A few days ago I set out additional powers and responsibilities which Londoners are entitled to have devolved to City Hall.
A shame then that the Evening Standard, which would be the most powerful media voice in a London with direct control over such services, mockingly refers to the “independent republic of London”.
But extra powers are just part of the improvements needed to London’s disappointingly timid devolution settlement – we need to look at the way our City government is funded.
London has to move away from ‘grants’ from central Government for essential services such as fire and police.
This year City Hall was forced to draw up its budgets without knowing the full value of such grants – this is unsustainable. The budget document notes “uncertainty regarding future years’ budgets for the GLA Group”, making future planning more difficult. (See Section 8)
We’re not a charity or deserving cause to be sent some money in the hope that’s of use, we’re a complex, city-state which powers the UK’s economy.
To continue to grow and prosper, London needs a long-term and binding funding settlement which gives us the freedom to drive forward ambitious plans without first having to ask remote, unaccountable Ministers for their blessing.
National government is a welcome guest in London, but no guest should seek to dictate what their host can do.
So how do we move to a more secure financial footing?
Even if VAT wasn’t already eye-wateringly high at 20%, regional variances in sales tax would be expensive and cumbersome for retailers to implement. So a London Sales Tax isn’t an option. And the removal of lower earners from the tax system suggests the power to vary income taxes would be of questionable value.
So instead of seeking extra tax powers, London must argue for keeping more of what it already pays inside our own borders.
This summer record number of visitors are expected to descend on the capital. They will spend huge sums in the West End from which the Chancellor and Treasury will scoop up greater VAT and corporation tax receipts which will then be spirited away for national use.
We must always be willing to share the wealth created here with the other regions, but the case needs to be made now for a healthy portion of the Olympic windfall to remain in London’s coffers.
Our next Mayor needs to open talks with the UK Government on a fair share of corporation, income and sales tax for London to retain for its own use.
Such a settlement should be enshrined in primary legislation, span multiple years – ideally multiple Mayoral terms – but open to periodic review at the request of a unanimous vote of the London Assembly and Mayor.
And Ministers must be clear that how we spent that money – be it reduced prescriptions, enticements to big business to set-up here, subsidised infrastructure to incubate small business or new transport projects – is a matter solely for Londoners and their government.
Update: The Economist carries an article which neatly sums up the current funding settlement as follows:
“London’s been turned into a teenager asking parents for money.”