Former trade minister Gareth Thomas wants capital to have tax-raising powers equivalent to those given to Scotland, to ‘deal with the tragedy of our poverty’

London should be treated as a city state and given tax-raising powers to match its equal standing with the four nations of the UK, according to a potential Labour candidate for mayor.

Gareth Thomas, a former trade minister who hopes to succeed Boris Johnson next year, says that as the country inevitably moves towards a federal system, it was time to recognise that “our UK is made up of England, Scotland, Northern Ireland, Wales and the city state of London”.

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Writing on theguardian.com, he says it is right that London’s wealth is redistributed to help other parts of the country. But he adds that the capital’s mayor should be able to take a larger slice of that cash to solve its own problems through tax-raising powers equivalent to those handed to the Scottish government.

Thomas, who is competing with the former culture secretary Tessa Jowell and the MPs Sadiq Khan, David Lammy and Diane Abbott to be Labour’s candidate for mayor in 2016, writes: “I believe we should look at London having greater control over income tax.

“We need the powers over our wealth to deal with the tragedy of our poverty.

“That includes more power over our NHS, our schools and skills and employment training.

“London is the most expensive place to live in the UK and the worst place to move around in.

“The quality of life of Londoners suffers because of that. The lived experiences of working Londoners I believe is worse than that of any other city dwellers in the country. As mayor, I want the powers to change that.”

Facebook Twitter Pinterest Gareth Thomas. Photograph: Ray Tang/REX Shutterstock

The Scottish government is in the process of being given nearly full control over income tax, air passenger duty and housing benefit.

The prime minister has suggested he is open to further powers, including over welfare, being passed over as well. However changes to the generous funding arrangement between the Treasury and Scotland, known as the Barnett formula, have not been proposed.

Under that deal an extra £1,623 per head, or 19% of public expenditure, is given to Scotland compared with England.

Thomas writes that it is time that London, the generator of much of that wealth, had a similarly lucrative deal with the UK exchequer.

He writes: “I do not doubt, or challenge the need of Scotland to have the Barnett formula. I just think it is only fair that Barnet – and all of London – has its own funding formula too.

“We have an asymmetric union and asymmetric devolution settlements but I believe that for too long London has been ignored in those equations.”

Labour increased its control of London to take 45 of the capital’s 73 parliamentary seats in May’s general election, despite heavy losses elsewhere in the UK.

The party’s gains left it with seven more seats than it polled in London five years ago, while the Tories lost one.

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Thomas further argues that these results provided reason enough for greater autonomy for London from the Conservative government’s policies.

He writes: “Like other parts of the country, London should have the powers to make our own decisions so we can have the policies we vote for.

“From John O’Groats to Land’s End we all recognise that the United Kingdom must change and reform if we are to retain the union which has worked so well for our country and indeed the world. London cannot be ignored on that journey.”

Labour will decide on its candidate in mid-July. The Respect party leader, George Galloway, has announced his intention to run as an independent.

Galloway, who lost his seat in Bradford West in the general election, launched his bid on Twitter on Thursday, tweeting a photograph of himself sitting on a bed next to his infant son. “Dad, you’ve got to do this. I’ve got your back!” a caption on the photograph reads.