'London should become a city state after hard Brexit'

Written by David Lammy, Labour MP for Tottenham in north London and first published at the Evening Standard

Last week Nicola Sturgeon stole the headlines by firing the starting gun on another Scottish independence  referendum, but it is London that stands to lose the most from Brexit. To borrow the Prime Minister’s favourite phrase, now is not the time for London to foot the bill for this hardest of all hard Brexits.

Sturgeon complained that the Government has ignored the wishes and interests of Scotland, leaving her with no choice but to push for independence. London’s economy is double the size of Scotland’s and there are almost twice as many people living in London as in Scotland, so why have the capital’s interests been totally sidelined and why isn’t London’s voice being heard?

Throughout history there have been great cities that are essentially also states in their own right — Rome, Athens, Singapore and Hong Kong. London — given its predominance in our economic, social and cultural national life — certainly fits the bill too.

What all great cities have in common is an ability to change with the times. If London is to retain its position as the pre-eminent global city we must recognise that this is not a Brexit that will work for the capital — this is a Brexit for the Europhobe hardliners on the Tory backbenches.

This Brexit at any cost, regardless of the consequences, will be absolutely catastrophic for London and our place in the world. But as things go pear-shaped, there is a way out of this and nothing should be off the table when it comes to protecting the strength and future prosperity of our capital.

Whitehall has begun the devolution of control over adult skills, criminal justice services and employment support to City Hall, but Brexit changes everything, so it is perfectly rational to consider more radical proposals than piecemeal devolution.

Let’s not forget that 60 per cent of Londoners voted to Remain. The referendum result sent a shock wave through the capital, but as the dust begins to settle, London finds itself increasingly constrained by — and at odds with — the policies and priorities of our central Government.

If Scotland can have another referendum on independence, then why can’t we have a well-overdue debate about London becoming more autonomous and independent from the rest of the country? If Brexit was a victory of smalltown conservatism, resurgent nationalism and anti-immigrant sentiment, then London’s status as the financial and cultural capital of Europe depends on resisting these shifts.

Earlier this year the London Finance Commission proposed a comprehensive London devolution package in light of Brexit, including additional control over the tax paid by Londoners and London businesses to bring us into line with our global competitors. New York keeps around 50 per cent of the taxes raised in the city and Tokyo keeps almost three quarters, so a comprehensive settlement to enable London to keep more of the taxes generated here would give the capital the tools we need to mitigate the impact of Brexit and stay ahead in the global race.

Take the issue of immigration. Huge swathes of our nation — including the ministers calling the shots around the Cabinet — view freedom of movement as a problem so severe that we must leave the single market in a desperate bid to reduce net immigration to the “tens of thousands”, regardless of how much it hurts our economy. But London would grind to a halt without European migrants coming to the capital to work, and separate visa arrangement will be essential to enable London to maintain access to the talent it needs to grow.

Fast forward a couple of years and London’s status as the world’s pre-eminent global city will be under threat. Our position as the financial services capital of Europe is at risk and could disappear overnight if there is a flight of capital and talent to cities on the Continent.

Over the course of the next two years as the reality of Brexit begins to bite, the economic, social and political cleavages between London and other parts of the country will become more pronounced. London’s status as a de facto city-state will become clearer and the arguments for a London city-state to forge a more independent path will become stronger.

London already accounts for just under a third of all UK tax revenue — up a quarter in real terms since 2005 — so it beggars belief that the interests of the capital have been completely overlooked when planning for Brexit. The Treasury is increasingly reliant on London to subsidise expenditure and investment in other regions so embarking on a course that will hurt London economically is bad for the whole country, not just the capital.

The Office for Budget Responsibility estimated the cost of Brexit at around £60 billion in additional borrowing over the next five years, and it is London that will foot the bill. We cannot afford a lost decade. We are already seeing London schools hit by huge cuts as money is shifted from the capital to the shires. Local authorities in the capital are already on their knees after seven years of swingeing austerity.

This is the last thing we need when urgent attention and huge investment is crucial to address the capital’s housing crisis and a deepening chasm between top earners and workless poor in many London boroughs. We can’t go back to the Seventies: needles strewn across our public parks; our schools falling apart; the National Front marching on our streets; political paralysis, civil unrest and economic turbulence.

What has become clear since June is that the Government will not fight London’s corner in the Brexit negotiations. The case for a London city-state has never been stronger. As Sturgeon told the SNP conference: we are not powerless, we can still decide which path we take. If you identify with London’s values, it’s time to fight for them.