Yesterday LCCI’s Chief Executive Colin Stanbridge gave evidence to the London Assembly’s Devolution Working Group, which is looking into the Government’s plans to devolve business rates, in full, to local government. LCCI welcomes in principle the developments around business rates, and we have long called for London to be given greater control over its finances to invest in infrastructure improvements. In 2013 we contributed to and support the recommendations of the London Finance Commission to permit the Greater London Authority (GLA) to retain all property taxes that the capital raises, including business rates.
With the Government set to allow local authorities to retain the £26bn raised each year in business rates, it is vital that devolution to London isn’t seen as a finished job. That is why in our recently published agenda for the next mayoralty, Towards a Greater London, we called for the next Mayor to commission an update of the London Finance Commission. Devolving property taxes to the capital would only see the Mayor retaining 12% of taxes raised in the city, a tiny proportion compared to Tokyo’s mayor retaining 70%. The future Mayor must make the case to the Treasury that this would be fiscally neutral, with a pound-for-pound reduction in London’s grant from Whitehall. The message here is clear: London is willing to pay for itself, but it must be given the fiscal powers to do so.
Devolving more financial power to London will allow the capital to better face the unique set of challenges it faces. Take housing as an example – it is a top priority for businesses, politicians and residents, half of whom favour house building as the top priority for spending in the city. Insufficient housing supply, not just to buy but also to rent, is one of the top three barriers to London’s competitiveness according to almost half of business leaders. If London is to build the homes it needs for its workers, it should be given greater powers to determine which types of housing are genuinely affordable, and accessible, in a city facing a crisis on a unique scale. Skills devolution should also be a target for the next Mayor, who should secure primary commissioning control over the Skills Funding Agency’s budget, allowing businesses to drive forward demand-led training so that they can access the skilled workers of the future.
The GLA and the London boroughs must work together to make sure devolution is a success. Clusters of combined authorities working together have the power to drive greater economic cooperation, saving costs and time through jointly commissioning services. They are also well-placed to tackle strategic planning issues. Greater Manchester is seen as the standard bearer for greater cross-borough collaboration, which has led to a devolution deal for the city to have an elected mayor. With London having had a mayor since 2000, LCCI is calling for the next Mayor to convene a ‘metro mayors panel’ to explore how to encourage and embed best practice on devolution across the country.
The Chancellor’s ‘devolution revolution’ is ongoing, and what is clear is that London cannot be left behind. Business rates devolution must not be the end of further devolution to London – it must be the beginning of a package of greater powers to allow the capital to accommodate forecasted population growth.
Sophie Mew is Policy and Public Affairs Officer at LCCI