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LONDON'S BOROUGHS TELL MAYOR HIS COUNCIL TAX DEMANDS 'UNACCEPTABLE'

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The Association of London Government (ALG) representing all 33 of London's boroughs have told the mayor that his de...
The Association of London Government (ALG) representing all 33 of London's boroughs have told the mayor that his demand for a 35 per cent increase in his part of the council tax is unjustified and would be unfair on Londoners. The ALG view comes after consulting all 33 of London's boroughs.

Londoners are being faced with having to stump up an additional£555m this year if the mayor gets his way to introduce a massive hike in his part of the council tax - this is on top of a 23 per cent increase he imposed last year.

In a submission on the mayor's precept the ALG has taken issue with the need for such an increase this year when he raised his share of the bill by 23 per cent last year and received generous settlements from the hovernment.

The ALG's submission also spells out concerns on a number of proposals the mayor outlines in attempting to justify raising his share of the council tax by 65 per cent in just two years.

ALG chair Robin Wales said: 'If the mayor goes ahead with his proposal it would mean that in the two years that he has been in power he would have raised the council tax by 65 per cent.

'This would mean that with 30 per cent of the properties in London above Band D some people, including pensioners and those on low incomes could be faced with an increase in the GLA precept of up to£2 a week.

'To try and impose a 35 per cent increase in his share of the council tax this year is beyond belief. It is completely unacceptable.

'On behalf of all Londoners the ALG is calling on the mayor to deliver on the proposals he made last year and not force Londoners to dig even deeper into their pockets to fund even more empty promises.'

The cost of the core GLA

Under the services provided by the core GLA, the ALG is concerned that Londoners are being asked for an additional£15m, an increase of 41 per cent, for which they will see few benefits.

These include an additional£1m for external relations and communications, a 45 per cent increase in the cost of management and support services to£12.1m - of which£6.6m is earmarked for the new GLA City Hall development - and only budgeting for 1.3 per cent (£0.7m) of efficiency savings when other public bodies are achieving around 3 per cent.

Transport Budget

The ALG is concerned that the proposed increase in the precept for Transport for London (TfL) is set to rise by 921 per cent despite their receiving an increase of £267.6m (37 per cent) in grants from the government this year.

Also on the transport budget the ALG is questioning the need for increasing staffing by 16 per cent in the main TfL bureaucracy and by 34 per cent at TfL Street Management, for an allocation of£25m for 'general contingencies'.

The ALG is calling for more detailed information on some of the schemes TfL are proposing to fund from their allocation, and has also questioned TfL's capacity to spend and deliver on some of the schemes it has provided details on for next year. This is in the light of underspending in the current year, revealed when the GLA's budget committee questioned the mayor and transport commissioner Bob Kiley last week.

The ALG also calls on TfL to spread the cost of capital items over the life of the product rather then pay for it at once over the next year.

Metropolitan Police Budget

The ALG welcomes the fact that the Metropolitan Police have identified savings in their budget and has urged them to continue to seek ways of making more cost effective use of their resources, especially as they have enjoyed a significant boost in resources in recent years.

The views from London boroughs

London's boroughs from across the political spectrum report that the 35 per cent increase in the mayor's precept is unacceptable. They report that at a local level they still have to see the benefits of the 23 per cent the mayor took from Londoners last year.

Notes

The Association of London Government is committed to fighting for more resources for London and getting the best possible deal for London's 33 councils. Part think-tank, part lobbying organisation and part service provider, the ALG formulates policies, organises campaigns and runs a range of services all designed to make life better for Londoners.

If the mayor goes ahead with his 35 per cent increase some Londoners could face tax bills of over£1,000.

The actual council tax paid by anybody depends on the value of their home. In London high property prices mean that many people will pay more than the 'average' Band D figure of£1 per week quoted by the mayor. In London over 30 per cent of the properties are above Band D. This could mean that some people on average or low incomes will face increases of up to£2 per week, rather than the mayor's headline figure of£1 per week.

If the mayor goes ahead with his proposal his share of the council tax bill would have increased by 65 per cent in two years, while in contrast the average borough increases have gone up by an average of 23 per cent over five years.

Attached is a chart showing the accumulative results of the demands of the mayor of London on his council tax precept. This shows what the impact of the mayor's proposals would be on Londoners.

% of London homes in bandprecept increase in 2001-2002precept increase in 2002-2003TotalTotal

Band£ per week£ per week£ per week£ per year

A3.530.360.671.0353.56

B13.650.420.781.2062.4

C26.720.480.891.3771.24

D25.40.541.001.54 80.08

E15.270.661.221.8897.76

F7.520.781.442.22115.44

G6.220.901.672.57133.64

H1.671.082.003.08160.16

* A graph illustrating the historic and projected level of GLA precept is available on request from LGCnet.

Greater London Authority (GLA) Group Draft Consolidated Budget 2002/03

Response by the Association of London Government

Executive summary

It is unacceptable and unrealistic to expect London council taxpayers to bear a further 35% increase in the GLA precept, on top of the 23% increase in 2001/02.

The cumulative increase, over two years, is equivalent to a 65% increase in the precept. In contrast, the average increase in London borough council tax is 23% over a five-year period.

Council tax is a serious issue for many people. It is regressive and impacts heavily on people living on very tight budgets. The problem is exacerbated in areas such as London where property values are so high.

The GLA group budget contains 'wish list' elements that are not realistically achievable. It is unfair that council taxpayers should have to foot the bill for things that will not happen. These items should be reduced or removed.

The GLA should set itself tougher targets for saving money and demonstrate that it is producing better services that represent better value for money.

As well as pursuing efficiency savings, the GLA should dispose of its surplus property and cut back on its more peripheral activities.

Most importantly, it should take account of what London council taxpayers realistically can afford, and not expect people to pay so much more without seeing additional benefits.

Introduction

1. This paper sets out the ALG's response to the Mayor's draft consolidated budget 2002/03 for the GLA group.

The impact of the proposed budget on London council tax payers

2. The ALG considers it unacceptable and unrealistic to expect London council taxpayers to bear a further 35% increase in the GLA precept on top of the 23 % increase in 2001/02. This results in a cumulative increase of 65% over two years. In contrast, the average London borough council tax, increased by 23% over a five-year period.

3. The cumulative increases in annual council tax bills over two years (in 2001/02 and that proposed for 2002/03) resulting from the GLA Group precept are:£54 for band A; rising to£80 for band D; to£98 for band E;£115 band F;£134 band G and£160 for band H properties.

4. Council tax is a serious issue for many people. Homes in London have high valuations compared with the rest of England . Council tax is regressive and impacts heavily on people who, while not qualifying for benefit, are on very tight budgets living in areas with high property values. Opinion polls for the ALG show that 29% of C2 voters register Council Tax as a concern.

5. Boroughs consider the total potential council tax in their areas when setting their own budgets. Many boroughs face hard choices, especially where the band D council tax is approaching, or likely to exceed,£1,000. Six boroughs have band D council tax in excess of£950 in 2001/02.

6. Given the role of the London Assembly, and the arrangements for budget scrutiny established by Parliament in the Greater London Authority Act 1999, it may be unlikely that the GLA budget would be capped other than in the most extreme circumstances. However, if, as a result of this 65% increase over two years, the GLA were to be capped, this would result in uncertainty and chaos for London government and services to the public. Boroughs would have to re-issue council tax bills - at considerable cost and confusion to local people.

Summary of the ALG's response to the Greater London Authority (GLA) Group Draft Consolidated Budget 2002/03

7. The GLA Group Budget contains elements that are 'wish list' or aspiration - that is, service developments that are not realistically achievable. These elements should be reduced or removed. Some initiatives, for example, those put forward by TfL, rely on the ability of partner organisations to deliver and may well be limited by the capacity of those organisations.

8. The core GLA savings targets should be tougher.

9. The proposed budget for TfL needs radical review to reduce the scale of increase in 2002/03 and future years. The ALG urges TfL to explore ways of evening out the impact of capital spending to align the timing of the charge to council taxpayers with the timing of the benefit from the investment. Council taxpayers need to see some benefits of investment before having to pay more.

10. The ALG welcomes the savings in the MPA draft budget, and urges more challenging savings to be identified during 2002/03 and future years.

11. The GLA should:

- Budget only for those services which can actually be delivered in 2002/03

- Consult more fully, and provide information to enable informed comment to be made.

- Provide evidence of achievement at borough level to show what difference the GLA Group's services have made to London

- Provide clear explanations of changes to earlier consultation or approved documents

- Demonstrate, and achieve:

o Excellent value for money

o A real and visible difference through service delivery

o Continuous downward pressure on resources

- Constantly strive for, and achieve:

o Efficiency savings

o Disposals of surplus property and other assets

o Removal / reduction of low priority and low value activities, and

o Tight budgetary control and maximum value from all budgets

- Take account of what London council taxpayers realistically can afford.

Comments on the Draft Budget Requirements of Component Bodies

The Greater London Authority

12. The ALG challenges the 41% (£14.8m) increase in the GLA's budget requirement, in particular:

- The 45% (£12.1m) increase in management and support services, including£6.6m for City Hall

- The£2.9m proposed for new initiatives, and the£0.5m increases for each of external relations and communications

- Efficiency savings, at£0.7m, are only 1.3% of the budget. The ALG made savings of 7.5% in its 2002/03 budget.

13. The ALG believes that the Mayor should make savings in the budget of the core GLA, through reducing expenditure, and increasing efficiency savings. A budget increase of over 40% contrasts unfavourably with the strenuous efforts at borough level to minimise increases in council taxes.

Transport for London

14. The ALG challenges the almost ten-fold increase (921%) in TfL's requirement, and considers that the 37% increase (£267.6m) in TfL's grant from the Government should enable TfL to put forward a much lower requirement.

15. The ALG challenges:

- TfL's increase in balances, in particular the£25m for general contingencies for TfL Corporation and the increase in working capital for Transport Trading Limited (TTL) of£21.1m.

- TfL Centre (where the budget is expected to grow from£73.5m in 2001/02 to£165.8m in 2002/03, an increase of 126%)

- Staffing levels in TfL, which have risen from 2,257 in July 2000 to 2,614 in July 2001. This is a rise of 16%. TfL Street Management has seen an increase in staffing of 34% in one year alone.

- TfL base costs of £735m are set to increase by 23% over and above the increase in TfL's strategic initiatives.

- The budget for strategic initiatives, which totals£374m, has more than doubled since 2001/02. The ALG urges TfL to reduce this, and to budget only for those initiatives that can be justified, resourced and delivered. The capacity of contractors to respond to TfL's demands may limit the scope for implementation.

- The ALG believes TfL should:

- Reduce the£5m Innovations fund

- Review expenditure on the customer information programme of£7m

- Review expenditure on World Squares (£19m) and flagship walking and cycling and town centres (£22m)

- Review additional funding for door-to-door transport (over and above the£5m allocated for Taxicard), to justify the additional resources.

16. Annex B of the GLA Group proposed budget show the expenditure items and deliverables (totalling£90m) for 2002/03 that would be reduced, deferred or not progressed if available resources were less than in the budget.

17. The ALG has identified projects totalling£43m can be cut where no meaningful consultation has taken place, including the Transport Policing Initiative, or where projects have low impact.

18. TfL should review the level of funding and phasing of other projects in order to ensure some progress is made in projects totalling£48m.

19. The ALG has identified projects totalling£24m that should not be cut, as they are borough priorities.

20. The ALG's view on these proposals is set out in Appendix 1.

21. The ALG believes that the TfL funded initiative to police buses (which is likely to use a combination of Auxiliaries and Constables) is uneconomical and impractical, and that this initiative, if it proceeds, should build on the effective and economical model developed by boroughs in delivering warden and parking enforcement services.

22. The ALG is concerned that funding for transport enforcement will not be additional, and that existing MPS resources might be pulled back. Furthermore, the Police Reform Bill will change the legal position. It might be better to await its enactment before proceeding with this scheme.

23. The 2002/03 budget for TfL Corporation includes£244.2m capital expenditure charged to revenue. The ALG challenges TfL to explore financing options to spread the financial impact of capital spending over the life of the assets, smooth the impact on the council tax, and align the timing of the charge to council taxpayers with the timing of the benefit from the investment.

24. The ALG understands that there is significant under spend of the TfL budget for 2001/02. This calls into question the need for such a large increase in the budget requirement for 2002/03 and also the capacity of TfL to deliver such an ambitious programme of initiatives.

25. The ALG challenges TfL to improve consultation, provide greater transparency on proposed budgets and the assumptions on service levels, outputs expected or programme of delivery on which they are based. The ALG needs sufficient information to track changes and to assess the significance for London boroughs and needs to have information that underpins that provided in TfL business plans.

London Development Agency (Zero Budget Requirement)

26. The ALG is keen to work with the LDA to ensure that London gets its fair share of RDA resources, and to ensure rigour in allocating resources, particularly in the context of the growth in Single Pot funding from£26m in 2002/03 to 116.5m in 2003/04 and£174.2m in 2004/05.

27. The ALG would like to work closely with LDA in allocating funding between the three tiers of activity under area interventions (strategic locations, local strategic partnerships and a general innovation fund).

Metropolitan Police

28. The ALG welcomes the£60m savings reflected in the draft budget for the Metropolitan Police, and expects the MPA to pursue the target and to identify alternatives, at least equivalent to£60m, should those identified be difficult to realise.

29. The ALG welcomes the efficiency reviews and looks forward to the MPA achieving more challenging saving targets in future years. This is particularly important in the light of the MPA having enjoyed significant additional resources in recent years. Since 1995/96 the MPA precept has increased by almost 150% while police officer numbers have declined by around 5%.

30. The ALG urges the MPA to deploy staff resources better in order to achieve a significant and lasting reduction in overtime costs, and to promote best practice budgetary control throughout the organisation.

31. The ALG urges the MPA to provide evidence that police officers are being released for operational duties as a result of the greater investment in civilian staff. The ALG seeks reassurance that police officers are allocated to boroughs, and that effective systems are in place to increase the proportion of police officer time that is available for operational activity.

32. The ALG believes that London bears a disproportionately large share of the national cost of counter-terrorism, and urges the MPA to ensure that future costs are fully matched by additional funds from Government.

London Fire and Emergency Planning Authority

33. The ALG welcomes the emphasis on community safety, the targets for reductions in fires, deaths and injuries and the reorganisation to establish commands in boroughs.

Conclusions

34. The ALG is willing to work with the Mayor to frame a budget for the GLA Group which is acceptable and affordable to London council taxpayers, and which reflects achievable service developments that are high priorities for London citizens.

Appendix 1: ALG views on TfL proposals for projects to be cut

Summary

The ALG agrees projects can be cut where no meaningful consultation has taken place, including the Transport Policing Initiative, or where projects have low impact. Total saving£43m, including:

- Transport Policing Initiative

- Conductors on doored buses

- Multi stop river service.

A group of projects where ALG considers it regrettable if they were to be cut, and that TfL should review the level of funding and phasing of other projects in order to ensure some progress is made in these areas. Total cost£48m, including:

- Enhanced door to door services

- Reduction in bus services targeted to improving social inclusion

- Reduced road safety expenditure

- Delay by one year and reduce funding for flagship walking, cycling, town centre and area-based schemes

- Local interchanges, bus stations and shelters (reduced funding)

- Thames road crossings (development & PFI costs).

£24m projects - ALG considers these should not be cut, as they are borough priorities. Boroughs are responsible for 95% of roads in London and are main deliverers of Mayor's Transport strategy. These projects include:

- Reduced maintenance on TLRN and borough roads

- Deferral of some bus priority schemes not related to congestion charging.

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