Sadiq Khan funding bid warns government that ‘starving the capital of investment’ will slow UK recovery

Sadiq Khan funding bid warns government that ‘starving the capital of investment’ will slow UK recovery

Sadiq Khan has presented his official bid to the government for public funds for City Hall and Greater London Authority functional bodies with a warning that supporting the capital’s “powerhouse economy” is fundamental to the country’s emergence from the pandemic-induced recession.

In a letter to Chancellor Rishi Sunak, the Mayor has emphasised London’s position as “one of a handful of genuinely global cities” but one which “still requires government investment for infrastructure and public services” if it is to continue to be “a huge net contributor in terms of taxes” without which “the government’s plans to invest in other parts of the country would not be possible”.

Separately, City Hall has shared with On London a ten-page document it compiled detailing over 30 government funding pots from which London government has either received nothing or been expressly excluded in recent years, ranging from money for road repairs to help for new school teachers.

Khan’s submission to Sunak’s comprehensive spending review (CSR) underlines from the start the UK’s economic dependence on London, stating that “when London succeeds, the UK succeeds and vice versa – and there can be no UK recovery from Covid-19 without a strong London economy to drive it”.

The submission document makes the case for “a fair deal from Whitehall” in core areas of mayoral power and responsibility – transport, housing and the Metropolitan Police – along with measures to protect jobs, businesses and cultural industries in and around the capital’s Central Activities Zone (CAZ), which have been devastated by the coronavirus’s effects. It includes short term funding of at least £5.65 for the remainder of this financial year and all of next as well as repeating a request for £4.9 billion a year towards affordable homes delivery.

The submission points out that the output of the CAZ and its environs plus that of “the Northern Isle of Dogs” – essentially the Canary Wharf financial centre – was valued at around £228 billion in 2017, “accounting for over half of London’s output and just under 13% of total UK output”.

The funding argument is augmented by a renewed plea for more power and responsibility in relation to growth and regeneration to be devolved to London government, a case also made by Prime Minister Boris Johnson in 2013 when he was London Mayor when endorsing the findings of the London Finance Commission, which he set up.

Khan’s emphasis on London’s global character and the national interest being served by a successful London economy are further echoes of Johnson during his time at City Hall.

The list of government national funding streams from which City Hall says London has received nothing includes the ongoing national clean air fund, to which Londoners contribute through a national diesel surcharge on Vehicle Excise Duty. City Hall says “a fair share” of this would be around £42 million.

Transport for London and the capital’s boroughs are described as “ineligible for all schemes detailed so far” covered by a £3 billion Department for Transport fund for buses, as well as for a £269 million “pothole action fund” and further £500 million “pothole fund” and two local road maintenance funds. On London has reported TfL’s unsuccessful attempts to access funds to meet the cost of repairing Hammersmith Bridge.

City Hall also says that London was “excluded from applying” from the £2.6 billion “stronger towns fund” set up in 2019 and did not benefit from £2.5 billion for “transforming cities” that was distributed to ten other English regions. It calculates that London received 0.64% – or £42 million – of £5 billion to improve broadband in hard-to-reach rural areas, which some Outer London boroughs share characteristics with.

Particular attention is drawn to London’s receiving only £22.1 million or 2% of a £900 million national “getting building fund” announced in the government’s 2020 summer statement, with London’s “underlying economic resilience” given as a reason. City Hall makes the point that “there are many high streets and town centres in London in need of targeted levelling up”.

Khan’s letter to Sunak describes London’s public services as “massively underfunded, notwithstanding the high levels of poverty – some of the highest in the UK – and inequality that we see across the city”. Analysis by the Institute for Fiscal Studies published last year confirmed that London has the highest poverty rates in Britain, included the most severe.

On London showed yesterday, that the government has decided to end VAT-free shopping for non-EU international visitors, partly on the grounds that it “does not benefit the whole of GB equally, with the current use of the scheme largely centred on London”. A call to reverse this move and extend the concession to EU nationals as well is included in a manifesto from an alliance of Central London businesses and associations seeking more government help.

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