Taking Londoners, and Labour voters in London, for granted in a big effort to secure ‘Red Wall’ areas less loyal to the party looks like a ploy straight out of the Morgan McSweeney playbook.
By WALTER CRONXITE, Political Editor
Empty-handed: Chancellor Rachel Reeves had not much to offer for London or beleaguered local councils
The Spending Review delivered by Chancellor Rachel Reeves this week left the capital, and many of the country’s financially embarrassed local authorities, empty-handed, as the Labour government funnelled most of its spending towards those “Red Wall” seats in the Midlands, North and in Wales that are thought to be under threat from Nigel Farage and his rag-tag party of chancers.
Wednesday’s speech was a review of the budgets for government departments for the next three years that appeared to be less the work of Treasury economists, and more like something straight out of the Morgan McSweeney political playbook.
Overall, Reeves announced that departmental budgets will grow by 2.3% a year – a more modest sum compared to 3.8% annually at the 2021 spending review under Boris Johnson’s Conservative government.
There was a record boost for the NHS, amounting to an extra £29billion a year, as well as some extra funds for policing and prisons.
There was some funding for London, but nowhere near enough for a city that is the engine of the national economy, and Mayor Sir Sadiq Khan, the day after his investiture as a knight with King Charles at Buck House, must have felt bitterly let down by his own party.
Large-scale housing schemes at Beckton Riverside and Thamesmead Waterfront in east and south-east London, with 15,000 homes proposed on each side of the Thames, and Docklands Light Railway and Bakerloo line extensions intended to drive economic growth got not a penny from Reeves.
Missed opportunity: the 100 hectares of the Thamesmead Waterfront site, with a DLR extension, could deliver 15,000 homes. Chancellor Reeves ignored it
Transport for London got a £2.2billion funding package over four years to fund its capital renewal programme, and so provide some certainty over that period instead of the annual panic and scramble with once-a-year funding announcements.
But there were other, serious omissions, according to Mayor Sir Sadiq.
While welcoming the multi-year settlements for TfL and City Hall, the Mayor of London said: “I remain concerned that this Spending Review could result in insufficient funding for the Met and fewer police officers.
“It’s also disappointing that there is no commitment today from the Treasury to invest in the new infrastructure London needs. Projects such as extending the Docklands Light Railway not only deliver economic growth across the country, but also tens of thousands of new affordable homes and jobs for Londoners.
Let down by Labour: London Mayor Sir Sadiq Khan
“Unless the government invests in infrastructure like this in our capital, we will not be able to build the numbers of new affordable homes Londoners need.”
Following years of neglect of London by Tory governments, yesterday’s Spending Review was a kick in the teeth for Labour-supporting Londoners, who had been promised a revised relationship with government.
“The way to level up other regions will never be to level down London,” the Mayor said.
The Spending Review was allocating budgets to government departments for a three-year period from 2026-2027 to the end of this current Parliament, the “tricky second album” part of her financial planning following Reeves’ debut Budget last autumn.
But Robotic Reeves’ Budget did more than simply redress some of the issues inherited after 15 years of Tory-led governments. Its relentlessly down-beat tone sucked confidence from an already struggling economy in the middle of a global “permacrisis”. And this was before President Trump started meddling with world trade over tariffs.
Reeves needed to jolly things along a little, with a hastily assembled package of pro-growth announcements, and some re-announcements, intended to inject some positivity into the country. Except for London.
So while Cardiff and West Yorkshire get new trams systems, as part of last week’s £15billion package of transport infrastructure, London’s left waiting.
“What I found striking are the similarities between the political messaging over the past few days with what we heard from Tory ministers in the last government,” Nick Bowes, a former policy director for Mayor Khan at City Hall, said last week.
Side-tracked: plans for DLR extensions and the Bakerloo line extension did not get a metion from Reeves
“Deliberately making a virtue out of directing funding to areas away from London, referring to investment in the ‘regions’ – as if Greater London is somehow not a region…
“Now, I don’t begrudge for one moment Leeds getting a new tram. It is long overdue,” Bowes said, adding the “but”, describing this denial of significant new funding for London as “bad news for London and arguably for the country too”.
Bowes said: “Whether we like it or not, the capital is the driver of the country’s economy and without the tax income it generates, funding for many of the things announced this week wouldn’t be possible. But that tax income can’t be assumed – London needs to prosper, be an attractive place to live, work and run a business. Standing still means going backwards.”
Bowes suggested that Keir Starmer’s Labour government is “to take London for granted – that ‘the city votes Labour and will continue to do so, so we can focus our attention elsewhere’… That’s a dangerous strategy and one which the Conservatives – but perhaps more so the LibDems, Reform and Greens – will exploit to the max at next year’s borough elections.”
North-South divide: this mapping of the major schemes approved by the government illustrates graphically how London and the south-east is being starved of investment
Labour’s polling figures in London were already markedly down on the high tide mark of last July’s General Election figures, when here in Croydon, thousands of Labour voters in constituencies such as Croydon East just didn’t bother to vote.
Chancellor Reeves did confirm £39billion for social and affordable housing during this Parliament, something which councils across the country have long called for, as they daily face rising demand to provide suitable accommodation.
The details of how, or where, this money is likely to be spent have not yet been released.
There was no cash for the Bakerloo line extension to Lewisham (which perhaps might then run on to Beckenham Junction). The Tube line operates the oldest trains in regular service in Britain; the extension, like Thamesmead and Beckton DLR schemes, has been proposed to drive business and housing developments in south-east London, at an estimated cost of £8billion. Reeves made no mention of the Bakerloo line extension in her review.
Brenda Dacres, Lewisham’s elected mayor, told The Greenwich Wire: “The government’s spending review brought welcome news in terms of funding for affordable and social housing… We welcome the multi-year funding settlement for Transport for London, which will provide more certainty for the capital.
“However, we had hoped to see a direct reference to the Bakerloo line upgrade and extension… The case for the Bakerloo line upgrade and extension is clear: it’s a transformative infrastructure programme whose benefits will not only be felt by Londoners using the line, but across the country — unlocking over 100,000 new homes, supporting 150,000 jobs, and injecting £1.5billion per year into the national economy.
“The project would pay for itself within just a few years.”
Such benefits have been ignored in favour of the kind of political expediency which has the fingerprints all over it of McSweeney, Steve Reed’s former shadowy council gofer at Brixton Town Hall, now Keir Starmer’s chief of staff in Downing Street.
Winners and losers: how Chancellor Reeves has divvied up the departmental budgets
And there was virtually no mention for hard-pressed local councils, such as Croydon, where the MHCLG was getting ready, as Reeves was at the Despatch Box, to call an end to five years of failed efforts to drag itself from a ever-deepening hole of debt.
Like Gideon Osborne before her, Reeves as Chancellor has opted to pay for her spending plans by squeezing ever more Council Tax from residents, passing the buck for tax increases to local councils across the country.
Darren Jones, the Chief Secretary to the Treasury, was quick to say that councils don’t have to increase their Council Tax each April, but he knows full well that he and his boss, Reeves, have given them no alternative. So it will be a 5% Council Tax increase across the board for most, if not all, local authorities in April 2026 – just ahead of local elections.
Passing the buck: Chancellor Reeves and Darren Jones (front bench, right) want local councils to increase Council Tax by 5% next April
Jones’s posturing while doing the media rounds was disingenuous in the extreme. He knew that documents in the Spending Review assume councils would increase their local taxes by the maximum allowed.
The review has allocated a 1.1% increase in grant funding to local government, but also said total spending power for councils would rise by 2.6%.
Veteran capital commentator Robert Gordon Clark, from London lobbyists LCA (who used to be called the London Communications Agency), in their newsletter this week described Reeves’ Spending Review as “a defining moment for London”.
“London is now in real and present danger of experiencing a period of significant, managed decline,” said Gordon Clark.
“Managed decline”? Remember that, straight out of the Thatcher era, when the Tory Prime Minister sent Michael Heseltine off to “manage decline” in Liverpool. It’s not a good thing.
Gordon Clark’s assessment continued: “Yes, we can look forward to some upgrades to the current Tube network. But housing delivery remains stubbornly low; the police are not happy with their settlement; and none of the three shovel-ready transport infrastructure projects have been funded.
“So, the thought of London going back to the days of the 1970s and early ’80s, when the population declined as Londoners left the city in frustration at poor education and housing, is one none of us care to contemplate, or in my aged case, witness again.”
Andrew Fisher’s latest podcast interview guest is economics professor Jo Michell, who discusses Rachel Reeves’ Spending Review. The Andrew Fisher Interview is premium content, exclusive to paying subscribers who support Inside Croydon’s independent journalism, and also available to purchase on our Spotify channel- To listen all our podcast episodes, including Under The Flyover interviews and Croydon Insider discussion shows, visit out Spotify page by clicking here
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