Government funding rules could push London fares and mayoral council tax bills even higher than Sadiq Khan’s initial estimates, the London Assembly’s budget and performance committee heard yesterday at City Hall (pictured).
Draft City Hall budget plans now out for consultation assume a council tax hike of £27.89 a year at Band D, taking the mayoral levy to £423.48 from April, alongside an overall four per cent increase in Tube, bus and London Overground fares.
But new rules confirmed before Christmas allowing local authorities larger council tax increases could see the mayoral bill rising to £434.14 for a Band D household, compared to £395.59 in 2022/23. Whitehall is also pressing the Mayor to fall in line with the national rail fare 5.9 per cent hike.
Council Tax was “outdated, regressive, unfair and not fit for purpose,” Khan told the committee as it probed City Hall’s 2023/24 spending proposals. His instinct, he said, “is to make sure public transport is as affordable as possible for people who need it most.”
The government had increasingly “shunted” costs from Whitehall to councils and regional authorities, “using council tax to fill budget holes” without providing more resources, he added. However, failing to take advantage of the more generous rules, allowing council tax to rise by three rather than two per cent, would put long-term pressure on City Hall budgets, Khan said. “If I decide not to do that, that means we’ve lost this year and every subsequent year. We risk losing money over the period.”
Officers also confirmed the concerns outlined by Transport for London at the committee earlier this week, that failing to increase fares overall in line with the national increase would see the government deducting cash from the funding deal agreed in August last year, putting further pressure on the transport budget.
City Hall controls an annual revenue budget of some £16 billion, covering the Metropolitan Police, London’s fire services and TfL, plus some £5 billion capital spending each year, with TfL spending of almost £9 billion and police spending of £4.5 billion making up the bulk of the outgoings.
Income from fares and other sources, government grants and £3 billion in retained business rates, mainly earmarked for TfL, leaves net spending of around £1.3 billion to be met from council tax in 2023/24.
Council taxpayers have increasingly contributed more to City Hall over recent years, both for policing and latterly for TfL under the various government bailout deals during the pandemic.
Under Khan’s initial proposals, £282.66 of the overall £423.48 levy for Band D households would go to the Met, with £61.16 earmarked for the fire service and £57.09 for TfL. Using the full leeway now allowed by government would mean £29.3 million more for the police and £3.7 million more for the fire service.
The overall spending plans also include a new focus on cost-of-living support for Londoners, with £4.9 million earmarked for information and advice services.
The budget remains tight, with the London Borough of Culture scheme, Khan’s drinking fountain programme and his Commission for Diversity in the Public Realm among programmes facing the axe over the next two years.
The continuing uncertainty over council tax and fares levels saw the committee take the unusual step of “summonsing” the Mayor to face further questions on 21 February. Failing to comply with a summons notice without a reasonable excuse is a criminal offence.
“The Mayor is yet to make a series of decisions that will have material impacts on his 2023-24 budget,” said committee chair and Conservative Assembly member Peter Fortune. “We need to have the full picture.”
A decision about TfL fares is expected by the end of this month, with a further draft budget presented to the full Assembly on 26 January and a final Assembly debate on 23 February.
Although the Assembly has the power to amend the mayoral budget, a two-thirds majority in favour of an alternative is required for it to do so, and to date that requirement has never been met.
The draft mayoral budget currently out for consultation can be seen on the GLA website here. The closing date for consultation responses is 13 January.
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