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The London News Debate

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London - arguably the capital city of the world with an economy built


on financial and other business services. Know where in Europe can


match the money-making formula which you will find around here.


The city is absolutely definitely a prize asset. But the capital has


problems, too. We have become dependent on the risky business of


banking. And we find ourselves with too few jobs in other industries.


There are not enough jobs to go around. London is at a turning


point. The growth and success it has enjoyed for decades can no


longer be taken for granted. It is no wonder that at a difficult time,


people are asking a difficult question. What shape do you want


Tonight, we are at the Museum of London in the centre of the Square


Mile. We are going to have a discussion you do not normally here.


We are dispensing with the usual chat about our economy. We are


going to ask how we want our economy to evolve over the next two


decades. You do not need me to remind you what has dominated over


the last two. Let me start by asking you, do we want more of the


same? I am Nicola Horlick. I have been a fund manager for 29 years. I


am taking part in this programme because I feel very strongly that


somebody does need to stand up and defend financial services and


banking and there seemed to be very few people who are prepared to do


that. Just looking at the statistics, we cannot do without


financial services in this country. The city is absolutely deaths --


definitely a prize asset. London relies on the financial sector.


Virtually every major bank in the world has some sort of office in


London and it does employed a huge number of people across the south-


east. We have to compete on a global stage and make sure we


safeguard that industry and protect it and encourage it to grow further,


rather than trying to undermine it. Encourage it to grow further,


rather than undermine it. Nicola, is there really potential for the


city to grow more? I thought it had outgrown itself over the last ten


years. It ends than flows because we have our ups and downs and


markets. When it goes down people sadly lose their jobs. Overall, I


believe it can grow further because there are places in the world which


are growing. They are buying financial services. Their companies


are growing. They need to be financed. People will save more in


the Far East as those economies evolve. I'm a fund manager. I'm


best people's savings and that is an industry with that will grow as


wealth grows around the world. Philippe Legrain, you're an


Economist. Financial services, could it be yet bigger? It could be


but it shouldn't be? The city needs to be simpler. It needs to be safer


and no longer subsidised by the tax payer. That means it needs to be


smaller. London is overly reliant on a dangerously unstable activity,


a large part of which involves at extracting value. That is


particularly true of fund management. Fund managers capture


most of the gains from the funds which are invested with them.


both agree it is possible for the city to grow. Let's ask Owen Jones


whether it is desirable. You wrote Chavs - The Demonisation Of The


Working Classes. Do the benefits of the city trickle down to ordinary


Londoners? Absolutely not. London has become one of the most unequal


cities on the face of the planet. It is a stunning division of wealth.


The top 10 % of Londoners are now worth 273 times the bottom 10 %. If


you go to Tower Hamlets, you can see the Grand spires of Canary


Wharf, huge pockets of affluence and gentrification surrounded by


massive amounts of poverty. Tower Hamlets being one of the poorest


boroughs in the country. It is not creating jobs and wealth for many


average Londoners who are living in some of the worst poverty in the


entire country. Jane Ellison, Conservative MP for


Battersea? Why do not agree with that picture. There are people


earning a lot of money but what everyone forgets is the city is


supporting lots and lots of people who are doing jobs which are not


financial services or telephone- number salaries. A lot of people in


my constituency work in mid-level jobs which are support services, IT,


marketing. The city is just far more than the people we see


dominating the headlines. Let's get some views from our audience.


Although the city has helped London, it is clear that we have a mixed


economy. For far too long we have had services. You have had loads of


people lose jobs, not all people who work in financial services earn


millions of pounds. I recall when everything crashed. Loads of people


did not have a job the next day, with their ground -- their brown


boxes. Now loads of money has been invested. I work in the public


sector and loads of people lost their jobs that way. We need to


have a mixed economy. The we are going to come to that very point in


a few minutes. Patrick Nolan from the Reform think-tank. I need to be


careful. There are some parts of the financial sector which may not


have performed properly and we are doing work on Regulation but


actually, financial services are important for all sorts of things.


If you are manufacturing and selling to overseas markets, the


time you agree a contract and the time you get the money, they can be


a difference in which case currencies can move. You need to


protect yourself against that. Nicola mentioned insurance. We


cannot see it as a zero-sum game. Diane Abbott? We need to


distinguish between that kind of city activity which is about


investing and people who were just gambling with financial instruments


and blew up the economy. It is all about balance and the sort of


London we want to see. I am a huge admirer of Nicola but you cannot


just have a London that is just for the very rich. We want to provide


opportunities for everybody. The city does not provide many jobs for


people in Hackney. Just to come back to a point bite your


constituents. The minimum wage in this country is �6.08. To have a


London living wage which the Mayor supports, it is �8.30. The service


sector which is massively expanding, people are nowhere near the London


living wage. They are living in poverty because the jobs are not


that. You are presenting a very extreme picture. Absolutely not.


You're not talking about hundreds of thousands of people in the


middle who won neither very poor and I take your point about the


London living wage, or extremely wealthy. There are a lot of people


in middle whose jobs are very important and are working very hard.


You do not improve London's economy by destroying one of its prize


assets. Diane is right took a what it does in the future. I think that


is an interesting discussion. Malik -- Shiv Malik, a book about -


- author of Jilted Generation. Is there a business model which London


has been pursuing, lots of wealthy people buying up bits of central


London, is there a consequence for ordinary Londoners? Absolutely. If


you're young and you live in London, you find yourself paying out 50 %


if not more of your wages on rent. This is because we have a massive


housing shortage in this country but especially in London. And of


course, it is the rich who have been able to buy up lots of


property in central London. They see it as a way of investing their


money at a lower tax rate. So there is a connection between the city,


the role that London has carved itself in the world and the fact


that young people cannot afford a home? Exactly. We do not build much


in London. When stuff has brought in from outside, it exacerbates the


problem. Patrick Nolan, I want your view. We cannot continue with the


idea that making rich people poorer will make us better off. We are not


going to get a higher minimum wage if the country is poorer. If we


have a well-functioning financial sector and people performing well


and succeeding in the global market, we will be rich as the country. If


we are richer we will have a stronger tax base and more


resources for things like a minimum wage. We have got to reform the


housing market. We should not make the country poorer to try and fix


the housing market. By building houses we are creating an economy.


Stunningly, it is not being done. What we need to do, you can see how


an economy gets completely skewed if there are incredibly rich people


at one end because you do not have the distribution going on that you


need to create the jobs in other services. You end up with a Gucci


economy or Ferraris being brought up at one end but nothing happening


at the bottom which is what you want. You want people throughout


the economy with some capital, some expenditure to go out there and


boost the economy more widely. you have a living wage, poor people


have more money in their pockets, they are more likely to spend it.


If you give it to rich people they are more likely to save it. We can


stimulate our economy with the living wage. There are not fairies


printing money. As a country we have to earn away. -- earned our


way. You seem to be forgetting,... A large part of the economy's tax


base. It amounts to �100 billion a year. We are paying for the banks.


They are not paying for us. That is a complete myth. I want to get a


couple more thoughts from the audience. If you want to join the


conversation on Twitter, used the hashtag # BBC London. Let me take


the gentleman in the blue sweater. The Olympic village has been built


with taxpayers' money. �900 million was spent on building the village.


It was sold to a rich Consortium for �600 million. That could have


been given to Newham Council, to Hackney council, to pass on to the


homeless in those areas. It was desperately-needed by the homeless.


And what happens? It is given to the rich. It is subsidised by the


taxpayer. It is totally rubbish. That is what is happening. We are


subsidising, the poor people are subsidising the rich. It has got to


stop. OK. I want us to move on. Before we


do, I want to reflect on the business model that we are talking


about. Over the next 20 years, seeing the city, the professional


services surrounding the city, not just financial services but legal,


accounting, consulting, advertising, seeing that section grow and


probably seeing the most -- most of the rest of London, people whose


jobs are serving that, making their sand ridges, building and design in


their homes. How many of you, this is completely unscientific, but I


am interested in the mood of the audience, how many of you think


that would be a perfectly good model for London, to see more


growth in the professional and financial services sector? How many


people think that would be a good London may be very dependent on the


financial services but it wasn't always like that. In the 1950s,


factories accounted for 40% of the capital's output and now it's down


to below 3% and no where is that story more clearly told than in


Dagenham where car production used to employ many many thousands.


are so many unemployed in this area alone there's not enough jobs to go


around. Ford has not benefited me at all. I have applied for their


three times. They want qualifications. The rich are


getting richer. You will be sorted for life. You have mums and dads.


Of the people have not got anything and it's hard, you know. I am a


mechanic by trade. I am willing to work. Friends of mine, in this


local area, it's definitely going to get tougher. Shiv Malik, voices


of youngish Londoners there. People who want jobs, probably not in the


City. Blue collar jobs, factory jobs. Do you think factories are


ever going to be viable in London again? Of course factories are


going to be viable throughout the country. In London, I guess it's


really a question of rates and how far, you know, businesses are


willing to expend on kind of you know, on rent and stuff like that.


But the question really for young people is for the last sort of ten


years or so, even longer than that, they've been sold a kind of lie in


the end. They've been told you know, education, education, education.


That's the way to go. But Shiv. Shiv. Shiv. Shiv. Yeah. What about


these young Londoners from Dagenham? They didn't go to


university. They're not burdened with student debt. What about them?


Do you think London can provide, and what sort of jobs would you


like it to provide for them? Well, I think, I mean, this is really the


nub of the question for many politicians across different


political segments. It's pretty difficult. What we haven't been


able to clearly create is the sort of jobs where, you know, people


across the spectrum can come in to them. And it's a really very tough


question. London will never become a manufacturing centre. No. As it


was. I remember, I mean, the reason you have so many West Indians


living in places like Brent and Hackney is cos those were once


centres of manufacturing light engineering. But we could invest


and produce green jobs. We could put money into house building and


that creates jobs which many young Londoners could do. And we could


also invest in the public sector and that produces jobs. There is no


reason why London should have very rich people like Nicola, who I love,


and then people on benefit. They've got to have jobs for ordinary


Londoners and their children. the middle you're concerned about.


It's the middle. Owen Jones. It's exactly that point. What happened


in the 80s and the 90s were these middle income skilled jobs were


sucked out of the economy, both under the Tories and New Labour.


Now what we've seen in Germany, they've got an industrial strategy.


So they caught the high tech boom and then they caught the renewable


energy boom. We're not talking about going back to a 1950s factory


skyline. We're talking about creating green collar, skilled jobs.


In London? Absolutely. Absolutely in London. By building houses, but


green collar jobs which give those sorts of men and women, skilled,


secure employment which is well paid. Jane Ellison and Patrick.


Well, I do actually have a very successful manufacturing company in


my constituency which is surprising in a place like Battersea. But


where they've been successful is they're very high tech. They're


exporting all over the world. I mean, they're exporting technology


to the Far East which is fantastic. But I think it's very unlikely to


get is industry that's very heavy on land use and all that sort of


thing. This is quite a small site but very high tech. And I think


there is potential there because being close to export markets,


being close to the City, dare I say, and all of that, the international


aspect of London is actually good for this sort of company. I mean,


when we talk about manufacturing we've kind of got to understand


what's happening in the bigger picture. Back in New Zealand, I


worked for a Labour government as an advisor to a front bench


Minister and we had a lot of problems. Similar problems with our


manufacturing sector in the sense that we were losing a lot of jobs


there, because what's happening with manufacturing over the last


couple of decades is that when transports become cheaper and it's


been easier to communicate with suppliers overseas, the supply


lines have been broken up. So manufacturing plants don't have


to... You don't build the entire car in a manufacturing plant any


more. You just build a part of it. So manufacturing has fundamentally


changed and we actually have to have a different type of


manufacturing if we're going to have manufacturing in London.


look at Germany, they kept their manufacturing base far better than


we have. And, actually, if you look at our youth unemployment rate,


it's hurtling towards a quarter. In Germany it's 9%. They've got


apprenticeships, supported by the employers. They've gone for two


years, which actually give these middle income secure, skilled jobs


to young people like that. Mike Tuffrey, you're a Lib Dem member of


the Greater London Authority. You're a Lib Dem on the London


Assembly. Absolutely. And we've got 400,000 people unemployed now and


that number is rising. You're right, the economy has been hollowing out,


so there are these top level financial services jobs. And there


are lots and lots of low paying, very flexible temporary work. And


the question is, in the middle. And I agree with those who are saying


light industrial, processed, food processing, waste. Why are we still


sending our waste and burying it in Essex? Why isn't that being re-


processed? Where are you going to put it in London for goodness sake?


No, you reprocess it and re-use it and there are already plastic


recycling in Dagenham. We should have more of those. We need to


change our wastes policies. We can create good jobs for people in the


middle if we plan to do so. We need to have a multiplier effect of the


local economy but not centralised. We have moved to a city to the


Docklands. We can move Potter financial-services and tertiary


sector industries to different areas of London which have a knock-


on effect on local businesses as a result of it, and how much better


distribution of wealth, accordingly. A gentleman over here. You showed a


clip about the youngsters in Dagenham. I just happen to be from


the automotive industry. Manufacturers really realise growth


is in the services sector. think there's more jobs in


mechanics than the workshops? Absolutely. In the after-sales and


the service sectors where there have been body shops, mechanics,


stimulate growth, bring the youngsters in for apprenticeships


programmes and get them to Buddy up and use the. I want to bring John


Burton in here. We have a missed opportunity with a larger and


unemployed youths we have in this country and the lack of housing.


And all these private companies profiteering off public money. Why


is that happening? Because the politicians are being backed by


them. Construction is the point I was making. We have got some


fantastic infrastructure projects, all of them public and private


funded. We had got our stations being rebuilt. London will create


an enormous human capital of expertise in the skilled


engineering jobs. The building houses, too. Your government has


decimated the social housing budget. Well, that's not true but let's


look at the construction sector. Let's look at the construction


sector. They are rich with apprenticeships. Many of those


public sector contracts go with conditions of employing


apprenticeships. In theory, something like the Olympics should


have brought thousands of jobs to Hackney. But in practice, what we


found was that people in those adjoining boroughs got very few


jobs. But Diane, we're talking about the future, so let's learn


that lesson and get it right in the future. Yeah, but let's learn the


lesson because it's one thing that's going to be a big


infrastructure project. It's another thing for guys like those


guys you saw in the film. Engineering jobs. These are good


skilled jobs. They're equivalent to the kind of things they were


talking about. Don't talk it down. London will be the expert at some


of these skills over the next 10-15 years. Shiv Malik. You know, you go


to work and then you go home and if your disposable income at the end


of that, because your housing costs are very expensive is so low, then


suddenly the work doesn't look so attractive. That's one aspect of it.


So it's a whole economy. But the other aspect is we haven't actually


asked well, what kind of work do we really want, you know young people


to be doing. What kind of work do we want to see in this country?


There's something a bit more fundamental about that. Right. We


need to move on. We need to move on folks, I'm sorry. We've got a lot


to get through in this programme. But it doesn't have to be factories


or finance. Can we get growth from other new businesses and sectors?


The capital is always reinventing itself and you don't have to go far


from here to see young Londoners, striving to find the next big thing.


It's a hugely exciting time. We set up a company as a care working


office space. To fund start-ups. They are early stage are just


getting off the ground, anything enabled by technology and mostly


related to the internet. The potential of what the companies are


building is enormous. It creates some jobs. It's not the same as the


Toyota a but the growth rate in two years and hiring people from


different backgrounds is significant. A lot of investment is


coming into this area as well. There's going to be a tax revenue


and incentives for young people to get involved in the job market. The


impact of Facebook on the US economy with its value estimated to


be $100 billion, there is no reason why we can't build a business is


more successfully here in London. Right. Eileen Burbidge, a lovely,


up-beat, positive video. I'm sure we'd all love to have Facebook in


London, probably employs five people. But it would be great to


have in London, wouldn't it? What do we do? I don't think anyone is


going to disagree we want more of that. What do we need to do to get


more of it? I think we need to encourage young people and she was


talking about this as well, to sort of use their skills and what


they're using actually day to day and realize that they can actually


start finding jobs and employment that actually leverage those kinds


of skills and those interests. lot of what London has done in the


past is attract entrepreneurs here, they come here to set up a business.


Are we still an attractive place. Can we be a more attractive place.


Are we in danger of throwing it away by 50p tax rates and talking


about business in the ways we do. London is still hugely attractive


and I think that's something that's been brilliantly leveraged actually


over the last couple of years and what's happening with the Olympics


and also the government sort of putting new attention on what's


happening in East London, all the way out to Statford with the


Olympic City and everything they're sort of terming Tech City or which


used to be known as Silicon Roundabout. It's multicultural.


There's great talent to hire from. It's very attractive to hire people


from the continent, from America, from North America. So you can get


a great sort of diversity of talent to address global opportunities and


create global businesses online. Does anybody think it's a good idea


to add new set-up. But does anybody call them here who calls himself an


entrepreneur? The gentleman at the back. I have a chain of opticians.


I and the retail face. I'm with staff who are struggling day to day


and we talk about, yes, entrepreneurship, stuff like that.


We can be wishy washy. We need services, we need retail business


and yes, we need the ability to start up. I'm very much for


financial services. It's important. But the banks in Britain are so


conservative in their thinking of venture capital. That's why people


go to other countries like the States something like that as well.


And that is what we need. We need more help in terms of finance, all


the way through. I think we're back to the banks. I think I need to


call on Nicola Horlick to give us a quick comment on that. I think it's


true of banks all, all over the world, you don't generally, when


you start up a business get money from a bank. And, in fact actually,


if you look at how a lot of people start their businesses, they often


borrow money on credit cards, which is terrible, but that's how it is.


And I think the important thing is to encourage individuals which you


can do through the tax system, to invest in businesses. And the


government actually has been doing that by increasing the benefits


that high rate tax payers can get for investing in new businesses. So


I'm really hoping that over the next few months we're going to see


the benefits of that with more, higher, net worth individuals


investing in new businesses. Because that's exactly what banks


are supposed to do. They're given a licence to basically give money to


businesses and if they're not doing that, what's their utility?


what does a bank do? A bank takes deposits from people who have cash,


who tend to be older people and it then lends. To who? It's got to


measure the risk. I'm not a banker, but that's what banks do. So the


point is, if they take huge risks... They don't actually do that.


They're more likely to lose the money. In an advanced capitalist


economy, they create credit. No, look... This is the licence that


they have. Look, new businesses We do not want companies to have a


Based on the fact they are talking about small businesses, and


thinking about the youths, so many of them are out of work. You go to


uni, you have a degree and a Masters and you come out of


university and he did not have a job. At the end of the day, the


banks are not helping the young people, even if you do not get


employed, at least you should be able to go to banks and get me to


start your own business. We have been talking about lending to small


businesses, we have to understand what got us into this mess and part


of that was very loose lending. But we also have to understand the


serious problem this country house with debt. And in particular, we


have to understand that these cuts, which everyone will agree are quite


hard, we have to do because we are spending so much money on servicing


our debt every week, that there is a real risk to the economy here.


You are contradicting yourself. am going to move on.


We have talked about the city, the finance is, the entrepreneurs, we


have talked about the need for jobs. Let's talk about those who are more


socially excluded. We have an amazing economy but it has pockets


of real deprivation -- deprivation with poverty too much for the rest


of the country. How do we re-engage with folks who have lost touch with


the labour market and risk becoming alienated. Here is one scheme which


is helping young people find a fulfilling role.


We are there exterminators and we are a group of young people running


a business together. We have been set up by the Active Change


Foundation. We are a pest control company. It is young people now


have been in the youth centre who have been up to no good on the


streets. It is going to be really a life changed. It is really hard to


look for a job at the moment. ended up getting involved in a gang


and saw a lot of things I did not want to see. It is hard, very hard.


This is our launch celebration to say yes, we are here now, can you


see us? We are trained and qualified. I believe this is my


only way out to change my life around. This is a huge life changed


five number of us here. It is giving us the stepping-stone.


Exterminated as it is a great example of what can be achieved


when people sit down and talk about opportunities they can give to


young people. The rat catchers of Waltham Forest,


the exterminators. We have a couple of them here. Assad, tell us what


you think you would be doing it you had not been given help to create


this business? I would be doing what I do to make my money,


basically. It would not be legally. There are many ways to make money.


It is all about money, I will be honest with you. I would do


whatever it takes to get that money. Assad, you have this in common with


Nicola, it is all about the money. Hanif Qadir, you run the Active


Change Foundation. The key word is active. You put a lot of effort


into creating a project like this. It helps a few youngsters.


Absolutely. It goes back to that gentleman who said you have to find


individuals Andy have to inspire people to bring them down to the


grassroots level. Is it is a lot of work, it is very expensive, can you


help everybody on the estate? not big money, it is more money but


it is with an initiative. A bit of hard work. It takes a bit of hard


work to work with the young people. Look at the gaps. It is about


filling the gaps in the market. do we feel about putting in


resources to help younger Londoners who are deprived. Patrick Nolan,


you tend to be sceptical about schemes? The important thing to


understand is it is not just the government's job. The discussion


before told about what the government should do and the


assumption that they should spend more. It is not just that the


government. It is a families and it is about communities and it is


everyone saying of the right thing and for example, teaching their


children to be more financially literate, to understand how they


need to work at school. If you look at the UK... I understand what you


say but in reality it is different at the grassroots level. Some


people have not got a chance in life and some people have not got a


family background to give them support. That is reality. The


majority of young people in this country who are socially excluded


do not have that support mechanism. The government is not going to help


with that, we have learnt that. you get government funding? We get


funding to prevent gang crime and extremism. We can stop them from


being criminals and extremists but what are we going to do with them?


This is an initiative. We put money together, 10 ground, that is all it


cost to give six people a chance in life. -- 10 grand. We have not told


about what employers can do to help small businesses or the sort of


social problems. It is not just a question of what the government


should do. Too often we say it is just a problem for the government.


I have not said anything about the government. They are not equipped


for this problem. Bottom line. few thoughts from the audience


about how much help should be given to people from the States.


gentleman over there said it is not about the government. It is about


the government. When the government are making women work longer hours


so they are not there to help look after their children, that is the


government's job to ensure they are looking after women and providing


back-up for mothers and have enough time to be there with their kids.


They are also pursuing low income families on to the outskirts, so


they are removing them from the Prime area to the outskirts where


there are no jobs. You are causing more problems for the other kids


who are surrounded by other people who are not doing anything or


providing them with any sort of influences apart from crime. So it


is the government's job, OK, that is why you are then power to do


your job, OK? These people, people have to take more responsibility


for themselves. Let me give you one example. You have to take


responsibility. Let's let Patrick finish. We are talking about all


these problems and another one is financial literacy and people


getting into high levels of debt and pay-day loans. The second most


taboo family -- to be subject in families is finance. If people are


not willing to talk about these things then they need to look at


themselves. They need to start taking more responsibility. On the


social excluded, micro initiatives like those are fine. But in the end,


you cannot create jobs out of thin air and government has a role in


putting money in people's pockets, in creating the general conditions


where small service industry can thrive and for government to walk


away and say, people are not financially literate, that is very,


very unfair. I'm not having a go at you, I make a point about the


government's role. I would like a few more comments from the audience.


The 20 cent of Londoners in -- 20 % of young people do not have an O


level. The system has let them down. There are enterprises out there,


socially concerned entrepreneurs who are prepared to create jobs. I


have done this for years. Created jobs for people you are not


qualified very well, who are inarticulate who are not able to


get a job. There are lots of us. We need assistance from procurement


agencies, local councils, to buy services locally, not from big


highly capitalised companies. have had quite a journey, ladies


and gentlemen. We have talked about the house, perhaps not and the


people in the middle. Here is a last question for year. I'm


interested in where the optimistic about the next 20 years. The city


will progress and be more affluent and hope fully and possibly more


equal. How many of you are optimistic about London over the


next 20 years? How many would say you are pessimistic about London?


You are split. I am not going to count hands because it is


completely unscientific. It looks about 50-50. May be slightly more


optimistic. Ladies and gentlemen, that is it. We have to draw to a


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