Tuesday 30 June 2020 4:02 pm

Sadiq Khan slams Johnson’s New Deal for ‘failing to grasp’ scale of economic crisis

Mayor of London Sadiq Khan has slammed Boris Johnson’s pledge to pump £5bn into British infrastructure, saying the government has “fundamentally failed to grasp” the scale of the economic challenges facing the UK. 

In a major speech this morning, the Prime Minister set out government plans to inject billions into a new infrastructure project to help “build, build, build” the British economy out of the coronavirus crisis. 

Read more: Industry reacts as Boris Johnson lays out ‘New Deal’ recovery plan

Johnson channeled former US President Franklin D Roosevelt’s “new deal” in the 1930s, promising to create thousands of jobs and to drive investment through a nationwide building campaign. 

However, the mayor criticised the PM’s plans as insufficient given the major recession that the UK faces. 

Khan told City A.M: “This announcement shows the government has fundamentally failed to grasp the scale of the economic challenge ahead and the unprecedented threat to millions of jobs in London and across the UK.

“This funding is just a tiny fraction of the economic stimulus packages announced weeks ago by other major economies such as Germany and the US,” he added. “As well as being money that was previously announced, this is another example of central government deciding what is best for local areas and cities, instead of meaningful devolution to those closest to the issues.”

Earlier this month, German chancellor Angela Merkel unveiled a €130bn (£114bn) fiscal stimulus package in a bid to kickstart the economy, as Germany heads for its worst recession in 70 years. All families in Germany received a one-time transfer of €300 per child as part of the support package.

Meanwhile, US President Donald Trump has already spent trillions in financial stimulus during the Covid-19 pandemic, and has promised that a second stimulus package will be at least $2 trillion (£1.63 trillion). 

In his speech in the Midlands this morning, Johnson pledged to accelerate infrastructure projects including £1.5bn for hospital maintenance, £100m for road projects, and £900m for “shovel-ready” local growth projects such as improving high streets.

The PM also announced plans to radically reform the UK’s planning system to put an end to the housing crisis. Johnson said the government will push forward with Project Speed, a new framework designed to fast-track major building projects across the country.

“We will build fantastic new homes on brownfield sites and other areas that with better transport and other infrastructure could, frankly, be suitable and right for development,” the PM said.

However, the mayor of London slammed the PM’s pledges, saying: “The proposed changes to the planning system will mean that developers build more luxury penthouses and small cramped homes unfit for families, rather than the council homes and genuinely affordable homes we desperately need.” 

Khan added: “This is exactly the legacy that the Prime Minister left when he was mayor of London — with just three social rented homes started during his last year in City Hall — and will make the housing crisis worse rather than better.”

It comes as data from the Office for National Statistics (ONS) released today showed that the British economy suffered its worst slump since 1979 during the pandemic. UK GDP slumped by 2.2 per cent in a coronavirus-ravaged first quarter of 2020, the ONS found, surpassing initial estimates. 

Meanwhile, a report by leading think tank The Resolution Foundation predicted that the rate of unemployment in the UK could take seven years to return to pre-coronavirus levels.

The number of furloughed workers in the UK rose to 9.3m last week. Many have warned that the UK will see a flood of redundancies as the chancellor’s Coronavirus Job Retention Scheme winds down in October.

“The government has a generational responsibility to ensure that nobody is left permanently unemployed, homeless or pushed into poverty as a result of this virus — and to rebuild a better, fairer and greener country,” Khan added.

Read more: Khan calls for London furlough extension as he warns of ‘looming unemployment crisis’

“Right now Ministers are failing that test. We urgently need the Government to come forward with proposals for an unprecedented economic stimulus package that truly matches the scale of the challenge to jobs and growth.”

Number 10 did not immediately respond to requests for comment.