London’s National Economic Contribution

Debate between Danny Beales and David Simmonds

Thursday 10th July 2025 Westminster Hall

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to speak for the official Opposition in this debate, and congratulate the hon. Member for Kensington and Bayswater (Joe Powell) for having secured it.

Although there will always be a degree of party political difference—I am sure the hon. Member for Sutton and Cheam (Luke Taylor) achieved some cross-party consensus when he said “heaven forbid” the idea of a Liberal Democrat Government—what came across clearly in every Member’s contribution, including from the hon. Member for Strangford (Jim Shannon), was the sense of valuing the success of our capital city, and understanding the contribution it makes not just to the people who live here and choose to make it their home, but to our country as a whole. That is my starting point.

In preparing for this debate we will all have been sent a lot of information from many organisations that represent different aspects of life in our capital, but is clear that the contribution of London’s economy to the rest of the country is vital. It is vital because it is the biggest income earner for our country, because it makes a huge net contribution to tax receipts, which support public services across the whole country, and because it is the one genuine world city that places the United Kingdom in an internationally competitive economic league. That is why it has such an incredibly diverse population. In my constituency alone, which is not by any means one of the most diverse in London, well over 100 first languages are spoken by local residents, yet they all have in common the essential fact of being Londoners.

As we consider the decisions that the Government will have to make, and the policies they are considering, I would like to highlight a number of points that arise partly from the views brought forward local authorities and business organisations, but also from the day-to-day concerns we hear from Londoners.

A number of Members highlighted the challenges around housing, which is an important place to start. We recognise the nature of our city: housing remains in huge demand and, as several Members highlighted, is significantly more expensive than it is in the rest of the UK. In Greater London, 300,000 new homes already have planning permission. However, we have to acknowledge that there has been a 66% reduction in new home starts in the last two years, and in the last 12 months a 92% reduction in new home starts through our housing associations, which are the main provider of social housing. There has also been a 27% rise in the last 12 months in the number of people sleeping rough on the streets of our capital city. There is, then, a rapidly accelerating challenge around housing and, overall, a collapse in London’s delivery of house building in recent years, compared with the ambitions that the Government have set out and many London boroughs have enshrined in their housing targets.

We need to ensure that the aspiration the Government set out in their Planning and Infrastructure Bill is reflected in the actions that take place in the market. The very significant loading of that additional housing funding towards the tail end not of this Parliament, but of the Parliament after means that many of those London boroughs are asking when they can expect to see the additional resources that will help them to deliver that aspiration. Decisions that have been made, for example, to further ringfence the ability of local authorities to spend homelessness funding that they already have further constrains their ability in particular to address issues around rough sleeping.

We also need to recognise that, although many have made reference to the challenges of the local government funding formula, the NHS funding formula also creates very significant variations in the levels of funding, particularly within the capital. Just as, on the whole, inner London boroughs under governing parties of all colours have enjoyed significantly better per capita levels of funding than those in outer London—reflected in widely differing levels of council tax—we know that certain parts of our London NHS are significantly better funded.

The Minister will have been in the Chamber and heard many of his colleagues talk about their hope that the new 10-year plan for the NHS will see the further development of walk-in services and urgent care centres to keep people out of A&E. The NHS, because of its funding pressures, is looking to close those services at Mount Vernon Hospital in my constituency, creating further pressure on an already hugely pressured A&E in the constituency of the hon. Member for Uxbridge and South Ruislip (Danny Beales), who will be aware of this already, as the hospital is under the same NHS trust.

We need to make sure that not only local government, but the national health service are thinking about how they can deploy their resources in the interest of Londoners across the capital. We also need to reflect on the diversity of London’s economy. As a number of Members have mentioned, when we talk about London we tend to think of glass towers in the City inhabited by billionaire international bankers. However, 44% of the London borough of Havering is farmland, as is 23% of the London borough of Hillingdon and 35% of the London borough of Bromley. As well as attracting international capital and the cutting-edge technology industries, London also remains significant through the contribution that agriculture makes to the life of people in our capital.

Those of us in outer London, where most of those farms are located, will have heard loudly and clearly from local farmers—whose land is often not just farmland, but often a crucial part of the green belt, which maintains and supports the environment of our city—how concerned they are about the impact of measures such as the family farm tax. The family farm tax has a disproportionately large impact on London, because that farmland is of significantly higher value than equivalent sites in other parts of the country, due to its location in Greater London.

[Danny Beales]

I thank my constituency neighbour for giving way. Does he agree that, although the farmland and the farmers of London are deeply important, that is one crucial measure—alongside a number of others that the Opposition have not supported—that will raise billions of pounds to invest in our NHS? Hillingdon hospital now has £1.4 billion, after only getting £70 million from the last Government, to be actually built after 14 years. Is it not the case that every constituent in Hillingdon will benefit from that and every constituent in London will benefit from billions of pounds more in our NHS and in education?

[David Simmonds]

I am glad to hear my neighbour express his strong, vocal support for the family farms tax. I am sure his constituents at Goulds Green farm, Maygoods farm and other such places will be listening attentively to the position he takes as they reflect on the impact that will have on their businesses and the contribution they make to the local authority.

Given the wealth it generates and the contribution that it makes, London needs to have those world-class services funded correctly. The hon. Member will know, as he was a by-election candidate before becoming a Member of Parliament, that Governments of all parties, broadly speaking, have made commitments. We need to make sure those are delivered and that some of the changes made, particularly on London’s fringes, do not have a detrimental impact. I suggest to the Minister that it is worth having a consultation going across Government on what the impact of some of those decisions around the London fringes will have on the provision of NHS services in the capital.

The fact that London is not immune to those worldwide trends means that issues around crime and personal safety remain very significant, and particularly salient in their impact on our tourist industry. All of us work in this city and will be very aware that, in the good weather as the summer holidays get going, our public transport is full of people from all over the world coming to stay in London hotels, spend money in London restaurants, go shopping, and take their children to see London museums. Making sure that we live in a capital city that is safe, and where the traditional reputation of the United Kingdom as a safe reputation is maintained, is incredibly important. I pay tribute to the work that one of my local councillors, Susan Hall, the Conservative leader at the GLA, has been doing to make sure that those issues remain active and at the forefront of mayoral thinking.

We know that Mayor Khan was the only police and crime commissioner in the whole country to give back to the previous Government the money that he was given for extra police officers in the capital, because he chose not to spend it on that. That has left a deficit in our police numbers across the city. We need to ensure that our police have not just the resources but the connections with other local public services that enable them to do an effective job of cracking down on crime. That is a process of long-term change. In the past, many retailers asked for and were granted additional powers, via the Security Industry Authority, to enable their in-house staff to, for example, carry out arrests of people who are shoplifting. The cost of insuring those staff has run well above what any of those businesses contemplated. We must recognise that we are therefore facing a new policing paradigm, around shoplifting in particular.

In conclusion, although this is not just about the Minister’s Department, we need to hear from him that the Government are sighted on the value that London adds to this country. There has sometimes been a sense, particularly in the debate about the local government funding formula, that any formula that does not extract significant resources from London and redeploy them elsewhere will not find favour with this Government. I appreciate that the Minister is under pressure from colleagues across the country who want the deployment of additional resources, but a 27% rise in rough sleeping in the capital and the collapse in the delivery of social housing under this mayor is putting acute pressure on London’s local authorities. The levels of deprivation in some parts of this city are especially acute, given that London’s median income is around £10,000 a year higher than that of the rest of the United Kingdom, which means the dynamic around housing costs is particularly powerful.

We need to ensure that this city can continue, from its thriving economy, to contribute 22%—although the figures are debated, and it depends which lobby group you ask, it is between a fifth and a quarter—of our country’s GDP, or around £12 billion net, after public expenditure, to the wider Exchequer of the United Kingdom. That is £64,000 a year GDP per capita against a UK average of £37,000 a year. That economic competitiveness is living proof of the effectiveness of trickle-down economics. We know that, from the international billionaire who decides to build a new business headquarters in the city, to the trades, the workers who deliver it and maintain it, everybody benefits from the success of London. This is, and must remain, a city where people from all over the world and all over our country want to come to live and work, to study, to make a home or to raise a family. As this debate has showed, we all recognise the stake that we have; for all of us, as Members of Parliament, London is not just a place where some of us choose to live, but the place where all of us spend our working lives.

Local Government Finances: London

Debate between Danny Beales and David Simmonds

Wednesday 26th March 2025 Westminster Hall

[David Simmonds (Ruislip, Northwood and Pinner) (Con)]

It is a pleasure to serve once again under your chairmanship, Ms Lewell. I add my congratulations to the hon. Member for Leyton and Wanstead (Mr Bailey) on securing, with cross-party support, a very wide-ranging debate. My starting point, having served 12 years as a London councillor under the last Labour Government and then 12 years as a London councillor under the previous coalition and Conservative Government, is that he should be careful what he wishes for when he has a debate on this subject.

We can already see a pattern beginning to reassert itself in the finances of our local authorities in London and in local government generally. What sound like significant increases are announced, but while one hand gives, the other takes away. Extra funding that has been announced, for the most part comprises maximum possible rises in council tax, very large increases in business rates, and an assumption that local authorities will raise the maximum possible fees and charges from their residents, which is then deducted from any central Government support. We can see the imposition of that in decisions large and small. On the smaller side, we have had representations from London Councils about the impact of ringfenced grant funding to tackle homelessness, which reduces the freedom and flexibility of local authorities in the capital to deploy those resources to keep people off the streets. On a much more macro scale, we have the national insurance contributions rise, which, after additional Government support, leaves local authorities in England over £1 billion net worse off than before the Budget was announced.

Many of us will have served through many years when there were announcements, such as significant rises in the single regeneration budget, and the establishment of the dedicated schools grant under the last Labour Government. However, as Members who experienced those announcements will know, that approach of starting with a standard spending assessment and then damping any increase that it could give rise to, especially impacting on outer London boroughs with a very significant level of social need, has had a significant long-term impact. If there is an apology to be made from the Opposition about our approach to finances in local government, it is that we did not go as far as we would have wished to, as set out by my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez), in redressing some of those imbalances.

The very first council meeting I attended as a member of the public was the last one at which a Labour council ever set a budget in Hillingdon. An 18% council tax rise hit local residents, and the council made £40 million—then around 10% of its budget—in unspecified savings. Let us not succumb to any fiction that somehow we are entering a gilded age for the local authorities of our capital city. And of course, it comes at a time when we know that the pressures on local authorities are rising sharply. According to the charity St Mungo’s, there has been a 29% increase in rough sleeping in the capital compared with the equivalent period under the last Conservative Government. A huge impact on our economy—not just the business rate rises, but the loss of confidence and the lack of investment.

Many Members have spoken eloquently about the pressures around homelessness—the shortage of housing. We have all been ambitious about that, but it is very striking if we look simply at the numbers. The serving Mayor, Sir Sadiq, was set a target by the last Government of around 100,000 new affordable homes. He set himself a target of 52,000—around half what central Government said he should be able to deliver. He actually delivered 35,000 new affordable homes. In total, in equivalent periods, the current Mayor has delivered 65,000 affordable homes, compared with 90,000 under his Conservative predecessor.

Although we all share the ambition, we need the shared starting point as well, of recognising the challenges, including the impact of damping and the inner/outer London inequality. Those things have existed in our funding formula for a very long time, and they are part of a complex set of interactions that arise from not just the current Ministry of Housing, Communities and Local Government, but the Department for Education, the Department of Health and Social Care, the Department for Transport and the Home Office. Many, many London local authorities are supporting significant numbers of asylum seekers. Hillingdon has the highest number of asylum seekers per capita of any local authority in the whole country—a cost not currently funded at all by central Government, but contributing very significantly to the numbers of people needing to be housed and children to be cared for. That complex picture needs to be taken into account when we debate this issue.

I have some asks and some requests to put to the Minister. Like others, I thank London Councils for its excellent work to consider not just the big picture of the quantum of financing, but the things that could be done, such as removing some of the ringfences that the Government have imposed on how those resources are deployed. The first ask is that, as the Government proceed with their processes on devolution, we look at a true shared decision-making arrangement. There is a risk that the devolution settlement will leave London as the only major devolved area with no formal agreement between the Mayor and the boroughs on shared decision making. We see much of that tension around housing.

I ask the Government once again to look at a process around fairer funding, which has been worked on in the past, to begin to address the inequality of funding between inner and outer London. We know the origins of that lie in assumptions that are made about deprivation, but it manifests in almost every area of local government finance in London.

We still see relatively very large amounts of grant going into inner-London local authorities with low-level council tax, which are also often the ones that are most able to raise revenue in other ways. If we compare parking revenue accounts, for example, London borough of Bexley raises £6 million a year and Hillingdon raises £3.8 million a year, all of which can contribute, to a limited extent, to things such as environmental and road improvements. The London borough of Westminster raises £70 million a year—a net contribution of over £40 million just for environmental projects alone. The capacity of local authorities in London to raise revenue is hugely variable, and not just about the costs imposed by the demographics. We need to make sure that we take that fully into account.

I know that the Minister has been asked for this before on the Floor of the House, so I want to ask him to reconsider the position around national insurance contributions. We have just had an emergency Budget, and have been through a period of six months where it has become clear that the sums do not add up, but its impact—driving up the cost of children’s and adult’s social care, as well as every other part of public service in the capital—has been absolutely enormous. We have had representations from every single London borough about the impact of that. There were promises made that that would be mitigated, and we need to see them fulfilled.

Let me finish with an important point. It seems to me that all Members here, on a cross-party basis, have done their best to speak up from east to west, from inner to outer, for the interests of residents in the capital. We know that those challenges will be significant. I say gently to my neighbour, the hon. Member for Uxbridge and South Ruislip (Danny Beales), the rises in charges are 5%, not exponential.

[Danny Beales]

Does the hon. Gentleman welcome the significant uplift in public health funding from this Government? Or the fact that there is a third more homelessness funding, a significant and additional uplift in local government funding and millions more to be spent on potholes, one of the biggest levels in London? I could go on. That is a significant increase compared with what happened under the last Government, of which he was part. At the same time, our council is increasing council tax for many people, introducing a garden tax and making significant increases in fees and charges, as well as cutting council tax support to many. Does the hon. Gentleman agree that that is an acceptable record?

[David Simmonds]

I think I will probably avoid descending too much into parochial politics, but it is important to recognise that I will have to pay the garden tax—I do not know whether the hon. Gentleman will—because I live in the London borough of Hillingdon.

All our local authorities are facing elements of those challenges, and are addressing them as best they can. London local authorities have demonstrated probably the greatest financial resilience of any group of local authorities in the country. We have seen a considerable increase in balances held by local authorities across the capital, but that masks significant variations. In particular, significant financial pressures are being created in outer London, partly because of the significant numbers of unfunded costs around things such as asylum and the long-term impact of the very rapid rise in rough sleeping. Set that alongside the fact that the long-standing structural underfunding leaves them less able to deal with the impact of a massive increase in national insurance contributions and the devastating impact of the Budget on the local economy and its ability to pay those taxes, all of which support local services. Let us take all those things into account, and come out of this with a new funding settlement for London. I ask the Minister to give us an undertaking that this will not be one of those settlements where a Government simply give with one hand and take with the other.