Mayor Sadiq Khan seeks more local transport funding powers
Ministers have been told that London needs greater ability to raise and retain funds for major infrastructure projects.
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Ministers have informed the Mayor of London that he requires the authority to generate and keep funds locally to finance significant transport infrastructure projects. This call comes as schemes like the Bakerloo Line extension are in consideration. Currently, Sir Sadiq Khan must seek funding from central government for projects not covered by the Greater London Authority's (GLA) budget.
Potential for Infrastructure Growth
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Professor Tony Travers, a local government expert, stated that many substantial infrastructure and housing developments in London could advance if City Hall were granted additional financial powers. He noted that regional mayors currently have little incentive to raise money in their areas, as it is largely directed to central government. Travers suggested that projects such as the Bakerloo Line extension, the West London Orbital, and the DLR extension to Thamesmead could proceed more readily if London possessed powers similar to those used for the Northern Line extension.
Travers also warned that the mayor's housing target of 558,000 homes between 2028 and 2037 is contingent on the granting of these powers, as many developments depend on the progress of associated transport schemes. He indicated that the Prime Minister would need to address this for London, given the capital's significant contribution to the UK's economic output and tax revenue.
Government Funding Plans and Existing Tools
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A government spokesperson announced plans to reform regional mayors' funding by replacing grants with a share of local income tax, scheduled for 2028. The Ministry of Housing, Communities and Local Government pointed out that the mayor of London already has the ability to raise funds through the mayoral community infrastructure levy, which has supported projects like the Elizabeth Line. This power is also being extended to other regional mayors.
Tax Increment Financing (TIF), a method involving borrowing against anticipated tax income, is another tool available. The GLA used TIF to fund its £1bn contribution to the Northern line extension to Battersea Power Station earlier this decade. However, implementing TIF requires the housing secretary's permission to designate an area where tax income can be utilised.
A GLA spokesperson described TIF as one of several mechanisms to support major infrastructure investment. They added that the mayor and Transport for London (TfL) are continuously investigating innovative strategies to secure essential investment and foster sustainable economic growth across London.
Questions this report answers
+What are ministers telling the Mayor of London about transport funding?
Ministers have informed the Mayor of London that he must be allowed to raise and retain money locally to fund major transport infrastructure projects. This is to enable schemes like the Bakerloo Line extension to proceed without solely relying on central government grants.
+What does Professor Tony Travers believe will help London's infrastructure projects?
Professor Tony Travers believes that many large infrastructure and housing schemes could progress if City Hall were given more financing powers. He stated that mayors currently lack incentive to raise local funds as they are often funnelled to central government.
+How will regional mayors' funding change in the future?
A government spokesperson indicated that regional mayors' funding will be overhauled by 2028. Grants will be replaced with a share of local income tax, providing a new model for how these authorities are financed.
+What is Tax Increment Financing and how has it been used in London?
Tax Increment Financing involves borrowing against expected future income from taxes. It was used by the GLA to fund its £1bn contribution to the Northern line extension to Battersea Power Station, though it requires specific government permission to implement.
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