Colin Stanbridge: Forget Scotland - London needs more power

Scotland’s vote on independence could be a turning point for the UK. But whatever the outcome, we should not let slip this opportunity for London and other major cities: we must use the vote to engage in a far wider debate about the funding of our cities.

Wales is to get “new financial powers to take control of its own economic destiny”. Who knows what fiscal carrots may be dangled in front of the Scots if the polls narrow further? I am sure there are convincing arguments for allowing Scotland, Wales and Northern Ireland to have more control over their financial destinies. However, if their path to success lies through devolution of more fiscal powers, we should be discussing similar moves for our major cities.

London’s economy is double the size of Scotland’s and Wales’s combined; our population is equivalent to that of the two nations together. Yet the powers devolved to them dwarf the powers of London local government.

During the run-up to the Government’s Comprehensive Spending Review last year, the London Chamber of Commerce launched its “Grow London” campaign to fight the threat of cuts to Transport for London’s budget. In the end, the cuts were smaller than feared — campaigns like ours had their effect. But they shouldn’t have been necessary.

It should be obvious to politicians and civil servants that London’s success is heavily dependent on having world-class transport infrastructure. With a rapidly growing population, transport upgrades will be vital not only to London but to the success of the UK economy. We shouldn’t always have to go cap in hand to central government.

Thanks to the Mayor there is now a credible alternative. The London Finance Commission’s report lays out a plan to allow the capital more financial independence. In essence it recommends that all property taxes (including business rates, stamp duty and council tax) should be devolved to London government. Initially the Treasury would reduce the amount of grant given to London by the amount yielded by those taxes. But as these tax revenues rise with property values, London would have significant extra income.

The commission also proposes a reduction in restrictions on City Hall’s borrowing. London would be able to invest for itself in much-needed infrastructure such as Crossrail 2 and more river crossings in the east. At the moment London has no real ability to get such projects under way.

Adopting such ideas would bring increased local democracy. There would have to be more checks and balances on the office of Mayor especially. The Assembly would have to be given real powers to hold the Mayor to account; the voting public would need to take the assembly and mayoral elections more seriously.

Such changes should not be confined to London. As the commission makes clear, other large cities could also benefit. Politicians pay lip service to localism yet they are incredibly reluctant to make changes that really take power away from Westminster.

Now is the time to have a real debate about how cities like ours can fund their own futures. The Mayor’s commission has come up with a credible alternative. Now he needs to make selling it to central government and the parties his number one priority. That would be a truly historic legacy of his mayoralty.

Colin Stanbridge is chief executive of London Chamber of Commerce