London’s financing is constrained by a narrow tax base—primarily property-based taxes like business rates, a rate precept, and a council tax precept—that do not automatically scale with the economy.

Proponents argue for enhanced fiscal devolution as part of the incoming government’s agenda, including greater tax and spending powers for mayors.

London accounts for about one-eighth of the UK population but generates roughly one-quarter of jobs and economic output, returning a net tax surplus of £49 billion to the rest of the country.

London’s recent economic struggles have weighed on national growth, strengthening calls for fiscal devolution to stimulate broader growth.

Supporters frame fiscal devolution around four mechanisms: linking funding to local performance, spreading growth locally, enabling investment via tax increment finance, and boosting local accountability and autonomy over funding.

London’s tax revenue per capita, even after PPP adjustment, is among the lowest of G7 primary cities, at roughly $955, compared with higher levels in peers like New York, Tokyo, Munich, and Paris.

Giving mayors the power to share locally generated income and corporation tax while retaining a larger share of business rates could spur nationwide growth.

Centre for Cities notes London’s limited fiscal autonomy, with the GLA heavily reliant on central grants and TfL fares; taxes contribute only about 32% of revenue—the smallest share among G7 primary cities.

The GLA’s tax base is limited since it retains only about a third of business rates and modest council tax proceeds, with most services delivered by boroughs.

Andy Burnham and other advocates push for London-centered devolution to sit within broader reforms aimed at boosting national economy and growth.