Debate on the Address

My Lords, I shall concentrate on one vital element of the national economy—London. I should therefore begin by declaring my interest as chief executive of London First, an organisation which seeks to make London the best city in the world in which to do business. My sights are not solely on London. The shape of the UK, and indeed the world economy, has changed. In this increasingly global environment, London has the potential to be the world city, and the UK needs it to succeed. London's contribution is clear. With 12.5 per cent of the population, London contributes 18 per cent of the UK's GDP and in recent years accounted for 40 per cent of the UK's export growth. Up to £20 billion of taxes raised in London every year contribute to public spending in the rest of the country. The underlying issue for London is its success. Its population has increased by 700,000 in the past 15 years and is set to grow by the same amount in the next decade. Around 375,000 people came to live and work in London last year, 345,000 left and 100,000 were born—a phenomenal rate of social change, representing 10 per cent of London's population. Legislation needs to keep pace, specifically addressing the following challenges: first, the UK's tax and regulation regime needs to remain competitive, a point ably made by the noble Lord, Lord Rowe-Beddoe, in his maiden speech. Secondly, the capital needs devolved decision-making to enable the public sector to respond quickly and efficiently. Thirdly, Londoners' skills need to match the jobs on offer. Fourthly, immigration needs to be competently managed. Finally, the capital needs investment in its overstretched transport system. I turn to these in order. London is one of the most important financial centres in the world. I look forward to measures in the exchanges and clearing house Bill to limit the chances of importing over-restrictive US regulation. The sector is already fighting a continuous battle against inappropriate European legislation. The Chancellor's new high-level group for financial services and the creation of the role of Minister for the City are a welcome recognition of the need for constant dialogue in this fast-changing arena. I also welcome the Chancellor’s pledge to reduce regulatory burdens by 25 per cent, but as others have pointed out, saying it is one thing, doing it is quite another. I look forward to further measures to devolve power in the Greater London Authority Bill. Your Lordships may be interested that in a recent survey of businesses asked whether they felt that the GLA, no London government, or the GLC were more effective, around 60 per cent endorsed the current GLA, 17 per cent preferred no government and 12 per cent preferred the GLC. I leave others to speculate on what this says about the current Mayor of London and previous leader of the GLC, Ken Livingstone. Two important measures are proposed: new powers for the mayor to direct planning development decisions and devolution of responsibility for adult skills training. It is unfortunate that, on the eve of the First Reading of the Greater London Authority Bill, the Secretary of State has called in an application for offices in Fenchurch Street in the City. The Government are planning further reform of the planning system to address productivity and competitiveness. It is just this sort of intervention that causes the uncertainty and delay which undermine competitiveness. The decision to enable the mayor to take over strategic planning decisions from the boroughs in exceptional circumstances should enable broader economic and social issues to be addressed, but goes against local concerns. It is crucial that these new powers do not result in developers getting caught in the crossfire between local and London government, each jealous of their own position. As London First, we will argue for the greatest possible certainty and clarity in the process, which is not the case with the current proposals. We look forward to more workable provisions in the Bill. Among the employed, London has the highest skills levels in the country, but 1.5 million adult Londoners have low or intermediate skills and London also has the highest unemployment rate at 8.2 per cent. It is not surprising therefore that London attracts international migrants at the rate of around 200,000 a year to fill the vacuum in the middle. The Further Education and Training Bill will provide for the five learning and skills councils in London to merge and a new employment and skills board will be established to set adult skills strategy, chaired by the mayor, with a majority of business members. This should create the opportunity for business to introduce a sense of market reality to skills provision and for the mayor to provide leadership across the government institutions working in London. We have to make training deliver jobs for London’s unemployed, not just qualifications. That brings me to the Asylum and Immigration Bill. While it is vital that we improve Londoners' skills, we also need to recruit the best talent from around the world. Businesses in London would like to see a continuation of the open door policy that has made London thrive. I agree with the noble Lord, Lord Bilimoria, who in his excellent maiden speech stressed the need for an open and free market. I also support the Governor of the Bank of England in calling for reliable immigration statistics—a subject on which others touched. As London continues to grow, major new housing and commercial development is needed. Planning procedures are still taking too long. While it is convenient to argue about legislation, the main scope for improvement lies in doing things better. Borough planning departments need to be better resourced and the appeals process speeded up. Targets for increasing housing supply will also not be achieved without investing in infrastructure. In particular, in the Thames Gateway actual housing development is running at 5,000 per year against a target of 16,000. A planning gain supplement would not raise significant funding since the majority of the development is on brownfield sites. Instead, national, London and local government need to make house building less of an endless obstacle course. The Thames Gateway, London and the UK are becoming severely constrained by the need to invest in transport. If London were permitted to invest the money it collected in taxes, it could not only solve its own transport problems but increase the national tax take. I look forward to the Eddington report, which is due to set out the economic benefits of investment in transport and recommend ways of speeding up planning for major projects. I touch briefly on capacity constraints on London's roads. With potentially 400,000 more vehicles by 2025, congestion will grow by 25 per cent. Road construction on this scale is impractical. The only option is to ration resource through pricing. I welcome the inclusion of a Road Transport Bill in the legislative programme. However, if road user charging is to gain public acceptance, it must be seen as a net economic and social contributor. This means hypothecating the charge to invest back into better management of local roads, public space and more public transport. Where will all the displaced drivers go? Crossrail is the only mass transit system which is deliverable in the foreseeable future, and that is only by 2016, by which time London will have grown by the size of the city of Leeds. The hybrid Bill for Crossrail should reach your Lordships' House in the spring. The one outcome that business in London looks for above all else is to complete the legislative process and resolve its funding so that construction can begin without delay.