London sorely needs to keep more of its huge tax harvest

There is much to ponder on in today’s Mayoral wish list from BusinessLDN, which represents thousands of private sector employers across the capital. 

Perhaps the most eye-catching demand — and the one we flag up in today’s story — is the plea for far greater fiscal autonomy for whoever gets to occupy City Hall after polling day on May 2 (let’s face it, probably Sadiq Khan).

London’s local and regional government only get to keep 7% of the tax revenues harvested from workers and businesses across the capital, the other 93% goes straight to the Treasury coffers, much to pay for public spending elsewhere in the UK. 

One ludicrous consequence of this is the endless rounds of negotiations between the Mayor’s Transport for London and central government over funding for the capital’s nationally important mass transit networks.

In a parallel universe where London gets to keep a bit more of its tax revenues, the Central line Tube train fleet could have been overhauled before the motors all started breaking down, and, who knows, perhaps we would not be “celebrating” the fifth anniversary of the closure of Hammersmith Bridge this month. 

But the political hostility between blue Whitehall and red City Hall has made that an impossibility since 2016 when Khan first got elected. But by the end of the year the political landscape will have almost certainly changed with Sir Keir Starmer and Rachel Reeves holding the purse-strings.

It is unlikely in the current tough fiscal climate that the Treasury will willingly give up its tax harvest from London. 

But with Treasury and City Hall finally on the same political page it would seem a window of opportunity for London’s government to get the longer-term financial settlement, particularly for transport, that it, and the business community, are crying out for.