London 2030 – Securing the Future Growth of the Capital: Marnix Elsenaar – partner & head of planning at Addleshaw Goddard LLP...

A barbecue summer has finally hit London, property prices in the capital continue to rise and the City's skyline is being transformed as overseas investors continue to see London as a safe destination for their investments. But despite the growing feel-good factor, significant challenges remain if London is to safeguard its status as a global financial centre and a place where people want to live and work.

Having declined for almost half a century after the Second World War, London's population began to increase during the 1990s and the trend shows no sign of slowing down. The capital grew by a million people between 2001 and 2011 and is likely to hit 10 million by 2030. Such a high rate of population growth brings significant challenges to both the public and private sectors: where will people live, how will they get around, where will they work and what jobs will they do?

Demand for housing continues to outstrip supply and the Mayor of London has identified a need for 400,000 new homes over the next 10 years which requires an annual rate of construction rather higher than the current rate of approximately 25,000. Business as usual will not be good enough. London's government will need to persuade central government to give it the tools to increase supply: can London achieve more control over tax raised in the capital, as recommended by the London Finance Commission, and over housing benefit so that it can design its own solutions to London's housing crisis? And where will everyone live? The increasing polarisation between house prices in the centre and the outer London boroughs coupled with a concentration of jobs in the centre, risks creating a doughnut effect. This puts increasing pressure on London's transport system as workers travel ever-greater distances from the outer Boroughs to jobs in the centre.

London has been investing in its transport systems during the last decade but new projects, such as Crossrail and the Thameslink upgrade are taking much longer to deliver than planned. To keep pace with increasing demand London needs to deliver essential projects, such as Crossrail 2, much faster and develop a long term funding and delivery plan. In the meantime, Transport for London will wish to consider investing in softer measures to reduce transport such as discouraging one-stop journeys and encouraging the staggering of journey times.

The third key challenge facing London is the provision of jobs. London's labour market is critical to its global competitiveness but there is a growing skills deficit as projections show a trend away from low skilled jobs towards jobs requiring high skills. While London has a large number of low skilled workers and 45 per cent of the population is educated to degree level, there is a shortage of workers with mid-level skills. As a result, London's employment rate has lagged behind the national average throughout the last 20 years with a resulting impact on social mobility and living standards. Improving the capital's skills base will require action from the public and private sectors. Will employers commit to investing in continuous learning for the existing workforce? Can London improve the quality of its further education colleges and, to repeat the devolution theme, can the GLA and London Boroughs achieve control over national skills funding to enable them to lead more local interventions to improve the skills base?

London is the UK's only global city but if it wants to retain its global ranking there's work to do.

This article is based on London 2030: A series of events exploring the future growth of the Capital, Tom Bolton, Centre for Cities, July 2013. For more information, please visit: