Press Release

Mayor acts to protect the global capital of finance
12-12-2008   669

London must radically up its game or face losing its status as the world’s top financial centre, the Mayor of London Boris Johnson was warned today. The Mayor has vowed to protect the capital’s position and ensure London’s successful fight-back.

London’s position was at risk before the start of current economic downturn – it faces a real and serious threat from competitor cities that have developed aggressive strategies to steal business away from the capital.

That is the finding of a landmark report produced for the Mayor by leading city experts. In June, the Mayor asked Bob Wigley, Chairman of Merrill Lynch for Europe, the Middle East and Africa to lead a panel of senior city executives including representatives of the City of London Corporation to examine how London could sustain its position as the world’s leading financial centre. 

The report found London is in danger of losing out to other cities:
The favourable tax and regulatory regimes of cities like Dublin and Luxembourg have together attracted over £420 billion of investment funds away from London
Across the Atlantic, Bermuda’s attractive regulatory framework and zero per cent corporation tax has seen its insurance market gain 700 jobs from London since 2000 with a loss of £450 million in taxes to the Exchequer
Dubai International Financial Centre is aiming for the same stature as New York, London and Hong Kong, backed by a government setting zero tax on income and profits and resulting in the licensing of 750 financial services companies in under four years
Singapore’s concerted strategy to turn its local financial centre into a regionally significant player has seen it attracting over 1,000 domestic and international financial institutions to become a regional leader and beacon for financial trading. These reforms were led by the establishment of an agency with the task of “developing Singapore as an international financial centre”

At home the report also identifies specific issues, including the burden of domestic and European regulation, deteriorating skills levels and under-strain infrastructure and systems. In particular it refers to concerns over the status of Heathrow, almost at capacity, calling for alternatives to be pursued to ensure that London as a hub does not lose out to its European competitors. 

The report’s over arching message is that London needs to take a far more proactive approach to protect its position and sets out five key recommendations:

Rebuilding the UK’s reputation for leading global financial regulation
Creating a professional-led board to promote London as a financial centre
Boosting and improving the capital’s infrastructure
Making London the location of choice for those starting or progressing international financial  services careers
Improving the competitiveness and predictability of the UK’s tax and financial regulatory
regime

The Mayor fully supports the report and welcomes the swift action being taken by the City of London on the recommendation that a board should be set up under its leadership with the primary objective of promoting London as a financial centre at home and abroad. The Financial Services Board will act as a politically independent and strong voice for London's financial services, which is crucial to the promotion of the capital internationally now, in the current economic downturn, and more importantly in the future when the eventual upturn arrives. This new co-coordinated approach, led by the City of London Corporation and working with Government and other bodies, will ensure that London's financial services are much better equipped to face the tough challenges ahead.

Mayor of London, Boris Johnson said:
‘It is clear there are challenges that must be overcome if London is to retain its global status, particularly during the current economic downturn. Bob’s team have identified what needs to be done and I will pull out all the stops to protect London’s position as the world’s premier financial centre and emerge from the downturn stronger than ever. On top of establishing a single body to oversee the work that needs doing, I will not stop until I lobby whoever it takes to remove the obstacles that are putting London’s global reputation at risk from the new kids on the block chomping at our heels’.

Bob Wigley, Chairman of the Review Panel said:
‘Boris asked me to carry out this timely review because as the Chairman of a business which regularly chooses where to put new business, I know what drives our decisions. Our recommendations start with the industry supporting the authorities to rebuild London’s reputation for leading global financial regulation and to restore trust in doing business in London. They go on to include investment to make London the location of choice, and in creating a more predictable, competitive tax regime which will attract companies to base their headquarters in London. We have built on the excellent work already undertaken by the City Corporation, and the Chancellor's high level group and have drawn on the expertise of those running London’s largest banking, insurance, hedge fund, venture capital, legal and accountancy businesses.’

The City of London Corporation is a non-partisan entity. The Review panel is independent and non-partisan.

The Wigley Report’s key recommendations are:

1. Rebuilding the UK’s reputation for leading global financial regulation

The industry and the regulatory authorities working together to rebuild the UK's reputation in the wake of the financial crisis.

Supporting the FSA's planned and published move from risk based supervision to a more intense supervisory model, and supporting the creation of a new global policy framework.

The Government must urgently review the UK's administration laws to restore trust in London based financial services subsidiaries of overseas firms.

Statutory immunity must be granted to whistleblowers to deter insider dealing. 

An annual independent survey of UK financial services regulation benchmarking it globally, to be carried out by the new International Centre for Financial Regulation

2. Creating a Financial Services Board to promote London as a financial centre

London should form a single powerful, properly resourced body, under the leadership of the City of London, to promote London’s position as a global financial centre. 

The agency shall promote London’s financial services sector overseas, anticipate strategically important trends and highlight domestically the industry’s contribution to the UK.

A chairman of top industry calibre should be appointed to oversee the new body.

3. Boosting infrastructure

That the Greater London Authority set up a “financial services infrastructure group”, in co-operation with the City of London Corporation, to plan for the long term infrastructure needs of the industry.

The group would co-ordinate a solution to the industry’s fast-growing data processing requirements, collaborating to establish a common data centre.

4. Making London the location of choice for financial services careers

A Chancellor’s High Level Group-led programme to ensure that London remains the location of choice for professionals starting and progressing their international financial services careers.

The programme would help London become the centre for academic excellence in financial services, deepening the links between industry and academia and upgrading the facilities of the capital’s universities.

5. Improving the competitiveness and predictability of the UK’s tax regime

The Review developed three specific proposals for tax reform for consideration by HM Treasury:

Improve the process of introducing new tax policy by forming a panel of industry experts to support HMT and HMRC pre consultation

Use the tax system to reinforce the UK as the most attractive geographic location for companies to base their headquarters or regional holding companies

Formalise corporation tax policy to demonstrate the UK’s intention to remain globally competitive

An annual independent international benchmarking of the UK’s tax regime to be carried out by the widely respected Oxford Centre for International Taxation

The members of the Review Panel were:

Bob Wigley (Chairman), Chairman for Europe, the Middle East and Africa, Merrill Lynch  
Simon Fraser, President, Fidelity International Asset management
Stuart Fraser, Chairman of the Policy and Resources Committee, City of London Corporation      
John Griffith-Jones, Chairman and Senior Partner for Europe, the Middle East and Africa,
         KPMG
Lord Peter Levene, Chairman, Lloyd's of London 
David Lewis, Lord Mayor of the City of London and former senior partner, Norton Rose
Harvey McGrath, Former Chief Executive and Chairman, Man Group plc and Chairman, London         
        Development Agency     
Andrew Moss, Chief Executive, Aviva plc
Manny Roman, Co-Chief Executive Officer, GLG Partners  
John Varley, Chief Executive, Barclays plc             
Helen Weir, Group Executive Director, UK Retail Banking, Lloyds TSB plc
Philip Yea, Chief Executive, 3i Group plc      

Over 80 senior executives from the industry were interviewed by or took part in a series of workshops during the course of the review"

The report can be downloaded from www.london.gov.uk/mayor/economy

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