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The move would save the GLA Group £55m over five years and would help the Mayor both to protect front-line services as much as possible from cuts and to invest in jobs, skills provision and other initiatives to aid the economic recovery from Covid-19.
Last week, the Mayor revealed that unless the Government properly invests in London’s economic recovery and provides the necessary financial support, the GLA Group will suffer an unprecedented financial emergency as a result of the Covid-19 crisis – just like other local and regional authorities across the country.
Sadiq also declared last week that he would be taking a personal pay cut of 10 per cent, to be reviewed after six months, in solidarity with frontline workers and all those affected by the pandemic. This comes on top of the 11 per cent saving to taxpayers arising from the Mayor’s decision in 2016 not to take a pension, unlike his predecessors.
Overall, the GLA Group faces a budget shortfall of up to £493 million over the next two years due to an unprecedented loss, because of Covid-19, of business rates and council tax income, with losses expected to continue in future years. Sadiq has warned that this will mean significant cuts across the entire GLA Group – including to public transport, the Metropolitan Police Service and the London Fire Brigade – which could hugely hamper the economic recovery effort and risk Londoners’ safety.
Against this backdrop, the Mayor is committed to protecting and investing in the things that matter most to Londoners. He wants to focus his potentially severely limited budget resources on front-line public services and supporting the economic recovery, rather than on high City Hall building costs.
The lease for the City Hall building was granted in 2001 for 25 years, but it allows for a ‘break’ in the contract after 20 years, in December 2021 – the first and only chance the GLA has to consider leaving.
Notice has to be given this year and a decision is needed by September so there is time to plan and carry out the move.
The City Hall building currently costs the GLA £11.1m a year in rent to private landlords Kuwaiti-owned St Martin’s, service charges and rates.
The Mayor believes this is above the market rent (even before the impact of Covid-19) and the contract in place means that this figure is due to rise even further – to £12.6m per year beyond Christmas 2021. By contrast, The Crystal is already owned by the GLA and its “outstanding” rating for environmental sustainability means its running costs will be lower than the current City Hall.
The GLA moved into the current City Hall building in 2002 as part of the regeneration of the More London area near London Bridge. With this regeneration work now complete, moving the seat of London’s government to the Royal Docks could have a similar impact on a much larger regeneration project in East London, which is set to lead to 25,000 new homes and the creation of 60,000 new jobs within the next 20 years, supported by the arrival of the Elizabeth line.
The Mayor will now begin a formal consultation on this proposal with the London Assembly, UNISON, PCS, the Chairs of GLA and Mayor’s Office for Policing and Crime (MOPAC) staff networks, and all GLA and MOPAC staff. These consultations will last for six weeks.