Restoring the fortunes of our high-tax, low productivity nation will not be easy, but there are a few low-cost measures which, along with longer-term structural reforms, can unleash London’s huge potential, says John Dickie
After rebuilding the Labour Party and securing a historic electoral landslide, the hard work of delivering change starts now for Sir Keir Starmer and his new team as they set out their legislative priorities in the King’s Speech today.
The government has already hit the ground running with a flurry of pro-growth announcements, including reforms to our antiquated and under-resourced planning system, which have been widely welcomed. But this honeymoon period will not last forever and the new administration will rightly be judged on whether it delivers on its mission to kickstart growth.
There are grounds for optimism. The UK now has political stability after years of flux and the economy seems to be turning a corner – albeit slowly. Interest rates are also expected to fall over the next year.
But restoring the fortunes of our high-tax, low productivity nation in the face of dire government finances and stretched public services will be akin to turning around a tanker in choppy waters.
Labour has recognised that a large majority on its own will not create more resources. That is why they are rightly focused on collaborating with the private sector to drive change and implement its policies at the scale and speed required. As an engine of economic growth for the whole UK, London will play a critical role in delivering the government’s missions.
Unlocking the investment needed to produce a step-change in our economic performance will require a laser-like focus on delivery. This needs to encompass not only high-profile interventions, but also smaller steps which individually cumulatively will help shift the dial.
This starts with no or low-cost measures which, taken together, will build investor confidence, unlock private investment and create jobs. These include greater clarity on future tax policy, removing stamp duty on shares to improve the UK’s attractiveness as a place to list, scrapping the Infrastructure Levy to provide certainty for developers and local authorities as well as overhauling the apprenticeship system to increase take-up.
These short-term growth boosters need to go hand in hand with longer-term measures such as increasing funding for the supply of affordable homes and providing UK-wide supply chains with certainty by agreeing a multi-year capital funding deal for Transport for London on a par with other regions. The latter is also critical to keep the city moving sustainably and unlock the homes that Londoners desperately need. For example, over 20,000 new homes could be delivered along the length of the Bakerloo line extension – in turn supporting the delivery of thousands more along the existing route.
Greater political alignment between Westminster and City Hall also presents an opportunity to reset the narrative on London’s relationship with the rest of the country and unleash its full potential. This will require giving the Mayor – and other metro mayors – further powers and funding to meet the needs of their local areas more quickly and effectively than the current broken centralised model.
Last week’s gathering of metro mayors at 10 Downing Street was a welcome first step and the planned Council of the Nations and Regions could be an important vehicle – alongside Labour’s new Mission Boards – to improve partnership across different levels of government. Collaboration rather than competition should be at the heart of this new approach, ending the process where different parts of the country were pitted against each other to bid for small pots of money. That is why the six leading employers’ groups – including BusinessLDN – from different regions across England have joined forced to form the Growing Together Alliance and bolster efforts to boost our local economies.
Labour has made a positive start to implementing the change it promised when in opposition. The government now needs to put in the hard yards as it looks to turn ambition into action. London’s businesses stand ready to help galvanise growth and deliver this vital national mission.
John Dickie is Chief Executive of BusinessLDN