Keeping our capital working for the UK

A fairer share of tax

"Stable tax policy has been a competitive advantage for London."

Baroness Jo Valentine
Chief Executive, London First

London generates substantially more in tax receipts than it receives in public expenditure. Yet little of the tax collected from London is determined by London government and the GLA is funded largely through a grant from central government, which can vary from year to year.

London therefore has a much greater dependency on short-term funding decisions made by central government than competitor cities such as New York, Paris and Tokyo. This reliance on short-term spending rounds creates unnecessary uncertainty and provides an inefficient and inadequate mechanism to meet the city’s long term investment needs.

We support the recently published conclusion of the London Finance Commission that London should have more service delivery devolved from central government, and that its government should retain sufficient income from the tax receipts collected within London to enable it to fund its spending and investment needs.

Even with this arrangement, London would generate tax revenues well in excess of its own requirements and so would continue to support general government expenditure outside London.

We welcome the recent devolution of 50% of the business rates to London local authorities and see this as a first step towards London being able to finance and fund its needs.

Until such devolution takes place, it is vital that investment continues at adequate levels to meet the city’s growing needs and that a commitment is made to maintain this investment for the foreseeable future. London’s population is forecast to grow by 1.1 million, the equivalent of a city the size of Birmingham, by 2020. Sustained investment is vital for both London’s and the UK’s economy.

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Contact David Lutton for further information

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