London is joining forces with other major English cities to make the case for greater financial autonomy.
Earlier this year the Mayor’s London Finance Commission put forward a number of proposals which, if enacted by Government, would give the capital greater control over taxes raised within it.
The Commission’s proposals include devolving control of all property taxes to City Hall and councils, with a pound-for-pound reduction in Government grant.
While the change would not give London more cash in the first year, the move from grant settlements would bring greater freedom and flexibility on how to spend the cash.
It would also enable the Mayor and borough leaders to commit to long-term projects such as Crossrail 2 in the knowledge that they had a predictable income stream from which to fund them.
Investing in such schemes would then boost receipts from some of the retained property taxes, increasing the amounts available to invest in future projects.
When the Commission’s report was published, Chair Tony Travers said the proposals could also apply to other cities.
Professor Travers has since suggested their adoption could depend on backing from other parts of England.
The Mayor and London Councils, the body which represents all local authorities in London, have now joined forces with Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle, Nottingham and Sheffield to make the case for greater financial freedom.
The group believe that properly funded local government is best placed to tackle unemployment and contribute to the nation’s economic recovery.
It is also suggested that greater autonomy for regions and cities could be the answer to calls for English devolution following the establishment of regional Governments in Scotland, Wales and Northern Ireland.
The Mayor of London, Boris Johnson, said: “That London’s government is joining with England’s largest cities to call for change is an historic and significant move.
“My aim is for the capital to win fiscal reforms in line with those presented by Professor Tony Travers’ excellent London Finance Commission report, namely those that give residents and businesses a closer say over where their hard-earned taxes are spent.
“This will enable politicians elected by Londoners to plan and finance the infrastructure we need to prosper in the face of a decade of expansion. By the same token, this formula can be applied to cities across England, ending stop-start finance settlements and instead providing a reliable stream of funding to enable investment, jobs and growth.’
Sir Richard Leese, Chair of the Core Cities cabinet which represents Citiies outside London, said: “England’s great cities have a proud tradition of independence and ambition. Yet our ability to act on that ambition has been eroded as central state control of our finances has increased year on year.
“Together the Core Cities and London represent more than half of the national economy and almost half the population. But we only directly control around five per cent of the taxes raised within our cities, and such funds as are returned by the government come back with strings attached.
“This means less local decision-making, missed opportunities, wasted time and money and less competitive cities. Both the Core Cities and London could create more growth if we were not hampered by an almost complete lack of control over finances.”
Mayor Jules Pipe, Chair of London Councils, added: ‘Greater devolution to England’s cities and localities offers new hope for securing the sort of economic growth our country so critically needs.
“London’s boroughs need to be at the heart of shaping the capital’s economic and fiscal future, as well as working together to reform services in a way that reflects the reality of severely reduced public finances. London Councils believes that this campaign can play a vital part in driving that agenda forward.”