Hand Major UK Cities Same Freedoms as Liberated London, Report

Major UK cities should be given the same devolved powers as London if they are to start punching above their weight and making a greater contribution to the economy, according to a report.

The Cities Outlook 2014 study by the Centre for Cities thinktank said rather than asking if London is a drain on the rest of the economy, which draws in investment and talent that is much-needed elsewhere, the question should be why other cities are underperforming.

"London has been preferenced over other cities in recent years by national politicians in that it had been afforded a range of policy freedoms and flexibilities that have not been extended to the UK's other cities," said the report.

"If policy makers are serious about increasing the contribution that other cities make to the national economy they need to extend the freedoms and flexibilities held by London to other large urban areas.

"Every city faces unique challenges that cannot be properly addressed by one-size-fits-all policies created in Whitehall. If devolution is deemed a good thing for London, then it should be deemed a good thing for other cities too."

London has a directly elected mayor – currently the Conservative Boris Johnson – with a broad remit across the greater city area and a range of powers that other cities lack.

This includes control of the transport system and policing, as well as greater control over city planning.

The city's success extends not just across the UK, but the world. It is a leading financial hub and draws in billions of pounds of foreign investment every year. London's greater freedom to self-determination is, in part, a driver of this success.

However, the report dismisses the perception that London's success is a drain on other cities.

It found that while London sucks in under-30s from the UK's regions, because of better opportunities for graduates and the draw of a big city lifestyle, more people overall leave the capital than come in. Between 2009 and 2012, 939,000 people left the city against 775,000 who moved in.

The report also said there is a symbiotic relationship between London and the rest of the country, each relying on the success of the other. There is an overspill of business success in London to the UK regions, with firms opening offices in other cities as they expand.

Ties between London and other UK cities should be strengthened, such as through better transport links.

"This report makes clear that our cities need more control over their own future, and more freedom to build on their own strengths rather than be restricted by uniform national ways of doing things," said Greg Clark MP, minister for cities.

London Finance Commission

A separate report commissioned by London's mayor called for London to keep hold of some of the taxes generated in the city in exchange for a reduced grant from central government.

The study by the London Finance Commission, led by London School of Economics academic Tony Travers, called for property taxes such as stamp duty to be kept in the capital rather than sent to the Treasury, so the cash can be invested in the city's infrastructure to help it cope with rapid population growth.

"Our problem in London is we are engaged in endless hand to mouth negotiations with central government about penny packets of finance - that's a chronic problem," said Boris Johnson, London's Conservative mayor, at the report's launch in City Hall.

"It means now, for instance, we have no real certainty about the financing for very important projects beyond 2015. That means our contractors have no certainty, which affects the price we can get for the deals that we do. It makes it more expensive. It means that there's a certain sort of bunker mentality in London government in our dealing with Treasury and central government.

"I have a sort of nervousness about prejudicing the current round of negotiations for fear of upsetting the Treasury or seeming to ambitious. I warmly welcome the ideas in this report."

London gets 74% of its funding from a central government grant and the capital generates 18.5% of the country's tax income.

The city's population is growing. It is currently 8.4 million, but will add a further 1.6 million by 2030, if current projections are accurate.

Upgrades to the Tube system and major projects such as Crossrail and the Thames Tideway Scheme are not going to be enough to cope with the future burden placed on the capital by its ever-expanding economic significance not just domestically, but across the world.