The weekend debate: Should Boris Johnson get his way on London’s tax take?

Here’s your starter for ten in our weekend slot where we throw up an idea or thought for debate…

Incumbent Mayoral candidate Boris Johnson has developed plans for Londoners to keep more of the tax revenue generated in the city to spend on better public services. Boris said the capital should be getting a greater return from the tax it contributes to the exchequer.

According to the Evening Standard the equivalent of £2,500 for every Londoner goes to other parts of the UK rather than being spent on public services in the capital.

Boris Johnson said that London should no longer be a “cash cow” for the regions:

London is the powerhouse of the UK economy and it is time to look at formally recognising that and make sure hard-pressed and hard-working Londoners get the benefit of their contribution.

This is despite the billions spent on Crossrail, the Olympics and the money spent on the Mayoralty itself, all of which primarily benefit the capital.

Despite saying he wasn’t looking to pick a fight with regions outside of London Boris’ plan has already caused controversy with politicians in Wales, but what do you think? Does London get a raw deal? Or is pouring more money into the capital self-defeating?


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8 Comments

  • Of course he shouldn’t, London quite clearly does not get a raw deal.

  • Andrew Duffield 14th Apr '12 - 12:21pm

    London is already heavily subsidised by the rest of the UK; public (and private) sector workers receive London pay-weightings and spending per capita on public works is much higher too. This massive transfer of wealth is evidenced by continuing rent and house price rises in the Capital, ultimately pocketed by London’s landowning individuals and institutions. It is this unearned and largely untaxed gain that perpetuates deadweight taxes on the whole UK economy. As ever, those who monopolise the highest value locations collect on this unfettered privilege, while the rest of us pay.
    Of course, as Liberals we know this already.
    Don’t we?

  • As most large companies and multinational subsidiaries in the UK are headquartered in London there is an inevitable flow of cash and capital from the outlets (in the regions) to the core (in London). This massive draining of wealth INTO London is only partly offset by redistributive taxation. The continual obsession with London of MPs based in London (even those not elected in London) ensures that the country will continue to spend disproportionate amounts of the nation’s wealth in the capital. (This, of course, is the main argument for proper regional government).

  • As a Londoner (South) I don’t think that is a wise or fair policy. But it will certainly be popular.

  • I hope this is just a piece of cynical populism ahead of an election. Anything which undermines the principle of universality in taxation has to be resisted because it can only lead in one direction: the opting out of elements of taxation by those (i.e. largely the rich) who do not use some of the services for which they are paying. The government’s proposals to send every taxpayer a breakdown of how the money they have paid in income tax is being spent could well have the same effect so that the future debate about taxation shifts from overall levels to ‘fairness’, which would suit those with an anti-state ideology very well.

  • Peter Watson 15th Apr '12 - 9:47am

    Maybe this sort of localism is exactly what is needed and should be supported by those of us fortunate enough to live elsewhere.
    London should get to keep some of that tax revenue. It will need all that money to buy water, electricity, oil and gas from the rest of us.

  • Yes the £2,500 per ‘Londoner’ makes a good headline, but the key statement contained in the article is:

    “In 2009/10, the last year for which figures are available, London contributed about £99 billion to UK GDP through tax — but only got £94 billion back in public spending. This net contribution of about £5 billion was lower than normal because of the economic downturn. Experts claim it would usually be between £10 billion and £20 billion a year.”

    So we can see that firstly, ‘London’ (whatever that actually means) actually contributes relatively little to the Treasury (from elsewhere on libdemvoice a figure of £712 billion is cited as being the total for local and central spend in 2012) and secondly of that less than 20% of the tax revenue contributed from ‘London’ gets spent outside of ‘London’. So whilst appreciated you can hardly call it a “cash cow”.

    If we were to treat ‘London’ as a single tax payer, then a case could be made for 50+% of the contribution from ‘London’ to be spent outside of ‘London’; or is ‘London’ just another member of the super rich legitimately using the system to achieve an effective tax rate of between 5~20% …

    So we can conclude that Boris is making soundbites that are attractive to those people who are able to vote in the London Mayoral elections.

  • Foregone Conclusion 16th Apr '12 - 8:15pm

    Boris seems to have an ingrained disdain for those of us who don’t choose to live in Greater London, the Home Counties, or the South-East of England. Most Londoner’s won’t remember his horrible remarks about the people of LIverpool (and not to mention his casual slur on the 96 who died at Hillsborough), but I do: http://news.bbc.co.uk/1/hi/uk_politics/3749548.stm. He is a metropolitan snob.

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