are various reasons why it can make sense to organise enterprise policy along sectoral lines. First
firms from the same sector often share similar issues and it can therefore sometimes makes sense for the
public sector to design initiatives targeting sectors as a whole. This must not be based on the notion
that the public sector can ‘pick winners’ but that some sectors exhibit disproportionately the sorts of
market failures described earlier and hence are clear candidates for public sector assistance. Others may
be particularly important for the LDA’s equality target groups – either as employees or entrepreneurs.
Second, sectors can be an effective means by which the public sector actually relates to firms. Firms often
see themselves in sectoral terms. Business associations are often organised along sectoral lines because subject to differences arising from firm size - they often share common regulatory environments, supply
chains, workforce requirements and similar product markets. Such associations can be an effective means
of making the business voice heard and provide a single point of contact for public sector development
agencies.
Some sectors have been slow to develop such coordination mechanisms. This can result in firms underinvesting in branding, marketing and promotion. In a number of such cases, it has been possible for the
public sector to facilitate and encourage the development of sector ‘commissions’, time-limited bodies with
a remit to identify key sector issues. The LDA-sponsored sector commissions for manufacturing and the
creative industries are recent examples.
More broadly, businesses from a range of sectors often organise themselves in a variety of ways with a
view to sharing information, increasing market and political power, and promoting their products.
Examples include London First, for large businesses, and the London Chamber of Commerce for smaller
businesses. Small businesses that face relatively high insurance, legal and other costs as individual firms
can realise potentially significant savings in such groups. Despite this, membership of many such
organisations is limited, perhaps because business groupings can suffer from a ‘free rider’ problem, where
non-participants benefit from the efforts of existing members in lobbying and promotion, for example.
The dynamic process underlying London’s economy was outlined in the overview section at the beginning
of this document, particularly the fundamental importance of London’s highly productive firms and the
impact this has had on London’s income but also cost base and the ability of less productive firms to survive
in London, particularly those facing competition from lower cost regions in the UK or internationally.
Against this background, there are a number of principles that underlie successful sector support including
the following:
34
-
-
-
It should be based on clear evidence of clear market failure
The market failure should affect a sufficiently large share of firms in the sector to justify a
sector approach as opposed to an individually tailored firm level approach or an approach aimed
at a different set of firm characteristics – eg size or location
The firms operating in the sector should clearly be capable of generating income and
employment in London on a sustained basis and against the backdrop of changing global
economic conditions.
Intervening in a particular sector for a particular reason should not be taken as a signal that all
other public sector interventions should be concentrated in this sector: this would risk erring in
the direction of long discredited industrial policy.
Examples of sectoral activity that would meet these criteria include (but are not restricted to): the
promotion and marketing of tourism and the creative industries in London; the support of small firms through premises, finance and mentoring – engaged in the commercialisation of academic research such as
life sciences; and the dissemination and promotion of design techniques aimed at higher value added
activities by facilities such as the Centre for Excellence in Manufacturing and Engineering.
5.2
Objectives
The analysis above identifies 5 key objectives that emerge from the analysis of the investment in knowledge
and enterprise. These are:
5.3

Investing in London's higher education infrastructure and increase the level of London wide
innovation

Tackling barriers facing small businesses

Improving delivery of publicly funded support services

Increasing information available for large inward investors and traders

Support sector marketing, research and networking
Actions
The following table indicates the actions required to deliver these objectives:
Investing in London's higher education infrastructure and increase the level of
London wide innovation
 Increase links between London HEIs and start up businesses and improve
management capabilities within HEIs to enhance the rate of spinout success
 Supporting potential innovators in the commercialisation of new ideas through the
dissemination of new ideas on new processes and techniques, alternative supply
chains and product markets
 Developing London's environmental sector by support the development and take up
of new environmental technologies
35
Tackling barriers facing small businesses




Promoting access to broadband and other new technologies through encouraging
cost sharing among SMEs
Help start-ups access mentoring, premises and support and improve access to
finance and insurance for SMEs and business in uncertain and high risk sectors
Develop services to address the needs of types of businesses, including social
enterprises, that are identified as having the potential to achieve broader objectives
Reduce barriers to expansion and diversification by helping all SMEs, including
black and minority ethnic, women and disabled entrepreneurs, in bidding for public
contracts
Improving delivery of publicly funded support services



Empower London businesses to demand the skills, training and business support
that best suits their needs so creating informed client for services
Assessing the effectiveness of current general SME support activities and develop a
seamless service for support to SMEs
Co-ordinate and develop ICT specific services in public sector business support
organisations
Increasing information available for large inward investors and traders


Design and develop a one-stop-shop for strategic businesses in London combining
infrastructure, skills, knowledge and access to finance either centrally or subregionally.
Extend information on emerging markets for London exporters
Support sector marketing, research and networking



Promote London's sub-regional and sector offer overseas and domestically
Support the development of sector networks and brands where this will offer
market advantages and help articulate sector strategies
Deliver inward investment services in London
36
6
Marketing and promoting London
An important component of London’s economic development is ensuring that the capital’s strengths are
adequately marketed and promoted. Nothing damages a reputation more than a gap between the marketing
pitch and the reality on the ground. If marketing London is to be successful, we have to continuously
develop ‘London the product’ through the actions described in this strategy.
However, promotion, marketing and branding must themselves also become a central element of London’s
approach and offer. London needs to invest more in effective international and domestic promotion to
maintain and improve perceptions of it as one of the world's most successful cities. London needs to make
sure that the world understands that it is a city which attracts businesses and investment because of its:





talented and highly-skilled workforce;
tax and regulatory environment;
easy access to finance;
international markets and supply chains;
unsurpassed international transport links.
London also plays a critical role as the gateway to the UK for tourism and investment. A strong
functioning nation needs a successful capital city and London’s marketing and promotion will help to
maintain its status as a premier investment location, which has tourism, trade, investment and business
retention benefits for the whole of the UK.
6.1
Key
Promotion
Issues
for
Marketing
and
London's status as one of the world's key
tourism, learning and lifestyle destinations
needs to be reinforced and developed. This
promotional activity must respond to - and
counter - increasingly negative perceptions of
London’s infrastructure, cost base and overall
quality of life.
Marketing efforts must be clear, consistent
and instantly recognisable. We must shift our
promotional emphasis so that it reflects
London’s diversity and dynamism together
with its history and heritage. London’s unique
diversity enables the visitor to have an
unrivalled range of experiences. It includes
diversity of cultural offer, environment,
attractions and architecture, together with the
rich mix that London can boast in terms of
race, language and ethnicity.
Team London brings together all of the
London organisations 32 who undertake direct
Marketing and Promotion SWOT Analysis
(see charts 7.1- 7.10 in Volume 2 Evidence Base)
Strengths
 London successfully combines the many facets of its
appeal, historic creativity and entrepreneurial energy.
Weaknesses
 The reality of high costs and poor infrastructure,
combined with a perception of an unsafe and unfriendly
city tend to undermine its reputation.
 Uncoordinated promotion and branding.
Opportunities
 Maximise benefits from changing patterns of both
domestic and global tourism.
 Team London will develop consistent brand awareness,
boosting tourism and investment.
 Global overseas investment is projected to grow and
London’s advantages should secure a healthy share of
this - in particular, as English increasingly becomes
lingua franca of international business.
 Olympics.
Threats
 Failure to respond to structural changes as
globalisation continues, resulting in further decline in
visitor numbers, for example.
 More effective response to these challenges from
competitor cities.
Team London is an initiative involving a wide range of London-based bodies from business, tourism, sport, culture,
education and the arts. The current members are London Development Agency, London First Centre, Greater
London Authority, Arts Council for England (London Office), Corporation of London, Universities UK, Government
Office for London, London Higher Education Consortium, London Tourist Board, London Chamber, Visit Britain, UK
Sport, Trade Partners UK, and CBI London.
32
37
promotion and marketing of London, together with the Mayor’s Office and GLA. The LDA facilitates the
project and provides back-office support to enable the delivery of various initiatives that will improve the
scope and impact of London’s marketing.
Team London has been developed to improve the promotion of London as an international destination by:




facilitating Mayoral leadership of London’s co-ordinated promotional activities;
bringing more co-ordination to the capital’s promotional efforts;
encouraging collaboration between London’s marketing agencies;
developing a clear promotional language and visual palate which reflects London’s unique offer.
The message being developed by Team London will play to London’s strengths, based on the reality of
what London has to offer as a destination for tourism and business, and as a place for culture, learning and
sport. London must also learn from other cities that are more advanced in developing collaborative
approaches to promotion.
The message is based on the understanding and expression of London’s unique essence – its ability to offer
visitors and investors of every kind the ability to constantly discover more of what London has to offer.
This will emphasise:




6.2
London’s celebration of difference and diversity - London is always open to ideas and
individuality, accepting not judging, always willing to take a longer view.
London’s creativity - London’s longevity is founded on a deeply-rooted tradition of inventiveness.
London continues to intrigue, acting as inspirer and developer of creative thought and action.
People draw on the city’s immense richness of experience, finding new ways to explore commercial,
cultural and learning opportunities.
London’s resourceful evolution - London is never daunted by change; it lives in a state of flux,
confident of its ability to keep moving forward. The city thrives on the strength it draws from
continuity and the freshness it gains from renewal.
London’s positive energy - The feel of London is dynamic, vibrant, crackling – London is alive
with the spark of possibility.
Objectives
This identifies 2 key objectives that emerge from the analysis of marketing and promoting London. These
are:

Invest in effective international marketing and promotion

Reinforce and development London's status as an international tourism destination, including
business tourism
38
6.3
Actions
The following table indicates the actions required to deliver these objectives:
Invest in effective international marketing and promotion



Deliver new products and counter negative perceptions to enhance marketing and
promotion of London
Roll out developing London brand across key organisations and events
Build on ambassadorial role of London's HEIs and foreign student body
Reinforce and development London's status as an international tourism destination,
including business tourism

Use Olympics, Wembley and other key events to promote London internationally

Develop London’s capacity to compete for international convention business, and to
host major events, including exploring scope for an international convention centre
in London

Strengthen London's gateway role to promote rest of UK

Support the delivery of the Visit London strategy
39
7
Resources and Implementation
Previous sections have highlighted recent performance in London in terms of overall economic
performance, social inclusion and resource management as well as the broader global economic context in
which London competes. Individual chapters have summarised key strengths and weaknesses in London’s
key economic drivers as well as in specific sectors, areas and in marketing.
This section looks at the resources required to deliver this Economic Development Strategy and the process
by which these resources should be allocated. It is clear that the delivery of this plan will require
substantial resources, led by strong partnerships. This is a strategy for London as a whole and no single
agency is tasked with its implementation.
7.1
Resources & Investment
London already invests heavily in economic development across all of the areas covered by this strategy. A
recent review of economic development public expenditure in London estimates that, in the 2001/02, the
last year for which comprehensive figures were available, total public sector expenditure in London on
economic development and regeneration activity was £5.5 billion. The chart shows this broken down by a
number of key themes.
Source: Public Sector Economic Development Expenditure, LDA
Since 2001/02, there have been significant changes in funding arrangements as new London governance
arrangements have become established, and as a result of the Government’s Comprehensive Spending
Review and revisions to funding programmes. This did not, however, change the broad structure of
funding in relation to the pattern of economic development across London.
40
For 2003-2004, key funding sources managed by regional partners are shown in the following table:
Funding Source
Transport for London
Learning and Skills Councils
Housing Corporation
Local Authorities
London Development Agency
Neighbourhood Renewal
ERDF and ESF
Business Link for London
2003-2004 Budget
£2.4 billion33
£1.1 billion
£800 million
£700 million34
£339 million
£100 million35
£83 million
£30 million
Source: LDA estimates
These figures do not include the substantial expenditure on Higher Education and on a variety of other
smaller initiatives. Nor do they include the significant resources brought to London by the voluntary and
community sector, or funding from the National Lottery distributors.
While the level of funding appears substantial, the majority is tied to specific programmes and output
targets, around which there is little flexibility. The funding for infrastructure (transport and housing) in
particular, is not adequate to address the backlog of investment created by years of under-investment, let
alone cope with the demand for increased investment.
7.2
Resources Available to the London Development Agency
As can be seen above, the LDA has direct control over only a small proportion of London’s total economic
development expenditure. The resources that the LDA does have at its disposal are allocated through the
Agency’s annual corporate planning process. The following table explains the LDA’s budget assumptions
for the 2003-2006 period. The budgets shown for 2004 and beyond are indicative and will be reviewed as
part of the 2004-07 Corporate Planning process. The balance between area, sector and regional priorities
will also be reassessed.
Net expenditure including full year expenditure for London Underground
Estimated minimum, including housing and discretionary Government funding
35 New Deal for Communities and Neighbourhood Renewal Fund
33
34
41
London Development Agency Budget 2003-06 (£m)
Budget
2003-04
Indicative
2004-05
Indicative
2005-06
339.9
331.0
352.1
138.0
28.3
0.9
167.2
94.4
8.1
0.0
102.5
75.8
4.0
0.0
79.8
Area interventions, sector strategies & regional priorities
Recharges
149.9*
6.4
156.3
204.8*
6.7
211.5
247.9*
6.9
254.8
Running Costs
16.4
17.0
17.5
Income
Annual Grant Income
Expenditure (programmes)
Inherited Programmes
Single Regeneration Budget (SRB)
Land and property
Other
New Programmes
Total Expenditure (rounded)
339.9
331.0
352.1
* Including DCMS tourism grant (£1.9 million in 2003-04)
Source: London Development Agency, Corporate Plan 2003-2006 (Draft)
In 2003-04, the LDA’s inherited SRB
programme accounts for over 40per cent of
our investment and therefore continues to
make a significant contribution to delivering
economic development across London. As
part of the corporate planning process, the
LDA currently organises its investments
around three key principles:



Area Interventions.
Sector Strategies.
Regional Priorities.
Beneath this, there are 21 work programmes
addressing various aspects of economic
development in London36. For each of these
programmes there is a Programme Investment
Plan that details the level of investment, the
type of activities to be undertaken, the
anticipated outputs and the commissioning
strategy37.
7.3
LDA Planning Documents
The London Development Agency produces a suite of
planning documents, each having a distinctive purpose
and focus:
Economic Development Strategy (EDS)
One of the Mayor’s strategies for London, it provides a
broad framework for responding to changes in economic
need and opportunity. Revised every three years, it is an
analytical ‘what needs to be done’ document setting out
the agenda for London’s economic development as agreed
by a wide range of key players.
LDA Corporate Plan
The Corporate Plan is an organisational tool outlining
how the LDA will deliver the EDS. It sets outs detailed
Agency priorities, performance targets and budgets and
clarifies internal delivery structures. The Plan is
produced on an annually covering a 1-3 year rolling
programme of work.
Programme Investment Plans (PIPs)
The Programme Investment Plans set out in detail the
Agency’s plan of action for each of its major programmes.
The PIPs outline the activities to be undertaken with
details of associated budgets, targets and delivery
Additional resources required for successful
economic development of London
mechanisms.
These programme areas are listed in the LDA Corporate Plan 2003-6
More details on the LDA’s investments and targets can be found within the Agency’s Corporate Plan and on the
LDA website www.lda.gov.uk.
36
37
42
Further work is needed to identify the costs of key infrastructure and other projects, including those
identified in this Strategy, the London Plan, and the Mayor’s Transport Strategy. The GLA Group will use
this as the basis for making a strong case for further investment to deliver national, regional and local
policy priorities as part of its submission to the 2004 (and subsequent) Comprehensive Spending Review.
London First, for example, has identified a need for £100 billion of capital investment in London’s public
services’ at the same time, estimates show that London is subsidising expenditure in the rest of the UK by
up to £20 billion, since it makes a net contribution to the national exchequer38.
7.4
Organisational Arrangements and Delivery Vehicles
The achievement of the objectives set out in this strategy requires the active involvement of partners from
across London. This includes those organisations who are responsible for strategic planning and
investment in London, but critically also the business community – both investors and employers – and
local people, community and voluntary organisations. The aim of this strategy is to avoid creating a
complexity of partnerships, but rather to embed arrangements and bring a new, long term, focus to activity
in London.
Sub-regional partnerships offer a tool for the consistent approach to developing strategy and delivery of
economic development, in line with the draft London Plan assertion that some issues are best addressed at a
level that lies somewhere between the boroughs and London as a whole. The development of sub-regional
economic strategies as part of the development frameworks being prepared to implement the London Pan
(see the Infrastructure and Places section of this strategy), will be an important step towards identifying
and prioritising issues for co-investment.
A number of other partnerships and working bodies have developed since the production of the previous
strategy that have contributed to the development of the ideas and proposals set out in this document.
These partnerships will play a critical ongoing role in the implementation of the revised strategy. The way
in which these partnerships engage with this strategy and plan is through the proposed sub-regional
frameworks.
The Action Matrix presented in the next section draws together the objectives, cross-cutting aims and
actions that have been identified across the plan. There is now a need, through the sub-regional strategies
and frameworks and the corporate planning processes of delivery partners, to agree a further set of SMART
operational actions.
38
Investing in London: the Case for the Capital, GLA 2001 and Public Services for a Growing City, GLA 2001
43
8
Action Plan39
Investment in Infrastructure and Places
Objective
Proposed
Lead
Actions
Develop, implement and build capacity of sub-regional partnerships to
GLA/LDA
Support the objectives of deliver London Plan through sub-regional frameworks
Using land acquisition powers to facilitate economic development where
the London Plan
appropriate
LDA
Ensuring co-ordinated delivery in Thames Gateway
LDA
Making the economic, social and environmental case for major projects
such and Cross Rail and Thames Gateway Bridge
GLA Group
Maximising the economic benefits from investments in infrastructure and LDA/Londo
the implementation of the Mayor's Transport Strategy
n Boroughs
Regional
Addressing construction sector labour shortages in order to avoid delays Skills
to key projects
Partnership
GLA/LDA\
London
Support the delivery of an
Ensuring a good supply of housing accessible to all incomes levels
Boroughs
adequate supply of
commercial property and Develop a framework to enable intensification of development leading to
increased densities on brownfield sites and work to support increased
homes
rates of housing development in the Thames Gateway
GLA/LDA
Ensure that London retains essential employment sites while facilitating
changes of use in appropriate locations
GLA
Deliver an improved and
effective infrastructure for
London's future growth
and development
Importanc
Complexit
e
Cost
y
H
M
M
M
H
H
M
L
H
H
M
L
H
M
M
H
M
M
H
H
M
H
M
L
M
L
M
In rating each of these factors the LDA has taken an assessment of the importance of the action to facilitating London’s long term economic development,
the cost of the specific action detailed (as opposed to the cost of the associated activity), and the institutional complexity associated with delivering the action.
This initial rating will be reviewed in light of a more detailed assessment of costs and benefits.
39
44
Ensure development of regeneration expertise and sharing of best
practice through, for example, the establishment of a Centre of Excellence
in Urban Regeneration
LDA
Develop and implement initiatives to improve design and management of
Promoting the
public spaces and invest in London's natural environment and open
GLA
development of a healthy, spaced including considerations of energy efficiency, sustainable design Group/Lond
and construction practices.
on Boroughs
sustainable and high
quality urban environment
GLA
Support improved public services including policing and public safety,
Group/Lond
street cleaning and waste management
on Boroughs
Take action to encourage developers and all businesses to adopt
environmental goods and services and launch a campaign to encourage
better environmental performance from the business community.
GLA/LDA
M
L
L
M
M
L
M
M
M
M
M
L
45
Investment in People
Objective
Improving skills of
workforce
Tackling barriers to
employment
Actions
Making the case for increased educational resources to help raise
attainment in London's schools
Promoting and improving links between employers and schools including
the provision of work related information, advice and guidance
Making the case for increased flexibility in the provision and design of
training and qualifications and piloting market based approaches to
training provision
Supporting training for those re-entering employment after period of
inactivity and promoting progression through models such as the NHS
Skills Escalator (an initiative intended to develop skills and career
development of NHS staff).
Raising the awareness and promoting take up of Working Families Tax
Credit
Improving access to, affordability and availability of childcare .
Making the case for improvements to the tax and benefit system to
improve the gains from employment for lower paid workers in London
Encouraging the expansion of flexible and family friendly employment
practices in the public and private sectors and linking supporting
employers with potential employees
Proposed
Lead
Importance Cost Complexity
GLA
H
L
L
LDA
Regional
Skills
Partnership
H
M
M
M
M
H
Regional
Skills
Partnership
M
M
M
GLA/LDA
M
L
M
LDA
H
H
M
LDA
H
M
H
LDA
H
M
M
H
M
H
Active labour market approaches to developing pathways to employment LDA/JC+
46
Monitor and evaluation of mainstream programmes to ensure that they
are reaching and are of benefit to target groups within London
Targeted interventions to address the specific barriers to the labour
market faced by particular groups
Reducing disparities in
labour market outcomes
Explore ways of recognising qualifications amongst migrant populations
between groups
Develop and implement a mayoral campaign to end discrimination and
institutional racism in the workplace and to ensure that London's
employers are ready to implement Part III of the DDA
GLA/LDA
M
L
M
LDA
Regional
Skills
Partnership
H
H
H
M
L
H
GLA/LDA
H
L
M
M
M
M
M
M
H
H
M
M
H
M
H
M
M
M
Develop a London wide employment brokerage service for disabled people LDA
Ensure that existing and planned housing developments lead to balanced
healthy and sustainable communities
LDA
Ensure that planned housing development is linked to employment
Addressing the impacts of opportunities and includes transport infrastructure and childcare provision LDA
concentration of
Tackle peer group effects working with education authorities to address
disadvantage
concentrations of disadvantaged pupils in schools
GLA
Increasing the availability, relevance and uptake of services for young
London
people in areas of disadvantage
Boroughs
47
Investment in Knowledge and Enterprise
Objective
Investing in London's
higher education
infrastructure and
increase the level of
London wide innovation
Proposed
Actions
Lead
Increase links between London HEIs and start up businesses and
improve management capabilities within HEIs to enhance the rate of
spinout success
LDA/BL4L
Supporting potential innovators in the commercialisation of new ideas
through the dissemination of new ideas on new processes and techniques,
alternative supply chains and product markets
LDA
Developing London's environmental sector by support the development
and take up of new environmental technologies
Promoting access to broadband and other new technologies through
encouraging cost sharing among SMEs
Help start-ups access mentoring, premises and support and improve
access to finance and insurance for SMEs and business in uncertain and
Tackling barriers facing high risk sectors
small businesses
Develop services to address the needs of types of businesses, including
social enterprises, that are identified as having the potential to achieve
broader objectives
Reduce barriers to expansion and diversification by helping all SMEs,
including black and minority ethnic, women and disabled entrepreneurs,
in bidding for public contracts
Empower London businesses to demand the skills, training and business
support that best suits their needs so creating informed client for
Improving delivery of services
publicly funded support
Assessing the effectiveness of current general SME support activities
services
and develop a seamless service for support to SMEs
Co-ordinate and develop ICT specific services in public sector business
support organisations
Importance Cost Complexity
M
M
M
M
M
M
LDA
H
M
M
GLA/LDA
M
M
M
BL4L\LDA
H
M
M
BL4L/LDA
M
M
L
BL4L/LDA
M
M
M
LF/CBI/LCCI
H
M
H
LDA
H
M
H
BL4L
M
M
M
48
Increasing information Design and develop a one-stop-shop for strategic businesses in London
available for large inward combining infrastructure, skills, knowledge and access to finance either
investors and traders centrally or sub-regionally.
Extend information on emerging markets for London exporters
LDA
LDA/TPUK
M
M
H
L
M
L
Promote London's sub-regional and sector offer overseas and domestically LDA/TPUK
Support sector
marketing, research and Support the development of sector networks and brands where this will
offer market advantages and help articulate sector strategies
GLA/LDA
networking
M
L
L
M
M
M
M
M
L
Deliver inward investment services in London
LDA/LFC
49
Marketing and Promoting London
Objective
Action
Deliver new products and counter negative perceptions to enhance
Invest in effective
marketing and promotion of London
international marketing
and promotion
Roll out developing London brand across key organisations and events
Proposed
Lead
Importance Cost
Complexit
y
Team
London
M
M
M
GLA/LDA
H
M
M
LHEC
GLA/LDA
/Visit
London
H
M
L
H
M
M
LDA
H
M
L
Strengthen London's gateway role to promote rest of UK.
LDA/GLA
H
L
M
Support the delivery of the Visit London strategy
LDA
H
M
M
Build on ambassadorial role of London's HEIs and foreign student body
Use Olympics, Wembley and other key events to promote London
internationally.
Reinforce and
Develop London’s capacity to compete for international convention
development London's business, and to host major events, including exploring scope for an
status as an international international convention centre in London
tourism destination
50
Appendix 1 Statutory Framework for the London Economic Development Strategy
Section 7 A (4) of the Regional Development Agency Act 1998 Act “the RDA Act 1998 ” as amended by the
Greater London Authority Act 1999 “The GLA Act 1999 ” requires the LDA to keep the London Economic
Development Strategy,” the EDS”, prepared under Section 7 A (1) of the 1998 Act in relation to its
statutory purposes, under review, and empowers it to submit proposed revisions to the Mayor. The
statutory purposes are (Section 4): o
o
o
o
o
Furthering the economic development and regeneration of London
Promoting business efficiency, investment and competitiveness in London
Promoting employment in London
Enhancing and developing the skills of local people
Contributing to sustainable development in the United Kingdom.
In revising the EDS the LDA is required to comply with any directions issued by the Mayor under the
RDA Act 1998 (Section 40(3)).
Under section 41 (2) of the GLA Act 1999, the Mayor must keep each of his strategies under review and
shall make such revisions of the strategies, as he considers necessary. When revising the strategy the
Mayor is required to have regard to certain matters. S41 GLA Act 1999.These are



The principle purposes of the Authority under section 30 the GLA Act 1999
The affect the proposed revision would have on the health of persons in Greater London and the
achievement of sustainable development in the United Kingdom; and, Section 41(4)
More specific matters set out in S41 (5) the GLA Act 1999 being
 Consistency with national policy and international obligations
 Consistency with other strategies
 The resources available for the implementation of the strategy; and
 The desirability of promotion and encouragement of the use of the Thames for Transport.
The Mayor issued directions to the LDA under the following provisions:
 Section 27 of the RDA Act 1998 to submit revisions of the EDS to him in accordance with Section
7A(4) of the RDA Act 1998
 Section 7A(6) of the RDA Act 1998 to prepare the proposed revisions in accordance with a Project
Brief issued by him.
The Mayor delegated the following of his functions in relation to the EDS, to the LDA, in accordance with
the provisions of Section 38 of the GLA Act 1999 to:






Take responsibility for consultation required in connection with the preparation of the revised EDS
in accordance with the 1999 Act including:
Prepare consultation documentation/draft revised strategy for his approval prior to consultation,
which has regard to the need for consistency with his other strategies, and reflects his stated
policies and the statutory requirements of sections 33, 41and 404 of the 1999 Act and section 7A of
the RDAA 1998;
Determine the persons or bodies to be consulted in accordance with section 42(1)(e) of the 1999 Act
and section 2(3)(a) and (b) of the Regional Development Agencies Act 1998, in addition to any
consultees notified to the LDA by me;
Produce and making available the approved consultation documents;
Publicise the consultation exercise, and distributing the consultation documents;
Engage with stakeholders to seek their views;
51


Facilitate evaluation of consultation response to the strategy and preparing reports to me outlining
the consultation processes that have been carried out, summarising consultation responses, and
identifying the principal drivers of proposed changes; and
Prepare a report to be made available to the public outlining key aspects of the consultation process.
Section 38(7) of the GLA Act 1999 empowers the LDA to exercise functions delegated to it on behalf of the
Authority.
52
Appendix 2 LDA’s Sustainable Development Principles
Economic: the nature of economic growth
Employment and Skills – creating jobs that help to build skills, quality of life and social cohesion in London
Distribution of wealth – economic development should promote equitable wealth distribution across the
population
Building Potential – economic development should build the potential for maximising future prosperity and
quality of life
Social: building a healthy society
Access to Opportunity – Equity between individuals and groups is promoted, in particular for minority groups.
Inter-generational equality is maintained by ensuring that future generations inherit a good natural
resource base, technology and social capital
Community and Social Capital – Social cohesion, tolerance, understanding and ability to work together is
enhanced
Quality of Life – quality of life for communities and society is enhanced including access to healthy
affordable food, green space, leisure and health facilities and affordable housing
Environmental: protecting the natural environment
Natural Resource Inputs – total inputs of natural resources should be minimized. Use of environmentally
benign inputs should be maximized relative to total inputs
Polluting Inputs – outputs with a negative impact on the environment and people should be minimized
Quality of the natural environment - quality of habitat and biodiversity is not compromised, and where possible
is protected for the future and enhanced where it has been formerly degraded
53
Appendix 3 LDA Target Framework40
Over 90 per cent of the LDA’s budget is invested through our programme activity. The Agency increased
the number of our output indicators from four in 2002-03 to ten in 2003-04. Five of these are common to
all Regional Development Agencies – marked with an asterisk. The new indicators we have introduced
reflect the specific needs of London’s economy and we will monitor the effectiveness of all our outputs in
meeting our equality objectives.
The broadened range of indicators combined with the more long-term nature of our investment –
particularly within our areas programmes- tempers the achievement of our targets in the shorter term. Our
active management of the Lower Lea Valley programme, for example, will ensure that we capture the
benefit of our investment in the London Olympics bid in the medium and longer term. (Figures are
expressed on gross attributable basis and targets for 2004-06 will be reviewed annually as part of the
Corporate Planning process).
Our learning opportunities output is anticipated to reduce in 2004-05 onwards reflecting the diminishing
contribution of our inherited programme and the more targeted emphasis of our Single Programme
activity. This will focus on enabling Londoners to access jobs – whether by skills or other activities –
including through our significant initiatives to improve the supply of affordable childcare.
The targets for the 2003-06 period are detailed in the following table:
Indicator
Annual LDA target
2003-04
2004-05
2005-06
Opportunities for Londoners
*Creating or safeguarding of jobs (29 per cent to benefit
black and minority ethnic Londoners) NB This includes those
created from our inward investment activity.
Enabling people to access jobs (50per cent, 29per cent and
5per cent to be women, black and minority ethnic and disabled
people respectively)
*Creating learning opportunities ((50per cent, 29per cent
and 10per cent to be women, black and minority ethnic and
disabled people respectively)
Business Development
*Creating or attracting new businesses (33per cent, 29per
cent and 5per cent to be owned by women, black and minority
ethnic and disabled people respectively)
Providing advice or support to businesses (33per cent,
29per cent and 5per cent benefiting women, black and
minority ethnic and disabled people or business owners
respectively)
8,000
8,000
8,000
8,000
8,500
10,000
20,000
13,500
12,000
900
900
950
12,500
13,000
13,500
40
40
4041
Physical Development
*Remediating brownfield land (hectares)
100
150
200
Creation of workspace (net additional 000m2)
1,500
1,500
1,500
Facilitating new housing (units)
Leveraging partners
250
250
350
*Stimulating private investment to benefit London’s most
deprived wards (£ million)
Regional coordination and intelligence (examples will include the Olympics bid and securing joint
funding around the Corporate Plan priorities.
Appendix 4 London’s Sub-Regions
40
41
Taken from the LDA’s draft Corporate Plan 2003-2006
Plus a possible 116 from Olympics
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Central London (Camden, Islington, Kensington and Chelsea, Lambeth, Southwark, Wandsworth and
Westminster): This area covers the central activities zone – the home of many of London’s most important
economic sectors. The priorities here are to maintain this area’s role as a key driver for London’s economy,
support the intensification of uses to meet targets for homes and jobs, to maintain a diverse business base
and to ensure residents from deprived areas are able to access current and future job opportunities here.
There is scope for major new development in areas on the fringe of the central area. The London Plan
envisages 140,000 more homes and 237,000 jobs here, and identifies six opportunity areas (Waterloo,
London Bridge, Elephant and Castle, Vauxhall/Nine Elms/Battersea, Kings Cross and Paddington), eight
areas for intensification (Farringdon, Smithfield, Holborn, Euston, Tottenham Court Road, Victoria,
Arsenal and Holloway) and three strategic employment locations.
East London and the Thames Gateway (City of London, Tower Hamlets, Hackney, Newham, Redbridge,
Barking and Dagenham, Havering, Bexley, Greenwich and Lewisham): This is London’s largest, and most
diverse, sub-region. It demonstrates the effects of the forces described earlier in this strategy at their
starkest, containing as it does both the strong and growing concentration of finance and business services
in the City and Canary Wharf and London’s largest concentration of industrial land. East London has some
of the most deprived wards in the UK, with communities facing particularly severe poverty and social
exclusion. It also contains part of the Thames Gateway area (which extends eastwards to North Kent and
South Essex). The London Plan identifies East London as the priority area for regeneration and as the place
where a substantial amount of London’s expected growth can be accommodated; however, this will require
massive infrastructure investment, particularly in transport (including Crossrail, the Thames Gateway
Bridge and proposed transit schemes), but also in utility services, environmental infrastructure to support
development and help prevent flooding, and new homes and social infrastructure such as schools and health
facilities to serve the new communities. At the same time, there will need to maintain the competitiveness of
the financial services industry and to support a world-class bid to hold the Olympic Games in 2012. The
Plan envisages 142,000 new homes and 149,000 new jobs here, identifying fourteen opportunity areas
(Bishopsgate/South Shoreditch, Whitechapel/Aldgate, Isle of Dogs, Stratford, Lower Lea Valley, Royal
Docks, Barking Reach, Dagenham Riverside, Deptford Creek, Greenwich Riverside, Greenwich Peninsula,
Belvedere/Erith, Thamesmead and Ilford), three areas for intensification (Beckton, Woolwich Arsenal and
Kidbrooke) and twenty-four strategic employment locations.
West London (Brent, Ealing, Hammersmith and Fulham, Harrow, Hillingdon and Hounslow): This is an
area with a strong, dynamic economic base, particularly in media, ICT and business services, and associated
with Heathrow airport – but also with significant areas of deprivation. It forms part of the “western wedge”
which straddles the London boundary, taking in the greater Thames Valley. The priorities here are to help
maintain the success of the growth sectors here: improving transport linkages and ensuring high quality
commercial and residential property availability, public services and natural environment and supporting
provision of the skilled workforce increasingly required. Linking areas of deprivation with employment
opportunities through labour market and skills initiatives, and maximising the benefits from the new
national stadium at Wembley are also priorities. The Plan envisages 60,000 new homes here and 87,000
jobs, five opportunity areas (Wembley, White City, Park Royal, Heathrow/Feltham/Bedfont Lakes,
Hayes/West Drayton/Southall), one area for intensification (Willesden Junction) and sixteen strategic
employment areas.
North London (Barnet, Enfield, Haringey and Waltham Forest): North London has had mixed economic
success recently, with strong jobs growth in Barnet but job decline in the manufacturing areas of the Upper
Lee Valley. It sits at the southern end of the London-Stansted-Cambridge corridor identified by the
Government in its Sustainable Communities Plan as a key area for development to meet housing needs. The
priorities here are to enable local residents compete in the London labour market and access new
opportunities, to help develop sustainable homes and communities with adequate transport and other
infrastructure, strengthening town centres and enhancing strategic industrial sites in the area. The Plan
envisages 60,000 new homes and 27,000 jobs, identifying three opportunity areas (Upper Lee Valley,
Tottenham Hale and Cricklewood/Brent Cross) and three areas for intensification (Mill Hill east, Haringey
Heartlands/Wood Green and Hendon RAF) and nine strategic employment areas.
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South London (Bromley, Croydon, Kingston, Merton, Richmond and Sutton): This is a generally
prosperous area, marked by a high degree of residentialisation with several successful town centres.
Although there are high employment rates (linked with a high level of out-commuting to central London
and Surrey), the area also has pockets of deprivation in northern Croydon, Merton and elsewhere, including
a number of areas with concentrations of social housing in need of regeneration. Priorities here are to
maximise the capacity of the larger centres (including Croydon) to provide growth in homes and jobs,
improving east-west transport links and focussed approaches to tackling the problems of areas of
deprivation to ensure all residents can benefit from the prosperity of the area. The Plan envisages 57,000
new homes by 2016 and 36,000 jobs, one opportunity area (Croydon) and one area for intensification
(South Wimbledon/Colliers Wood) and ten strategic employment locations.
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