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London needs a fairer piece of the fiscal pie

Sometimes reality bites. A few weeks ago, a friend and I were at the cinema. Before the film started, he politely asked what my big idea was for London. I said it was about making sure that the capital had more control over its taxes and services. He was shocked. Surely London is rich enough already? It’s the rest of the country we have to worry about. Then the lights went down.

That exchange nicely encapsulated to the difficulty in which London finds itself.

Those of us who work on London issues can rehearse the powerful arguments as to why London needs more self-government.

Britain, and above all England, remains a remarkably centralised country. London’s elected leaders – along with other English city and regional leaders – lack the powers their counterparts in other countries take for granted. The Mayor and the boroughs are better positioned than Whitehall departments to tackle complex problems and join up services. London’s current tax regime, especially its property tax regime, is poorly designed for the city’s needs. Council tax is regressive. Stamp Duty encourages under-occupation. Landowners get rich off the back of other people’s hard work.

If London had more powers to design a fairer and better tax regime, it could channel investment into much needed housing, transport, education and training.

Moreover, the argument goes on, giving London more power won’t mean less power or money for the rest of the country. It’s not just London that needs more self-government. So do other cities and regions. And growth is not a zero-sum game. London’s success is felt through the country, in terms of extra taxes and busier, more extensive supply chains. It’s not about London taking a bigger share of the pie but about creating a bigger pie, as The London Finance Commission has highlighted.

Yet these are complex, somewhat technical arguments when what people really want to talk about is why London looms so large over the rest of the United Kingdom. Perhaps that’s why London’s arguments for more devolution have not gone down very well in recent years.

It feels as if the devolutionary zeitgeist has moved elsewhere – the focus has gone on creating and empowering regional city and metro-mayors. If London’s arguments for more control are going to be heard, it will have first to show that it understands national concerns.

My big idea for London? Making sure that the capital does more for the country, by giving the Mayor and boroughs more power over housing, transport and skills. Did I mention that those are the issues Centre for London is focused on?  Lights out.

Ben Rogers, Director, Centre for London.