London mayor takes pay cut over virus funding cut fears

LONDON: London's mayor announced Wednesday he will take a 10 percent pay cut due to a budget crisis caused by the coronavirus outbreak, as he urged the government to help Britain's stretched local authorities.

Sadiq Khan said the capital faces a budget shortfall of nearly £500 million ($628 million, 560 million euros) over the next two years because of an "unprecedented" income loss from the crisis.

The Labour mayor warned he could make cuts to police, fire and transport services without additional funding from the government, which he accused of risking "a new era of austerity".

"COVID-19 has had a devastating impact on London's public finances," he said in a statement, warning many local authorities across the country were in a similar position.

"I will do everything in my power to persuade ministers not to force another era of austerity on local and regional government.

"It's only right that I should volunteer for an immediate pay cut in these extremely difficult circumstances."

As well as taking a cut on his £152,734-a-year salary, Khan said he would freeze the wages of his 15 direct appointments given the £493-million budget shortfall forecast.

Like most local authorities, the directly elected London mayor -- created in 2000 as part of local governance reforms -- is funded through government grants and income from sources such as transport fares.

'Return to austerity'

Funding for them from the British government has fallen dramatically over the last decade under the so-called austerity policies of the ruling Conservatives brought in after the 2008 global financial crash.

Prime Minister Boris Johnson's government says it has boosted their finances during the pandemic, but is facing its own mounting bill for various emergency virus response policies for workers.

Meanwhile, the government is facing unprecedented falls in revenues due to the nationwide lockdown introduced in late March and now being gradually eased.

Britain's economy has crashed spectacularly, shrinking by one-fifth in size during April as unemployment has surged and it heads into recession.

The Organization for Economic Cooperation and Development last week predicted the UK economy was on course to shrink by more than 11 percent in 2020 because of COVID-19.

Amid the grim economic picture, other regional and local leaders have echoed Khan's call for extra funding to cope.

The devolved government in Scotland, which was given tax-raising powers when it was created in the late 1990s, warned this month of a possible "return to austerity".

It wants increased borrowing powers, allowing it to take on debt, to fund its COVID-19 response.