London needs its Financial Independence Day

It is clear from the referendum result that London is in quite a different place from the rest of England. However, while knee-jerk responses around the capital getting its own arrangements with the EU or becoming some sort of city state are outlandish, it is now apparent that London does need to have more control over its finances.

Britain will now look to make its way in the world outside the EU, however the economic burden of paving that way ahead will fall most heavily on London. That being the case then it is common sense to make sure that London is enabled to operate successfully and so in turn, drive wider UK future growth and prosperity.

Currently the Mayor of London has control over only 7 per cent of taxes raised within the capital yet the Mayors of equivalent global cities such as New York or Tokyo 50 per cent and 70 per cent of local tax revenues respectively.

In our greatly changed political landscape our Mayor’s weak fiscal position cannot continue. The case for change and the means to achieve that are clear.

Enhancements

The capital’s business sector, welcomed the 2013 proposals of the London Finance Commission, chaired by Tony Travers, for Westminster to increase London control of local tax revenue from seven per cent to around 13 per cent. Hardly a revolutionary request but enough, as all of London’s political leaders agreed, to begin making a noticeable difference in what and how the Mayor could advance enhancements in key infrastructure like transport, housing or broadband. Additional revenue could help boost Mayoral efforts to project London’s presence on the international stage with more overseas trade missions to forge new trade links and attract inward investment.

Renewal

New Mayor Sadiq Khan should now commission an update of the London Finance Commission final report to provide an understanding of potential financing options.

Long before the EU referendum was even a thought, London Chamber of Commerce and Industry advocated more power to for London to grow – for the simple reason that the captial is forecast to reach a population of 9 million by 2020 and then become a megacity by 2030. The existing devolutionary settlement needs renewal.

Retaining more London generated taxes is crucial, but greater devolution to London must be about more than just money. Securing new competencies will be key.

The referendum result indicated that for many in England and Wales migration was a cause of concern. However in London it is not. Londoners know that successive waves of migrants have made London the success it is today.

It is crucial to the future of the London economy that the capital continues to have a flow of migrant workers to help our capital thrive. Without them success cannot be guaranteed, without their work and efforts our city would slowly grind to a halt.

Growth

London businesses need access to a diverse, skilled workforce. Enabling more businesses to recruit workers from overseas will help. That is why we believe a new ‘London Visa’ could give the capital the ability to attract the people from the rest of the world, with specific skill-sets, to contribute to London’s growth.

The London Visa could be developed and underwritten by the Mayor of London and the main long-established, business organisations on his Business Advisory Council. This would provide a collective body that could guarantee a third-party sponsorship route for registered sector-specific firms with recognised skills deficiencies.

Keeping London an economic success has always been vital not just to us who live and work in the capital but to the whole country.

Now, as we face into the future, outside the EU, it is more important than ever that policymakers in Whitehall carefully consider what they can do to ensure the UK prospers, not falters, in the years ahead.

As a first step they can move relatively easily to grant London just a little more autonomy in tax retention. Once that is achieved and working successfully then consideration can be given to the case for more.

To prosper in the post referendum world the UK needs economic certainty. To secure that London needs to be given more control over its destiny.


Colin Stanbridge, Chief Executive LCCI

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