Friday 30 October 2015
Looming affordability crisis threatens London's reputation as world-leading city
- Housing costs and price of office space biggest barriers to starting new business
- Reputation as a world city key to drawing businesses to London
According to a new poll of Londoners, business leaders and councillors in the capital, London's lack of affordable housing, high price of commercial space and cost of transport are among the biggest barriers to the capital's economic competitiveness.
The new research, conducted by ComRes for the London Tomorrow thought leadership panel, warns that the UK capital could be becoming a victim of its own success as it becomes unaffordable to set up a home or business here.
The research found that London's reputation as a world-leading city was the most important factor in drawing businesses to London. 80% of councillors, 74% of businesses and 69% of Londoners select this as one of the top 3 reasons business would want to be based in the capital. In a timely development, London's access to EU markets for labour, goods and services was also cited as a major pull factor in drawing businesses to London by 61% of councillors, 37% of businesses and 42% of Londoners.
However, the findings suggest that this reputation - and London's future competitiveness - is at risk from a looming affordability crisis. 69% of London councillors and 48% of both Londoners and London businesses cited the insufficient availability of homes as one of the biggest barriers to London's competitiveness. Almost half (49%) of businesses felt that the high cost of commercial space in the capital was a major barrier and 39% of Londoners, 41% of businesses and 34% of councillors highlighted London's transport costs.
London Tomorrow - a thought leadership initiative by London Chamber of Commerce and Industry (LCCI) in association with EY and supported by London City Airport - has warned that a lack of affordability could seriously threaten the capital's prospects as a world-leading city in which businesses want to set up shop and expand, and where people want to call home.
Commenting on the results, Colin Stanbridge, Chief Executive of London Chamber of Commerce and Industry said: "London is a phenomenal success story, but are we soon to become a victim of our own success? This new research shows that our city is fast becoming an unaffordable place to set up shop and live.
"We also need to carefully consider how necessary transport and infrastructure upgrades can be financed, when 39% of Londoners already think transport costs are a major barrier to London's competitiveness, making fare increases unpalatable."
"We must act quickly to ensure that London's world-leading reputation isn't eroded by failures in these fundamental areas. Government needs to provide better and more coordinated advice to businesses on the funding available to help them set up and scale up here in our capital. These results should also make DCLG consider whether its move to allow developers to convert disused office space to residential is appropriate in our thriving capital."
Caroline Artis, EY's Senior London Partner, said: "Not only is our transport infrastructure in need of serious investment, but Greater London desperately needs new homes for the burgeoning population, better broadband provision and mobile reception for our business community, and more schools and colleges to train the businessmen and women of the future.
"Attracting investment into London doesn't appear to be the problem, according to EY's 2015 UK Attractiveness Survey. London is the single most important location for foreign direct investment in Europe and last year saw the strongest FDI performance in a decade, attracting 381 projects to the capital.
"However, although investors want to put their money into projects, they can be spooked by the rocky road to delivery, which threatens London's competitiveness and can be a major barrier for businesses looking to scale up in the capital."
Patrick Burrows, Chief Financial Officer, London City Airport, said: "Clearly projects as diverse as Crossrail - both one and two - and the cycle superhighways are on track to provide both new transport links and alternative transport modes, which is good news for London. Issues remain, however, with road, rail and air - issues of cost, capacity and of infrastructure at bursting point. What's needed are greater freedoms in terms of how transport infrastructure is developed, how quickly projects can be initiated and how (and from where) funding can be obtained."
Full findings from London Tomorrow research:
How important are new businesses and entrepreneurs to sustaining and stimulating economic growth in London?
- Important: 98% of councillors; 91% of businesses; 92% of Londone
What are the most important domestic factors to London, if it is to be competitive with other major UK and global cities?
- Affordable housing: 51% councillors; 38% business leaders; 46% Londoners
- London transport infrastructure: 36% councillors; 42% business leaders; 45% Londoners
- Business-friendly tax and business regulations: 27% councillors; 44% business leaders; 26% Londoners
- A skilled domestic workforce: 34% councillors; 20% business leaders; 30% Londoners
- More devolved fiscal powers (tax & spend): 28% councillors; 10% businesses; 12% Londoners
- Digital connectivity: 17% councillors; 24% businesses; 19% Londoners
- Security measures against threats: 9% councillors; 13% businesses; 23% Londoners
- Airport capacity: 8% councillors; 13% businesses; 12% Londoners
What are the most important international factors to London, if it is to be competitive with other major UK and global cities?
- Maintaining its place as an international finance centre: 30% councillors; 43% business leaders; 34% Londoners
- Membership of the EU: 28% councillors; 22% businesses; 16% Londoners
- Openness to a skilled international workforce: 20% councillors; 15% business leaders; 19% Londoners
- Openness to foreign investment: 11% councillors; 10% business leaders; 16% Londoners
What are the main barriers to London being competitive with other major UK and global cities? (showing top four responses only)
- Insufficient availability of homes: 48% Londoners; 48% business leaders; 69% councillors
- Lack of skilled workers: 32% Londoners; 25% business leaders; 44% councillors
- London transport costs: 39% Londoners; 41% business leaders; 34% councillors
- Price of commercial/office space: 42% Londoners; 49% business leaders; 34% councillors
What are the most important reasons why businesses would want to be based in London?
- Reputation as a world-leading city: 80% councillors; 74% businesses; 69% Londoners
- Access to EU markets for labour, goods & services: 61% councillors; 37% businesses; 42% Londoners
- Quality of life: 37% councillors; 33% business leaders; 27% Londoners
- Specialist business hubs (Tech City etc): 35% councillors; 29% business leaders; 32% Londoners
- Transport infrastructure: 25% councillors; 27% businesses; 26% Londoners
- Access to airports: 19% councillors; 22% business leaders; 20% Londoners
- Digital connectivity: 11% councillors; 13% businesses; 15% Londoners
Which are the biggest challenges for someone wanting to start a new business in London? (showing top seven responses only)
- Housing costs: 68% councillors; 56% businesses
- Price of commercial space: 46% councillors; 62% businesses
- Lack of skilled workers: 40% councillors; 18% businesses
- Uncertainty over EU membership: 33% councillors; 26% businesses
- London transport costs: 22% councillors; 28% businesses
- Competition from other major UK and global cities: 20% councillors; 13% business leaders
- Government policies towards businesses: 18% councillors; 23% business leaders
What are the biggest challenges for small businesses looking to grow and expand in London?
- Price of commercial space: 70% councillors; 69% business leaders
- Difficulty accessing funding and investment: 67% councillors; 48% businesses
- Lack of skilled workers: 42% councillors; 23% businesses
- London transport costs: 31% councillors; 38% business leaders
- Lack of support from Govt: 28% councillors; 34% business leaders
- Limited digital connectivity: 18% councillors; 11% business leaders
How much of a positive impact would each of the following have on the affordability of setting up in London for start-ups and small businesses?
- Boosting visibility of potential funding and investment available: 74% councillors; 62% business leaders
- Creating more sector-specific incubator hubs: 71% councillors; 47% business leaders
- Providing Govt support schemes: 64% councillors; 59% businesses
- Providing more shared workspace: 60% councillors; 44% business leaders
Which are the sectors do you think London is most competitive in? (showing top three responses only)
- Finance: 80% councillors; 68% business leaders
- Creative industries: 68% councillors; 53% businesses
- FinTech: 31% councillors; 35% businesses
ENDS
Media contact
Sophie Mew, Policy and Public Affairs Officer
T: +44 (0)20 7203 1897
M: +44 (0)7827 241528
E: smew@londonchamber.co.uk
NOTES TO EDITOR:
- 'London Tomorrow: Shaping future cities' is a thought leadership panel by London Chamber of Commerce and Industry, in association with EY and supported by London City Airport
- London Chamber of Commerce and Industry (LCCI) is the capital's largest and most representative business organisation, with members ranging in size from multi-national companies to SMEs and sole traders.
- Colin Stanbridge of LCCI; Caroline Artis of EY and Patrick Burrows of London City Airport are available for further comment and interview.
- ComRes interviewed 150 London Councillors; 514 business leaders and 1,005 London adults from 13th - 7th September 2015 online. All three surveys were representative of their respective audiences. ComRes is a member of the British Polling Council and abides by its rules. Full data tables are available at www.comresglobal.com