By Judy Hirst | 10 July 2013
The London Finance Commission's proposals to devolve more financial powers to the capital could create a ‘virtuous circle’ of economic growth, according to its chair Tony Travers.
He told the CIPFA conference today that giving greater tax and spending powers to the city would potentially increase gross domestic product and raise tax revenues, benefiting the Exchequer and the economy as a whole.
The commission, whose members included outgoing CIPFA chief executive Steve Freer, was set up in 2012 by London Mayor Boris Johnson to explore greater fiscal autonomy for the capital.
Among its proposals, which were published in May, was devolution of property taxes, including the right to revaluate and band taxes locally. ‘Grant off-set’ arrangements would ensure there would be no gain or loss for London in relation to the rest of the UK.
The commission also proposed the development of a ‘high-level infrastructure plan’ for London, with the mayor as the capital's ‘infrastructure champion’.
Travers said that, if implemented, this model ‘would have profound implications for all of the UK, which is much more centralised than most democracies.’ London is a ‘clear outlier’ when it comes to fiscal autonomy, compared with other major cities, he said.
There would also be advantages for central government of adopting the commission’s proposals, as the plan would create local incentives for growth and provide a potential answer to ‘the English question’ in the wake of Scottish and Welsh devolution, he added. This could help to ‘heal the disconnect between Whitehall, Westminster and the people, and promote political pluralism'.
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