Member Article

London Devolution: This is how Sadiq Khan hopes to wrest more control from Whitehall

The London Finance Commission has today published a major new report that outlines proposals for devolution more powers to City Hall in the aftermath of the UK’s decision to leave the European Union.

The Commission’s ‘Devolution: a capital idea’ report has been compiled following cross-party consultation involving political and business leaders, helmed by Professor Tony Travers from the London School of Economics.

Its proposals, which have received wholesale backing from the Mayor of London, Sadiq Khan, outline ways in which the city could wrest more control over its finances, expenditure and tax revenue from Whitehall and give London equivalent powers to some major world capitals.

The issue of further devolved powers for the Mayor’s office and London’s councils has been catapulted to the top Khan’s agenda following last June’s exit vote, amid fears that the capital will be seriously impacted by the UK’s exit from the EU.

Some of the key recommendations outlined in today’s report include:

• Government, the Mayor and London councils working together to look at the possibility of a tourism levy, similar to that in Paris, Amsterdam and Rome, which would be use to promote tourism in the capital
• London being assigned a percentage of Londoners’ income tax yield in line with its overall expenditure
• Giving the capital a proportion of VAT yield from London businesses if a larger share of public expenditure is devolved
• Devolving responsibility of the apprenticeship levy to London’s government in order to give it more control over skills and employment initiatives
• Devolving air passenger duty (APD) and the soft drinks industry levy for all taxes raised within London.

According to the Mayor, the new ‘beefed-up’ proposals would mean the city was able to operate more efficiently and effectively, with more integrated services and could potentially bring forward infrastructure investment.

Khan said: “Giving London more control would allow us to manage the current economic uncertainty in the aftermath of the EU referendum, giving London the stronger voice it needs so we can protect jobs, growth and prosperity for the future.

“Now is the time for the Government to seize the moment and unleash the spirit of devolution seen in other parts of the UK the capital can continue to drive the UK economy for decades to come.”

Professor Travers argues that the vote to leave the EU makes the case for more devolved powers ‘even more acute’ and that the current centralised system made it impossible for City Hall to properly tackle London’s inequalities.

He added: “This report makes the case for a much more ambitious devolutionary settlement for London. It argues that by giving London government greater power over the tax base and public services, the city’s leaders would be provided with stronger incentives to develop its economy and opportunities to reform public services.”

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