Mayor co-signs letter calling for Government to let boroughs raise money from an ‘overnight stay levy’

The Mayor of Tower Hamlets John Biggs has joined other local authority leaders in co-signing a letter calling for boroughs to be able to retain money from a levy on tourism.

The letter to the Ministry of Housing Communities and Local Government was arranged by Central London Forward and proposed the levy as one way to help fund public services.

It also called for a delay to any changes from the government’s Fair Funding Review into the funding settlement for local government.

Tower Hamlets receives £148 million or 64% less in core funding from the government since 2010 and has to make a further £44 million in cuts over the next three years as it is hit by rising demands and further cuts from central government.

The so called ‘Fair’ Funding Review was proposed by the government to redirect money from boroughs such as Tower Hamlets – which currently receive a higher share of funding due to the levels of deprivation – to shires which would mainly benefit Tory areas. Early analysis showed London could lose £0.5 billion as a result.

With the looming deadline on Brexit and the Tory leadership race, uncertainty for local government has continued, making it difficult to plan ahead as councils look to the next financial year and how they will fund key frontline services for their residents.

Mayor Biggs joined the call for the current local government funding settlement to be at the very least rolled over for another year to give councils some certainty. This would also give time for further lobbying to prevent plans to slash funding to areas like Tower Hamlets and consideration of other ways to raise revenue and have a more sustainable financial settlement to keep local services running.

Mayor of Tower Hamlets John Biggs said: “With the government in meltdown difficult decisions are being put off and local government is again an afterthought. Government needs to take away the threat of the ‘Fair’ Funding Review and also give us the means to raise revenue so those who stay in the borough pay a small contribution to pay for key services.”

Cllr Candida Ronald, Cabinet Member for Resource said: “Local government has suffered from round after round of cuts and after nearly a decade of austerity we face another looming threat from the so called ‘Fair’ Funding Review which will take money away from Tower Hamlets. We need government to give us and our residents certainty about the cash which keeps our vital services running.”

ENDS

Notes:

  • Letter to Rishi Sunak MP:

Dear Mr Sunak

Thank you for engaging constructively in the debate around possible new fiscal freedoms for local authorities when you appeared before the Housing, Communities and Local Government Commons Select Committee on 18 June.

We wanted to put on the record our view that, if Central London authorities were given the power to introduce an overnight stay levy, the money raised should be spent locally in Central London. We would not introduce an overnight stay levy which resulted in money being raised in Central London which could not then be spent here.

Central London makes a critical contribution to the UK economy, with more than £1 in every £7 of our national economy generated here, and contributions to the UK tax base from our boroughs fund public services across the country. We will continue be net contributors to public finances but we should be given the flexibilities to protect and grow our local economies and meet the needs of our communities.

We are advocating for greater fiscal flexibilities such as an overnight stay levy because of the need to maintain to a very high standard this engine of economic growth for the UK whilst recognising the changing nature of public service funding. In your evidence you seemed to suggest that this money could be equalised across the country which would be contrary to the principle of implementing it.

Without a doubt, overnight visitors bring a great amount of benefits to our economy. However, we must recognise that they can also cause difficulties for local residents and areas, including congestion, pollution, over-crowding, degradation of public spaces and additional strain on local services and utilities. An overnight stay levy would be a moderate and proportionate contribution from visitors towards addressing these issues. Equalisation should not apply as the costs of welcoming the millions of visitors to Central London are not felt in other parts of the country.

While giving your evidence, you speculated as to whether a consensus yet exists that local authorities would have to accept a lower degree of equalisation if new fiscal flexibilities were introduced.  Central London authorities will be working hard to create a consensus in the coming months for greater fiscal devolution and for retention of additional local revenue for local expenditure. It is important to note that the accepted degree of equalisation will depend on the nature and purpose of any new fiscal powers local authorities receive.

We remain encouraged that you are engaging in this debate and we hope that new mechanisms for raising local revenue will be in place before we face the cuts in funding that the Fair Funding Review could bring.  To that end, we would recommend delaying the Fair Funding Review for local government at least until the Government’s long term Spending Review takes place.

ENDS

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