Examination of Witnesses (Questions 500-512)
MR DAVID
LUNTS
12 JUNE 2006
Q500 Alison Seabeck: Michael Lyons
is carrying out a review at the moment, including looking to local
government funding. Have you submitted a view to him about where
you would perhaps consider wanting further freedoms in terms of
raising additional funds, outside the Congestion Charge? Is it
appropriate, in your view, for the GLA to have those fund-raising
powers or are there powers you would like to see with the boroughs?
Mr Lunts: I am glad you raised
that because I should have mentioned it in my opening response.
Another area where certainly the Mayor would like to see some
further devolution and change is in the whole question about financial
responsibility and the ability to raise revenues locally. The
GLA is heavily reliant, as is most of local government, on central
Government grant. There have been some welcome moves away from
that in recent years, not least with the prudential borrowing
regime that is available now to TfL which has worked very successfully.
Yes, the Mayor has made submissions to Michael Lyons and the Mayor's
submission revolves around a relatively small number of main propositions.
I suppose the most important and radical is the Mayor would like
to see the GLA's reliance on the council tax precept changed so
that boroughs would remain funded through the council tax, but
he regards it as being advantageous to have a regional income
tax to fund the GLA's activities. In his view, it is more progressive
and it would sharpen the accountability of the Mayor and London
government to the electorate by detaching it from the council
tax bills. A regional income tax which, in his submission, initially
at least would be pegged at a level that would replace the existing
precept, which would be about a penny on regional income tax.
Secondly, he would like to see a denationalising of the London
business rate. He would like to see much more control of London
government over the level of business rate in London. The other
areas that he has recommended to Michael Lyons are there should
be more flexibility to undertake specific local tax raising measures
in order to fund specific infrastructure projects, which is obviously
something which is available to a lot of North American mayors
to have things like tax increment finance, and particular measures
to focus on particular infrastructure requirements. I think that
view is taken because it is fairly clear that business in London
is open to the suggestion that it should perhaps pay more tax
but they want to see the benefits of those extra taxes. Finally,
the Mayor would like to see some freedoms and flexibilities for
the Mayor to respond to—particularly environmental taxes,
perhaps some ideas around commuter taxing, using the congestion
tax model but perhaps extending that to other areas, such as airports
and so forth.
Q501 Alison Seabeck: Has the Mayor
had any discussions with the Treasury about the regional income
tax proposal? Is it something he sees as applying in London or
would he expect it to be applied in other parts of the country
and, if so, by what sort of body?
Mr Lunts: I think the Mayor's
view about it is that it is very much a particular mechanism to
help fund London government at this stage. The three main drivers
for this proposal in his view are (a) it is more progressive as
a system of tax, (b) it is more transparent because it means that
Londoners can see precisely how much they are being charged by
the Mayor for what he is doing, and (c) it introduces a bit more
freedom, a bit more flexibility, in terms of the revenue that
can be raised. He sees it as having those three advantages but,
because of the accountability point, I can see that it might be
rather difficult to introduce regional income tax elsewhere because
there is no accountable regional government to insert into the
formula.
Q502 Mr Hands: It seems to me that
quite a number of backers of the city-region concept in this whole
regional government debate have latched on to London as a possible
example of a way forward for city-regions. My first question is
does the Mayor think that London is itself a city-region or is
it just a city?
Mr Lunts: I suppose it is tempting
to say you could argue it is both. London clearly is a city in
its own right. It operates as a city but it operates as a city
on a particular scale. Arguably, the London city-region is a good
deal further than the current GLA boundaries. All kinds of people
have claimed to have the definitive answer as to what really comprises
the London city-region but it is very clear if you look at commuter
patterns, investor patterns or housing markets and a whole range
of things, the London economy and people's travel to work into
and out of London is much, much wider. Ultimately it is probably
a rather futile quest to try and redefine the extent of the London
city-region.
Q503 Mr Hands: So if there were a
London city-region, which I think you and I would probably both
agree is a slightly questionable thing, it would extend quite
a bit further into Surrey, Kent, Buckinghamshire, Hertfordshire,
et cetera, so you would not see the current GLA boundary as being
the London city-region.
Mr Lunts: In the Mayor's submission
to Government on reviewing the GLA and the mayoral powers five
years on he was not asked particularly to address should the GLA
boundaries change, and he did not address it. The Mayor is on
the record on various occasions, I know, as referring to the fact
that there may come a point at some time in the future when it
is appropriate to look again at the GLA boundaries. There has
been some speculation and at times I think the Mayor has wanted
to encourage that to consider whether at some point the GLA needs
to expand, perhaps in some way out to the M25. Although the London
city-region concept inevitably is something which is difficult
to pin down, one of the things that is very powerful in terms
of the geography of London and the map around London is that there
are certain defined boundaries. At the moment there is the governance
boundary, the electoral boundary of the GLA, there is the M25,
which is a real collar, and there is the greenbelt. There are
some quite specific spatial definitions to London and arguably
some of those are not very well reflected in the current electoral
boundaries or governance boundaries.
Q504 Mr Hands: Based on that, and
I am asking you to speculate about areas that are not in London,
how applicable do you think the Mayor/GLA model could be to a
city-region like, for the sake of argument, Stoke-on-Trent taking
over the surrounding region? It does not sound very applicable
at all.
Mr Lunts: I hesitate to respond
too enthusiastically to your offer to speculate about the future
of boundaries in Stoke or anywhere else. I have already said that
my own view, based on less than two years' work in the GLA and
working in local government, in national government at ODPM, is
there are real difficulties and constraints on what can be achieved,
particularly in the short-term, with new governance models at
city-region level. I think there is quite a compelling logic to
city-regions needing to be better organised, better defined, given
more freedom and flexibility to exercise strategic leadership
and organisation of things like land use planning, economic development,
transport and so forth, but any argument that suggests the way
to resolve this is to make some very quick and definite decisions
that involve a wholesale reorganisation of boundaries and local
government I suspect would be unwise and likely to set things
back.
Q505 Mr Hands: I think many people
are viewing London or the GLA as a city-region government, but
I would differ from that. Do you think that you have sufficient
influence in Whitehall? I am not asking in a general way but specifically
on economic policy and how far the London economy is aligned with
the UK at the moment. In your evidence you say the London and
the national economy have been closely aligned the last 20 years.
What would happen if they were to become disjointed? Do you think
that London has sufficient clout as an elected body with the Mayor
and the Assembly, with Whitehall, to be able to do something about
that?
Mr Lunts: I think probably it
does not. London is hugely successful, hugely important, it is
the dynamo of the national economy, we all know that. It has various
unique aspects which mean that it has got international competitive
advantage and is in an extremely advantageous position to benefit
from emerging investments coming from the growing economies in
the Far East and elsewhere, all that is taken as read. Because
London government is still new, it has only been around for five
or six years, because the original settlement that established
the GLA was inevitably one which, although I said at the beginning
was a bold measure in terms of introducing a new and innovative
form of government, involves some compromises and some fudges—that
was inevitable perhaps for a new system—I think the time
has come to have a more sophisticated view about how Whitehall
and Westminster engages with London government. Our view, the
Mayor's view, is very much if London government is going to really
matter, if the Mayor is going to be properly accountable to Londoners
for London's continued performance locally and in the wider world,
then it is time to devolve more seriously some of the powers and
responsibilities that are absolutely essential to continuing to
drive London's competitive advantage. Labour market and labour
force issues is the obvious big one that is currently no responsibility
really of the Mayor.
Q506 Mr Hands: How would you describe
the institutional relations between London and the surrounding
parts of the South East? How often does the Mayor meet, or does
he ever meet, with the leaders of, say, Hertfordshire and Surrey
County Councils or the RDAs for the East of England and the South
East and that kind of thing?
Mr Lunts: I think relationships
are not bad. The London Plan, which I suppose is the foundation
document for the Mayor and the GLA—it is the most important
strategy he publishes because it is very much about setting a
vision and the statutory spatial strategy for London, and it obviously
has to be right, and it is the document that goes through a very
extended period of consultation and inquiry before adoption—is
quite a good example of where collaborative working with adjacent
regions has been quite successful. Equally, we have joint arrangements
with the East of England and South East to consider issues that
are relevant to their regional plans. I think that works quite
well. The Regional Development Agency in London, the LDA, has
good relationships, good rapport, not just with the adjacent regions
but also with the RDA network nationally. We are working very
closely with the East of England and South East on the Thames
Gateway strategy. By and large it works reasonably well. There
are differences in political view across those regions and across
those authorities that you will be well aware of, but by and large
it works pretty effectively.
Q507 John Cummings: Could you give
the Committee an example of where the city and its surrounding
communities in what is termed as the "hinterland" have
had a disagreement about a proposed course of action, and could
you tell the Committee what happened?
Mr Lunts: A disagreement?
Q508 John Cummings: Yes.
Mr Lunts: Around anything major?
Q509 John Cummings: Anything specific
that leads us to believe how you would resolve such a conflict.
Mr Lunts: In the time that I have
been at the GLA, which has been about 15 or 16 months, nothing
springs to mind as being a major fallout between the regions.
I would need to check back and look at what I might be able to
drag up from the time before I was there. Can I get back to you
on that?
Q510 John Cummings: It does not appear
to be a major problem?
Mr Lunts: No, I do not think so.
Q511 John Cummings: Has it ever been
suggested to you that London's economic and cultural success has
been detrimental to the life of other settlements in the London
"super-region"?
Mr Lunts: That London success
has been at the expense of adjacent regions?
Q512 John Cummings: Yes.
Mr Lunts: I do not think so, no.
I am very much of the view that adjacent regions and regions beyond
largely benefit from London's success. Certainly if London was
less successful it is very difficult to see how adjacent regions
would benefit from that outcome. No, I think pretty much it is
win-win. Some people may say it is not fair because London gets
investment that could in theory go elsewhere, and I suppose at
one level that must be true because if you are investing somewhere
you are not investing somewhere else, but by and large I think
people outside London have benefited enormously and perhaps the
best example of that is the enormous regeneration and growth over
the last 10/15 years of east of London, Canary Wharf, the Isle
of Dogs and now the Gateway more generally. That, coupled with
new infrastructure, means that it is a very important source of
in-commuting, it generates a very substantial tax surplus that
is available for reinvestment by the Exchequer, and London has
a massive range of facilities, not just jobs and economy but culture,
leisure, all kinds of things, from which people in adjacent regions
benefit.
Alison Seabeck: Thank you very much for
your time, Mr Lunts.
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