Chancellor accused of 'short sighted' cuts and 'damaging anti London agenda' amid fears no extra cash for capital

10 June 2025, 11:00 | Updated: 10 June 2025, 15:49

By Natasha Clark

@NatashaC

London politicians have hit out at claims the Chancellor's not going to announce any extra cash for the Capital in tomorrow's spending review.

Sources close to City Hall have told LBC they fear Rachel Reeves is "pitting London against other regions" and it will send a "hugely negative message to business and investors" if she prioritises spending outside of the capital.

In a major row between the London Mayor, and Treasury, insiders fear there will be no new projects or funding announced for London in the big announcement on Wednesday.

It's understood there were asks for more money for the Met Police, for funding for the Bakerloo line extension, and improvements to the DLR too - but the Treasury is not expected to give these the green light.

The Treasury refused to comment on speculation, but said that it would deliver economic growth for London and all parts of the country.

City Hall also fear that some English regions, including London, will lose money to support local economic growth and tackle poverty such as the UK Shared Prosperity Fund, Growth Hub Funding and the Levelling-Up Fund.

That funds high streets improvements, support for small businesses, and promoting British companies and products abroad.

The Chancellor's expected to prioritise defence and the NHS at tomorrow's statement - but that will come at the expense of other areas of government.

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Last week the Chancellor revealed plans to rip up the Treasury rules to plough more money into Midlands and the North, with £100bn of major infrastructure spending expected.

A source close to the Mayor accused ministers of a "damaging and misleading anti-London agenda", adding: “The truth is that public expenditure per journey is less in London than the rest of the country."

They said: "If the Treasury go ahead with this cut it would be incredibly short-sighted. They say they want economic growth but their actions in failing to invest in new infrastructure in the capital and cutting local growth funds will actually damage our economy, not improve it.

"They say they want regional mayors to be the drivers of growth but then remove their levers to achieve growth.

"London contributes hugely to the Treasury in tax revenues and could deliver even more with the right support. These funds have been incredibly effective in the past, and cutting them will cost jobs, damage the capital as well as other towns and cities, and cut tax revenue."

They also warned that if the capital is ignored, it will "make it impossible for ministers to meet their national housing targets and damage the nation’s prospects of returning to growth."

They said: "If ministers continue to get taken in by a damaging and misleading anti-London agenda it won’t just be the capital that suffers, but the whole of the country.

“It sends a hugely negative message to businesses and investors.”

Insiders say that public expenditure per journey is less in London than the rest of the country, and child poverty is higher than almost any other region.

Politicians have told LBC that they fear the implications for London of diverting funds out of the capital.

Former London minister Paul Scully told LBC: "Labour MPs must be tearing their hair out about the lack of attention that this government is giving London.

"London feels like it's just been degraded or downgraded over the last few years.

"I don't need to tell you about what happens if you don't get Met Police funding - the pressure that they are on for their police officers, having people on the ground and their estate is absolutely colossal.

"It's important that London continues to thrive, because when people looking to invest, if people are looking to come as tourists, they always see London first as the UK and then they go around the country. 50% of tourism spend is all within the M25.

"We cannot afford our health care to be downgraded. We cannot afford to feel more and more unsafe on the streets."

Tory MP David Simmonds, who represents Ruislip, Northwood & Pinner, added: "London is the engine of the national economy and it contributes a huge amount to the public finances across the country.

"So it's very concerning to hear that this is very poor for the capital.

"We know that there is a need for investment in public transport, that law and order on our streets is under pressure. It's taken huge amounts of pressure from police forces across the country to see any increase at all in police budgets.

"So the big concern we have to have here is that we end up with a situation where those critical public services are net worth worse off.

"We've already seen that happening with councils that have less money to spend on day to day services as a result of those tax rises. And we don't want to see that impacting on the ability of the police to keep the streets of London safe and to contribute to the work that they do across the whole country on things like anti terrorism, because that is also important in an increasingly unstable world."

And Lib Dem MP, Bobby Dean, who represents Carshalton and Wallington, said: "Sadiq Khan told us in the last election that with a Labour mayor working with a Labour government, he'll get everything he needs, and that's obviously not proven to be true.

"It sounds like the spending review is going to be bad news for London.

"It's bad news for the Met police, who look like they're going to have to cut officers. It's bad news for Transport For London because it looks like some of the major infrastructure projects are not going to come through.

"And it's also bad news for all our borough councils, who are not going to get the spending settlements they need.

"I don't understand why the government wants to pit the regions in this country against each other. What's good for London is good for the rest of the country.

"The average Londoner, once you take into account housing costs now, is actually worse off than the average person across most regions in the country, we have inequity in London that needs tackling as well.

"I think the government might be getting it wrong here. I hope they're not going to pursue this sort of anti London agenda like we saw in the previous term by the previous government.

"We need to make sure that we drive growth all across the country and tackle disadvantage all across the country as well."

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But other MPs insisted they were hopeful that the Chancellor would deliver help for London, and would not be left empty-handed.

Rachel Blake, the Labour MP for Cities and Westminster, said: "I'm hopeful that we secure a really great funding settlement for London around the Bakerloo extension and the DLR as well.

"If you look at our really positive story of transport for London here, I think we are a really great example of the importance of investing in public transport, and I'm pleased to see the investments that have happened outside London."

On concerns that the capital will be ignored, she said: "I really don't think that's what we're seeing at all. I don't think we're seeing places set against each other. I think what we're seeing is an important recognition of regional transport investment.

"And when you support London, the whole of the UK succeeds in the same way. When you start to tackle some of the ingrained ongoing regional inequalities, I think we'll see benefits in the whole of the UK too. I will always do my best to stand up for London."

A Treasury spokesperson said: “We know the success of the London transport network is critical for both the capital and the UK’s economy, which is why during the Budget the Chancellor announced TfL would receive nearly £500 million in additional funding.

“This week’s Spending Review will deliver economic growth for London and all parts of the country, driven by investment and focused on the priorities of working people, putting more money in their pockets.”