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Report: Khan endorses London devolution proposals

Words: Laura Edgar

Giving more powers to London would make the case for a more devolved England, according to a report that has been championed by Sadiq Khan.

Following last year’s vote to leave the European Union (EU), Khan, the Mayor of London, asked the London Finance Commission* to bring forward a set of devolution proposals. He said nothing should be ruled out when protecting London’s jobs, wealth and prosperity.

Tony Travers, London Finance Commission and professor at the London School of Economics, said the vote to leave the EU makes the case for further devolution more acute.

“It cannot be assumed that the current degree of fiscal centralisation within the UK is the only way of doing things.”

The centralised nature of UK Government, he continued, makes it “virtually impossible for the mayor and the boroughs to bring about the required structural change to address the types of inequalities Londoners face, from housing to household income”.

According to Travers, Devolution: a capital idea makes the case for a much more ambitious devolutionary settlement for London.

“It argues that by giving London government greater power over the tax base and public services, the city’s leaders would be provided with stronger incentives to develop its economy and opportunities to reform public services.”

In order to enable the city to bring forward infrastructure investment and to operate more efficient, effective and integrated services, including housing and planning, the commission has recommended that London’s government has control over a wider range of taxes in exchange for lower levels of government grant.

This, said the commission, would bring London into line with other global cities.

Additionally, the report states that its proposals for London should be seen as making the case for “a more devolved and better-governed England”.

Jon Collins, Core Cities cabinet member for finance and investment and leader of Nottingham City Council, said: “The London Finance Commission focuses on our capital city, but it also makes a strong case for government to be more ambitious in giving all the great cities of the UK real powers to invest in infrastructure and to improve the living standards of their citizens.”

Despite recent devolution deals, Collins said England is “still a heavily centralised country” and that Whitehall “needs to loosen its grip and trust our cities to make the right decisions”.

Other recommendations in Devolution: a capital idea include:

  • Short of full property tax devolution, the government should work together with the boroughs, the GLA and TfL to develop a consultation paper on the objectives, principles and design options of a land value capture charge (Part 4, Chapter 6).
  • National government should work with London’s government to trial the operation of a land value tax pilot on undeveloped land.
  • The operation and setting of council tax should be devolved to London’s government.
  • Stamp duty on domestic and commercial properties – and related levies – should be devolved to London’s government. The amount collected in council tax and stamp duty could be considered together, striking a balance between the annual taxation of property and the taxation of transactions.
  • London’s government should have permissive powers to develop new mechanisms for managing charges on property development.
  • Central controls should be removed from planning application fees, building control charges, land searches and licensing fees. Such fees and charges should be audited locally to avoid cross-subsidisation of other functions.
  • The Greater London Authority (GLA), Transport for London and London Councils with their counterparts in the rest of the South-East, should consider developing a strategic transport and infrastructure funding proposal for submission to the government by the time of the 2017 Autumn Budget. These organisations should also work with the National Infrastructure Commission to collect evidence for the National Infrastructure Assessment.

Khan said he fully endorsed the recommendations in Devolution: a capital idea.

“London has the same population as Wales, Scotland and Northern Ireland combined, but we have far less control over how our economy and public services are run," he said.

“Giving London more control would allow us to manage the current economic uncertainty in the aftermath of the EU referendum, giving London the stronger voice it needs so we can protect jobs, growth and prosperity for the future.”

Speaking to The Planner, Richard Blyth, head of policy at the RTPI, said: “Our Planning Horizons research Making Better Decisions for Places has shown how fiscal devolution provides local leaders with the resources to shape places, and manage, coordinate and integrate services infrastructure and policy across appropriate meaningful areas. It is potentially easier for local authorities to move funds from one budget line to another in order to undertake projects with wide-ranging future benefits such as better housing and public health.”

The report can be found here.

*The London Finance Commission comprises a group of cross-party political and business leaders led by Travers.

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