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Sadiq Khan is planning to move the Greater London Authority and mayor’s office out of City Hall and into Docklands in a bid to plug some of a near-£500 million gap left in the capital’s finances by the coronavirus crisis.

The London mayor has launched a six-week consultation on moving the home of the capital’s government to a GLA-owned building in east London’s Royal Docks with an estimated saving of £55 million over five years to be redirected to frontline services.

Mr Khan has warned that, along with local authorities across the country, the GLA faces an “unprecedented” financial emergency as a result of the loss of income from business rates and council tax during the Covid pandemic. He has appealed for government to step in and help the authority with a budget shortfall of up to £493m over two years and has taken a personal pay cut of 10 per cent.

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The iconic ball-shaped City Hall building on the south bank of the Thames – branded the “glass testicle” by London’s first elected mayor Ken Livingstone – currently costs the GLA £11.1m a year in rent, service charges and rates, a figure the mayor has branded “above the market rent”. The figure is due to rise further to £12.6m in 2022.

The contract with Kuwaiti-owned property firm St Martin’s was negotiated by central government in 2001 and later assigned to the GLA, which moved into the building in a regeneration area around London Bridge the following year.

The 25-year lease allows a single opportunity for a “break” in the contract after 20 years, which comes due in December 2021. A decision is needed this year to provide time to plan and execute the move.

Meanwhile the GLA-owned Crystal building in Royal Docks is currently lying almost empty after original owners Siemens moved out last year. Built as an exemplar of environmentally sustainable design, The Crystal is expected to have considerably lower running costs, said the mayor’s office.

Mr Khan, who was announcing the plan to City Hall staff this morning, said: “My first priority will always be to protect funding for frontline services, including public transport, the Met Police and the London Fire Brigade. That’s why I’m consulting on plans for the GLA to leave the current City Hall building next year and relocate to The Crystal at the Royal Docks in Newham.

“In normal times, it would be standard practice for any mayor to consider utilising the lease ‘break’ clause on the City Hall building that becomes possible this year, and to view it as an opportunity to ensure Londoners were getting the best value for money. In the current financial context, and with the looming black hole in London’s public finances, it would be negligent not to do so.

“Leaving our current home would save £55 million over five years, which would help us to protect and invest in the things that matter most to Londoners, as well as supporting the regeneration of the Royal Docks.

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“The Crystal is a highly sustainable building on the site of London’s most ambitious regeneration project, where the GLA and Newham Council are working together to create a new commercial district and visitor destination with thousands of new homes and jobs.”

Newham mayor Rokhsana Fiaz said she was “delighted” at the proposed move, which she said would help drive a major renovation project designed to create a new business district and bring jobs and housing to the former dock area.

If the move goes ahead, the mayor and London Assembly will be based at The Crystal, renamed as City Hall. The GLA will also lease one floor of Transport for London’s (TfL) Palestra building in Southwark for other staff. The GLA will continue to lease its current space at London Fire Brigade’s HQ in Union Street, Southwark.

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