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London faces tough choices amidst COVID-19 budget cuts

London Mayor Sadiq Khan has come forward with a number of proposals on cuts that would save the city some 500 million pounds

  • July 01, 2020 11:30
  • Author Anton Stoyanov
Medium sadiq khan
Source: The London Conference 2019 (CC BY-ND 2.0)

The aftereffects of the COVID-19 pandemic are already being keenly felt by governments around the world. Throughout the pandemic, officials were scrambling to provide funding for many sectors and services in order to keep them afloat – but now, with the lifting of restrictions authorities are faced with yet another problem – namely stabilizing their already strained budgets and making them resilient to a potential 2nd wave of the disease.

The pressure is even more present in the United Kingdom, where the central government’s mishandling of the crisis forced many local authorities to take extra steps to protect their respective populations.

London under strain

The costs of COVID-19 have been especially high in the country’s capital of London, where authorities are forced to come up with some 500 million pounds in savings over the next few years in order to compensate for the losses incurred due to the pandemic, should central authorities fail to provide an adequate financial cushion.

Current worst-case estimates put the net loss in revenue for London authorities at 7% in council tax and 11% in business rates income by March 2022. That means that should there be no financial support provided by the UK’s central government, the capital will have to cut the budgets of many of its departments including The Greater London Authority, the London Fire Commissioner, the London Legacy Development Corporation, the Mayor’s Office for Policing and Crime (including the Metropolitan Police Service), the Old Oak and Park Royal Development Corporation and Transport for London. 

The Met Police and the Fire Department will go through the least amount of cuts due to their essential role in keeping the city safe, but the other organisations will be severely hampered for years to come should the need for massive budget-slashing arise.

“The GLA Group could lose £493 million of business rates and council tax income over the next two years which would require significant cuts across the board. While I have prudently put aside significant sums to meet unexpected risks, the scale of the challenge is far beyond anything that any local or regional authority could have prepared for.

I will do everything I possibly can to support the vital services that Londoners rely upon. That is why I have already proposed to save £55m by relocating City Hall and am taking a 10 per cent pay cut in solidarity with frontline workers and all those affected by the pandemic.”, stated London Mayor Sadiq Khan.

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