Today, the capital’s leading business campaign group BusinessLDN has published a manifesto outlining quick yet radical interventions a new Prime Minister should make to help the UK swerve the forecast recession. The manifesto urges the yet-to-be-announced leader of the Conservative Party to tackle the cost of energy, increase access to childcare, reform rail fares, rethink the approach to skills and commit to building homes at scale, to create the conditions for a return to growth.
The new Prime Minister must be ready to tackle these issues from day one by setting out a clear vision for the country. As energy costs continue to rise, some pubs and restaurants face a 300 per cent increase in new tariffs*, raising fears of closure due to high costs. Furthermore, the charity Pregnant then Screwed earlier this year revealed two in five mothers work fewer hours than they would like because of high childcare costs, with a similar proportion (43%) saying that the cost of childcare has made them consider leaving their job**.
Beyond immediate action on energy bills, BusinessLDN has set out five further priorities that would support the county and capital:
Make childcare more affordable and accessible – the new Prime Minister should take urgent steps to increase the affordability and availability of childcare, starting by bringing back employer supported vouchers, expanding the 30 hrs of free care to cover 1 – 2‑year-olds;
Reform of rail ticket pricing – demand for public transport usage will not recover if costs continue to rise and services are cut. Rather than price rises, now is the time for short-term incentives that reduce cost, followed by longer-term wholesale reform of the complex fares system;
Agree on a sustainable funding deal for Transport for London so that cuts to services can be avoided, Londoners can have confidence in their public transport, and the capital’s economy can continue towards recovery;
Address the skills shortage so people can get back into work by making the skills and welfare systems better aligned, removing disincentives for job seekers to access training. Further reform of the Apprenticeship Levy should also be prioritised; and
Build homes at scale – creating new models to help stimulate private investment into affordable housing from long-term investors.
Acting on these areas with urgency would start to create conditions for growth that cannot be achieved by tax cuts alone, while easing the pressure on businesses and families this winter.
John Dickie, Chief Executive of BusinessLDN, said: “The last two years have seen one crisis after another for the capital, the country, and its businesses. The covid pandemic, a war in Europe and the challenge posed by the rapidly rising cost-of-living mean the next Prime Minister must be ready to take radical action from day one. We have set out the key priorities that will create conditions for growth and help to ensure that the forecast recession is tackled head-on so that businesses will stay afloat and families safe this winter. Now is the time to act.”
The priority for the Prime Minister’s first 100 days should be to:
Address the energy bill crisis: The new Prime Minister’s priority should be to address the current energy crisis and the imminent increase in bills. As high costs are likely to be with us for some time, this must be a sustainable package that can be put in place as soon as possible with the most vulnerable households and businesses receiving the most support. At its core should be a system of direct payments, protecting those who are most in need, while in parallel creating incentives to reduce energy use. The new government must commit to the roll out of an ambitious retrofit programme to improve energy efficiency and to enable homeowners to generate their own energy. This will help to manage future price volatility, enable the Government to meet its net zero targets and create green jobs that will help to stimulate growth in the economy.
Increase access to high-quality, affordable childcare: For many parents and carers, childcare costs and a lack of availability are a barrier to returning to the workplace or working flexibly. At a time of skills shortages and a cost-of-living crisis, the new Prime Minister should take urgent steps to increase the affordability and availability of childcare and support more labour-market inclusion. In the short-term, this could be addressed by bringing back employer-supported vouchers, expanding the 30 hours of free care to cover 1 – 2‑year-olds. The Government should also simplify existing funding structures to make it easier for parents to access support.
Provide the rail services needed at a price passengers can afford:While leisure travel has recovered strongly, cost and convenience remain disincentives to many commuters who have spent much of the last two years working remotely. With rail travel still in the process of recovery and cost-of-living front of mind, a more radical approach to fares is now needed. During this period of uncertainty, it is important to keep fare increases well below inflation to support the reestablishment of demand: it is not possible to drive a shift to public transport by increasing costs and making services less frequent. In the medium-term, the current fares system must be fundamentally reformed to remove the complexity and perverse incentives that lead to passengers splitting tickets and train operators running the last peak train empty and the first off-peak train overcrowded.
Agree a sustainable funding deal for Transport for London: Cuts must be avoided so that Londoners can have confidence in their public transport, and the capital’s economy can continue towards recovery. Londoners rely on public transport to access jobs, education, and services roughly twice as much as those in any other region. Six in ten rail journeys nationwide start and/or end in the capital and nearly as many tube journeys are taken every year as rail journeys across the country. Reducing services or raising prices now will cut people and businesses off from opportunities.
Support people back into work and encourage reskilling at scale: The labour market is suffering from acute shortages at a time when London also has a relatively high unemployment rate, with the latter disproportionately affecting young and minoritized groups. Supporting young people into jobs, encouraging economically inactive workers back to work and reskilling people of all ages is crucial to mitigate the cost-of-living crisis. The new government should better align the skills and welfare systems by removing disincentives for job seekers to access training. It should also urgently deliver reforms to the apprenticeship system, which enable a proportion of the levy to be used towards wage costs for apprentices and allow larger employers to transfer more funds to SMEs. BusinessLDN is bidding to play a direct role to tackling these challenges by bringing together the private sector, providers and local government through the Local Skills Improvement Plan to develop a blueprint for a data-driven, employer-led skills system for the capital.
Stimulate the economy through building homes at scale: The current government, through Homes England, has invested to help unlock private investment into affordable housing and has opened its strategic partnerships programme to a wider range of organisations. These are positive steps, but the shortage of housing, and particularly affordable housing, is a long-standing, systemic issue in the capital. While it is welcome that London has received £4bn for the affordable homes programme for 2021/26, this was a reduction on the previous settlement and significantly under the £4bn plus required annually to meet need in London. The new government must work swiftly with the private sector to create new models for investment into affordable housing, and remove barriers in the planning system that slow, and in some cases, stop development progressing.
Notes to editor:
BusinessLDN is spoken as ‘Business London’, with LDN the international marker for the capital.
BusinessLDN is the new name for the business campaign group London First.
(*) Boland, Hannah, Pubs and restaurants warn of winter closures as energy bills soar 300pc, The Telegraph, 15 August 2022, https://www.telegraph.co.uk/business/2022/08/14/pubs-restaurants-warn-winter-closures-energy-bills-soar-300pc/
(**) Pregnant then Screwed, https://pregnantthenscrewed.com/one-in-four-parents-say-that-they-have-had-to-cut-down-on-heat-food-clothing-to-pay-for-childcare/