London’s businesses support stronger councils within the capital

The government’s ‘devolution revolution’ across England is welcome, if a tad late. Giving more powers to local decision makers in various city regions will unlock potential for future prosperity.

However Whitehall has largely left London out of the process, perhaps because our city has a mayor and assembly but that would ignore that London’s devolutionary settlement, enacted in 2000, is unfinished business.

Charisma aside, our two mayors have been relatively weak in terms of powers, compared to the mayoralties of New York or Tokyo. This matters a lot and not only because of international prestige.


London is on course towards ‘megacity’ status. By 2020, nine million people will be living and working in the capital; 10 million by 2030. This is a sign of success but it will put pressure on the capital’s transport and housing. Our polling surveys reveal that London businesses are already enduring the impacts. Staff recruitment and retention, punctuality and productivity are all affected by increasing numbers of workers having to live in outer London areas or beyond due to limited housing, facing lengthy commutes.

London’s mayor has to face these challenges within a legislative framework formulated 16 years ago. In many instances the mayor had to go to Whitehall to make the case to be permitted to do this or that. No other global city has to endure that. This month, London will elect a new mayor. This is an opportunity to renew London’s devolutionary settlement.

Retaining more London-generated taxes and securing new competencies will be key; London retains seven per cent of London taxes compared to New York’s 50 per cent. The new mayor could begin the process of persuading Whitehall of the potential for fiscal devolution by commissioning an update of the London Finance Commission report.

The new mayor will want to harness London boroughs’ creativity and energy to engage Whitehall on future needs. Regular reviews by central government of borrowing limits for the Greater London Authority and councils may be a point to explore.


As devolution spreads across England, there is merit in exploring how clusters of combined authorities could drive greater economic cooperation across London. The 2009 act creating combined authorities does not apply to London but, where appropriate, an initial voluntary pooling of ideas and resources may feed into any review of future London governance.

Some believe that more powers for London could mean less money flowing to the rest of the UK but it would be of significant benefit to the wider UK. A stronger London economy would enhance various London-linked procurement and supply chains throughout UK cities and regions and boost employment. Giving London the powers to grow means creating opportunity across the whole country.

Sean McKee, LCCI director of policy and public affairs



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