Oral evidence: The future of devolution after the referendum, HC 700Monday 10 November 2014
Oral evidence, 10 November 2014.
Witness
Sir Edward Lister, Chief of Staff and Deputy Mayor (Policy and Planning), Greater London Authority, gave evidence.
Chair
Do we blame the local authority for your late arrival?
Sir Edward Lister
I think it is a good example of the difficulties with our lack of infrastructure in London that it takes so long to get across from London Bridge to here because we have had to close most of the station.
Chair
Excellent. Welcome, Sir Edward. It is a real pleasure to see you. Did you want to start by making an opening statement on the current state of devolution and the political interest that has been generated at the moment?
Sir Edward Lister
Thank you very much, Chairman, and thank you for giving me the opportunity of coming along here and saying a few words on this subject. I think it says something when this rather dull area of local government finance has become interesting for a lot of people now, which is a major step forward. Over the last year or so, we have seen that and that is a great beginning. I think the Scottish referendum has added impetus to that because we now quite clearly do need to look at what is in it for England. I would argue what is in it for England is very much finance and it is about local finance. A bit of background: London is growing by 100,000 people a year; we are on 8.6 million. Our last peak was in 1939 and we were 10.6 million then. We will be on 11 million by 2020. We will be going up, and by the 2050s we will be around 12 million. This kind of growth is putting an enormous strain on the infrastructure. Even if that growth drops back because people start to move out of the city, it will still only drop back by about 75,000 to 80,000. It is still going to be enormous growth. We are campaigning in London, along with the other core cities, to try to retain more of the tax base that is raised in the city. I want to stress that what we are campaigning for is not revenue as such. It is the revenue that we need for capital expenditure and it is about long-term ability to borrow and to sustain the kind of infrastructure investments that we as a city need, whether those are further expansions to Crossrail, expansions to the tube network, housing or you name it. We have already done a London infrastructure study, which is out for consultation at the moment, where we have identified expenditure north of £1 trillion by 2050. Not all of that is public expenditure, but all of that is expenditure that this city will need if it is going to continue to grow at this kind of rate and stay as a world-class city. The Mayor and Professor Tony Travers put together the London Finance Commission, which called for evidence and looked very closely, and one of the things it clearly identified was that if you took all the grants that we currently get and added them together, they would basically come to the same as all the property taxes. Our suggestion to the Committee is that if you transferred property taxes to the city, you would be doing no more than giving us what you give us already in various forms, but you would give it to us on a continuous basis and you would give it to us in a way that would enable us to use that for long-term infrastructure growth. What we are talking about is moving from about 5% at the moment of the tax in London to about 11.5%. That is all. We are not looking at an enormous amount. If I may compare us with New York, they keep 50% of their taxes, or Tokyo 70%. So you can see we are not asking for that much.
Mr Turner
What evidence is there of public demand for further devolution and especially when you look at the percentage of votes cast in London when you compare that with general elections?
Sir Edward Lister
Well, I would say that the mayoral election was quite a high turnout.
Mr Turner
But not as high.
Sir Edward Lister
It wasn’t, was it? It was a big one, but BBC did a study last week and 80% of the people they surveyed were advocating they would like to see more of the local funding within the city itself.
Mr Turner
It is one thing to have a poll surveyed in the comfort of people’s homes; it is another to get them out and get them to vote, and, purely by general elections, that is much more than the London results.
Sir Edward Lister
Yes, but if people thought that local government meant more to them, it would be an impetus for them to get out and vote because they would see why they were coming out to vote. At the moment, they often see it as we are just an agent of Government; we are very much dependent upon the kinds of grants that Government give us. As they have done in the past, if they saw that local government spent more or less than they thought was right, they would come out and they would clearly show their support or otherwise to that policy.
Mr Turner
Was there a wonderful time when London or Birmingham, or for that matter, any large cities, had the power to make these—
Sir Edward Lister
None of the cities have ever had the kind of fiscal powers that we are advocating, certainly not in living memory. We are asking for something that is new. It has never been there before, but local government has been spending this money, and I do stress we are not asking for money that we do not currently get. It is just that Government give it to us in penny packets and you see this quite regularly. You see the kind of funding that we get. It is usually good for four years and then it falls off a cliff until the new Government of the day gives us the next dollop for the next four years. That is how you see this working and that is what we cannot live with, with infrastructure.
Mr Turner
Assuming those transfers of money are additional devolution, what other powers would you like to have?
Sir Edward Lister
Our big push is very much about infrastructure and about capital expenditure in the city—areas particularly in transport but not exclusively in transport, in housing and other areas. After that the area of greatest interest to us and, indeed, to London councils is the skills agenda and the desire to have greater influence on skills, but that is very much a secondary one to the fiscal that we are anxious to obtain.
Mr Turner
What is the difference between London and any other area—rural areas in particular?
Sir Edward Lister
I am less able to comment on rural areas, but I can certainly comment on cities and I do not think there is any difference with us and the other cities. Indeed, I think all the core cities are arguing for the same thing. We are all talking about the need to put our infrastructure in place in a way that it is going to be sustainable for the 21st century. I think that is our main drive. I am sure you could run the same arguments for rural areas, but I am not equipped to mount those kinds of arguments.
Robert Neill
Good to see you, Sir Edward. The sense I get there is that you see there is a sort of metropolitan model and the difference between London and the other core cities is essentially scale rather than function.
Sir Edward Lister
Yes.
Robert Neill
How would you then fit that within what some have argued for, understandably from their perspective, as a broader, England-wide framework or do you say you cannot have a one-size-fits-all for England but you can have for the urbans, let us say, as against more rural areas, as Andrew was saying, or is there some commonality?
Sir Edward Lister
To be fair, London does have a very mature structure now where it has been handling powers that have not been available to any other city: our powers with policing, the fire service, transport and indeed housing. These are all powers that we, as a city, have. From what I can understand from the Chancellor’s announcements, a similar power is going to be transferred to Manchester and it is a similar type of package. I do not necessarily think it has to be the same. I do not think we would argue it has to be the same, because there are going to be differences, but we think the fundamental arguments are the same arguments.
Robert Neill
When you are talk about we have a mature structure, which includes the checks and balance and scrutiny models, would you say that Greater Manchester needs a Greater Manchester assembly—I say slightly tongue in cheek?
Sir Edward Lister
My understanding is they are using their borough councils as the scrutiny machine. That indeed was an argument that a lot of people ran. In fact, I was one of those at the time.
Robert Neill
You and I probably remember the argument more than most.
Sir Edward Lister
When the GLA was established, that was a perfectly credible alternative way of providing the kind of scrutiny that you need. There has to be a scrutiny of some sort. We have a particular model. It looks like Manchester may have a different one.
Robert Neill
A joint authority model that you adapt for Manchester could work perfectly well, yes. Can we move on to talking about the London model? London does have, in that structure, some quite significant boroughs dealing with major functions, as will the metropolitan districts in the core cities. Have you reached any particular agreement with the London boroughs, assuming that there was some devolution particularly of property tax revenues, how you would split that in terms of how the spend goes, who takes responsibility for it and how London boroughs have an input into that structure?
Sir Edward Lister
Yes, we have had those discussions with the London councils and have broad-brush agreement to how that would be handled. I do not think there is any real dispute between us. We would stick with the powers that we currently have and operate and, likewise, they would deal with theirs. We do not see conflict. They have the same issue that we do that they need certainty in their funding. If they get that kind of certainty they can plan much better. That is what we are both arguing for; there is no difference between us.
Robert Neill
Logic would say you would have the same discussion if you were in Greater Manchester or West Midlands or wherever.
Sir Edward Lister
Yes. I do not think anybody in local government is particularly going to disagree on this. We might have a little bit of an argument over an individual power or something but not about the broad principles.
Robert Neill
Tell me if I am wrong, but it strikes me that one of the significant points you are making here is where you are looking for devolution in particular is around capital expenditure and capital programmes and around infrastructure projects but, of course, a lot of the personal service functions of the London boroughs and the mets are, to a much greater degree, revenue-spend intensive. Is that an important part of the package as you see it?
Sir Edward Lister
It is a difference between us, but I think, even as far as the boroughs are concerned, we do recognise there is good borrowing and bad borrowing out there. Good borrowing is where you are building up the balance sheet and we do try to differentiate between us. None of us is looking to be able to borrow money to sustain services, but it would obviously be much easier for those boroughs, if they currently get a grant at the moment from central Government, if that grant could be turned into tax revenues, which are there already. I am not asking for new taxes or anything, but taxes that are there already. It would give them that certainty and they would be able to plan much better.
Chair
The Mayor and Professor Travers, who has been a witness in front of us on many occasions, have made a very strong case for the devolution of property taxes. Some three years ago, this House passed in the Scotland Act an element for Scotland, at their request, of assigned income tax, which I think started at 10p and no doubt the Lord Smith package will change that quite considerably. Does the Mayor favour additional tax raising ability through income tax assignment or what is his view on that? Do you know his mind?
Sir Edward Lister
Yes. His view has been, as indeed was the view that came out of the London Finance Commission, that we can get what we need out of the property tax base that is already there. It may be necessary to slightly alter or rearrange that; not looking at more money out of it but perhaps making some of it fairer. The fact remains that we think that is sufficient. We have never looked at income tax or any amounts from that.
Chair
In a strange way, these reports and this consciousness out there over other forms of income have come on top of the Scottish referendum and the excitement and big democratic involvement that was generated. If I can allow you the fantasy of your report having been issued a couple of years ago and having been, bit by bit, accepted by Government, were you in a position now with those powers and income tax assignment on offer to the rest of England, one assumes that you would jump at the chance of having your share from the DCLG of the income tax pot.
Sir Edward Lister
We have always seen that any income we got would have to be matched by the relevant grant being withdrawn, so it would always be cost neutral. I think it would depend on what was the item in question and was that grant being withdrawn, but if that was the case then, yes, of course. I do stress, because I think it is terribly important and we have been misrepresented on this at times, none of us is asking for more money. I keep on underlining this because I think it is important. This is not an inflationary grab for anything. It is about certainty.
Chair
Also transparency, because local electors and taxpayers do not understand that, in fact, a very high chunk of income tax already goes to local government, but it is disguised in the rate support grant and block grant and all the jargon and difficulties around that. Just to continue a thread from our previous witnesses, income tax assignment would not change equalisation, the rates and the money amounts, but would give accountability and transparency—all those things that you think would be valuable in London.
Sir Edward Lister
Yes, absolutely. I think this is important because we are providing a lot of very major services to people and we are having to fund those through various grants. If we can get that flowing through the boroughs and through the City Hall, we would prefer that.
Chair
We have just cleared a report in private session, before witnesses came in to talk to us, on voter engagement. Do you feel that if you had that level of local expenditure and it was transparent to local people, that would have a healthy impact on political involvement, the growth of political partners or the improvement in turnout if people could see, for example, on their wage slip that, rather like national insurance, a certain chunk of what they already pay, not additional, went to local government? Would that be a stimulus that we are all searching for to improve voter engagement?
Sir Edward Lister
I believe it would be. I believe people have to be able to equate the services they are getting to the money they are paying and have to be able to see that relationship. Nobody understands that while it is just a central Government grant. I would suggest that very few people understand how any of these calculations are done. It has become a specialist subject for us all as to how some of these grants are calculated, but the fact remains that if everybody could see what they are paying and then see what they are getting back, I think you would have better local government as a net result.
Fabian Hamilton
Sir Edward, sorry to jump in on the back of that, but I represent part of the city of Leeds, although I am a Londoner by birth. The resentment in Leeds towards the amount of money that goes to London is quite considerable. It is an imbalance. Do you think that if the money that is already allocated was raised instead, or was paid through the method that you have described and we have been discussing this afternoon, that would go some way towards allaying and resentment?
Sir Edward Lister
We are not after something that we do not think should go to Leeds—
Fabian Hamilton
No, I understand that. You have made that very clear.
Sir Edward Lister
And nor are we asking for more than Leeds gets. The trouble is at the moment there is no transparency in the system. None of us can, hand on heart, say that Leeds is getting that much less than London. It is in so many different pots and so many different places that it is hard to make that equation.
Fabian Hamilton
Whether it is a perception or a reality, would that be allayed by—
Sir Edward Lister
But I think this would allay it. I completely agree with you and it would explain to people just how important it is. Indeed, it could well be that people see that kind of infrastructure and the money that goes into it and they decide they want to spend more money on it. You could mount those kinds of arguments. You cannot mount that kind of argument today.
Chair
What are the constraints currently on capital borrowing for London? I understand that the Mayor has requested that if you are a devolved authority you should be able to borrow more for capital purposes. How would that work?
Sir Edward Lister
Obviously, this is all about prudential borrowing, but at the moment we are very much bouncing along on our ceiling because we have already borrowed very substantial sums of money for Crossrail, circa £3 billion. We have other debts to do with the Olympic Park and the Olympic Games, which are on our books, and we are borrowing a further £1 billion towards the Northern Line extension. That has taken us very close to our ceiling. What we are arguing is that we will have to relook at the borrowing powers of local authorities, and, of course, they have to be able to stand up. The asset base and everything else has to be taken into account, but you will need to lift that level.
Chair
Should devolved authorities be able to issue bonds for specific purposes, perhaps consulting the population, providing they can raise that and they have the appropriate credit rating on the open market?
Sir Edward Lister
A clear rating, which is very important. Ours is a very high credit rating. They need to have that, but, above all, they need certainty of the income to be able to support that bond or whatever. Provided that certainty was there, then yes. May I just mention that we are in the process of putting a bond together, which we will be issuing during the early part of next year, for the Northern Line extension where we are borrowing a considerable amount of money? That is being borrowed against future incomes from SILs and from business rate uplift. We are already moving in that direction, but we just need to go further.
Robert Neill
Logic says command authorities like Greater Manchester or Greater Leeds and so on ought to have the same capacity to do that. This could be a good rating on the bond as well, couldn’t it? Essentially, it is a quasi-sovereign.
Sir Edward Lister
Yes, it is. Indeed, a number of the local government pension funds are looking at it quite seriously.
Fabian Hamilton
To follow on from what Bob said, if you superimpose the London Underground map on Leeds, it will swamp the entire city. However, if you superimpose it on what I would call Greater Leeds, which would include Harrogate and York, the combined authority in other words, Bradford, Wakefield, Halifax and Huddersfield, then it begins to make sense and yet we have nothing approaching the kind of public transport system that Londoners enjoy, and rightly so of course. Would you think that raising a bond for a combined authority like that would make sense? Would that be something that you would advocate?
Sir Edward Lister
I would argue that, when you are talking about job creation and improvements and opportunities, it always starts with the transport. It is the number one ingredient for regeneration. Provided that bond is going towards capital expenditure and it is going on the balance sheet as a clear asset and has a clear story and all other things are equal, it would create rating and everything else, then, yes, I think it is the right way to go forward, but obviously that does need Treasury approval.
Chair
If you are raising additional money, people are a bit anxious sometimes, “If you let these local authorities raise this money what is going to happen?” If you raise the money, one of the ideas was that there would have to be a democratic check of some description and an approval of some description. You may say that could be the GLA. I may say that it should be some sort of proposition on a ballot paper at election time that if you want to raise money—particularly if you are talking about £15 billion to £20 billion for a big capital project—it should be there for the people to argue about and politicians to try to persuade people about so that people say yes or no. Do you feel that that would be healthy if we are devolving, that it is not merely devolving the financial responsibility; it is devolving political responsibility to the electors, too?
Sir Edward Lister
Yes, I do because I think it is quite important. We cannot grow the cities and we cannot provide the kind of infrastructure. I would fully support, with the example of Leeds, a Leeds combined transport authority, something like TfL. It works. It works extremely well, being linked into the city. Those kinds of projects do require enormous capital investment and I think, provided that is what we are talking about—it is about capital investment in the city—there has to be, as you say, proper checks with the local authorities. It has to be done through the ballot box. It has to be done through all the normal checks and balances, but I think that would make people much more interested in local government if they were starting to debate those kinds of subjects and the way their city is going to develop.
Chair
The last one from me, before I call Fabian: another bogey is that these local authorities will all go crazy, they will all borrow and they will all do this, that and the other and, at the end of the day, someone will have to pick up the tab. Do you feel that local government, at some point, has to have a process whereby they do go bust, which we have seen in other countries, as the ultimate sanction for that sort of behaviour because it would mean, I suspect, whichever political party was in control at that point would never be in control again for many decades? Do you feel that is a nuclear option that you do have to have as a reserve power? May I immediately equivocate my question by saying that in my experience local authorities manage their financial affairs better than national Government, but nonetheless, Sir Edward?
Sir Edward Lister
Yes. That is a bit of a nuclear option you are putting on the table. I think the majority of local authorities would have no difficulty managing sensible borrowing limits, and indeed they are going to be capped because it is about the asset base and the revenues that have to come in to support that borrowing. Borrowing is not a cheap option. It is quite expensive and it has to be paid for, so it can only take place if there is a sensible financial case. I do not think we would object from a London point of view, and I am not sure any of the other cities would object, even if there was the kind of scrutiny that Parliament would give—or, indeed, Government would give—to sign those off. What I am trying to argue is with any of this borrowing we need long-term certainty in the revenue and that is what we do not have. That is what makes doing any of this almost impossible, because the amount of moneys we have coming in is very much in penny packets.
Fabian Hamilton
Can I move on to the constitutional change issue and process? I know we have touched upon it, and I apologise I was a bit late into the Committee. I believe that the Mayor made it plain in his memorandum that the Government should be more ambitious in its timetable for devolution and the goals for devolving powers to cities in England. What kind of timetable for devolution of powers to cities would you like to see?
Sir Edward Lister
We very deliberately launched the London Finance Commission so that it was out there well before the general election and well before the political parties started writing manifestos in the hope that we could influence those manifestos because we would like to see this now. We believe it is something that is immediate. We are not necessarily saying we want all of it at once, but we need to start this journey and get greater autonomy within the cities to put the infrastructure that they need in place. We have a long list of schemes that we think are essential for London’s growth. In London, we have 38 opportunity areas. These are areas where we believe we can get a sizeable amount of our new housing, but each of those 38 opportunity areas has a problem. In some cases, it is land assembly; in some cases, it is contamination; in many cases, it is transport. All of them need something, and unless we can do whatever it is that frees that area up, we will never get the kind of housing built that we need as a city. This could also be argued for offices and all the other employment areas. What I am trying to argue is that we need this now. We need this ability to start planning how we are going to open up those areas. The second point I would make is that you do not have to start delivering this immediately. What the market needs is a clear signal that we are going to do it and the best example for all of this is one of our opportunity areas, Vauxhall Nine Elms, where we are building an extension to the Northern Line. It is costing £1 billion to build this extension and we are building in that area now just under 20,000 new homes, 25,000 new jobs, but the point I want to make is that 18,500 units of housing have been through the planning or are in the planning system and they are all there. The cranes are all over the place and it is all happening, but we have not started building the Northern Line. There are no shovels in place. We are just about to start the Transport and Works Act through the House. We have put the funding arrangements in place, so people know and have certainty, and with certainty has come all the commitment and that is what we need right across the city. If we can give certainty, we can get the kind of growth that we need.
Fabian Hamilton
I have certainly seen some of the cranes in Nine Elms. A lot of work on devolution in England has focused, as you will be aware, around cities and metropolitan areas. How can we ensure that the principle of devolution benefits everybody, in other words those in rural and small villages and towns, rather than just those in and around major cities?
Sir Edward Lister
I did say earlier I am not the best person to argue this because I do not know enough about some of the rural funding issues that are out there, but I am sure the principles are very similar. They have a need for infrastructure; they have a need to change things, and I would suggest that often local communities are going to be much more sensitive to the needs of their area than remote organs of government. I cannot believe this would not work just as well in those areas.
Fabian Hamilton
The Local Government Association has called for a constitutional convention to be convened to look at how devolution should proceed across the United Kingdom. Do you believe a constitutional convention is necessary?
Sir Edward Lister
To be blunt, no. I think this has a danger of becoming a delaying tactic so we keep on talking about it even longer. I would much rather argue that we should start the devolution process and start transferring some of these powers. By all means, let it evolve gradually. It does not all have to happen overnight, but at least let us start that process.
Fabian Hamilton
Parliament should do that in conjunction with the Local Government Association?
Sir Edward Lister
Yes.
Fabian Hamilton
We have previously published a report in this Select Committee looking at the prospects for codifying the relationship between central and local government and we are currently holding a consultation on the possibility of a codified constitution for the UK. Do you think that a stable relationship between central and local government in England requires primary legislation to make it work, or should there just be some form of entrenched code that acts as a precedent?
Sir Edward Lister
I think these things can be done by codes. After all, Governments of various persuasions will change this as time goes by and it would be naive to believe that they will not. I think it is more about having some kind of agreement out there and we can evolve this, but we need to start the process and that is what I am really arguing for, because it has already been two years since we published the London Finance Commission and we are still arguing the case. We have not transferred anything yet. We need to get to the point of getting some of these services transferred—let them evolve—and I am sure the codes and, in due course, if somebody feels legislation is needed then fine, that will have to follow.
Mr Chope
London is a successful world city. Don’t you think a lot of that success is attributable to the fact that it is part of a unitary state rather than a separate island on its own?
Sir Edward Lister
Yes.
Mr Chope
I do not know what the exact figures are but, unlike Scotland where the number of people crossing the border into and out of Scotland every day is relatively small, in London you have hundreds of thousands if not millions of people crossing from beyond the outer London boundary into London and back again. Doesn’t that show that this is better dealt with by a national Government rather than by local government?
Sir Edward Lister
I hope I have not given the impression that I am trying to argue for the city state, because I am not trying to mount that argument at all and I want to stress that. London’s population is 8.6 million. I think I am right in saying that the transport network deals with 9 million people a day moving in and out of London, so you can see that there are very substantial numbers of people coming into London from outside as a net result of that. We are very much dependent on the greater south-east for much of the labour force in London. My argument is that we are very much part of the United Kingdom, but we also do need investment if we are going to continue to grow as a city, and it is that investment that we are trying to argue for and that needs funding. We will only get that if we have certainty. We need certainty to get it. We are not asking for a lot. You could argue that a city like New York keeps just north of 50% of the tax base there. We are not even after that. We are after 11.5% of our tax base, so we are a long way away from some of these other models that are out there. That is the argument.
Mr Chope
You are asking for more certainty about the revenue streams that come from the Government, rather than control over the amount of revenue?
Sir Edward Lister
Correct.
Mr Chope
When you say you want to have power over property taxes, you want the receipts of property taxes, but you do not want to decide the levels of property tax yourselves?
Sir Edward Lister
No, not particularly. We are very happy for you to do that, but I would argue that in the course of time, if you looked at all of the property taxes, you would probably look at them in a different way. There is no question about it. Stamp duty tax is not a rational tax at the moment in the way it is affecting the city. It is one of the reasons people are not moving out of the city; it is so expensive to move home. There are a number of taxes there that you could do in a different way if you wanted to, but that is not the argument today. The argument today is that if we have that certainty we can then put in place the programmes to build the infrastructure that we need as a city and we can build in all sorts of safeguards. For example, if business rates were tied to council tax, businesses would be paying a much lower rate of business tax today. It is things like that. We are very happy to build the safeguards and we recognise there is a need for those safeguards.
Mr Chope
You make a very powerful argument against stamp duty, because it is effectively a tax on transactions and if you have a tax on transactions, it results in fewer transactions. Are those issues that you have to lobby about? You are a very substantial and effective lobbyist on behalf of the Greater London Authority. Is that not something that has to be lobbied on and sorted out ultimately by the national Government?
Sir Edward Lister
Yes, but if you can in the process of that, at the end of that debate give us that income and the certainty of that income and allow us to borrow against it—and I do stress this is about capital expenditure rather than revenue expenditure; it is about the capital moneys—we will be able to build the sort of things we need to build in this city and that is what we need to have. If we are to continue to be a world-class city, we have to continue to have very sizeable investments into our infrastructure.
Mr Chope
We have heard today that £54 billion a year is what it is costing the United Kingdom taxpayer to pay the interest on the country’s borrowings. What is the cost of the interest on your borrowings at the moment and what would be the maximum amount you would think reasonable?
Sir Edward Lister
I think I would argue at the moment that we are part of that £54 billion today because you are giving us the money in the form of grants. What we are saying is, “Don’t give it to us the form of grants. Give it to us in the form of revenue, and we as a city will work out the most cost-effective way.” We are not going to make the situation worse than it is today. We are not after more.
Mr Chope
You say have borrowed up to your limit or almost to your limit.
Sir Edward Lister
Yes.
Mr Chope
There must an interest cost associated with borrowing at that level. Can you give us a feel for what that level of interest is?
Sir Edward Lister
No, I can’t. I would have to take note of that question and provide you with the information. I can assure you it is going to be quite low, relatively speaking, but I will give you that information.
Mr Chope
Basically, you would like to have more money and more certainty to deal with the transport infrastructure, but you are not thinking in terms of taking more powers to yourselves from the boroughs?
Sir Edward Lister
No, we are absolutely clear on this and that is where we and the boroughs are in complete agreement. There is no conflict between us and the boroughs. We are not looking to tread on their toes in any way. We are looking very much in the economic area and the infrastructure area—the things that apply to the city as a whole—and we are certainly not touching any of their areas.
Mr Chope
Do you think the City of London Corporation supports your line on this?
Sir Edward Lister
I think it would be reasonable to say that all the London boroughs and the City do support our arguments.
Chair
If I can take you back to Fabian’s last question about safeguards and entrenchment, I know it is something that could never happen but the structure of government in London could be abolished by a Prime Minister who did not approve of a particular authority. I am sure that has never happened, even in the recent past, but let’s imagine that it could. Have the negotiations; have the interactions; but at the end of the day, if you are to have what you have underlined here, very powerfully, sustainability and long-termism, particularly in your transport and infrastructure projects, don’t you need the certainty that Whitehall can’t come along again and take away from you, just on a political whim very often, powers that it has already given? Doesn’t there need to be that element of entrenchment?
Sir Edward Lister
At the end of the day, we have to be a responsible city and have to be seen to be a very responsible city, and therein lies our safety, if you like, because, yes, of course, Government can always change things. I do underline this whole argument. This is about finding the finance that we need to grow and expand the city. It is not about finding more money to pay for our revenue services. We fully understand that those will continue to decline. The amounts of money available to us, as indeed to all of local government, will continue that reduction, but in capital areas we cannot afford that. We have to keep on putting that in and that goes on the balance sheet at the end of the day, and we can build in checks and balances on it as well, but this is the area that we are after. I do not think that is particularly contentious because these big programmes that we are trying to argue for—the Mayor is arguing for Crossrail 2. If that is anything like Crossrail 1, that is north of £14.5 billion. Those are the kinds of programmes that we need as a city and if we do not build these kinds of rail links in the city, this city will start to choke up. We have to get these big schemes off the ground.
Chair
Let us imagine you negotiate that and the satisfactory deal is concluded by a particular Government with a particular mayor or Greater London Authority, but that after the next election people are telling me that the austerity package must be at least as severe as the one that we have experienced over the last five years. Do you not want some stronger guarantee that what you have just negotiated will stick and cannot be unpicked by an incoming Government when you have done the deal and signed the contract?
Sir Edward Lister
London is 23% of the GDP of the United Kingdom. The rest of the south-east is about another 22%. Very much of the city’s fortunes are the same as the country’s fortunes. If London sneezes, everybody catches a cold. That is the reality of the situation. We are very supportive of the work done by the Chancellor in creating a northern powerhouse. We fully support that because that makes sense for us as well in London. We do need a more balanced economy, so we are totally supportive of that. But, yes, we do need to continue this devolution of powers to the cities and I think, regardless of your political views, the role of mayor has been a great success in London. We have two mayors and both of them have made a mark on the city and they have come from different political backgrounds, but the city has grown stronger as a net result of that. I think the current political structure speaks for itself and provided we keep on being relevant and the electorate sees that what we have in the big cities is relevant, we will continue to have that support, which will enable us to continue.
Chair
Sir Edward, thank you very much. Are there any last thoughts or last remarks you want to leave with the Committee or anything that we have omitted to ask you about?
Sir Edward Lister
No, I think you have pretty well covered everything, one way or another, and probably some areas I was not expecting. Thank you at least for listening to this argument and certainly I do hope that we can get your support to argue this through both with Government and Opposition.
Chair
You may have heard the conversation I had with the previous witnesses, that we are doing this report on the back of the emotion, as much as anything else, that was generated by the Scottish referendum and we intend to report fairly quickly, so that we can hopefully have some influence on the way devolution is going to spread from Scotland to other places. I hope that the window of opportunity that a number witnesses have talked about will be one that we can collectively leap through in the not too distant future. Sir Edward, thank you so much for your time and for struggling across London to get to see us. We do appreciate it. Thank you very much. The future of devolution after the referendum, HC 700