It’s crunch time for London’s competitiveness – and alarm bells are ringing
THE BIG question for London’s business community this morning is this: will our new government, whatever its make-up, help keep Britain open for business?
London gives the UK a place on the world stage, and is the country’s principal gateway for investment and tourism. Last year, the city’s success allowed it to contribute £34bn more to the Treasury than it took out – so London’s prospects are not just a matter for the capital, but for the whole nation.
Its success is far from guaranteed. Alarm bells are ringing over the political decisions that the parties will be formulating even now.
One already sounding out loud and clear is the risk to London’s status as a global financial centre. HSBC’s announcement that it is considering relocating its global headquarters is symptomatic of a worry that is unsettling many of the capital’s bankers: are we actually welcome here?
The ongoing uncertainty over our status in the EU could see investment decisions diverted to our rivals. This must be minimised. But the new government must also recognise that the burden of regulatory and tax costs on the City is discouraging investment. One of the most dysfunctional taxes is the bank levy, because it is uncertain and unstable. Merely removing the unpredictability of its rate would reduce its burden.
Another worry is the negative rhetoric around immigration that has permeated politics recently. We need to do away with arbitrary targets that discourage skilled foreign workers and students from wanting to come here. These people fill skills gaps, contribute to our success, and actually boost opportunities for British workers.
Moreover, if we are to attract people here, we need to make sure London is a city that works. This means the government will have to commit to levels of infrastructure investment that can sustain a population that is growing by 100,000 a year.
This popularity is putting immense pressure on the city’s housing and transport. Getting on with projects like Crossrail 2 and the extension to the Bakerloo line will be crucial, as will a step-change in housing development.
Will the Treasury be prepared to spend the money London’s infrastructure needs, or will the chancellor be brave enough to devolve enough powers to the mayor so that the capital can finance its own development? It’s got to be one or the other if this is going to work.
Digital infrastructure is also a concern. London has been hugely successful in attracting new industries, such as digital technology, but we suffer particularly from low broadband speeds that need to be turbo-charged.
Finally, let’s remember that being open for business works both ways. Yes, we want people to bring the talent and investment we require to our shores, but we need to get to them too. The Airports Commission will report later this year on a new runway in the South East and it is vital that the Department for Transport gets behind the recommendation, whatever it may be.
How the new government deals with these important questions will have a profound impact on both London and on how the nation’s whole economy fares.
Baroness Jo Valentine is chief executive of London First.