By the week the evidence mounts, highlighting the detrimental impact of Covid-19 on London’s businesses and employees, compounded by the capital’s loss of visitor and commuter revenue. With the Prime Minister rightly outlining the need to harness a green recovery, perhaps the most appropriate metaphor for London’s Spending Review needs is that the government immediately plugs in and charges up London’s electric battery, so that we can accelerate getting the whole nation sustainably on the road to recovery.
That recovery is all the more imperative, as very soon London and the UK will be redefining its place on the world stage and need to be in the best possible economic health to compete and capitalise. London needs government support as much any other region in the UK right now. Covid-19 has had no regard for the “levelling-up” narrative, evidenced by the capital having the second highest unemployment rate in the country in the third quarter of 2020 (6%) and the largest decrease in workforce jobs among all UK regions (104,000). The most recent furlough scheme statistics also show that London had the highest take-up rate in the UK (13%).
Of course, the need for levelling-up the UK economy remains clear and, indeed, London business supports it. But in delivering it we must ensure that party politics, or any assumption that London is self-healing, don’t lead to punishing the capital. This isn’t a zero-sum game. London’s recovery is the UK’s recovery. Hold London back and you hold the UK back too.
For example, investment in a long-term settlement for Transport for London is also an investment in TfL’s supply chain across this country. It is also an investment in the transport network that tourists rely on to head from London’s airports onwards to visiting and spending in other UK regions. Indeed, ensuring that London’s airports are thriving helps to benefit regional airports and said levelling up agenda in the process. The Spending Review should show support for both TfL and the aviation sector, particularly allowing for the latter to introduce consistent airport testing.
Until we have an approved vaccine, testing remains key to both our health and economic management of this virus. Along with the British Chambers of Commerce, we at the London Chamber of Commerce & Industry (LCCI) are calling for extensive and open-ended funding to be directed at immediate and significant improvements to the test-and-trace programme, ensuring efficient roll-out, quick turnaround of results, and rapid tracking. We don’t need a world class system, simply one that works and enables us to balance tackling the virus with giving businesses, their employees and their customers the confidence they need to start building back our economy.
To support that building back we are a looking for a number of things from the government for London business in Wednesday’s conclusion to the Spending Review. These include:
- Maintaining the Business Rates holiday for a further 12 months.
- Extending the deferral of all tax liabilities due in July 2020.
- Removing the obligation to pay interest on late payment on such liabilities.
- Extending the VAT cut to beyond March 2021 for hospitality businesses.
- Extending the threshold for hospitality grants beyond £51,000.
To alleviate the impacts of Covid-19 on London’s attractiveness as a global flagship destination, the Spending Review should also look to:
- Reverse the decision to abolish VAT refunds for overseas visitors. This scheme should be extended to European visitors and made digital.
- Help theatres contribute to London’s cultural recovery by increasing theatre tax relief, and provide tax relief to supply chain businesses that supply the arts and culture sector.
- Reduce VAT on admission for currently non-exempt forms of entertainment, such as “commercial” performances.
- Introduce financial support to cover the costs of the reopening venues, fund the difference between ticket sales and break-even point and cover the cost of cancellation in the event of further movement restrictions.
- Invest in retrofitting Central London venues to improve their environmental performance and reduce their running costs.
The final point returns me to the theme of the introductory metaphor – London’s green recovery.
LCCI welcomed the Prime Minister’s commitment to making London the global centre for green finance and the recently announced initiatives to support this, such as implementing a green taxonomy and introducing sovereign green bonds.
Further government support could incentivise small and medium-sized enterprises to embrace this transition and play a strong role in innovation. Also, investment should be aimed at enabling local government to accelerate its delivery of retrofitting projects across the capital’s residential, commercial and industrial property stock.
Investment in TfL would drive employment through boosting the carbon efficiency of TfL’s own network, scrappage schemes to support businesses’ transition to ultra-low emission vehicles, increasing the quantity of electric vehicle charging points and providing infrastructure that supports walking and cycling.
So, I urge the government to unveil the right support on Wednesday that allows London to immediately start the UK’s drive to Covid-19 and green recovery. Levelling-up will also be part of that journey.
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