London-New York Dialogue – what will protect the leading status of the two World Cities?

Today saw the latest in the series of meetings on the London – New York Dialogue, promoted by the Urban Land Institute.  Having been involved in many of the predecessor discussions, originally sponsored by Greater London Enterprise, over the last fifteen years or so, it was good to go along and hear how ideas are developing particularly in the light of the world economic crisis.

The opening keynote address was given by Dan Doctoroff, who was Mayor Bloomberg’s Deputy for Economic Development until the beginning of this year when he moved (interestingly) to be President of Bloomberg (his boss’s old firm).  He pointed out that this was the twelfth major economic crisis since New York became a major financial centre in the late 18th Century, and that New York (and London) had ultimately emerged strengthened from the previous eleven. 

The measure he used to assess the crisis was the number of Bloomberg Terminal installations in businesses around both cities: the total had risen by around 60% over the four years to the end of 2007, but the number had then flat-lined.  This flat-lining, however, does not imply stability – there is substantial churn in the figures with a fall-off in the large firms but plenty of new installations in smaller financial firms. As he put it: “Financial services are Darwinian” and this churn is a healthy sign for the future.

He emphasised the importance of London and New York not seeing each other as competitors but as collaborators – the word I would have used would have been symbiotic – and this led to a strong plea for stronger links between the two cities.

He characterised three factors as being required for the continued success of world financial centres like London and New York: firstly, that the cities are English-speaking (this may be something of a tautology); secondly, that they have a diverse population with “immigrant energy” (there has been a net inflow into London of around a million people from overseas in the last ten years); and thirdly, that being a forward-looking financial centre is “in the DNA”.

However, the position of London and New York is not necessarily assured.  It will be essential to maintain their infrastructure – in particular, transport, personal safety/security, and quality of life.  Neither city can afford to sacrifice any of these in the aftermath of the current crisis.  Moreover, because of the critical role both cities play in their national economies, both cities need to energise their national governments in their support (this is particularly true for London whose impact in supporting the rest of the UK economy is crucial).

I asked him how important he saw the need to maintain social cohesion and address economic inequalities in cities.  He answered that it was a vital part of maintaining a quality of life conducive to a stable future.

Two issues occurred to me.  First, Mayor Bloomberg’s vision for New York (PlaNYC), which Doctoroff had a key role in devising, with its 127 integrated initiatives affecting the environment, housing and transport is far more ambitious and cohesive than anything that has yet emerged from Mayor Johnson’s office in London. 

Second, much more needs to be done to put the case for London to have the resources necessary to maintain and improve its infrastructure.  Successive UK Governments have short-changed the capital, despite London’s key role as a driver of the UK economy.  A start could be made with the capital’s business rates.  At present, all business rates are levied  by local councils on the businesses in their area at a standard rate set by national government.  That money is not, however, for the local councils to use.  Instead, it is passed en bloc to the Treasury, who redistribute it back to local government pro rata in respect of population.  For the local authorities in London, this is a net loss each year of around £2 billion.  In essence, London’s businesses are subsidising those in the rest of the country by that amount.  Think how useful a £2 billion per annum contribution to a London Infrastructure Fund would be …..

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