General Election 2015 A Manifesto for Jobs and Growth

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1 General Election 205 A Manifesto for Jobs and Growth Making the best city in the world in which to do business

2 Making the best city in the world in which to do business has long been seen as one of the best cities in the world in which to work and do business. Its language, time zone, political stability, tax and regulatory regime, legal system, culture and quality of life are all key factors in its position as the world s leading global hub for business and talent. But the strains of s success are beginning to show: in absolute terms our population is growing rapidly, adding around a million this decade and a million in the next. We need to invest in providing the transport, infrastructure and housing to support this growth. And in an increasingly interconnected and competitive world, we need the education and training to give all ers the chance to compete. Our established global competitor cities, and new rivals, are all investing in their futures; we need to do the same to remain competitive. And this is not just about : joint working between and the rest of the UK is vital to support economic growth for the country as a whole. s economic performance and the UK s performance are highly correlated: when performs well, the national economy tends to perform well, and vice versa. 350 Direct UK jobs 360 Indirect UK jobs 230 Induced UK jobs 940 Total UK jobs 7m Direct UK GVA 8m Indirect UK GVA Source: Building, Building Britain, First and PWC, Expand and improve transport infrastructure to meet the needs of s rapidly expanding population: build an additional runway in the South East maintain momentum on Crossrail 2 p rovide certainty of long-term funding to support underground upgrading Take urgent steps to tackle the housing shortage, giving the Mayor and government more powers to build the 50,000 homes per year that the capital needs. Improve skills of s workforce and manage migration effectively to ensure s position as a world leader for talent is maintained and strengthened: d evolve funding and powers to ensure manages its own skills strategy for ers p rovide an immigration regime that welcomes those who contribute economically to our country Figure : An example of supporting UK jobs and growth: a typical Central office development would provide 940 UK jobs and 47m GVA A typical Central office development First has set out its priorities to enable to continue to compete and thrive, helping drive economic growth not only in the capital but in the country as a whole: 2m Indirect UK GVA 47m Total UK GVA 4 5 Ensure changes to tax policies support economic competitiveness: recognising that tax reform impacts our ability to compete for talent with other cities. Play an active and positive role in Europe, leading reform of the European Union from within so EU membership works even better in the UK s interests, focusing on completion of the Single Market in services as a priority.

3 Improve transport connectivity and capacity: Airport capacity The UK is an island nation operating in a global economy: building additional runway capacity is vital to connect the country to existing and emerging markets. Expand and improve s transport infrastructure s transport infrastructure is under real pressure as a result of the capital s significant population growth. We need bold and swift action by government. Provide sustained investment in infrastructure: Across all of s infrastructure, there is need for sustained public investment. produces a substantial tax surplus for the country as a whole and its economic growth will see this increase. The GLA s recent 2050 infrastructure investment plan sets out both s needs and the benefits from long-term planning. Similar arguments are made by other English cities. 2 The next government should implement the recommendation of the Finance Commission to devolve the revenue from a suite of property taxes to and, where appropriate, to other English cities, replacing existing grants pound for pound. Until such devolution is implemented, Government must provide sufficient certainty and resources to allow government to invest in s needs. Building additional runway capacity is vital to connect the country to existing and emerging markets. All parties should accept the Airport Commission s conclusion that the South-East needs more runway capacity and commit to implementing its final recommendations swiftly once the Commission reports in June 205. Transport capacity needs new transport capacity: this requires adequate and certain funding for Transport for (TfL) to meet the city s needs. In particular: C ontinued underground upgrading: s underground network carries over a billion passengers a year and while much has been achieved to modernise the network, growing demand means investment in signalling and rolling stock must continue. The next government should as a minimum reaffirm the core 5 year capital funding settlement for TfL which runs through to N ew rail: Crossrail 2 has the potential to be a major infrastructure project which can be predominantly funded locally by. It will also open up new parts of for development. The Government must work with the Mayor to allow its construction to start towards the end of the parliament as Crossrail opens. New roads: outer is heavily reliant on surface transport and is Europe s second most congested major city, with the Greater Authority (GLA) estimating that delays and disruption on s roads cost the economy approximately 2 billion, while the associated pollution contributes to thousands of deaths. TfL needs the resources to invest in s roads, in line with its roads strategy. Such investment should in part come from a geographically broader and more sophisticated congestion charge, to help manage overall network demand. Figure 2: Indicative increase in delay per kilometre travelled by motorised traffic* Seconds delay per km +0% +8% +4% +7% +8% East South West Central North *Forecast by TFL s strategic models based on committed transport investment and forecast growth to 20. The diagram above shows the likely increase in delay for motor vehicles by 203, according to TfL research (shown in seconds delay per km) Source: Roads Task Force, Transport for, 203 3

4 2 Take urgent steps to meet s housing challenge Over the last 0 years only 200,000 homes have been built as the city s population has grown by around million. This situation is unsustainable. As well as the human misery this causes, rapid house price inflation is undermining s competitiveness. Central government can help solve s housing challenge in a number of ways. Figure 3: The risk s housing supply and costs pose to the capital s economic growth 5% 22% Don t know Insignificant 73% Significant Give the Mayor greater powers to deliver Additional infrastructure priorities E mpower the Mayor to be able to set hard evidence-based housing targets on the boroughs and be able to reward those that meet them and take over decision making from those that fail. E nable utility regulators to support growth: regulators currently have no power to consider the growth implications when considering utilities investment plans. This leads to ludicrous situations, such as when developers can only connect new buildings to the electricity grid with protracted delays and high costs. Where there is a sound business case, the government should enable utilities to invest ahead of need to support growth. Empower the Mayor to lead on identifying and disposing of publicly owned land in that is surplus to requirements. In s 38 opportunity areas, earmarked for rapid growth and housing densification, the complexities of development need to be reduced and, in particular for central government, planning policy should be changed so that the Mayor s planning decisions are not subject to second guessing by the Secretary of State. L ondon boroughs should be empowered to invest more in housing. The government should scrap the restrictions that stop boroughs borrowing prudentially against their existing stock, thus enabling them to fund building more housing. S top dumping sewerage in the Thames: with still reliant on a Victorian sewage system, the 25km Thames Tideway Tunnel will be vital to ensuring that our public health infrastructure is modernised. We urge all parties to continue to provide their backing for the Thames Tideway Tunnel. A ction to enable the market to improve broadband and mobile coverage in the capital Nearly ¾ of s business leaders thinking housing supply and costs are a significant risk to the capital s growth. Source: You Gov poll of,200 adults for First,

5 3 Improve skills and manage migration effectively has one of the most competitive labour forces in the world, with more high skilled people than any other city. To maintain this position, we need a qualified and mobile talent pool from which to recruit. We want ers themselves to have the right skills to meet demand, but we must also recognise that not all of the gaps can be filled by ers and that sometimes companies will need to recruit internationally. We need an immigration regime that welcomes those who contribute economically to our country and which is welcoming to overseas students and tourists. I mplement a skills policy that works for ers: powers and funding over skills should be devolved to the government as it is better placed to meet the needs of both ers and s employers. Apprenticeships should be supported as a way of getting more ers properly trained and into jobs. H ard data not arbitrary immigration targets: immigration policy should not be driven by an arbitrary target, but by hard data. The next government should develop better data collection on migration so that we can see the facts on inward and outward flows. S tudents are temporary visitors not migrants: we should follow the lead of other countries such as Canada and Australia and urge the next government to stop classifying students as immigrants. By choosing to study in the UK, they are making a significant contribution to jobs and growth in this country. British-educated overseas talent is an asset not a liability: the government should reinstate the automatic option or make it easier for foreign students to work here for a few years after graduation; this would be good for UK universities, good for UK business and good for Britain s long-term relations with the global business community when these graduates return to their home countries. R esource and manage UK border security: the next government should ensure that the UK Border Force is effectively resourced and managed so that it can simultaneously secure our borders while processing queues quickly. Similarly, the Government should ensure the UK Borders Agency swiftly processes visa applications with minimal hassle for applicants. Figure 4: Leading cities by sector, based on employment ranking Financial services Technology, media and telecoms Business and professional services Los Angeles Culture 2 New York 2 2 New York 2 New York 2 New York 2 Hong Kong 3 New York 3 Chicago 3 Chicago 3 Hong Kong 3 Los Angeles 3 Toronto 3 4 Paris 4 Boston 4 5 New York 5 Boston 2 Los Angeles 5 Hong Kong 5 Boston Los Angeles New York 4 Los Angeles 4 Singapore 4 Sydney Life sciences Boston Education Singapore 4 Singapore Consumer business 5 Singapore 5 Chicago 5 Source: Globaltown: Winning s crucial battle for talent, Deloitte,

6 4 Ensure changes to tax policies support economic competitiveness has the largest concentration of highly skilled people in the world. This makes the competitiveness of its personal tax system particularly important. Ensure the tax regime supports our competitiveness Top rate of income tax The Government s decision to cut the top rate of income tax from 50% to 45% (or from 52% to 47% when national insurance is included) was strongly welcomed by business. However this remains high compared to s international competitors and the balance of evidence suggests that it is above the revenue maximising rate. We would urge the Government to ensure no increases in the top rate of income tax and, over time, to review and reduce it. Any increase would be very damaging for s competitiveness and jobs, growth and exchequer revenues. Create clarity over the Banking Levy Designed to deliver a particular revenue target, the Levy is a badly constructed tax, as the rate changes make planning impossible. The next government should re-design the Levy to make it stable and predictable. Improve the system The next government should: increase the resources and pace of the work of the Office of Tax Simplification and consult on changes to tax policy to avoid unnecessary shocks. We welcome the Government s moves to review business rates, which have risen year-on-year. A tax based on property above a certain level is a de facto tax on. Domestic property taxes The council tax is in dire need of revaluation and, given the increase in property values, there is a case for adding proportionate new bands at the top. However, a tax based on the value of property above a certain level would be expensive to administer, damaging to confidence and competitiveness, and a de facto tax on. 8 9

7 5 Play an active and positive role in Europe, leading reform of the EU from within Membership of the European Union (EU) and access to its Single Market is critical to the capital s continued success. In particular this is because of the importance of services to, and Britain s, economy; and as a result of s success in attracting overseas investment, much of which is driven by access to the whole of Europe. 0 We believe reform is needed in the way the European Institutions currently work in particular to address the criticisms that that the EU is too inward looking and focused more on harmonisation and regulation than driving international competitiveness and growth. We want the next government to put its energy into leading reforms in the EU, and in particular to driving the completion of the Single Market in services. Figure 5: and the EU Of the top 250 of the world s largest companies...00 have their global or European HQ in...40% of foreign firms cite access to the EU as the main reason Source: Futures: Crowned Business Capital of Europe, Deloitte, 204

8 About First First was established in 99. We are a not-for-profit membership organisation with a mission to make the best place in the world in which to do business. Our Partners and Members reflect the diversity of s economy, drawing from both the private and not-for-profit sectors across property, transport, finance, professional services, creative industries, hospitality, retail and education. This wide sectoral coverage of our membership gives us an unrivalled insight into the issues affecting s businesses and enables us to represent them across a spectrum of issues, all under the shared goal of maintaining s global competitiveness. Design David Carroll & Co Contact: Telephone Website 2

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