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.
