City Hall is to receive almost £30m in additional Government funding in return for not increasing its share of the council tax.
The Greater London Authority raises some of its money via a precept on the council tax which is collected on its behalf by local authorities.
Mayor Boris Johnson has frozen this precept since coming to office.
However, he has disappointed Conservatives on the London Assembly who have called for a cut in the amount of money City Hall takes from Londoners.
Welcoming news of the coalition’s additional funding, Mayor Johnson said: “When elected, I promised to put an end to the outrageous increases in GLA’s share of the council tax, and I am pleased that we are now all reaping the benefits of having strong financial controls in place.”
Although City Hall have portrayed the Mayor’s freezing of the precept as “financial prudence”, the decision has forced him to borrow £110m to support his policies.
The London Assembly recently reported that Londoners would incur debt and interest repayments of £10m per year “from 2014/15, and for an unspecified period”.
The report also warns that these repayments “will reduce the amount of revenue funding available in future years.”
