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London

To help build an economy that works for London, the Budget announces:

A Regional Growth Fund will operate in England and support proposals from private and public-private bodies that create sustainable increases in business employment and growth.

The impact of the employer National Insurance Contributions (NICs) rate rise previously announced will be largely reversed. This will lead to a saving of around £410 million in London.

The Budget 2009 proposal to repeal the special tax rules for furnished holiday lettings will not be implemented. Instead, the Government will consult over the summer on an alternative proposal. This will benefit an estimated 5,200 individuals in London who receive an income from furnished holiday lettings.

The Income Tax personal allowance for those aged under 65 will be increased by £1,000 in cash terms, taking it from £6,475 in 2010-11 to £7,475 in 2011-12. In London over 2.7 million basic rate taxpayers will gain by up to £170 from this measure.

The Government will increase the basic State Pension in April 2011 by the equivalent of Retail Price Index. This will benefit 1 million pensioners in London.

The Budget sets out the path that the Government will take for reducing spending over the course of this Parliament. Full details of the Spending Review, which will have implications for London, will be set out on 20 October.

The following statistics illustrate the current economic landscape in London

In London in the latest reported full year, 2008:

• London contributed £265.1bn to UK economic output. This was 21.0 per cent of the UK’s total economic output [1];
• the average economic output per person was £34,786. This was above the UK average of £20,520 [1];
• 59,100 new businesses were started, accounting for 21.9 per cent of new business started in the UK [2];
• the public sector employed 754,000 people, which accounted for 17.8 per cent of total employment [3]; and
• the private sector employed over 3.48 million people, which accounted for 82.2 per cent of total employment [3].

The latest labour market figures for London, from the three months to April 2010 [4], show:

• that 3.72 million people aged 16 and over were in employment. This was 68.7 per cent of people in London aged 16 to State Pension age; and
• 366,000 people aged 16 and over were unemployed. This was 9.0 per cent of all employed and unemployed people aged 16 and over in London.

Sources

1. Office for National Statistics: Regional, sub-regional and local gross value added, 9 December 2009 (PDF, opens in new window)
2. Office for National Statistics: Business demography 2008, 30 November 2009 (PDF, opens in new window)
3. Office for National Statistics: Regional analysis of public sector employment, September 2009 (PDF, opens in new window)
4. Office for National Statistics: Labour Market Statistics Regional Monthly Data, 16 June 2010 (opens in new window)

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