Agenda item

Ahead of the publication of the London Growth Plan, to receive an update from Oxford Economics on their research into the West London economy.  The Board will be asked to consider the key findings and approve the proposed second phase of research.

The Board is asked to note that Neil McCullough, Director of Cities Consultancy, Oxford Economics has been invited to attend for this item.

(Agenda republished to include the attached paper on 20 February 2025)

Councillor Muhammed Butt (as Chair) introduced the item, reminding members that Oxford Economics had been commissioned (following a need identified at the West London Alliance Leaders Board) to improve the evidence base relating to the West London economy.  The Board was advised that the first phase of the analysis had now been completed.

The Chair then welcomed Neil McCullough (Director Cities Consultancy – Oxford Economics) and Hugo Bessis (Oxford Economics) to the meeting, who had been invited to provide a brief presentation on the initial findings from the research.  The following key issues were highlighted as part of the presentation:

·             The outline of the main research objectives, along with initial analysis of the strong fundamentals identified in relation to the size and strength of the West London economy, based on population, location, skills and earnings with strong specialisation identified in relation to strategic sectors such as life sciences, logistics & aviation, creative industries and digital activities.

·             Despite the strong foundations identified, the analysis had also shown West London performing behind other regions (such as East London, Oxford Cambridge Arc, London and the UK as a whole) in terms of economic output by Gross Value Added (GVA), which in 2024 had been 16.4% lower than in 2019.  With the economy in West London still recognised as recovering from the pandemic, this decline was partly attributed to the fact that some sectors had taken longer to recover (such as aviation) along with West London having a lower share of highly productive sectors (particularly professional services).  However, it was also evident that some of West London’s sectors had tended to be less productive then the London average.  As a result, the baseline forecast for West London within the initial analysis had remained relatively modest compared to London overall and the rest of the UK.

·             Although the initial baseline forecast had been modest, the analysis had identified the potential for significant productivity growth in the West London economy with the ability to contribute an additional £7bn per year in GVA if each of West London’s sectors was as productive as the London sector average. In noting that the London economy had been slowing and gaps between regions was narrowing, West London’s position within London was also identified as key, given the sub region’s ability to attract skilled workforce, its international links and its proven ability to deliver quick returns in relation to infrastructure and skills and employment support investment.

·             Oxford Economics had identified five key sectors to explore in more detail:

o      Life sciences: recognised as a well-established sector (Imperial College, Brunel University, various pharmaceutical groups), with significant growth opportunities, and supportive Government policies.

o      Advanced manufacturing: recognising West London as the manufacturing hub of London with activity focussed mainly on food, drink and basic pharmaceuticals. Opportunities for linkages with other sectors (e.g. life sciences) were a key area of future potential, if land availability and cost constraints could be addressed through successful regeneration.

o      Logistics and aviation: identified as key sectors due to the presence of Heathrow Airport, Park Royal and other key sites.  The expected growth of exports and passenger travel provided clear opportunities but it was also recognised that the sector remained susceptible to disruption as a result of sustainability issues, congestion and global instabilities.

o      Creative, digital and tech: it was noted that West London historically had a strong specialisation in screen production now supported by a fast growing digital and tech sector although challenges remained in relation to the adaption of new technologies, skills shortages and global competition.

o      Clean energy: recognised as a rapidly growing sector in the UK and globally, clean energy was also felt to have implications for West London relating to the aviation sector.  It was felt that West London’s challenges in relation to constrained electricity capacity and distribution may also give rise to opportunities for the development of clean energy solutions.

·             In recognising the barriers to the growth of strategic sectors across West London, the analysis had also outlined where it was felt targeted intervention could help to overcome the barriers and transform these into enablers for expansion.  These included:

o      Energy Infrastructure – energy demand was felt likely to increase across West London as the economy and population continued to grow.  It was recognised that positive progress had started to be made on addressing the current energy constraints but that more work was required to ensure developments were able to progress, including proactive investment in grid capacity.

o      Digital Infrastructure – recognising that one of WLAs growth priorities was to enhance West London as a global innovation gateway, it was noted that West London already benefitted from strong connectivity.  Further improvements in the digital infrastructure could release additional economic gains for West London not only in terms of investment opportunities for tech, digital and manufacturing businesses but also in terms of encouraging new industries and uses such as data centres and Internet-of-Things applications. Opportunities to encourage more inclusive growth were also identified, with West London Alliance boroughs already investing together in digital connectivity and working on digital infrastructure improvement projects through the Digital West London programme.

o      R&D and innovation – West London was identified as already performing well in terms of innovation, with Imperial College and Brunel University in particular already recognised as supporting a growing innovation ecosystem, and scope for better cooperation between businesses focused through development of the WestTech Corridor.

o      Access to finance and inward investment – West London had already been identified as performing well in relation to the attraction of Foreign Direct Investment (FDI) particularly in terms of manufacturing and Information & Communication, but there was felt to be scope to increase this further in areas such as life sciences with the potential positive impacts on employment, wages, productivity, export and knowledge diffusion.

o      Skills – whilst West London was home to a large pool of skilled residents, the analysis identified that a large proportion commute elsewhere for better paid employment. A key challenge was therefore to support the creation of higher value-added jobs that would be able to retain skilled residents.  The region also included a significant cohort of residents with fewer qualifications and in lower-paid jobs and supporting these residents to upskill and find work was cited as a key lever to support economic growth and help raise productivity.

o     Transport accessibility – whilst acknowledged as being well connected to Central London and internationally, West London was also recognised as suffering from traffic congestion, a lack of North South links, and various connectivity gaps.  The potential offered through improved transport accessibility and transport schemes such as the West London Orbital and next phase of the Superloop was seen as key to unlocking increased productivity, social inclusion, reducing congestion and pollution as well as supporting housing and wider regeneration opportunities.

o      Housing – recognising that housing affordability in London had deteriorated substantially over the past 20 years, with the house price to earnings ratio in West London amongst the highest, it was felt that a focus on efforts to improve affordability would support better matching of workers to jobs and provide the means to support more inclusive growth through social housing development.  The challenges in this respect were also recognised, given the competition for land in West London and tension between the efforts to increase housing whilst also providing business space and industrial land.

o      Health & Wellbeing – whilst West London had been identified as having a relatively healthy population, challenges were recognised in terms of the number of inactive working age residents, pockets of health deprivation and poverty and increase in health-related issues for those aged 65+ with significant impacts on both the formal health and care system and on unpaid care.  Efforts being made to reduce inequalities in health and access to healthcare would support both economic growth and quality of life, though this was a challenging area to address given the range of factors involved including housing, poverty, social cohesion, safety, employment and skills and the environment.

·             As final conclusions, the initial analysis had identified that West London had the assets, industries, and strategic position to grow and contribute even more to the UK’s economic output, with clear opportunities in relation to fast-growing sectors such as life sciences, creative industries, tech and advanced manufacturing.  This would require overcoming or mitigating a number of barriers which were limiting current growth potential.

The Chair thanked Neil McCullough for the presentation and then sought comments from the Board, with the following areas highlighted:

·             In welcoming the analysis, members supported the focus on growth enablers given concerns and challenges highlighted in relation to the impact of poverty, skills and training, housing and energy infrastructure in constraining potential opportunities for growth across West London.  Within West London’s shared growth priorities on transport, energy, skills, housing and global innovation, the role of individual local authorities and their individual growth plans and strategies were also identified as key.

·             The Board recognised the key relationship between the research undertaken and the launch of the London Growth Plan, which included strong principles around polycentric and inclusive growth.

·             Speaking on behalf of West London Business, Andrew Dakers highlighted what he felt were the significant opportunities for growth across West London based on the type and level of businesses already being attracted, but identified the need for this to be delivered in a structured way.  Reflecting on the recent launch of the research on polycentric growth commissioned from the Centre for London by Ealing Council, supported by the West London Alliance and Imperial College (which the Board had helped shape as its previous meeting in November 2024) he highlighted land cost and availability (including office space) and transport links as key issues from a business perspective.

·             Whilst recognising the challenges outlined (particularly in relation to housing affordability, land use, energy infrastructure, skills and training) members also welcomed the focus on the opportunities identified for growth across West London given the existing infrastructure, diverse nature of the population and work already being undertaken to focus on place shaping and the development of local innovation sectors.

In terms of next steps, the Board’s view was sought on plans for the next phase of research focussed around more detailed assessment of the impact in being able to overcome the identifiable barriers to growth and delivering on the enablers of growth.

In welcoming presentation of the initial research findings, the Board RESOLVED as a way forward and in recognising the ongoing work being undertaken:

(1)        To note the update provided on the emerging findings and key themes in relation to the research commissioned from Oxford Economics.

(2)        In support of the efforts being made to continue building a broader insight into West London's economy and develop the supporting evidence base, to endorse plans for the next phase of research, on which further updates would continue to be provided.