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London's Tory Mayor Defies the Tory Party


Mayor Boris Johnson rakes Cameron over rent subsidies

When U.K. Prime Minister David Cameron unveiled his ambitious plans to cut welfare benefits, he expected brickbats from the opposition Labour Party. What he might not have counted on was Boris Johnson, London's mayor and a fellow member of the Conservative Party, blasting the Tory leadership's proposals.

Johnson has raised the alarm about the possible effects on the U.K. capital of Cameron's plans to reduce social-housing subsidies, a step that may force people on low incomes to move to areas where rents are cheaper. "The last thing we want is a situation such as Paris where the less-well-off are pushed out to the suburbs," Johnson told BBC London on Oct. 28. "We will not accept any kind of Kosovo-style social cleansing of London."

Similar attacks from Labour lawmakers had been slapped down in the House of Commons. Johnson's protests will be harder to brush off. The difficulty for the government is that the mayor's vocal championing of London, which was useful while the Conservatives were in opposition, is in danger of muddying the Tory refrain: "We are all in this together." A personal rivalry may be at work as well. Ladbrokes, the betting agency, is quoting 4 to 1 odds that Johnson succeeds Cameron as head of the Conservative Party.

Johnson, known for his unruly shock of hair and rhetorical outbursts, announced on Oct. 20 that after "months of hard negotiations" he had persuaded the government to maintain investment in the capital. "London is the engine of the U.K.'s economy, and it would be fiscal suicide to have starved it of fuel," he said.

Eight days later he was attacking the government's plans to cut annual rent subsidies by 8 percent, or $3.2 billion, by 2014-15. London Councils, the umbrella group for London's 33 local authorities, estimates that as many as 82,000 households in the capital will become homeless as a result of the cuts. Cameron's spokesman, Steve Field, says the government estimates the cap will affect only 21,000 benefit claimants, 17,000 of whom are in London. Johnson says he is "in detailed negotiations" with the Department for Work and Pensions to get transitional relief.

The emphasis on the capital has angered some elsewhere in the U.K. Rachel Reeves, a Labour lawmaker for Leeds and a former Bank of England economist, says one local housing charity has told her that 15,000 families in her city will be affected by rising rents. "This is not just a London phenomenon; this will hit families and pensioners up and down the U.K.," she says.

As for Cameron, he's not backing down, at least for now. "The Prime Minister does not agree with what Boris Johnson has said or, indeed, the way he said it," Field told reporters shortly afterwards.

The bottom line: Prime Minister Cameron has been blindsided by criticism of his budget cuts by London's mayor and fellow Tory, Boris Johnson.

Penny is a reporter for Bloomberg News. Donaldson is a reporter for Bloomberg News.

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