Higher taxes on dividends, pension contributions and savings risk discouraging investors at exactly the moment we need them, writes Lady Mayor Susan Langley
This week, as we welcome the Prime Minister and international leaders from across the world to Guildhall for the first-ever Lady Mayor’s Banquet, I’ve been thinking of what it means to stand and speak in a hall shaped by so many centuries of history and partnership.
That feeling of partnership really must underpin everything we do, because the challenges we now face are urgent: increasing investment, unlocking growth, connecting capital with opportunity.
Last week’s Budget reflected the mixed picture facing the UK economy. Some measures were good for the City. No further change to bank taxation offers stability at a time when lenders need certainty. A three-year stamp duty exemption for firms listing in the UK is an important step towards strengthening the listings environment and boosting capital markets.
But higher taxes on dividends, pension contributions and savings risk discouraging us at precisely the moment we need savers and investors to be confident and active participants in our economy. A stable, predictable, internationally competitive tax regime is not a luxury, it’s a necessity for growth.
City’s success can’t be taken for granted
We can see the urgency of this challenge in the recent OBR forecast, which points to persistently low growth over the coming years. While the Square Mile continues to thrive, employing around 678,000 people, generating record tax revenues and producing more tech unicorns than France and Germany combined, we cannot take success for granted. Other global financial centres are moving at speed. Our competitors aren’t local, they’re global.
Initiatives such as the Mansion House Accord, the Office for Investment: Financial Services and the new Sterling20 partnership are beginning to shift the dial. The commitment from L&G alone, £2bn for 10,000 new social and affordable homes, demonstrates what’s possible when government, regulators and the City work together. But execution is everything. In the UK, only 7p of every £1,000 in a defined contribution pension goes into venture capital. In the US, it is $5 per $1,000. That gap is costing our savers, our entrepreneurs and our national economy.
If we want to really free ourselves from the low-growth trap, we need to connect capital with projects that deliver real-world impact, housing, infrastructure, green energy and innovation. The money exists. The ideas exist. What’s missing is the mechanism to bring them together quickly and at scale.
Finally, we must reshape perceptions of the City itself. Too many still believe the Square Mile is square in mindset: closed, exclusive, reserved for those from certain backgrounds. Nothing could be further from the truth. I want people to see the City I know, open, innovative and eager for talent. A place where over 300 languages are spoken, where start-ups sit alongside global banks and where opportunity belongs to all of us.
We can only deliver this change in partnership with businesses, policymakers, investors and citizens. We can show we are more than the sum of our parts. Together, we can reconnect capital with opportunity. Together, we can ensure people choose here, not there.
Susan Langley is the Lady Mayor of the City of London