The Clustering of Financial Services in London*



very well selling something to the end user, you’ve then got to make sure you can deal
with that effectively. So they need to be discussing those particular elements, they also
need to be able to take feedback from the users in much more detail than comes
through the sales people.

Even when relocation made sense, it also made sense to maintain some presence in the
center of the cluster. As one insurance respondent put it “The City still has the connotation
of - good address, got to be there at the center”. An auxiliary financial services respondent
took the view, “Every firm worth its salt operates with headquarters here in the City”.

Some firms made the point that in order to get a substantial benefit in terms of lower
costs they would now need to move quite some distance from London, probably outside the
South East but as the following quotations illustrate finding a move which is truly cost-
effective is not always easy:

There are firms that have successfully broken the mould, they’ve moved away from
London to other places in the UK but it’s not an absolute given. So if you were to look
at x’s experience in Lewisham what they found out is that they didn’t move far enough
so people still have to get on a train to get to Lewisham and why would I want to work
in Lewisham - why not go three stops further and work in London again? The
opposite of that is x which took all of its back office staff down to Bournemouth which
worked very well. But the converse of that would be when x and x went to Dublin
where the labor market was just too small and too tight and although they had cheaper
occupancy, they were paying over inflated rates for labor. It’s a pretty mixed bag of
the positives and negatives of the people who’ve moved away from London.

These days it is hardly worth bothering unless you’re moving to Birmingham or north
of it to get the savings and obviously that increases the risk. Which is why - good
news for London - I think most of us are still here ... The reality of life is anything
international, whether you like it or not, this is not that big a country and so there’s an
incredible focus on London and coming to London and people understand that if you
said our Head Office is in Blackburn you’d get a blank response from an international
point of view and there’s no point in trying to dress it up.

Several firms expressed an opinion on whether the promotion of financial services
clusters elsewhere in the UK would be viable. Most were skeptical, pointing to the
business reasons for continued concentration in London. One firm stated that the City is
made up of mini-clusters anyway, of insurers and lawyers for example. It would therefore
be impossible to transplant the mini clusters and maintain their important juxtapositions. A
range of other comments suggested the need for careful consideration of plans to establish

35



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