Localism in London

Think Tank Future of London held an interesting workshop last week, asking what does the Localism agenda mean in London? With the Localism Act winning Royal Assent yesterday, it was a useful reminder of how differently it will work in London.

The Act abolishes Regional Spatial Strategies, replacing top down housing targets with bottom up incentives – the New Homes Bonus rewards councils that allow new housing. But in the capital the London Plan and its housing targets stay, and in any case many boroughs are already broadly supportive of new housing.

The Bill also gives local communities powers to draw up Neighbourhood Plans. However London already has some of the smallest, most “local” boroughs (8 of the 10 smallest councils in the country are in the capital), and it lacks the established town or parish councils that may drive forward Neighbourhood Plans elsewhere.

But there is one aspect of localism that could have a bigger impact in London than elsewhere.

The proposed reform of local government finance would allow councils to keep some of the growth in business rates, giving them the incentive to allow new commercial floorspace.

The opportunities for this are particularly strong in London, which already accounts for more than quarter of business rates collected in England. The final scheme will certainly retain some redistribution, to avoid central London benefiting disproportionately. But nonetheless the Government intends that councils that grow their business base will reap big benefits.

Imagine the effect on the finances of Tower Hamlets and Newham if this had been in place when Canary Wharf or Stratford City were built. Over time the impact of this incentive could turn out to be as significant as anything else in the localism agenda.


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