London Finance Commission: Raising the Capital

Lord Bilimoria Excerpts

Wednesday 3rd July 2013 Lords Chamber

[Lord Bilimoria]

My Lords, I thank the noble Lord, Lord Harris, for initiating this debate. He said right up front that London is the greatest city in the world and I could not agree more. It is the greatest of the world’s great cities. He congratulated the London Finance Commission on its report, Raising the Capital. I had the privilege of serving on mayor Boris Johnson’s Promote London Council, which was a great experience. It came up with what ended up being London & Partners and had huge success. It really understands London and looks at its competitiveness.

It struck me that few cities in the world—the report did not really touch on this—are a political capital, a government capital and a financial business capital. London is one of them: think about Washington, New York, Delhi and Mumbai. We have a huge advantage. But for London to develop I think that autonomy would help. Although Crossrail is going ahead and will make a huge difference to London and the country, we still have the problem of the third runway at Heathrow being delayed and delayed. Our airport infrastructure is creaking. We are losing our competitiveness.

Although tourism brings in well over £100 billion to the economy of Britain and London brings in a huge proportion of that, the most photographed building in the world is the Eiffel Tower. The second most photographed building in the world is our wonderful Houses of Parliament. Why is that? Is it because we do not belong to the Schengen scheme, which would advantage this country so much? Does the Minister agree that we should join the Schengen scheme? That would bring into this country even more tourism, business and investment which would benefit London.

The other aspect that the report did not really touch on was the whole relationship between the City of London and London. Of course, we all know the joke that the lord mayor of London makes the money and the Mayor of London spends the money. We have the richest and most important square mile in the world. Even after the financial crisis, the City of London is still the number one financial centre in the world and we are proud of it. But are the Government really clear about the relationship between the City of London and London? Is that a fair relationship? The report does not address that and I would be very interested in the Minister’s view.

As regards devolution, the future of London and its success is a prize for the whole country. However, in the latest results on productivity, when London was compared with other countries in Europe for example, its productivity was average at £58,000 per worker. Cities such as Paris, Frankfurt and Brussels were higher. Stockholm was number one on the list. Yet London’s productivity is 44% above the UK average. That is a serious issue. We really need to get the productivity of this country up in a big way and London’s productivity could be so much more.

The other point is that cities are the engines of growth for an economy. The noble Lord, Lord Patten, said that we are the most dominant city. In the United States, the Olympic Games did not take place in Washington or New York. Another city was chosen. Here, the Games took place in London and we are very proud of that.

We have not spoken about Europe and the European Union. In my role as the founding chairman of the UK India Business Council, I always see Indian businesses looking on the UK as a gateway into Europe, although in fact they are looking upon London as a gateway to Europe. Again, that would help London in its competitiveness. We must remember that outside London there are other great cities in Britain. Recently, I was in Liverpool where I spoke at the Accelerate Conference. Next year, the International Festival for Business will take place in Liverpool, showcasing the whole of Britain. It is important that in promoting London and giving autonomy—I will come to that later—there is also autonomy for other cities, which will unlock the UK’s economic potential.

The other thing that the report does not really emphasise enough is that we have the best of the best in the world in professional services in London when it comes to lawyers, accountants, insurance and banking. We need to enhance that competitiveness. However, the Financial Times states:

“The Greater London Authority has just one tax—the council tax—from which it receives a precept alongside the other local authorities within its boundaries, while Tokyo raises 16 separate taxes and New York has an array of levies, including property, sales and income taxes. Berlin wields a wage tax, among others, while Frankfurt receives a share of VAT. The drive by London’s authorities for greater leeway on tax is taking place amid a wider devolution movement in Britain”.

City deals are about to take place and incentives will be given to eight large urban centres in Britain. Can the Minister say why those incentives have been given to all those cities? Should they not also be given to London?

I chose London as the headquarters for my business because I think it is the best place in the world to have a global headquarters. I think what the London Finance Commission suggested would without doubt help London and our whole country. More flexibility and more autonomy would unleash London’s potential.