Ahead of the Queen’s Speech next Wednesday (08 May 2013), TheCityUK is urging the Government to ensure that its legislative programme for the next year provides a platform for growth and certainty for the financial and related professional services sector.
Chris Cummings, Chief Executive of TheCityUK, commented: “The Queen’s Speech is a chance for the Government to demonstrate its ongoing commitment to the financial and related professional services sector. The sector is crucial for the UK economy, generating 14.5% of GDP and employing over two million people across the country, but businesses need certainty and support in order to plan ahead and invest in new markets. In particular, we urge the Government to look at three key areas: international promotion of financial and related professional services; predictability, stability and transparency in the tax system; and creation of an infrastructure pipeline.”
International promotion of the financial and related professional services sector
“The creation of the Financial Services Trade and Investment Board (FSTIB), announced in the Budget earlier this year, shows that the Government recognises the crucial role of financial and related professional services in generating vital export opportunities – which will bring jobs and economic growth across the UK. The FSTIB will help the UK compete more effectively in the countries and regions that offer the most opportunities for growth, including the BRIC nations, GCC countries and Turkey as well as other Asian markets and Latin American economies. It will be an important vehicle to promote the UK as a place to do business and promote London as the international financial services capital of the world and a major European and global asset.
“The economic growth shown by the recent GDP figures is a positive sign but we cannot afford to be complacent. We must continue to support those sectors that have a vital role to play in driving the UK’s economic recovery, including the financial and related professional services sector. The sector contributed Â£195bn to the UK in 2011 and accounts for some 14.5% of total economic output. It has generated a trade surplus of Â£55.5bn, roughly the same as all other exporting sectors combined.”
Predictability, stability and transparency in the tax system
“We welcome the Government’s recent focus on tax transparency and competitiveness and its stated objective of creating the most competitive corporate tax regime in the G20. The UK’s reputation for stable and predictable tax must be maintained. TheCityUK’s research into factors impacting on business location decisions has found that businesses are concerned about the potential for unpredictable changes to the taxation of the UK’s financial services industry, and this has a significant impact on decisions on where to locate and invest.
“With a strong commitment to stable, fair and simple taxation the Government can maintain and increase the UK’s competitiveness. TheCityUK proposes a tax charter to ensure that the UK tax system is competitive, stable and less complex. We urge the Government to: assess any proposed changes to the tax regime against the criteria of competitiveness; set out a clear road map for long term reform of the tax system to allow companies to plan ahead; consult businesses ahead of any significant changes to taxation to better understand their potential consequences and avoid unintended effects; and maintain continuity by making changes within the current tax regime whenever possible rather than introducing wholly new rules.”
Creating an infrastructure pipeline
“Implementation of the National Infrastructure Plan should be a top priority. The UK needs a pipeline of bid-ready projects to fill the infrastructure gap. We need power stations and road and rail infrastructure to remain attractive as a place for businesses to invest and locate. The PF2 model will help to ensure that private capital and expertise is used effectively to fill the infrastructure gap, but more needs to be done.
“The Government should create a policy framework that fosters a stable and supportive environment and gives investors, businesses, private sector practitioners and the public confidence. Credit enhancement for large privately-funded projects should be provided to encourage institutional investment in public assets and services, and re-financing after the construction phase of a project should be considered to help overcome the problems of refinancing risk. In addition, creation of a centralised agency staffed by procurement professionals would help ensure that procurement expertise and experience is effectively employed across all projects.”