Sleaze watchdog to probe City Hall after cash scandal

Sir Christopher Kelly, chairman of the Committee on Standards in Public Life, unveiled proposals to investigate "controversies" over the governance and accountability of the London Development Agency and the Greater London Authority.

The LDA was at the centre of revelations during the mayoral contest over £2.5 million in grants to organisations with links to Mr Jasper, Ken Livingstone's former policing and equalities adviser.

Sir Christopher said: "The run-up to the Mayoral and Assembly elections in London... suggested potential weaknesses in the governance arrangements and standards established by the GLA Act 1999... now that the elections are finished, the implications for public standards of the accountability arrangements for elected mayors in general will be a strong candidate for further committee consideration."

LDA chief executive Manny Lewis and GLA chief executive Anthony Mayer announced they were quitting within days of Boris Johnson being elected Mayor of London.

The committee's annual report highlighted its plan to launch a full-blown inquiry or a less in-depth review. It said local government usually had systems to safeguard public money but some had limits on outside controls. "Clearly there may be risks of inadequate control and standards of behaviour resulting," it added. In London, it said "media claims about financial and other irregularities in organisations accountable to the Mayor have damaged public trust in aspects of local government ... and may well have influenced the outcome of the 2008 elevations for Mayor.

"Given these developments the committee will be seeking a closer understanding of the accountability and governance arrangements applicable to London in particular and to elected mayoralties more generally."

The committee aims to draw up guidelines for elected mayoralties, and how to hold them to account, rather than to probe any particular allegations of wrongdoing.

Mr Johnson has launched an inquiry into the LDA which is set to cut funding for some community organisations. Mr Jasper denies any impropriety.

Sir Christopher today slammed senior MPs, led by the Speaker Michael Martin, for banning outsiders from a review of their expenses. "It is difficult to see how the results can be expected to command full public confidence," he said.