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Mayor welcomes progress on devolution to London in Budget

  • London to pilot new model for financing major infrastructure projects
  • Significant progress on devolution of business rates
  • Agreement reached towards devolution of criminal justice, health, skills and employment support

The Mayor of London, Sadiq Khan, has welcomed the publication of a new London Devolution Agreement in Wednesday's Budget. He believes this marks a major step towards London getting the control it needs to grow and protect the capital’s economy from the uncertainty of Brexit.

Since he was elected as Mayor last May, Sadiq Khan, working with London Councils, has been negotiating with the Treasury and Downing Street for a deal for London that would give the capital more powers and tools it needs to safeguard jobs, wealth and prosperity.

Today’s London Devolution Agreement builds on commitments made by the Chancellor of the Exchequer, Philip Hammond, in last year’s Autumn Statement, which included a record £3.15bn deal to build 90,000 new and genuinely affordable homes in London and the devolution of adult skills funding and employment services support.

Further devolution granted to the capital today includes:

  • Infrastructure – London to pilot a new Development Rights Auction Model for funding future infrastructure projects. This new funding model will provide significant funding towards future projects – allowing them to be built quicker and with less reliance on Government funding.
  • Business rates – The Government will explore options for granting London more powers over the administration of business rates within London. This includes supporting the voluntary pooling of business rates in London, subject to appropriate governance structures being agreed.
  • Criminal justice – The Chancellor has agreed to finalise a devolution deal on criminal justice services by June. The deal will look at working and co-commissioning of services between the Government and the Mayor – with the aim of improving services for victims and offenders in London. This will give the Mayor far greater power to ensure services are tailored to the needs of the capital, helping to cut reoffending and make London a safer place for everyone.  
  • Health – The Chancellor also confirmed that an agreement has been reached to devolve a number of healthcare powers in London which will lead to better services that meet the needs of local communities.
  • Congestion – The London Devolution Agreement confirmed the devolution of new powers to allow the Mayor and TfL to reduce congestion.
  • Skills - At last year’s Autumn Statement, the government announced that it will devolve the adult education budget to London from 2019-20, subject to readiness conditions. The government has today stated that it will continue to work with the Mayor and London Councils so that employers can take advantage of the opportunities offered by the apprenticeship levy and will explore options for greater local influence over careers services, with a view to better matching skills provision and careers services with local needs and priorities.
  • Employment support – In the Autumn Statement, the Government also announced that it will transfer the budget for the Work and Health Programme to London. The government has today committed to a new strategic dialogue with the Mayor and London Councils on employment support. This will explore options for closer and better alignment of services for customers in London, to better support people actively looking for work, as well as those who need different forms of training and support.

However, the Mayor has voiced his disappointment that the Chancellor did not use the Budget to provide additional funding for the Metropolitan Police or back Crossrail 2 – the proposed south west/north east rail connection. Sadiq has warned that Government’s refusal to fully fund London’s police service is putting the capital’s safety at risk. Any further cuts would make it increasingly difficult to maintain the strategic target of 32,000 officers, making it harder to keep Londoners safe from growing security threats.

While he welcomes moves by the Chancellor to reduce the impact of business rates increases and overhaul the business rates system, Sadiq does not believe that today’s proposals go far enough and continues to warn that many London companies could be forced out of business as a result of the new charges that come into effect next month.

The Mayor of London, Sadiq Khan, said: “Today’s London Devolution Agreement shows that we get the best deal for Londoners when we put party politics aside and work closely with the Government.

“I am pleased that the Chancellor has recognised that giving London more control is vital if we are to protect jobs and investment in the aftermath of Brexit.

“London has a bigger population than Wales and Scotland combined, but we have far less control over how taxes are spent and public services are run.

“Giving London the ability to invest more in building crucial new infrastructure and devolving control of business rates will help increase economic growth and improve productivity.

"And granting London greater control over health, criminal justice, skills and back to work programmes will allow us to better improve the life chances of thousands of Londoners.

“However, London did not get everything we needed today. I am disappointed that the Government did not use the opportunity to fully fund our police force or pledge their support for Crossrail 2.

“And businesses across the capital still face a clear and present danger to their future as a result of business rates increases despite the proposals outlined by the Chancellor today.”

Claire Kober, Chair of London Councils said: “London government – the Mayor and the boroughs – have a track record of working together to deliver for the city. We are delighted that we will now be able to use the London Devolution Agreement as a springboard to enhance our plans to improve the lives of Londoners.

“Alongside Greater Manchester, the West Midlands and other regions of the country, the capital is proud to be at the forefront of devolution. As we’ve long argued, this promises local people the power to set out a new path for delivering both economic growth and excellent public services in the context of a continued squeeze on public finances.

“However, despite today’s positive news, we believe that there is more room for further transfer of power to both London and cities across the UK, and we will continue to argue the need for Government to properly fund public services.”

Many of London’s global competitors enjoy much more control over public spending and services in their cities.

New York keeps around 50 per cent of the taxes raised in the city and Tokyo keeps 70 per cent.

In January, the Mayor endorsed a comprehensive and wide-ranging suite of devolution requests proposed by the London Finance Commission.