The Mayor’s Outer London Commission: Report




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2.41 Notable clusters in manufacturing and warehousing employment exist elsewhere in outer London, particularly near transport infrastructure. Manufacturing is most prominent near Heathrow, Park Royal and in the Upper Lea Valley. Warehousing follows a similar pattern, with additional clusters near London City Airport, Croydon and along the Thames in East London. The Commission was mindful that employment is only one measure of economic activity. It did, for example, identify functionally important clusters of manufacturing related activity elsewhere e.g. at Biggin Hill and in south Kingston. The GLA and more local stakeholders could usefully work together to identify other such functionally important clusters, including those in other sectors such as leisure and culture.


How does outer London relate to the wider metropolitan economy?

2.42 Within London as a whole the accessibility and agglomeration advantages make the Central Activities Zone the prime location for businesses and there is very high competition for space there. Indeed it is this competition for limited space that drives up land values and acts, alongside congestion and other diseconomies of spatial concentration, as a check on further concentration27. As in most cities, land prices are highest in the centre and generally decline with distance from the centre, reflecting the appeal of central locations when compared to peripheral ones. Firms that benefit most from agglomeration are most willing and able to pay for offices in central London and so the most productive jobs are located in the centre. This is reflected in both productivity and wages earned28, as well as employment densities (see Figure 2.6)

Figure 2.6 Employment density in London

Source: Annual Business Inquiry 2007


2.43 Where agglomeration benefits do not amount to enough to compensate for higher rents, for instance in activities that are more space intensive, firms locate elsewhere, either in outer London or other towns and cities in the wider region. By and large (but not exclusively) these businesses tend to be suppliers to other businesses, often those in the centre, and businesses serving local communities. The types of business that might provide a more supportive role to other businesses include those involved in catering, cleaning, logistics and security. To this end the proportion of jobs associated with serving the population (like retail or health and education for example) and jobs in what might be referred to as ‘support business services’ is higher in outer London than in inner London. As a result, the composition of the economy in the outer boroughs more closely resembles that of the rest of Great Britain than inner London, as shown in Figure 2.7. Health and education account for 18 per cent of jobs in outer London and 23 per cent of employment is in retail and leisure. This compares to only 11 and 20 per cent, respectively, of jobs in inner London. Businesses providing supplies or services to other businesses make up the third largest component of outer London’s labour market.


Figure 2.7 Industrial structures: comparative geography

Source: Annual Business Inquiry, 2007


2.44 The analysis above underscores the importance of local services, both public and private, in driving the outer London economy. Figure 2.8 shows the shares of total employment in local activities and in schools and hospitals in the economic geography zones in outer London.

The Northern, Eastern and South Eastern outer urban areas typically have the highest proportions of their total employees in either local activities or schools and hospitals (around 25 per cent). Proportions of employees in schools and hospitals in Western and South Western areas are slightly lower in comparison.


2.45 Croydon and the outer areas of the remaining four corridors have shares of jobs in local activities and in schools and hospitals between 13 per cent and 18 per cent. These comparatively lower shares reflect greater levels of employment in other economic activities as shown in Figure 2.5.

What are the distinct features associated with outer London businesses and other employers?


Figure 2.8: Shares of total employment in local activities and in schools and hospitals, GLA Economics geography zones (see Figure 2.6) 2002

Source: Annual Business Inquiry, GLA Economics. Based on ONS definition of outer London


2.46 The nature of economic activity in outer London boroughs can also be gauged from the composition of firms in those boroughs. Figure 2.9 shows the proportions of firms in broad sectors defined by the ONS inter departmental business register (IDBR) for outer London boroughs.


2.47 Figure 2.9 shows that proportions of construction firms are highest in Havering (24.6 per cent) and Bexley (22.4 per cent). Meanwhile, Richmond upon Thames has the highest share of firms in the property and business services sector (49.9 per cent) followed by Barnet (45.1 per cent), Kingston upon Thames, Harrow and Merton.


2.48 IDBR data also shows the prevalence of small firms in the outer boroughs. Figure 2.10 here is restricted to micro firms (those with less than 10 employees) because employment in these firms is most likely to be located close to their places of registration in outer boroughs (unlike employment in larger firms). Figure 2.10 shows that the largest number of micro firms are located in Barnet, Ealing and Richmond. Of all the outer boroughs the fewest number of firms with less than 10 employees are located in Barking and Dagenham.


Figure 2.9: IDBR VAT registered enterprises by industry, outer London boroughs, 2007

Source: DMAG Focus on London borough statistics, ONS. Based on ONS definition of outer London


Figure 2.10: IDBR VAT registered enterprises by employment size band, outer London boroughs, 2007

Source: DMAG Focus on London borough statistics, ONS. Based on ONS definition of outer London


2.49 Figure 2.11 shows the break down of private businesses by broad industrial category in each of the outer London boroughs and makes clear the variation in employment type between the different boroughs, though even this masks very local differences. This analysis looks only at business units and so overstates the size of the private sector in outer London as public bodies like schools, hospitals and borough councils tend to employ large numbers of people.


Figure 2.11: Business units in outer London by broad industrial group

Source: Annual Business Inquiry, 2007


Outer London economy: supply side issues


What are the key demographic issues relevant to the Commission?


Historic trends

2.50 While outer London currently contains
42 per cent of the capital’s jobs it is home to 60 per cent of its 7.6 million residents. The historic demographic trends underpinning the present population/employment structure have a fundamental bearing on the issues and perceptions which the Commission was asked to address.


2.51 Figure 2.12 shows how outer London’s historic role in accommodating the city’s population has changed. While London’s overall population declined from WWII until the mid 1980’s, this contraction was concentrated in inner London, with outer London experiencing a mix of modest expansion or relatively lower rates of decline. The mid 80s was a cathartic time for London in demographic as well as political and economic terms. London’s population began to stabilise and then expand but this process was focused on inner London, with generally lower rates of growth in outer London. As with employment growth, Table 2.1 shows that the pattern of population change was by no means even, with:

• no boroughs growing at the same or a higher rate than the inner London average (19.1%),

• eight boroughs growing above the outer London average (8.7%) – Hounslow 17.6%, Merton 17.3%, Haringey 16.3%, Redbridge 15.6%, Kingston upon Thames 15.5%, Richmond upon Thames 13.0%, Brent 12.1% and Enfield 11.0%,

and

• eleven boroughs growing below the outer London average – Barnet 10.3%, Barking & Dagenham 8.9%, Hillingdon 8.3%, Ealing 8.2%, Sutton 8.1%, Croydon 6.2%, Harrow 5.7%, Waltham Forest 4.5%, Bromley 1.2%, Bexley 0.6% and Havering -3.8%.


2.52 The factors underpinning this pattern of change are complex and have implications for the economy of the wider city as well as that of outer London itself. On the one hand, the 2001 Census1 showed that compared with inner London, outer London is still relatively strongly characterised by indicators of ‘familism’ and social stability. It has relatively fewer single person households, more economically active residents as well as those over retirement age, less over-crowding, better health and higher educational attainment (see below).


Figure 2.12: Annual population change: inner, outer and Greater London: 1971-2008


2.53 However, outer London is changing. There is already a well established trend for migration of families and older people from outer London, especially to the home counties (from which the economically active may return to London to work). Conversely, the historic exodus of inner Londoners to outer looks set to continue, perhaps partially offset in the future by reverse migration of younger outer Londoners seeking more urban lifestyles closer to the centre. Figure 2.13 shows that the ethnic composition of outer London is also changing with particular growth in west, north and parts of east and south outer London. So too is its social status, with downward or static trends among the higher socio economic groups across most boroughs (Figure 2.14).


Figure 2.13 Change in high socio-economic group (Social Occupation Class 1-3) 1991 – 2001


Figure 2.14 Percentage change in ethnic minority population 1991 - 2001


Projected trends

2.54 Like London as a whole, Tables 2.1 and 2.2 show that the outer suburbs are projected to experience a substantial increase in both population and households in the period up to 2031. Outer London’s population is expected to grow by 520,000 to over 5.1 million. On an annualised basis, this is significantly higher (23,000 pa) than that recorded in the previous 23 years (16,000 pa), but much lower than that projected for inner London (32,000 pa). Figure 2.15 shows this projected growth between 2011 and 2031on a ward by ward basis. The projected increase in household numbers (17.6%) is expected to be significantly less than in other parts of London, but will still produce a challenging increment of 330,000.


2.55 This is partly because the tendency towards small households will be slightly more pronounced here than in the rest of the capital. In the period to 2031, one person households are expected to comprise a greater component of growth in outer London (78%) than inner (59%) as the suburbs undergo some of the demographic changes which characterised inner London in earlier decades. While the numbers of married couples are expected to decline, numbers of co-habiting couples, lone parents and ‘other adult’ households are expected to increase.

Nevertheless, relative to inner London, growth in the younger age groups is expected to be less and in the older groups greater.


Table 2.1: Outer London Population Change: 1985 – 2031

Table 2.2: Outer London Household Change: 2008- 2031

Figure 2.15: Ward Level Population Change: 2011-31


2.56 These projections are based on recent trends and national assumptions in mortality and fertility, together with migration largely determined by housing development. While susceptible to policy, social and technology changes e.g. in terms of migration, social cohesion or medicine, and subject to continuous monitoring, they at present look deepset and are considered to provide a robust basis for planning London’s future.

Age

2.57 The age of the resident population has particular implications for the economic concerns of the Commission, including the way these relate to quality of life through infrastructure provision. In 2006 outer London as a whole had larger shares of its population in the 45-64 and 65 and over age cohorts compared with inner London, although these shares were still lower than those for the wider UK (Table 2.3). Outer London also had slightly higher shares of residents 15 or under than inner London. However there was a significantly lower share of 25-44 year olds in outer London as a whole compared with inner London (almost a 10 per cent differential).


2.58 Comparing outer London boroughs, Havering had the largest share of its resident population in the 65+ age group (17.5 per cent), followed by Bromley (16.7 per cent) and Bexley (15.9 per cent). Meanwhile the highest shares of population 15 or under were in Barking and Dagenham (23.8 per cent), Redbridge (21.4 per cent) and Waltham Forest (21.0 per cent).


Table 2.3: Resident Population mid-2006 by age groups

Source: DMAG Focus on London 2008, ONS; Based on ONS definition of outer London


Density

2.59 Also of relevance to the Commission is the density of outer London’s population which affects not just the nature of market areas but also bears on the economics of infrastructure provision. Table 2.4 shows population densities for outer London boroughs and inner London (based on ONS definitions) in 2006. The most densely populated outer boroughs were Brent (6,277 per km2), Waltham Forest (5,712 per km2) and Ealing (5,517 per km2).

The sparsest populations were in the outer boroughs of Bromley (1,992 per km2), Havering (2,025 per km2) and Hillingdon (2,161 per km2). Population density in outer London as a whole was almost a third of that recorded for inner London.


Table 2.4: Population density, mid-2006

Source: DMAG Focus on London 2008, ONS Based on ONS definition of outer London


Population ‘churn’

2.60 Population turnover or ‘churn’ is also of relevance to the Commission. Turnover is measured as the population inflow plus outflow excluding within-borough moves. Flows include both migration within the UK and international flows (Figure 2.16).


2.61 Highest turnover rates amongst the outer boroughs are in those to the south and west of London, namely Merton, Kingston upon Thames, Richmond upon Thames, Hounslow, Ealing and Brent. The lowest rates of population churn over the 2001-2006 period were in the outer London boroughs of Sutton, Bromley, Bexley and Havering.


Figure 2.16 Average population turn over rates 2001 - 2006


What are the characteristics of the outer London workforce?

2.62 The relationship between numbers of residents and the numbers of jobs in outer London bears on the Commission’s remit. GLA Economics have assessed this using 2001 employment and population density data2. Results displayed in Figure 2.17 show wards where the ratio of employment to population density is greater than unity.


Figure 2.17: Areas of London with employment to population density ratio > 1


2.63 While areas with the highest ratios of employment to population density are focused in the centre of London, reflecting an agglomeration of business activities in the centre and commuting to central areas, the blue wards coinciding with Metropolitan town centres and other major employment foci e.g. Heathrow also have high ratios.

Despite having lower accessibility these outer London areas maintain high relative levels of employment, presumably sustained to a greater extent by the local resident populations.


2.64 When the population: employment relationship is presented at borough level (Table 2.4), Hillingdon (including its airport related employment) emerges with the highest ratio, with slightly more than 4 jobs for every 3 residents. Kingston is the only other outer borough where the number of jobs exceeds the resident population.
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