City policy chair: new taxes on financial services would threaten our prosperity

Chris Hayward, the policy chairman at the City of London Corporation, has cautioned that new taxes on financial services could pose a significant threat to the city's prosperity. While acknowledging the government's commitment to promoting wealth creation, Hayward emphasized the importance of avoiding any actions that could harm the financial and professional services sector.

This sector already generates £323 billion in economic output and contributes over £110 billion annually in taxes, accounting for around 12% of all UK tax receipts. Two-thirds of the 2.5 million jobs supported by this sector are located outside London, illustrating its nationwide impact. The City Corporation has collaborated with successive governments to achieve this success, exemplified by the Mansion House Accord.

This accord involved 17 of the largest pension providers pledging to invest up to £50 billion in UK businesses and infrastructure by 2030. Hayward urged the Chancellor to refrain from implementing any measures that could further complicate the sector's competitiveness, such as a windfall tax on banks or additional sector-specific taxes that would widen the tax gap compared to international rivals.

He proposed a more positive approach, suggesting that the government should explore ways to reform taxation on UK equities, including potentially removing stamp duty on shares. Additionally, the Chancellor should support institutions like the Office for Financial Services, which acts as the UK's concierge service for firms seeking investment, by providing longer-term funding and staffing.