The Lord Mayor of the City of London will today publicly urge the government not to pursue a policy of deregulation that would turn the capital’s financial sector into a so-called “Singapore-on-Thames”.
William Russell, the 692nd Lord Mayor, said the UK should avoid “sweeping deregulation and tax cuts” now that it has left the EU.
“This year, we need to make sure we sustain and build up advantages — not just safeguarding the UK’s competitiveness but enhancing it, as we tackle those issues which face us this year: our new position outside the EU; the recovery from the pandemic; and most importantly of all, the overarching threat of climate change,” Russell will say in a speech on Wednesday.
“This emphatically does not mean pushing for sweeping deregulation and tax cuts, in what has often been called the ‘Singapore on Thames’ model.”
Former Chancellor Philip Hammond publicly floated the idea of cutting taxes and deregulating the UK if the EU didn’t grant the market access after Brexit. The approach was dubbed “Singapore-on-Thames” in the press — despite the relatively high standards of regulation in Singapore — and the term has become shorthand for the policy package. The idea is popular with some members of the Conservative Party, who believe it will help the UK remain competitive internationally.
Russell will say the UK needs to “improve the highly successful ‘London on Thames’ offer which we already have, recognising that high regulatory standards are one of our biggest advantages, and can continue to support innovation in areas like fintech and green finance.”
Regulation could be “streamlined” but must remain “high-quality”, the Lord Mayor will say in the annual Financial & Professional Services Address.
The call to build and reform, rather than dismantle, comes as new figures show Britain’s financial sector paid £75bn in taxes last year.
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The City of London Corporation said in a separate release on Wednesday that the financial services sector paid £75.6bn to the HMRC in the 12 months to March 2020. That was roughly changed from the year before.
The total covers bank levies, taxes paid on things like profits, and employment taxes and other charges. The contribution of financial services accounts for 10% of the UK government’s total tax take, the City of London Corporation said.
“This report highlights the value of the UK’s financial services sector, which has shown incredible resilience despite unprecedented economic uncertainty,” said Catherine McGuinness, policy chair at the City of London.
The City of London Corporation, which overseas London’s financial district, expects the financial sector to pay between £71.1bn and £75.5bn in the current tax year, which has been impacted by COVID-19.
“While the pace and path of the recovery post-pandemic might still be uncertain, the financial services sector’s contribution provides a much-needed element of stability,” McGuinness said.
“The sector is vital to supporting prosperity right across the country and will play a critical role in fuelling our economic success. Two thirds of jobs in financial services are outside of London so it has a vital role to play in driving the UK’s economic recovery, particularly through employment taxes.”
The UK’s financial services sector faces uncertainty over its future outside of the EU. Services like finance were not included in the “skinny” free trade agreement struck between the UK and EU on Christmas Eve. Some UK financial services companies have been granted limited and time-limited permissions to continue doing business with EU customers. More permanent decisions are hoped for later this year. The shape of those decisions will have major implications for financial hubs like London and Edinburgh.
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