The Mayor of London has welcomed a new report calling for more financial autonomy for London.
The London Finance Commission’s report says current funding mechanisms are inadequate to cope with London’s predicted population growth of one million over the next decade. It sets out recommendations to better provide investment in the infrastructure needed to prepare the city for this growth.
The report's key findings:
- Existing funding models for basic infrastructure are inadequate to cope with predicted growth – London needs fewer constraints and greater devolved powers making it more accountable to its residents and businesses;
- A failure to invest in London will hamper forecast demographic and economic growth – sustained investment is needed into transport, schools, housing, energy supply and technology;
- The report proposes devolving the full suite of property tax revenues streams - this includes council tax, stamp duty land tax and business rates – with the ability to reform those taxes while retaining prudential rules for borrowing for strategic capital investment. This will provide stable and continuous funding for prudent investment, moving away from ad hoc financing for specific projects;
- A recommendation that London could introduce smaller new taxes, a power now being introduced in Scotland;
- The Mayor, London Councils and London Enterprise Panel develop and maintain a long term, high level capital investment plan for the city;
- With enhanced fiscal autonomy, London could re-invest additional tax yield directly back into the city. The report’s proposals are revenue neutral at the point of devolution, no additional money is being sought beyond that which London already receives;
- The report finds this is a formula applicable not only to support the growth of London but other large cities across the UK.