Following a successful event on 10 December 2020, in which we were joined by former MP and member of the House of Lords, Baron Risby of Haverhill, the City Future executive committee (https://www.city-future.co.uk/people) provides some insights into the above subject, drawing on some of the discussions from our event. Thank you to all those who participated and a particular thank you to our guest speaker and founding patron Lord Risby.
Launched by Sir John Major and Lord Risby, City Future is a think-tank for the City and a networking group for young professional in the Square Mile.
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Much has changed since our session on 10 December 2020, both in the UK and globally. Such are the times we live in. The UK and other nations continue to roll out coronavirus vaccinations, what seemed like a never-ending Brexit process has been consummated (in part at least) and the UK has moved back into lockdown due to the prevalence of a new coronavirus strain. Despite all of this, the solutions, challenges and opportunities discussed at our session in relation to the above subject still hold true.
The inaugural event of this new series from City Future was split into two sections. First, we discussed how the pandemic will change the City of London, both in terms of individual and institutional working practices. Second, the discussion became outward looking, and we looked at the role the City of London can play in the UK’s recovery from the pandemic. The overwhelming focus was on opportunities. We are at a crossroads and as Lord Risby put it “in the end, the resilience and flexibility of the City of London - through all the difficult times that have gone on in my lifetime - I'm absolutely sure [we] will emerge very well indeed, because [London] has everything in it and a very good reputation for probity and good regulation”.
Everyone reading this piece will have seen countless articles and social media posts discussing what the “new normal” will look like and the discourse around the current work-from-home environment[1]. There’s nothing new there, and we did not seek to regurgitate ground covered already. Two themes emerged as part of the first segment of our discussion. The first was a challenge, touching on the lack of informal training (as opposed to formal, which has largely continued via the medium of VC) affecting junior professionals in the City by virtue of not being in an office environment, and from that flows questions around how the City will continue to attract and nurture the next generation of talent and continue contributing to the UK economy. The dynamic nature of the City comes from a strong in-person interaction between professionals within and between institutions, and prior to the pandemic, on an internal level, institutions had therefore been considering alternative seating arrangements – from open plan to ‘hot-desking’. As Lord Risby put it “in my life both as a parliamentarian and working in the City, so many things were opened up to me just by a brief comment of somebody who’s had an experience … so we can’t lose that”. There will doubtless need to be some kind of return to in-person working practices, albeit not to pre-pandemic levels.
When working from home proved so successful for many, how will City institutions attract staff back to work? This leads us to the second point, an opportunity, attracting workers back to the office by redefining what a place of work is. Elaborating on this, the office could be structured so instead of it being a place where people will come and do the kinds of tasks that could be carried out at home in isolation, it’s more of an exciting focal point where staff come to meet, and the values and culture of the institution can manifest itself. A shift from the office being a place where you have to go work to it instead being a place where you absorb the culture and specifically go in to meet colleagues and exchange ideas in an engaging way. This is an exciting new possibility and in the context of an office in the City, can of course be achieved with much smaller offices which operate on a combination of hot-desking and several meeting rooms. While there has also been talk of regional hubs where employees go to work with others in-person, there are considerable advantages to maintaining the central London office approach in the context of City institutions. This may of course require some reconfiguration to the way in which railway companies and TfL charge people for travel!
On opportunities, there is clearly one to better develop the overall digital infrastructure in the UK and this has been discussed at length. But there is also a balancing act to sought between the development of digital infrastructure in the UK so as to allow greater “WFA” (“work from anywhere”) and also not discouraging a return to in-person working environments in the manner described above. But the point here is relevant on two levels. First, the UK Government getting this balancing act correct, but also institutions themselves in the context of the technology they adopt for both in-office and remote working. A number of institutions are still using heavily outdated technology for remote working even now that professionals around the world are working remotely.
Turning to the outward facing element of this discussion, where do we start with the role the City can play in the UK economy’s recovery from the pandemic? Here, we are not talking about simply economic recovery, rather also the kind of recovery that we would like to see from the pandemic. It is clear that most are not looking for a recovery to the status quo, given the opportunity this moment presents to “build back better” and also the threats that the UK will be exposed to if it does not adapt in these times of extreme change. Ali Azeem, President of City Future noted “…the Big Bang … [has] some similarities with Brexit and coronavirus as both [bring up similar] opportunities and threats that were very present in people’s minds back just over 30 years ago now, and it really does bring out this question as to where we’re going to go next with this and quite frankly I do believe we’re at a crossroads where we could be this nation of innovation”.
It’s helpful to compare the economic crisis occurring now with previous crises, if only to draw a clear distinction. While the 2008 crisis, for instance, stemmed from underlying issues with the City, this crisis is not caused by unstable lending and/or structural/credit issues caused by and sitting within the financial services sector. This distinction shows just how much of an opportunity the City has, to be at the centre of this recovery. The similarity is of course that both crises have economic impacts and were/are underpinned by huge impacts on consumption and small business dynamics and job losses (in this case held up by furlough scheme).
Last year, Boris Johnson made a huge public commitment to a “green recovery”, with a promised £12bn government investment to making the UK the “Saudi Arabia of wind”, ending the sale of petrol/diesel cars by 2030 (ten years earlier than planned), aiming for “net zero” carbon emissions by 2050 with the City of London Corporation being ahead of the curve, having already committed to net zero by 2040. When it comes to green and sustainable investment the City has a huge role to play, and this is multi-faceted – from investor criteria to lending policies for banks, but also potential for UK Government action through joint projects with the City and through legislation driving favourable balance sheet treatment.
London’s reputation alone as a focal point internationally can also form part of the role it plays in the near and medium term fortunes of the UK. Lord Risby made particular reference to the UN Climate Change Conference of the Parties (COP26) in Glasgow, as an example of the centrality the UK can have on climate change discourse and, by extension, discussions around sustainability and ESG. The City can doubtless play a role in and leverage off an opportunity like this.
We tried to avoid discussing Brexit in this piece, but you will forgive us this brief intrusion, to note that we now have a trade deal with Japan which, while a strong echo of the deal that Japan had with the EU, concentrates enormously and impressively on the financial services sector and a framework has been set in place where a formal meetings will take place in connection with it (which will include the UK Treasury, the Bank of England and the City of London Corporation). Lord Risby remarked that in the context of his trade promotion traveling abroad “there is such incredible admiration for the financial sector in this country which is very well regulated”.
Given the lack of clarity over financial services in the recent Brexit deal, we intend to separately produce some substantive content and position papers on the deal and its implications for the UK financial services, including some suggestions as to policy direction. Watch this space.
We look forward to seeing you at future events.
The City Future Committee
[1] Two of our committee members also wrote a piece on this for the International Capital Market Association recently (https://www.icmagroup.org/Emails/icma-regulatory/2020/11/09/icma-future-leaders.html). See “Networking, training, and “Zoom fatigue””.