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The Uk Economy

March 10, 2004

The Uk Economy

Mr. Mark Field (Cities of London and Westminster) (Con): London is a world city. Make no mistake, if its economy fails, the UK economy will fail. There is no doubt that London faces intense competition from a range of countries. I disagree with the hon. Member for Rhondda (Chris Bryant) because I do not believe that competition comes only from Europe. Increasingly, it is coming from further overseas. My medium-term sights are not on Paris or Frankfurt as financial centres, but on cities that have featured in my working life, such as Shanghai and Bombay. They will be the competition in the future, and that is something that the Treasury and Chancellor should pay considerably more attention to than has been the case hitherto.

I congratulate the hon. Member for Leyton and Wanstead (Harry Cohen) on introducing such a timely and important debate. By my calculation, he is the sixth longest-serving London Member of Parliament and, indeed, one of the five slightly more senior as is my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman). Like me, the hon. Gentleman has the interests of the capital close to his heart. Since I have been an hon. Member, he has introduced similar debates.

Like all of us here, the hon. Gentleman has an eye on the general election. I want to take this opportunity to plug our own excellent local candidate in Leyton and Wanstead, Julien Foster, who requires a mere 19.2 per cent. swing to secure the seat from the Labour party at the next election. If the hon. Gentleman is a little complacent about such matters, I wish to point out that I am just old enough to remember a time when Leyton was a Conservative-held seat. That was at the famous 1965 by-election. I was only three months old. My mother told me that I cried all day, but I am sure that that had nothing to do with the fact that Labour had been defeated.

I shall return to the excellent debate. 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. Therein lies a real problem. I refer to the sheer dominance of London and, to that extent, I accept what the hon. Member for North Tayside (Pete Wishart) said. Today, London is the political, commercial and cultural centre of our nation.

Many from outside the capital city cast an envious eye over London’s successes without perhaps appreciating some of its failures and problems, and wish at times to bring it down to size.
In opening the debate, the hon. Member for Leyton and Wanstead rightly said that London is the historic seat of democratic government and the monarchy in this country. I also agree with his comments about the large working population and the fact that that brings with it a lot of choice and innovation. London has a unique importance as a city and is the main driver of the UK economy. His message to the Minister was clear, and I think that I speak on behalf of all London Members who have contributed when I say that we hope that the Government will stand and deliver.

The Minister may have entered the debate with a somewhat heavy heart, but she will have realised from the contributions made on both sides of the Chamber that there is a great deal of unity among London Members on a number of these issues. I suspect that one of the usurpers, the hon. Member for North Tayside, might think that the debate constitutes a lot of whingeing from London Members, but he should hear what we say about Scottish Members in the Tea Room when we have discussed these matters.

My hon. Friend the Member for Chipping Barnet wisely recognised the deep disparities in wealth between areas and even within districts in London. The hon. Member for Regent’s Park and Kensington, North (Ms Buck), my constituency next-door neighbour, rightly outlined the crucial importance of Crossrail. The investment here in infrastructure projects, and Crossrail in particular, will benefit the nation at large. Indeed, I think that she said that it would prospectively generate very large tax revenues. Likewise, she emphasised the importance of employment and unemployment issues, child care provision and affordable housing for key workers, whether in the public or private sectors.

The hon. Member for North Tayside acknowledged how highly centralised the UK has become, and London is at its core. He also raised the notion of redistribution of much of the economic wealth that London creates. He is right to an extent when he says that London is a victim of its own success, particularly on issues of infrastructure, be it transport, health or education. I am not sure that I have all the answers, and I do not necessarily ask the Minister to produce them, but I will be interested to hear what she has to say on the hon. Gentleman’s interesting and important contribution.

The hon. Member for Hammersmith and Fulham (Mr. Coleman) made the case strongly for London housing the deepest pool of our qualified labour. He was right to point out that relocating much of our labour stock is easier said than done. Equally, he rightly recognised that about 65 per cent. of homelessness in the UK as a whole is in the capital.

The hon. Member for Rhondda re-established his new Labour credentials, in so far as they ever needed re-establishing, with admirable aplomb. Seriously, he made a relevant and focused speech on a number of issues, and I will be interested to hear what the Minister has to say in response.

London’s role as a global trading centre provides a great historical focus for Britain’s outward-looking approach. It is often said that 55 per cent. of our trade is with mainland Europe?the European Union nations. Indeed, that is often used as an argument as to why we should join the single currency, but I say forcefully that the logical corollary is that 45 per cent. of our trade is with nations outside the EU. Often, they are the largest-growing and fastest-growing nations and will be the trading partners for the future.

Chris Bryant : It is precisely the nations that are choosing to do business with other countries in Europe that have joined the single currency. It is for the trade that we do with eurozone countries, and the fact that countries outside are choosing to do business with France, Germany, Italy and Spain rather than Britain, that we need to make the change.

Mr. Field : It is fair to say that we have done significant trading with many of those nations, but let us be honest: the power of the English language is an important part of that. The power of relatively deregulated employment markets?they were certainly very deregulated before 1997?has also made a difference in that regard.

London’s historical trading is at the forefront of fostering and developing the links with some of the future economic powerhouses of the world. Equally, London’s pre-eminence means that, as a city, we are estimated to contribute £15 billion to £20 billion to the rest of the UK, as my hon. Friend the Member for Chipping Barnet pointed out. I am not arguing that London should hold on to what might be considered our money, but I should like to make some observations and I hope that the Minister will consider them in summing up the debate.

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.

I entirely endorse the comments of the hon. Member for Regent’s Park and Kensington, North. I was going to say what she said?that there is a risk that we will kill the goose that lays the golden egg. Indeed, I was going to use those very words. Failure to invest in the capital’s infrastructure might have serious medium-term consequences. I hope that the Minister will take this matter to the Chancellor because what we are debating is the need for a vision about a wide range of economic and spending priorities for decades to come.

The debate addresses local government funding as a whole. I impress upon the Minister the need to keep more of business rates in the hands of London’s local government. That would help to fund vital services, such as the underground, Crossrail and health and education. The contribution of the hon. Member for Twickenham (Dr. Cable) leads me to state that national pay bargaining helps to discriminate against London’s poorest workers; we need to have a realistic London weighting regime.

The lesson of this debate is that all Members?not only London Members?should seek to praise, not to bury, our capital city. Now is not a time for self-congratulatory complacency, but 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.

On regulation, I take on board what the Minister said about the debate around the Penrose report on Equitable Life; I listened to that in great detail with my City of London hat on. I suspect that the hon. Member for Islington, North (Jeremy Corbyn) wishes to say a few words on that.

Jeremy Corbyn : Almost. The hon. Gentleman has a concern for light-touch regulation. I want him to turn his mind to social housing for just a second, and support all other London Members from other parties who want 50 per cent. social housing on all new development sites?not just those with more than 15 units.

Mr. Field : My concern is that when I talk to developers in Westminster, many of them say to me up front that if they are told that they must have a 50 per cent. social housing requirement for residential accommodation, that does not make it worth their while to develop and they will sit on their hands. I appreciate that Westminster is an exceptional case. The set rule that the Mayor has proposed sounds sensible superficially.

Whatever target is set for the proportion of social housing, 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 people who are in relatively low-paid employment but are not necessarily paid from the public purse, such as many shopkeepers. We need a more innovative approach to this matter, particularly in central London where, as has been pointed out, there are strong pressures.

Mr. Andrew Love (Edmonton) (Lab/Co-op): The hon. Gentleman will be aware that the Mayor not only suggested the figure of 50 per cent. but commissioned considerable research into where that would be a reasonable target. The hon. Gentleman says that Westminster is not such a place, but the research clearly showed that that was not an unreasonable figure to ask for in Westminster.

Mr. Field : I talk directly with many property owners. They might not be the most Livingstone-friendly people. It is a grave concern that if a set target is in place it might be too inflexible for us to achieve the goals that we all want to achieve. There is not much difference in outlook and in the goals that we all want to achieve. We all appreciate that one of the joys of living in London is that the community is diverse, in all senses of that word. We do not want to see ghettoisation, either of very wealthy or very poor people, in parts of our capital city. We must allow flexibility to work to best effect.

Mr. Coleman : I met last week the chief executive of Berkeley Homes, Tony Pidgeley, who spoke glowingly of his relationship with the current Mayor. I mentioned to him two developments in my constituency?one at Imperial wharf, where St Georges and the council reached an agreement, and one on the former Queen Charlotte’s site?where the proportion of affordable housing would be 50 and 85 per cent. respectively. May I suggest that the hon. Gentleman tells the Westminster planners to talk to their colleagues in the London borough of Hammersmith?

Mr. Field : I shall certainly make such a request, although I suspect that the hon. Gentleman will have even more joy directly to his left, with the hon. Member for Regent’s Park and Kensington, North. On a serious note, I should also be happy to meet the managing director of Berkeley Homes. It would be useful to glean his views.

I was about to sit down to allow the Minister to take the hot spot. However, in summary, I hope that she will recognise that innovation and initiative are key to London’s success, as they have been for 2,000 years. Innovation has an important part to play in our economy, and I hope that she will take on board many of the diverse issues that have been raised during this excellent debate.