London should be allowed to retain “a small share” of the VAT and income tax collected in the city to help it mitigate the impact of Brexit, according to the reconvened London Finance Commission.
The commission, chaired by Professor Tony Travers from the London School of Economics, was first established by former Mayor Boris Johnson and in 2013 set out proposals for greater fiscal autonomy for London.
Following this year’s vote to leave the European Union, current Mayor Sadiq Khan asked Professor Travers to reconvene the commission and explore how London could be given “a stronger voice and the tools it needs to protect jobs, wealth and prosperity.”
Interim conclusions published today call for some of the almost £60bn Income Tax and VAT yields generated in London to be devolved to local politicians.
The precise amount would depend on the pace of wider service devolution and, as with the commission’s 2013 proposals, would be fiscally neutral so that the Treasury and other regions would not be worse off.
The commission also suggests that part of the apprenticeship levy on employers is retained by London, allowing it to target resources at sectors with potential shortfalls in labour supply as a result of leaving the EU.
Publishing the proposals, Professor Travers said: “The London Finance Commission is asking for Londoners to have more control over taxes and spending to ensure that Brexit does not undermine the city’s capacity to grow and to generate tax for the UK as a whole.
“The recommendations in the report may sound radical, but are modest when compared to other international cities like New York and Frankfurt, and are supported by public opinion.
“London is not an island; the whole country benefits from London’s growth both economically and culturally, so when London prospers the rest of the country prospers as well.
“Our devolution proposals will give London the tools it needs to accelerate its growth from which the entire country will benefit.”