London Councils and The London Chamber of Commerce and Industry (LCCI) have today published the seventh annual London Business 1000, which reports the views and sentiments of over 1000 businesses across the capital.
This year’s London Business 1000 shows that businesses in the capital think the next UK government should prioritise tackling climate change and increasing affordable housebuilding (joint at 29%), followed by improving public transport (27%) and easing international trade restrictions (26%).
The 2023 survey found that London business leaders remained strongly supportive of devolution of powers to local councils. Over 70% of business leaders reported that they were in favour of councils having increased powers to build new homes and local infrastructure, as well as over community safety, policing and employment, and training services.
Encouragingly for skills and youth employment, the survey found that there has been a marked increase in the proportion of small and micro businesses that employ apprentices over the past two years, rising from 7% in the 2021 London Business 1000 to 20% in 2023. For large businesses the figure has remained relatively constant, at 45% in 2023 compared with 42% in 2021.
The effects of inflation seen throughout 2023 were reflected in the findings of the survey. Inflation has had a serious impact on firm operations; as many as 77% of businesses had to make operational changes in response to high inflation seen over the past year and the related increase in the cost of living.
Businesses also identified crime as a significant threat to operations. Half (50%) of London businesses reported that crime has increased in the last 12 months, and one in five (20%) said that their business has directly experienced at least one criminal incident over the same period.
Mayor Jason Perry, London Councils’ Executive Member for London’s Future, said:
“Our residents benefit when local businesses are thriving, so London boroughs are rightly concerned about current trading conditions and the impact this is having on our communities.
“Businesses have faced unprecedented challenges in recent years and now the increasing cost of doing business, driven by high housing costs and inflation, is putting them under further strain.
“There is a clear need for further devolution to strengthen businesses across the capital, London government currently controls around 7% of the tax raised locally compared with New York’s 50%. Businesses support the move to shift funding and power closer to communities in key services like skills and affordable housing delivery.
“The survey also showed that half of London’s businesses are looking to take on more staff, but struggle to find people with the right skills. There has been positive movement with the Apprenticeship Levy, with more SMEs taking on apprentices, and businesses spending a larger proportion of their levy. London Councils will continue to lobby Government to ensure greater freedoms so more firms can take advantage.
“Businesses have also told us that the high cost of housing in London is a key barrier to recruiting and sustaining the staff they need. Delivering more affordable homes for Londoners remains a key priority for boroughs and we remain committed to working alongside national Government to achieve this for our communities.”
Responding to survey findings, Karim Fatehi MBE, Interim CEO at the London Chamber of Commerce and Industry, said:
“The past year has seen some improvement in trading conditions for businesses. However, continually high inflation, lack of affordable housing for staff, and new operational pressures such as increasing crime rates all mean that firms are desperate for measures that really work for London. As the survey clearly illustrates, this means businesses want to see major policy shifts in critical areas.
“Whilst it is very encouraging to see more London firms – especially SMEs – employ apprentices, there is little doubt that reform of the Government’s Apprenticeship Levy could further boost these numbers and help tackle the capital’s ongoing skills crisis and boost youth employment. It is also not surprising to see firms calling for an increase in affordable housing as a priority ahead of a 2024 general election; the need to employ key workers in many industries, especially hospitality, is hampered by the unaffordability of London’s housing stock. This is a key priority, and we will challenge the candidates for Mayor of London and the political parties vying to form the next Government to make it clear how affordable housing will be provided across our city, as well as how they will tackle climate change, another top priority for London businesses.”
“Crime is on the rise in the capital and is doubtlessly affecting business success. It is shocking that as many as 1 in 5 firms surveyed have been direct victims of crime in the past year; The London Chamber is in active discussions with the Metropolitan Police and the City of London Police to see what more can be achieved to lower the crime rate in the capital”.
Main highlights from the London Business 1000 survey are below:
- Devolution: The UK remains one of the world’s most centralised nations, which restricts councils’ ability to deliver positive economic and social outcomes. London government controls around 7% of the tax raised locally compared with New York’s 50%. There is broad consensus across the London business community regarding devolutions, according to this report.
- London Councils will continue to make the case for control and funding to be closer to communities, including partnering with the devolution trailblazers in Greater Manchester and the West Midlands.
- Around a third (32%) of London businesses strongly agreed that local councils should have more freedom to build houses – echoing the growing sense that housing is a key priority for businesses.
- Skills Challenges: The Business 1000 survey showed while most businesses are looking to recruit, they struggle to find the skills they need. One in six business leaders think London’s high cost of housing is a major cause of why they struggle to recruit and grow their business. Nearly half (47%) expect to grow their workforce in the next 12 months. Three quarters (76%) of firms have challenges with their current workforce’s skills, with decision-makers in large businesses particularly likely to say this (84%).
- Apprenticeships: Half of businesses want the levy simplified and more freedom to allow them to use it to support wages. There are still barriers facing businesses to employing apprentices; when prompted, just over a third (35%) cite that they do not meet the needs of their business. While another one fifth choose issues revolving around the extra workload that this would involve, whether this be the administration time or the extra management that it would require (both 22%). A majority of businesses (51%) still report no engagement at all from their local authority.
- Diversity and Inclusion: When prompted with a list of actions, most London businesses said they were taking steps on diversity, inclusion and equality. However, just under a third (31%) of firms said they were not undertaking any activities around ensuring a more diverse workforce. The lack of understanding and action around diversity and inclusion is a concern and an area of action for future work with the capital’s business leaders.
Notes to editors:
- For a seventh year, London Chamber of Commerce and Industry (LCCI) and London Councils have commissioned an annual survey of more than one thousand London businesses. The Business 1000 is unique in providing a regular barometer of business sentiment and priorities in London. To read the full report click here.