Yahoo Finance District line blues: a journey through London’s struggling economy
The morning rush hour used to be the busiest time of day for Jayant Amin’s newsagent in the heart of the City of London, before Covid-19. Having watched five neighbouring shops close in the building he occupies opposite Mansion House tube station, he is one of the survivors hoping to benefit from the slow return of office workers.
“I’ve seen ups and downs. We survived the 2008 financial crisis, but this is the worst one,” he said. Trade remains slow for Amin and his wife, Rajeshree, who have run the shop for two decades. Next month he will be granted the freedom of the City of London in recognition of his long service, giving him the right to drive sheep over London Bridge. However, it is flocks of office staff he is hoping for.
“It was a ghost town at times during lockdown,” Amin said. “Now it’s starting to improve, but if people don’t come back into the City it’ll have a big impact.”
Ahead of the chancellor’s budget, the Guardian travelled the length of London Underground’s District line to take the temperature of the capital’s economy. Amin’s shop in the Square Mile sits close to the middle of the line, which runs between Richmond, Wimbledon, Ealing Broadway and Edgware Road and Upminster on the Essex border.
Contributing more than a fifth of national income, the capital has an image of prosperity compared with the “red wall” towns of the north and Midlands, where the Tories have focused much of their political capital. Yet London contains some of the poorest areas of Britain.
Although Rishi Sunak will focus much of his budget speech on locations outside the M25, the capital sums up the economic challenges he has to address – not least inequality.
The District line encapsulates the problem. In leafy locations such as Richmond upon Thames, most people were able to work from home, and saved money during lockdown by avoiding commuting. East Ham, towards the other end of the line, is historically a poorer area, with large numbers of residents in lower-paid jobs supporting the office-based economy, such as retail, hospitality, cleaning and security. Many were furloughed, and unemployment rose fast amid the worst recession for 300 years.
“You’ve had a serious impact on jobs that are dependent on office workers and on international tourists,” said Paul Swinney, the director of research at the Centre for Cities thinktank. “London has gone from being this big dark star sucking activity in from rest of the country to looking like the sick man of the UK.”
Leaked Treasury documents suggest a “plan B” proposal to limit the spread of Covid by bringing back home working could cost the economy £18bn over five months. London would again shoulder a big chunk of the burden.
Richmond upon Thames was the place in Britain with the highest rate of people working from home – more than 70% of the local workforce. Cinita Kitaguchi, who works at Digby’s coffee bar at Richmond station, has seen a gradual increase in morning commuters in recent weeks. But business is still not as brisk as it was. “Mondays and Fridays are still dead quiet; no one wants to work near the weekend,” she said.
Unemployment in the borough has remained low at just 3.5%, and the average house price is more than twice the national average. Yet Richmond hasn’t escaped the economic impact of Covid entirely, according to the Liberal Democrat council leader, Gareth Roberts. Several shops closed down on the high street and claims for universal credit tripled last spring. “It’s been a culture shock,” he said.
Sophia Procter was about to launch her first business in February last year, but pushed back the plan until summer to avoid the initial chaos of Covid-19. She took on PR jobs to keep money coming in after her husband’s work as a freelance TV producer dried up.
“I was juggling home schooling with freelance work. Trying to launch a business and do all that under one very small roof was the most stressful time of my life,” she said.
Her company, Munchy Play, launched with support from the local council, sells children’s plates with a track for toy cars and trains. “You never plan for a global pandemic. It’s been really positive since. But the government needs to do more to support small business.”
Travel 20 stops on the District line to Mansion House, and activity still remains substantially below pre-pandemic levels. The number of commuters tapping in or out of the station is still less than half of pre-Covid levels, compared with 60% across the network as a whole.
Much has changed since the turn of the millennium, when the Amins opened the newsagents. They now sell more vapes to bankers than copies of the Financial Times, which has its offices a short walk away. The couple travels in from their home in Wembley each morning. “All the shops there are busy,” Jayant said.
Down the line in East Ham, just 13 stops away, unemployment has surged to more than 9% during the pandemic, while the area had among the highest rates of furlough in the country before the scheme closed at the end of September; leaving many local residents high and dry.
Sitting in the VE6 coffee shop around the corner from East Ham station, the local Labour MP, Stephen Timms, says the area had struggled with poverty for decades before Covid struck. Despite its issues, many people had jobs in the City. The trouble was much of it was low-paid and precarious.
“Before the pandemic almost everybody had a job. That is no longer the case. So, the question is how long is it going to take people to get back to employment again. And, the evidence is, slowly,” he said.
Despite high rates of local unemployment, Janvir Sandhu, the owner of VE6, has still found difficulty recruiting staff for the shop, which is run as a social enterprise and offers vegan food and yoga classes.
“No one was coming forward; maybe it was a sense of lazyitis,” she said. The loss of eastern Europeans due to Covid and Brexit has cut the number of people willing to work in hospitality, and one of her staff switched to the nearby Amazon warehouse after hearing of high rates of pay.
Rokhsana Fiaz, the directly elected Labour mayor of Newham, which encompasses East Ham, said additional government funding was needed to help residents back into work, including for training programmes. More help for the unemployed is vital at the budget, she says.
“When you take into account a pre-existing economic context and austerity, it has impeded the ability of our residents to lift themselves up and out of the constraints of poverty,” she said.
Sunak could step up to the plate at the budget, for an area where the health and economic effects of the pandemic have been tragically high. But the chancellor has made matters harder by cutting universal credit by £20 a week, taking £24m of combined spending power out of the local economy.
“It’s going to be really hard. How can you sustain a sense of resilience or even hope? Even before the pandemic we had large numbers of people in poverty,” said Fiaz.
