London Mayor granted new tax powers to fund Bakerloo Line extension

Chancellor John Healey has announced a significant devolution of fiscal powers intended to fund major infrastructure projects in England. Under the new budget plans, regional mayors will be permitted to retain a share of income tax starting in 2028, and local councils and mayors will eventually be allowed to keep all business rates by 2030.

In London, these changes are expected to provide Mayor Sadiq Khan with increased borrowing capabilities, estimated by some reports to be as high as £10bn. This funding could facilitate the long-delayed extension of the Bakerloo Line from Elephant and Castle through Old Kent Road and New Cross Gate to Lewisham. The proposed extension would include new stations at Burgess Park and Old Kent Road.

Other potential projects enabled by these new powers include the development of the West London Orbital, connecting Hendon and Hounslow, as well as upgrades to Euston station and the transformation of Stratford into an international travel hub. The government is also allocating an initial £285 million to support regional leaders in investing in local projects.