London is not a “cash cow” for the government and should retrieve what it contributes to the national purse, Boris Johnson, the mayor, said, in a bold attempt to rewrite funding arrangements for the capital.
Launching the economic plank of his re-election campaign on Wednesday, the Conservative candidate for mayor pledged to set up an independent London funding commission to examine the case for a system similar to the Barnett formula – which governs the distribution of public spending in Scotland, Wales and Northern Ireland – if he wins the poll on May 3.
Mr Johnson said: “I want to defend the interests of this city from what I think is occasionally the rapacity of the Treasury. I think it’s time for us to look more seriously what we as Londoners contribute and what we receive from the exchequer.”
The Barnett formula is based on the amount that is allocated every year to the English regions. Critics say the formula gives too generous a settlement to Scotland compared with English regions such as the north of England.
Mr Johnson’s campaign calculated that £1 in every £5 earned in London subsidises the rest of the UK and said the city had continued to make a net national contribution even during the economic downturn.
Under Mr Johnson’s proposal, money would be allocated to the city without ringfencing so the mayor could determine where it was spent – a significant enlargement of powers for City Hall.
Katie Schmucker, an associate director at IPPR North, a public policy think-tank, agreed that there was a need to review how government funding was allocated around the UK.
But she contested the idea that London was ill served. “London already does very well out of the current arrangement. The north of England is the part of the country that has the most substantial headroom for growth,” she said.
London already receives a greater proportion of public spending per capita than any other UK region or country. Treasury data put planned spending in London in 2010/11 at £10,256 per head, compared with an average in England of £8,588 per head.
Ms Schmucker said: “If we continue to disproportionately direct investment at London and the south-east we will carry on seeing the same patterns of economic disparity across UK.” .
Mr Johnson’s proposal comes as the Scottish National party’s drive for independence has put the wider political and economic relationships governing the union under scrutiny.
Tony Travers, an expert in London governance at the London School of Economics, said: “It is undoubtedly related to Scotland, and it’s hard to see that this isn’t a consequence of the SNP’s bid for freedom. English politicians are becoming alert to what they perceive as the privileges the Scots have won.”
However, he thought it unlikely to be embraced by the chancellor. “It’s hard to imagine George Osborne giving London more money and less for everybody else,” Mr Travers said.
After his speech on the economy Mr Johnson was asked whether he regretted a foul-mouthed confrontation on Tuesday with Ken Livingstone, his Labour rival, over suggestions that he had avoided tax.
The mayor said: “He knew what he was saying wasn’t true and he went ahead and said it. I was trying to think of a way of getting through to him …there may have been a salty participial epithet that escaped my lips.”
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