Raising the capital The report of the London Finance Commission

[John Short]

Raising the capital The report of the London Finance Commission May 15, 2103

The Commission’s report recommends that funding arrangements in London should allow London government to make additional self-determined investments in its own infrastructure both to cater for the growth already forecast for its population and economy, and to promote additional economic growth. Relaxing restrictions on borrowing for capital investment while retaining prudential rules and simultaneously devolving the full suite of property tax revenue streams would afford London government greater autonomy to invest in the capital.  Such reforms would also increase London government’s accountability to residents and businesses. Change would be achieved without affecting the financial settlements of other parts of the country.

The report has got some generic sections on devolution and taxation which should be of general interest
Executive Summary 7
Recommendations 10
Part 1: Introduction and Background 13
1. Introduction and background to the Commission 14
2. UK devolution in context 17
3. Summary of previous reviews 21
4. Principles adopted in making recommendations 25
Part 2: Evidence 27
1. Summary of evidence received 28
2. Academic and international evidence 34
Part 3: supp orting london and UK growth 37
1. London and UK cities 38
2. Funding and incentivising growth 47
Part 4: Fiscal powers 56
1. Introduction to fiscal devolution 57
2. Emerging concepts of devolution to cities 59
3. Property taxes 62
4. Radical tax reforms? 70
5. Fees and charges 73
Part 5: Relationships within and outside London 75
1. Distributional and equalisation mechanisms 76
2. Implications for wider London government reform 78
3. London within England 80
4. Conclusion 81
ANNEXES   82

[FitzFord]

I have read the Summary but not read all the details of the proposals of the Commission, so I hope that in these details the concerns I raise will have been dealt with. The essence of my concern is: London is the Capital of a major country and as a consequence has responsibilities and costs that are unique to that role. It is not clear that it automatically follows that this role generates an appropriate balance of costs and revenues. That would suggest that there should be principles articulated that outlines how costs and benefits would be measured and monitored with regard to these unique characteristics and responsibilities, and an agreement on how costs and benefits would be shared. If one of our readers has already found the answer among the details would you please post a response and reference to encourage the rest of us to continue reading the details?

Fitz.