Caroline Pidgeon: It’s time for more devolution to London

For decades I have been a champion of devolution – of giving people more control over the decisions that affect their lives, from the allocation of funding at a very local level to improve an area, to wider service provision and structures.

As I come to the end of my 16 years as a member of the London Assembly – and 26 years of elected office overall – I feel the time is right for a further shift of power away from Whitehall to the regions and to communities. I used my final Mayor’s Question Time (MQT) appearance to ask Sadiq Khan for his thoughts about the issue.

One ever-present challenge is that whatever the local or regional government structure, funding is a problem. Back in 2013, the previous Mayor, Boris Johnson, set up the London Finance Commission (LFC), a group of experts chaired by Professor Tony Travers. Its first report, Raising the Capital, transformed the debate and voiced the need for London and other cities to have more financial control.

Following Mayor Khan’s election and the Brexit referendum result in 2016, the LFC published a further report – Devolution: A Capital Idea. This called for a new devolution settlement for London which could also be a model for other city regions.

At MQT I called on the Mayor to consider a third LFC report to look at innovative ways to fund services and infrastructure to be presented to the next national government. We cannot continue with the begging bowl politics that have got worse since the pandemic. He agreed to consider this.

Looking at the current state of national politics following Britain’s regrettable departure from the European Union, it seems to me that devolution, including fiscal devolution, are key to reengaging and empowering citizens and their representatives across the country.

I often reflect that whatever Leave voters felt they were voting for back in 2016 it was not “business as usual” – an endorsement of centralised power, simply moving it from Brussels to Whitehall and job done. People across the country feel isolated from the democratic process.

At present, virtually all taxation in the UK is determined by central government. Only Council Tax and, in England since April 2013, a proportion of Business Rates can be seen as local taxes – and even they are subject to cumbersome controls, including referendum rules set by central government. When you compare this with other countries you realise just how much power is concentrated in Whitehall and therefore held by the national government of the day.

It cannot be assumed that the current degree of fiscal centralisation within the UK is the only way to do things. Giving London and other city regions greater power over their tax base and delivery of public services could be hugely beneficial all round, allowing those services to be reformed and giving everyone an incentive to see their local economy develop and grow.

It makes sense to bring London in line with most other global cities by allowing its government bodies to control a much wider range of taxes – crucially in exchange for lower levels of government grant. Other cities could benefit in the same way.

Devolution of this kind would enable London to operate more efficiently and effectively, integrating services and bringing forward infrastructure investment vital for growth at no additional cost to the country. It would also enable Whitehall to concentrate on the bigger global challenges.

The full suite of property taxes should be devolved to London’s government, including stamp duty and the operation and setting of Council Tax and Business Rates. And simple ideas such as a modest tourism levy of the type already operating in global cities such as New York, Paris and Berlin could be used to promote tourism.

The centralised nature of UK government makes real innovation at the local level incredibly hard. In London, the Mayor and the boroughs need further powers to bring about the structural change needed to address the types of inequalities Londoners face, from housing to household income.

When I questioned the Mayor about further powers and the fact that London has been left behind some other regions, which have secured trailblazer devolution deals – including a single funding pot – he agreed with me, particularly concerning the funding of new infrastructure.

Further devolution would give London government strong incentives to innovate and help invigorate local democracy. And as I said to the Mayor, additional powers to strengthen the London Assembly – the elected provider of checks and balances on his powers – must be integral to any future devolution deal.

Caroline Pidgeon has been a Liberal Democrat member of the London Assembly since 2008 and was previously a councillor in Southwark. Follow her on X/Twitter. OnLondon has partnered with the Institute for Government to put on an event about devolution to London. It will take place on 30 April. Sign up HERE.