Purpose

This report sets out the recommendations to Cabinet to approve the signing of the JP Morgan Chase Canary Wharf Development Memorandum of Understanding.

Decision

1. Note the progress made in collaboration with Government, the GLA, JP Morgan, and Canary Wharf Group to explore a viable business rates incentive mechanism to support the development, which could be worth between £1bn-£1.6bn. 
2. Delegate authority to the Corporate Director of Resources and Corporate Director of Housing and Regeneration, in consultation with the Mayor and Lead Members for Housing and Regeneration and Resources and the Cost of Living, to negotiate community benefits including quality jobs and other social values for Tower Hamlets residents with JP Morgan. 
3. Agree that officers continue detailed modelling work with Government, including scenario testing of rateable value ranges and business rates income forecasts, subject to legal advice across a range of issues including subsidy control.  
4. Delegate authority to the Corporate Director of Resources and Corporate Director of Housing and Regeneration, in consultation with the Mayor and Lead Members for Housing and Regeneration and Resources and the Cost of Living, to finalise the Council’s proposed position for submission to Government and also upon these officers advice for the Mayor to sign the MOU. 
5. Note that a further Cabinet report will return with finalised modelling, legal implications, and recommended option(s), including any requirement for Cabinet approval in due course.   

Reasons for the decision 

1. Strategic Investment & Economic Growth: The development would retain a major global employer in Tower Hamlets and secure long-term economic activity and employment opportunities. The site represents one of the borough’s most strategically important commercial locations.  
2. National Significance: Government has confirmed the scheme’s strategic importance, indicating willingness to consider bespoke incentive mechanisms to prevent displacement or loss of major financial-sector investment to other cities or countries.  
3. Financial Planning: Modelling of potential rateable values indicates that the development could generate very significant business rates in the medium–to–long term. Establishing the correct approach now is essential to protect the Council’s future income base while complying with subsidy control rules.  
4. Governance & Assurance: A coordinated approach via the Steering Group will ensure a transparent, controlled process across the Council, Government and partners. 

Alternative options 

Do Nothing / Withdraw from Discussions  

The Council could choose not to collaborate on an incentive proposal. However, Government has indicated that JP Morgan may not proceed without business rates certainty, potentially resulting in the loss of major inward investment and associated economic benefits. 

Rely Solely on Local Discretionary Relief  

Under discretionary relief rules, Tower Hamlets would bear 30% of the cost, the GLA 37%, and Government 33%, creating substantial long-term financial exposure for the borough. This option is considered high-risk and financially unsustainable.  

Enterprise Zone Designation  

Cabinet could recommend exclusively pursuing an Enterprise Zone model. This project will include the legal and subsidy control risks that needs to be assessed.