London: all that glisters...

The nation’s capital boasts it is the greatest city in the world. David Goodhart says it is actually the most economically, politically and ethnically polarised part of Britain, and not a good place to live unless you are affluent.

London is currently winning all the plaudits, whether it is as top ‘city of opportunity’ (PwC) or global city where most global professionals want to work (Boston Consulting Group). The idea of London as the most popular and successful city in the world is, naturally, a message relentlessly promoted by the London Mayor and the main London media outlets. But for the majority of people who actually live in the city it is at best a half-truth.

London is certainly a phenomenon. It is a city that has partially outgrown its country and sometimes feels more attached to the rest of the world than to its own national hinterland. It is the apotheosis of the transactional, market society—a wonderful place to have as a bolt-hole if you are a rich foreigner, a good place to come and live and work for a few years if you are an ambitious young incomer from provincial Britain or from another country. Yet it is also the most economically, politically and ethnically polarised part of a Britain that has come to regard it as ‘the great wen’ of Willam Cobbett’s famous denunciation.

With its population at 8.1m in 2011 (and, largely thanks to immigration, growing at roughly 1m per decade) it is eight times larger than the next largest city in Britain. This is a ratio more commonly found in the developing world than in Europe or North America. Moreover, of the eight next largest cities in Britain only one (Bristol) has a per capita GDP higher than the national average. That makes for a very capital-centric country.

Last year around 45 per cent of all advertised graduate jobs in the country were London-based. And despite more public debate about ‘rebalancing Britain’ since the crash of 2008 the gap is getting wider. As Tim Hames, director general of the British Private Equity and Venture Capital Association, has pointed out: ‘As far as the professional middle class is concerned London has become a form of gigantic black hole dragging everything into it. In England at least it is often London or bust.’

As Hames implies this is not a positive state of affairs for Britain or even for most people in the capital itself:

‘It makes London an incredibly expensive city in which to live and work, with the property market distorted by its status as an international enclave… Moreover, it can make the rest of the country feel inconsequential. This despite the fact that cities like Aberdeen, Bristol, Cambridge, Edinburgh, Glasgow, Manchester, Newcastle and Oxford are world leaders in certain fields.’

London has a high proportion of Richard Florida’s ‘creative class’ – highly educated, mobile people for whom rootedness is not a high priority. And it has a relatively small proportion of the middle income/middle status people, who form the core of any country – a squeezed middle in numbers as well as income levels. Some of those people – especially those on modest incomes from the white British majority – have in recent years felt themselves squeezed out both financially and culturally between affluent professionals and the growing ethnic minority presence. Hence the rapidity of white population decline in London.

As recently as 1971 the white British made up 86 per cent of the London population. In 2011 it had fallen to 45 per cent, down from 58 per cent in 2001; that means 17 per cent of London’s white British residents left the city in the decade after 2001. Nobody, including the academic experts, expected London to become a ‘majority-minority’ city as soon as the 2011 census. Politicians were also caught unawares. Ken Livingstone, the former London mayor, told me in an interview with Prospect magazine in 2007 that London would not become a majority-minority city in my lifetime. It had probably already become one as he was speaking.

White British net migration from London (around 500,000 a decade) has actually been pretty constant since the 1970s. There was no white British ‘return’ when the city began to thrive once more in the 1980s after a long period of decline. Just when we would have expected the city to start attracting white British residents again, the rates of outflow remained flat and even rose somewhat in the 2000s — at a time when newcomers were pouring in to transform the city.

There are a few places in outer London like Barking and Dagenham where speed of change suggests a strong element of ‘white flight’ but in general the reasons for white exit are many and complex, to do with wanting fresh air and greater space to bring up children as much as discomfort with the ethnic composition of neighbourhoods (see Eric Kaufmann and Gareth Harris’s brilliant Demos pamphlet on this issue, Changing Places). But if ethnic change plays no role at all in the flows, why is it that white British people are significantly more likely to leave London than ethnic minority citizens and are also more likely to move to whiter areas (as Kaufmann and Harris show)? And, more generally, if London is such a wonderful place to live why do so many native Londoners, white and non-white, want to get out?

One reason for wanting to leave is the scale of churn itself which makes stable communities increasingly rare. According to the UCL publication London 2062 (edited by Sarah Bell and James Paskins) London’s ‘revolving door’ saw total inflows/outflows of 6.8m in the period 2002-2011. In around one third of the 33 London boroughs the equivalent of half their populations move in or out every five years. There is churn in all big cities, but not normally on this scale (at least in the developed world). There are many factors behind the churn – a large number of students, changes to family structure, the cost of living in London and, of course, the highest level of immigration the city has ever experienced.

Infrastructure development – transport, schools, health, housing and so on – cannot, in the main, keep pace with the inflows. Liberal societies with rights and legal protections and due process are not designed for the sort of rapid infrastructure development that London requires. The very thing that attracts so many people to London (and Britain as a whole) – the stability, the rule of law, democratic due process – are the very things that make it so hard to accommodate them! It is true that transport capacity in London is expected to expand by almost fifty per cent between 2001 and 2021 but housing is a much less encouraging story. It is widely agreed that the city needs between 40,000 and 50,000 new homes a year to keep up with population growth, yet in 2012/13 only 18,000 homes were completed and in most years the completion rate is similarly below half of what is needed.

The result of this undersupply of new infrastructure is, of course, greater congestion and rising costs (in a less trumpeted recent report Savills, the estate agent, declared London the world’s most costly city partly thanks to rising rents). In housing the newest immigrants often live in conditions more associated with sprawling third world favelas. As Eric Kaufmann and Gareth Harris put it in Changing Places: ‘Incomers are willing to trade room size and amenities for proximity to co-ethnic networks and employment.’ Ian Gordon of the LSE calculates that 40 per cent of London immigrants from poor countries in the 2000s have been accommodated through an increase in persons per room.

Rapid immigration has also impacted social housing, which still makes up about one quarter of London’s housing stock. This is, in general, no longer available to ordinary Londoners on modest incomes but rather to the poor/unemployed or those with special needs of some kind. About one in six of the social housing stock is occupied by foreign nationals, which suggests a much higher proportion of new lets is going to newcomers.

Meanwhile, a Financial Times investigation discovered that as a result of rapidly rising house prices in the capital members of the professional middle class – architects, engineers and academics – could no longer contemplate buying a house in whole sections of London: the City of London, Kensington, Westminster, Wandsworth, Islington, Camden and Hammersmith. In fact in only three London boroughs is home ownership affordable to people on local median incomes.

So, contrary to the ‘greatest city in the world’ boast, for the middling classes of all ethnic backgrounds London does not offer a good quality of life. Indeed it is one of the least good places to live in Britain on most counts. According to the ONS, London has the highest anxiety levels and lowest life satisfaction levels of any region in the country (in the latest ONS report published in September London’s mood improved but it stayed bottom of the league). It also has the highest crime levels in the country (though declining) and the worst air pollution in western Europe. According to an Ipsos MORI poll, 85 per cent of Londoners think that England is overcrowded, higher than any other region. And according to a poll commissioned by the Yorkshire Building Society in 2013 only 13 per cent of Londoners trust their neighbour – again the lowest figure in the country and one third the level in Scotland and Wales.

Of course the story is not as bleak as such a list implies. London has enormous attractions too, not just economic. It has a rich public realm – and much of it is free: museums, parks, the South Bank at a weekend. Its schools are the most improved in the country, especially for poorer pupils. Its cultural life is wide and impressive (though is London’s theatre really the best in the world, as is often asserted?). And it is, of course, a city of opportunity albeit overwhelmingly for the affluent and the young. Indeed, it is increasingly a mono-generational city designed for people to work in for a few years and then move on, not a place to lay roots. As the UCL London 2062 report points out London sucks in large numbers of people in their twenties and thirties from the rest of Britain and the world and tends to expel everyone else. London loses population in all age groups except those aged 20-29. As London 2062 puts it: ‘London acts primarily as a city for work, where all other aspects of the life-cycle are hard to sustain.’

London is still living off the social capital of the past but another generation of churn on today’s scale and, on current trends, it can only become an even more unpleasant place to live except for the affluent. Let me now consider the trends in two areas: London’s economic life and ethnic integration.

London is, of course, one of the most economically dynamic regions in the entire developed world. It is home to many of the country’s, and world’s, leading companies, financial markets and universities. But it also exhibits the drawbacks of a laissez-faire, transactional form of capitalism: economically unequal, a polarised labour market and little investment in training especially at the bottom end. London has both the richest and poorest communities in the country – of the 20 places in Britain with the highest levels of non-employment/unemployment half are in London. Two of its boroughs, Hackney and Tower Hamlets, are among the ten most deprived in England. According to the Centre for London 28 per cent of Londoners are classified as poor (down to 16 per cent if housing costs are excluded).

There is also greater ethnic inequality in London than elsewhere in Britain: in London 40.5 per cent of white British adults are professionals but just 25.5 per cent of minorities are. In the rest of England and Wales the gap is only eight percentage points. Part of the reason is that the average white Briton in London is more affluent than whites elsewhere in the country.

London remains, of course, the central hub of Britain’s hub economy as well as the political, administrative, cultural and media capital of the country. Yet more than any other region it pays little heed to national social contracts, London employers have no special loyalty to Londoners let alone British citizens. According to the Centre for Research on Socio-Cultural Change, more British-born citizens leave London every year than enter it from the rest of the country: the population increase is driven almost entirely from abroad. And London’s universities now generally admit more people from abroad than from the rest of Britain outside London.

London has the lowest apprenticeship figures of any region in the country, only 3 per cent of employers recruit direct from schools and youth unemployment is the highest in the country at 25 per cent (and higher for many ethnic minority youths). The Living Wage Campaign is a valuable counter to London’s often ruthless market economy but despite much noise about it from the London Left the living wage is only paid by 400 companies in the capital.

Many of these factors have been exacerbated in the past 20 years by exceptionally high levels of immigration, both at the top and bottom of the labour market. At the top end a global ‘war for talent’ ideology takes for granted that London’s top institutions must be free to attract whomever in the world they want. Of course London needs to be relatively open, and many of the people it attracts help to generate economic activity and create new jobs. But when one third of all graduate jobs in London are taken by people born abroad there is also bound to be some displacement of British citizens, either in London itself or people who would have come to the capital from other parts of the country.

At the bottom end the displacement story is even clearer, (and that is without even considering illegal immigration in the capital). Around 20 per cent of low-skill jobs are taken by people born abroad and according to Ian Gordon of the LSE wages in the bottom 20 per cent may have been depressed by as much as 15 per cent in periods of peak inflow. Until the big immigration surge starting in the late 1990s there were fewer people in London employed at the very bottom end of the labour market than elsewhere in the country, and they were better paid. Mass immigration has expanded the numbers at the bottom and reduced the pay gap. Why would you employ a local school leaver for a low skill service sector job when you can hire a better motivated graduate with modest wage expectations from eastern or southern Europe?

This is not just about coffee shops. According to Peter Carter of the Royal College of Nursing nearly one third of new London nurses have been recruited from abroad in the past year, mainly from Africa and Eastern Europe. Yet over the same period NHS London has axed nearly one quarter of its training places.

A dynamic city needs immigration, especially at the top of the labour market where some people from abroad really do have unique skills that are vital to a company or cultural institution. But you can have too much of a good thing, especially for the middling and poorer people of London, many of them from ethnic minorities, who have experienced greater pressure on public services and housing, longer commuting times, downward pressure on wages, greater competition in the job market as well as large increases in core living costs.

And any decent community needs time to absorb newcomers, time to establish the connections of familiarity and continuity that make for solid communities that together make for a great city, not just a place to make a quick buck. But despite the melting pot rhetoric the sheer scale and speed of the recent inflows into London means that it has become a more ethnically segregated city than is often realised. I detailed some of the figures on white British decline earlier, and this has left five boroughs where less than one third of the population are white British – Tower Hamlets, Newham, Harrow, Ealing and Brent. Across Britain nearly half of the ethnic minority population live in wards where the white British are less than half of the population, and this proportion has risen sharply since 2001. There is no reason to believe London has bucked this trend, indeed the speed and scale of demographic change in the capital may have made it even worse.

A major recent survey by the Social Integration Commission asked people about their friendships and contacts across ethnic boundaries and found that relative to its ethnic minority population London is actually the least integrated region in the United Kingdom. It also found London to be the least integrated by age and class. It is often pointed out that public housing and expensive private housing nestle next door to each other in many parts of the capital, but that does not mean that the people in the different forms of housing have significant social contact.

London is a relatively tolerant city – with about 90 per cent of people saying people from different backgrounds get on with one another. That does not mean there is much common life being forged across ethnic boundaries. Walking around the centre of London or travelling on public transport one has the impression of a mixed up, colour-blind city, at ease with its ethnic diversity. And that is true of some neighbourhoods, but there is also a reality of ‘sundown segregation’ with many Londoners returning home to live in parallel, monocultural communities. In 13 per cent of London households no one has English as their main language, and 40 per cent of pupils in London schools speak a language at home other than English.

Schools everywhere tend to be more segregated than the neighbourhoods that they serve and that is as true in London as anywhere else. Around 60 per cent of South Asians live in majority white areas but only about one third of South Asian primary school children are in white majority schools. Chris Hamnett of King’s College and the author of a report on ethnic minorities in London schools concluded: ‘There are very high levels of ethnic minority segregation in London schools.’

Finally, the belief that Londoners are more progressive and liberal than the ‘backward shires’, as David Aaronovitch puts it, is only partly true. In fact London is more politically polarised than any other part of the country. There is less hostility to immigration, reflecting the fact that more than half of the population are immigrants themselves or the children or grandchildren of immigrants – though not much less hostility, 60 per cent of Londoners think that immigration has been too high or much too high. There is also a tilt to the Labour party in the capital thanks to the Labour voting bias of ethnic minority Britons.

But the last Euro-election results in London also reveal an electorate sharply divided along ethno-cultural lines. Two out of three visible minority voters voted Labour, while two out of three white voters backed the Tories or UKIP. In fact UKIP, which won 17 per cent of the vote in London, outpolled Labour by almost two to one among white voters in the capital.

So, in part thanks to the immigration of the past 20 years, London has become more economically and politically divided, and for ordinary families it is probably the least good place to live in Britain: it has the highest crime, pollution, congestion and anxiety levels and lowest levels of trust and neighbourliness. And it is only for the rich that these drawbacks are compensated for by greater wealth – according to Danny Dorling the median Londoner is not much better off than the average citizen of the country as a whole.

How then does London get away with perpetuating such a powerful myth about itself while telling the rest of the country how dependent it is on the urban superpower? One could argue that there is a sort of ‘contract with the capital’ in which the rest of the country pays to raise children who then as graduates move to London where they are more productive and then pay higher taxes to repay the rest of the country. London does generate proportionally more tax income than any other region because it has so many high earners and successful companies, but it also sucks up a disproportionate amount of public spending. And the idea that London does not need the rest of the country did not survive the financial crisis: the capital could not have supported the London based banks without the national tax base to draw upon.

The London media, above all the Evening Standard, is understandably wedded to London ‘boosterism’ as, of course, is the mayor’s office and to a lesser extent the Labour-dominated GLA. And the ‘greatest city in the world’ story does partly reflect the experience of affluent professionals living in pleasant parts of the capital, networking with interesting colleagues from all over the world, and with the financial cushion to buy themselves out of some of the congestion and pressure described earlier.

The voices of those in the bottom half of the income spectrum do not get heard much in the London media and many of them are in any case recent immigrants who, fresh from poorer and more chaotic places, happily endorse a London story that is partly about celebrating their arrival.

Although London is essentially a left-wing city the ‘old left’ issues of pay, jobs, public services, community and public housing get drowned out by ‘new left’ issues of diversity and minority rights – Doreen Lawrence rather than the late Bob Crow. This makes it hard to mount a case from the left for more social and employment protection – more fellow citizen favouritism – for London’s school leavers and young unemployed.

There is a bigger reason too why London gets away with telling itself and the rest of the country (and the world) such half-truths. It is that the London ideology largely overlaps with, and indeed contributes to, the wider liberal ideology that dominates the country as a whole – the ideology of much of the upper professional class, both centre left and centre right. It is an ideology for the successful but caring, favouring individual autonomy, geographic and social mobility, openness, diversity and equality in most things apart from income.

London’s liberal ideology does not like immigration caps or favouritism towards long-established Londoners. It has little understanding for popular hostility to needy newcomers jumping queues in social housing or the NHS. Similarly, it cannot comprehend white ambivalence about the ethnic transformation because it involves sentiments of group identity and affinity and a desire for familiarity in neighbourhoods that are not generally felt by more mobile elites, and are therefore too often dismissed as xenophobic.

And the London ideology simply ignores what does not fit its worldview. It was striking how little coverage the news of London becoming a ‘majority-minority’ city received when it was first announced by the ONS at the end of 2012. The Evening Standard did not even put the news on its front page, tucking it away on page 10. And the BBC London television news had it as its seventh item. Boris Johnson’s usually ubiquitous blond bob was nowhere to be seen.

According to the Financial Times columnist Janan Ganesh demographic and social trends are remaking Britain in the freewheeling image of its capital city. He argued in a recent FT column that Britain is becoming more urban, more diverse, more atomized, and altogether more like London. And he concluded: ‘If the future points to a rootless, postmodern society in which nothing is sacred, then London got there long ago.’

Ganesh evidently approves of the London-isation of Britain. But a rootless, postmodern society ‘in which nothing is sacred’ is not, given a choice, where most people want to live.

Yet for many of its inhabitants, both old and new, London has indeed become an insecure, congested, transit camp. The biggest single reason for this has been the unmanaged mass immigration of the past two decades. The challenge to London politicians is to somehow reduce those inflows and make it a more decent place for the middling majority – less ‘rootless and post modern’ – without losing the economic dynamism and cultural vigour that mass immigration has contributed to.