Aiming for the top: inside the Greater London Authority building by the river Thames

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Boris Johnson, London’s idiosyncratic mayor, is in reflective mood. His second term in City Hall ends next May and he is ready to dispense some advice to his successor ahead of what is likely to be a riveting 2016 mayoral election.

Point one: do not listen to anyone who tells you to put a fleet of catamarans on the Thames, a “vicious tidal river”. Point two: ignore the “rich hedge fund people who always say what the city really needs is more helipads”.

But Johnson has a serious piece of advice as he prepares to embark on an ill-defined future career in national politics: “Understand the vital connection between transport infrastructure and housing development.”

London’s rising population — projected to hit 10m by 2030 — and rocketing property prices are a sign of the capital’s success but also a potentially disastrous weakness unless the city’s infrastructure keeps pace. He says that without this investment “you will have employees who cannot afford to live anywhere near their place of work — that is a massive cause of economic inefficiencies”.

Johnson says London will “continue to be the greatest city” in the world, but only if the capital invests in new transport projects such as Crossrail 2 to link the city centre with new housing projects.

If that happens, according to the mayor, London will continue to flourish, even if Britain were to vote to leave the EU in a referendum (an outcome he views with studied equanimity). “We have the time zone, we have the languages, we have the incredible concentration of skills, of universities, the artistic, cultural, creative media sector and that is not going to go away,” he says. “I think that London will continue to survive and prosper in or outside the EU.”

Since the City of London is also the principal financial centre for the whole of Europe, the question of Britain’s EU future will be one of the key questions in next year’s mayoral contest.

It is already shaping up to be a gripping battle. London is traditionally seen as a Labour city, but the ethnically diverse metropolis has twice elected Johnson, a Conservative Eton and Oxford-educated classicist.

Earlier this month, the Conservative party selected Zac Goldsmith as its candidate for 2016 — an even richer Old Etonian and son of the late Sir James Goldsmith, the eurosceptic tycoon.

Goldsmith, an environmentalist who opposes the expansion of Heathrow airport, is a dashing, independent-minded maverick who has built up a huge majority as an MP in his Richmond Park constituency in south-west London. More eurosceptic than Johnson, he may well end up in the Brexit camp when Britain has its in-out EU referendum at some point before the end of 2017.

“London is outward-looking, hugely dynamic and provides the best environment for businesses to flourish,” he says. “In or out of the EU, that won’t change, but for my part I hope the prime minister delivers sufficient reforms that voters feel able to vote to stay part of it.”

The current mayor Boris Johnson with David cameron, the prime minister

Goldsmith adds that his biggest priority is delivering Crossrail 2 — a proposed new north-south link across London. George Osborne, the chancellor, has hinted he could give his backing to the project in his November Autumn Statement on the economy.

“London’s population is growing faster than ever, and just to keep things moving we need to continue record levels of investment in the transport system,” Goldsmith says.

The Liberal Democrats, the Tories’ junior coalition partner in national government until May, are regrouping and are unlikely to mount a strong challenge in the mayoral contest. Their candidate, Caroline Pidgeon, was selected unopposed after her rival pulled out of the contest because of work commitments.

“London is a great city, but the huge potential it offers is not available to everyone,” says Pidgeon, leader of her party in the London Assembly. “We need to tackle the brain drain to London’s economy caused by too many women not returning to work in part due to the high cost of childcare. We also need to end the scandal of too many young people struggling to rent, let alone buy a property.”

The Greens have selected Sian Berry, a north London councillor, who ran in the mayoral election in 2008. She has promised to make housing her main priority, with a preference for developments led by residents, rather than big property companies.

The Greens are not expected to win, but they could dent support for Labour, Britain’s main opposition party, which desperately needs to retake the capital to regain some political momentum.

Labour’s chosen candidate, Sadiq Khan, could hardly be more different from Goldsmith. The silver-haired 45-year-old MP for Tooting, who used to be a human rights lawyer, sees himself as a symbol of modern, multicultural London.

He grew up in a council house in the south of the city as one of eight children. “My parents came here [from Pakistan] for a better life for themselves and their family — my dad as a bus driver; my mum sewed clothes to help support the family,” he says.

When he was elected to Parliament in 2005 he was the first Muslim MP to represent a London constituency. He says he likes the “charming” Goldsmith: “The fact that Zac’s a billionaire doesn’t mean he can’t empathise.”

But Khan professes concern about the Tory MP’s euroscepticism. “Leaving Europe would be catastrophic for London,” he says. He campaigned to be the Labour candidate on policies such as a higher living wage and more social housing.

Khan says he wants to encourage more social mobility: “My job as mayor is to make sure that if you’ve got talent it’s not wasted. There could be a Mo Farah in science. There could be a Mo Farah in technology, or in business, or winning the next Nobel prize.”

He is very keen to court business and has already distanced himself from recently elected Labour leader Jeremy Corbyn’s high-tax socialist rhetoric. He says he has the support of bus drivers and cleaners but also that of entrepreneurs and business leaders.

“I want us to have a competitive tax policy to make sure businesses come here. We need to encourage businesses from Paris, Rome, Berlin, the mega-cities of China and India to come here.”

The runners: (from left) candidates Sian Berry of the Green party, Zac Goldsmith of the Conservatives, Caroline Pidgeon of the Liberal Democrats and Sadiq Khan of the Labour party

As for Johnson, his chances of succeeding David Cameron as prime minister have receded, according to the bookmakers. Cameron’s unexpected outright election victory in May 2015 proved that the Tories did not need the eccentric charm of the London mayor to win.

What will the mayor do next? “If there’s anything I can do to be useful in any further capacity I will look forward to that,” he says. “I’m a municipal toenail at the moment and I’ve been very privileged to get on with being mayor of London for a long time.”

London’s mayor faces a struggle to wrest policymaking and fiscal control from Whitehall

Eyes on the prize: City Hall, foreground, wants control over all funds raised by property and business taxes

Britain’s old centralised power structures are being broken down. Scotland, Wales and Northern Ireland are increasingly self-governing, while George Osborne, the chancellor, promises “radical devolution to the great cities of England”.

But what about London? Boris Johnson, the capital’s mayor, fears the metropolis could be overlooked amid this new zeal for pushing out power to the UK’s constituent nations, and to regional centres such as the Manchester-focused “northern powerhouse”.

Politicians from all parties, along with officials in the Treasury, have long been wary of ceding power and fiscal autonomy to London, which is a cash cow for the rest of the country.

Tony Travers, professor of government at the London School of Economics, says the centralising of tax and spending powers at Westminster over many decades “infantilised” London city government. The nadir came when Margaret Thatcher, the Conservative prime minister, scrapped city-wide London government in 1986.

Since Tony Blair’s Labour government created the London mayoralty in 2000, powers and revenues have been trickling into City Hall. Now Johnson wants to go much further. The Conservative mayor is urging David Cameron’s government to hand over sweeping new powers to London in a devolution deal that would give the city authorities greater control over policy areas such as criminal justice, transport and housing.

Money is at the heart of the debate. Johnson says London keeps about 5 per cent of all taxes raised in the capital — the housing-based council tax — compared with 50 per cent in New York and 70 per cent in Tokyo.

The mayor also has control of fares revenue from London’s public transport — another vital source of funds — but his fiscal autonomy and powers are feeble compared with his counterparts in other world cities.

Johnson argues that the figure for London would rise to 11.5 per cent if the city had control of funds raised by all the property taxes raised in the capital, including 100 per cent of business rates.

The mayor says devolution “would reduce London’s dependence on deals with Whitehall and provide the stability of funding that would incentivise investment and economic growth around the entire country”.

Johnson already exerts significant influence over policy in areas such as strategic housing planning, transport, policing and economic development, but he wants more power and more money to deliver on his priorities.

He would like, for example, to take over supervision of London’s courts and prosecution service — he already sets the strategic priorities of the Metropolitan Police — and even have control of areas of urban planning such as “protected views” — the lines of sight to historic buildings such as St Paul’s Cathedral.

Greg Clark, the local government minister, is in negotiations with the mayor, but how much will he deliver?

“It would be wrong to say there has been a stampede of enthusiasm towards embracing these proposals,” Travers says. “The Treasury finds it hard to let it go.”

But Travers says it is right that London — which, along with the south-east of England, is the only region that is a net tax contributor to the British economy — should keep control of more of its revenues.

He argues that it does not follow that London’s gain would be a loss to the rest of the country, not least if the city uses its increased autonomy to generate more jobs, growth and taxes.

“New York has significant fiscal devolution but is a big net tax contributor,” he says. “It depends on where you pitch it.”

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