LDN Weekly – Issue 306 – 07 March 2024 – Taxing Times

Dear Reader,

As LDN goes to press, we are digesting the Budget and the headline announcements. Fuelled by Diet Coke, it’s enough to give even those with the best constitution a dose of indigestion. What we can say is that pretty much everything Jeremy Hunt announced today has been trailed in the media over the past few days. Even the big headline grabbing National Insurance cut was plastered across this morning’s front pages. In times past, this was the kind of parliamentary felony that saw Chancellors resign – but nowadays it’s par for the course.

The Chancellor will be hoping today’s NI cut, following the one last year, will revive the Tory Party’s flagging fortunes. With the Government running out of road before the General Election, any sign of life in the Tory poll ratings will need to happen soon. But with the smoke and mirrors of tax and spend, and with the feelgood factor not yet rippling out across the country, how people vote could still come down to whether they feel better off than five years ago.

The Office of Budget Responsibility (OBR) analysis shows that while there is a modest reduction in overall levels of taxation, the burden is still the highest for 80 years. According to the OBR, 7 million people have been dragged into higher rate tax bands – the £41bn this raises twice what the NI cut costs. What the Chancellor gives with one hand, the taxman takes with the other.

On planning, housing and transport, the Budget repackaged many recent announcements, although some modest targeted investments were announced. Extra money for Barking, Canary Wharf and Euston is designed to unlock schemes and keep alive ongoing work. Yet levelling up barely warranted a mention and public money going to the Euston Road and Canary Wharf certainly raises some questions about where levelling up now fits withing the government’s strategy.

Yet, there’s no news on the DLR Extension to Thamesmead – or any other major infrastructure projects for London like the Bakerloo Line Extension, new tube trains and signalling. It’s likely they are all stuck now in the Treasury in-tray until after the General Election, holding up thousands of new homes in and around Thamesmead and elsewhere. We also saw a string of devolution announcements beyond the M25, but London totally ignored. London’s hospitality business will be unhappy there was no restoration of tax free shopping for tourists, just an acknowledgement of further consideration of the evidence.

We know from experience that Chancellors want to own the good news on Budget day, but in the 48 hours afterwards things can unravel under scrutiny (see abolition of the 10% tax rate, pasty tax etc) –bad news buried in the figures takes a while to be discovered. One thing to watch closely is just how much pressure there is on public spending in future years, and which departments shoulder the biggest burdens. Certainly local government is not happy with today. Whoever forms the next Government will have some fiercely difficult decisions to make.

Last week, business group Make UK (which you might remember as the Engineering Employers Federation) called for an end to the jamboree of government financial statements, pointing out that two statements a year has been responsible for twenty six changes in Corporation Tax since 2019. It’s an interesting point – as we seek solutions to the country’s sluggish productivity and the lack of economic growth, might the decision making process itself be part of the problem?

Nick Bowes, Managing Director, Insight

nb@londoncommunications.co.uk

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SPRING BUDGET

Hot from No. 11: The Chancellor Jeremy Hunt spoke for nearly 66 minutes at the despatch box announcing a mix of unsurprising policies, given most had been reported in the press over the past few weeks.

Headline grabber: the 2 percentage point cut to National Insurance contributions is the big announcement of the day. A trailed reduction in income tax didn’t materialise – but Hunt was clear that two types of taxes on income was ‘particularly unfair’ and hinted at aspirations for a ‘simpler, fairer tax system.’ All eyes on the Conservative Party manifesto for what this could mean in practice.

Swiped: Labour’s flagship plan to scrap so-called non-dom status was snatched from the grasp of Shadow Chancellor Rachel Reeves, with Hunt abolishing the tax-free status, replacing it with a four-year grace period. Reeves responded to the Budget stating the Chancellor had ‘lifted the lid on fourteen years of Tory economic failure.’ Labour Leader Keir Starmer said it was a ‘desperate move.’

Stolen virtues: Along with non-doms, the Budget included increasing the cap on Right-to-Buy receipts from 40% to 50% to ensure local councils retain more from selling their council stock. Labour announced they would do the same in December 2023, though at a higher percentage of 70%.

Life’s pleasures: Alcohol duty was frozen for the second budget statement in a row, with Hunt backing the ‘Great British Pub.’ Bad news for smokers with a one-off tobacco duty increase and a new vape tax.

Coasting: The tax advantage for short-term holiday lets is to be abolished. Chief Executive of the National Residential Landlords Association, Ben Beadle, said the changes would ‘make no meaningful difference’ to the private rented sector.

Streamlined and fancy free: Hunt keenly focused on a new Public Sector Productivity Plan, which he claimed could unlock £35bn in savings. He proposed a digital transformation in the courts, NHS and police services, all aimed at reducing paperwork and to make public services ‘simpler and fairer’.

Shires in bloom: Big news for the residents of Warwickshire, Surrey and Buckinghamshire whose non-mayoral devolution deals have been finalised, while the North East mayoral combined authority is set to become a trailblazer.

Not all plain sailing: Trouble could be brewing for Rishi Sunak as the Chancellor announced the extension of the Government’s windfall tax on energy providers’ profits. Leader of the Scottish Conservatives, Douglas Ross, was ‘deeply disappointed’ by the decision and was reported to be placed on ‘resignation watch’ by the Whips after opposing the move.

Missing: Some things didn’t make the cut - business rates reform (again), a new mortgage guarantee scheme, nor the reintroduction of VAT-shopping for overseas visitors. Hunt didn’t even mention the so-called tourist tax in his speech, but Treasury documents confirmed the Government was still ‘considering’ the findings of a commissioned review of the policy. CEO of New West End Company, Dee Corsi, said the Budget was a ‘missed opportunity to inject growth’ through the scrapping of the tourist tax.

London’s gains: Barking Riverside receives Government support with £124m of new funding, while Canary Wharf receives £118m to boost the transformation into a life sciences hub. Money will also go to the Alan Turing Institute off the Euston Road.

Keeping Euston going: Further details of the Government’s plans to develop the Euston Quarter into a life sciences and residential hub were also included in the Budget. Key member of the Euston Delivery Group and Lendlease’s European Chief Executive, Andrea Ruckstuhl, said bringing forward the first plots of land for redevelopment was a ‘a significant milestone for a once in a generation project.’

Traipse the boards: Culture lovers will be pleased to know that the National Theatre is to receive over £26m to fund repairs and maintenance to its stages and infrastructure. Touring and non-touring performing companies also receive permanent tax relief, with further tax relief supporting the film and audio visual industry.

Political response: The Mayor of London described the Budget as ‘further evidence that the Government is failing to adequately support the capital’s economy…they continue to starve London of the investment we need that would bring benefits to the whole country.’ Cllr Claire Holland, Deputy Chair of London Councils was pleased by the extension to the Household Support Fund but that pressure on borough finances ‘looks set to continue’ and called for ‘urgent reform of the local government funding system.’

CAPITAL PLANS

It’s been a busy few weeks on the planning and built environment policy front, so in this week’s LDN, we bring you a summary of the main points.

Opportunity London: LCA is a proud partner of Opportunity London and has helped support the development and pre-MIPIM launch of the first ever London Investment Prospectus. The initiative presents a single front door for investors along with a promotional programme – all backed by the Government, the GLA, London Councils, the City Corporation and a broad range of other public and private sector organisations.  The Prospectus presents an initial list of nine developments which are collectively seeking nearly £10bn of investment, and will be added to as further opportunities are presented across real estate, energy and infrastructure.  

This is not just a judicial review… Marks & Spencer won their judicial review of the Secretary of State’s decision to reject plans for the demolition and redevelopment of the Oxford Street store. The High Court ruled that Secretary of State Michael Gove had ‘misinterpreted and wrongly’ applied planning policy when considering the scheme.

Victory is spelled GOVE: Operations Director at M&S, Sacha Berendji said the High Court’s ruling ‘could not be clearer’ that Gove’s decision was unlawful and urged the Secretary of State to ‘send a clear message’ that the Government was pro-development.

Not quite there yet: The ruling is a defining moment in the ongoing debate over retrofit versus demolition, but it’s still not a planning consent until Gove issues a decision. He could always refuse again and face another threat of legal action or seek changes to the National Planning Policy Framework to support his refusal. However, both of these routes take time – which is something the Government is running out of with an election around the corner.

Late to the party: Ealing Council, the last London borough to adopt a community infrastructure levy (CIL), has launched a consultation on a draft charging schedule. The proposals include a £300 per square metre charge for residential development in central Ealing and £200 per square metre in the rest of the borough. Student housing, large-scale purpose-built shared living, and other houses in multiple occupation (HMOs) will cost £350 per square metre.

Future City: Thursday’s City of London Corporation Court of Common Council meeting will consider the City Plan 2040, after it was unanimously approved by the Policy & Resources Committee. The Plan will then go out to public consultation before being submitted to the Secretary of State for approval. Meanwhile in leafy green Harrow, the council has published their own draft Local Plan for review.

Coordinating co-living: New London Plan Guidance on co-living schemes has been adopted, including requirements for the amount of communal areas or facilities per resident. The guidance also states that co-living schemes must provide a cash in-lieu contribution towards local authority affordable housing if co-living is the only housing proposed in a planning application.

Euston Squared: Camden Council launched a timely new report on the regeneration potential of a redeveloped Euston Station served by HS2. The scheme could create 34,000 new jobs, turbocharge the life sciences and tech businesses based around Euston and provide 2,500 homes with council leader Georgia Gould calling on the Government to get HS2 back on track.

• Westminster City Council has published draft proposals for their updated City Plan which includes a ‘retrofit first’ approach to development. If adopted, the City Plan would require developers to adhere to new embodied carbon emission targets and produce whole-life carbon assessments on the impact of demolition and rebuild, as well as the scheme once delivered. Westminster has said that it accepts demolition is ‘sometimes’ the best option but is asking for a more sustainable approach to development. The council added it would be ‘more flexible’ in supporting building extensions if they encourage retrofitting.
  
  
• LCA was pleased to support De Vere Partners in securing planning permission for its Soap Works scheme at Greenock Road in Ealing, which proposed delivering an 18-storey building on industrial land with 124 homes (36.5% affordable) and 2,159 sqm of ‘flexible’ industrial space on lower floors. The developer also secured consent for a part-nine, part-16 storey residential building on nearby Stirling Road containing 140 flats (35% affordable) and 794 sqm of industrial space. Also on Stirling Road, Henley IM also received planning permission to deliver a 11-to-12 storey building with 51 flats (35% affordable) and 951 sqm of commercial space.
  
  
• Rocket Properties has submitted plans to Hackney Council for a new 27-storey office building on Shoreditch High Street, which will include 31,800 sqm of office space and ground floor retail units. The 0.3ha site, known as One Fairchild Street, was previously owned by Highgate Holdings who secured planning consent in 2015 to deliver a ‘stacked’ 31-storey hotel and commercial scheme.
  
  
• Greenwich Council has approved Crosstree’s plans to deliver a new 36-storey purpose-built student accommodation scheme on the Greenwich Peninsula. Planning officers praised the proposals for the 820-bed scheme which includes 28,400 sqm of living space, shared courtyards, and terraces on upper floors set next to the O2 Arena.
  
  
• Tri7 and Fusion Group have submitted new plans to Haringey Council to deliver a mixed-use scheme in Wood Green. The existing Mecca Bingo Hall on the site would be demolished to and replaced by four buildings of up to nine storeys, containing 623 student bedrooms, amenity spaces, and 77 affordable homes. The scheme also includes 8,600 sq ft of ground floor retail space and around 23,000 sq ft of public open space and external amenities.
  
  
• Some 16 years after LCA handled the opening of St Pancras International, HS1 is reportedly seeking a design consultant to explore options for increasing the capacity at the station. The rail operator is aiming to boost the capacity to run services from other train operators alongside the Eurostar, which itself is seeking to grow its passenger capacity from 1,800 an hour to 2,700 by 2025.

• Jason Sibthorpe, President of Europe, Middle East and Africa (EMEA) at Avison Young, is stepping down to pursue new opportunities after eight years. The firm has appointed the head of their Polish arm, Michał Ćwikliński, as his replacement in a newly created role of EMEA Regional Director.
  
  
• Chief Operating Officer at Sellar, Owen Dannatt, has left the role after over four years with the business.
  
  
• The Association for Consultancy and Engineering Group has appointed Kate Jennings as its new Chief Executive. Jennings joins from Logistics UK as its Policy Director.
  
  
• The All Party Parliamentary Group for London re-elected Bob Neill MP and Florence Eshalomi MP as co-chairs, with Catherine West MP elected Secretary and Munira Wilson MP as Vice Chair.

CANDIDATE WATCH

• As mentioned above, former Minister for London and MP for Sutton and Cheam, Paul Scully, is to stand down at the next General Election.
  
  
• Cllr Catherine Deakin, Cabinet Commissioner for Health Equity at Waltham Forest Council, has been chosen as Labour’s candidate for Broxbourne.
  
  
• Cabinet Member for Health and Adult Social Care at Greenwich Council, Cllr Denise Scott-McDonald, is Labour’s candidate for Sevenoaks.

LONDON POLITICS LATEST

Scullying away: Conservative MP for Sutton & Cheam and former Minister for London, Paul Scully, won't be standing at the coming General Election. Scully, first elected in 2015, currently holds a majority of 8,351 in a seat the Lib Dems will be eyeing up. Controversially kept off the shortlist to be the Tory Mayoral candidate, he was unceremoniously dumped as Minister for London in the autumn reshuffle.

Tory broadside: Scully doesn’t hold back, tweeting “fuelled by division, the party has lost its way”, with a swipe at the Tory Party’s attitude to the capital: “when London works, the UK works but for that to happen, you have to give it attention, love and care. We should not be disrespectful to Londoners, but treat the mayoral role seriously...”.

Run-around Sue: Scully may have apologised for his widely condemned remarks about people being Tower Hamlets being a ‘no-go area’, but former Home Secretary Suella Braverman spared no blushes in claiming pro-Palestinian protests had turned ‘parts of London’ into ‘no-go areas for Jewish people.’

Unlucky Seven: Scully’s departure makes it 11 sitting London MPs not fighting the next election, seven of which are Tories - a third of the party’s London’s MP. Expect this number to climb further still.

Capital comrades: Elsewhere, the London Labour Party gathered for their regional conference last Saturday, buoyed by strong poll ratings. Yet the message of the day to delegates was the importance of avoiding complacency. The Mayor, Sadiq Khan spoke, railing against the attacks on him by former Tory MP Lee Anderson and criticising his Tory opponent Susan Hall, arguing the coming election will be  “the toughest contest of my political life”.

Money woes: In advance of the Budget, the ongoing financial struggles of local government saw 19 councils across England receive bailouts from the Government. In London, Havering gets a £54million lifeline while Croydon receives a further £38m. With barely a week passing without more bleak reports out of Town Halls, it seems likely more Whitehall money will be needed to stave off further bankruptcies – something the Government will be desperate to avoid this side of the election. 

Murkier and murkier: In the new seat of Croydon East (notional Labour majority of 3,413), Labour’s inquiry into the selection of a parliamentary candidate which was paused after accusations of irregularities is reported to have found evidence membership lists were altered. The pausing of the selection also saw the selection of Labour’s candidates for the London-wide list and Croydon and Sutton Assembly seat put on hold for May’s election.

Lambeth walk: The party whip has been removed from four Labour councillors who defied orders and voted for a Green Party motion on Gaza. One councillor subsequently resigned, triggering a by-election in Knight’s Hill ward.

Ugly scenes: Amid growing tensions across politics, Tower Hamlets saw the public removed from the council chamber after councillors were accused of racism and sexism. Next door in Newham, Labour’s Cllr Joshua Garfield – the borough’s only Jewish councillor – was heckled during a debate on the council’s budget. The Mayor of London’s regular Mayor’s Question Time was also held online after security fears.  

Rocky out east: Elsewhere in Newham, a long-anticipated peer review into the operations and management of the council makes for tough reading for the Mayor of Newham, Rokhsana Fiaz. The review found concerns with the “breadth of the Mayor’s portfolio responsibilities which was felt to be neither sustainable nor desirable”. 

Culture clubbed: Working relationships at senior levels also come in for criticism, with “poor behaviours” that are “undermining the delivery of the council’s priorities” and that relationships ”require resetting”.

Drawing a Line: In response, Newham’s Mayor and Chief Executive both welcomed the findings as “comprehensive and far-reaching” and “valuable and insightful”. Given the peer challenge team will return to review progress later in the year, coupled with Newham’s febrile politics, it doesn’t feel like a line has been drawn under the council’s problems just yet.

Sirens off: Government inspectors have removed the London Fire Brigade from special measures after making ‘several improvements’ to its services. The brigade has implemented a number plans to improve its internal culture and leadership after an independent review in 2022 found LFB was ‘institutionally misogynist and racist’.

Thank TfL, it’s Friday: In good news for those keen to boost Friday numbers in the office, the Mayor confirmed that all day off peak fares go live from 7 March.  Meanwhile, polling reveals Londoners views on the new Overground line names – most liked are Liberty and Windrush with Mildmay and Weaver least popular.

WE RECOMMEND

• The Guardian come out swinging for London in a punchy editorial.
• An interview with Carlos Moreno, the man behind 15 minute cities.
• A first look inside TfL’s new £2bn Silvertown Tunnel.
• Inside Housing sit down with Secretary of State Michael Gove.
• What is Brick Lane without bagels?
• Londoners’ response to the new Overground names.
• The Observer’s interview with Govia Thameslink Railway’s Chief Executive Angie Doll.
• Two pieces on the Mayor - John Elledge in the New Statesman arguing Khan is lucky with his opponents and Patrick McGuire in The Times on the differing campaign approaches of Team Khan & Team Starmer.
• Our very own Nick Bowes on why London’s government needs more powers.

OVER THE TOP: WILKINSONEYRE'S TUBE STATION-SPANNING BANK HQ

WilkinsonEyre is featured in Architects’ Journal’s February edition on Facades and Cladding, with its innovative project 21 Moorfields. Director, Giles Martin, speaks about the new 51,000m2 headquarters for Deutsche Bank, which bridges Moorgate station. Read the full piece here.

LCA'S JONNY POPPER MAKES COMMS POWER LIST

PR Week’s annual UK Power Book 2024 – listing the most influential and respected communications professionals in the country – is out. And we’re proud that LCA’s co-founder and current Chief Executive Jonny Popper is profiled, a reflection of his career and standing in the PR world. You can read more of Jonny’s interview here in which he gives his frank take on his favourite PR campaign of the last 12 months, and who’s had a year to forget.

LCA AT LONDON LABOUR PARTY CONFERENCE

Last weekend, LCA attended The Labour Party's London Regional Conference, where we heard from leading political representatives from across the capital, as momentum builds for the Mayoral elections in May and an impending General Election.

It was great to catch up with old (and new) friends – including MPs, council leaders, Assembly Members and parliamentary candidates.

We were then joined by a few of our clients and associates at the Conference’s annual dinner on Saturday evening, with the Mayor of London headlining.

Photos courtesy of LCA

LDN CONTRIBUTORS 

LCA prides itself on its intelligence-led approach to PR and communications and our dedicated insight team monitors London politics, news and issues as it happens.

If you would like to know more about LCA or anything in this edition of LDN – London in short please get in touch. 

Nick Bowes

Managing Director, Insight

Robert Gordon Clark

Senior Advisor and Partner

Emily Clinton

Account Manager, Insight 

 Daniel Reast

Insight Executive

Design:  Aroa Maquedano Pulido:

We strive for balance and accuracy at all times; however, if you feel we have made a mistake, omission or have misrepresented a story or issue please alert the team by contacting the LDN team by using the details above.

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