The Future of the City of London

Introduction

Alderman William Russell thanked Hoggett Bowers and the participants for the opportunity to join the discussion and started by acknowledging the insurance sector as a pillar of the City, representing 27% of GDP.

The 692nd Lord Mayor of London, recognising the appointment was established as long ago as 1189, made the point that the insurance sector and the City has a proud and enduring history, including overcoming many and varied challenges, by adapting and innovating.

London, The City and the UK have suffered difficult times before and have come through them, although the next few weeks are undoubtedly going to be tough. Footfall is a problem as the move to work from home whilst necessary, has also been very successful. So, who would have predicted in 2021, that localism is the City of London’s biggest competitor?

The need to get employees back into the office was made clear on a recent call between the Lord Mayor and a prominent CEO, as he fed back that there was limited value in individuals attending in small numbers. It does not achieve social interaction. As Jamie Dimon of JP Morgan said with reference to his brokers, “you don’t have much ‘spontaneous creativity’ working from home”!

“Let the bells ring to signify and celebrate a return to the City”

Whether it’s after Easter or early summer, when it is safe, The Lord Mayor looks forward to reopening and rejuvenating the City with a symbolic cultural and creative celebration to promote a safe and flexible return. Bishop of London, Sarah Mullally, has suggested a celebration by opening all the churches and letting the bells ring out!

We must think very hard about the future of the City as a competitive centre for global business and foster an ecosystem capable of attracting international talent. We need to build on our connections and forge new links for growth and innovation; create an infrastructure for sustainable finance and green investments.

“The role of the City going forward”

Our first contributor questioned how to return when our streets our empty, our high streets are in transition and the demand for office space is reducing. Post pandemic, what is the role of the City, wherever it’s located? The Chair of a leading broker shared how their UK expansion will be supported by a 10% space reduction in the City as they move to a ‘drop-in’ and regional office strategy.

Employee feedback surprised a NED as the learning opportunities for young investment bankers has improved online. The video call enables a discreet ‘ring side seat’ to learn from clients, bankers and lawyers alike. She reflected how lucky they were to experience such client meetings early in their careers.

Another NED commented how many young workers have lost the excitement as work becomes too routine. A short spell with a global brand and then they are off to do something they see as more worthy and fun. The challenge therefore is to ensure people want to return to City offices. We have an opportunity for leaders to rekindle the teaching culture, reinvent and redefine the office as a good place to interact, share and learn. However only the most senior leadership can make it happen.

The NED of a leading broker observed how some more senior employees are reassessing if they want to return to commuting given that remote working has worked so well for them. This is where these individuals need to prioritise the needs of their teams and the benefits of the wider business, before their own.

“Other risks of not returning to the office”

One NED worried if more people of all ages say they don’t want to come back, it is now relatively easy for employers to recruit from all over the world – which would be to London’s cost.

The NED of a European reinsurance business shared these feelings but also the Lord Mayor’s optimism after seeing the effects of Super Storm Sunday in the US. Disaster recovery procedures ran smoothly prompting operations to be moved offshore. Within four years, the ‘FOMO’ effect reversed the offshoring trend as senior management remained in Manhattan to avoid missing out.

“Why return to the City?”

The City of London is one of the most concentrated professional clusters in the world. The Lord Mayor talked about how, for his generation, London was the place to be and it still attracts many graduates. London has the opportunities, it’s where networks form and the ideas are created. The Lord Mayor shared his view that many will be surprised how quickly London will return to normal. A few will lead and FOMO will bring the rest.

Talent is the City’s greatest strength. Many FinTech organisations relocated to London to cluster together. Competitors headhunted, innovators were hired, and the concentrated ecosystem flourished. Brexit proved people want to remain in London. That is why the Mayor is optimistic for a financial services (FS) Brexit deal. Green finance will also bring many opportunities as the City aims to become the green finance centre of the world! The United nations Climate Change Conference 2021 (COP 26) will build upon this and attract more jobs.

Talent is the key and London’s cultural sector is one of the reasons why people around the world claim they want to live in London. If you survey the young on what they like about the City, it’s the arts, the culture, the creativity. London has a massive advantage.

“Attracting, not driving, people back to the City”

The Lord Mayor talked about the nervousness of being seen to order people back. The way people are brought back is critical, the experience must be additive. Senior executives must be seen to be returning and to encourage their teams to do likewise.

As leaders we need to be optimistic. We need to show the leadership as well as optimism. It’s a challenge and everyone, the City of London Corporation and boards across the City need to be up for the challenge to bring the community together again.

Jonathan Neame of Shepherd Neame recommends we focus on the young as they are more fearless. Start with a 2 or 3 day a week but help people to make a day of it. Encourage the use of the pubs and restaurants, the weather will have warmed up and promote alfresco dining. The buzz will create the FOMO effect!

It was mentioned that it’s the young who want to come back. They don’t have the space, the resource or properties of older staff. They are missing the social interaction. There was an assumption it would be the older staff, motivated by years of habit and tradition, who would be the first to return, yet it’s clear that it will be the younger people. From a wellbeing perspective, the younger generation are more open to returning, so perhaps the challenge will be in persuading their senior leaders who have the technology, property and space to work from home, to commute once again.

“The Future”

We were already on the path of most City employers having fewer City employees so it’s important to distinguish between what to do immediately and what to do in the longer term. The City needs to be a more attractive place to be part of and that plays to the Mayor’s cultural initiative.

Another Chair made the point that we must also differentiate between localism and globalism as in the City, we have no localism. “We need it and we need to think about the message. It can’t be just a dry message. What I have found with my colleagues is, you come to work otherwise you will miss something.

In September, staff attendance was up to 14% but for the most part, many people stopped coming in, not just because of the team point, but because they found there was no infrastructure. Only the Co-op and one or two pubs were open. The local café was shut. And that prompts the question, how the City of London helps finance small retail businesses? So, when people come to work, they want their world around them to be attractive”.

In contrast, last year the West End was vibrant, and the City was not. Probably because the West End has a strong leisure culture whereas the City is dominated by large employers. There are numerous shops, theatres, restaurants in the West End and endless places to go. The City does not have that. If the City wants to retain its role, it’s going to have to become far more residential to build the culture. It has to be a living space that attracts people at the weekend. The City has money and needs to use it wisely.

“The City – Vibrant, Residential and Green”

Another Chair was quick to support this point and talked about how there is an opportunity to relaunch the City. Before the Pandemic, when asked what words people would associate with the City and they’d say business, financial, quiet, dry – many words associated with FS. Being the centre for Green Finance and climate initiatives is talked about, but look at Paris and the Gorilla Garden initiative and planting out green spots around trees. This Chair talked about wanting Aldgate to become a green walkway but was told “stuff will fall on people’s heads” and you can’t have hanging baskets because they are illegal and so on.

What the work force wants now is different to each generation. We have a brilliant opportunity to ask what brand we want the City of London to portray and to invest in it.

One Chair referenced the Green Finance conference in November with the comment that the insurance sector is good at this type of initiative. “There are 500 people assessing climate models in the City. If we thought about this in the context of the City’s brand, we could lead society. We should raise our profile much more. Businesses must lead on this. If insurance, banks, and asset finance were more coordinated – the City could become a world leader in ESG, the green revolution and decarbonisation. This in turn makes the City more attractive to the younger generation”.

The Lord Mayor agreed and talked about the City’s green team focus on COP26 to create a finance pavilion which will have strong insurance representation. There is also a series of ESG and energy transition conferences planned for the City throughout 2021. The City of London has its own climate city action plan which is aiming for net zero. Few other world cities have this. Hopefully by this time next year, we will feel there has been more coordination around the climate change initiative and London is reaping the benefits.

“Regional cities stealing a march on London?”

The Lord Mayor talked about some of his visits to regional cities. The Universities of Edinburgh and Glasgow (the UK’s No 2 & 3 in terms of FS presence) along with Bristol and Bath, are working with business to retain talent in their local areas. They have set up FinTech hubs and they don’t want that talent to head to London. Leeds, City of culture in 2023, is also making strides forward. Covid has worked in their favour. Commuting to London is recognised as not being the best part of the day and the levelling up of the regions is a priority of the Government. Sovereign Wealth Funds are seeking to invest outside of London. London and the City of London will need to punch above their weight to defend their position.

“Brexit – the deal for Financial Services?”

The question of “Are we straining every sinew for a deal?” was asked by an NED who had recently had to sign off on a large book of business going to the EU. There are rumours of exhaustion in the UK negotiation team so it may take longer than March to finalise a deal. It comes back to London’s financial expertise and proven ecosystem. We are fully aware of the competition. However, the liquidity pool remains in  London and the City has a strong listing pipeline for this year. There is positivity and we will adapt. We hope European friends will recognise what we have in London is critical to corporates. There’s lots of opportunity and it’s all about mindset!

There was agreement that there is a need for clarity and that this needs to happen soon or customers will be forced to take alternative steps. Early resolution is required.

In summary, there is much that can be done to bring people back to City by accommodating changing work patterns post Covid, as well as making it even more attractive than it was before by recognising the wider demands of differing generations. Leadership teams need to be confident and work together to communicate the advantages of the return as well as lead from the front. The opportunities are there for the taking!

Acknowledgments

Hoggett Bowers are very grateful to all our contributors and a special thank you to:

Alderman William Russell, the Rt. Honourable the Lord Mayor of the City of London

Marcia Campbell, NED, Aberdeen Standard

Dominic Christian, Global Chair, AON

Edward Creasy, Chairman, Charles Taylor

Robert Dickie, NED, MS Amlin AISE

Denis Hall, NED, Cembra Bank

Rosemary Hilary, NED, Vitality

Angela Knight, NED, Taylor Wimpey

Sue Langley, Chair, AJ Gallagher

Malcolm McCaig, NED, Ageas Insurance

John Nicholson, NED, AON

Martin Pike, NED/Chair of Risk Committee, Standard Life Aberdeen

Caroline Silver, Advisory Partner, Meolis & Co

Sally Williams, NED, Lancashire Holdings