Senior business leaders unveil action plan to boost growth in London

Leading figures from business, culture and academia in London are today [Monday 16 March] urging the Government to adopt an ambitious package of measures to drive growth in the capital quickly and provide an immediate shot in the arm to the UK economy.  

BusinessLDN’s Growth Commission, chaired by Helen Gordon, Chief Executive of Grainger plc, was created in the aftermath of the November Budget which saw UK growth downgraded for every year through to 2029/30.  

With the Spring Statement showing growth is set to remain lacklustre, the Commission is urging the Government to redouble its efforts by lifting barriers that are holding the city back and implementing practical steps to get the economy moving quicker. 

Its wide-ranging recommendations include: accelerating housebuilding through targeted, short-term support to bolster demand including a new Help-to-Buy scheme and temporary stamp duty reductions for first-time buyers; revisiting the decision to abolish the ​‘non-dom’ tax regime to reverse the exodus of high-net worth individuals from London; removing international students from net migration figures to avoid it becoming an annual flashpoint; and giving the capital the tools it needs to take forward innovative funding and financing of infrastructure necessary to allow the city to grow – in turn freeing up public spending for other parts of the country.  

Helen Gordon, Chair of the Growth Commission and Chief Executive of Grainger plc, said: ​“Unlocking the full economic potential of London as an economic engine for the UK is essential to deliver the growth needed to make people across the capital and beyond feel better off. 

“While the capital has inherent strengths from the rule of law to a highly-skilled workforce, success can’t be taken for granted amid intense global competition. 

“Our recommendations deliberately focus on what business leaders know will make a real difference quickly. Implementing these practical solutions would help break the shackles that are holding the city back and get the economy out of the slow lane.” 

The Commission identified measures that cut across all sectors, including housing as a foundational issue, as well as sector-specific reforms. Its recommendations highlight steps that can be delivered now through policy change with no additional public spending, medium-term measures that may require some legislative change but again entail no extra cost, and long-term asks that will involve some fiscal investment but would deliver significant payback and unblock growth.  

Cross-cutting measures to boost investment and productivity include:  

• establishing a new Office for Tax Competitiveness to identify where the UK’s appeal is being undermined by being out of kilter with other jurisdictions; 

• announcing a roadmap to scrap stamp duty on share transactions to improve the attractiveness of the UK as a place to list in a move that would pay for itself over the medium-term; and  

• delivering on Labour’s manifesto commitment to replace the current business rates system with a tax fit for the 2020s 

John Dickie, Chief Executive of BusinessLDN, said: ​“The Government is right to recognise that boosting growth is the only sustainable way to improve living standards and invest in public services.  

“As the Spring Statement showed, steps taken by ministers to restore economic stability are starting to bear fruit. Positive longer-term reforms such as speeding up the planning system, investing in infrastructure and reforming housing regulations should also improve the UK’s anaemic productivity. But urgent action is needed to boost business confidence and private investment now.  

“The Commission’s package of recommendations would help the economy get out of the slow lane by ensuring we are internationally competitive on tax, cutting red tape, tackling London’s housing crisis and giving the capital the tools it needs to deliver at speed. Ministers should seize the moment and unleash the private sector’s animal spirits.” 

The Commission highlights London’s housing crisis as the foundational issue that is stalling growth given its impact on the ability of firms to recruit and retain talent. The Government has already taken steps in the right direction including reforms to the planning system and emergency housebuilding measures for the capital announced with the Mayor of London.  

But more action is needed to get the market moving given housing delivery in London is at rock bottom. The Commission’s housing recommendations include: 

• pausing and reviewing the introduction of a new Building Safety Levy to avoid jeopardising delivery by making it less viable to build;  

• driving further improvement in the performance of the Building Safety Regulator to reduce bottlenecks to delivery;  

• and extending the emergency measures for London until market conditions have improved significantly and ensuring they have a catalytic impact, for example by reworking the existing Fast Track Route through the current London Plan review process to allow a lower affordable housing threshold. 

The Commission also examined most sectors identified in the Government’s Industrial Strategy, including creative industries, financial services, life sciences, professional and business services, and digital and technologies – with higher education also considered given its importance to London’s economy.  

Sector-specific recommendations include: 

Supporting growth of the creative industries by: 

• ensuring that revenues from a proposed overnight visitor levy are used to increase tourism; and  

• restoring VAT-free shopping for international visitors to boost the attractiveness of the UK for international tourists in a move that would be net positive for the public finances. 

Supporting growth of financial services by: 

• phasing out the bank surcharge and the bank levy so that banks are taxed in the same way as other corporates and in line with other international financial centres, to maintain London’s international competitiveness; and  

• reforming the short-term business mobility system, including facilitating intra-company transfers, so that businesses can bring in overseas employees for short-term projects without navigating a full work visa process. 

Supporting growth of higher education by: 

• remove international students from net migration figures to avoid it becoming an annual flashpoint; and 

• giving greater clarity on the major announced funding reforms on apprenticeships, the lifelong learning entitlement and knowledge transfer funding to enable Higher and Further Education institutions to plan and invest with greater confidence and certainty. 

Supporting growth of life sciences by: 

• better marketing the UK’s R&D tax credit nationally and internationally so that its scope and benefits are better understood to further attract global life sciences to London and the UK; and 

• fast-tracking immigration routes for science and innovation roles by accelerating Skilled Worker, Global Talent and Investor visa processing.