City Hall spending will be boosted by a £187.8 million tax revenue windfall from April according to Sadiq Khan’s final published 2023/24 budget plans, with the £130 million of it earmarked for cost-of-living help for London families now specified as funding provision of free school meals for all of the capital’s primary school children for the forthcoming academic year.
The extra money is forecast to come from higher than expected council tax and business rate income, and will also boost funding for the Metropolitan Police, victim support and the Mayor’s violence reduction unit. The budget plans, which will be considered in public by the London Assembly on Thursday, also confirm a hike of almost 10 per cent in the Mayor’s council tax precept, to £434.14 a year for Band D properties.
A major focus of Thursday’s full assembly meeting is likely to be growing demands for Khan to boost his £110 million “scrappage” scheme for helping lower income Londoners, charities and small businesses replace older, more polluting vehicles when City Hall’s Ultra-Low Emission Zone, designed to tackle poor air quality, expands in August to cover the whole of the capital.
The Assembly gets two bites of the cherry when it comes to voting on the mayoral budget, and has already agreed to recommend a Liberal Democrat and Green call for the Mayor to double the size of the scrappage fund – albeit by five votes to nil with Labour and Tory assembly members (AMs) abstaining. Khan rejected that call, which Lib Dem (AMs) will bring back to this week’s meeting.
However, at this stage a budget amendment can only go through with a two-thirds majority of AMs voting in favour – a hurdle which has never been cleared in the Greater London Authority’s 23-year history and would require some measure of cross-party support.
The Lib Dem proposal would use £100 million sitting in a City Hall “transport services funding” reserve pot currently unallocated. But TfL’s continuing financial uncertainties meant it would be unwise not to keep the reserve in place, Khan has said, while it was also too early to assess the likely take-up of the existing scrappage scheme, which launched only on 30 January.
His ”wait and see” stance was accompanied by a fresh call for national funding support, pointing out that the government had allocated scrappage cash to six cities to date, including more than £100 million to Birmingham, Bristol and Bradford, while refusing to allocate any of the “approximately £500 million of vehicle excise duty paid by Londoners” to the city.
Pressure is mounting on Khan from beyond City Hall though, with the London Chamber of Commerce, generally supportive of measures to improve air quality, last week warning of the costs to larger firms still considered small or medium-sized of replacing vehicles as well as supply chain delays, and calling for a wider scheme and a longer transition period.
Could there be more to come from the Mayor? Veteran AM and Labour group leader Len Duvall, while unsurprisingly declining to back the Lib Dem amendment when it came before the assembly at the end of last month, nevertheless suggested further announcements could be on their way from the Mayor. A meeting of the assembly’s budget committee tomorrow (21 February) could be an opportunity.
Overall, the budget documents show London’s regional government remains big business, with total revenue spending of some £16.4 billion, including £4.5 billion on the Met, some £9 billion keeping the capital’s transport network running and a £4.4 billion capital budget.
Income from fares and other sources, including government grant and devolved funding for adult education, leaves net outgoings of around £4.8 billion to be met from taxes – £3.5 billion in business rates and £1.35 billion from council tax amounting to a little under eight per cent of total revenue spending. The bulk of the cash raised from council taxpayers, some £900 million, goes towards the Met, with £178 million for Transport for London.
Produced in a “climate of extreme economic circumstances”, according to the Mayor, 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.
It also continues a growing government-prompted trend of increasing council tax payer contributions, both for policing and latterly for TfL under the various government bailout deals during the pandemic. Of the coming £38.55 increase, £15 will go towards the Met, the maximum allowed. Failing to take up the maximum rates, Khan has explained, would put long-term pressure on City Hall budgets.
A £20 increase earmarked specifically for TfL is also a significant shift, which required special dispensation from Whitehall, granted by communities secretary Michael Gove in order to provide extra funding for TfL – which is still suffering shortfalls post-Covid – despite expressing his disappointment “that London taxpayers are having to foot the bill”.
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