Today Apple announced it will be moving into the high-status new development at the iconic Battersea Power Station on the banks of the Thames in South London. The plan is to set up a new UK ‘campus’ to echo the doughnut-shaped ‘spaceship campus’ the company is currently constructing in Cupertino, Ca, as a global headquarters.
The half-a-million square foot lease is one of the largest office deals in central London in two decades, and it’s a good fit – the power station matches Apple’s design aesthetic and it has a strong music link.
Apple will be bringing together all its 1400 non-retail London employees at the site – mainly human resources and other corporate – but it will have plenty of space to expand, at least to another 1600 staff members.
And the UK has a new government Budget in November, one that in the strained atmosphere post-Brexit has taken on added significance.
One of the issues the chancellor Philip Hammond will be attempting to tackle is how to stop a flood of big, global companies leaving the UK now that their access to the European market has been severely curtailed, with the clear damage to UK tax revenues and employment that would follow such an exodus.
One mooted plan is to lower Corporation Tax – already one of the lowest in the world – by another 5%, and then to take it even lower. The effect on the bottom line of those big corporations will likely off-set any Brexit pain they’re feeling.
Apple has had plenty of tax-related problems in recent weeks – the European Commission ruled last month that the company has to cough up $14.5 billion in “illegal tax benefits”, which Apple is appealing – and its enthusiasm for the EU is fading fast. CEO Tim Cook said, “The most profound and harmful effect of this ruling will be on investment and job creation in Europe.”
Apple’s European headquarters are currently in Ireland where it employees 5,500 people. It has said those jobs are safe, for now, but the new UK campus won’t be open till 2020, and with a new corporate tax regime in place and a business-friendly government in power, the establishment of Apple East in London looks a good bet. Apple wins on every front – it gets to stick two fingers up to the EU, which on many fronts has not been tech-friendly, and it can clean up its brand by paying the tax it owes, to the UK, and not to the EU. The UK benefits significantly, in higher tax receipts, in jobs, and in the gold-rush of tech firms who will follow the lead of a massive name like Apple. The lower corporate tax rate will more than pay for itself.
London Mayor Sadiq Khan has already welcomed Apple’s vote of confidence in the city. Today he said: “I’m delighted Apple is moving into Battersea Power Station, helping to generate new jobs and economic prosperity for London. It is a further sign London is open to the world’s biggest brands and the leading city for trade and investment.”
It’s no secret that the Mayor and the government have been involved in a host of back-channel negotiations to attract companies like Apple and stave off any post-Brexit economic nightmare. But a move by Apple to London would also fit with this government’s driving policy to build a global technology hub in the capital (and along a corridor running up to Cambridge). The chancellor said today that this move “demonstrates how the UK is at the forefront of the next steps in the tech revolution.”