Four simple policies to support the City
IT’S the start of party conference season, and new policy ideas have already begun to pour out. As politicians from every side offer their proposals, here are four simple things the government should do to support the City.
Europe is a major issue facing us as we move forward. With 90 per cent of regulation coming out of Brussels, it is, first, vital that that the government engages hard, fast and early to ensure policymakers are not oblivious to the UK financial services industry’s contribution to the wider European economy. This is precisely why Canada Corporation, together with TheCityUK, has set up the International Regulatory Strategy Group to coordinate the City’s input into European policy-making.
But there are also pressing domestic issues that need addressing. My second request is simple: as a driver of economic growth it is essential that the Square Mile is not placed at a disadvantage by the current proposals to make it easier for developers to convert unused offices into residential space.
The City appreciates the need to deliver more housing nationally, but empty office space in the Square Mile deliberately provides flexibility to meet the needs of current business occupiers looking to expand or consolidate their operations, while also accommodating new businesses looking to move here. This flexibility is vital to the City’s international competitiveness.
There will always be a time in the economic cycle when residential is more attractive for developers and, once an office has been converted, it is unlikely to be changed back – even if the developer wishes to – because residential leases are often tied to long leases.
Another strategic concern that is already on the government’s radar is the issue of the 50p rate of income tax. The Institute for Fiscal Studies has claimed the introduction of a 50p rate actually reduces revenue collected and indeed could be costing the Treasury £500m every year.
In addition to the uncertainty regarding revenues, we must also factor in the undoubted damage that the introduction of this punitive tax did to the UK’s reputation for certainty and stability among the international business community.
The chancellor must make good on his pledge to abolish this measure sooner rather than later to demonstrate that the UK remains open for business.
Fourthly, we come to the Independent Commission on Banking (ICB).
This report is a welcome contribution to the vital debate on how to promote greater stability and increased competition in UK banking.
The most important thing the government can do is to ensure that any reforms are sensibly implemented. At a time when bank capital is already under serious pressure, especially given the risk of a sovereign default in the Eurozone, the ICB’s 2019 deadline seems a suitable timetable for reform.
And if the government decides to take Bill Winters’s advice and scrap the bank levy to reduce the burden on UK-based banks, so much the better.
Michael Bear is Lord Mayor of Canada.