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BusinessLDN: Chancellor must unlock London growth to drive UK economy

BusinessLDN has submitted its Budget asks to Chancellor Jeremy Hunt (Victoria Jones/ PA) (PA Archive)
BusinessLDN has submitted its Budget asks to Chancellor Jeremy Hunt (Victoria Jones/ PA) (PA Archive)

BusinessLDN has submitted its Budget asks to ChancellorJeremy Hunt, arguing that measures to unlock the capital like rates reform and VAT-free shopping will also help drive nationwide growth.

John Dickie, CEO of the cross-sector business body, said the organisation aimed to focus on a smaller number of goals, as it recognised it would be difficult to ask for a long list of wants.

“The Chancellor is going into this budget with very limited room for maneouvre, so we can’t go in with a huge shopping list,” he said. “We focused on a few changes.”

The submission included calls for rates reform, energy bills relief for businesses, reforms to the apprenticeship levy and the return of VAT-free shopping for international visitors.

Given the fiscal constraints ahead of the government, VAT-free shopping will be among the priorities. Dickie says the measure is projected to slightly increase the Treasury’s overall tax intake, meaning it is less likely to be competing with other measures that have a negative budget impact.

But beyond the fiscal impact, BusinessLDN chair Sir Kenneth Olisa sees another reason why it could be an easier win for London businesses: it would represent an easy win for the Government at a time when positive headlines have been hard to come by.

“If you look at headlines in newspapers, what we are arguing is a revivification for the high street,” he said. “That is a headline which would be good news for the Chancellor, good news for the Government.”

However, Dickie also notes that the way in which the measure was reintroduced - as part of Kwasi Kwarteng’s catastrophic mini-Budget - does mean there is a risk that some in Government still view the policy negatively.

When it comes to the measures that - in Dickie’s words - are “a little bit harder for the Treasury to grip”, as they carry a cost - reforming business rates is one that BusinessLDN has been prioritising.

“We welcomed the temporary relief, but the truth is we have a hopelessly broken system,” Dickie says. “We would like to see root—and-branch reform and breaking of the national system where right now if prices change in Bolton, that affects rates in London.

“We would like to see individual regions setting their own rates.”

Dickie added, though, that recent history suggests serious reform on business rates may be unlikely.

“I’m not optimistic on business rates because the chancellor keeps kicking those into touch,” he said. “We go through a cycle of Chancellors saying ‘something must be done’, there’s a review and then it turns out the review doesn’t actually review very much about business rates at all.”

The pair largely see their suggestions as spurring growth across the UK. But if the most obvious benefits are felt in London, will that lead to concerns about Government favouring the capital?

Olisa doesn’t think so, saying the government should pursue growth where it can get it, rather than trying to target it in certain locations.

“One of the biggest challenges we faced in the UK was defining leveling up,” Olisa said. “And one of the great fears we had in London was that levelling up would mean levelling down for us.

“Speaking not as BusinessLDN chair but as Lord Lieutenant, we have some of the most deprived parts of the UK. A concern we had was that money would be taken from the poor parts of Tower Hamlets and given to other parts of the country.

“The point being actually what we need to do is to get growth happening in the economy and if you get growth happening, it will spread like water would do by finding its own level and anybody who tries to be really clever about pinpointing that would make a mistake.”