๐จ๐น๐๐ถ๐บ๐ฎ๐๐ฒ ๐ด๐๐ถ๐ฑ๐ฒ ๐๐ผ ๐ณ๐ถ๐๐ฐ๐ฎ๐น ๐ฑ๐ฒ๐๐ผ๐น๐๐๐ถ๐ผ๐ป – ๐๐ผ๐ป๐ฑ๐ผ๐ป’๐ ๐ฎ๐น๐ฟ๐ฒ๐ฎ๐ฑ๐ ๐๐ฟ๐ถ๐๐๐ฒ๐ป ๐ถ๐!
No matter what commentators or thinktanks might put out today or the next few days, the London Finance Commission said 99% of what there is to say about local fiscal devolution – and its worth a read for those serious devolution wonks out there!
The Commission was set up in 2012 by Mayor Boris Johnson and chaired by Professor Tony Travers (LSE). It produced Raising the Capital (May 2013). Mayor Sadiq Khan reconvened it, and it issued Devolution: A Capital Idea (January 2017).
๐๐ถ๐ป๐ฑ๐ถ๐ป๐ด๐ (๐ฎ๐ฌ๐ญ๐ฏ)
- The UK is among the most fiscally centralised advanced economies. London government directly controls only a small share of the taxes raised in London, roughly 7%. Comparable cities such as New York control far more.
- London faces sustained population growth and large investment needs, especially for housing and transport (e.g. Crossrail 2). Grant-dependent funding cannot meet these reliably.
- Central control weakens accountability and limits the capacity to invest for growth.
๐ฅ๐ฒ๐ฐ๐ผ๐บ๐บ๐ฒ๐ป๐ฑ๐ฎ๐๐ถ๐ผ๐ป๐ (๐ฎ๐ฌ๐ญ๐ฏ)
- Devolve the full suite of property taxes to London government: council tax, business rates, stamp duty land tax, annual tax on enveloped dwellings and related property taxes. Grant would be reduced to keep the change fiscally neutral at the outset.
- Give London freedom to revalue council tax and add bands.
- Relax borrowing controls, including the Housing Revenue Account cap, within a prudential framework.
- Over time, allow a share of income tax to be assigned to London, and allow minor new taxes (e.g. a tourist levy) subject to approval.
- Make equivalent reforms available to other major English cities, not London alone.
๐ฎ๐ฌ๐ญ๐ณ ๐๐ฝ๐ฑ๐ฎ๐๐ฒ
The Commission reaffirmed its 2013 case, set in the context of Brexit and continuing growth pressures.
- It recommended devolving property taxes, and later assigning shares of income tax and possibly VAT.
- It called for powers to introduce new taxes such as a tourist levy.
- It sought wider devolution over skills, employment support, health and care integration, and criminal justice.
- It again proposed extending the model to other cities and city regions, with fiscal neutrality and safeguards for equalisation.
Links to the reports are here:
- Raising the Capital (May 2013): The Commission’s first major report, which assessed funding arrangements in the capital and recommended devolving property tax streams and relaxing borrowing limits for infrastructure.
- Interim Report (October 2016): Published after Sadiq Khan asked the Commission to reconvene, shifting focus toward revenue funding, public services, and a broader local tax base.
- Devolution: A Capital Idea (January 2017): The full updated report proposing greater local control over income tax, VAT, property levies, and employment/apprenticeship funds following the EU referendum.
#no10north #devolution #fiscal #localtax #london
