Devolution is the flavour of the month, with plans to transfer powers from Westminster to Scotland sparking widespread debate about how else we can fix Britain’s over-centralised system of government. But London will have to take a very different approach to other regions. Yes, the capital desperately needs more fiscal autonomy, but it also needs to define new economic boundaries. London needs to partner with the wider South East to create a new devolved “Thames City” super-region. It would form the third greatest urban economy in the world, with a combined GDP of over £500bn.
But what is the problem? London pays in a lot more than it gets to keep. The capital generates about a quarter of UK GDP and, given that only about an eighth of the UK population lives in London, it is clearly punching above its weight. It is therefore disappointing that the city is an international outlier in terms of fiscal autonomy. In contrast to most major cities, it relies heavily on central government transfers for its funding. In total, 73.9 per cent of its income is received through grants, comparing unfavourably with New York (30.9 per cent), Berlin (25.5 per cent), and Paris (17.7 per cent).
This creates problems. London is growing at a staggering rate. The latest projections estimate that the capital’s population will rise by 37 per cent between 2011 and 2050, with an average estimate of the resident population of 11.3m by the end of that period. This is by no means a bad thing, since a larger population will mean a larger working population. The number of workforce jobs – those located in London regardless of residence – will likely rise to 6.3m by 2050 from roughly 5m today. The city needs to house and provide transport for this extra million workers.
On paper, London’s mayor already has many key powers, and can act without much getting in his way. But in reality, Parliament is in the driver’s seat. City Hall has to go begging when it wants new transport projects like Crossrail, or big new housing schemes. Central government often does provide what the city needs; the economic importance of London is obvious. But the chancellor can’t look like he favours the South, and this leads to less focus on the capital than it probably deserves.
London needs more affordable housing, schools, tech cities, and transport infrastructure, and much else besides. The mayor has put considerable effort into pushing the government to fund these things, but how many bike trips to Parliament does it take before that becomes his full time job? It’s time to cut out the middleman and give London the power it needs to succeed, with the devolution of property taxes.
Devolved property taxes would give London more flexibility to respond to the pressures caused by a booming population. And as the population increases, housing prices will likely rise too, growing the pot of money the capital can draw on to fund development.
Yet importantly, this issue doesn’t stop at the borders of Greater London – and that is why we are calling for the creation of a new super-region: “Thames City”. London’s issues often become the surrounding region’s problems. The capital provides neighbouring counties with a substantial proportion of their employment, and the skills of commuters are essential to London’s economic success. Our destinies are interlinked. People need to move quickly and comfortably between London and its surroundings, they need homes, and they need London to stay successful to provide employment.
In the past, London has just swallowed up its surroundings. But now there is an alternative: a partnership, where these areas retain their independence. Once property taxes are devolved, some should be given to a new body representing London and its neighbouring areas. This body would co-ordinate the sizeable shared development pot; funding large-scale projects to meet the growing gaps in housing and transport.
This new super-region would represent the shared goals of Greater London, Essex, Kent, Surrey, Berkshire, Buckinghamshire, and Hertfordshire. In partnership with county councils, the capital could build at least 40 new “garden suburbs” on disused brownfield sites outside the confines of Greater London. We could collaborate and go beyond current transport plans to deliver Crossrail 3, 4 and 5.
Giving London and its neighbours new devolved powers and a greater share of the tax they generate would allow us to provide what our region needs, not what Parliament thinks we need. More than anything else “Thames City” would give the South East a say in London’s growth.
Andrew Boff is the GLA Conservatives housing spokesman. Southern Powerhouse: True devolution for London and the South East can be found at http://glaconservatives.co.uk/sp