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Rt. Hon. Lord Mandelson, First Secretary of State, Secretary of State for Business, Innovation & Skills, Lord President of the Council
London, 09 July 2009
One thing everyone says about London: it's a global city. And it's a great city. And it isn't an island. It faces opportunity and challenges because it is making its living in the world. Doesn't feel like anywhere else in Europe. Globalisation's left its mark on London and London's leaving its mark on globalisation.
But this is also Britain's first city, driving investment and innovation across our regions. And London needs to keep looking out not just at the world but to its British hinterland.
Obviously, London as a global capital, and world-leader in financial services, has felt the effects of this global crisis.
Disposable spending is down which hurts retail and global demand is badly down, which hurts any London business which exports.
But this city's wider economy has always been about more than just finance - a major international centre for business services, the creative industries, IT, tourism and hospitality.
With one of the largest and most diverse clusters of Higher Education Institutions in the world, it's a leading location for cutting-edge R&D and hi-tech, innovative companies.
Also cultural leadership - in the arts, design and media.
This is what makes London a magnet - for people, FDI, ideas.
And over 900 businesses, more than half of them are from London, have already won £3.5 billion of work supplying the Olympic Delivery Authority. We need to turn that huge economic opportunity and showcase into a legacy of skills, infrastructure and experience for the capital's economy.
But other global cities like Paris, New York, Dubai and Shanghai are investing in their comparative advantages too.
And the next great wave of global wealth creation will probably be on the west coast of the Pacific Ocean – that's a challenge for London.
But the other big trends of this century all go in London's favour - the continuing expansion of the global services economy, low carbon, the need for new solutions to urban living, digital communications and fragmented supply chains.
Last week, in Building Britain's Future – the Government set out a prospectus for Britain's economic recovery and renewal based on the pursuit of those markets.
The new Department for Business, Innovation and Skills brings together in one place the policy levers to do this. To my knowledge it's the first time a government has taken that strategic choice. Our focus is to equip the UK to compete in a 21st century world economy.
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Wherever you can point to future potential in the UK economy you will find this government focusing on how active policy can tap it.
World-class infrastructure for a business capital of the world? We're working with the Mayor and LDA to deliver the infrastructure improvements this 21st century city needs.
Crossrail alone will add over £20 billion to the UK's economy, creating thousands of extra jobs and boosting capacity. We're not making the wrong decisions in this downturn, as have been made in previous downturns. Nor are we cutting investment in other infrastructure and skills, in our schools and hospitals and other essential economic capabilities.
For the same reason we made the decision to allow Heathrow to develop its third runway, albeit subject to some of the strictest environmental criteria ever imposed. London lives and dies by its transport infrastructure.
And we're funding world-leading numbers of ultra-low carbon vehicles through the Technology Strategy Board, and supporting innovative UK companies in the transformation of this industry. London is also leading the way in the use of electric vehicles and we will keep on working with the Mayor on his plans.
Our Digital Britain action plan will also get broadband to just about every home and business in the UK in the next few years - building a digital infrastructure, that can power London, and the UK's, creativity.
And our people? London's a highly skilled region. But there's still a large part of its workforce that doesn't have the skills or qualifications that they need. With record investment, we're supporting LSEB in its work to integrate and streamline the skills and employment support now available.
No less fundamental is the City, even if it has taken a knock. Over the last ten years, we've built and supported one of the world's most competitive business and investment environments - helping cement London's global reputation as a financial centre. And we're committed to maintain it across the sector in areas including private equity and hedge funds.
As the Chancellor set out yesterday, we've got to work hard to get the regulation right on this. And we've got to be engaged in shaping the reform of European and global regulation to ensure a stable, competitive UK financial services sector.
And, incidentally, we won't influence EU policy by cutting ourselves off from Europe. We won't persuade others to adopt our point of view in Europe by isolating ourselves in Europe. [Political content removed].
But the City faces a challenge: no doubt about it. Culture change in many boardrooms and back offices. A bit more old fashioned banking.
I believe the point about the City's future competitiveness lies not in it being less regulated than anywhere else, but in a level global playing field, where the comparative advantages of London make their own case.
But being a global city is about more than just global finance and big business.
It's about the creative industries built on London's strengths as a global cultural capital.
Start-ups being launched from a kitchen table in Tower Hamlets.
Architects who are greening buildings and the designers working on low carbon technologies.
Businesses - large and small - building their links in Europe and other key markets. Like any economy London's diversity is its strength.
And it might seem beside the point to spend so much time talking up the resilience of a city that has prospered on this spot for more than a millennium.
But in a recession it is important to remind ourselves of our strengths even as we put all our energies into fixing our vulnerabilities. One thing London doesn't suffer from is a lack of confidence. That together with the brilliant personality of its citizens will turn out to be its strongest asset of all.
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