could provoke a movement out of London. A number of other issues were occasionally
mentioned as being negative aspects of London, such as street crime, untidiness and
restrictive City planning regulations however these disadvantages appeared to be second
order.
3.7 Declustering
In addition to exploring the advantages and disadvantages of London clustering, the
interview survey specifically addressed the factors that push firms to consider relocating
part or all of their activity away from the cluster.
In general, a location outside London in the South East or elsewhere in the UK was
considered viable only for non-client facing staff. Firms involved in dealing felt that they
still needed to be in the London cluster because these activities had been “much less
dematerialized” than other types of activity. However, several firms sounded a note of
caution about the extent to which even back office functions could be spun out from the
City. Some back office functions are purely routine and these lend themselves to
declustering. Many such activities have indeed already been relocated. Other back office
functions are specialized and depend upon knowledge of City practices and knowledge of
the client. These operations are not candidates for declustering. More fundamental perhaps
than the front office/back office or client facing/non-client facing distinctions is whether or
not the particular activity if routinized or commoditized as opposed to being bespoke or
complex. If business activity is commoditized or routine it is amenable to declustering.
But even then, it is not straightforward:
We haven’t reached that stage in the circuit yet - we have presently the back office
staff for the London business here in this building and it is not too difficult to ask the
question - do you need to have a back office near x? What benefits does it bring?
Back office has no customer connection etc., with IT you can do it anywhere. The
question is, would you find, in Milton Keynes, skilled staff? Because back office is
not anymore manual, routine, repetitive - you need quite a number of skills - and if
you couldn’t find those people in Milton Keynes would they be prepared to move
there?
Of the back office, there would be some functions you could ship out - finance, to a
certain extent some admin. But the analysts need to have a central location where you
can catch that extra piece of information. There’s a balance - the senior members of
those back office functions should be talking to the back office of the client. It’s all
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