London’s Economy

I congratulate the hon. Member for Hendon (Mr. Dismore) on securing the debate and on the way in which he opened it. I am the first Member representing a non-London seat to speak, so I may not seem so metro-centric as others. I want to touch on some of the themes raised by hon. Members in this brief but important debate. The hon. Member for Hendon set the scene well when speaking about London’s transport problems. Its transport infrastructure is a constraint on the growth and development of London as a major employer and as a place to live. My hon. Friend the Member for Orpington (Mr. Horam) commented on some of the stresses on suburban rail services caused by the growth in passenger traffic into London. It has a ripple effect not only into and out of London, but even as far south, Mr. Hancock, as your constituency and mine. Long distance commuters from Portsmouth and Fareham travelling into London face increasingly cramped conditions because of transport developments and increasing demand in outer London as well as in the centre. The hon. Member for Hendon was also right to mention London’s housing problems. Anyone who lives in London, even those like me who live here only part-time, is acutely conscious of the pressures caused by house prices and the affordability, availability and quality of housing stock. He also spoke about unemployment, which I shall return to later. The hon. Gentleman highlighted a point which was also raised by my hon. Friend the Member for Cities of London and Westminster (Mr. Field). He spoke about the tremendous paradox that London has a high level of unemployment—higher than any other part of the United Kingdom—but also a high level of inward migration. Society faces the risk of polarisation with extreme wealth and extreme poverty living cheek by jowl. The hon. Member for Hackney, South and Shoreditch (Meg Hillier) has referred to the issues around social cohesion that flow from that. My hon. Friend the Member for Cities of London and Westminster has rightly paid tribute to the work of the lord mayor of London and the City of London corporation in promoting London’s financial services sector. They promote not only the financial services sector in London, but the sector outside London, and they act as ambassadors for the sector on a global basis. It is important to recognise that London, as a global city, needs to build strong links with other parts of the world. We need to attract business into the UK as well as people into the UK. In debates about London, it is important to look outwards and to recognise that other cities and capitals are trying to attract the same business. We need to consider London’s competitiveness as a city and international financial centre and how it shapes up and compares with other centres in the world. I shall return to that subject in a moment. First, however, I want to say a little more about unemployment in London. At 7.9 per cent. in the mid-point of last year, it exceeded the national average. It seems a contradiction that although London’s economy is growing faster than the UK economy, London is seeing such high levels of unemployment. Certainly we are seeing inward migration, as we heard from my hon. Friend the Member for Cities of London and Westminster, and anyone who has spent time at any of the international banks based in the City or in Canary Wharf will have seen the rich and diverse pattern of employment. We need to consider the causes of London’s unemployment. One factor highlighted by the report commissioned last year by the City of London corporation was the skill levels of people in London. It found that the proportion of graduates living and working in London is much higher than in the UK as a whole. It was also evident from the report that the proportion of Londoners with few or no qualifications also exceeded the national average. I suspect that that low level of skills underpins the high level of unemployment in the capital. If we are to tackle the mismatch between wealth and poverty in London, we need to consider the skills of the population as a whole. The report also highlighted the fact that the number of adults receiving training in London was below the national average. We clearly need to focus on improving the skills set of people who work in London, but we must also raise the aspirations and attainments of young people there. I have visited the City of London academy in Southwark, and I am sure that its programme will play just as important a role as city technology colleges, the forerunner of academies, in raising levels of attainment in parts of London.