How we can prosper in the future
The CityUnited Project presents the second of a stimulating two-parter by the City of London’s Mark Wheatley
In Part One of this two-parter Mark looked at some of the basic building blocks on which our City was founded. In Part Two below, he seeks to draw on the lessons that can be learned for the future properity of the City of London.
In Part One I suggested that a look back at the history of the City gives us four themes where we might draw lessons for our future: resilience, tax, common law, and openness.
When it comes to the concept of Resilience which I dealt with in Part One, we’ll either prove our confidence or we will not have a City to cherish. It is as simple as that.
Now let’s talk about tax – and free trade zones and ports
Tax is more complicated. There are issues of fairness in a developed society. We are a wealthy place and our wider society has deep deprivation. Moreover, the Treasury looks greedily upon the taxes raised here. Especially in the wake of the Great Recession and in the face of fiscal pressures, it would be a brave and/or foolish politician who would suggest lower taxes on ‘bankers’.
Still, there are some thinkers developing interesting ideas. The Government has plans for Free Trade Zones to stimulate commerce in key places around the country. London politicians are pondering how we can align these with our maritime ports (let’s not forget the deep pools for shipping – now down river).
That makes sense but some cutting-edge thinkers like Seonaid Mackenzie have outlined even bolder ideas for our place and others.
Seonaid has a plan for Financial Free-zone Hubs from London to Liverpool to Glasgow to Belfast. All of these places are ports and historic locations associated with Finance, Fund Management and Insurance.
Her idea would play upon historic links between cities and across cities. It aligns past and present qualities in a bold way.
Wholesale Fund Hubs
Specifically, Seonaid suggests that we could “create a Wholesale Fund Hub (WFH), nurturing jobs in Custody, Administration and all areas of wholesale financial services, similar to Singapore and IFC”.
Fans of over-burdened markets shudder at references to “Singapore-on-Thames’. Still, Seonaid notes that the “UK offers fund structures like Unit Trusts and Investment Trusts but it lacks the wholesale markets of Cayman, Ireland, Luxembourg and even Malta, some of which these could be so easily drawn back to the UK”.
Seonaid’s idea would increase the UK’s competitive landscape and skills of workers already here, and encourage others to locate here. As she notes, “the UK has such a great brand of Collaboration, Communication and Innovation” to work with.
Maybe we could even create such a hub around the soon to be vacated site of Smithfield Market. Seonaid’s ideas are both wider and deeper that that but they spark ideas which she and others should develop.
Free Trade and Special Economic Zones… and FinTech
Embracing the full potential of Free Trade and Special Economic Zones, particularly the WFH, we could draw talent to areas of our City that deserve revival. We could also focus on parts of FS which are at a relative disadvantage, or those sub-sectors we wish to encourage.
Given the proximity of FinTech incubation in the City of London and some local developments, perhaps the London hub could align with those innovators here? FinTech is a recognised ‘growth-driver’ already and putting that into close proximity with a revived fund hub might be a ‘win-win’. It should foster innovation and encourage new jobs to London.
Handled right, nobody loses. A focus on Smithfield is not vital but could add to the mix.
Law is more straightforward
Barney Reynolds, Global Head of the Financial Services Industry Group at Shearman and Sterling, has recently and eloquently extolled the benefits of our dependable common law system. It gives confidence to business leaders, secure in their contract and their property.
With that, let’s not forget intellectual property – these days threatened by State actors like China. Our international clients value our legal traditions as much as they do our talents and capital. Let’s continue to lead the way with an appropriate and robust legal framework which protects us and our property. Let’s assert Common Law – because it works.
Let’s also be proud that our City leaders (not Sadiq’s team in City Hall, but those in the Square Mile) made a strong statement of welcome for Hong Kong BNOs who want refuge here, in the wake of draconian new laws imposed on our sister city. Let’s continue to welcome talent to our streets – whether it comes from the UK, Hong Kong, Mumbai or anywhere else. They can find opportunity here, especially if we stay true to our historic strengths.
With centuries of City foundations, it’s time to build on them again
As I mentioned at the start of Part One, Ladbaby’s charity song that “We built this city on sausage rolls” was catchier, I know, but we really built the City on resilience, light taxes, common law and our natural openness.
The City was built on values and ideals. These determined that our interests would become profound and they made us rich. Now it’s time to build on them once again.
- By Mark Wheatley, member of committees including the Policy & Resources and Finance Committees of the City of London, writing in a personal capacity, 04 April 2021
If you missed Part One you can read it here