Mayor's Budget Guidance 2010/11

Report: 9
Date: 30 July 2009
By: Treasurer and Director of Resources on behalf of the Commissioner

Summary

This report summarises the Mayor’s budget guidance issued for the 2010/11 budget planning round.

A. Recommendation

That members note the mayor’s budget guidance for the 2010/11 budget planning round, and the implications for the MPA budget.

B. Supporting information

Mayor’s budget guidance

1. The Mayor’s budget guidance for 2010/11 was issued on 23 June 2009, together with a letter from the Mayor to the Chief Executive of the Authority. A copy of this and the budget guidance is enclosed for members as Appendix 1. It is also available on the website.

2. Each functional body is expected to take into account the Mayoral priorities, which for 2010/11 have been grouped into four themes as follows:

• Promoting safety and personal wellbeing
• Improved housing and the living environment
• Building economy and opportunity for all
• Cleaner, greener, more efficient and accessible transport and technology

3. In addition, and in recognition of the current economic climate and the marked deterioration in public finances the following key principles are also seen as being critical in the development of business plans:

• How is value for national and council taxpayers being delivered?
• How are resources being prioritised to key objectives?
• How are resources being used more effectively through joint working across the GLA group?

4. A critical GLA focus during the budget development stage will be to examine and assess the business plan proposals to deliver in line with the themes and principles outlined in paragraphs 2 and 3 above and the results expected to be achieved over the plan period.

5. The 2010/11 process is similar to last year consisting of the following:

• Budget guidance issued by the Mayor revised if necessary in light of emerging issues
• Budget development by functional bodies and GLA
• Interim information from the functional bodies to the GLA by end of September
• Preliminary draft proposals issued by the Mayor for consultation with each of the functional bodies and the Assembly by the end of October
• A formal response to the proposals by end of November accompanied by detailed budget and business plans covering at least a three year period and which must be consistent with the Mayor’s budget guidance and preliminary proposals
• Mayor’s formal draft budget proposals considered, prepared and issued for consultation in mid December
• Consultation
• Scrutiny by the Assembly’s Budget Committee throughout the process

Policy Priorities

6. The specific policy priorities applicable to the MPA are:

• Fight crime, reduce criminality, provide better value for money, and therefore increase confidence in policing
• Tackle gang, gun and knife crime (particularly by young people) through intelligence-led activity
• Protect Londoners by reducing the risk presented by terrorism
• Improve the MPS response to rape and sexual assault and develop a strategic response to trafficking for sexual exploitation
• Provide and maintain a visible and proactive presence on the transport network (relevant parts thereof) and at transport hubs
• Implement findings of reviews on public order policing by the MPA Civil Liberties Panel, HMIC and where relevant, the IPCC
• Implement the outcomes of the Race and Faith Inquiry (in particular as regards promotion, progression and career opportunities)
• Improve and augment the detective capability of the MPS and enhance the professionalism of the service throughout
• Enhance, in conjunction with partners, police presence and service to town centres and areas of small businesses
• Ensure a clear and comprehensive response to dangerous dogs in London
• Invest in infrastructure and workforce modernisation to increase productivity and reduce bureaucracy
• Build financial effectiveness, rigour and resilience for the future

7. The Mayor has also outlined specific policy priorities applicable to the GLA and all functional bodies which are as follows:

• Assist Londoners and London businesses through the recession, including supporting the Mayor’s Economic Recovery Action Plan, which is updated quarterly, and positioning London for resumed growth
• Provide significant support to the Mayor’s ‘Time for Action’ programme in order to prevent violence and improve opportunities for young people
• Deliver the Mayor’s call to end violence against women through his ‘Way Forward’ strategy
• Deliver value for money and better quality of life for all Londoners
• Take forward the use of procurement to deliver economic, environmental and social priorities through the GLA Group responsible procurement programme
• Prioritise measures consistent with the commitment to carbon reduction targets of 60 per cent by 2025 and promoting open spaces
• Supporting delivery of the London 2012 Olympic and Paralympic Games and its legacy
• Providing skills and employment opportunities both through the direct workforce and through supply chains, implementing the Living Wage for London, and promoting equality in the workforce and across London
• Implementing the Living wage for London and promoting equality in the workforce.

Business and Budget Plans

8. The business and budget plans must:

• Cover at least the period to 2012-13
• Set out what is planned to be achieved in high level terms over that period, specifying profiled deliverables and defining measures to assess progress and impact
• Highlight in high level terms plans towards delivering carbon reductions
• Demonstrate how the budgets and business plans will increase diversity within the workforce
• Include updated budget estimates and borrowing and capital spending plans covering the plan period (these can either be integrated into the business plans, or be in the form of separate accompanying documents)
• Include an assessment and explanation of the quantified financial benefits expected to be secured by joint working across the GLA Group

9. Interim budget information due by 26 September must include the following:

• A succinct overview describing the main business priorities and how the MPA/MPS plans to deliver on each of the Mayoral priorities, over the three year period 2009-10 to 2011-12.
• A high level financial breakdown indicating how the financial planning guidelines will be achieved.
• A summary of identified savings to balance the budget
• A summary of outstanding financial uncertainties and issues

10. It is recognised that by the end of September each member of the GLA Group will not necessarily have an updated balanced budget that has been formally endorsed by its Authority. Furthermore estimates might only be high-level and subject to further consideration and refinement. Accordingly there might be concern if that information were to be widely disseminated and the Mayor has therefore accepted that the interim response should be supplied in the form of advice to the Mayor.

Financial Planning Guidelines

11. The background to the financial planning guidelines is the significant deterioration in public finances, and the Mayor’s intention is that value for the national and council taxpayer should continue to drive the development of forward plans, with the functional bodies rigorously pursuing efficiency savings, including savings from increased joint working across the GLA group.

12. There is considerable uncertainty around planning for future years, as with the exception of TfL all functional bodies only have indicative grant allocations for 2010/11. The Mayor is also the anticipating a reduction in future government spending in 2011/12 and beyond. Therefore for 2010-11 the guideline is based on existing plans of a 1.25 per cent increase and net revenue expenditure of £2,673.3m. However for 2011-12 and 2012-13 there is considerable uncertainty over the level of grant funding and the Mayor believes plans should be prepared on the basis that there is a reduction in public expenditure. Accordingly there is an upper and lower limit for these two years which assumes a cash freeze and a reduction of 1.5 per cent in general grants in each year. The Mayor has also indicated that there is no addition to the GLA council tax precept for Olympic security costs.

Consultation

13. The Mayor has included a requirement to have dialogue with budget consultees to complement and prepare for his statutory responsibility for consultation. Each functional body should maintain a dialogue with, and provide key information to, key stakeholders before budget submissions are finalised in November. Although not specified in the Mayor’s Budget Guidance the main purpose of this dialogue would be to obtain stakeholders’ views on policy priorities and options and communicate with stakeholders, so they are better prepared to respond to the Mayor’s formal budget consultation. The dialogue should ideally focus on the services provided and the relative priorities of each service. The issue of the costs of these services would then be specifically addressed later in the process by the Mayor’s consultation.

14. The Authority has complied with this request in previous years by formally writing to a selected list of consultees requesting views. However, the amount of information that can be given to consultees at this stage in the budget process is limited. The time available for consultees to respond is also limited to the short ‘gap’ between the availability of information available and the Mayor’s requirement to get responses included in the November Budget Submission. Accordingly it is intended to send a letter to consultees attaching the latest available statement of emerging priorities, together with a very high level assessment of resource implications in mid September, requesting responses by mid October. An assessment of responses will be included in the draft budget submission in November.

15. The Budget Guidance also comments that there has been refined dialogue with key stakeholders over the last two years and it is intended to hold a meeting with the voluntary sector in September. The GLA note that a meeting will also be arranged in November to enable functional bodies to explain and discuss their budget and business proposals with key stakeholders.

16. The MPA has to deliver its budget submission to the Mayor by 26 November 2009, after approval by the Full Authority.

Financial implications of budget guidance

17. The budget guidance gives a clear expectation on the level of increase in net revenue expenditure, which is acceptable, but given the high level of uncertainty over future levels of grant funding, does not give any specific direction on the level of Government Grant to be assumed Each member of the GLA group will need to keep under review grant levels for 2010-11.

18. Work has already started on the business-planning framework and this committee received a report on progress at its last meeting, this included the estimated budget gap based on the assumption that net revenue expenditure would increase by 1.25 per cent in each of the next three years.

19. The assumptions now need to revised in light of the Mayor’s budget guidance and the table below summarises the financial guidelines (as per the guidance) for the next three years and the revised savings gap.

20. Part of the budget process will be a review of the reserve requirements. The Treasurer will report to the Authority in November with an overview of the Authority’s reserves to 2013 and this will form the basis of identification of any resources available to assist the budget submission in due course.  

C. Race and equality impact

The Mayor’s budget guidance gives particular emphasis to equalities issues and delivering on equalities is seen as a pre-requisite for achieving sustainability.

D. Financial implications

The Medium Term Financial Plan and Budget will provide approval for expenditure and income during 2010/11 and future years.

E. Background papers

• Mayor’s Budget Guidance 2010/11 (Appendix 1)

F. Contact details

Report author: Annabel Adams Deputy Treasurer, MPA

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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