Although Greater London was bounded by a green belt three times its size in order to prevent its expansion, the city exerts a strong influence across most of the Wider South East. Communities in Brighton, Basingstoke or Basildon may feel distinct from the capital, but their proximity to London is one of their principal defining features. Planners speak of London as a “city-region” – to describe these dense personal, social and business connections across the Wider South East. 6 This chapter shows how these connections have multiplied and strengthened in recent years – presenting common challenges, but also opportunities to shape the future of the Wider South East.
In the last decade, London and the rest of the Wider South East have exhibited similar patterns of growth – notably higher growth in population, 7 employment 8 and property values 9 than the UK average. So how is their relationship changing?
Commuting is the most visible evidence that London has grown more connected to the rest of the Wider South East. This increased connectivity is partly thanks to rapid job growth in central London. In 2016, there were 900,000 people commuting into Greater London (a 30 per cent increase on 2004) and 300,000 making the reverse journey (a five per cent increase; see Table 2 on page 6).
This growth in commuting has matched job growth, so the proportion of commuters has remained the same: commuters hold 16 per cent of London’s jobs, and respectively 13 and 16 per cent of people living in the South East and East of England regions depend on London employment. London’s reliance on commuters is here to stay.
Commuting patterns are dominated by travel into London – but not all travel long distances, or into central London. 35 per cent of in-commuters work in Outer London, and orbital work trips have increased (although these are underestimated in the regional data in Table 2). Many Wider South East cities and towns are also major employment centres, generating commuting flows themselves, so dependencies go both ways. 10 Indeed, the Gross Value Added (GVA) of the South East and East of England regions combined is greater than that of London. 11
As commuters cross the London boundary, they create large economic transfers: incomes earned in London are mostly spent outside, and vice-versa. To highlight some of these flows, we estimated the economic contribution that commuters make to the economies of Greater London, Hampshire and Surrey counties. 150,000 Hampshire and Surrey residents work in London – they represent about three per cent of London’s workforce. 12 Using average workplace salaries, we estimate that wages earned in London by commuters from Hampshire and Surrey were worth £13bn in 2016, while the wages earned by Londoners commuting to Hampshire and Surrey totalled £5.5bn. 13 Assuming similar average wages for those commuting into London from other counties, wages earned in London by commuters were worth £70bn in 2016.
The history of commuting across the London boundary also has deep cultural implications. Although communities inside and outside London express fears of being swallowed by London’s urbanisation, in many ways they are part of the metropolis. Maps of personal phone calls made on landlines show dense connections between communities across the London commuter belt 14 – partly because many Wider South East residents have family and friends in London, perhaps because they once lived there themselves: half of Brighton’s and Milton Keynes’ residents have lived in London, according to polling commissioned by Centre for London. The majority of residents polled in these cities viewed the impact of London on their local economy as positive – which was not the case in the rest of the country. 15
Live-work flows are not the only ties that bind London and its neighbours: cities and counties are also connected through leisure and shopping trips, trade, and capital movements, but these are more difficult to quantify. Estimates of inter-regional trade suggest that the South East and East of England regions together account for 40 per cent of London’s imports from the rest of the UK and half of London’s exports to the rest of the country. 16 In a 2003-2006 Polynet study, the authors conducted interviews with 148 service firms and institutions that were part of eight knowledgeeconomy sectors in eight cities of South East Englandii. Among the firms interviewed outside London, 72 per cent had links with a London office, and 58 per cent also had links with another office in South East England outside London. The analysis suggested that business interactions between branches, suppliers and clients across South East England have strengthened in the last two decades, as business service companies have opened offices in cities around London. 17 Conversations with economic development professionals in councils on the edge of London attest to the permeability of the London boundary.
The users of public services also cross the London boundary. Patients living in London are seen in hospitals in Surrey or Kent (and viceversa), and councils place social care clients in facilities in neighbouring administrative areas. Nearly 5 per cent of the school places offered by Surrey County Council for 2017-18 were to children living outside the County – many (though not all) of these will be resident in London. Similarly, 3.7 per cent of Surrey schoolchildren were offered places in neighbouring education authorities. 18
London’s transport services do not stop at city limits (unlike, for example, the New York City Transit). Transport for London manages 70 bus routes across the London boundary, 19 and currently runs train services outside London on five lines. Oyster cards can now be used at nearly 60 stations outside London, and that number is set to rise. And Transport for London is increasingly providing services for communities outside London – from 2019, Crossrail 1 will increase the number of people who are 45 minutes away from central London and Canary Wharf by 38 per cent, many of them outside London altogether.
Crossrail 2 plans four branches outside Greater London, and the opportunity for collaboration will be even greater if more rail operation franchises are transferred to Transport for London, as Centre for London recommended in 2016. 20 This would give London government a stake in neighbouring communities, and an opportunity for all parties to plan for transport at a city-regional scale. On top of this, High-Speed Two will double morning peak arrivals at Euston and provide a new gateway into London at Old Oak Common, probably extending London’s commuter belt further north.
Some transport assets are fully regional. Most London airports are not located in London, but they serve passengers living either side of the M25: half (52 per cent) of airport passengers travelling to or from London use an airport outside London (see Table 3).
Taking a broader view highlights the diversity and quality of shared amenities. Parks and open land outside the capital provide recreation opportunities, and huge environmental benefits such as biodiversity, flood control, and relief from air pollution and heat. London also offers cultural institutions, as well as a dense network of schools, universities and colleges, complemented by surrounding cities. London’s boundaries are porous, and to many, invisible.
However, while the ties across the Wider South East have enabled economic success to be shared far beyond the M25, they have also given rise to common challenges, as the next section illustrates.
Shared issues and opportunities
The tight integration of London with the rest of the Wider South East means that housing markets around London have felt the heat of the capital’s growth (see Map 3): as land supply in the capital has tightened, demand for housing has “leap-frogged” the Green Belt.
Commuters help drive house price growth elsewhere, as they outbid people working locally, who are less able to afford the more expensive homes – and may be compelled in turn to move further out. Our research shows that the areas with the greatest increases in the numbers of residents commuting to London between 2002 and 2016 have also seen their housing market become less affordable for residents who work locally. 21 The impacts of the housing affordability challenge are profound: housing costs push the London poverty rate from 14 to 27 per cent, the South East from 12 to 18 per cent, and East of England from 14 to 19 per cent. 22
Problems with accessing housing are exacerbated by poor housebuilding rates: household growth has outpaced housing completions for several decades. Increasing housing supply has been a challenge throughout the Wider South East – especially in “affordable” housing. Because of this backlog, the challenge ahead is steeper: the assessment of housing need drafted by government, based on future population growth and current housing affordability, suggests that Wider South East local authorities will need to deliver over 150,000 homes every year of the next decade – 59 per cent of England’s assessed housing need (see Table 4). The Mayor of London’s draft London Plan sets a target of 65,000.
Local authorities throughout the Wider South East are also struggling to fund transport, environmental and social infrastructure – needed not only to accommodate growth sustainably and mitigate the effects of climate change, but also to improve the life chances of their deprived residents. Many Wider South East residents do not share in its prosperity: in 43 local authorities (most of them on the edge of the Wider South East), median weekly pay for employee jobs was below the UK average in 2016.35
Essex, Kent, West Sussex and Surrey are facing infrastructure funding shortages ranging from 30 per cent (Kent) to 60 per cent (Surrey) – totalling £10bn by the 2030s. 23 In London, Crossrail 2 was budgeted at £30bn in 2014 prices, and only made up a small proportion of the infrastructure funding gap estimated in Mayor Johnson’s London Infrastructure Plan 2050. 24
Central government still allocates most local funding, including that for infrastructure, and decides on projects with regional implications, such as airport capacity or rail investment. 25 However, government has been slow to move on several major infrastructure projects, calling into question its willingness to provide political leadership for the Wider South East – but also opening up opportunities for Wider South East authorities to take on that role.
On top of this, Brexit – and especially leaving the Single Market – will be a greater shock to the Wider South East economy, which is more reliant on service trade and EU migration than the rest of the UK. 26
London and its neighbours are facing common challenges in managing the city-region’s growth – challenges that can pit communities against each other. The next section looks at how these challenges are perceived by local authorities from either side of the M25, the relationships they are forging, and the areas where cooperative working is most needed.