Thursday 20 October 2016 1:07 am

Chancellor Philip Hammond reassures the City over its post-Brexit prospects after reports of Whitehall indifference towards financial services

Philip Hammond has insisted the health of London’s financial services will form a crucial part of Britain’s negotiations to leave the EU, after a top Conservative MP challenged the chancellor over revelations published in yesterday’s City A.M.

During a near-two-hour grilling in front of the highly influential Treasury Select Committee, Hammond backed London to retain its status as the world’s leading financial centre and repeatedly vowed that the government will fight its corner during Brexit talks.

Fears have grown in recent weeks that sections of Whitehall, such as the Brexit department and the Department for International Trade, were taking an indifferent and unsupportive stance towards the City, as Prime Minister Theresa May prepares to trigger Article 50 early next year.

“London will continue to be a global financial services centre – of that I have no doubt,” Hammond said, insisting that he is holding meetings with international financial players “to ensure they are enabled to continue operating… from London”.

Fellow Tory MP Stephen Hammond pressed the chancellor during the select committee hearing, citing yesterday’s front page of City A.M. “Financial services as an industry feels that the government is indifferent to its plight, in terms of these negotiations,” he said. “Do you think across government there is a recognition of the importance of this industry?”

“Yes I do,” Philip Hammond replied. “The reality is that financial services remains our single largest sector, it is responsible for a very large number of jobs… providing one of the few bright spots in terms of a positive current balance with the rest of the EU, and the industry knows that we regard it as extremely important. The industry knows that we understand that it has a particular set of challenges as we go into this period of negotiation with the EU, and I hope the industry knows – it certainly should know – that helping to address those challenges and taking account of those challenges will be a very high priority for the government.”

The chancellor added that he has high hopes for a deal that allows European financial companies to trade in and out of London.

“If jobs were to go from London’s financial services sector, the likelihood that they would go to Europe is probably lower than the likelihood that they would either disappear altogether or go to the US,” he said. “The damage that any erosion of the competitiveness of London’s financial services market would inflict on the real economy in Europe… will also be a factor that comes into play.”

Hammond continued: “We’re at an early stage of people across the EU thinking through what the consequences here are. London is Europe’s global financial services market. London provides a service to the manufacturing businesses, to the farmers, to the commodity producers, of the European Union, and anything which broke up this deep and broad pool of capital and expertise in London would be hugely detrimental to the real economy across the European Union as well as to the UK.”

Referring to “our vitally important financial services sector”, the chancellor said the government’s determination to reduce immigration would not affect the finance or technology sectors. “When the public tells us loudly and clearly that they have a problem with levels of migration, it is very clear to me that they are not talking about computer programmers, brain surgeons, bankers, senior managers,” he said.

“We already have a regime which readily facilitates people coming from outside Europe to work in financial services businesses [and] other people with high skills coming to work in the UK. That isn’t where the problem lies and that shouldn’t be where the concern of business is.”

Hammond added that while the UK is unlikely to retain the same passporting system that it enjoys as a member of the EU, financial services companies "are also realistic and are looking at other options beyond passporting to protect their interests, and we’re obviously working closely with the industry on looking at all the options for future protection of London’s financial services businesses."