Challenging times for London supremo

By Gavin Stamp
Business reporter, BBC News

Boris Johnson's record of financial management remains unproven

When he starts work in his new job on Monday, London's new mayor Boris Johnson will go from worrying about poll numbers to an altogether different but equally nerve-wracking set of figures.

These are the sums that will go a long way towards defining whether the next four years are seen as a success or a failure for the capital.

Topping them all is the £16bn that is due to be spent on Crossrail, the east-west rail link construction which will get under way in 2010.

Responsibility for the management and delivery of this huge scheme rests with the mayor. Scrutiny of how it is progressing and how costs are being controlled will be intense.

Olympic dream

Only slightly smaller, but equally momentous, is the £9.3bn cost of the 2012 Olympics, the countdown to which begins in earnest in August.

The mayor will be a figurehead for the Games in the crucial preparatory phase.

He will be held accountable for ensuring that London's much-criticised transport network can cope with the unprecedented demands put on it by the event.

He will also be expected to help guarantee the dream of a large and sustainable legacy from 2012, boosting everything from employment opportunities to sporting facilities.

The new mayor is going to have his work cut out Rita Beckwith, chairman, Docklands Business Club

Then there is the much smaller but politically potent sum of £252m, the amount paid by drivers in congestion charge payments last year.

The eventual fate of the new plan to charge so-called "gas guzzlers" £25 a day, which is subject to a legal challenge by carmaker Porsche, remains unclear.

But what is clear is that Ken Livingstone's signature policy and plans for its future extension or contraction are likely to dominate debate throughout the next four years.

The 2008 election was the most bruising yet and there is little doubt that the winner will face a far tougher period in office than has been the case since 2000.

Economic clouds

In addition to the real pressures of 2012 and Crossrail, the economic environment is far less favourable now and this could mean problems for the new incumbent.

As an economic powerhouse and global brand name, London has been a unreserved success in the past 20 years.

Its growth has been so dynamic that it now accounts for about a fifth of the UK's total GDP and 15% of all its jobs.

The City has been the cornerstone of this growth, with more than half a million jobs being created in financial services since the mid 1990s.

London has eclipsed New York as the preferred destination for companies wishing to raise capital by listing their shares. The City now generates annual export earnings of £24bn.

Transport will top the mayor's agenda

But London's pre-eminence as an international financial capital, with more than 30% of its jobs depending on banking and business services, makes it particularly vulnerable to the current global credit crunch.

Some estimates have put likely City job losses in the next 18 months as high as 20,000, although the ultimate figure may be much lower than this.

Although the mayor has no influence over how companies hire and fire people, bloodletting on such a scale would create a grim backdrop to his efforts to bang the drum for investment from around the world.

City leaders will be looking to the mayor to keep his nerve and stand up for London, in what could be a difficult period for London's flagship industry.

"We will get on with whatever mayor has the right policies for London," says Stuart Fraser, chairman of the policy and resources committee at the City of London Corporation.

"What we are looking for is someone who can lobby on behalf of London, especially for infrastructure.

"We also need a mayor who can fight for London to have a fair share of the nation's resources."

Investment priorities

An economic downturn will obviously reduce economic growth, crimp tax receipts and put pressure on spending levels in key areas of the mayor's budget, such as transport, housing and skills development.

Balancing investment priorities will be a major challenge for the mayor, since nervous businesses are now looking for reassurance and assistance in equal measure.

"There is a lot of work to be done in a few short years," says Rita Beckwith, managing director of City Cruises, which has been running sightseeing and leisure cruises on the Thames for more than 20 years.

"The new mayor is going to have his work cut out."

As chairman of the Docklands Business Club, which represents more than 500 businesses in east London, Ms Beckwith applauds the progress made in regenerating swathes of the city and spreading the benefits of tourism more widely.

But she warns that small and medium-sized firms feel unrepresented and need to be "given a voice" in decision-making at a time when the cost of doing business is biting hard.

Ken Livingstone campaigned to stay in business for another four years

"Policies have been introduced in London without a thought about the knock-on effect on what you are supposed to do next," she says.

Citing the high cost of office space, poor signposting of stations and visitor attractions and chronic Tube overcrowding, she says the Mayor must work much more constructively with central government and local councils if key challenges are to be met.

These working relationships could be all the more unpredictable should Thursday's "mid-term" elections and 2010's expected general election redraw the UK's political map.

"I think there needs to be a fundamental change to ensure more money comes into London to affect the changes that are necessary," Rita Beckwith adds.

"The mayor has started to do something really good work in skills, but there has to be far greater effort in the future. If we don't upskill people, particularly in east London, we can't take advantage of what is going to happen at the Olympics."

Delivering investment pledges on Tube modernisation and on the provision of new and affordable housing will be crucial to the Mayor's programme over the next four years.

Personal questions

In addition to these policy challenges, personal imponderables remain.

Boris Johnson's record of financial stewardship is untested and his ability to juggle the complex and competing demands of a large administrative machine like London remains unproven.

Mr Johnson may find it difficult to resist calls for major reform of the under-fire London Development Agency, the body responsible for promoting economic development and allocating Whitehall funds for regeneration, skills and innovation schemes.

Despite being described as the most "powerful" directly-elected official in the land, the new mayor may find that his honeymoon period is even shorter than normal this time around.