Call to give City Hall local funding powers to speed up transport schemes
Ministers have been urged to allow the mayor of London to raise and retain money locally to fund large transport and housing projects, a move proponents say would reduce reliance on lengthy central approvals. The proposal was made at an all‑party parliamentary session on devolution where Prof Tony Travers described the current model as a brake on delivery.
Under present arrangements the Greater London Authority (GLA) and the mayor must seek funding from central government for schemes that cannot be paid for from existing GLA resources. Critics say that forces projects into a slow, centralised decision‑making process and weakens incentives for local investment.
"Regional mayors currently had 'virtually zero' incentive to raise money in their own areas as it largely gets funnelled to central government,"
Prof Travers told MPs and peers that a range of projects across the capital could proceed if City Hall were given powers similar to those used to fund the Northern line extension earlier this decade. He pointed to the Bakerloo Line extension, the West London Orbital and an extension of the DLR towards Thamesmead from Beckton.
- Prof Tony Travers argued for devolved financing powers at a parliamentary devolution session.
- Tax Increment Financing (TIF) has been used previously by the GLA, but requires housing secretary approval to designate areas.
- The government says it will replace some grants with a share of local income tax from 2028 as part of a funding overhaul.
City Hall has previously used Tax Increment Financing (TIF) to borrow against future tax receipts. That approach contributed to the GLA's £1bn contribution to the Northern line extension linking Battersea Power Station and Nine Elms. But setting up TIF schemes requires the housing secretary's permission to designate an area where future tax income can be retained against borrowing.
A government spokesperson told delegates the administration intends to overhaul the way regional mayors are funded by replacing some grants with a share of local income tax from 2028. The detail of how this will work in practice, and whether it will offer the same flexibility campaigners want, was not specified at the session.
Speakers at the meeting argued the current system leaves London waiting for Treasury approval for major schemes. As one participant put it: the city is "stuck in a slow central decision‑making process waiting for Treasury approval." Proponents say devolved fiscal levers would give the mayor and the GLA greater incentive to promote locally productive investments and to capture some of the benefits they create.
| Project | Example use |
|---|---|
| Bakerloo Line extension | Identified as a scheme that could benefit from local financing powers |
| West London Orbital | Cited by Prof Travers as another project that could progress with devolved funding |
| DLR extension from Beckton to Thamesmead | Named as a potential candidate for City Hall‑led financing |
Local control of financing is not a new idea. Supporters point to the Northern line extension model as evidence that borrowing against expected uplift can work: the GLA used TIF‑style arrangements to help contribute £1bn to the costs. However, that route required Whitehall approval to create the designated tax increment area.
Those arguing for change say giving mayors more autonomy over raising and retaining funds would alter incentives for local leadership to invest and plan long‑term. Without such changes, the capital remains dependent on central funding decisions for large projects that shape daily life for millions of Londoners.
The government has signalled a shift in funding architecture from 2028, but many questions remain about how new arrangements will interact with existing controls and whether they will satisfy demands for quicker, locally led delivery.
As debates continue in Westminster, Londoners faces the prospect that ambitious transport and housing schemes will either await central sign‑off or require a renegotiation of the fiscal relationship between City Hall and Whitehall. The practical consequences—on fares, construction timetables and local development—will be watched closely by council leaders, businesses and commuters across the capital.
