Charles Wright: Sadiq Khan’s ‘precarious’ 2022/23 budget plans

Charles Wright: Sadiq Khan’s ‘precarious’ 2022/23 budget plans

City Hall spending will be boosted by almost £340 million of extra cash from April, according to Sadiq Khan’s final 2022/23 draft budget published yesterday ahead of approval decisions next week.

The windfall, arising from council tax and business rates income being higher than initially forecast, comes on top of an additional £259 million confirmed last month as being available for spending following a change to government business rate rules.

The budget nevertheless remained “precarious”, Khan said, still shaped by both the ongoing impact of the pandemic and the “lack of funding from the government to support key public services”, which he maintained left him with “no alternative” to implementing his proposed £31.93 council tax precept increase on Band D households – a hike of 8.8 per cent – which will take it up to £395.59 a year.

The Whitehall squeeze on the capital’s beleaguered transport network features strongly in the draft budget, which assumes there will be £1.2 billion in revenue support for Transport for London from the government, though this has not yet been confirmed. It also earmarks £20 of the council tax increase to help plug TfL’s funding shortfall when government support ends in March next year.

Some £217 million of the £259 million of extra business rate income will be set aside for transport-related projects outlined last month for improving London’s air quality and environment. These schemes, if introduced, such as further extending the ultra-low emission zone, new road-user charges on all but the cleanest vehicles and a “boundary charge” on non-London vehicles entering the city, would also raise money.

Almost £50 million is allocated to cover possible cost overruns completing the Crossrail Elizabeth Line, with Khan warning that TfL, denied any capital funding in the government’s October spending review, still required “significant interventions” to keep its investment programme running.

The Mayor’s council tax increase includes £10 towards the Metropolitan Police budget, which Khan said was a government requirement. Whitehall had confirmed that it would only pay for 4,557 of the 6,000 additional police officers City Hall and the Met estimate the city needs.

The budget also contains big ticket items which, according to Khan, will support the capital’s post-Covid recovery by funding a “decisive move towards a better, greener, fairer and cleaner city”.

Pioneering plans for a £500 million “green bond” scheme for zero-carbon projects, including energy efficiency upgrades to London’s ageing housing, have been  allocated a £90 million kick start.

Youth projects and initiatives tackling crime, targeting violence against women and girls, teen violence and homicides and the recruitment of 100 extra emergency call handlers, will receive £37 million.

Tourism, supporting one in seven jobs in the capital and making up almost 12 per cent of London’s economy in normal times, will be supported with an extra £10 million for promoting the city to international and domestic visitors, and community groups helping Londoners “impacted by inequalities” will be helped with £1 million in small grants.

There was disappointment for Liberal Democrat and Green Party Assembly members, who last month  respectively proposed that the budget should include a City Hall “building safety support hub” for Londoners caught by the cladding crisis, and an “empowerment fund” to help residents have a stronger voice when facing estate regeneration ballots or major local developments.

Rejecting the two ideas, Khan said building safety required “a national solution and national support services” and that his estate regeneration ballot rules already incentivised councils to work closely with residents while the planning process already provided what he called “adequate scrutiny of competing interests”.

Under the laws governing mayoral budgeting, any further amendments put forward when the final budget goes before the Assembly next Thursday 24 February will only be adopted in the unlikely events that they achieve a two-thirds majority.

Overall London government remains big business, with total gross revenue spending of some £15 billion a year, including £4 billion for the Met and £8 billion on TfL, as well as funding for the London Fire Brigade, training and environmental programmes, and the Olympic Park and Old Oak Common development corporations.

Londoners contribute £1.2 billion through council tax, with business rates contributing £3.3 billion and fares, congestion charges, grants and other income making up the total.

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Categories: Analysis

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