A new fiscal policy for London?

The London Assembly should be given tax raising powers as London’s economy differs from the rest of the UK in general, having higher housing costs and a generally greater expenditure. The power to reform income tax could, for example, be used to give London residents on low and middle incomes a tax cut to help them through these difficult economic times.

The rising cost of housing in Greater London could be tackled if the London Assembly was given control over Stamp Duty, the proceeds of which could be used to help fund house building and renovation projects in overcrowded boroughs. The Greater London Assembly should see 50% of its central government funding withdrawn and replaced with the power to raise its own revenues.

The London Living Wage has helped tackle the cycle of low pay in London but has also imposed extra demands on small and medium sized businesses. If the London Assembly were to receive fiscal autonomy from Westminster, it would be able to reduce business rates, a tax paid by all commercial operators, and introduce a scheme whereby businesses with an annual turnover of less than £30,000, would not be required to pay this levy. Such a policy change would stimulate small businesses which are often overlooked by political decision makers.

The budget block grant that London receives from Whitehall could be reduced in stages as the London Assembly takes over the collection of income tax revenue. Fiscal autonomy for London would see a saving in public expenditure, as the block grant would halve, but would also see London benefit from higher tax revenues in the long term. The London Assembly would have the finances to deliver the improvements that Londoners need but have long been denied because of inadequate political leadership. The London Assembly could, in the long term, take over responsibility for the NHS and adjust its own state pension priorities.

London should take taxation powers back from Whitehall and run its own public services and manage its own economy. The London Assembly should be more influential than it currently is. London is the capital city of England and has complex social problems which require both time and money to fix. It is time that decisions affecting Londoners were made by elected London officials, such as the Mayor and the Assembly Members. Whitehall could retain power over VAT, Corporation Tax, National Insurance and Excise Duties.

I believe it is time that Londoners had some degree of control over their own taxation. Such a reform would in the long term increase investment in London and help tackle the cycle of deprivation and social exclusion that exists in the capital’s poorest boroughs. The benefits for Londoners would depend on the decisions made by the Mayor and Assembly members. Benefits for central government would include a reduction in public service expenditure – the transference of payroll costs over to the London Assembly and a strengthened democratic governance structure in London.

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This post was written by Oliver Healey