Business leaders have warned that excluding London from Labour’s plans to devolve more powers to cities would benefit the capital’s European rivals, not its English neighbours.
On Tuesday Labour leader Ed Miliband set out plans to give England’s largest cities greater control over spending and services in a bid to boost economic growth.
He said that while London continues to perform well and Scotland and Wales have benefited from devolution, “every region in England outside London is below the national average when it comes to productivity.”
Miliband said regions and cities which could demonstrate plans for growth “will receive powers and access to resources from Whitehall the like of which we have not seen in living memory.”
However his speech omitted any plans to devolve more financial powers to the capital, as recommended by the London Finance Commission’s report which has the backing of all City Hall parties, local councils and London’s business community.
The London Chamber of Commerce and Industry (LCCI) gave a “broad welcome” to Labour’s plans but warned failure to include the capital would harm the UK economy.
Director of Policy, Sean McKee said “London is currently too dependent on central government funds to deliver the projects that will keep the capital competitive and enable it to cater for a growing population. Only 7% of all taxes raised in London, stay in London. When growth takes place in the capital, the rest of the country benefits too.”
He added: “If London is not given the financial freedom to grow, then it is Berlin and Barcelona that will benefit, not Bristol or Birmingham.”