London Devolution: Not If, But When

Rachel Holdsworth
By Rachel Holdsworth Last edited 39 months ago
London Devolution: Not If, But When

devolution

Calls for devolving more powers to London are growing stronger — it looked like such fun in Scotland, we thought we'd have a go. It's easy to imagine the rest of the country huffing that we already have plenty of power and influence, but Jonn Elledge in CityMetric recently mooted an argument that giving the capital more power would actually benefit the rest of the country.

The situation is this: most of our spending money comes from a central government grant. London gets to keep just 7% of the taxes paid by residents and businesses — the rest goes into the Treasury's coffers, leaving us to request cash for infrastructure projects like Crossrail. In contrast, New York keeps 50% of its taxes and Tokyo 70%.

Boris Johnson is currently in talks with government to allow us to keep things like stamp duty, something which Cities minister Greg Clark has ruled out. The Mayor told the BBC's Tim Donovan that the government regards London as a "great cash cow for stamp duty, they want to take all that money and decide how to spend it themselves".

Sadiq Khan, Shadow Minister for London, has launched a campaign and petition to allow us to keep more of our taxes, as well as wanting more devolved powers to run public services, health, education and training alongside building homes and infrastructure. Darren Johnson, Green Assembly Member, argued this week that if London had more control over business rates, stamp duty and council tax — including creating additional bands — we could fund programmes of genuinely affordable social housing, diversify our economy and fund infrastructure projects without having to go cap in hand to the Treasury, reducing the amount available to be spent elsewhere. As Jonn Elledge puts it:

"It may even be ultimately possible for London to pay for the vast majority of its own capital projects: through property taxes, borrowing against future incomes streams and so on. The city is rich. Why should it expect bungs from the taxpayer?"

So when Greg Clark chastises the city for not being clear about how it would spend the money it could raise —  at Tuesday's London Conference he said "London's only talking about taxes when the rest of the country is talking about things that are going to make a difference on the ground" — he presumably means the Mayor isn't presenting enough of the ideas coming out of alternate (i.e., non Tory) channels. However, Clark has conceded that it's not a question of if London gets devolved powers but how much, and when. Send your ideas to City Hall (or leave them in the comments).

Last Updated 07 November 2014

R Lindsey

We suffer the same issue in Toronto Canada, we only get 11% back and the city is repeated castrated by the Provicial and Federal governments. The largest and wealthiest city in the country is forced to beg cap in hand too.

johndodds

New Yorkers pay city and state tax as well as federal tax. Are you comparing like with like?

Arriviste

Then why is Sadiq Khan backing a mansion tax that will take money away from London? Parroting his line without challenging his actions is shoddy journalism.

Neil McL

Thank you for raising a very important issue. Excellent journalism and ideas please keep them coming.
When studies of development via devolution were carried out in the early part of the decade four regions were identified as the most likely to benefit from devolution. Scotland, Wales and NI have now all benefited from devolution. London hasn't, but it remains distinct the remainder of South East. It is multicultural and has acute challenges on poverty and deprivation. There is a natural Labour majority which is between 50-60% of the electorate. I think it is high time that the London Labour party, if it has not done so already forms a grass roots devolution organisation.

Nickpicker

Given that 'london' seems to think it's the 9 million in the GLA when there are another 5 million who come in to do all the work this independence gig is a bit rich. The UK is the only country that has a capital city that has forgotten that's its job. Try building the Walkie Talkie in Washington DC and you'd find what a country that cared about its capital felt

Howard

how much of the 7pc then goes back into Lundun-town i wonder..

mb

The big question I have is how will this affect the rest of the country? London it seems subsidises everywhere else in the UK, so what happens if those channels were to be interrupted? Perhaps it's more about control than anything else, but it's an issue to study at least.

Kyle Johnson

Why do people automatically take the position that a wealthier, more prosperous entity subsiding another is a bad thing. What would be the long term affects of depriving the rest of the country from London's enormous tax returns? Who would develop the agriculture that feeds us? Or educates the young people who replenish us? Or myriad many other things that London gains from the rest of the country?