What does the General Election 2015 mean for London Business?

Housing, skills, infrastructure investment, potential for devolution and that all important ‘in/out’ referendum were the issues that dominated this morning’s roundtable at the London Chamber of Commerce and Industry…

With all political parties making various pledges to support businesses in their manifestos before the Election, this event considered what London businesses can now expect from the newly formed government. The panellists sharing their views were: Tim Donovan, Political Editor, BBC London; Marc Sidwell, Executive Editor, City AM; and Colin Stanbridge, Chief Executive, London Chamber of Commerce and Industry (LCCI). Mishcon de Reya, plus another 20 or so guests from a cross section of companies, came along in search of more insight…

How have we got here?

Tim Donovan speculated that Labour had ‘overestimated incumbency’ and claimed that the Labour picture in London is not in fact as positive as it looks. In a historically ‘Labour city’, the shockwaves from a Conservative majority are still rippling through London almost two weeks since the result was announced. The shifting demographic in London, driven by house prices, was acknowledged as an influencing factor in changing the historical strongholds of certain constituencies. For example, those who formerly lived in Chelsea may now live in Battersea – shifting the vote towards the right.  The same effect could be interpreted to be taking hold in other areas, as Labour strongholds were weakened, or their seat lost entirely.

What does this Government mean for London Business?

As the new Business Secretary, Sajid Javid, today promises to cut red tape and collect damaging debts owed to small businesses (estimated to be over £32bn according to The Department for Business Innovation and Skills), can London businesses trust this to happen? The promise of deregulation is a well beaten drum, but there was a sense from City AM editor, Marc Sidwell, that this time it might actually happen leading to the widespread empowerment of businesses..

Reform is also anticipated in the retail sector, with UK high streets expecting a radical shake up. In addition, Sir Hector Sants has been appointed to conduct the review into the banking sector’s competitiveness.

In, out, in, out…

The EU referendum, threatening a Brexit, is also keeping London businesses on their toes. With a decision not expected until 2017, businesses have two years to twiddle their thumbs and manage the associated risk. Putting aside the referendum, Marc stressed the need for robust negotiation on Europe. Establishing a single market for the services and removing the notion of an ever closer union were hailed as key benefits likely to be sought by the UK. Marc reiterated the need for the Prime Minister to ensure he establishes terms that enhance Conservative credibility and keep the City happy if he is to prove the UK made the right decision.

Whilst most businesses are in favour of an ‘in’ decision, with some contemplating moving their headquarters out of the UK if a Brexit were to happen, both Marc and Colin believed London would retain its draw as a global merchant power with strong international relationships, supported by being a member of the Commonwealth. Marc said he did not ‘envisage flight’ of businesses and ‘an alternative to the EU is unlikely to be calamitous’.

‘Devolution is in the air’

Will devolution of Scotland and decentralisation of Manchester in its bid to form the ‘Northern Powerhouse’ be at the expense of London? Colin reminded us that London has provided £34bn net contribution to the rest of the UK in the last fiscal year (figures from recent Centre for Economics and Business Research). Should London be fiscally devolved to manage its own taxes in order to compete with other major cities? Greater retention of London’s finances would go some way to accommodate its forecasted population growth by implementing necessary transport improvements and housing developments. Colin summarised that if this Government recognises the need to serve the capital, then it can in turn serve the rest of the country.

And so much more

The Government is under pressure to address the housing shortage and the associated need for free schools. The panel reiterated the need for skilled immigrants to help deliver this solution given the low unemployment rate in the UK – a resource that may be withdrawn in the event of a Brexit. Businesses may well have the opportunity to flourish under this Government, but without the people running them able to function in this overcrowded City, they could flounder. With this in mind, London’s Mayoral Election is set to prove very interesting…