Sadiq Khan: Why a mansion tax raid on London would be wrong

Sadiq Khan insists he is not unnerved by a new centre of political gravity in the North of England. “There is plenty of cake for everyone,” he says. However, the Mayor of London is less optimistic about one potential consequence of that new political geography: extending mansion tax. Khan says he is opposed to reports that the Government is considering lowering the threshold for its planned High Value Council Tax Surcharge from £2m to £1.5m, a move that would bring many more London properties into its sights. Shorts The measure, already dubbed a “mansion tax”, is due to come into force in 2028 at the £2m threshold. The reported proposal to reduce that threshold to £1.5m would substantially widen its reach, with analysis suggesting that the overwhelming majority of the additional properties affected would be in London and the south-east. For Khan, that raises a fundamental question about what constitutes wealth in a city where property prices have long outstripped those elsewhere in Britain. “I’m against this government or any government… incurring attacks on people who may be asset rich but cash poor,” he says. “The cost of homes in London has gone up over the last period. So somebody who may live in a property that on the face of it is worth £1.5m, it’s not as wealthy as some people may be led to believe.” He adds: “There’s a perception that… the streets of London are paved with gold. Now, people may be living in properties for a variety of reasons that on the face of it may be worth a lot of money, but it’s not true to say these people are wealthy.” ‘I don’t like language of London versus Manchester’ It is an unusually sharp intervention from a Mayor who otherwise insists he is relaxed about the rise of a rival centre of political power in Manchester. For decades, London has been the dominant economic force in Britain. Now Andy Burnham’s Government is deliberately putting more political weight behind the North, including through the creation of a new No 10 North base in Manchester. Khan says he welcomes the change. He rejects the idea that Britain should be viewed through a contest between London and Manchester, or London and the North. “I don’t like the language of London versus Manchester or London versus the north or London versus the rest,” he says. “It’s London and Manchester. It’s London and the North. It’s London and the rest.” Khan says there has been a “rewiring” of Britain, but he has seen no evidence of Burnham being “anti-London”. He is, however, enthusiastic about Burnham’s plans for fiscal devolution – including his proposal for a new overnight visitor levy, dubbed the “tourist tax”. The measure would allow cities to charge visitors staying in hotels and other paid accommodation, with the proceeds retained locally to fund priorities such as transport, tourism and public infrastructure. But it has already prompted a backlash from parts of the hospitality industry, which warn that an additional charge could make Britain more expensive for visitors and deter tourism. Khan rejects that argument, pointing instead to cities such as Paris, New York, Toronto, Berlin and Amsterdam, where visitors already pay charges on top of their accommodation bills. “We’ve got to make sure we recognise you don’t stay number one by being complacent,” he says. “If you go to any city in the world… you pay your hotel bill or there’s a little bit in your bill which is a contribution towards retaining that excellence.” ‘We need to transition away from fossil fuels’ For all his enthusiasm about London’s prospects as a global destination, Khan is less relaxed when the conversation turns to climate change. The Mayor has made improving air quality a defining feature of his time in office, but the Government is facing criticism over the prospect of approving new oil and gas development in the North Sea, including the Rosebank and Jackdaw fields. Khan argues that the case for a faster transition away from fossil fuels has only strengthened. “I think this government and my generation of politicians can either be the first generation that gets it and takes action, or the last generation that fails to get it, fails to take action,” he says. He points to increasingly extreme weather, including heatwaves and flash flooding, as evidence of the scale of the challenge, while arguing that greater investment in renewable energy would also help protect households from the volatility of fossil-fuel prices. “We need to transition away from fossil fuels into renewables,” he says. “We need to be invested in solar, invested in wind, offshore and onshore, invested in nuclear, moving away from oil and gas.” Khan says he is unconvinced by the case for granting new licences for Rosebank and Jackdaw. His preferred path is greater investment in domestic renewable energy. Asked what he regards as his greatest achievement after 10 years as Mayor, Khan initially resists the premise. “Asking a politician what his or her greatest achievement is like asking a parent what their favourite child is,” he says. “You don’t do that.” Instead, he points to the sheer upheaval London has experienced during his time in office: Brexit, the terrorist attacks of 2017, the Grenfell Tower tragedy, the pandemic, the Liz Truss mini-budget and wars in Europe. “It’s been a roller coaster of 10 years,” he says. “The only thing I’ve not had is locusts.” But he says he is proud that, despite those shocks and the political instability at Westminster, London is “greener, healthier, safer, more prosperous and more affordable”. ‘I have plenty of fuel in the tank’ The question of how long he intends to be around to help shape that future remains open. Khan, who will turn 60 during the next mayoral term, has not ruled out seeking another five years in City Hall. But he says he will make the decision next year, following the pattern he has established of announcing his intentions in the year before an election. For now, he insists he is “thoroughly enjoying being mayor” and has “plenty of fuel in the tank, fizzing with ideas”. Those ideas include plans to pedestrianise Oxford Street, clean up London’s rivers and introduce a new licensing regime aimed at improving the capital’s nightlife. When the conversation turns to the possibility of an early general election, Khan is careful not to encourage his fellow mayor-turned-national-politician to roll the dice too soon. Khan says Burnham’s priority should instead be to govern, focusing on the problems facing the country, including energy, the cost of living and housing. A general election now, he argues, could be seen as a distraction. “Andy’s got a great team in Parliament, a majority of 170. He knows what he wants to do,” Khan says. “I think the question the public may ask if he was to hold a general election is: what purpose does the general election serve? Why are you doing it?” He points to his own experience of Westminster’s revolving door during his decade as Mayor. “Andy’s the seventh Prime Minister since I’ve been Mayor,” he says. “If you have a general election, clearly there’s a possibility of there being an eighth Prime Minister. But why would you do that when you’ve got this huge majority and so much runway in front of you to deliver for our country?”