Paul Drechsler: Government must reframe its attitude to London for the good of all the UK

Paul Drechsler: Government must reframe its attitude to London for the good of all the UK

As a proud Londoner, while I reflect on the last four and a half years as chair of BusinessLDN, it is easy to feel gloomy as we close the year heading for recession, with a war in Ukraine and a cost-of-living crisis at home.

Despite the challenges, I remain of the firm view that London is the greatest capital city in the world: one of the most diverse, an international beacon for inward investment and innovation, and a magnet for businesses to find people and for people to find opportunity.

Although London does many things well, it is not smooth running for everyone. We have amongst the highest unemployment and poverty rates in the UK and we know both disproportionately affect Black and minority ethnic communities as well as the young.

We have a shortage of affordable housing and an unaffordable childcare system, which means we lose a lot of dynamic talent. And with the current cost-of-living crisis and double-digit inflation, the city’s businesses are navigating a downturn with a significant skills gap constraining economic growth.

Yet London attracts people and investment from all over the world. It is the people who make it diverse, culturally rich and creative. It is irresistible because of 370,000 students in 40 universities, hundreds of business accelerators, 220 nightclubs, 3,500 pubs, 190 museums and 40 theatres in the West End alone. This is why 80% of visitors come to London. And the potential to leverage London as a gateway for international tourism could, no doubt, be tapped further.

I have watched the debate about London’s role in the UK and its global standing over recent years with a mixture of amusement and horror.

No one could disagree with the premise of levelling up and the importance of reducing inequality across the UK. And while no one outside the capital is overly charmed by arguments about the sizeable tax surplus London generates, I make no apology for stating that without a successful, thriving capital, the nation will be considerably poorer.

That’s why the decision to extradite English National Opera from London is an own goal for the UK. The downgrading of the capital’s cultural offering will do nothing to improve our ability to attract people here and the loss will be felt in our city and well beyond it.

The removal of VAT-free shopping to international tourists was equally short-sighted. Notwithstanding the challenges around public finances, are we really turning away wealthy tourists who will instead flock to Paris and Milan and spend their cash there instead of in London, Manchester and other UK cities? That is not levelling-up – it is the very opposite.

I urge the government to look again at London and reframe its relationship with the rest of the country. We all want to see a return to growth and the suggestion that a loss for London is a win for the regions is deeply flawed.

To support a return to prosperity, the government should get the Office for Budget Responsibility to crunch the numbers and reconsider the decision on VAT-free shopping. With the new King’s Coronation next year, this could provide a significant boost to the UK economy. With the right connectivity in place, we could flood up to £1.3 billion in visitor spend into UK regions.

We need to take more action on skills. Re-skilling those out of work, aligning skills and jobs for the young and – where the need is justified in the short term – allowing immigration to help fill the gap and fuel our economy.

And looking outwards, much needs to be done to rebuild a great diplomatic and trading relationship with our nearest neighbour, the European Union – the fastest and biggest source of GDP increase available now by far.

Of course, there is much more we have to do more to make the city attractive, equitable and affordable to work and live in, to remain competitive, to attract and develop talent, and to deliver a net zero carbon future. And we must work actively with other city regions to deliver on the promise of future economic growth and prosperity for all.

As we look to the future, my great wish is that we harness the London attitude – the spirit, pride, and energy – that drives our success, to ensure our capital city works for business, for Londoners and for the whole of our United Kingdom.

Paul Drechsler is chairman of BusinessLDN (formerly London First). This article was originally the speech he made at the winter reception of the All Party Parliamentary Group for London held today in the Cholmondeley Room and Terrace at the House of Lords and sponsored by London HQ.

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