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Government / Local politics

The key economic questions Labour’s London mayoral candidate Sadiq Khan needs to answer

Sadiq Khan last week overcame the first obstacle towards becoming mayor of London, by being nominated to be Labour’s candidate.

The capital is typically thought of as a Labour city: the party securing 44 percent of London votes in last May’s general Election, and 45 out of 73 seats. And yet, Labour has won only one of four London mayoral elections since the post was created in 2000 – a statistic which shows that the real challenges for Khan are likely to lie ahead.

To have the best chance of winning in May 2016, Khan will have to convince Londoners that he has a better plan to develop and sustain London’s economic growth than the Conservative candidate. That means addressing the following issues:

Housing

The capital desperately needs more houses. Conservative estimates suggest that 500,000 new houses need to be built in the next decade to meet demand. And the London Chamber of Commerce has warned that high housing costs pose the biggest threat to the capital’s global economic competitiveness.

Khan has proposed building more homes on land currently owned by Transport for London, and says he will work closely with London boroughs to identify brownfield sites that could be developed for housing. He’s vowed to introduce a 50 per cent affordable housing target for any new development in the capital. And he’s proposed a “London Living Rent” option for new affordable housing, based on the principle that rents should be around one-third of renters’ incomes.

These policies will be difficult to implement, especially if housing supply doesn’t increase. That’s why whoever becomes mayor will need to look at all the solutions on the table – including building on the greenbelt. Our research shows that building on just 2 per cent of London’s greenbelt could provide more than 430,000 suburban homes in close reach of train stations.

Zac Goldsmith, who is likely to be selected as Conservative candidate for Mayor, has already ruled out building on the greenbelt. Khan will now have to weigh up what is most politically expedient – matching Goldsmith’s promise in a bid to appeal to voters in London’s outer suburbs, thereby limiting his chances of implementing policies like the “London living rent” if elected Mayor; or keeping all options open, including the greenbelt, and potentially losing some votes as a result.


Devolution

While London enjoys greater devolved powers than any other UK city, the mayor’s role is relatively constrained compared to counterparts in other major city governments across the world.

Khan highlighted this discrepancy in a Labour hustings, saying that as mayor he would like to emulate initiatives such as New York mayor Bill de Blasio’s “tech talent pipeline”, and would push for more powers over skills and further education funding in order to do so.

However, to ensure that London can continue to compete with other major global cities, Khan also needs to make the case for the mayor to have greater control of the city’s fiscal affairs – such as the power to retain and reinvest revenues raised in the capital through stamp duty, council tax, and business rates.

And with central government likely to agree more devolution deals with other UK cities in the coming months, Khan should be arguing for London to also get a better deal. If elected, he will have to work closely with central government to make that a reality. However, with the Labour party yet to define a clear position on city devolution – and new leader Jeremy Corbyn so far openly opposing the government’s agenda – Khan may well find himself at odds with his party leadership if he does push for greater devolved powers.

Transport and infrastructure

Maintaining, improving and expanding London’s transport infrastructure will be crucial in sustaining its economic growth. Khan has talked about the importance of securing funding for Crossrail 2, and beginning consultation about future rail services including Crossrail 3; but he has offered little detail on how will deliver on those promises.

And with his vow to freeze transport fares and to cut bus fares for Londoners, he will need to find plausible answers as to how he plans to fund these transport projects – such as working closely with the businesses in the capital which are set to benefit from them. Boris Johnson raised more than £4bn to fund Crossrail 1 by persuading businesses to accept a 2p supplementary business rate in the capital. The extension of the Northern Line to Battersea is also being partly funded through partnerships with the private sector.

Khan will need to demonstrate that he is similarly willing to work closely with businesses to secure investment for these kinds of projects. And he should push central government for more, arguing for greater powers and responsibilities in this area.

In the meantime, Khan needs to find a way of balancing electorally-appealing policies such as fare freezes, while leaving himself enough space to manoeuvre if he is elected – when he may have to implement less popular policies to guarantee investment.

Andrew Carter is deputy chief executive of the Centre for Cities.

This article originally appeared on the think tank’s blog.
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