London

Ministers criticise mayor Boris Johnson over £111m fund

Boris Johnson
Image caption Mayor Boris Johnson said the money had to be spent with care

Two government ministers have expressed "serious concern" at the slow progress being made by London's mayor to help the capital's economy.

Business minister Michael Fallon and housing minister Mark Prisk wrote to City Hall outlining their concerns over the mayor's failure to spend £111m.

The money was given by Whitehall to the mayor a year ago to invest in infrastructure and other projects.

City Hall said the criticism was a "panicky response".

Boris Johnson's officials said he was not prepared to "water-cannon" money at schemes without being sure they would bring benefit.

The disagreement is revealed in an exchange of letters between the ministers and the co-chairmen of the London Enterprise Panel (LEP), deputy mayor Kit Malthouse and Harvey McGrath.

On 14 February, Mr Fallon and Mr Prisk wrote to City Hall saying: "There is now serious concern around the pace of progress by the LEP in London.

"We appreciate that the LEP started later than most due to a number of factors and its function is different from other LEPs (advisory rather than decision-making).

"It is important however that, as other LEPs are doing, the panel starts to have an impact on growth through the allocation of Growing Places Fund and by publication of a clear set of priorities and action which will support these."

The ministers have demanded the mayor produce a "growth plan" for the capital by April.

'Panicky response'

But in a terse letter in response, the LEP chairmen reject the criticism.

"Londoners will want to see lasting benefits from very considerable sums we are investing and due diligence is therefore vital.

"We are sure you will accept that it is not a good Conservative habit to water cannon money at ill-defined targets without proper control.

"Indeed, cries of haste from Whitehall ministries could be misread as a panicky response to a more general perception that failure of the Coalition's macroeconomic policy is failing to deliver growth.

"Serious and successful growth policy requires serious scrutiny of public funds."

The government set up LEPs across the country to replace regional development agencies.

They are intended to be business-led panels, divorced from local authorities and well-placed to decide where government funds should best be invested.

Mr Johnson insisted on one London-wide partnership rather than several for the capital.

But the London LEP was considerably delayed, lagging behind other regions, meaning City Hall investment in measures to aid the economy have stalled.

'More positive'

City Hall say this was because of the Olympics and the mayoral election when Mr Johnson won a second term promising to make the capital's economy a priority.

The London panel says it will focus on helping small and medium businesses, the science and technology sector and transport infrastructure, however so far no money has been released and it has failed to provide a "standard return" to the government.

The letter to ministers shows less than half of the £111m has been allocated for projects, including £37m for transport.

City Hall says it has a firm intention so far to buy a former pharmaceutical factory in Dagenham, help London's film industry and invest in broadband technology.

In their letter to ministers his officials say: " We are very aware of the relatively small size of the resources available to us to influence this huge global city economy, and therefore absolutely determined to ensure that the Growing Places Fund (GPF) and any other public resources allocated to us are deployed in the most effective way.

"Whilst recent years have been challenging for London, the economic forecasts for the capital remain more positive than the rest of the UK. "

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