Keeping our capital working for the UK

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And now the case for London devolution

A year-and-a-half of relentless campaigning in the Scottish independence referendum has ended, but the argument over how and where power is wielded in the UK is far from over.

The devolution genie is out of the bottle and even though voters in Scotland rejected independence, British politics may never be the same.

With talks now beginning on devolving more powers to Scotland, the cities and regions of England are taking up the call for greater localisation of powers.

London, along with the rest of England’s cities and regions, has been very patient as Scotland has had the kitchen sink promised to it. Wales already has control over stamp duty and landfill tax, and potentially has income tax powers on the way.

It might sound strange equating the running of a city with a country, but London’s economy is bigger than that of Northern Ireland, Wales, and Scotland combined.

And we must not forget that a bit of devolution for London is not a big ask when the UK is one of the most centralised democracies in the world. For example, London keeps 6 per cent of the tax raised in the city, while New York keeps 50 per cent.

The arguments for devolution are straightforward: local governments are usually more attuned to what is needed in their area, while handing over powers can make them more engaged with, and accountable for, the money they spend.

Handing over decision-making powers also allows local governments to plan for the long term – particularly for things like big infrastructure projects – rather than having to rely on the whims of central government.

With an estimated £1.3 trillion needed for infrastructure investment alone up until 2050, the rapid growth of London has left the city particularly exposed and over-reliant on national whims to meet local needs. London’s inability to deal with its housing crisis is clear for all to see, while Transport for London’s reliance on a settlement that is uncertain from one year to the next is a particular problem.

As a first step, London First supports the London Finance Commission, which recommended that a suite of property taxes be devolved to London government (this would be swapped pound for pound for the existing grant, so it’s no new money now).

But we need to be careful what we wish from this newly-emancipated devolution genie. We should not ride a wave of populism straight into wholesale devolution. This mustn’t be about local financial control for its own sake.

The challenge for local government everywhere will be to demonstrate that, once given extra responsibility, it uses these extra powers to invest in projects that result in jobs and growth.

Contact John Dickie

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