Mayor's budget guidance 2009/10

Report: 5
Date: 18 September 2008
By: the Treasurer and Director of Resources on behalf of the Commissioner

Summary

This report summarises the Mayor’s budget guidance issued for the 2009/10 budget planning round.

A. Recommendations

That members note the mayor’s budget guidance for the 2009/10 budget planning round, and the implications for the MPA budget.

B. Supporting information

Mayor’s budget guidance

1. The Mayor’s budget guidance for 2009/10 was issued on 22 July 2008, together with a letter from the Mayor to the Chair of the Authority. A copy of the budget guidance together with a copy of the accompanying letter to the Chair of the Authority 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 following priority needs:

• Contribute to the Mayor’s priority of tackling youth violence through preventative measures and increasing youth opportunities
• Deliver value for money and better quality of life for all Londoners
• Prioritising measures consistent with the commitment to carbon reduction targets of 60 per cent by 2025 and promoting open spaces
• Supporting the delivery of the London 2012 Olympic Games and Paralympic Games and its legacy
• Deliver the Mayor’s revised Housing Strategy to be published in the autumn
• Implementing the Living Wage for London and promoting equality in the workforce

A critical GLA focus during the budget development stage will be to examine and assess the business plan proposals to deliver against these strategic aims and objectives, and the results expected to be achieved.

3. The 2009/10 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 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

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

• Maintain the highest level of preparedness and resources to protect Londoners against Terrorism
• Greater emphasis to be given to preventing and detecting crime of violence and hate, including violence against specific groups such as women
• Immediate priority to be given to tackling knife and gun crime, including provision for additional handheld scanners and knife arches
• A more visible police presence on buses, trains and at transport hubs
• Reduce bureaucracy to increase resources for frontline policing
• Increase police accountability through the introduction of crime mapping and regular public meetings with borough commanders
• Greater emphasis on internal HR issues including staff welfare, morale, diversity and equality

The Mayor has also outlined specific policy priorities applicable to the GLA and all functional bodies which are shown in full in Appendix B to the Mayor’s Budget Guidance, but which include

• GLA group priorities for preventative work on youth violence, including more youth opportunities, are currently being developed by the Mayor. It is clear that significantly increased resources will be needed across the GLA group to tackle these issues and budgets should be developed to ensure that the GLA group contributions to implementing the Mayor’s priorities in this key area are fully funded for 2009-10 onwards
• Deliver value for money and better quality of life for all Londoners
• Prioritising 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 Games and Paralympic Games and its legacy
• Deliver the Mayor’s revised Housing Strategy to be published in the autumn
• Implementing the Living wage for London and promoting equality in the workforce.

Business and Budget Plans

6. The business and budget plans must:

• Cover at least the period to 2011-12
• 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

7. 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.
• Costs of manifesto commitments being implemented in 2008-09 and how these are being financed together with budget implications over the planning period
• A summary of identified savings to balance the budget
• A summary of outstanding financial uncertainties and issues

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. It has been made explicit that the information sought in the guidance is requested in accordance with the provisions of sections 110 and 125 of the GLA Act 1999.

Financial Planning Guidelines

8. The Mayor’s intention is that value for the national and council taxpayer should drive the development of forward plans with the functional bodies rigorously pursuing efficiency savings, including savings from increased joint working across the GLA group. This means that the guidelines are more stringent than those advised in the guidance for the 2008-09 budget process.

9. For 2009-10 budget plans should be prepared on the basis of an annual increase in net revenue expenditure of 1.75 per cent over the 20087-09 amount of £2,595.0M presented in the Mayor’s published budget and annual increases of 1.25 per cent in 2010-11 and 2011-12. In addition the Authority is asked to prepare financially balanced plans which take account of alternative options to increase net revenue spend in 2009-10 over 2008-09 of 0.25 per cent more or less than the above guidelines (that is 1.5 to 2.0 per cent range), including the impact on service levels over the three year period. The Mayor has also indicated that there is no addition to the GLA council tax precept for Olympic security costs.

Consultation

10. 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.

11. 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 (as will be seen in the business plan and budget papers elsewhere on this agenda). The time available for consultees to respond is also limited to the short ‘gap’ between the availability of information available at this time and the Mayor’s requirement to get responses included in the November Budget Submission. Accordingly, in the week commencing 20 September, 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, requesting responses by 20 October. An assessment of responses will be made included in the draft budget submission in November.

12. 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.

13. Progress on development of the budget submission will be reviewed through the Mayor’s meetings with functional body members and chief officers; regular officer–level meetings, will support this.

14. The MPA has to deliver its budget submission to the Mayor by 27 November 2008, after approval by the full Authority.

Financial implications of budget guidance

15. The budget guidance gives a clear expectation on the level of increase in net revenue expenditure, which is acceptable. The guidance does not give any specific direction on the level of Government Grant to be assumed. Each member of the GLA group is to keep under review a best estimate of the level of grant support expected. GLA officers will examine these assumptions during the budget development process.

16. Work has already started on the business-planning framework and this committee has a report on the current agenda.

17. Applying the Mayor’s guideline of a 1.75% increase in net revenue expenditure (NRE) to his 2008-09 published NRE of £2,595.0M would give a 2009-10 NRE envelope of £2,640.4M. The table below shows the effect in 0.25% variations away from this in 2008/09. Every 0.25% variation from the 1.75% guideline would add/deduct £6.6M. This guideline is now forming the basis of the detailed budget work now being undertaken by the MPS.

Table 1 - Effect of 0.25% variations away from the guideline 1.75% increase in net revenue expenditure (NRE) in 2008/09

For completeness, although not requested by the Mayor, the figures above show the position in 10/11 and 11/12 if 1.25% increases were to be added to the low and high options.

18. 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 2012 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 2009/10 and future years.

E. Background papers

• Mayor’s Budget Guidance 2009/10 (Appendix 1)

F. Contact details

Report authors: Ken Hunt Treasurer, MPA

For more information contact:

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

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