London is a world city. Make no mistake, if its economy fails, the UK economy will fail. There is also no doubt that London as a financial centre faces intense competition from a range of other cities around the world, and not just from the United States and from within Europe.
Indeed my medium-term sights are not on Paris or Frankfurt as financial centres but on cities that will feature in the working life of all of those currently at school, cities like Shanghai and Bombay. I believe that they are already providing strong financial competition for London and any future government needs to recognise this development rather than concentrating on European centres as in the past.
The historical importance of London goes back some 2,000 years. That makes it unusual. For example, Berlin was a small town in as recently as 1750, and cities such as Chicago barely existed 170 years ago. This long time dominance of London as the political, commercial and cultural centre of our nation has created the problem of envy in many areas outside of the capital.
Cities across Britain continue to cast an envious eye over London’s successes and wish at times to bring it down to size without perhaps appreciating some of its failures and problems. London got the first underground system in the country and many other innovative items of infrastructure but it is now failing to keep up with the demands of fast-paced 21st century technology-led economy.
London’s streets have always been seen as paved with gold and many from out side of the capital still fail to recognise the deep disparities in wealth between areas and even within districts in London.
We must remember that London is the showcase for the entire country, not only for tourists but for all overseas visitors, people who want to come and live here, and a significant number of businesses that wish to invest in the UK. Many businesses that invest outside the capital have representative offices in London. Therefore, investing in London’s infrastructure is of key importance for the whole of the UK. Without a thriving London, the whole of the UK will suffer.
I believe that failure to invest in the capital today will have serious medium-term consequences. London must keep more of its business rates in the hands of its local government because only that will help to fund vital services, such as the underground, new innovative transport systems such as Crossrail as well as health and education services for those who live and work here.
At the same time, as I have made clear in parliament on many occasions, unions and government must recognise that national pay bargaining helps to discriminate against London’s public sector professionals and workers in the lower income strata. We need to have a realistic London weighting regime.
Now is the time to praise and invest in our capital not to cramp its capabilities. We must also not subsume London’s economic success by introducing ever more tax regulation and Government obstruction. London’s initiative and innovation is a key to our economic welfare in the years ahead and to survive the strong competition which I believe will continue to develop from the likes of Cities in China and India.
An important aspect of such innovation must also cover housing as well as transport and other public infrastructure. Whatever target is set for the proportion of social housing in new developments, we must appreciate that key workers are people who work in the private sector as well as the public sector. The glue of many of our communities is supplied by people who are in relatively low-paid employment but are not necessarily paid from the public purse, such as many shopkeepers. We need a much more innovative approach here in London to this matter, particularly in the centre of this city where pressures have increased alarmingly during the last few years as property prices have soared.
If London falls behind other world centres in its ability to attract financial investment and international business operations the whole nation will be the poorer and we must all start looking twenty years ahead when, I believe, global competition will see some European cities in the second rank of global economic importance.