Today sees the publication of the final report of the reconvened London Finance Commission, set up by Sadiq Khan and chaired by Tony Travers.
The commission, of which I am a member, builds on the work of the first commission, set up by Boris Johnson, in arguing that London government should be given more control over its tax base.
In the first commission report, we recommended the devolution of property taxes. In the report launched today, we suggest that devolution could be extended to cover a proportion of income and non-property business taxes as well.
What are the chances of Theresa May’s government will adopt any of our recommendations? On the face it, they are not great.
It’s long been agreed that Britain has suffered from over-centralisation and for at least 30 years now, perhaps starting with John Major’s 1992 manifesto, every government has been elected on a promise to devolve power downwards.
But the truth is, if we set aside devolution to Scotland and Wales, there is no simple devolutionary story we can tell about England. The Cameron governments, like others before it, gave with one had and took with the other. New powers, for example, are being given to city regions and their new metro-mayors. Elected police and crime commissioners were intended to strengthen local accountability over crime and justice. And councils have been given new responsibilities for public health.
On the other hand, schooling has been centralised, as government has backed academies and free schools that are ultimately answerable to the Department for Education. Local government has taken a disproportionate share of funding cuts, inevitably weakening its position vis-a-vis central government.
This ambiguity can be seen in London. On the face of it, the creation of the Greater London Authority in 2000 marked a big downwards shift in power. In reality the mayor was and remains a less powerful figure than the Greater London Council abolished in 1986, and hugely less powerful than his counterparts in cities like New York and Tokyo. I suspect if you ask most borough leaders whether they feel more powerful now than they did a decade ago, they would answer that the cuts have left their boroughs weaker than they were; London boroughs have seen their funding cut by nearly half in real terms since 2010.
But the decision to leave the EU has, as today’s commission report sets out, powerfully strengthened the argument for devolution, both to London and other English cities and regions.
This is in part because the UK is likely to hit difficult economic waters as it leaves the EU, and we need to ensure that the economy is firing on all cylinders. That will only happen if London is given an opportunity to design a tax regime that is fit for purpose.
But there is also another reason. It’s often been said that Brexit poses the biggest challenge that national government has faced since the Second World War; David Davis, minister for exiting the EU, has said as much. Only yesterday the Institute for Government published a report that pointed to the massive pressures Brexit is already putting on Whitehall. The civil service is smaller than at any time since the Second World War. Yet the government’s “major projects portfolio remains too big and half of departments have 50 or more listed priorities”, the report says. It urges Ms May and her ministers to consider rethinking some of their pre-Brexit priorities and focus on the job at hand.
But devolution offers our hard-pressed government the chance to do just that. Giving London not just the power but the responsibility to, say, design and manage its own tax regime, run its own schools and skills system, and make its own capital investment decisions, would allow the government space to get the best of our divorce from Europe. If ever there was a time for letting go, this is it.
Ben Rogers, director, Centre for London