London’s budget challenges must be addressed

• London’s transport system has a funding requirement for 2022-23 of £1.1 billion. In its budget proposals, Transport for London (TfL) states it cannot balance the budget in ‘any of the upcoming financial years to 2024-25 without extraordinary Government support’.
• The Mayor’s Office for Policing and Crime (MOPAC) budget submission includes an optimistic expectation of additional Government funding for 3,287 additional police officers in 2022-23. There is little detail in their submission to show where and how it will balance its budget.
• The London Fire Commissioner (LFC) forecast an £8.8 million budget deficit in 2023-24, which was intended to be funded by a drawdown on reserves. Future savings are needed, but to date, no clear and concrete savings proposals have been developed.
• The London Legacy Development Corporation (LLDC) stadium operator, E20 Stadium LLP, continues to require a subsidy, with a £24.8 million loss for 2020-21 and there are currently no effective commercial strategies to fully eliminate the operating subsidy. There has also been only modest delivery against affordable housing targets, with only 23 per cent affordable housing to date.
• The Old Oak and Park Royal Development Corporation (OPDC) has still not secured any land five years after agreeing a Memorandum of Understanding with the Department for Transport around the use of its land holdings.
• The London Assembly Budget and Performance Committee has published its response to the Mayor’s Draft Consultation Budget for the Greater London Authority (GLA) Group 2022-23. The report warns that there are serious financial challenges facing the Mayor and the GLA Group for the year ahead.

A series of recommendations are included for the Mayor to help balance the budget and to make improvements to the budgetary process:

• TfL should look at a range of options to increase income for the longer term and not just those required to achieve financial sustainability for 2023-24. TfL should provide more detail on the specific road user charging proposals under consideration to bridge the £373 million budget gap. TfL should be transparent with its presentation of budget gaps and TfL should review the options of raising external funding to complete the Elephant and Castle station fit out, in addition to continuing to lobby the Government.
• MOPAC should continue to lobby the Government for longer-term funding settlements for the Met and further funding for police officers in London. However, they should base their budget and plans on expected funding. MOPAC should detail the financial impact of the projected increased capital borrowing on its structural budget gap in its final 2022-23 Budget and conduct a review of the funding and delivery of its capital programme.
• The LFC should develop a plan to recruit and retain staff, where there are key shortages, such as fire safety officers. A reliance on borrowing should be limited and demonstrable progress is needed on plans for the development of the Albert Embankment site.
• If the LLDC requires further funding from the GLA then this should be in the form of a loan that should increase to the amount that the LLDC can expect to repay and not be arbitrarily capped, in order to ensure that as much of the GLA’s investment is returned to the GLA. The LLDC should also improve levels of affordable housing across the remaining developments on publicly owned land and make progress towards securing a naming rights deal for the London Stadium that reflects good market value.
• The OPDC should publish its outline business case for Government support. The OPDC must work with Network Rail and the Department for Transport to prioritise the agreement for the transfer of public sector land holdings in 2022-23 and report progress in quarterly performance reports.

Susan Hall AM, Chairman of the Budget and Performance Committee, said:



“The Mayor’s budget has some gaping holes, especially in relation to transport and policing, that urgently need to be addressed to make sure this city runs effectively. The Mayor must take forward our cross-party recommendations, so that Londoners can continue to receive vital public services.



“Of course, the pandemic has changed everyone’s lives as we know it, but we still need to keep London’s economy going, the city moving and ensure Londoners are kept safe in their homes and on our streets. The city will suffer if it does not have the infrastructure, jobs and homes it crucially needs.



“Value for money needs to be at the absolute core of everything the Mayor does. It is difficult to stomach the prospect of already hard-up Londoners paying a double whammy of rising transport fares and increased council tax contributions to the GLA. The future of this great city lies in the hands of the Mayor and he needs to balance the books in a sensible and sustainable way.”