The Independent View: London – a magnet for talent

london by Harshil ShahVince Cable recently accused London of acting like a giant machine that sucks in all of the talent from the rest of the country. Our new report, Cities Outlook 2014, shows that London is indeed a magnet for young people from across the country. But the big question is: why does this happen, and what does it mean for policy?

First, let’s look at the key stats. Somewhat counterintuitively, overall London loses population to the rest of the country. But this is overwhelmingly to the Greater South East, whereas between 2009 and 2012, almost every city outside this region lost population to the Capital. London also sees large gains in people aged 22-30 – all but five cities (all of which are in the Greater South East) saw people within this age group leave to the capital.

This data highlights that London is indeed attracting young workers from across the country, but that upon starting families, these people begin to exit the capital. Critically however, they tend not to return home, and a number of them are likely to continue to work in London.

The biggest losers from London’s pull on young workers are our other large cities. Between 2009 and 2012, there was a net flow of 48,000 22-30 years olds to the capital from large cities. This was enough people to sell out Manchester City’s Etihad Stadium.

Migration patterns in large cities look very different to the capital – they see a huge inflow of 18 to 21 year olds, largely reflecting the arrival of university students, but they see a significant loss of 22 to 30 year olds. In other words, once students graduate, they take their degree to pastures new.

So the universities of large cities attract a large number of young people. But cities then struggle to retain them once they graduate.

But what factors are driving these trends, and can anything be done to address them?

First, it’s important to note that London attracts young people because of the amenities that only a big city can provide. Yet while the ‘bright lights’ of the capital are likely to play a role, England’s large cities should also benefit from an in-migration of people from smaller cities and non-city areas.

Second, London simply boasts an unrivalled number of available jobs and career progression opportunities. There are more graduate level jobs in London than in the large cities – on average between 2009 and 2012, 35% of all jobs in London were graduate jobs, while this figure was 26% for the large cities.

The challenge for cities outside of London, therefore, is for them to offer sufficient economic opportunities for young people to stay beyond university. If this is to happen, we need to see far greater levels of devolution to UK cities. Currently they have very little control over the money that they are given, and that means that they have little flexibility to divert funds to help create jobs and boost their local economies.

Bristol and Birmingham are very different places, with different strengths and challenges. And yet in general national policy does not recognise this. Until we place power in the hands of local politicians our cities outside of London will struggle to fulfil their potential. And this is not just bad for their local economies, but for UK plc as a whole.

* Alexandra Jones has been Chief Executive of the Centre for Cities since summer 2010.

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11 Comments

  • One of the biggest problems is that financial and professional services companies suck in so many young graduates from other sectors, leaving our industrial sector and employers outside London with lean pickings.

    The so-called Milk Round of large companies touring the universities to pick out the best graduates and syphon them off to head offices, usually in London, is one of the biggest sources of regional disparity there is.

    Until we can tilt the playing field back in as many different ways as possible, this process is going to continue. We need to be looking at engineering graduate bursaries to boost salary levels to those comparable with the financial services sector, supported by industry itself. We also need to look at changing the rules on takeovers, to stop the financial sector sabotaging the career prospects of those in industry by conniving in continual sell-offs of what remains of our industrial base.

    This problem is, like so many others, multi-factorial, and just focusing on local government as a means of addressing it is like to fail because it is just one tiny part of a very much larger, more complex picture.

  • RC I agree with every word in your comment.
    Vince was correct to point out that London has for decades been operating with a feed back loop which sucks the life out of business and society in the rest of the country.
    If we can not solve this regional problem in the UK there is no hope for a solution for the EURO zone which is doing the same thing to whole countries.

  • Peter Watson 3rd Feb '14 - 12:17pm

    For me, this issue makes me wonder what the effect of HS2 will really be.
    Will it reinvigorate business and investment in the north, as its supporters hope?
    Or it will it simply become easier to commute to London, making northern cities little more than dormitory towns?

  • London is a giant machine that sucks in talent from the whole of Europe, not just the UK.

    I really don’t see how it can change, and [email protected] not convinced it would be good if it did. 10 exceptional people together in London can do much, much more than ten groups in the regions with one exceptional person each.

  • David Allen 3rd Feb '14 - 1:02pm

    “If we can not solve this regional problem in the UK there is no hope for a solution for the EURO zone which is doing the same thing to whole countries.”

    Good comment. Well, we ought to be much better placed than the eurozone, because we have a single national government, which can deliver regional policies. Devolution on favourable terms, the Barnett funding formula for local government, regional public spending policies, and enterprise zones have all included and shared one common objective – economic rebalancing from the centre toward the periphery.

    What has driven these objectives? Why, the power of democracy. Our national political parties have known that if they don’t look after the regions, they won’t get votes in those regions. And why is regional policy now weakening, so that London can pull ahead to an unprecedented extent? Why, because the power of our democracy is weakening. Long fixed term parliaments, business and donor domination of all parties, growing political cynicism as all parties seek to manipulate rather than please the voters, all contribute to this trend. No party offers a solution, setting the stage for UKIP – or worse – to gain popular support.

    However, at least we aren’t as badly off as the eurozone, where there is no central government which has to be responsive to the popular will and to the demands of peripheral regions and nations. Hence Europe is sucking activity to its centre and letting its periphery fall to waste, and it’s worse than what is going on within our single nation.

    We’re not as badly off, that is, until Salmond creates his sterlingzone, with all the faults of the eurozone in miniature. Let’s all pray that won’t happen. Scotland, as a peripheral part of the “sterlingzone”, would be one of the long term losers if it did!

  • @ M You do not seem to dispute that there is a drain towards London ? People outside London feel “done down” by what is happening. Is business outside London of no value? I do not want to “do London down” I would just like a level playing field. Stopping the financial drain towards London with Land Value Tax, so that public subsidies for major projects like the Olympics and Crossrail etc do not go straight to private profit with increased real estate values would be a good start.

    @ Alexandra “The challenge for cities outside of London, therefore, is for them to offer sufficient economic opportunities” It is more a case of us needing a regional banking structure so that they can get a chance of the investment, based on deserving viable regional businesses. Currently first call on available capital goes to projects which fit the profile required by London Financial Institutions. Only politicians can deliver a change to that.

  • Jonathan Brown 3rd Feb '14 - 11:09pm

    Good article. The trouble is that almost everything points towards people wanting to ‘get ahead’ being forced to go to London – for the work, for cultural opportunities, for politics, for the media…

    It’s so sad as so many of our other cities actually have the basis for what they need to become really great (again). I certainly think a devolution would help.

    On the issue of HS2 I suspect that rather than turn other cities into dormitory towns for London, paradoxically, the greater ease with which people will be able to get to London will actually make living outside of London more attractive. And when I say living, I mean working, going out, as well as just sleeping. If people know they can get to London if/when they need or want to, it makes it easier to locate businesses (and families) in other places.

  • It’s so sad as so many of our other cities actually have the basis for what they need to become really great (again).

    Except they don’t, really, because what London has that makes it work is that there’s only one of it. It’s a positive feedback loop. As above, ‘ 10 exceptional people together in London can do much, much more than ten groups in the regions with one exceptional person each’.

    If the same talent pool was spread out among ‘so many of our other cities’ then there wouldn’t be the feedback effect multiplying what they can achieve by being together. Instead of one truly global-class city, there would be a bunch of mediocre-at-best cities in a small backward country nobody could be bothered with.

    Like it or not, it’s London that makes the UK, and what makes London is that it’s unique.

  • Frank Booth 3rd Feb '14 - 11:59pm

    Yawn. Another article about the North/South divide, sorry London/the rest divide that completely ignores finance! Have all these people been living in a remote hillside farm with no access to the outside world for the last 6 years? The UK economy has not really performed well for a long time. This has been masked by an enormous explosion in credit and investment banking boom (fraud?) centred in London. Not to mention those pension funds, also centred in London, making lots of money out of clients who end up doing rather badly – I see the government has passed on reform in this area.

    As usual the solution we’re given is local democracy – as also suggested by the BBC’s Stephanie Flanders before she went off to work for JP Morgan. Presumably this would involve local politicians having the freedom to implement ‘business friendly’ ie neoliberal policies in their cities. The Centre For Cities was once a part of the IPPR (Tony Blair’s fave) and is now stand alone. Who’s funding it?

  • Alexander Matthews 7th Feb '14 - 9:14pm

    Talking as a young (23) graduate who moved to London, after graduating from a university in the Midlands; can I ask, has anyone ever actually just asked us why we move to London?

    It is no great secret; most of us move here for the culture (which is also why many more do not move here).

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