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Wheatcroft Panel Proposal To Slash Hundreds of Millions From Economic Regeneration

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The main purpose of this article is to consider the extremely damaging consequences for London that would follow from the implementation of Patience Wheatcroft’s proposals for the London Development Agency (LDA).

These, for reasons outlined below, would result in a reduction of hundreds of millions of pounds a year in spending on economic development and regeneration in London. Of the proposals considered so far by Boris Johnson’s administration that would act drastically against the interests of London this is the most serious yet. But it is also worth putting the scale of damage that would be involved from these proposals against the background of the large losses for London that have already been suffered as a result of the first two months of Boris Johnson’s administration as they show a clear pattern.

In its first two months in office Boris Johnson’s administration has already imposed extra costs, or cuts, on Londoners of over £45 million a year. If the nonsensical scheme to bring back Routemasters with conductors is proceeded with all independent transport experts conclude that this will cost over £100 million a year – raising the costs to Londoners to around £145 million a year. To take the details, £30 million a year has been lost for the financing of London’s public transport and cycling schemes through the cancellation of the £25 a day CO2 charge on gas guzzlers, as well as £15 million a year from the cancellation of the deal to receive cut price oil from Venezuela to finance half price bus travel for those on income support in London. Unless Boris Johnson abandons his pledge to find an alternative scheme to finance cheap travel for the worst off Londoners, or cuts back cycling and public transport plans, this £45 million a year cost will have to be borne by Londoners.

To give a scale of comparison, even if every single accusation made by the Evening Standard regarding Lee Jasper were true – which they are not – this would be £4 million over eight years – or half a million a year. The losses imposed on London by Boris Johnson are therefore already ninety times a year as much as the issues he and the Standard attempted to make central in the election. Largely demagogic cuts – such as £3 million a year for the Londoner – don’t even remotely fill the gap.

The harsh financial penalty imposed on London is on top of the purging of women and ethnic minorities from the senior ranks of the GLA Group, the removal of anti-racism from the Rise Festival, the enforced resignations of top GLA officials James McGrath and Ray Lewis, and other issues that have been widely commented on.

This illustrates clearly the fundamental character of the Johnson administration. It has no adequate grasp of the really big financial choices in London and therefore makes a great noise over much smaller issues to attempt to divert attention from its squandering of tens, or in the case of the ‘new Routemaster’ hundreds, of millions of pounds. This is its real financial incompetence.

That Boris Johnson’s administration has no understanding of what ‘value for money’ actually means is shown on its own website. This lists as ‘value for money’ anything which is simply cuts in expenditure. But to cut expenditure can be extremely bad value for money.

Suppose a travel agent proudly announces they have cut their advertising expenditure by half and thereby delivered value for money. Then they come back six months later and say ‘it is very puzzling, we saved £5 million by cutting advertising costs, but we have lost £25 million because our number of customers has collapsed.’ The £5 million saved was actually genuinely cost cutting – but it was disastrous value for money. What counts in value for money is, in business terms, the cost-benefit ratio – not the absolute level of costs.

Now let us turn to the Patience Wheatcroft Report’s recommendations. It proposes that the LDA should no longer deliver projects. These should instead be delivered through the Boroughs. The absolutely key passage is on page 85: ‘The regeneration activity resulting from these [LDA] funds should be undertaken by those organisations best able to understand the needs of the local population across London. The responsibility for delivery should be discharged through the London Boroughs, the third sector, or the private sector, working in parallel. In our view, the better and most cost effective vehicle… generally speaking would be the London Boroughs.’ And: ‘The allocation of funds across the needs of the London Boroughs should be managed by the LDA, responding to business cases from the Boroughs.’ (p86)

Anyone who knows the real world knows what that would mean: it means the Tory-controlled boroughs will slash their own, council tax-financed, spending on regeneration by the amount they receive from the LDA. Given that the LDA’s budget is well over £500 million a year then, after the Borough cuts, this means that total spending on economic development and regeneration in London will fall by many hundreds of millions of pounds a year.

Who will be the biggest losers from this slashing of economic development and regeneration in London?

First to lose will be London’s poorest communities as the Tory boroughs and LDA divert resources from community projects. The much trumpeted Mayor’s Fund will be a pittance in comparison. London’s communities will be told they should be sincerely grateful for a few million scraps from table while regeneration from the LDA that can help them will be cut by hundreds of millions of pounds.

But London as a whole will also lose. London is growing very rapidly. Its population is rising by around 40,000 a year. It is under strong pressure for investment in housing, the transport system, the environment. It is under strong new competitive pressure from Asian cities. London therefore requires massive investment, the exact opposite of the cutting of hundreds of millions that would result from Patience Wheatcroft’s scheme – which was endorsed on television by the new chief executive of the LDA.

If this goes through London will become a more scratchy, uncomfortable place with rising levels of deprivation. Costs will actually rise in London due to underinvestment. That is the inevitable result of the slashing of investment in London proposed by Patience Wheatcroft’s Report.

It is the worst proposal yet in the growing damage Boris Johnson’s administration is already doing to London.

Comments

  1. Give me a break. Ken Livingstone turned London into a third-world trash heap, an embarrassment of a city. Boris is just cleaning up the mess.

  2. I would add another point about the Rise Festival. Livingstone is right in bringing up the disgraceful fact that the anti-racism message was dropped.

    But in addition there is yet more news on the Rise event: The new administration may have found a way to avoid the same problem next time. How? Abandoning the festival entirely!

    I refer you to page 26 of the FAP report by Wheatcroft and co:

    Point 3.56 suggests that they could “generate substantial savings, particularly if entire events such as the Rise Festival were cancelled”.

    Hmm, I wonder if the Evening Standard will deem that worth printing?

    Andrew Gilligan would probably call it ‘nitpicking’, as he did in his 26/06/08 Standard column in response to the initial Rise Festival message dropping.

    All the problems Livingstone outlined should wake people up to the truth about this administration. But sadly, when you have the sheer might of the main London paper behind Boris, what hope is there?

  3. I would add another point about the Rise Festival. Livingstone is right in bringing up the disgraceful fact that the anti-racism message was dropped.

    But in addition there is yet more news on the Rise event: The new administration may have found a way to avoid the same problem next time. How? Abandoning the festival entirely!

    I refer you to page 26 of the FAP report by Wheatcroft and co:

    Point 3.56 suggests that they could “generate substantial savings, particularly if entire events such as the Rise Festival were cancelled”.

    Bad times.

  4. Michael William- “Ken Livingstone turned London into a third world trash heap”…?! what fetid blinkered corner have you been holed up in these pastr 8 years??!!! not even the likes of Boris and his team can claim such nonsense!

    All the indicators show -regardless of the evening standard’s campaign to oust the former mayor and discredit him as corrupt (so at the trough his snout was that he still caught the tube to work- compare that to your average tory councillor in london, many of whom would never ‘slum it’ with the rest of us)- that the lowest wages were up, streets were cleaner than for the last 20 or more years, etc…and london has grown as a world city, with the likes of the tour de france, olympics and all sorts of other world class world city events being attracted here- i came to this city for a year- and have been here nearly 6 now-much of that has been due to what London has become over the last 5 or more years.

    The London public were duped into thinking routemasters and ill advised slurs and comments by the previous mayor were reasons to throw the baby out with the bathwater! Livingstone, love him or hate him, fought the PPP on the tube, invested massively in public transport to get this city moving, introduced the tory-hated congestion charge (why arent they banishing that if it’s sooo bad?), introduced greener buses, made more moves than anyone else to clean up our air, tidy up the city, and generally make this place exactly the opposite of a ‘trash heap’?!.

    I wonder if mr Williams has ever left his blinkered world and visited a real ‘3rd world city’ where people live in cardboard cities on railway tracks, the air makes your eyes sting, and litter infests every pore of the city, not to mention the stray animals and traffic chaos. This has also been due to borough efforts, but much of it was championed by city hall.

    I myself now watch in disbelief as Boris dismantles anti racism festivals, introduces nanny state proposals on the sale of alcohol/banning tube drinking, and employs so many bad advisors that two have already quit! Londoners will learn the hard way over the next four years what a tragic and shameful mistake this has been- and of course he doesnt need to fund a london newspaper- he has his own ‘londoner’- times three- called the standard, the metro, and the lite (not to mention his own national audience in the telegraph column).

    But as long as we all get a cut of £20 per head on the mayor’s precept, it’ll be worth it eh?!

    Bad times indeed…

  5. For Boris’s “removal of anti-racism from the Rise Festival” read “removal of racism from the Rise Festival”.

    The only true anti-racism is that which refuses to exploit racial difference. These “anti-racists” not only feed on racial issues but thrive on making them a source of confrontation.

  6. The former Mayor’s comment calls for serious consideration and not invective. On the London Assembly, I voted against his measures more than any other Member so cannot be accused of being a supporter. And the former Mayor’s essential and most important point is (sadly) correct: I can scarcely say anything different because I was on record during the Mayor and Assembly campaign that irrespective of your view of the details and policies, Boris Johnson was promising big new costs countered by little other than what the former Mayor describes as “demagogic cuts”…tokenistic things which appeal to some but which themselves do not financially amount to much. One of the first things I called for when I was elected in 2004 was the scrapping of the Londoner, but it was clear to me even then that this tokenistic saving would have a zero impact on a £10 billion+ budget. The simple facts are that Londoners will in some ways have to bear these extra costs of the new Mayor when he has not truly specified real savings.

    The problem with the point about value for money is that government often “invests” in things which, unlike the travel agent, do not have a measurable return, and a type of questionable return is often then claimed. But with that caveat, the new administration is indeed showing a lack of grasp (and vision). And in fact the points that the former Mayor makes really reflect this lack of clear vision as to what the new Mayor wants to actually do in London. He appears to be rattling around like a pinball at City Hall bouncing from one costly peg to another – the key will be in the Budget and Toby Hall should keep his hand on his ha’penny on that £20 cut in the Mayoral precept. Not long now. The way things are going the new Mayor has as much chance of succeeding in this endeavour as the proverbial one armed blind man in a dark room trying to shove a pound of melting butter into a wildcat’s left ear with a red hot needle.

  7. Why is anyone surprised at this latest report by these un-elected Tory supporters?
    I can sum it up in much less pages – giving Londoners true Value for money:

    “Cut the projects that benefit the poor because we can get away with it – then divert the saved money to our friends in the private sector to ensure we all get places on the board when we’re done wrecking London and we’re found out by the electorate”

    Look on the bright side – at least this is a good test run for how a Tory government would work. It’s a shame that the poorest Londoners will suffer, but at least it should prevent a tory win in the national election. David Cameron must have his head in his hands.

    One thing I would say is that Ken’s piece does show how difficult it is to run the London budget, so many things to consider, and a cut in one place may create massive waste in another.

    I’m still confused how giving into Porsche and paying their legal costs represents ‘value for money’. The case would never have been won by Porsche in a million years and yet Boris decided to walk away from it. Quite a bizarre decision don’t you think? Maybe we’ll see Boris stop using his bike and start driving a donated Porsche to work in the future.

    Finally – on the appointment of ‘bad choices’, well if Ken wants to admit his choice of Lee Jasper was bad (although I’m yet to be convinced) – it’s one bad appointment in about 10 years. Boris made 3 in the first month! – now that’s progress for you…..

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