Covid-19: Recovery of Central London Businesses

Part of the debate – in Westminster Hall at 11:00 am on 22 June 2021.

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Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster 11:00, 22 June 2021

I beg to move,

That this House
has considered the recovery of businesses in central London from the covid-19 outbreak.

It is a pleasure to serve under your chairmanship, Sir Christopher. I am delighted to have secured this extremely important debate on business recovery in central London following the covid-19 pandemic. It has been very clear from my weekly meetings with business representatives from across Cities of London and Westminster that businesses, restaurants, shops and hotels are all part of a larger ecosystem, which also relies on the huge cultural offer that my constituency provides. Covid has proven that if we take one part of that ecosystem away, for example by not allowing theatres to open to their full capacity, there is a vast knock-on effect on all surrounding hospitality businesses, as well as on other cultural offers such as museums and galleries. I am confident that London will bounce back, but the Government have a choice on how quickly that happens.

Cities of London and Westminster is home to the monarch, to the Head of Government and to Parliament. It is also home to the nation’s high street, Oxford Street, and to the cultural and entertainment powerhouses of Soho and Covent Garden. On the one hand, Westminster’s businesses supported in excess of 715,000 jobs and contributed £53.6 billion annually to the national economic output, the highest contribution of any local authority in the United Kingdom. To put that into context, before the pandemic the Oxford Street district alone generated £13 billion of gross value added—25% of the entirety of Wales’s GVA. On the other hand, the UK’s world-class financial sector, based in the square mile in my constituency, is the underlying strength of our international trade and total services exports. The City of London has the largest financial services cluster in the world, with nearly 60,000 companies and hundreds of thousands of jobs for workers commuting in, pre-pandemic.

A key concern regarding the London recovery is business rates. The system, born in the 16th century, is wildly out of step with the modern digital age. Even before the covid-19 pandemic, it was not working—it was not fit for purpose. Empty retail space was on the rise, footfall was in decline and the sector was grappling with systemic shifts in customer behaviour. The pandemic has only accelerated that. It has also laid bare the urgent need to create a fairer and more sustainable tax system that relies less on property and that does not go only one way—up.

Without action on rate reform, the viability of much of the retail sector and the substantial taxes that it generates will hang in the balance. Specifically for central London, it would be useful if the Minister considered whether the business rates relief cap of £2 million could be temporarily removed so that businesses can secure the relief that they need right now. The cap effectively means that many mid-sized chain businesses, which typically pay well above £2 million in business rates, face bills that, according to UKHospitality, could force them

“to prioritise paying tax over paying wages.”

The large hotels and event spaces that depend on business conferences and meetings will be particularly hit by the cap and will be paying business rates in full by the end of July, with no realistic prospect of an uptick in income until at least the autumn. That is simply not good enough.

Covid-19 has created new challenges for the business rates system. I know that the Government have called for its review and for fundamentally reforming business rates, but we need that to be accelerated and temporary relief in the short term to be announced as soon as possible. There is no doubt that that reform is a crucial part of the puzzle as our economy recovers from the impact of the pandemic.

That leads me to my third point. The beating heart of the west end is our significant cultural offer.