A new year, another report. I trust you all had a restful break and wish you a prosperous new year. Which, I suppose is the nub of the problem because, without being particularly political, for many Londoners it will not be. Alongside the cuts in public spending and services which I often write about, the economy is teetering on the edge of a return to recession. As is usually the case, while the problems may have been caused by the mistakes of the powerful, it is those without power who tend to suffer. Over the next few weeks at City Hall, life will be dominated by the Annual budget-making process. And so this report is dominated by our budget challenges at City Hall. My new pattern is alternating shorter and longer reports. This is one of the shorter ones!

As I write, and while others toil in the engine-room, trying to balance the £billions, the Mayor is jollying in Davos, Switzerland – at the Annual ‘World Economic Forum’. Many bankers will be there. He seems to have difficulty at the moment deciding whether he likes or loathes them, so I imagine he will be doing a bit of both. Generally speaking, where a headline beckons, our Mayor will follow.  This is true of his policy on bankers as much as anything else.

 
Budget Cuts

The City Hall budget is a complicated thing, amounting to £14billion or so spread across a handful of disparate organisations. As with the rest of local government, it faces grant cuts of the order of 20% over the next four years. However, because its finances are different from typical councils - as a ‘strategic’ authority - the effects are different.

As an example, a grant cut to Transport for London will only affect a part of its finances, as a sizeable chunk comes through fare income, and a further chunk is capital works, which are funded differently. And the police service depends not just on Government grants, but on a sizeable Council Tax precept income and on money from ‘specific grants’, so it is again somewhat immune from cuts in mainstream grants. This, plus the fact that (nod nod, wink wink, as they say) it looks as if the Mayor, as the highest profile Conservative leader outside of Parliament, is being treated more generously than other Council leaders, means that while difficult the budget changes at the GLA are less bloody than elsewhere.

Our final budget will be agreed on 23rd February but its bones are already clear:

•    The transport budget involves few cuts (although there are some, such as to transport and highway maintenance budgets given to Boroughs under the ‘LIP’ programme) but this is achieved through an average 7% fare increase. Additionally, the scrapping, over the new year, of the Western Extension to the congestion charge zone (known as the ‘WEZ’), means that TfL loses about £55million income each year. This is roughly equal to half the income raised through the fares rise.  Tougher times are coming and there have been substantial job losses.
•    The police budget, on which some details are outstanding, faces cuts which have been dampened by redirecting extra precept income from the Fire Authority to the police. A freeze on police officer recruitment is being partially reversed but, on the current trajectory, police officer numbers will be falling by about 600 each year from now on. In political terms this means the number which grew under the previous Mayor, and for the first two years of the current Mayor, to a highpoint of about 33,500 officers, will now decline as a hallmark of his administration. Evidence suggests that, with a time-lag, this will be followed by a reduction in public confidence and, for example, reduced response and clear-up rates. However, this does take time to work through. Politically, however, it may mean that the finger prints of the Mayor will be long faded before people realise the impact of his decisions.
•    The London Development Agency is being abolished, and its powers transferred into City Hall. This decision is widely supported, (it was indeed first proposed by Labour members) - the idea is to provide a more focussed targeting on regeneration, skills and job creation in the Mayors office.  However, less anticipated, the budget for LDA work is being essentially scrapped too, with, as yet, no funds for City Hall to carry on the work. It is expected that this will be partially reversed following intense lobbying but, even if partially reversed, it will mean that just when London needs some extra muscle to invest in skills and employment initiatives, it is losing much of its capacity to do so. Again, there is a time lag but the Mayor is being stripped of his ability to support Londoners at a time of need and this is a big problem for Londoners and, politically, for him.  
•    The Fire and Emergency Planning Authority is relatively unscathed this year. In fact its large reserves have been used to cushion the police budget, by allowing a reduction of £30million in precept income, to be diverted to policing. But the hideous word ‘backloaded’ applies to its cuts, which means it will feel them towards the end of the Government’s spending period. This means a risk of large cuts in 2013/14 and 2014/15. Conveniently, for the current Mayor, and inconveniently for his successor if he is replaced, this will be after the next Mayoral election.
•    Other budgetary and wider resource matters include the loss of local control over most skills and employment budgets (effectively ‘Nationalised’ by the government) and the arrival of housing capital grant-making powers at City Hall, but with the budgets received facing deep cuts. ‘Lesser’ matters in budget terms, but with some longer-term budget implications include the transfer of the Royal Parks from Government to City Hall, and the new arrangements when the Metropolitan Police Authority is abolished. More on these matters in a future report.

Other Matters

This report is mostly about the budget. Other matters of interest include:

•    A resolution of the fire dispute. A new shift system has been agreed but it was rather more complicated and bloody than that may innocuously appear.
•    An impending decision on the future of the Olympic Stadium.  I support and am lobbying for the West Ham option.
•    The impending extension of the Mayors Cycle hire scheme to cover Tower Hamlets. It is of note that the average income of users is over £50k, and they are 70% male.  Is the scheme a serious contribution to London’s transport challenges?  Or more of an environmental, tourist and fitness project for quite a select group of Londoners and visitors?
•    The start, on January 31st, of the A13 average speed camera scheme, with a new 50mph speed limit.
•    The recent failure of a judicial challenge to overturn an increase of flights at London City Airport. Coincidentally, it has just been named ‘airport of the year’. Depending on your point of view that is either good news or a further insult.
•    Some changes to local bus services, particularly with the planned opening of a second bus station at Stratford, to serve the massive new developments there.
•    Controversy over the ‘Thames Tideway Tunnel’, a new and massive sewer under the Thames and parts of East London, particularly because of its impact on King Edward Park, in Limehouse.
•    The small matter of my impending reselection. Or otherwise!
•    Last time I promised a report on Olympic Ticketing. This will now be next month.