Take back control - says Lib Dem London Assembly member Caroline Pidgeon

By Caroline Pidgeon MBE

Liberal Democrat London Assembly Member

For decades, I have been championing devolution; for communities to take back control over the decisions that affect their lives from the very local allocation of funding to improve an area, to wider service provision and structures.  The beauty of our local government is that it looks different in different areas, to suit local communities’ needs. 

However, no matter what the structure, funding has always been a problem for local services.  Back in 2013, Boris Johnson, as Mayor of London, commissioned Professor Tony Travers to Chair an expert panel called the London Finance Commission, which produced Raising the capital | London City Hall.  This report transformed the debate and voiced the need for London and other cities to have more financial control.

The EU referendum, and Britain now having left the EU, has made the case for devolution and fiscal devolution more urgent.  Whatever Leave voters felt they were voting for, it was not ‘business as usual’.  It was not an endorsement of centralised power, simply removing it from Brussels to Whitehall and job done.  People across the country feel isolated from the democratic process.

The referendum result not only affects the country as a whole but also within our nations, regions and cities.  The uncertainties from Brexit and the pandemic may well be better managed at a local level, with local and regional government able to respond more effectively.

At present, virtually all taxation in the UK is determined by central government.  Only council tax (and in England from April 2013, a proportion of business rates) can be seen as local taxation – and even this is subject to cumbersome controls, including referendum rules set by central Government.  When you compare this internationally, you realise the power that Whitehall holds.

In the light of Brexit, the London Finance Commission published a further report – Devolution: a capital idea.  This called for a new devolution settlement for London, which could apply equally to other city regions.

It cannot be assumed that the current degree of fiscal centralisation within the UK is the only way to do things.  Giving London and other places greater power over their tax base and delivery of public services could be hugely beneficial all round – allowing public services to be reformed and with everyone having an incentive to see their local economy develop and grow.

It makes sense to bring London in line with most other global cities by allowing the capital’s government control over a much wider range of taxes – crucially in exchange for lower levels of government grant.  Other cities could benefit too.

This would enable the city to operate more efficiently, effectively and integrate services, bringing forward infrastructure investment vital for growth at no additional cost to central government.

Modest devolution of this nature to London and other cities would enable Whitehall to concentrate on the bigger global challenges, whilst allowing local areas to be reinvigorated.

Simple ideas such as a modest tourism levy which is already operated in international cities such as New York, Paris and Berlin could be used to promote tourism; a percentage of Londoners’ income tax yield – broadly to match its overall expenditure, as and when further devolution occurs; and for London government to be able to consider other health-related taxes, such as a sugar sales tax and a saturated fat tax, to be devised and fully managed by London government.

And significantly, the full suite of property taxes should be devolved to London’s government. This includes the operation and setting of council tax and business rates and the devolution of stamp duty.

The centralised nature of UK government makes it incredibly hard for real innovation at the local level.  In London, the Mayor and the boroughs need further powers to bring about the required structural change to address the types of inequalities Londoners face, from housing to household income.

Moving to further fiscal and other service devolution would give local and regional government strong incentives to innovate and develop their areas.  It would also help invigorate local democracy.  When so few people vote in local elections, is it any surprise when Whitehall pulls most of the strings?

A radical transformation of local and regional government is needed.  Taking back control, could be the answer, if that control is genuinely local!

Caroline Pidgeon MBE AM

Liberal Democrat London Assembly Member

 Download the EGF report on Decentralisation HERE