London leaders are bracing for cuts in the Chancellor’s Spending Review amid fears the capital is set to be snubbed in favour of funding other UK areas.
Sir Sadiq Khan is said to be furious that the city is likely to be one of the biggest losers when Rachel Reeves unveils her public spending plans on Wednesday.
The Chancellor is reportedly preparing to remove London’s allocation from Britain’s Shared Prosperity Fund after next year.
The pot of cash was started to support economic development in place of EU structural funds following Brexit.
It was designed to help communities and people access opportunity in places in need, such as ex-industrial and deprived areas.
For the three-year period from 2022–25, Greater London was allocated over £144m. This year the capital was granted just under £63m from the fund.
But City Hall speculates that London’s share will be cut to zero as part of the Treasury budget savings.
Sir Sadiq’s pleas to introduce a tourist tax for visitors to the city are also thought to have been rejected, however those changes would be likely to take effect at a budget rather than a spending review.
Many countries in Europe including Greece, Spain, and Germany have introduced city taxes, which are used to combat over tourism and help pay for services.
Manchester introduced its City Visitor Charge in April 2023 and tourists pay a £1 per hotel room, per night charge if staying in paid accommodation in the city’s Business Improvement District.
The tax helps fund street cleaning, marketing, and event support.
City Hall has put a number of proposals to ministers that need funding. They include money for a new fleet of Bakerloo trains and to extend the line as well as upgrades to the Piccadilly line, the DLR extension to Thamesmead and improvements to South Kensington tube station.
London councils, which are collectively estimating a £500m budget shortfall this year, have also asked for money to cover rising temporary accommodation costs and to help build new homes.
Met Police commissioner Sir Mark Rowley has been publicly lobbying the Chancellor for more money amid suggestions that the Home Office is set to face cuts.
He was among six UK police chiefs who warned that without more investment the government will fail to meet its target to bring down crime.
A source close to Sir Sadiq said that ministers "must not return to the damaging, anti-London approach of the last government".
They added: "Sadiq will always stand up for London and has been clear it would be unacceptable if there are no major infrastructure projects for London announced in the spending review and the Met doesn't get the funding it needs.”
