Greg Taylor is a political consultant and was formerly public affairs manager at the Local Government Association and in the Mayor of London’s office.
During Boris Johnson’s overall successful eight years at City Hall, perhaps no campaign spoke more to his big-picture ambitions for the capital than his quest for serious, long-term financial devolution.
After his first term in office, Johnson realised that much of his ambition for his second term would be curtailed by the limited fiscal powers granted to the Mayor of London. Yes, a Mayor can add to the precept latched on to Londoners’ council tax bills, and revenue is brought in from London’s wildly expensive public transport system. But the vast majority of the Mayor’s budget is bestowed with begrudging munificence by Her Majesty’s Treasury through Government grant, leaving big spending decisions intertwined with the political whims and personal priorities of Whitehall ministers, rather than in the gift of the leader with the largest individual electoral mandate in the UK.
Frustrated by glacial negotiations with Osborne’s Treasury, which had little truck with London’s demands after a splurge of Olympic cash, and guided by his new Chief of Staff Sir Edward Lister, immediately after his re-election in 2012 Johnson commissioned created the London Finance Commission.
Chaired by LSE’s local government finance expert Professor Tony Travers, and bringing in cross-party commissioners like Jules Pipe (then Mayor of Hackney, now Sadiq Khan’s Deputy Mayor for Planning) and Nick Raynsford, then the Labour MP for Greenwich and Woolwich, former minister, and fiscal boffin), the Commission’s remit was broad. How could London do better, invest more strategically, deliver the best outcomes for its population and businesses?
A year later, the Commission reported, with some dismaying findings. London was keeping a piddling seven per cent of its total tax take for reinvestment in citywide infrastructure. When compared with New York, which keeps around 50 per cent, and Tokyo which keeps around 70 per cent, the powers of central government were shown to the all-pervasive. The capital was deemed to be “an extreme outlier” in comparison to its international competitors, with England “far too centralised” to see the services people urgently needed effectively delivered. The Commission’s recommendations were pragmatic but potentially game-changing: devolving property taxes, including stamp duty and business rates, to London’s government.
Still nowhere near to granting London Tokyo’s level of financial autonomy, but a good start.
Unsurprisingly, Johnson accepted and ran with the recommendations with characteristic gusto. They were the top agenda item in his regular meetings with Cabinet ministers, from Communities to Transport and Treasury. And they underpinned all his major speeches. In a stroke of political savvy, he gathered the leaders of the UK’s most powerful cities – from Manchester to Bristol – and persuaded them to jump on board, forming the joint City Centred campaign which aimed to prove this wasn’t a London-only (nor a Conservative-only) roadshow.
Assailed from all corners of the UK, with influential leaders like Manchester’s Sir Richard Leese and Bristol’s independent Mayor George Ferguson getting stuck in, the Government couldn’t ignore the clamour. In 2015 George Osborne announced the full devolution of business rates by 2020, a huge coup for the then-Mayor’s campaign, but a small step on the road to real fiscal autonomy.
Fast forward four years, and the London Finance Commission’s report, and Johnson’s campaigning, remain the benchmark for devolution discussions, even if progress has stalled. At a recent Devolution APPG meeting, longstanding HCLG Committee chair (and Sheffield MP) Clive Betts MP pointed out that the work remains unsurpassed, though the questions that the Commission’s report throws up remain unanswered. Questions around redistribution and ensuring economic sustainability outside major urban areas. Questions that, with the full weight of the No 10 Policy Unit and the Treasury behind him, Johnson can prepare to answer.
Thus far, those who campaigned alongside the then-Mayor could be forgiven for being disappointed by his moves in Number 10. In his July speech in Manchester, one of his first as PM, Johnson pledged £3.6bn to support 100 of the UK’s more ramshackle towns, while last week he promised to expand the £1bn Future High Streets Fund. While this smacks of the Whitehall-centric, hand-out mentality that the Prime Minister so vigorously denigrated only 3 years ago, the pre-election, short-termist motives are clear. It would take years to put the recommendations of the London Finance Commission into effect, but the Prime Minister seems likely to need votes very soon indeed.
But he must be bold in setting out his vision for the longer term, and soon. We have never had a Prime Minister with such depth of experience in municipal government, nor understanding of what levers and funds our cities, and regions, need to thrive.
Nor such a natural connection with the ambitions and worries of regional dwellers beyond the M25. It is, of course, right that Mr Johnson is unshackling his reputation from the capital city with which he is so intrinsically associated, but his time as Mayor showed him that Liverpool, Leeds, Newcastle and others will benefit from fiscal devolution every bit as much as London, with all the domino gains across their wider regions.
Future election success depending, it may well be within this Prime Minister’s gift to fundamentally change how our regions invest in their own futures. The London Finance Commission, despite its name, provides a blueprint for how to build an economy that truly gives power to “turbo-boosted” regions through devolved taxes. In the short term, devolution might require building up the powers of Andy Burnham, Sadiq Khan and the like, as well as Andy Street. But in the longer term, a serious devolution agenda would cement this Prime Minister, and the Conservative Party, as the champions of lasting local autonomy and freedom from the suffocating tendrils of risk-averse Whitehall mandarins. And there are votes in that, too.