Sir Sadiq Khan is to be granted new licensing powers to boost London’s pubs, restaurants, hotels and tourism industries.
Opposition peers raised objections that the legal shake-up to give the Mayor of London “call-in powers” would allow him too much leeway to override decisions by boroughs across the capital.
But the Government refused to accept changes to the English Devolution Bill’s proposed reforms to the licensing functions of the Mayor of London.
They include giving a new strategic licensing role for the Mayor of London.
Sir Sadiq will also have a duty to set out his licensing priorities in a new London-wide statement of licensing policies.
Ministers are seeking to learn from New York where the Mayor has far more influence over licensing rules compared to London.
New York’s Mayor Zohran Mamdani can set licensing policy priorities and propose changes to state laws that govern licensing.
Local government minister Baroness Taylor of Stevenage insisted that the new call-in power for the London Mayor would only be used “judiciously” for strategic purposes.
But she stressed it would stop councils from blocking night-time and other ventures due to “unnecessary red tape or short-term thinking”.
Thousands of jobs are being lost in London’s hospitality sector, with Rachel Reeves accused of undermining the sector with tax rises and increases to the National Living Wage.
The Chancellor has also rowed back on business rate reforms which had particularly hit pubs.
Sir Sadiq has also been urged to do more to stop pubs and clubs in the capital from being closed down due to noise complaints.
Explaining the controversial reform, Baroness Stevenage told peers: “If a London licensing authority decides not to grant an application of potential strategic importance...the mayor is required to decide whether or not to call in the decision.
“If a decision is called in, the mayor must issue a direction to the relevant licensing authority, having given regard to his licensing policy and the importance of promoting the licensing objectives. “
There would be new rights of appeal against decisions by City Hall, she added, to ensure the call-in power is used “judiciously”.
But she stressed: “The new call-in power will initially be given effect in London to help unleash the full potential of our capital’s world-renowned cultural venues but could be deployed in mayoralties across the country in the future to help prevent decisions from being blocked by unnecessary red tape or short-term thinking.”
Baroness Pinnock, a Liberal Democrat, slammed the proposal as imposing a “top-down command structure over local democracy” by giving the Mayor of London a “veto” on applications with strategic significance.
“If a borough council decides to grant or reject a licence, that decision is suspended and has no effect until the mayor decides whether to intervene,” she said.
“This is allegedly the devolution Bill, but I am yet to be convinced that it has any relationship to devolution.”
Baroness O’Neill of Bexley, a Conservative, also spoke out against the plan, warning that City Hall may not fully understand local factors behind licensing decisions by boroughs.
“The mayor might not appreciate the local policing capacity, or lack of it, and the implications of that on licensing decisions,” she said.
“He might not understand the local economy and what licensing could mean for that.”
But Lewisham Mayor Baroness Dacres backed handing the new power to City Hall.
“The key word is ‘strategic,’” she said.
She stressed that London’s nightlife and hospitality industries were essential to Britain’s economy.
“We need to support them; they bring more than 1.4 million jobs to the capital and generate £46 billion in economic activity,” she added.
Baroness Stevenage argued that there was “unmet potential for London’s night-time economy”.
She highlighted a YouGov survey which found that 45% of Londoners stated they had ended a night out before midnight in 2023-24, despite wanting to stay out later.
She stressed that night-time spending in the capital fell by 3% from 2022-25.
The capital also has a lower premises licence approval rate than the rest of England and Wales, she added.
“I know we have talked many times...about the restaurant and pubs business, and so on,” she told the Upper Chamber.
“We particularly want to encourage that sector in London...and everywhere else, but it is important to do that for the capital’s tourism and other trades.
“The new strategic licensing role of the Mayor of London would enable this and provide an opportunity to adopt a similar approach to those that have worked effectively in New York, Amsterdam and Sydney.”
