How much did the 2017 spring budget help London?

“Power to London in Brexit budget,” roared the Evening Standard at Londoners making their way home from work. “Mayor welcomes progress on devolution to London in budget,” announced a press release from City Hall. But just how helpful to the capital was Chancellor Philip Hammond on Wednesday?

There was no direct mention of London in his speech, although its section addressing concerns about the severity of business rate increases in some areas must have had the capital much in mind. Indeed, think tank Centre for Cities calculates that his relief measures will help London firms by nearly £48om while businesses in the north of England will be worse of than they would otherwise have been. But the source of the Standard’s excitement and Sadiq Khan’s welcome was a paragraph on page 45 of the 64-page full budget report under the heading Cities and Regions. Here it is:

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What does it mean? Essentially, the government has agreed to work with the GLA (serving the mayor) and London Councils (representing the capital’s 33 local authorities) on what might be achieved if they were given more control over six areas of policy, and agreed to make a further agreement to do the same with a seventh one. So, no new powers have actually been devolved from central government to the boroughs and the mayor yet. Rather, the government has formally said that it is discussing doing so in the policy areas listed and how. The Memorandum of Understanding between the three interested parties is here. So what might finally emerge, what difference could it make and how soon? Let’s take the seven policy areas one by one.

  1. Locally-delivered criminal justice services. The services concerned are for supporting victims of crime and helping offenders to mend their ways. City Hall says a final deal will “give the mayor far greater power to ensure services are tailored to the needs of the capital”. The Memo is more muted. It says the government, the boroughs, the mayor and his office for policing and crime will seek to “develop a shared view” about what devolution of services could achieve and which ones, in order to get better results. An agreement to “support the process for collaborative working” is promised by June. Sounds like there’s still a bit of work to do on this one.
  2. Action to tackle congestion. BBC London transport correspondent Tom Edwards summed this up on Twitter: “Most of this transport devo stuff was already happening”. But it still matters that it’s in the Memo. The meat of it is that the government is sympathetic to giving Mayor Khan the powers he would need for “extending the scope of the lane rental charge“, which means he could impose heavier financial penalties on utility and other companies who spend longer digging up roads than they were meant to. This will be consulted on during the summer, as will giving the same powers to the boroughs.
  3. Funding infrastructure. The GLA, TfL, London Councils, the Treasury, the DfT and the DCLG will establish a taskforce for trying out something called a Development Rights Auction Model (DRAM) on a “major infrastructure project” somewhere in the city. First, they’d have to agree on what that project ought to be. Then they would decide if it was worth doing a DRAM for something else. What is a DRAM? City Hall sums it up as a way of raising money to build new bridges, tunnels, rail links or whatever more speedily and with less reliance on the taxpayer. It’s basically a way for TfL to be given an advance slice of the rise in the value of land that happens when an area gets a serious new transport facility. Read more about it on page nine of this 2017 TfL report on land value capture.
  4.  Business rates. As the Chancellor said in his speech, by 2020 all £25b of business rates raised every year will be funding local government. As the Memo says: “From April 2017, the GLA will take on responsibility for funding TfL’s investment grant. In return the government will allow London to retain a higher share of locally raised business rates, as part of moving towards 100% local retention.” This much we already knew. The extra bit is that the Memo says the government will “explore options” for giving London government more control over how business rates gathered in the capital are administered, including “supporting the voluntary pooling” of them within the capital.
  5. Careers services. This means London’s budget for adult education. In his autumn statement the Chancellor said this would be devolved from 2019/20, if he was satisfied London was ready for it. The Memo says that work on this will continue “with a view to better aligning skills provision and careers services with local needs and priorities”. Deputy Mayor Jules Pipe will be keen to see quick progress. At an event before Christmas he expressed exasperation that this devo promise had been made 18 months before, yet nothing much had happened.
  6.  Employment support. This too was mentioned in the autumn statement. It’s about London’s budget for the future health and work programme being transferred to London. in the Memo the government “commits to a new strategic dialogue” with the GLA and London Councils to “explore options” for tailoring these services more closely to local need. No completion date is mentioned. Basically, this further formalises the aspiration already declared.
  7. Health and social care. Five pilot schemes giving local London government and health care bodies more freedom to shape services to local need were given the green light in December 2015. The Memo says that to “cement progress made to date” and “support London’s future plans” another memo will be drawn up. This suggests things have gone well and that there is potential for more such schemes to be tried out.

You’ll have grasped that much of this is simply everyone agreeing to what had been promised before and that much of it is conditional on everyone agreeing to the details. Looked at that way, it doesn’t feel terribly thrilling. But it is forward progress, and Mayor Khan can’t really be blamed for taking the glass-half-full position. His relationship with Hammond is said to be solid and businesslike, with both men recognising their common interest in helping London’s economy to stay strong.

That doesn’t mean the Mayor is all gratitude. He’s thanked the Chancellor for more the business rates relief, but says he ought to have gone further. He’s also said he’s disappointed there wasn’t more money for the Metropolitan Police and that the government did not “pledge their support for Crossrail 2” which, as things stand, looks a long way from getting started. Britain continues to have one of the world’s most centralised systems of government. There’s still a long, long way to go to put that right.

 

 

 

 

 

 

Categories: Analysis

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