Debate on the Address

Debate between John McDonnell and Gareth Thomas

Wednesday 27th May 2015 Commons Chamber

[Mr Thomas]

I say gently to my hon. Friend, for whom I have considerable respect, that I profoundly disagree. Never mind the Scottish question, the Welsh question or indeed the English question, there is a London question that demands an answer: when will London be able to shape its destiny without always having to go to the man in Whitehall and the man in Downing Street to sort out our great city’s challenges?

[John McDonnell (Hayes and Harlington) (Lab)]

I was the last chair of finance at the Greater London Council. London did have control of its business rates. It did have an element of property tax in the sense that it could borrow against its own assets. In addition, it had its own capital fund. It was certainly not a threat to the nation then.

[Mr Thomas]

I welcome my hon. Friend’s intervention. I hope that he will agree with me on this, too: there is now a democratic deficit in this capital city. London did not vote for austerity on the scale we can expect. London did not vote for cuts in the NHS. London did not vote for cuts—to our police, our schools or the services our councils provide—on the scale that is set to befall our great city. I gently say again to the House that London deserves better. It is time to start a proper debate about the devolution of further responsibilities and about income tax being devolved to London.

Many international cities derive income from a local income tax, including, I am told, New York, Berlin and Madrid. In the UK, there is already a precedent with Scotland having the power to set income tax. Given the huge contribution that London makes to the rest of Britain, it is not identity politics that drives the case for further devolution; it is economic and social imperatives.

The London Finance Commission argued that property taxes should be devolved first and that is right, but it also concluded that, if greater powers, for example, in welfare, health or education were devolved to London, the option of devolving or assigning income tax in London should be revisited. I believe that moment is now. If Greater Manchester is being invited to shape the future of its health and social care, I believe London should be invited to do so, too.

The London Challenge helped to drive up standards in education. I believe that it should be re-established and London given more collective responsibility to champion stronger standards and higher achievement in our schools. Skills and employment training budgets should be devolved, too.

These are, I recognise, big judgment calls for London itself and for the country as a whole. I disagree with many of the current Mayor’s choices, but the mayoralty throughout the terms of its two incumbents has demonstrated generally sound management of major public services, notwithstanding the current garden bridge plans. I believe that it is time to establish a cross-party, cross-government inquiry, with business and other key stakeholders closely involved, and with the remit to explore both the case for devolution of further responsibilities to London and the case for devolving further taxation powers. The next Mayor, even if they serve for two full terms, may not be the Mayor who sees responsibility for income tax devolved to them, but I believe profoundly that it is time for London to accelerate its path to proper devolution. We should, for example, consider the case for more local control of London’s NHS. I want the NHS to continue to be a truly national service. I think there is a need for national targets—cancer and waiting times being two key yardsticks by which to judge quality of service—but it is surely right that Londoners have more control themselves over services we value so highly.

Why should London not have responsibility for the decision on whether to introduce a London living wage, of course after consultation, not least with business? Why does that power need to rest with Ministers instead of Londoners? Why cannot we in London decide whether to control the cost of renting? Londoners together should be able to make these decisions, not have them dictated to us.

Any further devolution of tax powers and extra responsibilities will inevitably require scrutiny over how London is governed and whether the current divide in powers between Mayor and local boroughs and the Assembly are correct. Instinctively, I believe more power should be devolved to London’s boroughs. City Hall has often felt remote from outer-London suburbs, but I suspect it has not always felt terribly helpful to some inner-London boroughs either. A root and branch review of the powers and effectiveness of City Hall and the Greater London Assembly ought to be part of the work of a commission looking at future devolution. I say that recognising the skill, hard work and powerful contributions of many in the Greater London Assembly, not least many of my own colleagues.

London is a great city, the envy of many worldwide, but we face huge challenges as our city grows even bigger. Certainly we look to this great House to help, but in London we have the imagination, the talent and the wealth to confront head on the issues that hold our city back or hold back the ambitions of our neighbours and fellow citizens. If others in this great country have succeeded in securing greater powers to control and shape the response to their problems, why should not Londoners expect their Mayor to have the powers to be able to act?

I want London to continue to play a leading role in the UK. Indeed, I want London to lead the UK. But for that to happen, Londoners need to be able to lead London’s future.