Brown too late in fighting slowdown, says LDA chief

The new chairman of the London Development Agency today blamed the Government for putting London's economy at risk.

Harvey McGrath, who will temporarily lead the organisation, said ministers had brought in policies that were too "late and not vigorous enough" to stave off the threat of recession.

The multi-millionaire businessman suggested the economic problems faced by the capital would be "more protracted and a bit deeper" than might otherwise have been the case.

His remarks will come as a blow to Gordon Brown as he struggles to convince voters that his economic credentials will see the country through stormy economic times. Senior City figures have expressed concern that the rows over "non-doms" and capital gains tax, as well as the Northern Rock saga, have seriously damaged London's international reputation.

Mr McGrath, who chaired hedge fund Man Group and helped set up former mayor Ken Livingstone's skills strategy, spoke out as his new position was confirmed at City Hall.

He told the London Assembly: "I'm in the camp of being pessimistic about the outlook for the UK economy and in particular for the financial services sector. I think that the policy responses that we've seen from the Government have been late and not vigorous enough and the consequence of that is it's going to be more protracted and probably a bit deeper than it might otherwise have been.

"For London, I think that does have special consequences in that the economic base here is more heavily concentrated on the financial sector and allied trades. Not completely, there's a fair spread, but the significance in terms of the London economy will be magnified as a consequence of that concentration.

"What that means is it is a more challenging environment when we look at employment. The pressures in the global market have not abated. The inexorable drive to higher skill requirements and higher value-added will continue. It therefore makes it more urgent that we bring a better focus to bear on how we address the chronic lack of basic skills in a large segment of London's population."

Mr McGrath, who has opted not to take a salary for his four-month role, said there was an "urgent" need to restore the troubled agency's standing and credibility.

Its reputation was damaged after the Standard revealed it had handed out grants to a series of organisations that did little or nothing in return.