Written evidence submitted by the Thames
Gateway London Partnership
1. SUMMARY
The Thames Gateway London Partnership (TGLP) believes
that the National Insurance contributions holiday should be extended
to cover London and the South East. A failure to do so demonstrates
a lack of understanding about the diversity of the London Thames
Gateway's economy and the importance of the London Thames Gateway
as the driver for the UK economy.
The exclusion of London and the South East from the
Bill is inconsistent with the intention, as set out in the text
of the Bill, to "help those areas and communities that
are currently dependent on the public sector", failing
to recognise the often higher than average levels of public sector
employment throughout the London Thames Gateway.
The Thames Gateway London Partnership believes this
inconsistency should be addressed through an extension to the
proposed National Insurance contributions holiday to eligible
businesses across the UK.
The Thames Gateway London Partnership believes strongly
that this policy should apply fairly across the UK. We recognise
the cost implications of extending the holiday to the whole of
the UK and would therefore support the introduction of measures
which target this incentive more fairly, in particular at areas
with high levels of deprivation and public sector employment regardless
of their geography.
2. PUBLIC SECTOR
EMPLOYMENT IN
THE LONDON
THAMES GATEWAY
Whilst home to a thriving finance and retail sector
in Canary Wharf, the Thames Gateway is also a growing base for
emerging small businesses. There is particular strength in the
creative industries, which the government have recognised with
the recent announcement of plans to make East London one of "the
world's great technology centres" as part of the Prime
Minister's "tech city" vision.
However the Thames Gateway also contains some of
the most deprived areas of the UK and London boroughs where the
reliance on public sector employment far exceeds the UK average.
The Bill states that the measures around the National
Insurance freeze are aimed at "encouraging the creation of
private sector jobs in regions reliant on public sector employment,
through reducing the cost to new businesses of employing staff".
With that in mind, the London Thames Gateway should
certainly be included in the exemption.
A BIS/ONS measure of public sector jobs as a percentage
of total jobs by London Thames Gateway borough demonstrates that
many areas have higher than average levels of public sector employment
(see Appendix A). Indeed, the London boroughs of
Newham and Greenwich both have significantly higher than average
proportions of public sector jobs than many of the areas which
have been identified for assistance through this measure.
- The percentage of Newham's public sector jobs
as a percentage of the total number of positions is 32.2%, the
17th highest percentage in the country and the highest amongst
those boroughs excluded from the measure.
- Greenwich's figure is 30.7%, 26th in the country
and second highest amongst the excluded boroughs.
As well as experiencing an often higher than average
reliance on public sector employment, the London Thames Gateway
also suffers from depressed labour market participation. The Local
Futures Group's London East and South East Sub-regional Economic
Assessment ranks the London Thames Gateway 49th out of 53 sub
regions, performing in the bottom 20% nationally.
The extension of the contributions holiday to the
London Thames Gateway would help to rebalance the unemployment
levels as well as mitigate the impact of public sector job losses.
3. LEVELS OF
DEPRIVATION IN
THE LONDON
THAMES GATEWAY
In total, six of the top 10 most deprived local authorities
(as measured in recently published Economic Deprivation Index
data, see Appendix B) are London boroughs and will therefore be
excluded from the National Insurance contributions holiday.
Despite the high profile successes of regeneration
and infrastructure projects in and around East London and out
towards the South East, the Thames Gateway area does not exist
in a vacuum and experiences its own problems with significant
population growth, unemployment and access to employment.
4. CHANGING JUSTIFICATION
TGLP believes that there have been noticeable inconsistencies
in the Government's explanation of the purpose of the contributions
holiday for employers and that there has been a noticeable shift
in the tone of the Government's approach.
As stated above, initially the justification for
exemptions was clearly on areas with high public sector employment.
As identified in the text of the Bill, the measure is aimed at
"encouraging the creation of private sector jobs in regions
reliant on public sector employment, through reducing the cost
to new businesses of employing staff".
However, during the Second Reading debate on 23 November,
Exchequer Secretary to the Treasury David Gauke MP seemed to change
the rationale for the exclusions, saying that the Government "considered
how best to introduce the policy, and came to the view that we
should include the regions where the private sector was at its
weakest" (Hansard, 23 Nov 2010: Column 195).
There are important differences between an area having
high levels of public sector employment and those with a "weak"
private sector, and we believe this change in tone has not been
properly explained during the passage of the Bill.
TGLP is also concerned that the measure and tone
of some of the rhetoric towards London and the South East, suggests
that both existing and potential private sector employers in our
area do not need support, allowing a narrative to develop in which
London and the South East are being "punished" due to
our hosting of the UK's major financial centres.
5. CONCLUSION
The Thames Gateway London Partnership believes that
the National Insurance contributions holiday for new businesses
should be expanded to the whole of the UK. This would ensure that
start-up employers in London, the East and South East are not
disadvantaged purely on the basis of geography, and that government's
welcome efforts to ease the burden on small businesses recognise
the diversity of the Thames Gateway economy and our own often
high levels of regional deprivation and high reliance on public
sector employment.
March 2011
APPENDIX A
LEVELS OF PUBLIC SECTOR EMPLOYMENT
PUBLIC SECTOR JOBS AS A PERCENTAGE OF TOTAL
JOBS BY LONDON THAMES GATEWAY BOROUGH (BIS/ONS)
| Barking and Dagenham |
23.30 |
| Bexley | 18.59 |
| Bromley | 21.14 |
| Greenwich | 30.68 |
| Hackney | 20.02 |
| Havering | 19.83 |
| Lewisham | 23.57 |
| Newham | 32.19 |
| Redbridge | 25.18 |
| Tower Hamlets | 13.73 |
| Waltham Forest | 24.33 |
| UK AVERAGE= | 20.4% |
(The data uses estimates of the level of public and private sector
employee jobs by Local Authority and Travel to Work Area from
2003 to 2008. Unlike the Public Sector Employment figures these
estimates are measures of jobs not people/employment
http://www.guardian.co.uk/news/datablog/2010/nov/16/public-sector-employment-statistics-map-by-
authority#data)
APPENDIX B
LEVELS OF LOCAL DEPRIVATION
The London Thames Gateway also experiences severe
levels of local deprivation, being home to four of the ten most
deprived local authorities in the UK, as ranked from latest EDI
data (2005) in the CLG report 'Tracking Neighbourhoods: The
Economic Deprivation Index 2008'
| 1 | Hackney
| 6 | Islington |
| 2 | Easington (County Durham)
| 7 | Knowsley (Merseyside) |
| 3 | Newham | 8
| Barking and Dagenham |
| 4 | Liverpool | 9
| Manchester |
| 5 | Tower Hamlets | 10
| Haringey |
| 
