Strategies for managing urban growth and revitalisation. (Commentary).

Remarks from the Global Cities Symposium, Harvard University, September 5, 2002

Thank you so much for inviting me to take part in this important seminar. It's great to have the opportunity to visit this eminent centre of learning and intellect at Harvard too. I have come here directly from attending the World Summit on Sustainable Development in Johannesburg. There I was one of a mere 65,000 delegates.

But I was privileged to address the audience at both the NGO day and the Business day on the London Principles of Sustainable Finance. This subject, which is an important part of sustainable development, certainly has considerable relevance to what we are all discussing here.

As Chairman of the Policy & Resources Committee of the Corporation of London, I am the Leader of the municipal authority for the district known as the City of London, the largest international financial centre in the world today.

I am also the financial and business advisor to the separate Mayor of London. He directs the strategic governance of Greater London, particularly in areas like economic development, urban planning, transport, and the environment.

LONDON TODAY AND THE LONDON PLAN

I would like to start this address with a brief look at the London of today. For it is a city at the forefront of technology and communications. It is the world's largest international financial and business centre. It has one of the most cosmopolitan populations in the world. Three-hundred and seven languages are spoken there daily, and there are sizeable resident communities from over 90 countries with a richness of culture, diversity, and experience from all around the world.

For many of these people, London is "the place to be." London is an attractive place in which to live and work.

But, like any major city, London is far more than the sum of its parts. Central London is a unique mix of cultures, people, and experiences. It is this blend that provides the critical mass of the city; it is this blend which draws people to London in ever increasing numbers.

London is also rich in amenities and boasts some of the best museums, libraries, and archives in the world, dating back many hundreds of years. And London itself boasts a rich heritage in architecture and resources.

Aside from its heritage, London today is the centre of the most international financial markets in the world. This financial industry is clustered together in a small area, thus creating considerable business efficiency.

This is complimented by a large presence of companies involved in supporting services such as accountancy, law, surveying and all forms of consultancy.

But it is not just in financial services that London is a leader. It is a major centre for the creative industries and a major hub for news, media, and broadcasting--international as well as British.

The presence of a vibrant property market with a large supply of international investors and developers allows the continuous renewal of office stock to the latest technical and environmental standards.

London is therefore a complex economy, with everchanging patterns of economic activity and growth. Over the past decades, London has been an immense success story, and it has grown in economic, social and cosmopolitan terms as a consequence. It has a power and an influence far beyond the borders of the European Union.

But one must also add a dark side to London. Despite its great wealth and economic power, 29% of its households are below the poverty threshold. Child poverty stands at the distressing level of 43%. Some neighbourhoods experience a high level of crime.

There are also areas that have a very high rate of unemployment-1l% in the Borough of Haringey. And their residents suffer more health problems than those in more affluent places do.

There is also huge pressure on land both for business and housing. This has pushed up house prices to incredibly high levels whilst leaving some areas more deprived than ever.

The presence of talent alongside considerable poverty comes with a price. This has created strains that are now in need of resolution.

The Mayor of London is therefore in the midst of getting agreement for The London Plan. This is a new spatial development strategy for Greater London for the next 20 years. It is simply London's way of managing urban growth and revitalisation.

WHAT IS DRIVING GROWTH?

But before I discuss the London solution, I would like to say a few words about what the drivers are of this remarkable growth.

The first one is undoubtedly the financial and business centre in the City of London. The City is Europe's leading financial centre and the international financial centre. It differs from New York in that it deals in international finance and advice. The huge domestic market here largely sustains New York.

All the biggest international banks and financial institutions operate from London. Indeed many of them manage their entire overseas operations from there.

The presence of all these banks attract a very high quality workforce from all over the world. Financial services, particularly in areas like corporate finance are intellectually demanding and need the very best brains and the best managers.

Moreover international financial services are an expanding industry Over the next 15 years they are expected to grow by 1.75% per annum. Employment in the industry will also grow in line with this.

Another significant driver of growth is population. London's population has increased by almost 600,000 since 1989. This is the equivalent of a medium sized city. We predict that this will continue to grow by a further 700,000, reaching 8.1 million by 2016.

Such a rapidly growing city just cannot function on the present resources. For instance, this increase in population will require a further 130 schools--with teachers.

A third driver is the need for new jobs to match this population growth. The continued expansion of financial services, as well as tourism, the creative industries and other service sectors will of course provide the bulk of these. By 2016 we estimate there will be more than 600,000 new jobs in London. Financial services alone will provide 140,000 of these.

And lastly I come to the increasing use of sophisticated technology both in the office and in the home. London has a very high level of connectivity and is at the core of the global networks. E-tailing, E-commerce, and E-government will therefore impact on every aspect of life. Technology is also particularly important in financial and business services--which is in many ways the principal driver of change and innovation.

Technology in its wake, brings the need for greater skills and the ability to use the information. That in itself places heavy demands on training and educational facilities.

PLANNING FOR THE FUTURE

In planning the strategy for this growth and revitalisation there is one overriding necessity. That is to preserve and sustain the centre of London. This is the great wealth-producing area. This is where the economic dusters are--be they financial and business services or creative industries.

It would be quite counterproductive if in the course of our future strategy we dispersed these industries around outer London and relied on telecommunications and public transport. For as I said earlier the economic cluster does bring real benefit. We need to foster that.

One of the characteristics of London is that it suffers from a shortage of land. It is not at all densely populated, like New York is. We also wish to preserve our green belt and so prevent London from expanding ever outwards.

London's density is 4,554 people per square kilometre, although there are a few small select areas of over 19,000. Paris on the other hand is 20,000 per square kilometre--and it does not have tower blocks.

So there is considerable scope in London for higher density development, as well as development of the so-called brownfield sites--derelict industrial land.

There is a huge brownfield area in east London--the Thames Gateway, as well as selected areas nearer the centre, that will support both high-density housing and industry to provide jobs for those who live there.

In the financial and business centre in the centre of London, there are also demands from international business for tower blocks. Not huge ones such as you have here in the United States, but smaller buildings up to 50 floors and perhaps one million square feet in size. These blocks can also increase density considerably.

Unsurprisingly international companies demand buildings--be they tower blocks or campus-style complexes, to the highest international standards. And so that is what we have got to build.

In the City, the Corporation of London also goes to great lengths to ensure that there are good out of office facilities as well. By that I mean restaurants, bar and shops.

Another area important to redevelopment is public transport-especially railways, or what you in the United States call railroads. In London public transport also embraces our Underground, or metro system, as well as the very extensive bus network.

At present the network to the centre is comprehensive, but hopelessly overcrowded. One million people commute daily into the centre of London, 320,000 of them into the financial centre.

But elsewhere it is not so good. London's transport system is highly radial, in and out to the centre from the suburbs. Intra-suburban and orbital traffic is left to buses, operating on congested roads.