London’s Economic Recovery: Covid-19

– in the House of Commons at 2:30 pm on 23rd October 2020.

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Motion made, and Question proposed, That this House do now adjourn.—(Rebecca Harris.)

Photo of Felicity Buchan Felicity Buchan Conservative, Kensington 2:32 pm, 23rd October 2020

Thank you, Mr Deputy Speaker, for granting time for this Adjournment debate, and I thank colleagues who are in the Chamber; I am conscious that it is the Friday afternoon ahead of recess.

Reviving the London economy is critical, clearly for London but also for every single person in this country. London contributes a massive 25% of all tax to the Exchequer. Two small London boroughs—mine, Kensington and Chelsea, and neighbouring Westminster—contribute 10% of all business rates in the entire country, and London contributes £436.5 billion of gross value added. If we take the gross value added of Scotland and Wales and double it, then we get to London’s number. Ensuring that the London economy functions is important for people in Northern Ireland, the north-east of England, Scotland and Wales. It is critical.

Sadly, the London economy is suffering—in particular the central London economy. I think that there are two principal reasons for that. First, people are not commuting into work, and they are not coming in for cultural and social events at places such as theatres and restaurants. Secondly, there has been a massive decline in international visitors to our city. Let me take those in turn and look first at commuters.

Photo of Joy Morrissey Joy Morrissey Conservative, Beaconsfield

Many people commute from Beaconsfield into London, and although we are not part of London, we benefit tremendously from the London economy. I thank my hon. Friend for being such a champion of London and its economy, because consumers and commuters who travel into London benefit just as much as those in inner London. I thank her for securing this important debate.

Photo of Felicity Buchan Felicity Buchan Conservative, Kensington

I thank my hon. Friend for her kind words, and she makes a very important point. This is in the interests not only of London but of those who commute into London.

Let us look at the numbers. Morgan Stanley commissioned a survey in September comparing going back to work in the UK versus in France. In September, 34% were back to work in the UK, whereas in France the number was 83%. I have looked at the latest Greater London Authority data specifically for London, and only 41% are back in work—less than half of the people.

A second issue is the perceived lack of confidence in public transport—a lack of confidence that is quite wrong, to my mind. I hear that a lot from my museums, for instance, where footfall is dramatically lower. They attribute it to a lack of confidence in public transport. We need to get that confidence back, and we need to encourage people to come into central London. That is why I opposed so strongly what the Mayor of London did in extending the congestion charge to seven days a week and increasing it to £15. On the subject of the Mayor of London, he consistently talks down our great city. His job should be to inspire confidence, not to breed fear and nervousness.

Let me move on to international visitors. VisitBritain believes that numbers are down 74% on last year, which is a hit of more than £20 billion to the London economy. Again, it is all about confidence. We need to get those visitors back.

Clearly, London is in tier 2 measures, and I want to say how much I welcome the announcement from the Chancellor of the Exchequer yesterday to give additional support to constituencies such as mine that are in tier 2. I would also like to thank the Chancellor for his enormous financial support package across the country, greater than £200 billion. At the very beginning of the crisis, in the Treasury Committee, I called for a big, bold and decisive package of support, and, goodness, we have delivered that.

On the margin, I would say that London has not benefited from the support package as much as some other areas for very technical reasons. Grants to the hospitality sector, for instance, were given on the basis of having a rateable value of less than £51,000. Commercial property prices in my constituency are three times the national average, so businesses in my constituency with comparable cash flows and size to those in the rest of the country were not getting the grants that people in other constituencies were benefiting from. There is a similar case with the holiday on stamp duty. Clearly, that has been terrific throughout the country in giving people a holiday on property prices of less than £500,000, but just because of an accident of geography the average house price in my constituency is £1.25 million. Even in my ward, with the cheapest housing prices, the average price is £510,000. Very, very few of my constituents have benefited from the stamp duty holiday.

I also want to put it on the record that I am very concerned about the Government’s announcement that they will abolish tax-free shopping come 1 January. This might seem like a very esoteric subject, but international visitors to central London are critical for our economy. They spend a huge amount of money not only in our shops but in our hotels and restaurants, and they are highly mobile. If we make it less attractive for them to come to London by effectively putting a 20% increase on the cost of their goods, they will simply go to Paris or Milan. Especially as we are leaving the EU, we need to project an image of global Britain and to be encouraging international visitors. For the sake of the London economy and our high streets, hotels and restaurants, we need these spenders back.

However, let me look forward in a constructive way, because it is very easy to talk about the problems. How do we get the London economy going again? If there is one word I keep coming back to it is “confidence”. We need the confidence of commuters and the confidence of international visitors. How do we get that confidence? First, we have to get the virus under control: we need to get our numbers below 100 and to get the R rate down. If we do that, London can go back into being a tier 1 region. I would urge the Government to make that review as soon as the health statistics allow. We need to get London into tier 1 because London is the engine of our entire country. I would also strongly recommend that the Government review the 10 pm rule, again as quickly as the health statistics allow, because we need to support our hospitality sector.

We all need to work together collectively to get that confidence back and to reclaim London’s position as the finest capital city and the most prosperous capital city in the world.

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London) 2:41 pm, 23rd October 2020

I congratulate my hon. Friend Felicity Buchan on securing this Adjournment debate and on raising some really pertinent issues about the economic recovery that we so desperately need for our great capital city.

We are both privileged to represent constituencies in the capital city. They are very different, and it is really important that we actually remember that London is not one homogeneous mass. Therefore, the economic recovery and the plan for it need to reflect that. There are 600-odd high streets around the suburbs of London. What we saw, as we gradually starting to open up, was people shopping locally, as they were working from home and in their neighbourhoods, and that worked out okay. In fact, footfall was still down, but spend per head was up as people had the confidence—my hon. Friend talked about confidence—to go out in their local area to spend and to buy something in particular, not to browse or to shop as they might have done some months ago.

What clearly did not happen, however, was people returning to the central activity zones—the likes of Kensington, as well as the west end, Soho, the south bank, the City, Canary Wharf and all those areas. As my hon. Friend said, people did not feel the confidence to use public transport and return to their workplace, despite the enormous amount of work that Transport for London has done, and the investment put in and the work done by so many employers around the central London area in particular in making their workplaces covid-19 secure, as well as in making the pubs, restaurants and shops in all these areas secure.

It is so important that we remember what a massive contribution London makes to the UK economy. A fact that does not get outed enough is that the west end itself—all the culture, the restaurants, the hospitality, as well as the corporate business in that area—has 3% of the UK’s entire gross value added sitting within it. We must remember that when employers are saying they are not going to bring their employees back to their workplace any time soon—until maybe next year, the health figures notwithstanding—they should not expect that London will naturally be the same London they left. It does not have a God-given right to exist preserved in aspic, and it is incumbent on all of us to work together to make sure that we have a plan for recovery.

Such a plan works in three different ways—short term, medium term and long term. We must have a 90-day plan. As and when the health figures allow us to move back to tier 1, as my hon. Friend says, we need to be ready to go. We have already had one go, but it did not work as speedily as we would have liked. We need to be absolutely ready so that, when we get the incidence rate down across the boroughs, we can move to tier 1 and ensure that people have the confidence to travel and to return to their workplaces, albeit in a more flexible way than was previously the case. We are not trying to get back to how things were in January or February, because there is certainly a sense of permanent change, but we need to be able to shape that change.

Photo of Joy Morrissey Joy Morrissey Conservative, Beaconsfield

Does the Minister agree that we need a Mayor who cares about London’s economic recovery and actually fights for it, rather than putting in place measures that restrict not only economic growth but the number of people coming into the city, such as the London-wide congestion charge? We need a Conservative Mayor who can take a new economic approach that will revitalise London in the coming months and years.

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London)

Clearly, yes. I want Shaun Bailey to be in post after May to help shape the recovery. We have been working collegiately with the Mayor, the Greater London Authority and the boroughs, and indeed with colleagues in this place, in relation to the structures and work that we have put in place, but that kind of working also needs to be replicated in public. They cannot be sitting on a letter criticising the Government and pointing the finger elsewhere, as we have seen from the Mayor and other people. What they do in public and in private is so important, because what might seem to be a good short-term political campaign is terrible leadership for our capital city, which contributes so much to the rest of the country.

For the short-term recovery, it is so important that we show people what Transport for London has done, and what our retailers, publicans and restaurateurs have done, to make sure they will be safe. It is about confidence, but beyond that it is also about joy. What do I mean by that? I mean that when people go to a pub and find that getting a pint is too onerous, because of all the structures that have been put in place, they will go back home and have a bottle of wine and a ready meal, as so many did during lockdown. We need to get them back into central London not just one time; we have to make sure they want to come back time and again, to enjoy everything that London has to offer.

Clearly there is work to be done on the medium term. Businesses, particularly in retail and hospitality, are talking about business rates, as my hon. Friend the Member for Kensington explained so eloquently, and about tax-free shopping and the effect on international tourism. They are also talking about rents. There is a certain amount of business structure that needs to change. A number of landlords, in the suburbs as well as in central London, are sitting on empty properties with an artificially high market rent, purely to keep their shareholder valuation at a particular level, and that is not good for high streets. How can we work with landlords and tenants to find a better balance that works for our local areas so that we do not hollow them out?

My hon. Friend Joy Morrissey talked about the Mayor. I sometimes get the sense that he does not care whether he is the Mayor of London or the mayor of Gotham City; he just wants to be the Mayor. What do I mean about Gotham City? We run the risk of hollowing out the west end if we do not get the recovery right. If we have only the ultra-rich and the people on low incomes who service the city, but not the people in the middle who provide so much of the community and spend, London will not be the same as it was before.

There is so much that we are doing, such as the Chancellor’s winter support plan, to make sure that we preserve as many businesses and jobs as possible, while also moving to those long-term structures, whether a green recovery or the smarter use of digital in the centre of town, and building up the skills we need for the jobs that are yet to be created as we move towards a new economy. We have the new normal, with masks, one-way systems and hand sanitising—hands, face, space—but we are moving towards a new reality, with permanent behaviour change baked in. We need to recognise that and address it. It is about greater use of flexible working, recognising that people are not going to travel into London in the same way they did. It is about reduced use of cash, and different way of shopping. We need to be ahead of the game.

Conservative Members are always talking about levelling up the whole country, and that is so important. How does London play a role in that? Well, before lockdown I went to see the mixed-use regeneration at Battersea power station. The steels are made in Liverpool and are painted in the midlands, and the bricks are sourced from Gloucestershire. We are providing jobs all around the country for such projects, which also benefit London. The electric black cabs that go around town, which we need to return to the likes of Bishopsgate—some of the Streetspace initiatives are actually penalising not only black cab drivers, but disabled users of cabs as well—are made in Coventry. There are 2,000 people there making electric black cabs. There is also our culture sector in the centre of town. High House Production Park in Thurrock makes a lot of the production work for the Royal Opera House. The more that we can get that back, the more that we are creating and sustaining jobs around the country.

We need to level up London, so that it is not just an economic recovery, but a social one too; they feed into each other. The obvious example is Canary Wharf; if I stood at the top of One Canada Square, I would be among some of the richest people in the country, looking down at Whitechapel, which is one of the poorest areas. My hon. Friend the Member for Kensington speaks for and campaigns in her constituency, which also has a diverse community, with Ladbroke Grove on one side—the birthplace of one Shaun Bailey, who we were speaking to earlier—and Kensington on the other. Some people outside London only think of the richer part of Kensington.

Photo of Felicity Buchan Felicity Buchan Conservative, Kensington

My hon. Friend makes a very important point—that we need to level up within London. There is a difference of 16 years between the average life expectancy in the poorest ward in my constituency and in the richest. That is phenomenal. Some of our poorest areas are actually in London, so levelling up is not just a matter of north versus south; it is also within our inner cities.

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London)

My hon. Friend is absolutely right that we must look at this issue. Levelling up around the country and levelling up in London are not mutually exclusive; we can and must do both. That is one of the reasons why, during the pandemic, we have provided an extra £63 million for welfare support through councils. We have also put an extra £9 billion into the benefits system to ensure that families can cope as well as possible in the present situation.

The £200 billion or so that we are putting into the economy is to secure jobs, and help to protect businesses and livelihoods. This Government’s first priority is always saving lives, but close behind is restoring livelihoods, and protecting jobs and people’s futures. We know how long the unwind can be if we do not get that right.

I thank my hon. Friend for giving us the opportunity to speak about the economic recovery in London. Ultimately we will do this by getting to tier 1. It is not the Government’s tier systems that transmit the virus. It is people getting too close; breathing close to people, without a mask; touching people; and not following the rules. We need to follow hands, face and space. Working together and getting back to tier 1 is the best way to recover our economy in London and elsewhere.

Photo of Nigel Evans Nigel Evans Deputy Speaker (Second Deputy Chairman of Ways and Means)

Before I put the Question, I would like to wish all Members and staff here at the House of Commons and Parliament generally to have a very good and restful short recess. I am extremely grateful for all the hard work that they have put in to ensure that our democracy still functions at this particularly difficult time.

Question put and agreed to.

House adjourned.