London’s devolution deal, known as the Greater London Authority (GLA) Act, was passed in 1999. This created the position of the Mayor of London, currently Labour’s Sadiq Khan, who governs over a strategic body known as the GLA, with powers over transport, adult education and planning. The Mayor is held accountable by the London Assembly, an elected body of 25 Assembly members.  

As the first devolution deal, and with each deal being negotiated separately, Greater Manchester and the West Midlands have some powers which London does not – and vice versa. London has greater remit over transport, while Manchester for example has powers over health not given to London government. 

The GLA act has allowed London to lead the way in innovation over the last 25 years. In transport, the invention of the oyster card has paved the way for contactless payments, costs for transport have been kept relatively low in comparison to national prices and air pollution has improved at five times the rate of the national average (2016-2019). In education, when the Adult Education Budget was devolved to the GLA, enrolments rose significantly higher than those in non-devolved areas.  

Despite these successes, currently the UK is among the most centralised of all OECD (Organisation for Economic Co-operation and Development) countries. Subregional governments raise a mere 5% of taxes – significantly lower than comparable countries like the US (32%) and France (14%). At present, local and regional government is funded through regressive council tax, devolving a proportion of business tax raised, and competitive central government grants. 

Council tax bands remain set at the level of a property’s worth from 1991 in London. Half of English households pay more in council tax than Buckingham Palace. This outdated, regressive and unfair taxation remains controlled by national government, with no ability for local and regional governments to make change. 

In 2018/19, London piloted a scheme where 100% of businesses rates were retained and distributed on a London-Wide basis. This provided an estimated additional £311 million to London government. Since the pandemic, this scheme has been scrapped, despite its early successes.

For London to thrive, local and regional government needs to have greater fiscal power – the ability to make choices and raise their own taxes. 

London’s devolution should not be a ‘done deal’. Ideally, a strategic review of all devolution deals with be taken, re-negotiating the terms to devolve policy-related and fiscal power to local government.  

However, at Centre for London, we believe the key devolved powers which could make a substantial difference immediately are: 

• Devolve the Apprenticeship Levy in full to London. The capital has few apprentices than any other English region.  

• TFL should take over south London’s rail routes. When TFL took over Northern and Easter routes in 2007, ridership rose by 80% in four years which saw a growth in housebuilding. A similar programme in South London could double rail capacity, developing around 13,000 additional homes in just South Central London. 

• Devolve London’s property tax to the city and local government with the power to change these methods of taxation. This would incentivise local government to drive economic growth while funding sustainable investments.