We’ve had a dramatic few weeks – but finally the results are in and the Scottish have voted to stay part of the Union, with 55-45 percent in favour (roughly). We’re quite happy about this – as we believe we’re better together and stronger as a country. However, it’s clear that things are not quite the same after the referendum and there are lots of issues still up in the air. Such as the fact that the English have woken up to the West Lothian question – where Scottish MPs can vote on English issues – yet not vice versa – and the Barnett Formula – where Scots get more per head in terms of spending than the average person south of the border. Questions have been raised as to whether this is ‘fair’ and David Cameron has pledged to ensure the English get a better deal. As to how this will work is anyone’s guess. There are so many various factors that could affect how things turn out and we won’t go into them here. Instead, we’re interested in how this could affect London, the economy – and of course house prices…
One issue that’s been thrown up is that of regional devolution. Should England get its own parliament or should more power be devolved to regions and cities? Or, perhaps, we could have both? Interestingly in the past there’s been reluctance for this option from the public – who voted against this in 2004 in terms of regional assemblies in the north. However, the can of worms has once again been opened – and it’s not going to be closed until the situation has been resolved. There’s been talk for a while about London being “another country” in terms of its wealth and prosperity. So, could this be the opportunity for the city to break away and become its own republic? This could mean more powers over taxation and spending and more autonomy for the populace to vote for what it wants.
If London does end up with more say over its economy, perhaps the option for Stamp Duty reform could be placed on the table. And Scotland could play some part in inspiring the city to kick start this. For example, when the country first got its Scottish parliament in 2012, politicians put forward a proposal to replace Stamp Duty on property sales with an alternative called the Land and Buildings Transaction Tax (LBTT). This will come into effect from April 2015 and works differently in terms of the fact that it’s incremental rather than ‘slab’ like. This is similar to income tax and more progressive. In Scotland, the idea is that no tax is paid up to £180,000 (in the UK it is £125,000) and after that it’s graduated.
Although in Scotland it seems as if the taxation could be higher after £300,000 in comparison to the UK, this wouldn’t have to be copied to the letter by London, as the city has higher house prices; so could be adjusted accordingly. Up until now, there’s been no real pressure on politicians to reform the dreaded tax and no serious change has been promoted by either side. However, this could change in the event of devolved powers to cities. It’s not just Stamp Duty that could be challenged – the heavy planning regulations which keep housing scarce as the population increases – could also come under scrutiny.
Whatever the outcome, one thing’s clear: change is on the agenda – and it cannot be avoided. While some politicians may want to kick this into the long grass and delay the inevitable decentralisation of government, at some stage it’s going to have to happen. And for London, this could be no bad thing, as long as it’s managed carefully and efficiently.