London Mayor Sir Sadiq Khan should be given greater powers to raise and retain money locally to finance major transport and housing projects, a local government expert has said.
Prof Tony Travers, a local government expert, said the capital could accelerate projects such as the proposed Bakerloo Line extension if City Hall had more control over funding.
Under the current system, Khan must seek financial support from the central government for major schemes that cannot be funded through the Greater London Authority’s existing resources.
Travers made the call during an all-party parliamentary session on devolution, where he argued that regional mayors should have greater financial independence.
He said mayors currently had “virtually zero” incentive to generate additional revenue locally because much of the money raised is ultimately channelled to the central government.
“Whether it’s the Bakerloo Line extension, the West London Orbital, the extension of the DLR across the river from Beckton into Thamesmead – these are things that could easily go ahead if London had the kind of powers that were used to build the Northern Line extension,” Travers told the LDRS.
“Instead, we are stuck in a slow central decision-making process waiting for Treasury approval.”
One financing mechanism available to local authorities is Tax Increment Financing, which allows them to borrow against anticipated future tax revenues from an area.
The system was previously used to support the GLA’s £1bn contribution towards the Northern Line extension to Battersea Power Station and Nine Elms.
However, using the mechanism requires approval from the housing secretary before a designated area can be created for tax revenues to finance infrastructure.
Travers argued that similar powers should be handed directly to London’s mayor, saying they could unlock several major developments across the capital.
He also warned that Khan’s target of delivering 558,000 homes between 2028 and 2037 could be difficult to achieve without additional transport investment, as several housing developments depend on new or improved infrastructure.
Travers said he believed Prime Minister Andy Burnham was committed to strengthening regional devolution but argued that London should also benefit from greater financial powers.
“He’ll have to do it for London, because London generates such a large part of the UK’s economic output, and a bigger share of taxation.”
The Ministry of Housing, Communities and Local Government said London already had some powers to raise money through the mayoral community infrastructure levy.
A government spokesperson said the levy had helped finance projects including the Elizabeth Line and that ministers were extending similar powers to other regional mayors.
The ministry also said the government planned to change how regional mayors are funded in 2028, replacing grants with a share of local income tax.
The Greater London Authority said Tax Increment Financing remained “one of several tools” available to support major infrastructure investment.
A GLA spokesperson added that the mayor and Transport for London “continue to explore innovative approaches to unlock vital investment and support sustainable economic growth” across the capital.
