Uncertainty was the theme as London Assembly members probed Sadiq Khan’s finance plans for this year and next – on everything from the future of Transport for London to the mayor’s much-trumpeted possible move from City Hall to Docklands.
“It’s all-enveloping,” Khan’s chief of staff David Bellamy told today’s budget and performance committee meeting. “We don’t know what council tax income we are going to get this year and we don’t know what assistance the government will give us. It’s a very difficult environment in which to look forward.”
Accurate figures for budget planning would not be known until the end of the year, he said. Cash for police recruitment had yet to be confirmed, business rate income was subject to review, the impact on London of leaving the EU was unknown, and for long-term investment in the capital’s transport system there was “absolutely no certainty at all”.
City Hall’s “reasonable worst case” scenario forecasts a budget gap of almost £500 million over this year and next as a result of shortfalls in business rate and council tax income, with TfL taking a £212 million hit, Metropolitan Police funding down over £100 million and London Fire Brigade budgets reduced by £25 million. Reductions this year would see overall Greater London Authority group budgets hit by cuts of around £160 million.
“This is the most difficult budget we’ve faced in the history of the GLA,” said veteran Labour assembly member Len Duvall. “It is quite clear people will lose their jobs after this budget.” Khan agreed: “We don’t know how we are going to fill the gap. We are hoping that the government steps in to support us”.
A 90 per cent reduction in fares income and a £1.6 billion bailout providing support only until the end of September were adding to TfL’s funding crisis, the committee heard. “Passenger numbers are not going to be where they were in February,” said Bellamy. “When we get to October the books are not going to balance without extra funding”.
Long-term arrangements were needed, he said, for an organisation with 27,000 staff which, while treated as local government, would be one of the top 10 companies on the stock market if it was in the private sector.
The Whitehall review of TfL funding currently underway had three options, Khan said: restore the organisation’s operating grant, devolve power to City Hall to raise its own revenues, or provide subsidy “for the foreseeable future”.
Meanwhile, GLA finance chiefs were focused on essential work only, in TfL and across the authority, the committee heard. Projects including the repair of Hammersmith Bridge, the Canary Wharf to Rotherhithe ferry service, the Sutton tram extension and the Bakerloo line extension are all “paused”, there is a recruitment freeze for most vacancies, and financial reserves are being deployed to keep police numbers at 32,400.
Plans to save £55 million over five years by shifting City Hall from its current £11.1 million a year home to a new base at the Crystal in the Royal Docks are progressing, the committee heard – though fewer than half of GLA staff would actually move east and Khan himself would keep an office at TfL’s Palestra building on Blackfriars Road in Southwark.
The mayor’s “main office” would be in the Crystal, along with the Assembly chamber and committee rooms, Bellamy said. But GLA staff would also be using 300 desks at Palestra and 150 desks at the London Fire Brigade offices in nearly Union Street, all premises owned or leased by the GLA.
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