Wasted opportunity? Why Sadiq Khan is facing calls to demand even more powers for London after Autumn Budget

The Mayor welcomed new powers as “transformational”

By Kumail Jaffer, Local Democracy Reporter

Sir Sadiq Khan may have welcomed new devolutionary powers announced as part of the new ‘London Deal’ between Westminster and City Hall as “transformational” – but critics suggest that the Mayor should be demanding further authority for the capital from the Prime Minister.

Yesterday’s Autumn Budget saw Sir Sadiq receive the right to create two ‘Business Rate Retention Zones’ – where City Hall will be able to keep all the growth in business rate receipts in a designated area – to help fund upgrades to Stratford International and Euston station.

He was also granted his long-term ask of being able to extend the business rates supplement – a 2p per pound levy on larger non-domestic properties used to fund the Elizabeth line that was introduced in 2010 but expires in 2029. The government says this will “help the GLA to finance future transport infrastructure projects such as West London Orbital and the Bakerloo line Extension.”

This adds to previous announcements around retaining a share of income tax generated in the city and the ability to impose an overnight ‘tourist tax’ from 2028.

‘Major omissions’

The Fiscal Devolution Roadmap, released by officials alongside the Budget yesterday, claims that the GLA’s “unique governance structures, services and funding arrangements” means that “a bespoke approach may be needed for Greater London from 2028-29 onwards.”

It adds: “The government will work with the Greater London Authority and London boroughs to develop this.”

Antonia Jennings, CEO of the Centre for London Think Tank, criticised this “lack of detail” as one of two “major omissions” from the Budget.

“At Centre for London, we called for a dedicated London chapter recognising the capital’s unique position in the UK.

“But while London’s distinctiveness is recognised, it hints at the possibility that the capital will receive a watered-down set of fiscal powers.

“London cannot afford to become the exception to devolution. As other mayoral authorities gain greater control over locally generated revenues, the capital risks being recognised as the UK’s economic engine while missing out on some of the most significant growth-focused reforms.

“Fiscal devolution must be about more than rhetoric. It must give London’s regional and local government the tools to invest, plan and deliver for the long term, for Londoners and for the whole country.”

She also claimed that on housing, “the government’s diagnosis was stronger than its prescription”, adding that a failure to properly reform property levies like council tax and stamp duty will mean London’s housing market continues to suffer.

Thomas Turrell, the Transport spokesman for the City Hall Conservatives, suggested City Hall needed new investment to supplement further devolutionary powers.

“The Chancellor has failed to tackle any of the big issues facing the economy,” he told the LDRS.

“Yet again, all Burnham’s Labour offer people is small tinkerings. Instead of investing in projects like the Bakerloo line extension to Lewisham all we have got is vague statement about Mayor’s being given permission to fundraise for it.

“When it comes to projects like the West London Orbital line, all we get is that they are ‘subject to business cases’. Here is a business case – London can’t deliver a million new homes without new transport infrastructure.

“It is clear that Londoners will see little if any improvement to transport services in the capital, which so desperately need investment and expansion.

“This Budget has been a wasted opportunity.”

‘We can’t wait for funding powers’

Devolution for London will not be immediate, with ministers setting out a “roadmap” to full fiscal powers being handed over. The Mayor of London will not be able to start raising money from an overnight levy on visitors till 2028, for example.

John Dickie, Chief Executive of BusinessLDN, said: “We can’t wait for this to kick in towards the end of the decade – we need to keep up the momentum in delivering schemes which have already had government backing, such as the DLR extension to Thamesmead, and ensuring Transport for London has the funding it needs to maintain London’s ageing transport network and ensure the city can keep moving.”

Let down Budget?

For the Liberal Democrats, “tinkering around the edges” means nothing compared to their mission of reversing Brexit, which they say is “holding” the capital back.

A spokesperson for the City Hall Liberal Democrats said: “Tinkering around the edges does not give Londoners the breathing space they need.

“The truth is that Labour’s red lines on Europe are holding London and the rest of the UK back.

“The Prime Minister needs to finally take us back into the single market and Customs Union to give us the growth needed to cut Londoners’ taxes and give them the real breathing space they need.”

Reform UK Assembly Member Alex Wilson called on the Mayor of London to rule out further tax rises on ordinary Londoners using his new powers, which are expected to give City Hall an increase in borrowing capability of around £10 billion.

“Sadiq Khan is already eyeing up his new tax-raising powers and, like the rest of the Labour Party, asking who he can tax to fund more vanity projects such as his failing pedestrianisation of Oxford Street,” he told the LDRS.

“Reform’s challenge to Sadiq Khan is simple: rule out raising taxes on London’s hard-working residents and businesses.”