The UK government will miss out on tax revenues of up to £12bn unless urgent action is taken to support London’s recovery by attracting people back to the city and boosting transport infrastructure, says a business lobby group.
London’s business leaders are concerned the city will be overlooked in government plans to invest in levelling up the country through the recovery of the regions, such as the “red wall” parliamentary seats in northern England which recently came under Conservative control.
London First, which represents more than 200 businesses in the capital, will on Friday set out several recommendations to accelerate the city’s recovery as the economic lockdown ends.
These include a campaign to attract people back to central London that will cost £170m over three years, a £1.5bn investment in public transport and a business-led reskilling programme to support people whose jobs have been displaced by the pandemic.
It is also calling for the government to create a minister for recovery, similar to Nadhim Zahawi’s role as vaccines minister, to oversee efforts to help the country bounce back from the pandemic.
John Dickie, chief executive of London First, warned the government not to take the recovery of London “for granted”.
As Londoners went to the polls to elect their next mayor, Dickie called on ministers to “draw a line under the political wrangling with the London mayoralty and other metro mayors” and “to support the targeted interventions that will drive local growth”. Labour’s incumbent mayor Sadiq Khan is heavily tipped to keep his position.
London First have estimated their proposals could yield as much as £25bn-£35bn in gross value added, an economic measure of the value of goods and services produced, between 2021 and 2023. This would equate to between £8bn and £12bn in additional taxes over that period, it said.
The report, which has been written with consultants at Bain, argues London’s recovery will be an economic engine for the rest of the UK, in part through the generation of “substantial fiscal surplus that supports levelling up across the country”.
“The alternative is to hope that London will bounce back by itself,” said Dickie. “Hope is not a plan. It took over seventy years for London’s population to recover from the second world war.”
Central London has been far more heavily affected by the pandemic than other UK and global cities, according to London First, owing to its lower numbers of residents and higher number of smaller businesses in hard hit sectors such as hospitality, retail, arts, education and construction.
London has suffered the highest unemployment rate during the pandemic compared with the rest of the UK and also has higher levels of poverty.
If elected, Khan will endorse a “back to London” campaign to draw people to the city again, said Dickie. But Dickie wants the campaign — aimed at attracting people from home counties and other areas — to be expanded.
“Our plan requires the government to support a modest increase in public expenditure on promoting the city, continued central government funding for transport and a change in the approach to spending on skills,” he said.