The London Development Agency is set to cut 216 workers as its 2011-12 budget is set to be reduced by around two-thirds.

The LDA today told workers that the number of staff next year would be reduced from 324 to 108 workers.

It also said its budget would be £56m in 2011-12, which is a dramatic reduction from the £156m it received in the current financial year – a 64% cut.

The announcement comes after a week of speculation over whether the government would continue to fund the LDA in future, with England’s eight regional development agencies facing abolition by April 2012

London mayor Boris Johnson had made proposals to have the LDA absorbed into the mayor’s office.

However, this proposal is no longer meaningful, as the LDA will be abolished by April 2012.

A spokesman said: “The London Development Agency has been completely overhauled over the last 2½ years and the LDA now delivers increased benefits to London and better value for money. It is an open and transparent organisation. From having over 600 staff in 2008, after recent in-year budget cuts the LDA now has around 320 posts.

“The Spending Review imposes severe cuts on public sector funding. The Government has now indicated that our final settlement will only cover legal commitments in our budgets.

“We had planned for various scenarios as part of our preparations for closure in March 2012. Despite this low settlement, we intend to continue to meet our project commitments and move towards an orderly wind down.”

“We are consulting staff and trade unions to explore how we can achieve staff reductions and meet our commitments.”

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