'Make London bigger' to tackle inequality

London must be massively increased in size to tackle national inequalities, a centre-right think tank has suggested.

Policy Exchange is saying a substantial increase in London's size will allow people from poorer parts of the UK – mostly in the north – to move down to where there are better job prospects.

The group is calling for landowners to be given the right to convert industrial grounds into residential land. They say that if only half of the 10,000 hectares earmarked as industrial land in London and the south-east were used for housing, it would create £25 billion in value and allow half a million people to move to the area.

"No doubt some people will claim that these proposals are unworkable, unreasonable and perhaps plain barmy," admitted co-author Tim Leunig of the London School of Economics.

"But the issue is clear: internal migration has always been an important part of a dynamic economy.

"If we are to ensure that people in this country have similar opportunities, regardless of where they are born, we need to allow people to move from places with few prospects to places that offer more opportunities."

The Policy Exchange report, Cities Unlimited, also suggests a large expansion of Oxford and Cambridge so both can take a million extra houses. The authors say cities like these – high-skilled, high-wage service sector "hubs" are the best way of improving opportunities.

The government's current regeneration scheme comes under sustained criticism. The report suggests allocating current regeneration funding to local authorities who can build on their strengths. The authorities would then answer to "local people" instead of central government.

"All towns and cities should have the right to determine their own policies; and their local councils should be assessed regularly and accurately, and the results of such assessment explained to local people," said Dr Oliver Marc Hartwich, chief economist for Policy Exchange.

"Freedom, responsibility and accountability are the keys to unlocking the potential that exists in our towns and cities."

Ian Dunt