Mayor welcomes Autumn Statement as first step to major devolution deal

23 November 2016
  • Record £3.15bn deal for affordable housing in London
  • Devolution of adult skills provision to London
  • Devolution of back-to-work programmes to London

The Mayor of London, Sadiq Khan, has today welcomed commitments by the Chancellor of the Exchequer, Philip Hammond, as the first steps towards a major devolution deal for the capital.

He welcomed the record £3.15bn devolution deal struck with Government to build 90,000 new and genuinely affordable homes for Londoners. This is the largest sum of money ever secured by City Hall to deliver affordable housing. 

Following negotiations with the Mayor, the Chancellor has also relaxed the rules around how City Hall can use this money, meaning the Mayor can now build new homes for low-cost rent, London Living Rent, and shared ownership between now and 2021.

Sadiq believes that today’s Autumn Statement signals the start of a long-term process of giving London government the control it needs to grow and protect the capital’s economy from the current economic uncertainty. 

The Mayor, and London Councils, have been arguing that London needs a stronger voice in order to deal with the very real threats Brexit poses to key sectors of London’s economy like finance, higher education, housing, small businesses, culture and the creative industries. 

In addition to more money for affordable homes, the Chancellor also announced:

  • Devolution of adult skills funding to London from 2019-20.  This is crucial as it will allow the Mayor to give Londoners the skills they need for the jobs of the future – which is more important than ever in the aftermath of the EU referendum. The Mayor hopes to go further on this in the future with control of skills budgets for 16-18 year olds too.
  • Giving London more control over employment support services in the capital – the programmes and schemes that help get unemployed people back into work.
  • A new £23 billion national productivity fund, also welcomed by the Mayor, although he warned that Britain will need significant further infrastructure investment in order to manage the economic uncertainty ahead. The Mayor is disappointed that there was only a marginal improvement in the transitional relief scheme for businesses facing massive increases in their business rates bills.
  • £1 billion investment in digital infrastructure across the country and from April, 100 per cent business rate relief investment in new fibre.
  • Further investment in the London Local Enterprise Panel so it can continue to take a strategic view of the regeneration, employment and skills agenda for the capital.

However, Sadiq voiced his disappointment that the Government did not use the Autumn Statement to devolve to the capital some control over suburban rail services which he believes would have led to improved services for millions of passengers.

The Mayor believes that the most striking thing about the Autumn Statement is sheer scale of the economic challenge facing Britain in the aftermath of the EU referendum. The Office for Budgetary Responsibility has seriously downgraded its predictions for economic growth to just 1.4 per cent for next year, and say that growth won’t get back to pre-referendum levels until 2021.

The Chancellor admitted today that it will now take much longer to eliminate the deficit than previously predicted – it now won’t be eliminated until the end of the next Parliament – and Britain’s debt next year will top 90 per cent of GDP.

The Mayor of London, Sadiq Khan, said: “I’m delighted that we today took the first steps towards a major new devolution deal for London. London has a bigger population than Scotland, Wales and Northern Ireland combined, but we have far less control over how our city is run.

“Today’s marks the first step in our journey to give the capital a greater voice so we can protect jobs, wealth and prosperity and provide an extra incentive for economic growth.

“The record-breaking affordable housing settlement means we can get on with the hard slog of building new genuinely affordable homes, but it won’t happen overnight – fixing the housing crisis will be a marathon and not a sprint.

“Of course we didn’t get everything we asked for today – securing more control for London will not happen overnight. I’m disappointed, for example, that the Chancellor didn’t devolve control of suburban railways in London. Commuters who rely on Southern, South-West and South-Eastern services are currently being ripped off with a terrible service. I hope the government will move on rail devolution sooner rather than later.”

London currently controls only seven per cent of funds raised in the city, compared to 50 per cent in New York and 70 per cent in Tokyo.

The Mayor will now continue negotiations with the Treasury and Downing Street for a deal for London that focuses on further housing and skills devolution, fiscal devolution and control over public services including health and criminal justice

The Mayor believes that with interest rates predicted to rise steeply over coming years, the people that Theresa May likes to describe as ‘just about managing’ need Government help now more than ever.

Sadiq believes there was some good news today with the abolition of letting agents’ fees, the increase in the minimum wage and the freeze on fuel duty - but it didn’t go far enough. He was particularly disappointed that there was no action to freeze fares on national rail lines, or to make childcare more affordable – which now costs the average London family £16,000 a year.

In particular, the Mayor has welcomed:

  • Letting agency fees - Banning letting agency fees, which pile on costs for renters, is a very welcome move, and one the Mayor has been calling for some time.
  • Scrapping the proposed increase in fuel duty – This will be a welcome relief for motorists during these difficult times, saving the average driver £130 a year, and the average van driver £350 a year.
  • Increase in the National minimum wage from £7.20 per hour to £7.50 in April next year – The Mayor welcomes this increase  although it is lower than previously promised by George Osborne and is still a long way short of the London Living Wage of £9.75.
  • The launch of a new savings bond at the Budget next year, with an interest rate of 2.2 per cent gross – The Mayor believes this is a promising move, although we will have to see the details in the budget.