This morning Boris Johnson, Jules Pipe (Chair of London Councils) and Tony Travers (LSE) launched a report called “Raising the capital” looking at future funding ideas for London.
Cities like New York, Tokyo, Paris and Berlin get only a small percentage of their funding from central government, typically less than a third. London gets 73% of its funds from direct Whitehall grants, grants which are agreed one year at a time. This hand-to-mouth financial existence limits the ability of the city to plan long term and increases the cost of governing London.
The report suggests that these government grants are scrapped and London’s income derived from the suite of existing property taxes that Londoners pay. This means that London could set it’s own, more competitive, tax rates to encourage inward investment and stimulate growth. It would make long term financial planning easier and would cut the cost of the bureaucracy involved in shuffling money from London to the treasury and then back again.
Even if local government finance isn’t your thing, this report is well worth a read.