1. Governance
November 4, 2014

London wants more powers. And it's in the north's interest that it gets them

By Jonn Elledge

Big week for the north of England, this. Yesterday the government confirmed that Manchester was to get its own mayor (like it or not). On Thursday, Leeds will play host to the Northern Futures conference, a team up between the Centre for Cities and deputy prime minister Nick Clegg, to discuss ways of livening up the region’s economies.

All this has inspired a group of bigwigs to turn a spotlight, for once, onto an obscure and rarely discussed southern hamlet by the name of London. From the letters page of yesterday’s Evening Standard:

…the capital faces formidable challenges: a severe housing shortage, growing congestion and high levels of unemployment and poverty. There are no guarantees London will remain a city superpower if we don’t meet these challenges.

All the main political parties are now committed to giving more power away to the UK’s nations and city regions… But although London has more power to govern itself than most other British cities, its government is very weak by international standards. Seventy-four per cent of London’s income comes from central government grants, compared with 30.9 per cent in New York and only 7.7 per cent in Tokyo.

It goes on to demand politicians to commit themselves to handing London a wide range of powers: over finances, skills, education, health, even criminal justice. It’s signed by representatives of organisations including (deep breath) the Centre for London, City of London Corporation, London First, London Youth, the London Mayor’s Office, the Centre for Cities, London & Partners, the Cities Growth Commission, the London School of Economics, and okay you get the picture. And the picture looks like this:

Yay! London! Woo! Image: Rebecca Denton/Getty.

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It’s easy to imagine that the capital is getting a little bit grumpy about the fact that attention and power are, for one brief moment, being directed elsewhere. Not content with monopolising both the headlines and ministers’ inboxes, London has decided it wants to dominate the devolution debate too. I mean, where will it end?

But there is actually a very good reason why we should give London’s authorities more power – why, indeed, it’s in the interests of the rest of the country.

When the government takes major spending decisions, it’s the Treasury’s job to work out what economic benefits any given investment will have. London is booming; London is rich. Consequently, it’s easy to show that something like Crossrail, which will move people quickly from Heathrow Airport to Canary Wharf, will do wonders for the economy. It’s much harder to demonstrate that, say, building an extra line on the Tyne & Wear Metro will do the same.

The problem with this approach, though, is that it’s self-perpetuating. Everyone and their dog agrees that, to boost the economies of the big secondary cities, we need to invest in their infrastructure; but we don’t invest in their infrastructure because their economies aren’t as good as London. Catch-22.

There are two things we can do to bring this unfair competition to an end. One is to give other cities more power over their own financial affairs: that’s what’s happening in Manchester, and others will probably follow. The other is to take London out of the game.

After all, mayor Boris Johnson has said that, in the “right circumstances”, London itself should be able to fund “well over half” the £20bn cost of Crossrail 2. The more fiscal powers the city authorities have, it seems likely, the bigger that share will get – and the less we’ll need to top it up from the national coffers.

It may even be ultimately possible for London to pay for the vast majority of its own capital projects: through property taxes, borrowing against future incomes streams and so on. The city is rich. Why should it expect bungs from the taxpayer?

That may be going too far: it seems pretty unlikely the Treasury will ever cut the apron strings entirely. But nonetheless, there are very good reasons to think that the capital could, and should, pay for itself to a much greater extent than it does at the moment.

So, there you have it. London wants more powers – and, as unlikely as it may sound, it might be in the interest of every other city in the UK that it gets them.

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