More fiscal powers for London a ‘no-brainer’

The Greater London Authority (GLA) was established by the Government in 2000 to provide a bespoke devolution settlement for London. In its first 25 years, London’s Mayoral model has delivered major achievements, while the London Assembly is unique as a democratically elected scrutiny body tasked with holding the Mayor to account.

But London’s devolution settlement is ready for the next chapter:

• London’s limited fiscal powers are the greatest weakness in its devolution settlement and set it apart from other global cities that have much greater fiscal autonomy.
• London’s scale and complexity far exceed those of any other English city, yet its devolved powers lag behind other global cities and UK devolved administrations – which have smaller populations.
• The GLA’s reliance on grant funding from Government means it is subject to onerous spending rules that have limited its autonomy to tailor spending to local priorities.
• Despite its strengths, the London Assembly needs further scrutiny powers.

The GLA Oversight Committee set out to examine the potential impacts of the Government’s devolution proposals, as outlined in the English Devolution White Paper and the English Devolution and Community Empowerment Bill. The Committee makes 14 recommendations in its report ‘Trusting London to deliver: our place in the Government’s devolution reforms’, which include:

• Amending the Bill to allow London to implement a tourism levy on overnight accommodation, with revenues ringfenced for investing in infrastructure and services that enhance London’s appeal as a place to live and visit.
• Exploring and developing a standardised model for tax increment financing (TIF) to allow for infrastructure investment in the capital.
• Strengthening the London Assembly’s scrutiny powers, including by giving it broader powers to summons representatives and information from key service providers, including privatised utility providers.
• Establishing a Joint Commission to review the GLA Act in detail and propose amendments, including identifying additional devolved powers to be requested by the Mayor.

Chair of the GLA Oversight Committee, Bassam Mahfouz AM, said:

“Having compared London to other global cities, one glaring fact came up repeatedly: fiscal powers are the missing link in London’s devolution settlement. 

“The Government’s devolution reforms must not miss the golden opportunity to grant London the power to introduce a tourism levy – a measure backed by 41 per cent of Londoners. The levy would raise vital funds, improve services for residents, and strengthen London’s global appeal. London is an international outlier in not having one.

“Reforms to council tax and business rates are other areas where Londoners want more local control and frankly, they’re also no-brainers. It’s time to finally give London the tools to match its responsibilities.

“Our proposals offer a win-win that not only secures London’s future but strengthens the prosperity and democracy of the UK as a whole.

“We call on the Government to trust London to deliver.”