Transport and the Economy - Transport Committee Contents

Written evidence from the City of London Corporation (TE 102)


1.  The City of London's leading position as an international finance and business centre is heavily dependent on it being easily accessible not only from across the UK but, crucially, also from all over the world. To maintain London's position as the leading global centre for financial services, the City would encourage further investment in the capital's transport infrastructure. London accounts for 19% of national GDP, and 15% of jobs. While the City Corporation is not in a position to respond to all the areas being covered by the Committee's inquiry, it welcomes the opportunity to highlight the economic importance of having an efficient, high-quality multi-modal transport infrastructure. Comments are focused particularly on rail, in particular Crossrail, the Tube upgrade, and aviation.


2.  The City is served by two distinct rail systems - the national rail system, which operates both shorter distance commuter services as well as sub-regional services from across the south east, and the London Underground. The City has five mainline termini (Liverpool Street, Fenchurch Street, Cannon Street, Blackfriars and Moorgate), and a through station at City Thameslink. Farringdon, London Bridge and Waterloo stations are also of importance to the City, lying just outside the Square Mile. The City benefits from 15 Underground stations serving seven different lines within or close to the City boundary, including the major interchange at Bank.

3.  The number of people employed in the City of London is set to grow to 400,000 by 2016. It is therefore crucial that rail capacity keeps pace with forecast growth. Over 80% of City workers commute by rail, clearly demonstrating the importance of the rail network to the economy of both London and the UK.

4.  If no additional capacity was added to the transport network in the medium-term, overcrowding would worsen significantly, to the point where current and potential investors in London may begin to focus their resources elsewhere. The Corporation therefore supports the improvement of rail services both in quantity and quality, with the primary concern remaining the provision of improved peak period commuter services. Action is required to modernise and upgrade the existing rail network, and also to support the implementation of new schemes such as Crossrail and Thameslink.


5.  It is widely known that the City has a particular interest in the successful delivery of Crossrail. The importance of creating a direct link between the City and Heathrow airport, as well as easing pressure on the central-area of the Underground system cannot be underestimated. It will directly connect three major centres of employment - Canary Wharf, the City and the West End - and will bring approximately 1.5 million people within an hour's commute of central London. The direct, high frequency link to Heathrow airport is something which has been identified by a majority of City businesses as being important to their operations. Crossrail will add 10% to London's overall transport capacity, and will contribute to reduced levels of overcrowding on the London Underground and other National Rail routes, most notably the Central line and the inner Great Eastern Main Line.

6.  London must maintain its competitiveness versus other financial centres, (e.g. New York, Hong Kong, Tokyo, Singapore and many other competing cities) all of which have major rail investment programmes. In addition, the delivery of further UK high speed rail will be at risk without Crossrail. The favoured option of a high speed terminus at Euston is dependent upon the diversion of some West Coast Main Line commuter services onto Crossrail to free up capacity for high speed trains. A similar consideration applies were the high-speed train proposals to be centred on a Heathrow Hub development as an alternative to a third runway.

7.  As well as the direct transport benefits of Crossrail, the economic benefits to both London and the wider UK economy are substantial. In London, there is expected to be an economic boost of £1.24 billion annually across all London's boroughs. On a national level, Crossrail is expected to provide at least £36.24 billion worth of benefits to national GDP over a 60 year period[309].

8.  In addition to the direct economic benefits of Crossrail, there is also the potential for indirect benefits of creating employment. At the peak of construction, the project will employ up to 14,000 people, and Crossrail have committed to establish a National Skills Training Academy, providing an opportunity to support the skills development of those building the project. These skills will provide benefits long after the construction of Crossrail is complete.

The Tube Upgrade

9.  Crossrail alone, however, will be insufficient to meet the demands placed on London's transport network. The London Plan estimates that the population of London will increase by 1 million by 2026. Despite a slight dip in passenger numbers in 2009-10, the London Underground carried over one billion passengers for the fourth year in succession[310]. In the long term, demand is forecast to continue to grow by around 25% to 2025, and demand across the wider transport system is forecast to continue to grow to 2026, with the recently-published Mayor's Transport Strategy showing that, by 2031, some parts of the transport network (including some central sections of Crossrail) will continue to face severe overcrowding. It is therefore crucial that the Tube upgrade programme is delivered to complement Crossrail.

10.  The additional capacity that will be realised by the upgrade programme is vital. Without it, the current network will come under increasing strain and could become more unreliable as the system starts to become more and more overcrowded. According to London Underground, by 2026, without the upgrade overcrowding would increase by 40% and capacity would decrease by 30%[311]. Such a situation is unsustainable if London's economic recovery and growth are to be supported, and the Tube investment programme is therefore critical to both.

11.  The Tube upgrade programme will produce £30.5 billion of direct benefits to users as a result of time savings and improved travel conditions. It will also generate wider economic benefits for the UK in the order of £23.5 billion of additional GDP. Total benefits of £54 billion, are expected to flow beyond London to the rest of the UK[312].

12.  The case for both the Crossrail and the Tube upgrade is clear and compelling. However, equally clear is the significant erosion of benefits resulting from one being taken forward without the other, or of one being scaled back. It is therefore vital that both Crossrail and the Tube upgrade programme are delivered in full, to ensure that London continues to recover from the economic downturn and is capable of transporting growing numbers of passengers, and the full contribution to the UK economy is realised.


13.  The City Corporation acknowledges that the Government's stance on airport expansion as set out in the Coalition agreement is very different to that proposed by the previous administration and accepts that there will be no expansion at Heathrow, Gatwick or Stansted for at least the course of this Parliament. Aviation services however remain crucial to the well being of London and the UK economy, and the City welcomes the creation of the South East Airports Task Force to consider options for improving services. The City Corporation is currently in the process of commissioning research into aviation in light of the Coalition's policy statement and to build on the previous City-backed studies set out below. This new piece of work is expected to be available later this year in order to feed into the South East Airports Task Force.

14.  The City Corporation first commissioned research into the importance of aviation in 2002. The study[313] identified that the provision of air services in London that would compete with and outperform services available in other financial centres are essential if London is to remain globally competitive. This was updated by a further study by published in July 2008[314] which looked more at the extent to which City businesses relied on air travel. Although it did not go as far as placing a monetary figure on the value of aviation to the UK economy, this research demonstrated that, at the time, 64% of businesses regarded air travel as critical or very important for internal company purposes, and that 73% considered aviation critical or very important for meeting external clients or service providers. In addition, 82% of businesses regarded Heathrow as critical or very important to their operations, making it the most highly-valued airport in the South East by some margin. This was largely attributed to the wide range of destinations served and the frequency of the service. The research concluded that that this hub airport plays a key role in the functionality of the financial services industry in the UK.

15.  The 2008 report concluded that, in recent years, Heathrow had stagnated and lost some of its market share to European competitors. This is reflected in the fact that, while the frequency of services from Heathrow rose between 2003 and 2008, the number of destinations to which it provided air services declined and, in comparison with other major European hub airports where additional runways have been built to meet rising demand, the rate of expansion has been noticeably slower. Furthermore, 50% of businesses surveyed regarded road and rail access to London's airports as worse than that of airports in other major cities.

16.  Whilst recognising the importance of Heathrow to London's business community, both pieces of research highlighted major weaknesses in the airport's management. The 2002 report indicated that there was real concern about time wasted at airports waiting for security checks. While the importance of good security measures is understood, it is expensive for companies to have staff unable to work because of overly-long airport security processes. The 2008 report also identified that inefficient security procedures led to passenger delays and also prevented many flights leaving Heathrow at the time scheduled. The City Corporation therefore welcomes the inclusion in the Taskforce's terms of reference of consideration of "options for making best use of [existing] capacity, including scope for improving airport efficiency, reducing delays, greater reliability and enhancing the passenger experience to, from and within the airport, whilst having regard to the local environmental implications of any measures".

October 2010

309   The Economic Benefits of Crossrail, Colin Buchanan & Partners, 2007. Back

310   PPP & Performance report 2009-10, London Underground, 2010. Back

311   LU. London's Upgrade. Our City is Evolving. So is our Underground, Transport for London, 2010. Back

312   Holding the Line; the economic benefits of modernising the Tube, London First, 2009. Back

313  "The Use of Aviation Services in the City of London and the Central London Business District and the Implications for Future Aviation Policy", Oxford Economic Forecasting, published by the City of London Corporation, December 2002. Back

314   "Aviation Services and the City", York Aviation, published by the City of London Corporation, July 2008. Back

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