Company Tax and Economic Growth

chewmylegoff

vivatifosi wrote: »

Apologies for shortening your post chewy, but it's this bit I want to focus on.

A lot was happening at the same time.
1) Big Bang and deregulation of the City (1986) - every major bank in the world was looking for pretty big offices.
2) Little Bangs and the deregulation of services (c1988), growth in this sector lead to increased competition for offices in the City.
3) Lack of offices with large floor plates for trading floors in the City (though Broadgate was built for this reason)
4) Shortage of decent sized available space in the City unless companies were willing to wait for a pre-let. The city wasn't as vertical as it is now.
5) Shortage of suitable buildings - the new big banks needed far more cabling than could be retrofitted in some of the older buildings, with or without the need for the big open floor plates.
6) Development of the DLR, meaning that people could finally get there.
7) Growth of the international tech sector - many of which wanted an office in London but didn't want to pay the higher prices of the City and West End.
8) Dedicated support via the London Docklands Development Corporation which promoted the area in a way that was far above that of current EZs.

It wasn't all a success though. Canary Wharf's original developer, Olympia and York, went bankrupt in the process as markets took a dowwnturn here and in NY (where O&Y had other business interests), leaving empty floors. This also had a knock on effect on the extension of the Jubilee line, which has played a major part in opening up Docklands.

There was probably other stuff going on that I've forgotten about too... But you're right. The world's biggest office project (at the time) didn't fill up in one go.

I think I'm right in saying that there were only about 7,000 people working in Canary Wharf at the turn of the century and it didn't really take off until then. Certainly when my employer moved there in 2001 it moved into a building which had been sat empty for 10 years.

tincans

chewmylegoff wrote: »

I think I'm right in saying that there were only about 7,000 people working in Canary Wharf at the turn of the century and it didn't really take off until then. Certainly when my employer moved there in 2001 it moved into a building which had been sat empty for 10 years.

There was 35000 working there by the year 2000

Now over 100,000

chewmylegoff

Having now attempted to google it - it was 7,000 when the enterprise zone status ended apparently - in 1992.

Other figures thrown up by the first page of google located were 15,000 working there in 1999 and, according to the ONS 27,500 in 2001. Then 63,000 by 2004. It is now, as you say over 100,000 with a load more buildings planned. They better finish crossrail because the jubilee line is at capacity at the moment and the DLR is a toy train.

Didn't realise that the original canary wharf developer had to shoulder 50% of the cost of the jubilee line extension. No wonder they went bust...

purch

Pre/Post Big Bang many large Banks located Westwards rather than Eastwards in the search for office space...

Chemical Bank, First Chicago, in the Covent Garden area, Solomon Brothers in Victoria, Irving Trust/Bank of NY to Mayfair to name just a few.

Now, all of those have moved into Canary.

P.S> If I could find my old Hambros books I might be able to remember the others.....but it's early and I'm senile

purch

chewmylegoff wrote: »

No wonder they went bust...

Nearly bringing RBC and CIBC with them :eek:

norsefox

The UK has dozens of world-leading universities - to say the holes up north can't retain highly skilled jobs is nonsense.

Newcastle, Durham, Manchester, Leeds, Glasgow, Dundee, Aberdeen all have world class universities. Ridding this island of its fascination with London would be a good start to ensuring that growth occurs outside of the South East.

CLAPTON

norsefox wrote: »

The UK has dozens of world-leading universities - to say the holes up north can't retain highly skilled jobs is nonsense.

Newcastle, Durham, Manchester, Leeds, Glasgow, Dundee, Aberdeen all have world class universities. Ridding this island of its fascination with London would be a good start to ensuring that growth occurs outside of the South East.

and how does one do that without destroying the tax base that supports the north?

BobQ

Generali wrote: »

I'd take any town with perhaps 75% or less of the average GDP per capita (let's not get hung up on the percentage but you'd be looking to include maybe the poorest couple of dozen urban constituencies outside London).

Then you say that there will be a presumption of acceptance, subject to zoning, for planning permission in those areas. No business rates or employers national insurance will be payable in those towns for a time (let's say 5 years for the sake of argument) and the local college will offer student loans for vocational courses (repayable when incomes hit £xxxx). Let's face it, the take from business rates in Wigan or Blackburn or any of those other northern hell-holes must be pretty much nil any way.

Sending the Civil Service Oop North just makes things worse. They massively outpay local employers and so take the cream that hasn't moved away already. Private enterprise that could actually turn the area around can't afford to compete.

Your idea makes a lot of sense but it sounds too much like strategic thinking for most Governments to adopt.

The problem that also needs addressing is the need for better paid jobs and careers with potential in these areas, for that you need to get firms to move their headquarters. Take BAE Systems, it employs 58000 people in UK but over half are in the South and half of these are close to London. Similarly GSK employ about 100K people but these are mostly in the SE.

The sort of jobs that seem to move to these regions are call centres that employ people on minimum wage and zero hour contracts. These are better than nothing but they do not seem to result in engineering and manufacturing jobs or services based on professional skills.


The movement of public sector jobs to the regions was largely driven by saving money for the departments (compared with SE) and providing jobs in high unemployment areas rather than as a development strategy for those regions (whatever was said in public). That is they would not have happened had they not saved money or saved sitting MPs. The Met Office is an example of a public sector employer taking skilled work to areas needing development, but often the public sector transfers functions that are low skills or candidates for outsourcing.

vivatifosi

purch wrote: »

Pre/Post Big Bang many large Banks located Westwards rather than Eastwards in the search for office space...

Chemical Bank, First Chicago, in the Covent Garden area, Solomon Brothers in Victoria, Irving Trust/Bank of NY to Mayfair to name just a few.

Now, all of those have moved into Canary.

P.S> If I could find my old Hambros books I might be able to remember the others.....but it's early and I'm senile

The first post-Big Bang move that I really remember was Tullett and Tokyo Forex. That was notable because what they wanted was huge and nobody had ever heard of them. I can't remember where they moved though, may have been City.

cepheus

ajsexton wrote: »

Had a similar conversation at work recently...

I think everyone can pretty much agree that economic growth is directly linked to the success and profits of private business, when they are successful, they expand, take on new staff, resulting in more taxes being paid, more money being spent in shops etc etc

I also think that many would agree that a lot of businesses focus on London and the South East resulting in uneven growth around the country. I will say the a few other cities are getting some investment such as Manchester and Birmingham.

Could a method be devised to encourage business owners to expand outside of the SE via a method of a altering tax requirements for different areas of the country and adjusting for growth in an area each year.

One we discussed was if the corporation tax rate was 20%, then companies output from poorer areas such as the NW/NE could be taxed at a lower rate (say 16%) that tax rate would gradually move back towards 20% as growth occurred. This could be recalculated every 2 years - every year seems a bit overkill.

This might not deter existing investment in the SE as for a small %age reduction the costs to move would be prohibitive, but it might be enough to encourage incoming foreign large companies to make their UK operation bases in cities (and even towns) other than London.

Discuss...

well one might consult the people who study this for a living such as Nobel Laureate Joseph Stiglitz who has just published a White Paper with the Roosevelt Institute entitled Reforming Taxation to Promote Growth and Equity.

Remember: taxes are not a cost to an economy but a transfer within it, from one productive sector to another productive sector. So there’s no obvious reason from first principles why particular levels of corporate taxes should make a difference to economic growth either way. Once you factor in the current aggregate demand question, then it seems likely that corporate taxes at appropriate levels – including curbing corporate tax abuses – is likely to foster economic growth.