On London event: An evening of devolution debate with the Institute for Government

On London event: An evening of devolution debate with the Institute for Government

The second On London pre-elections event took place before a full-house audience on Tuesday evening in partnership with the Institute for Government at its handsome Carlton Gardens home near The Mall. The question was Does London Need A New Devolution Deal? The straight answer of the outstanding quartet of panelists was, it’s fair to say, “yes”. But deciding what such a deal ought to be and working out how to get it and how to make it work to best effect were more complicated.

Professor Tony Travers of the London School of Economics said the rest of the country had been given precedence in recent years, leaving London’s 1999 settlement in unmet need of a revisit. “There’s this sense that there’s a limited amount of devolution to go round,” he observed. “And there isn’t”.

Instead, there had been “overreach by national government” particularly in the form of interventions in planning issues, creating unwelcome uncertainty, and its attitude to Transport for London’s funding crisis during the pandemic.

Tony described TfL as being subjected to “pretty extraordinary measures during that time, made to do things that national rail companies were not required to. And yet it’s recovered better. It’s services, as measured by the Office for Rail and Road are rather better than national rail services”.

He emphasised that devolution to London shouldn’t be just about the Mayor and the Greater London Authority but also the capital’s 32 borough councils “which collectively spend substantially more than the GLA” and whose activities are often those that touch Londoners’ daily lives most directly.

Any new devolution arrangement would have to recognise that “many of them have been starved of cash”. Boroughs would also need “more control over many of the institutions that operate in London, so more regulatory powers that don’t cost money might be somewhere to look”.

Tony has twice chaired the London Finance Commission, instigated by Boris Johnson and revived by Sadiq Khan. This envisaged all property taxes being brought under London government control, which would enable among other things the “rational reform of Council Tax”. All property taxes would be “better handled at the London level,” Tony said. “They’re certainly not very well handled at the national level”. A tax on tourists and other “discretionary taxes” might also be considered.

Centre for London chief executive Antonia Jennings underlined the limitations on London’s autonomy compared with other global cities and the heavy dependence on government grants all UK cities have in common. This situation has negative implications for London’s economy as “greater fiscal spending power for local government is associated with higher productivity levels,” she said.

She went on to argue that City of London-fuelled economic growth prior to the 2007/08 financial crisis “isn’t a financially sustainable or practical option today”, hadn’t led to “broad-based wealth increases” and had contributed to today’s London housing crises.

The need now, Antonia said, is for “a new, fairer model” for London’s economy which will be “key to fixing the country’s growth problem overall”. Achieving this would certainly require “more fiscal and policy powers”.

She proposed six guiding principles for winning “the public and parliamentary support we need to upgrade the deal”: setting out a vision for what London could achieve with greater powers; building that new economic model; arguing for multi-year financial settlements; ensuring that devolution is “hard-wired” in law so that national governments can’t easily over-rule London decisions; devolution should extend even below borough level to give communities more power; scrutiny of new powers would need new funding, including of local media.

Alison Griffin, chief executive of cross-party local government group London Councils, emphasised the importance of “a blend of expertise” to making any new devolved powers function well. The London Recovery Board, now the Partnership Board, set up during the pandemic “where you bring some of the real players in London together” had shown the way.

She cited TfL as an example of a successful devolved body, one which had led innovations copied across the world. “Without the freedom we got with that deal 25 years, that would not have been the case,” she said.

Alison also stressed the implications of London’s sheer size when designing and operating governance arrangements. She thought a combined authority system, such as those in Greater Manchester and the West Midlands “could be really unwieldy” and impractical in London, with its 32 boroughs and the City Corporation plus its Mayor and maybe deputies as well.

Meeting challenges such as poor health, skills and climate change, particularly retrofitting buildings, would mean “boroughs coming together” in bespoke ways, building on initiatives and shared decision-making that are already producing results.

She pointed out that such “sub-regional partnerships are the same size as many of the combined authorities outside London” and that the focus should be on where public sector reform is going to happen. “How are we doing that together and helping us all in this room, our families and friends, our neighbours, to live better lives?”

Representing one the event’s sponsors, the Central District Alliance business improvement district (BID) – the other was related regeneration consultancy PrimeraAlexander Jan, who is also an On London contributor, proposed a harder-edged articulation of the devolution case in view of the range of organisations in favour of it and the strength of the case against the UK’s “remarkably centralised” way of government.

On day-to-day issues he listed “things like the state of our streets, cleansing and safety” along with the “general environment”, which BIDs can and do help with against a backdrop of “the pressure local government is under”. At a strategic level, he expressed regret that the Elizabeth line looks like being the last big transport project in London for a while.

On skills, Alex reminded the audience that London-wide business groups have a strong case for more control and said there is “half a billion pounds of unspent apprenticeship levy that the Treasury is hoarding every year which could go to London”. He added that another half a billion is raised in Vehicle Excise Duty in London and given to the National Highways agency despite Greater London containing no national highways. Meanwhile, the city’s housing costs have been “a constraint on London’s performance since the global financial crisis” as Centre for Cities research had shown.

The importance of London’s Central Activities Zone was emphasised by Alex, a “tiny area of central London” which he said produces 44 per cent of London’s economic output and generates Business Rates of about £5 billion a year. Noting that it is unusual for a city such as London to have no single authority in charge of such an area, he wondered if there could be closer collaboration between the Mayor and the boroughs covering the area, and new arrangements for more of the proceeds of growth there to be shared with local residents in the form of better services to compensate for the disruption that can come with development and change.

There was a lively question and answer session with contributions from Van DuBose, a former investment banker now active a public policy issues who got the idea for this event going in the first place back, outgoing London Assembly member Caroline Pidgeon, Nick Bowes from London Communications Agency (and formerly of Centre for London and City Hall), Jack Shaw of the Productivity Institute and people from the Electoral Reform Society and City AM.

The whole thing was chaired with great polish and expertise by Akash Paun, who leads the Institute for Government’s devolution programme. It was a pleasure and an honour for On London to team up with such a distinguished think tank. This article has reported only some of the points made during an excellent event. Be sure to watch the whole thing (also embedded above). It provided ample food for thought and explored many themes meriting deeper future coverage here.

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