‘What is good for London is good for the country,’ says mayor Sadiq Khan as he endorses London Finance Commission report calling for greater tax-raising powers and freedom from Whitehall interference

A faster pace of devolution to the capital would provide a blueprint for Britain’s major cities to take control of their destiny, according to a report for the mayor of London, Sadiq Khan.

With greater tax-raising powers and the freedom to implement policies to stimulate the local economy without Whitehall interference, London’s politicians would be in a position to show Manchester, Birmingham and Liverpool how to prosper following the Brexit vote.

Khan endorsed the findings of the London Finance Commission with a call to ministers to set London free from Whitehall control “because what is good for London is good for the country”.

He said London was uniquely tied to central government funding compared with other capital cities and, unlike them, struggled to develop policies tailored to its own needs without first winning central government approval.

“London has the same population as Wales, Scotland and Northern Ireland combined, but we have far less control over how our economy and public services are run,” he 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.”

Facebook Twitter Pinterest Sadiq Khan: ‘London has the same population as Wales, Scotland and Northern Ireland combined, but we have far less control.’ Photograph: John Stillwell/PA

The commission said London needed to get near the 50% to 70% independent funding that is common in other capitals. Currently London receives less than 10% of its income from independent sources, mostly council tax and a slice of business rates.

Khan said he wanted a slice of the new soft drinks industry levy, the air passenger duty raised in London and a voluntary tourism levy alongside revenues from Londoners’ income tax, VAT and stamp duty payments.

The commission said one of the main aims of further devolution would be to allow the mayor and London’s 32 London boroughs to overhaul property taxes that successive governments have allowed to become outmoded.

It argued that business rates, which are based on rising property values and set to soar in London and the south-east following a revaluation in April, failed to take account of the types of businesses affected. It said thousands of small employers could go bust without an overhaul that ministers were unwilling to sanction.

The commission also recommended that the mayor be allowed to run pilot projects allowing him to take control of new housing and business developments to make sure Londoners grab the lion’s share of property value gains. An annual tax on land values should also be investigated to all for cuts to transaction taxes on property, which encourage speculation and volatile price swings.

Tony Travers, the director of LSE London at the London School of Economics, chaired the commission which he said merely wanted to bring London in line with most other global cities.

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Jon Collins, leader of Nottingham city council, added: “The London Finance Commission focuses on our capital city, but it also makes a strong case for government to be more ambitious in giving all the great cities of the UK real powers to invest in infrastructure and to improve the living standards of their citizens.

“Even after the devolution deals of the last two years we are still a heavily centralised country. Whitehall needs to loosen its grip and trust our cities to make the right decisions.”

Combined authorities based around Birmingham, Liverpool and Manchester go to the polls in May to elect region-wide mayors for the first time. The elections will trigger the release of substantial funds from the Treasury, mostly for transport infrastructure projects. Sheffield, Newcastle and Leeds have so far failed to agree terms with neighbouring authorities to allow for mayoral elections.

Matthew Bolton, deputy director of the charity Citizens UK, said: “Devolution of fiscal powers to London would bring decision-making closer to the people. Greater participation of citizens and proximity to communities in turn makes for better decision-making. Londoners want to be in the lead on devolution, not lagging behind other regions, and now is the time for government to act.”



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