Monday 16 November 2020 3:39 pm

Sadiq Khan forced to cut budget by £38m after Covid leaves black hole

Sadiq Khan has revised the Greater London Authority’s budget downward by £38m after a drop in revenue due to the Covid crisis.

A statement from City Hall said the drop in spending is “because of a forecast unprecedented loss of business rates and council tax income, caused by Covid-19, and the government’s refusal to adequately fund local and regional government in London”.

Read more: Sadiq Khan blasted over ‘PR stunt’ as he moves City Hall to Royal Docks

Khan’s new budget for the authority in 2021-2022 now totals £602m.

The budget is not for City Hall-controlled entities like the Metropolitan Police, the London Fire Brigade and Transport for London (TfL), with budgets for these bodies to be released early next year.

It is expected that Khan may have to slash up to £400m from their budgets, unless the government provides emergency funding.

A statement from the mayor’s office said of the £38m savings, “£12m will be saved through reduced back office and core cost”.

The further £26m will come from “scaling back of some projects that are not considered vital to London’s recovery from the pandemic” with final decisions made “in the coming months”.

It comes as the mayor also confirmed recently that City Hall will be moved from its current site next to Tower Bridge to The Crystal building in East London’s Royal Docks in order to save £61m over five years.

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“This budget is about helping the city recover from this terrible period,” Khan said.

“As well as support for the coming months, the budget is also a chance to reimagine our city and define our aspirations and priorities for the recovery effort.

“Building on the fantastic community spirit displayed by Londoners during these toughest of times, we must deliver a cleaner, greener and fairer city, which is more economically resilient and supports thriving neighbourhoods, with improved wellbeing and access to a strengthened healthcare system.”

Read more: Khan: By 2022 40% of new Met recruits should come from BAME background

The budget releases funding for nine City Hall spending programmes, including a “green new deal” that aims to “double the size of London’s green economy by 2030 to accelerate job creation for all”.

Other programmes include increasing spending on public spaces, improving London High Streets, creating youth programmes and setting up a million “wellness ambassadors” to improve mental health in the capital.

Conservative mayoral candidate Shaun Bailey defended the government for not providing extra funding to City Hall.

“Khan’s wasted £9.56bn at TfL, £100m on his own PR, £10m on personality tests, and £800,000 on lavish beach parties,” he said.

“As mayor, I’ll restore order to London’s finances — so Londoners can be confident that their money is being spent on the services they need, not on PR and waste.”