Giving London more fiscal powers to impose a tourism levy and strengthen the Mayor’s office is a “no-brainer” to boost both the capital and the entire UK economy, senior London politicians have argued.
Ministers have been urged to amend the English Devolution and Community Empowerment Bill currently making its way through parliament to allow Sir Sadiq Khan to introduce a tourist tax on overnight stays to raise revenue.
Other recommendations in the report, entitled ‘Trusting London to deliver: our place in the Government’s devolution reforms’, included ensuring there are no joint decision making structures between the Greater London Authority (GLA) and the 32 London boroughs.
The report, launched by the GLA Oversight Committee yesterday (Monday 15 September) also proposes exploring tax increment financing (TIF), which allows borrowing for public infrastructure with the expectation that this investment will lead to increased property values and economic activity. TIF has previously been used to part-finance the extension of the Northern line to Battersea.
Image: LDRS
Committee chair Bassam Mahfouz told an event in Parliament: “London is at a crossroads – people are calling out for politics that delivers and the devolution bill is a key answer to that challenge.
“The time is now to ask where next? London’s devolution settlement is still incomplete.
“London lacks the fiscal freedoms needed to act boldly – we are being asked to compete with the likes of New York, Paris and Berlin, but we are tied to rules that belong to a very different scale of city.
“Devolution in London has worked well, but it’s unfinished. By trusting London to deliver, the government won’t just secure our capital city, but strengthen prosperity across the whole country.”
He added: “Reforms to council tax and business rates are other areas where Londoners want more local control and frankly, they’re also no-brainers. It’s time to finally give London the tools to match its responsibilities.”
Research conducted by his committee showed that 41 per cent of Londoners supported the Mayor’s Office having the powers to levy a tourism tax.
The charge is currently opposed by the national government, but that is in place in Manchester and Liverpool, who used a legal workaround in 2023 by both introducing a tourism-based Business Improvement District (BID), meaning they could collect taxes from hotels and serviced apartments.
Labour MP Dawn Butler, who has previously said she would “love” to be the Mayor of London, told the Local Democracy Reporting Service (LDRS) that allowing Sir Sadiq to implement a tourist tax would be an easy win for the government.
Image: LDRS
She said: “This is a well thought out document and it has some areas that need to be considered.
“The government should take the majority of these on board – for instance, the tourism levy is an easy one, low hanging fruit and the money could be ring fenced for London infrastructure.
“We need to move in this direction – we can do that quickly, and then move on from there.”
As well as strengthening the Mayor’s powers, the report also recommends that equal “commensurate powers for the London Assembly to scrutinise them” are also brought in.
