Boris’s Budget 2015-16: how the London mayor will make ends meet
Even though its population is booming London’s top tier of government is having to cope with large spending cuts
Two things always strike me at this time of year when the mayor’s draft budget is unveiled and probed: one, what a lot of money this tier of London government gets; two, how relatively little power comes with it. Boris Johnson’s proposals for 2015-16 and the London Assembly’s initial views on it have again inspired that response. What’s changing, though, is the intensifying impact of the government’s spending cuts and the mayor’s need to adjust to it. Then there’s the big, big, background context – a Greater London population about to top its previous record of 8.6 million, set way back in 1939, and surge towards nine million and beyond.
Let’s digest some headline numbers. The provisional grand total to be spent is £16.7b, slightly less than in 2014-15, split between the Greater London Authority (GLA) and the four “functional bodies” that carry out its and the mayor’s main responsibilities. Of these four, Transport for London (TfL) spends by far the largest amount: it will be about £10.8b in all in 2015-16. The Mayor’s Office for Policing and Crime (MOPAC), which oversees and sets the budget for the Metropolitan Police, comes second with roughly £3.5b. The GLA itself will get about £1.4b, almost all of it controlled by the mayor. The London Fire and Emergency Planning Authority (LFEPA) is set to be allocated £480m and the London Legacy Development Corporation (LLDC), responsible for developing the Olympic Park and its surroundings, £175m.
Just one of these entities, TfL, is set to have more money to spend next financial year than it has had this year, underlining the huge present and future importance of transport networks to the capital as its growing number of people demand more and more efficient ways to get around the place. The draft budget list of “key deliverables” includes investing the £913m Johnson pledged for cycling, £200m for bus priority schemes and a rather striking £4b in London’s roads, along with continuing Crossrail’s progress and introducing the Underground “night service” promised for September.
However, TfL’s finances are feeling the strain. The Assembly’s budget and performance committee has given a stark warning about fares: the inflation-level increases of the past two years have been welcome, but although the government has made up the difference this will only delay the effect on TfL’s finances, which have included an assumption that fare hikes would be greater. The committee calculates that, as a result, TfL will have to find an additional £351m over the next ten years to make up for this. Difficult choices remain.
Meanwhile, and significantly, the transport body’s range of uses to the mayor is expanding. In his (recommended) foreword to the committee’s report, its chair John Biggs notes that TfL has become one of Mayor Johnson’s main tools for encouraging jobs and economic growth in London. The controversial garden bridge plan, primarily a privately-owned tourist attraction, is one example of this, with TfL required to put £30m towards building it. The commuter-free Thames cable car is an earlier one. This could be just the start. Biggs writes that it is easy to imagine a future mayor “calling on TfL’s capital budget to kick start development work on the Old Oak Common site,” the biggest mayor-led redevelopment scheme since the Olympic Park.
The biggest turmoil, though, is that affecting the police. It is a galling fact that London’s monumental land values, which contribute to its housing being so unaffordable, are also helping the capital compensate for the effects of austerity. MOPAC’s property disposal programme, though controversial in some ways, is helping the Met to cope financially: the sale of Scotland Yard for a higher than expected £370m won’t help lower the price of the flats to be constructed there but is a godsend to the police bank account. Even so, Johnson’s police number target of 32,000 is looking ever harder to maintain as well as possibly limiting the Met’s options for re-organising itself. Effective policing is about something more than filling uniforms, a point the next mayor might have to embrace whether he or she likes it or not.
Johnson argues that his budget will protect the most important services a mayor should provide, naming these as “safer streets, investment in transport infrastructure and affordable housing.” To some extent, the budget and performance committee concurs. But some important things are going to be lost. For example, funding for environmental schemes, already meagre, is to shrink still further.
The mayor is proud that, once again, he intends reducing the council tax he raises. This will enrich Band D London households to the tune of a thrilling £4 a year and deprive his budget of £10.6m – a baffling priority when there are so many more important ones to consider. But, looking further ahead, Johnson is right when he argues in his latest Telegraph column that a big part of the answer to London’s long-term investment question is greater financial autonomy for the capital. In other words, more power over the money it raises and receives. Making the case for Crossrail 2, he writes:
It is crucial to stress that we in the capital fully accept that the city should shoulder the majority of the burden of funding the scheme. How? By developing the payment models we are already using to fund Crossrail (which will be a third supported by London business) and the Northern Line Extension, which is being fully paid for by the future tax yields from the developments the two new stations will make possible in the Battersea area. We need the same approach to Crossrail 2 – and that means giving London a share of the increase in stamp duty generated by the city.