Chancellor Philip Hammond is “open to persuasion” on devolving further powers to London and could make an announcement in the next budget, according to the city’s mayor Sadiq Khan (Lab).
There are hopes London will be provided with “new mechanisms” to help fund major infrastructure projects, including the construction of Crossrail 2 and an extension of the Bakerloo line on the underground system, said Mr Khan.
He also believes there will be “more progress” on business rates and the skills agenda for 16 to 18 year olds. Devolution deals to date, in all but the Tees Valley, have granted combined authorities with the power to oversee area based reviews of post-16 education and training.
Mr Khan said he was also hopeful of “more progress on public services, particularly health and criminal justice”. Five pilots aimed at radically transforming the way health and social care services are delivered in the capital were announced by former chancellor George Osborne in December 2015.
Speaking at the launch of the London Finance Commission’s report today, Mr Khan said: “We have entered the next round of negotiations with government on devolution ahead of the budget in March.
“We made some progress at the autumn statement. I’m pleased to say the government, and in particular the chancellor Philip Hammond, are open to persuasion on many of our key asks.”
Speaking to LGC, London Councils’ chair Claire Kober (Lab) said: “There are whole range of public service reform asks [being put to government] but the elephant in the room is Crossrail 2.”
Crossrail 2 is a proposed new railway that will connect Surrey and Hertfordshire, and London is expected to contribute more than half of the project’s costs. However, the London Finance Commission’s report said “local funding streams are currently very limited” while a levy on businesses has already been implemented to fund the first Crossrail scheme which runs from Reading and Heathrow in the west to Shenfield and Abbey Wood in the east. That levy is tied up in repaying debt until 2033 which “creates a significant problem in raising finance and affording debt” during the construction of other major schemes.
Cllr Kober said: “We just want government to get on and commit to Crossrail 2 because it’s not just a transport scheme, it’s an economic growth scheme.
“At the moment we’re at the mercy of government to decide whether such a scheme moves forward. I would argue as a city of nine million people we should be making decisions around infrastructure needs of our city ourselves and have the ability to service those independently.”
Meanwhile, Mr Khan thought there was a “renewed case of urgency” to devolve powers from Whitehall as a result of Brexit.
Over the coming weeks Mr Khan said he would assess which powers currently held in Brussels should be “repatriated” to London once Britain leaves the European Union.
One of the recommendations contained in the London Finance Commission’s report which has gained widespread media attention is the proposal to introduce a tourism tax on visitors staying in the capital. The report said a £2.50 a night hotel levy would raise £102m over a year.
But Mr Khan said he wanted the levy to be “voluntary” rather than compulsory as he did not want the initiative to have a negative impact on London’s hotel industry.
While Mr Khan thought some of the finance commission’s recommendations were “within reach of our city now” he admitted others would require “more work to persuade the government of our case”.