The New Face Of London; Oxford & Cambridge As Boom Cities Of 21st Century

There are a couple of interesting articles in the Financial Times that looks at the urban development of the UK. In one article, Tim Leunig argues that a government plan to build 3 million new homes should be built where they’re needed. New homes should be built in areas of growth such as the information technology boom towns of Oxford and Cambridge, and in London instead of areas of decline where he suggests that they’re not needed despite conventional wisdom that the new builds will spur new growth.

City size matters even more than in the past. Service sector companies, especially those employing highly skilled workers, gain most from locating close to each other, as knowledge spill-overs between workers and companies make them more effective. In addition the rise of dual-career, dual-industry couples wanting to work in the same city as each other gives companies in different industries the incentive to locate in the same place.

The postwar planning system was based on the belief that people should stay where they were and that jobs should move to them. But the belief that we can shuffle jobs around Britain proved false. You cannot move Canary Wharf to Liverpool: it is successful (in part) because of where it is.

….Britain’s highest land values are currently found in London and nearby commuter towns such as Reigate; in Oxford; and in Cambridge. A hectare of land in each is worth at least £8m, or around £200,000 per property. Nowhere else comes close to matching these levels. Additional houses in these areas are worth more because these places are capable of generating additional well-paid jobs. It is clear, therefore, that these are the most sensible places to build the first of the 3m new homes.

As we do so, the increase in supply may lead prices to fall to more typical levels, in which case the price signal will automatically lead us to build in other areas. But if the new homes attract new companies, then wages in these newly enlarged cities will stay high, leading housing and land prices to remain high. If that is the case, and it seems a plausible scenario, then the sensible strategy would be to keep increasing the size of these cities, generating more and more high-quality, high-wage jobs in the process.

Oxford and Cambridge would then become the Liverpool and Manchester of the 21st century: cities whose economic success leads to dramatic expansion, to the benefit of those who move to them, and, via buoyant tax revenues, to all of us.

More here: FT.com

Meanwhile an article by Michael Skapinker looks at what’s fueling a million immigrants who seem to have all turned up at once in London:

In 1986, London had an estimated 1.2m foreign-born residents, making up 17.6 per cent of its population. By last year, the number had risen to 2.2m, or 30.5 per cent of the total.

But the change goes beyond numbers. The LSE report, published in July, points to the truly novel feature of the recent wave of migration. Previous immigrants to London tended to come from a handful of countries, most with historical ties to the UK. The new generation of immigrants comes from every corner of the earth.

The immigrants of the last 20 years have moved to London for the same reasons. The difference is that, instead of coming in successive waves, they have all arrived together…The movement of people is a worldwide phenomenon and probably greater than any government can control. It is the result of the increase in global economic ties, cheaper flights and better communication links. Migration, while still requiring considerable personal tenacity, is no longer the all-or-nothing risk it was.

…Once, those leaving their countries feared they were seeing their families for the last time. Today, they can talk to, and see each other, on Skype and fly home for reunions. United Nations figures show that between 1980 and 2000 the number of people worldwide living outside their home countries almost doubled from 96m to 174m.

Cities such as London – open, cosmopolitan and economically diverse – are particular magnets. Mr Travers says the arrival of large number of migrants in London is “something to do with Britain’s economic growth, something to do with [the use of] English”.