A ground-breaking study, authored by Deloitte LLP and commissioned by the City Property Association (CPA) and the Westminster Property Association (WPA), has revealed the extent of the economic contribution to both the capital, and the wider United Kingdom, of Central London’s construction industry.
This report has found that, in 2013, construction activity across 11 Central London boroughs produced an estimated £6.2bn of GVA. This accounts for 39% and 7% of London and the UK’s construction sectors, respectively. This activity has not only created skills and employment for sub-contractors utilised across the developments, but has also resulted in subsequent jobs being created when sites are completed.
Through its supply chain expenditure on materials and the wages paid to employees, Central London’s construction industry impacts other sectors operating both within London and the rest of the UK.
For London as a whole, the industry is estimated to have contributed an indirect effect of £3.3bn of GVA and over 56,000 jobs, while stimulating a further induced gain in GVA and jobs of £2.9bn and 37,300. Taken together, the report has demonstrated that London’s economy has gained to the tune of £12.4bn of GVA, and through the creation of over 204,800 employment opportunities in 2013.
Whilst the primary benefits have the greatest impact upon London, the industry’s nationwide supply network provides economic benefits to the rest of the UK. The report estimates that the indirect and induced effect upon the economies in these regions has resulted in an additional £5.3bn of GVA and supported in excess of 85,000 jobs.
Overall, the sum of these wider benefits of construction activity in Central London provides an estimated total contribution to the UK economy of £17.7bn of GVA, and 290,300 jobs.
Daniel Van Gelder, Chairman of the Westminster Property Association, said:
“Whether it’s steel from the north, bricks from midlands, or labour from across the UK, development construction within Central London has clear economic benefits which spread far beyond the site itself. This year’s General Election featured anti-London and anti-development sentiment which does not reflect economic reality. A reality which proves that development within Central London produces significant and tangible benefits nationwide. As such, it is vital that politicians factor in the unique nature of Central London when making decisions on the UK’s future as a whole.”
Rob Samuel, President of the City Property Association, commented:
“The property industry is excited and proud to demonstrate the importance of the role our sector’s activities play, not only in Central London, but also more widely across the country, in generating growth across the UK. We look forward to continued dialogue with enlightened policy makers and working with them to deliver enough housing, office and leisure space for the capital to continue to thrive.”
Professor Tony Travers, of London School of Economics said:
“It is easy to take Central London’s economy for granted. New buildings appear each year; there are cranes everywhere and the Tube is packed. Yet until now it has been hard to quantify the economic and wider benefits that Central London’s building boom brings for the economy more generally. Some of these are felt directly in the city centre, but others ripple outwards to the rest of the capital, to the south-east and to more distant parts of the country. The capital’s development industry clearly benefits the UK as a whole, as demonstrated through this report, and looking to the future it is clear that the management of an on-going stream of new construction will need attention from local government, developers and the construction industry so that may continue.”