Source: Mayor of London
- Mayor makes official submission to the Government’s spending review
- Sadiq Khan warns that ‘starving the capital of investment’ will do nothing more than hamper the UK’s economic recovery from COVID-19
- Mayor reiterates call for urgent support for London’s retail, hospitality, leisure and cultural sectors
The Mayor of London has made his official submission to the Government’s Comprehensive Spending Review (CSR) with a warning to ministers that without further measures to support London’s economy it will hamper the entire UK’s recovery from COVID-19.
With the Prime Minister announcing further restrictions to stop the spread of COVID-19 that are likely to last at least six months, Sadiq is calling for an ‘urgent’ new package of financial support for the retail, hospitality, leisure and cultural sectors hardest hit by the pandemic, alongside a further extension of the business rates holiday. The Mayor reiterated that these measures are essential to prevent further unemployment in these key sectors, despite the support offered by the Government’s new Jobs Support Scheme.
City Hall’s submission to the Comprehensive Spending Review (CSR) lays bare the centrality of London’s key economic sectors to the UK’s prosperity. The capital’s economy accounts for a quarter of the UK’s total economic output and contributes a net £38.7 billion to the Treasury, with London’s creative industries generating £58.4 billion for the UK economy alone.
For every £1 spent on the London Underground investment alone, 55p is paid to workforces located outside London, with TfL contracts contributing around £6.4bn to the economy overall. London’s economic output is twice the size of the economies of Scotland and Wales put together.
The CSR submission makes clear the threat to these key economic sectors in the capital and therefore the UK’s recovery without further Government support. In the cultural sector 152,500 jobs are now at risk – the majority of which are in London. And with footfall in the West End currently standing at around 30 per cent of normal levels, there is a predicted loss of more than £5 billion in retail sales within London’s central district this year alone.
The Mayor further criticised the Government’s approach of excluding London from many of their recent spending announcements. Last month ministers announced £900M new investment in 300 ‘shovel-ready’ projects for new housing and infrastructure in England, but London only received a £22M share.
The Mayor of London, Sadiq Khan, said: “For years London has been the powerhouse of the UK economy – and ministers need to realise that it will be London’s recovery that will power the UK’s economic recovery through this pandemic.
“In the short term our world-famous retail, hospitality and cultural industries which contribute billions to the UK every year face an acute financial crisis. That’s why more targeted financial support in these sectors is needed so urgently to prevent further unemployment across the capital.
“But more longer term, with London accounting for a quarter of the UK’s economic output, the Government’s approach of starving the capital of investment will do nothing more than hamper the UK’s economic recovery from COVID as a whole.
“As I have outlined in my submission to Government, whether investment in transport, housing or our creative industries, London’s success has a direct economic benefit creating jobs all across the UK, while contributing a net £38.7 billion to the Treasury. Instead of knocking London, the Government should be investing in the city so that it continues to fire on all cylinders. The fact is the country needs a successful London. Put simply, there can be no national recovery without a London recovery.”
The Greater London Authority Group faces a forecast £493m budget shortfall over the next two years as a result of an unprecedented loss of business rates and council tax income, caused by Covid-19.
Separately, TfL needs at least £5.65 billion over the next 18 months because of lower public transport use during the pandemic and costs to complete the Crossrail project. Since the Comprehensive Spending Review in 2015, TfL has become more reliant on fares income than any other major transport authority across the world. But this source of income fell by around 90 per cent as a result of lockdown, and will be nowhere near returning to normal levels as long as social distancing measures are in place.
Prior to the pandemic, TfL had made huge strides to improve its financial resilience. During the last four years, it had made almost £1 billion of savings across the organisation and had built up cash reserves of more than £2 billion. As recently as March 2020, TfL was on track to reduce its like-for-like operating deficit for the fourth consecutive year, with a plan to turn this into an operating surplus during 2022/23.
Further to the Mayor’s existing demands of Government to protect key sectors of the London economy, the CSR submission outlines requirements for London in six key priority areas. Some of the key asks include:
- A devolved multi-year single funding settlement to support London’s economic recovery. Included in this would be funding for regeneration, economic development, business support, culture and the creative industries, and a fair share of national funding for Local Enterprise Partnerships.
- The creation of a capital fund for culture and creative industries infrastructure, with a ring-fenced allocation for London organisations, administered locally. This should include £100 million for London given its substantial contribution to the UK economy.
- Short term funding for TfL of at least £5.65 billion over the remainder of 2020/21 and 2021/22 to allow it to continue to run the same level of services and compete Crossrail, with a commitment from Government to work constructively to allow TfL to diversify its income to reduce overreliance on fares, including granting London greater control over a wider range of tax revenues to fund the network.
- An increase in London’s £4bn allocation of the next Affordable Homes Programme (AHP). For the funding period 2021-2026, London’s allocation falls far short of the average of £4.9 billion needed per year between 2022 and 2032 to deliver the 32,500 new affordable homes London needs every year.
- Sustainable long-term funding for the Metropolitan police service, including substantial capital funding and appropriate funding to maintain police office numbers given the expected reductions in income from council tax and business rates.
- The creation of a national £1.5 billion Clean Air Fund that will enable cities to fairly implement Clean Air Zones and tackle emissions, including through vehicle scrappage and retrofit schemes. In terms of funding for London this should at the very least match the Mayor’s existing £48 million scrappage scheme in the capital. An additional £1 billion to accelerate the electrification of London’s 9,000-strong London bus fleet would create highly skilled manufacturing jobs in areas such as Scarborough, Falkirk, Leeds and Ballymena.
Examples of companies TfL have contracts with across the country include:
- Siemens Mobility Ltd – which designs, manufactures and maintains traffic signals and infrastructure across London, is also manufacturing the new cameras for the expansion of the Ultra Low Emission Zone at its facility in Poole
- Holbro Engineering Ltd – an SME engineering firm based in Fleetwood, Lancashire who provide TfL with precision-machined refurbished components for S-Stock trains which run on the Metropolitan, Circle, District and Hammersmith and City line
- Hille Seating – a company based in Gwent who have provided benches as part of station improvement works in preparation for the Elizabeth line
- Emico – a engineering firm, with a head office in Hemel Hempstead, who are providing mechanical and electrical fit-out on a number of major projects such as installing new cabling, lighting and tunnel ventilation as part of the Northern Line extension
- Pashley bikes – who build the new design of Cycle Hire bikes at their factory in Stratford upon