City Hall budgets are set for significant reductions next year, with job losses likely as well as “fundamental” changes in mayoral spending programmes.
That was the warning today as senior Greater London Authority officials, including chief officer Mary Harpley, finance chief David Gallie and Sadiq Khan’s chief of staff David Bellamy, appeared before the London Assembly’s Budget and Performance Committee.
The committee, chaired by Conservative Assembly group leader Susan Hall, was continuing its scrutiny of budget cuts ordered by Mayor Khan in the face of a forecast £493 million shortfall in Business Rate and Council Tax income this year and next as a result of the Covid-19 pandemic.
Savings amounting to more than £20 million in 2020/21 were signed off by Khan in August. The reductions affect the £283 million “core” programme budget controlled by City Hall, including affordable housing funding, events, apprenticeships and skills programmes, public health promotion, spending on cultural activities and the costs of the London Assembly itself.
In June the Mayor warned that cuts of up to £45 million in policing in the capital and £10 million for the London Fire Brigade might also be required under “reasonable worst-case” estimates. Transport for London is subject to separate government bailout funding, and Khan has also proposed relocating the mayoral HQ to the Royal Docks, in order to save £55 million over five years.
Reductions highlighted at the committee included cuts to schemes providing construction skills, mental health support for children, advice on home insulation, “culture seeds” funding for community arts projects, an expansion of the Mayor’s free drinking fountain programme and tree-planting plans.
And with “one-off” budget items, such as planned spending supporting the capital’s “host city” status for the now postponed Euro 2020 international football tournament, making up much of the cuts, future budgets would be more challenging, the committee was warned.
“We will be seeking to change the way we deal with the budget,” said Gallie, GLA executive director for resources. “It’s a major transformation to reflect the new situation and, inevitably, as part of that there will be difficult decisions to take. The way we’ve organised ourselves in the past won’t be the way we bring forward the 2021/22 budget.”
Bellamy confirmed that the future would present “enormous challenges”, with Council Tax and Business Rate surpluses previously used to top up spending plans, including allocations earlier this year for “Green New Deal” carbon neutral targets and the Young Londoners Fund, unlikely to materialise.
“The things the Mayor was able to use that money for – it’s not going to happen,” said Bellamy. “The funding sources are not there anymore.” City Hall spending plans would be “fundamentally rebuilt”, he said, focused on statutory requirements, core mayoral functions and the priorities emerging from the London Recovery Board.
There was more optimism though from Rickardo Hyatt, City Hall’s housing director, who is responsible for overseeing the Mayor’s £4.8 billion housing programme which aims to see 116,000 affordable homes underway by 2023 – a target date that’s been extended from 2022 due to the pandemic’s impact on construction in the capital.
“Clearly there are critical challenges due to the pandemic and wider market uncertainty as well. But we have done as much as we can to mitigate those risks,” Hyatt said. “We still have quite a lot of work to do to see those homes come through, but we think we can deliver the programme.”
Challenged by Hall, Hyatt confirmed that just 14% of the planned homes had been completed by the end of April this year. But performance was in line with the target agreed with the government for housing starts, with more than 17,000 affordable homes started last year, a total claimed by Khan to be a City Hall record.
Since government funding was agreed in 2016, 59,000 affordable homes have been started, members heard, with 57,000 still to get underway. But Hyatt said that with homes typically taking three years to build from start to finish completion rates would increase as the funding period came to an end.
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