MPs have called for more power and resources to be devolved to London’s local authorities in order to boost the capital’s productivity.

The All-Party Parliamentary Group (APPG) for London says that modernising services and investing in infrastructure is crucial for encouraging economic activity within the capital.

A recent report by the think tank Centre for Cities warned London’s rate of productivity growth has plummeted in comparison to international competitors, costing the UK economy tens of billions of pounds a year.

In order to reverse this trend, the APPG for London proposes the reintroduction of tax-free shopping for tourists, reform of the Apprenticeship Levy to give employers more flexibility with how it can be used, and maintaining the Energy Bill Relief Scheme for businesses.

The APPG also points to London’s longstanding economic and social challenges, including the most severe housing and homelessness pressures in the country and among the highest poverty and unemployment rates found in the UK.

Shared by London Councils on behalf of the APPG, the report says that the capital ‘should be given the powers and resources it needs to tackle these issues, including through further devolution away from central Government and towards London’s regional and local government.’

Sir Bob Neill MP, co-chair of the APPG for London, said: ‘The Budget is a chance for the Chancellor to show he recognises London as an invaluable national asset. Rather than try to level London down, the government must do everything it can to get London back in business.

‘The capital is a vital cog in driving the UK’s prosperity, but the government cannot afford to take London’s contribution for granted.

‘We want London to be the best city in the world to live, to visit, and to run a business. To achieve that, the budget must bring fresh support for London’s economic recovery and help the capital overcome its immense challenges.’