London’s mayor should be granted greater authority to raise and keep money locally to fund large-scale transport and housing projects, a prominent local government academic told an all-party parliamentary session, arguing that current centralised funding arrangements slow delivery of major schemes.
Local borrowing and tax tools could accelerate projects
Prof. Tony Travers, described in the session as a local government expert, told MPs and peers that many sizeable infrastructure and residential developments in the capital could proceed if City Hall had broader financial powers. At present, under the existing framework, the mayor must seek central government support for schemes that cannot be met from Greater London Authority (GLA) funds.
Travers highlighted the role of borrowing against anticipated tax revenues — a mechanism sometimes called Tax Increment Financing (TIF) — as a model that has been used before to leverage local contributions to transport work. He pointed to the GLA’s previous local borrowing to help fund the Northern line extension to Battersea as an example of what devolved finance can achieve.
"Regional mayors currently have 'virtually zero' incentive to raise money in their own areas as it largely gets funnelled to central government," Travers told the Local Democracy Reporting Service.
He argued that transport projects now stuck in a lengthy approval process, pending Treasury sign-off, would move faster if the mayor could both raise and retain the revenues they generate. Examples raised during the session included the Bakerloo Line extension, the West London Orbital and an extension of the Docklands Light Railway from Beckton into Thamesmead.
Government plans and constraints
A government spokesperson said ministers intend to reform how regional mayors are funded by swapping grant funding for a share of local income tax from 2028. However, some tools currently available — such as TIF — still require specific approval from the housing secretary to establish designated areas where projected tax income can be used to back borrowing.
Travers told the session that without these flexibilities, ambitious housing targets set by City Hall are unlikely to be met. He cited the mayor’s goal to deliver 558,000 homes between 2028 and 2037, noting many housing developments are contingent on concurrent transport improvements.
Consequences for delivery and devolution
Giving mayors greater fiscal autonomy would change the incentives facing regional leaders, supporters say, by allowing local beneficiaries of growth to contribute directly to the infrastructure that enables it. Critics of the present approach contend that centralised control can impede timely decision-making and slow project delivery.
The debate touches on broader questions about devolution across England: whether more power and fiscal tools should be transferred from Whitehall to city and regional mayors, and how accountability and risk would be managed if local authorities take on more borrowing.
- Key projects cited: Bakerloo Line extension; West London Orbital; DLR extension from Beckton into Thamesmead; Northern line extension to Battersea (previous example).
- Policy change proposed: Allow mayors to raise and retain local revenues, with a move toward replacing grants with a share of local income tax by 2028.
- Financing tool discussed: Tax Increment Financing (TIF), which currently requires housing secretary approval for designated zones.
| Item | Relevance |
|---|---|
| Bakerloo Line extension | Example of a major scheme cited as stalled without local finance powers |
| Northern line extension (Battersea) | Precedent where local borrowing against future tax income helped fund the project |
| Housing target: 558,000 homes | City Hall aim for 2028–2037 contingent on transport delivery |
As the government signals a shift toward a local income tax share in 2028, the parliamentary debate prompted by Travers’ remarks underscores the tensions at the heart of ongoing devolution discussions: how to balance local initiative and fiscal responsibility with national oversight and uniform standards. For London, the outcome will influence whether major transport links and linked housing developments can be expedited by tapping local revenue streams, or whether central control will remain the decisive gatekeeper.
