London needs effective, efficient and sustainable infrastructure to thrive
July 30, 2014
The need for increased capacity and infrastructure investment in London is well recognised. London needs effective, efficient and sustainable infrastructure to thrive, be competitive and remain an engine of sustainable growth for the UK economy.
In our latest Cities of Opportunity, PwC’s index of 30 major cities internationally, London claimed the top spot as a centre for business, finance and culture for the first time. Against key indicators, London came top for Economic Clout, Technology Readiness, and as a City Gateway.
However, the index also revealed some of London’s underlying vulnerabilities. The city came sixth for transport and infrastructure, 17th for sustainability and the natural environment, and 16th for cost. A number of these vulnerabilities align with the findings of our ‘Good Growth for Cities 2013’ report on urban wellbeing with Demos. Despite having the highest income levels in the country, when measured against the wider range of publicly defined ‘good growth’ criteria such as affordable housing, transport, and working hours, London slipped below the UK overall average for ‘good growth’.
Today’s publication of the London Infrastructure Plan, addressing London’s infrastructure needs up to 2050, is therefore welcome, although the specific proposals in the consultation plan will need careful consideration.
There are substantial challenges to deliver the infrastructure that is projected to be needed in the paper. In particular, it's clear there is a large gap between the cost of what's required and the funds available. For the UK overall, PwC analysis of global capital projects and infrastructure spending to 2025 shows that spending will increase 51% from £70bn in 2014 to £106bn in 2025, with UK spending growing 3.9% per annum. Investment in London’s infrastructure needs to be balanced alongside the strengthening of the UK's other major urban areas, while also ensuring that smaller cities are not disadvantaged.
Some of the solutions in the plan - prioritisation, integration and better asset management - can help bridge the funding gap, but there is no getting away from the plain fact that whether through greater fiscal devolution, access to new tax streams or more user charging, someone has to pay. The question is how much, and where this should come from - the residents and employers that benefit from living and doing business in London; those who visit London for business or pleasure; or those with access to capital who are attracted to London as an 'investor ready' city. Biting the bullet on this question of who pays for the infrastructure needed to keep London thriving will be critical.