London Finance Commission: Raising the Capital

Baroness Hamwee Excerpts

Wednesday 3rd July 2013 Lords Chamber

[Baroness Hamwee]

My Lords, I welcome and support this report, and did not want to miss the opportunity of saying so from the Liberal Democrat Benches just because I had not had the opportunity I would have liked to produce a perfectly honed and intellectually challenging speech. Sometimes it is more important to say these things than to be proud and retiring.

It is always nice to find one’s prejudices confirmed. I was not surprised at the commission’s finding, or belief, that there would be more jobs and growth if London had more financial autonomy. It goes without saying that it would need to be used well. What is proposed does not seem to be so very extreme. Central government would retain about 88% of taxes paid in London, as against around 93% now.

Devolution in 2000 was very welcome—to me at any rate. The noble Lord, Lord Harris of Haringey, remembers it as well as I do. I declare an interest as a former member of the London Assembly and, some years ago now, a councillor in a London borough. It was welcome to the extent that there was devolution, as distinct from the hoovering up of powers from the boroughs. The noble Lord, Lord Patten, talked about more government, but normally one is talking about a rearrangement.

It would be disappointing if London government were not ambitious to do more—as are the Scots, leaving aside independence, and the Welsh. I am well aware of views from other parts of the UK about the London-centric nature of so much of our government. Non-Londoners might say, of the contents of this report, “Well, they would say that, wouldn't they?”. However, the noble Lord, Lord Harris, mentioned the membership of the commission—and they look to be a pretty independent-minded bunch of individuals.

What is good for London tends to be good for the UK as a whole because of London’s role in the wider economy. Knowing of the debate that is going on about HS2, I rather tremble about venturing that way, but, as regards infrastructure, one has only to ask not just any Londoner and not just any visitor but any company considering locating here.

Of course, housing is a hugely important part of the infrastructure and one about which, like other noble Lords, I feel very strongly, meaning that I support borrowing, including borrowing by the boroughs, to build housing within the prudential rules. That is not least because London’s government, representing Londoners and understanding what is going on in London, knows what is needed. Too often, the social housing element of bigger schemes seems a grudging add-on. It is easy for the developer and it is often identifiable just by looking at the development. Among other things, I think it is offensive.

In the foreword to the report, Tony Travers says that the message from the evidence was,

“clear and unanimous: London’s government needs to be given greater freedom to determine and use the resources raised from taxpayers”.

I read the subtext as including “clarity” and “transparency”. I suspect, too, that introducing new, smaller taxes may not have an entirely smooth path but, as someone who thinks that there is advantage in taxation, I do not dismiss that proposal.

Of course, the mayor should use his existing powers. It is not so very long since prudential borrowing was introduced in the form that it is now, and it does not advance the argument for new powers if the current ones are unused or underused. The mayor could fund a significant increase in affordable housebuilding.

The noble Lord, Lord Patten, referred to rough sleepers. I, for one, am not convinced that centralisation or the reduction of taxes would assist that.

If central government resists these proposals, it will not be the first time that any central government has grasped for arguments as to the importance of central control. I, too, lighted on the quotation from the Chancellor of the Exchequer. It begs the question of what the right conditions are, as the noble Lord, Lord Harris, said.

A Government who believe in entrepreneurship should apply the same thought—that freedom facilitates creativity and success—and apply that to finances, with the raising and spending of taxes. The dynamic in a wider context is towards more financial autonomy. I welcome the Raising the Capital report and I thank the noble Lord, Lord Harris, for the opportunity to say so.