Gordon Brown launched a campaign to woo the City by unveiling a review of the tax regime and promising to cut red tape.
At the inaugural meeting of his high-level group on financial services, the Chancellor told 32 City grandees he had commissioned a review of the way Revenues & Customs deals with large companies. It is to be led by a former chairman of Revenues & Customs Sir David Varney, who will report at the time of the pre-Budget report towards the end of the year. But Mr Brown shied from a promise to abolish stamp duty on share trading, as the City has long wanted and the shadow Chancellor, George Osborne, has committed to deliver.
Nor did the Chancellor capitulate to calls to cut corporation tax, despite the success of smaller financial centres such as Dublin winning business by imposing much lower rates.
Mr Brown's attempt to entrench business-friendly credentials ahead of his expected push for No 10 after Tony Blair steps down came amid concerns within some quarters of the City that London's competitive advantage may be ebbing. At the same time, the Conservatives under David Cameron are resurgent and vowing to win backing from the Square Mile.
Mr Brown's audience included chief executives and chairmen of high street and investment banks, insurers, private equity groups, hedge funds, exchanges, fund managers, lawyers and rule-makers. He unveiled a series of initiatives.
For the first time, he has set a target to cut the regulatory administration costs imposed on business by the Treasury - of filling in forms, training staff and the time spent on official inspections - by 25 per cent. The Financial Services Authority, the City watchdog, is expected to make a similar move, the Treasury said.
Responding to concerns about EU directives, Mr Brown promised to resist unnecessary "gold-plating" of EU rules into national law and to push for a more deregulatory stance under the German presidency. The Government will also examine, with the FSA, whether the regulatory regime may be lightened for insurance services with lower risks to consumers.
Lord Levene of Portsoken, the chairman of the Lloyd's of London insurance market, is to examine ways to modernise an industry which introduced electronic trading only recently.
The Chancellor also initiated a review of ways to close the financial skills gap in the capital.
Business groups applauded the meeting. Richard Lambert, director-general of the CBI, said: "We welcome the fact that the Chancellor has now recognised the financial services sector is a jewel in the UK economy and that its future depends on light regulatory touch."Reuse content