Free our cities to grow and prosper, cries Boris Johnson
Phewee. The people of Scotland have done the right thing – and by some margin. They have voted to keep Britain, to keep the Union, and to stay part of a great and United Kingdom whose best days are yet to come. With a 10.6 per cent lead for the Unionist cause, I believe the question has been settled for our generation and with luck for our lifetimes. And yet the story is not over – because the leaders of all parties are now committed to devolving even more powers and responsibilities from Whitehall to Scotland. This will be by no means easy.
The reality is that there is already a fundamental unfairness in the way England is treated under the devolutionary settlement. And if we are to go any further with devolution north of the border, that unfairness must be sorted out. David Cameron has rightly called for English votes for English laws, and I am delighted to say he has simultaneously recognised the attractions of empowering the great cities of Britain.
This is vitally important. It is one thing to solve the West Lothian question – by making sure that Scottish MPs don’t vote on questions that only affect England. We need to go further. Any serious devolutionary settlement for Scotland simply must reflect the need for greater fiscal autonomy for England, and in particular for London and England’s eight core cities – Birmingham, Bristol, Manchester, Liverpool, Leeds, Newcastle, Nottingham and Sheffield.
I support the call for urgent financial devolution in England, which formed the backbone of Professor Tony Travers’ work with the London Finance Commission, whose conclusions were published in 2013.
The idea in a nutshell is to give city governments – at all levels, boroughs and mayoralties - more responsibility for raising locally some of the tax money they spend locally. This would encourage those politicians to go for policies that encourage economic activity; it would encourage them to be prudent (and should therefore help Conservatives get elected); and if handled right it would lead to higher tax yields for the Treasury.
We in London are seeing a population explosion bigger than any in our lifetimes, with consequent heavy demands on our infrastructure. And yet, like all great English cities, the capital has been chronically unable to plan, to borrow, and to make the long-term investments we need – being forced instead to go intermittently to Whitehall to beg for penny packets of funding. This system is wasteful, unpredictable and unsustainable.
What we need instead is more stability and certainty and so what we are asking for is a very modest and trivial change – the devolution of 5 property taxes. You can see how modest it is when I say that in the case of London it would mean increasing the proportion of tax money spent that is actually raised locally from 5 per cent to 12 per cent.
You can see how trivial that is when you consider that in New York the city authorities at one level or another have control of 50 per cent of taxation, and in Tokyo it is up at 70 per cent. Compared to our global competitors, English cities are treated like children, and that needs to change.
As Tony Travers has shown, the devolution of property taxes would be revenue neutral, since the sums retained by the cities would be deducted from the central government grant to the city involved. There would be protections for businesses and householders so that if there were to be any changes to the rates, they would be equitable and agreed by city government at all levels.
And in any event local politicians would have a strong incentive not to mulct businesses or properties but to go for policies that will encourage growth. And in the case of London that extra growth will allow the city to export even more of its tax yield to the rest of the country so it’s win-win for all, and I believe the logic is unimpeachable.
I will not pretend that this is a revolutionary cause, or that you will see people mounting the barricades with the cry of “What do we want?”, “The revolution of the suite of five property taxes!” , “When do we want it?” , “Now!”
But I think it ought to be so narcoleptically uncontroversial as to become the settled wisdom of everyone who believes in localism and devolution and trusting people to run their lives. What’s good for Scotland should surely be good for England too.
Boris Johnson is Secretary of State for Foreign & Commonwealth Affairs and Member of Parliament for Uxbridge and South Ruislip