The London Underground had a second power station at Greenwich but that has since closed, with the system now supplied through the National Grid. Electric trams and electric trains changed the face of the city, paving the way for the retirement of the horse, and making possible the Clean Air Act in due course after the war. However, power stations initially meant coal and smoke. At least eighteen power stations have been constructed in London over the years. The earliest, in Deptford, Woolwich, Shoreditch, Croydon and Kingston, were developed to provide lighting, while the next tranche – in Barking, Brimsdown, Neasden and West Ham – powered trams and the new Underground. The biggest expansion was in the Edwardian period, with stations at Greenwich, Hackney, Kingston, Stepney and Taylor’s Lane, Willesden. These were all coal fired and are all now closed, though newer gas-fired stations operate at Taylors Lane and Brimsdown (Enfield). Newer stations appeared during the 1930s and 1940s at Bankside, Battersea and Brunswick Wharf, while Bulls Bridge in Hayes appeared as a gas-fired site in the 1970s. All have since closed. Bankside is now the Tate Modern art gallery, while Battersea is a listed structure still seeking love and attention (and investment). The others have been swept away completely. Power generation in London still happens in Barking (at a gas-fired site), Enfield, Croydon (also at a gas-fired site some half a mile from the original station, where one remaining chimney now marks the IKEA store), and at the Combined Heat and Power incinerator in Bermondsey. Greenwich remains as back-up capacity.
Power, transport and public health are the core infrastructure for any city, as the Romans perhaps knew better than we do. They founded London where it is because Southwark is the easiest place to cross the Thames when arriving from the south. However, London was abandoned when the Romans left. Its stone buildings would have fallen into disrepair and the city would have been a frightening place. Certainly the Saxons did not want it: they formed a settlement just up river and called it Lundenwic. It was used as a trading post and possibly not even regularly settled. Aldwych is the old market and part of the Saxon town. The Fleet River marked the boundary between the two cities and, over succeeding centuries, it remained the demarcation between the trading city, run by its aldermen in the City of London, and the administrative city in Westminster. The Fleet River became the drain for both and a huge risk to public health.
The ability for people to move around safely is essential to the well-being of a city, as is the creation of a healthy environment. In Chapter 4, I use the redevelopment of King’s Cross and St Pancras as an example of how transport improvements and public realm investment can change a location and generate economic growth as well. Transport may not be sufficient to generate growth, but it is certainly necessary.
The international dimension
There is a comic song (by Michael Flanders) that explains the laws of thermodynamics, the refrain of which goes:
‘You can’t pass heat from a cooler to a hotter,You can try it if you like but you’d far better notter Cos the cold from the cooler will get hotter as a ruler, and that’s a physical law!’
I have always found this useful in remembering the second law of thermodynamics, but I wish that there was anything half so clear in economics. I have spent a considerable proportion of my career trying to develop models and results that do not depend on incorrect assumptions or on a belief that using the word ‘perfect’ in a description means that such a world would be either desirable or achievable. In the process of considering how economic analysis actually works, however, one thing stands out as a rule: trade creates growth. Trade makes it possible to divide labour, exploit scale, use raw materials and transfer knowledge. The benefits of trade may not always be distributed as we would wish, but they are always there.
Trade can, of course, happen at many levels – between individuals, between communities and regions, and between countries. International trade has been a feature of all wealthy civilizations. The ancient Greeks decorated their temples with colour from Asia, the Mediterranean and the Caucasus. Rome traded across its known world. The discovery of the Americas opened up new trade opportunities and created what is currently the world’s richest country. China, on the other hand, closed its borders for several centuries and lost its technological advantage. It is now catching up. The inter-war period saw a diminution of trade, reflecting growing protectionism of home industry and jobs. This reduced employment and prosperity rather than increasing it, however. Trade shifts activity and employment, but this can be part of what Schumpeter called the waves of creative destruction. London’s jobs are centred where trade happens: central London, Heathrow, Docklands and around subsidiary centres such as Croydon (Figure 1.3).
Figure 1.3. London employment density map, 2003. Darker colours are areas of higher employment density. (© Greater London Authority.)
Technology can drive such waves of restructuring. This could be the technology that harnessed steam power, that which produced electric motors, or cars, or it could be the technology now giving us cloud computing, and which enables me to research this book almost entirely while sitting at my laptop.
London has always been a fulcrum in Britain’s trade with the world. Though the west coast ports of Bristol and Liverpool grew rich on trade with the Americas, London was still participating. Bristol had the slave trade, but more slaves were traded in London, just less obviously. Whether with ships or aeroplanes or via the airwaves, London trades. The meridian line at Greenwich does not of itself put London at the centre of the world’s time zones, but merely reflects London’s importance in trading relationships when those zones were established in 1851. But the time zones still reflect reality. New York is five hours behind, Delhi five hours ahead. London is the location where working hours in all these zones overlap. This is a huge advantage, as is the global use of English as a business language.
However, to be a centre of world trade, communication of all kinds must function effectively. I will examine this in relation to our love–hate relationship with Heathrow, to aviation and to our policymaking mechanisms in Chapter 5.
Chapter 2
Finance and other services: Docklands
London’s Docklands, dominated by the towers of Canary Wharf, stand as a symbol of the role of financial services in the capital’s economy – a role called into question by the impact of the 2008 financial crisis. But Docklands also symbolizes past shifts in the structure of London’s economy. If such large shifts have occurred before, they can do so again. Financial services are not as dominant as many people imagine, and form only one aspect of London’s broader strength in services. This latest crisis does not spell doom for London’s service-focused economy.
The London docks were once the centre of the world’s physical trade. The centre of the globe’s largest empire saw all sorts of goods come through its docks, which spread downriver on both banks from the wharves by London Bridge. Five docks were opened in the early years of the twentieth century, with the final and largest dock, the King George V, completed as late as 1921. By the mid 1930s the docks were at their peak (Figure 2.1). More than 35 million tonnes of cargo passed through the docks each year, carried by 55,000 ship movements and served by more than 10,000 lighters. In all, some 100,000 men were dependent on the Port of London for employment, more than 30,000 of whom were employed by the port itself.
Figure 2.1. Historic photograph of Canary Wharf. Courtesy of the PLA Collection (Museum of London).
However, by the early 1980s, only fifty years later, the Port of London Authority employed only 3,000 people and almost all the docks had closed. A huge area of London appeared to be derelict. This cautionary tale is important to all industries that appear