London Mayor Sadiq Khan at Odds with Treasury Over Funding in Spending Review

Strategic Insights -

A row has broken out between Mayor Sadiq Khan and Chancellor Rachel Reeves over funding in the upcoming spending review, with Khan's supporters claiming he is being short-changed. The mayor has been seeking funding to extend the Bakerloo line and for a £1bn project to expand the Docklands Light Railway, but it appears these demands will not be met by central government. Khan is also concerned that London might lose out on economic growth funds, such as the Shared Prosperity Fund and Levelling-Up Fund, which could have a significant impact on the city's economy.

Key Takeaways:

  • Sadiq Khan is seeking funding to extend the Bakerloo line and expand the Docklands Light Railway, but is not confident that these demands will be met by central government.
  • The mayor is concerned that London might lose out on economic growth funds, such as the Shared Prosperity Fund and Levelling-Up Fund, which could damage the city's economy.
  • Three senior council figures outside of London have said the future of the Shared Prosperity Fund is uncertain, and the £2.6bn pot of cash is set to be extended by Labour until next March.
  • The Treasury has declined to respond to Khan's claims, but a government aide has described the criticism as "nonsense", stating that London's settlement remains one of the most generous in the country.
  • The spending review will include £1.4bn for transport projects in regional cities, but London's funding is uncertain.
  • Research by the IPPR thinktank has found that London had received £1,183 per person per year of transport spending over the decade to 2022-23, twice as much as the English average and three times more than the East Midlands.

Statistics:

  • £1bn: The proposed funding for the expansion of the Docklands Light Railway
  • $2.6bn: The Shared Prosperity Fund, which is a pot of cash set up by the Conservatives in 2022 to replace EU structural funding
  • £1,183: The amount of transport spending per person per year in London over the decade to 2022-23, according to the IPPR thinktank
  • £1.4bn: The amount of funding included in the spending review for transport projects in regional cities
  • £1,183: The English average of transport spending per person per year over the decade to 2022-23, according to the IPPR thinktank
  • £465: The East Midlands average of transport spending per person per year over the decade to 2022-23, according to the IPPR thinktank

Sources:

  • The Financial Times, February 2023: "Sadiq Khan seeks funding to extend Bakerloo line and expand Docklands Light Railway"
  • The Times, 2023: "Khan's settlement remains one of the most generous of any mayor across the country"
  • IPPR, 2023: "Transport spending per person per year in London, England and the East Midlands"
  • The Guardian, 2023: "Rachel Reeves unveils £15.6bn investment for transport projects in regional cities"
  • Treasury official, 2023: "The government has already given London support for the expansions of Gatwick, Luton and City airports as well as backing for a third runway at Heathrow."