Mayor's Background Statement in support of his Final Draft Consolidated Budget for 2008-09

Summary

This report presents the Mayor's Budget proposals for the GLA and the functional bodies for 2008-09. This is the final draft budget and it will be the Budget unless the Assembly amends it, In accordance with the provisions of the GLA Act 1999, before 29 February.

1. Introduction

1.1 On 30 January the Assembly considered the Mayor's draft consolidated budget and did not make any amendments to it as defined in the Greater London Authority Act 1999. The process of approval of the final draft budget is set out in Schedule 6 of this Act and is as follows:

(a) After considering the final draft budget, the Assembly must approve it with or without amendment. The only amendments which are to be made are those agreed to by at least two-thirds of the Assembly members voting.

(b) If no amendments are made following consideration of the final draft budget, the final draft budget shall be deemed to be approved without amendment.

(c) The final draft budget as approved by the Assembly with or without amendment shall be the Authority's consolidated budget for 2008-09.

(d) It shall be the duty of the Assembly to approve the final draft budget with or without amendment before 29 February 2008. If the Assembly fails to meet this deadline, the final draft budget shall be the Authority's consolidated budget for 2008-09.

1.2 Annex A to this statement presents the Mayor's final draft consolidated budget as defined in the Greater London Authority Act 1999. Separate accompanying documents provide an explanation of the budget proposals, and finance and legal advice. These are the same as those provided for the draft consolidated budget, except for changes made where necessary to reflect the Mayor's final budget proposals, updated information in respect of grant and council tax levels, consequential drafting and the correction of typographical mistakes.

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2. Final Draft Budget Proposals

2.1 Careful consideration has been given to the debate on the Mayor's draft consolidated budget at the 30 January Assembly meeting. The final draft budget results in a small reduction from the precept proposed in the draft consolidated budget. This is made possible by an increase from forecast in the final council tax base and from the GLA’s share of a surplus from borough council tax collection, which together are equivalent to an additional £8.4 million of income. The Mayor’s final draft budget proposes increases in the budget requirements for MPA and LFEPA, of £4.2 million in total and this means that of the extra £8.4m available, this is split equally between increased budget provision and a reduction in the burden on council taxpayers.

2.2 The increase in council tax base means that the component budget requirement for the Mayor of London has been increased by £0.1 million. This is because the amount to be raised through the council tax precept for the 2012 Olympic and Paralympic Games increases from the £58.6 million forecast to £58.7 million (this is the product of a £20 precept for a band D household). This increases the like for like increase in the Mayor’s component budget from 0.8 to 0.9 per cent, however, this is still less than the increase in the Mayor’s proposed budget for the Assembly, which remains unchanged from that presented on 30 January. Therefore the Assembly cannot increase its component budget by way of budget amendment.

2.3 Reference was made in the Assembly’s debate to LFEPA’s funding position and the proposed use of reserves in 2008-09 and 2009-10. Even after the proposed use of general reserves to support the budget in these years, the level would still be 3 per cent of net revenue expenditure by 1 April 2010. However, the Mayor is proposing to reduce the use of reserves in 2008-09 by £3 million so this is available to support the budget in 2009-10. The other proposed change is to increase the budget requirement of the MPA by £1.2 million to ensure the full roll-out of the ‘No Witness No Justice’ programme, which the MPA had requested in particular should be considered if there was any flexibility in the final budget adjustments.

2.4 The net effect of increases in LFEPA, MPA and Mayor of London component budget requirements, the final tax base and the Authority’s share of a the net surplus on London Borough collection funds is to reduce the increase in the GLA precept for a band D household to 11p a week, as shown below:

Increase in precepts Pence/week Metropolitan Police Authority 7p London Fire & Emergency Planning Authority 6p Increased surplus on Borough Collection Funds -2p Total band D increase 11p

2.5 There are no other changes reflected within the Mayor’s final draft budget. The budget proposals include a net £3.9 million to develop borough partnerships in two-year deals

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to provide an extra 320 police officers within the Metropolitan Police Service (MPS) to tackle specific community issues. These officers are part of a planned overall increase next year of almost 1,000 police officers, subject to the outcome of bids to Government. There is an extra £2 million in 2008-09 for 20 officer posts to provide more proactive resources in combating the increasingly harmful gun and gang culture and an additional £5 million rising to £19 million in 2009-10 to continue the roll-out of Integrated Borough Operations to provide important local information and intelligence to help deliver the best response to incidents and ensure public and officer safety.

2.6 One of the highest priorities continues to be given to combating the terrorist threat and fulfilling the security and protection duty. However, the Home Office has not yet informed the MPS of the details of its security and counter-terrorism settlement for 2008-09 or later years. The budget provides an increase of £59 million in 2008-09. If there were to be a shortfall in the grant settlement, then the MPA and the MPS would manage operations within the overall financial resources available so that there is a nil budgetary impact.

2.7 The MPS are also leading on the security, safety and resilience arrangements for the 2012 Olympic and Paralympic Games. In addition to staff costs to expand key areas this budget also includes proposals for new Strategic Co-ordination and Olympic Intelligence Centres at Hendon, a deployment base and two sector bases within the Olympic Park and additional critical IT infrastructure enhancements to Command and Control, additional Airwave coverage and a secure Data Centre. The budget includes an extra £40 million in 2008-09 and £25 million for extra capital expenditure. The outcome of the bid to the Home Office will determine the precise amounts and this will be managed to ensure there is no impact on council tax payers.

2.8 TfL’s longer-term funding has allowed it to put in place a range of programmes and projects to make London’s transport system more comprehensive, more reliable, faster and accessible, and going a long way towards meeting growth in demand. As explained in the Mayor’s published background statement in support of the draft consolidated budget the implications of the Spending Review are not yet fully appraised and are not included in this budget. The current deal with the Government always assumed that reserves would be built up over a period before being drawn down by 2009-10. Accordingly the proposed budget for TfL uses £613 million in 2008-09 and £336 million in the following year.

2.9 The Mayor’s published background statement also stated that the contribution of £12 million from council tax payers is appropriate since TfL is investing in a range of services which are directed at providing broader benefits to the community and not just to those contributing to TfL’s transport revenues and in the context of major funding contributions from the Government, TfL (through its efficiency programme) and fare- payers.

2.10 The amount to be raised through the council tax precept for the 2012 Olympic and Paralympic Games remains at 38p a week for a band D household – the same as for the

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each of the last two years in line with the Mayor’s commitment agreed with Government that Londoners will not be asked to pay any more than this amount to fund the Games. There is no contribution in respect of the proposed component budget requirements for the MPA, LFEPA, TfL and LDA.

2.11 The LDA has a pivotal role in ensuring that the 2012 Games bring lasting benefits to Londoners through effective land remediation and in ensuring that ambitious design and effective delivery of a sustainable plan brings a worthwhile and permanent legacy to the east of London. The budget includes a provision of £300 million in line with the Mayor’s revised Memorandum of Understanding with Government that he contributes this additional amount towards the cost of the Games, from which the first £100 million tranche is assumed to be payable in 2010-11. LDA’s programme expenditure plans and debt obligations remain fully-funded, based on its necessarily prudent basis for the estimate of capital receipts from the sale of land, although the Mayor anticipates that actual receipts will be significantly higher.

3. The Impact on Local Taxpayers

3.1 The Mayor’s final budget proposals provide for gross expenditure of £11.3 billion funded as shown in the table below.

How budgets are funded £m % Spending plans 11,346 100 Less: Fares, charges and other income -3,901 -34 Specific government grants -3,661 -32 Government grants and redistributed business rates -2,235 -20 Reserves (TfL) -613 -5 Reserves (other) -22 -1 Surplus in council tax collection fund -6 - Amount to be met by council tax payers 908 8

3.2 The effect of the Mayor's final budget proposals is to require an increase in the GLA precept for a band D household of 11p a week. Over two-thirds of households in London fall within bands A to D and for the less than 2 per cent of households who fall in band H (the top band), the increase will be 22p a week.

3.3 The overall percentage increase in the GLA precept is 2.0 per cent and the increase attributable to each constituent body is summarised in the table below.

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Breakdown of the increase in 2008-09 2007-08 Increase Increase band D amounts a year a week Metropolitan Police Authority £227.02 £223.60 £3.42 7p London Fire & Emergency Planning £50.46 £47.12 £3.34 6p Authority Greater London Authority* £30.15 £30.00 £0.15 - Transport for London £4.09 £4.13 -£0.04 - London Development Agency £0 £0 £0 - Surplus on Borough Collection -£1.90 -£0.97 -£0.93 -2p Funds Total GLA group £309.82 £303.88 £5.94 11p

* Includes £20 for the 2012 Olympic and Paralympic Games funding agreement.

4. Conclusions

4.1 The Mayor has a number of statutory functions that must be fulfilled on behalf of Londoners and reflected in a financially balanced budget. These include the existing very major responsibilities in respect of policing, transport, fire and emergency planning and regeneration of land use/planning, and new extended responsibilities arising from the GLA Act 2007 in a wide range of areas including housing, adult skills, planning, waste, culture and sport, health, sustainable development, energy and climate change. The Mayor also has a number of discretionary functions, in particular a general power to do anything to further the principal purposes of the Authority, i.e. promoting economic development and wealth creation in Greater London, promoting social development in Greater London, promoting the improvement of the environment in Greater London, promoting the reduction of health inequalities between persons living in Greater London and contributing towards the mitigation of, or adaptation to, climate change in the United Kingdom.

4.2 The Mayor remains satisfied that the final draft budget is financially balanced and achieves a fair and reasonable balance between the statutory and discretionary responsibilities for the provision of services and the burden upon those required to finance the net cost. The estimates of income and expenditure, including allowance for inflation, government funding and council tax are soundly based, and there are appropriate provisions for contingencies and the level of reserves, which are forecast to reduce by £1.1 billion to £437 million by 31 March 2011, are adequate.

4.3 The Mayor also remains firmly of the opinion that the proposed budget requirement could not reasonably be categorised as “excessive” in the context of the government’s capping powers. Furthermore given the importance that the government, the public and businesses place on improved policing in the capital, improved emergency provision, improved public transport and improved environment in the capital the Mayor believes that the increase of

5 2.5 per cent in the consolidated budget requirement is reasonably required. However, the Mayor is aware that the Government has said that it is prepared to take action in 2008-09.

4.4 In commending the budget proposals to the Assembly the Mayor believes that Londoners will recognise and support his plans to continue to invest in public services in London as pledged when first elected. The budget builds on the previous seven budgets that are delivering impressive results, improving London’s policing, transport and fire services. This is vital not only for Londoners’ quality of life, but also to maintain the city’s economic competitiveness. This year’s budget also provides sustained investment to improve the capital’s environment and tackle climate change.

5. Recommendations

5.1 On the basis of the information set out in this document and annexes, the Assembly approves the Mayor's draft consolidated budget requirement for the GLA and the functional bodies of £3,148,600,000 as contained in ANNEX A. This draft consolidated budget requirement is made up as follows:

Constituent body Component budget requirement Metropolitan Police Authority £2,595,000,000 London Fire & Emergency Planning Authority £405,100,000 Mayor of London £127,800,000 London Assembly £8,700,000 Transport for London £12,000,000 London Development Agency £0 Total £3,148,600,000

Ken Livingstone Mayor of London

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Annex A

Draft component and consolidated budget requirements 2008-09

7 Draft component and consolidated budgets

Metropolitan Police Authority (“MPA”) draft component budget requirement calculations

Line Sum Description (1) £3,510,800,000 estimated expenditure of the MPA calculated in accordance with s85(4)(a) of the Act (2) £0 estimated allowance for contingencies for the MPA under s85(4)(b) of the Act (3) £0 estimated reserves to be raised for meeting future expenditure of the MPA under s85(4)(c) of the Act (4) £0 estimate of reserves to meet a revenue account deficit of the MPA under s85(4)(d) of the Act (5) £3,510,800,000 aggregate of the amounts for the items set out in s85(4) of the Act for the MPA (lines (1) + (2) + (3) + (4) above) (6) -£915,800,000 estimate of MPA’s income calculated in accordance with s85(5)(a) of the Act (7) £0 estimate of MPA’s reserves to be used in meeting amounts in lines (1) and (2) above under s85(5)(b) of the Act (8) -£915,800,000 aggregate of the amounts for the items set out in section 85(5) of the Act for the MPA (lines (6) + (7)) (9) £2,595,000,000 the component budget requirement for MPA (being the amount by which the aggregate at (5) above exceeds the aggregate at (8) above calculated in accordance with section 85(6) of the Act)

The draft component budget requirement for the MPA for 2008-09 is £2,595,000,000.

8 Draft component and consolidated budgets

London Fire and Emergency Planning Authority (“LFEPA”) draft component budget requirement calculations

Line Sum Description (10) £453,400,000 estimated expenditure of LFEPA for the year calculated in accordance with s85(4)(a) of the Act (11) £0 Estimated allowance for contingencies for LFEPA under s85(4)(b) of the Act (12) £0 estimated reserves to be raised for meeting future expenditure of LFEPA under s85(4)(c) of the Act (13) £0 estimate of reserves to meet a revenue account deficit of LFEPA under s85(4)(d) of the Act (14) £453,400,000 aggregate of the amounts for the items set out in s85(4) of the Act for LFEPA (lines (10) + (11) + (12) + (13) above) (15) -£28,100,000 estimate of LFEPA’s income calculated in accordance with s85(5)(a) of the Act (16) -£20,200,000 estimate of LFEPA’s reserves to be used in meeting amounts in lines (10) and (11) above under s85(5)(b) of the Act (17) -£48,300,000 aggregate of the amounts for the items set out in section 85(5) of the Act for LFEPA (lines (15) + (16)) (18) £405,100,000 the component budget requirement for LFEPA (being the amount by which the aggregate at (14) above exceeds the aggregate at (17) above calculated in accordance with section 85(6) of the Act)

The draft component budget requirement for LFEPA for 2008-09 is £ 405,100,000.

9 Draft component and consolidated budgets

Greater London Authority: Mayor of London (“Mayor”) draft component budget requirement calculations

Line Sum Description (19) £144,800,000 estimated expenditure of the Mayor for the year calculated in accordance with s85(4)(a) of the Act (20) £200,000 estimated allowance for contingencies for the Mayor under s85(4)(b) of the Act (21) £8,400,000 estimated reserves to be raised for meeting future expenditure of the Mayor under s85(4)(c) of the Act (22) £0 estimate of reserves to meet a revenue account deficit of the Mayor under s85(4)(d) of the Act (23) £153,400,000 aggregate of the amounts for the items set out in s85(4) of the Act for the Mayor (lines (19) + (20) + (21) + (22) above) (24) -£15,900,000 estimate of the Mayor’s income calculated in accordance with s85(5)(a) of the Act (25) -£9,700,000 estimate of Mayor’s reserves to be used in meeting amounts in lines (19) and (20) above under s85(5)(b) of the Act (26) -£25,600,000 aggregate of the amounts for the items set out in section 85(5) of the Act for the Mayor (lines (24) + (25)) (27) £127,800,000 the component budget requirement for the Mayor (being the amount by which the aggregate at (23) above exceeds the aggregate at (26) above calculated in accordance with section 85(6) of the Act)

The draft component budget requirement for the Mayor for 2008-09 is £127,800,000.

10 Draft component and consolidated budgets

Greater London Authority: London Assembly (“Assembly”) draft component budget requirement calculations

Line Sum Description (28) £8,700,000 estimated expenditure of the Assembly for the year calculated in accordance with s85(4)(a) of the Act (29) £0 estimated allowance for contingencies for the Assembly under s85(4)(b) of the Act (30) £0 estimated reserves to be raised for meeting future expenditure of the Assembly under s85(4)(c) of the Act (31) £0 estimate of reserves to meet a revenue account deficit of the Assembly under s85(4)(d) of the Act (32) £8,700,000 aggregate of the amounts for the items set out in s85(4) of the Act for the Assembly (lines (28) + (29) + (30) + (31) above) (33) £0 estimate of the Assembly’s income calculated in accordance with s85(5)(a) of the Act (34) £0 estimate of Assembly’s reserves to be used in meeting amounts in lines (28) and (29) above under s85(5)(b) of the Act (35) £0 aggregate of the amounts for the items set out in section 85(5) of the Act for the Assembly (lines (33) + (34)) (36) £8,700,000 the component budget requirement for the Assembly (being the amount by which the aggregate at (32) above exceeds the aggregate at (35) above calculated in accordance with section 85(6) of the Act)

The draft component budget requirement for the Assembly for 2008-09 is £8,700,000.

11 Draft component and consolidated budgets

Transport for London (“TfL”) draft component budget requirement calculations

Line Sum Description (37) £6,793,000,000 estimated expenditure of TfL for the year calculated in accordance with s85(4)(a) of the Act (38) £28,000,000 estimated allowance for contingencies for TfL under s85(4)(b) of the Act (39) £0 estimated reserves to be raised for meeting future expenditure of TfL under s85(4)(c) of the Act (40) £0 estimate of reserves to meet a revenue account deficit of TfL under s85(4)(d) of the Act (41) £6,821,000,000 aggregate of the amounts for the items set out in s85(4) of the Act for the TfL (lines (37) + (38) + (39) + (40) above) (42) -£6,196,000,000 estimate of TfL income calculated in accordance with s85(5)(a) of the Act (43) -£613,000,000 estimate of TfL’s reserves to be used in meeting amounts in lines (37) and (38) above under s85(5)(b) of the Act (44) -£6,809,000,000 aggregate of the amounts for the items set out in section 85(5) of the Act for TfL (lines (42) + (43)) (45) £12,000,000 the component budget requirement for TfL (being the amount by which the aggregate at (41) above exceeds the aggregate at (44) above calculated in accordance with section 85(6) of the Act)

The draft component budget requirement for TfL for 2008-09 is £12,000,000.

12 Draft component and consolidated budgets

London Development Agency (“LDA”) draft component budget requirement calculations

Line Sum Description (46) £403,700,000 estimated expenditure of the LDA for the year calculated in accordance with s85(4)(a) of the Act (47) £3,000,000 estimated allowance for contingencies for the LDA under s85(4)(b) of the Act (48) £0 estimated reserves to be raised for meeting future expenditure of the LDA under s85(4)(c) of the Act (49) £0 estimate of reserves to meet a revenue account deficit of the LDA under s85(4)(d) of the Act (50) £406,700,000 aggregate of the amounts for the items set out in s85(4) of the Act for the LDA (lines (46) + (47) + (48) + (49) above) (51) -£406,700,000 estimate of the LDA income calculated in accordance with s85(5)(a) of the Act (52) £0 estimate of the LDA’s reserves to be used in meeting amounts in lines (46) and (47) above under s85(5)(b) of the Act (53) -£406,700,000 aggregate of the amounts for the items set out in section 85(5) of the Act for the LDA (lines (51) + (52)) (54) £0 the component budget requirement for the LDA (being the amount by which the aggregate at (50) above exceeds the aggregate at (53) above calculated in accordance with section 85(6) of the Act)

The draft component budget requirement for the LDA for 2008-09 is £0.

13 Draft component and consolidated budgets

Greater London Authority (“GLA) draft consolidated budget requirement calculation

Line Description (55) £3,148,600,000 the GLA’s consolidated budget requirement (the sum of the amounts in lines (9) + (18) + (27) + (36) + (45) + (54)) calculated in accordance with section 85(8) of the Act

The draft consolidated budget requirement for the GLA for 2008-09 is £3,148,600,000.

14 Draft component and consolidated budgets

Summary of draft consolidated budget 2008-09

£ MPA LFEPA GLA: Mayor GLA: Assembly TfL LDA Total Estimated expenditure 3,510,800,000 453,400,000 144,800,000 8,700,000 6,793,000,000 403,700,000 11,314,400,000

Estimated allowance for contingencies - - 200,000 - 28,000,000 3,000,000 31,200,000

Estimated reserves to be raised for - - 8,400,000 - - - 8,400,000 meeting future expenditure

Estimate of reserves to meet a revenue ------account deficit

Estimated total expenditure 3,510,800,000 453,400,000 153,400,000 8,700,000 6,821,000,000 406,700,000 11,354,000,000

Estimate of income -915,800,000 -28,100,000 -15,900,000 - -6,196,000,000 -406,700,000 -7,562,500,000

Estimate of reserves to be used - -20,200,000 -9,700,000 - -613,000,000 - -642,900,000

Estimated total income -915,800,000 -48,300,000 -25,600,000 - -6,809,000,000 -406,700,000 -8,205,400,000

Budget requirement 2,595,000,000 405,100,000 127,800,000 8,700,000 12,000,000 - 3,148,600,000

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Draft consolidated budget 2008-09: Explanation of proposals (updated budget consultation paper

17 Contents

Page

Mayor’s foreword...... 19

Introduction and overview...... 20

Metropolitan Police Authority...... 24

London Fire and Emergency Planning Authority...... 28

Greater London Authority: Mayor of London...... 32

Greater London Authority: London Assembly ...... 38

Transport for London...... 41

London Development Agency...... 53

Consolidated budget requirement and funding...... 60

Capital spending plan...... 62

Appendix A – Progress on 2007-08 key deliverables...... 72

Appendix B – Metropolitan Police Authority...... 86

Appendix C – London Fire and Emergency Planning Authority ...... 91

Appendix D – Mayor of London...... 93

Appendix E – Transport for London ...... 95

Appendix F – 2012 Games and legacy...... 101

Appendix G – Climate Change...... 104

Appendix H – Savings & Efficiencies and Delivering More Together...... 106

Appendix I – Spending and financing summary...... 108

Appendix J – Key dates...... 109

Appendix K – Changes to budget consultation paper ...... 110

18 Mayor’s foreword

Superseded by the Mayor’s Background Statement

Mayor’s draft component and consolidated budgets 2008-09 19

Section 1 – Introduction and overview

1.1 This consultation paper sets out the budget proposals for 2008-09 for the Greater London Authority (GLA) and the four functional bodies:

The Metropolitan Police Authority (MPA) oversees the Metropolitan Police Service, which provides policing in London. The London Fire and Emergency Planning Authority (LFEPA) provides community safety, fire and rescue services, and emergency planning. Transport for London (TfL) has responsibility for the London Underground network, London’s bus services, the Docklands Light Railway, London Overground, the Croydon Tramlink, the network of main roads in London and regulation of London’s licensed taxi and private minicab services and The London Development Agency (LDA) works with business to sustain and improve London’s role as a business centre, while increasing economic opportunity for all Londoners.

1.2 As a result of changes introduced by the GLA Act 2007, for the purpose of budget setting the Mayor of London and London Assembly are now treated as separate constituent bodies. In previous years’ there was a single budget for the GLA. The budget for the Assembly comprises estimates for direct expenditure and income, and appropriate contingencies and financial reserves for Assembly functions. The budget for the Mayor comprises the rest of the GLA, and includes expenditure incurred on accommodation in relation to the Assembly’s business, and goods and services provided or procured for the Authority in general.

1.3 The GLA Group is subject to the local government finance regime. The planned spending of the GLA and the functional bodies after deducting any funding from reserves and expected income (other than general funding from the Government and the council tax) is known as their budget requirement. These requirements are consolidated to form the consolidated budget requirement for the GLA.

1.4 The Mayor proposes the budget requirements and has the final say in setting them unless the London Assembly achieves a two-thirds majority in favour of alternative proposals.

1.5 The budget proposals for each constituent body within the GLA Group have to be approved separately, and therefore they are presented in organisational terms in Sections 2 to 7 of this document. They are also presented in the order of the amount that council tax payers contribute to their services.

1.6 The complexities of a budget of over £11billion gross, £3billion net, and the very diverse nature of the functions of the individual component bodies, make it complicated to present information that meets the needs of all audiences. This document for discussion is therefore a summarised version of the overall financial proposals.

Mayor’s draft component and consolidated budgets 2008-09 20

Section 1 – Introduction and overview

Summary of proposals 1.7 To realise the Mayor’s vision of London as an exemplary sustainable world city, sustainable development has been placed at the heart of the Mayor’s budget process, with the Mayor’s 2008-09 budget proposals providing for the following major areas of spending:

Continuing to develop police Safer Neighbourhood Teams and deliver the Estates Strategy to support them to provide effective front-line policing, public reassurance and public confidence and direct resources to reduce serious violence and protect young people. Enhance counter terrorism capability and capacity. An unchanged contribution to the funding package agreed with Government towards delivering a successful 2012 Olympic and Paralympic Games and maximising the economic, social, health and environmental benefits of the Games to London and Londoners. Mayor’s Youth Offer to provide more activities and services for young Londoners by providing across all London boroughs more places to go and things to do, developmental and diversionary support and an Innovations and Development Fund to improve the quality of and access to services. Delivering the Mayor’s Climate Change Action Plan through measures to reduce carbon dioxide and other emissions, and non-renewable energy consumption, and measures to minimise waste and increase recycling, minimise water consumption and promote water efficiency. Measures towards reducing excess journey times by 13 per cent by 2020 and increasing capacity by 25 per cent with improvements to include: o New trains on the Victoria line from late 2009. o All District line trains refurbished by 2009. o The construction of 55 new DLR railcars due to enter service from 2008. o Opening of the Woolwich Arsenal DLR extension. o Improving London Overground services, including enhanced frequency, improved service and security and, as from late 2008-09, new trains. Improving the accessibility of services including: o continuing the expansion of stations which are step free from platform to street level o providing visual displays and audio announcements on all buses o introducing free travel on the Dial-A–Ride service from January 2008 Improving Londoners’ Health by introducing the London-wide Low Emission Zone and continuing to deliver the road safety programme to reduce the number of people killed or seriously injured.

Mayor’s draft component and consolidated budgets 2008-09 21

Section 1 – Introduction and overview

Maintain current levels of emergency cover and continuing to deliver and maintain the dramatic increase in capacity to improve resilience to respond to the new risks facing London.

Delivering the Mayor’s housing strategy, in particular working with partners to deliver the programme of 50,000 more affordable homes over the period 2008-11.

1.8 Subject to confirmation of government grant funding, and reflecting these major areas of spending, the Mayor consulted on a consolidated budget requirement for the GLA and functional bodies for 2008-09 of £3,144.3m. This has been updated as follows:

Budget requirements Approved Proposed Plan Plan 2007-08 2008-09 2009-10 2010-11 £m £m £m £m Metropolitan Police Authority 2,532.7 2,595.0 2,653.4 2,713.1 London Fire and Emergency Planning Authority 391.5 405.1 425.3 444.7 Mayor of London1 117.0 127.8 131.2 133.6 London Assembly 8.6 8.7 8.9 9.2 Transport for London 12.0 12.0 12.0 12.0 London Development Agency - - - - Consolidated budget requirement 3,061.8 3,148.6 3,230.8 3,312.6

1.9 An explanation of the individual budget requirements for each member of the GLA group is provided in sections 2 to 7 of this paper.

Amount to be raised from council tax payers 1.10 The council tax applicable to the GLA Group is set at a level that recovers the difference between the budget requirements of the five organisations and the funding received from the Government. Allowing for anticipated government grants, the proposed consolidated budget requires about £908m (2007-08: £882m) to be raised from the council tax payer. This and other sources of finance are summarised below:

£m Per cent Spending plans 11,346 100 Less: Fares, charges and other income -3,901 -34 Specific government grants -3,661 -32 Government grants and redistributed business rates -2,235 -20 Reserves (TfL) -613 -5 Reserves (other) -22 -1 Surplus in council tax collection fund -6 - Amount to be met by council tax payers 908 8

1 Separate component budget requirements for the Mayor and the Assembly take effect from 2008-09, equivalent figures for 2007-08 are shown.

Mayor’s draft component and consolidated budgets 2008-09 22

Section 1 – Introduction and overview

1.11 To raise this additional £26m from council taxpayers would require a band D council tax of £310 for the London boroughs and £83 in the City of London, after taking into account the 0.9 per cent increase in the Greater London council tax base for 2008-09. This is an increase of 11p a week (2.0 per cent).

1.12 Section 8 provides a more detailed analysis of the extent to which government grants fund the budget requirements and the amount of council tax to be raised.

2012 Olympic and Paralympic Games 1.13 The band D amount for the financial contribution to support the cost of the 2012 Games remains at £20. Further information on the GLA Group contributions to the Games and creating long-lasting wider economic benefits across London and for its diverse communities is provided in Appendix F.

Climate Change 1.14 The Mayor’s Climate Change Action Plan published in 2007 sets the framework for the GLA group to reduce carbon emissions up to 2025. In 2008 the Mayor will continue to take a leading role in the Large Cities Climate Change group. The GLA is developing two new strategies, a Mitigation and Energy Strategy and an Adaptation to Climate Change Strategy for London. Appendix G identifies action across the GLA group to improve the energy efficiency of buildings, to maximise use of decentralized energy, to promote staff energy savings behaviour and to minimise transport emissions.

Further information 1.15 Section 9 concludes the main sections of this consultation paper with a summary of the draft capital spending plan for each of the five organisations. Appendix A provides information on performance in the current year, 2008-09, on the key deliverables, which were set as part of the budget process. Appendices B to I provide more explanatory information on the year-on-year budget changes and Appendix J lists the remaining key dates in the budget process.

1.16 There are also more detailed public documents relating to the budget proposals, including those that have been the subject of individual scrutiny and discussion by the functional bodies. These are available on the GLA's and functional bodies' websites. For further information on these documents, or generally, please contact:

Ray Smith (for GLA Group) e-mail: [email protected] Doug Wilson (for MPA and LFEPA) e-mail: [email protected] Peter Greig (for TfL and LDA) e-mail: [email protected] John Moyles (for GLA) e-mail: [email protected]

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Section 2 – Metropolitan Police Authority

2.1 The mission of the Metropolitan Police Service and Metropolitan Police Authority is to work together for a safer London to ensure that communities are engaged with, confident in and satisfied with the police service, security is improved and the public feel reassured, crime, disorder, vulnerability and harm are prevented and reduced and offenders are brought to justice.

2.2 Key recent achievements are:

A reduction in overall crime of 13.4 per cent in the first three years of the current Public Service Agreement and in line to exceed the target of a 19.4 per cent reduction from a 2003-04 baseline by March 2008. The MPS has been judged as one of the top performing forces in the country in neighbourhood policing and addressing serious crime, according to the findings of a national performance assessment. The MPS was judged good or excellent in four of the seven categories of the Home Office annual Police Performance Assessment Framework and the results mark a second successive year of improvement. The MPS was one of only six forces considered excellent in the neighbourhood policing category following the introduction of Safer Neighbourhoods Teams in all 624 wards, with extra coverage in 87 wards having a population of more than 14,000. In addition, 21 Safer Transport teams have been established to focus on crime and anti-social behaviour on, and close to, public transport along with six Safer Neighbourhoods teams focussing on particular community issues.

Key Deliverables 2.3 The budget proposals for the Metropolitan Police Authority are dependent on containing additional costs of security operations, but have been framed to provide sufficient resources to:

Continue to develop the Safer Neighbourhood Teams and deliver the Estates Strategy Plan to provide effective front-line policing, public reassurance and public confidence. Enhance counter-terrorism capability and capacity. Make services more accessible and improve people’s experience of their contact with the police service, especially victims and witnesses. Reduce the incidence of homicide, grievous bodily harm, weapon-enabled serious violence and domestic violence homicide. Improve the reporting of serious sexual offences, the criminal justice outcomes for rape and increase the domestic violence arrest rate for offences. Improve the quality of police responses to serious violence through identifying and managing risk with partners.

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Section 2 – Metropolitan Police Authority

Improve police engagement with those communities linked to priority criminal networks/gangs and increase the confidence of victims and witnesses in the handling of these cases. Increase the number of criminal networks/gangs disrupted and reduce the harm they cause in communities especially those relating to drugs and firearms. Support the London Criminal Justice Board to increase the proportion of the public that have confidence in the criminal justice system. Increase the proportion of offences that are brought to justice, particularly the proportion of serious offences. Work with partners to reduce road casualties. Undertake planning and preparation for the 2012 Olympic and Paralympic Games and other major events and prepare for and respond to major incidents. Increase community trust and confidence in the police use of stop and search ensuring it is used fairly and proportionately. Reduce carbon emissions in line with the Climate Change Action Plan and Clinton Foundation Projects as well as offsetting MPS’ air travel emissions. Work to reduce the MPS’ environmental impact, including continued use and trial of alternative vehicles.

Proposed budget requirement 2.4 The Police Authority's gross expenditure is estimated to be £3,510.8m. After deducting fees, charges, specific grants, other income and use of reserves, the proposed budget requirement for 2008-09 is £2,595.0m. This is £62.3m higher than that for 2007-08.

Explanation of budget changes 2.5 The key changes in income and expenditure areas between years and that projected for the following two years for each of the main service areas are set out in the table overleaf. The changes in 2008-09 relative to 2007-08 can be summarised as follows:

Changes in the Police Authority’s spending plans 2008-09 £m 2007-08 budget requirement 2,532.7 Changes due to: Inflation 76.5 Net growth in existing services and programmes 23.2 New initiatives and service improvements 137.6 Savings and efficiencies -71.8 Increase in specific grants -107.2 Changes in use of reserves 4.0 2008-09 Budget requirement 2,595.0

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Section 2 – Metropolitan Police Authority

Service analysis Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Territorial Policing 1,346.2 1,334.0 1,329.3 1,341.4 1,335.3 Specialist Crime Directorate 368.9 380.1 378.5 381.8 381.8 Specialist Operations 179.5 203.2 237.9 235.3 233.5 Central Operations 260.7 260.5 296.9 336.4 363.6 Operational Services 165.5 163.4 161.8 157.6 158.2 Strategy, Modernisation & 14.9 14.3 13.7 13.4 13.4 Performance Directorate Directorate of Public Affairs 6.1 6.1 6.1 6.1 6.1 Directorate of Information 211.1 218.8 212.9 215.5 222.9 Resources Directorate 227.9 241.6 237.2 247.6 254.5 Human Resources Directorate 151.1 151.4 157.8 146.4 143.9 Pensions 29.2 29.2 29.2 29.2 29.2 Centrally held budgets1 60.4 32.4 124.5 201.8 280.6 MPA 11.5 11.1 12.6 12.5 12.5 Savings to be agreed - - - -40.5 -64.1 Net service expenditure 3,033.0 3,046.1 3,198.4 3,284.5 3,371.4 Capital financing costs 21.5 21.0 21.6 21.6 21.6 Interest receipts -11.4 -11.4 -11.4 -11.4 -11.4 Specific grants -506.4 -538.0 -613.6 -641.3 -668.5 Net revenue expenditure 2,536.7 2,517.7 2,595.0 2,653.4 2,713.1 Transfers to/from reserves -4.0 15.0 - - - Budget requirement 2,532.7 2,532.7 2,595.0 2,653.4 2,713.1

Note 1: This line includes budgets that the MPA will not attribute to business groups until later in its budget setting process. It includes, for example, inflation, pay awards and other such budget changes.

Inflation 2.6 Inflation is budgeted to add £76.5m to MPA costs in 2008-09. This is due to pay awards for uniformed officers and police staff (£59.6m, including overtime) and provision for general price inflation on non-staff budgets (£16.9m - £7.5m of which has then been eliminated through savings and efficiencies).

Committed change 2.7 The full year effect of 2007-08 budget decisions and those items of expenditure which are unavoidable or to which the Authority has committed adds £23.2m to the MPA’s budget for 2008-09.

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Section 2 – Metropolitan Police Authority

Increases in service levels and new initiatives 2.8 New initiatives add £137.6m to expenditure in 2008-09. The most significant proposals are the further rollout of Integrated Borough Operations (at a cost of £4.5m in 2008-09 and a further £14m in 2009-10) and a proposed two-year deal for Borough Partnerships (at a cost of £3.9m). In addition, the revenue costs of counter-terrorism and designated security posts (£59.2m) and preparations for the 2012 Olympic and Paralympic Games (£40.1m in 2008-09, rising to £95m by 2010-11) are expected to be funded by specific grants.

Savings and efficiencies 2.9 The budget proposals include cashable savings and efficiencies totalling £71.8m in 2008-09. The Home Office have set a target of £309.8m to be achieved in the period 2008-09 to 2010-11. This represents 9.3 per cent of forecast Gross Revenue Expenditure in 2007-08. Current forecast savings for 2008-09 are on target to meet the 3-year savings.

Reserves 2.10 The planned use of reserves is shown in the table below. The MPA’s policy is to maintain general revenue reserves of at least 2 per cent of net budgeted expenditure. These proposals include a general reserve and emergency contingency fund of 2.4 per cent of net budgeted expenditure. There are no budgeted movements to or from the general reserve in 2008-09.

MPA reserves Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Opening balances 134.2 134.2 149.2 149.2 149.2 Transfers to/ from: Earmarked reserves -4.0 15.0 - - - General reserves - - - - - Closing balances 130.2 149.2 149.2 149.2 149.2

Further information 2.11 Further analysis and information on the MPA budget is provided in Appendix B.

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Section 3 – London Fire and Emergency Planning Authority

3.1 The London Fire and Emergency Planning Authority is responsible for fire and rescue services in London and it supports the London boroughs in their emergency planning role. LFEPA has achieved significant fire reduction improvements through the “prevention is better than cure” strategy.

3.2 Highlights of recent performance include reductions in the total number of fires and serious fires, fire deaths and injuries, a substantial increase in community safety activity and a continued fall in the number of hoax calls. Significant progress was made against the five year targets set out in the first performance plan (2000 to 2005) and good progress continues against the current performance plan which has headline targets running from April 2005 to March 2010.

Key Deliverables 3.3 The proposed budget for LFEPA in 2008-09 has been developed to build on these achievements and to support the aim of making London a safer city. In addition to this the budget will support LFEPA in promoting sustainable development and in maximising the impact the Fire Authority can have on reducing pollution and harmful emissions. The budget will provide resources to support longer-term key service targets for the next three years to 2010-11 to:

Reduce accidental fires in people’s homes by five per cent (equating to 5,882 in 2008-09). Reduce the number of accidental fire-related deaths in the home by 20 per cent (equating to 28 in 2008-09). Reduce deliberate fires by ten per cent (equating to 15,589 in 2008-09). Reduce hoax calls by five per cent (equating to 3,025 in 2008-09). Maintain the current time it will take on average for the first fire engine to arrive at an incident, while reviewing how that might be improved (target average response time of 6 minutes). Improve the time that it takes a second fire engine to attend incidents across London (target average response time of 8 minutes).

3.4 In addition to this the budget provides resources to: Maintain current levels of emergency cover and progress plans for a new fire station in Havering. Continue to deliver and maintain the dramatic increase in capacity to improve resilience to the new risks facing London. Deliver a number of major projects including a new regional control centre, new radio scheme, new personal protective clothing and respiratory protective equipment for firefighters and a PFI programme to replace 10 fire stations. Continue the programme of home fire safety visits with partners (target of 40,250 in 2008-09 by own staff).

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Section 3 – London Fire and Emergency Planning Authority

Continue to reduce the impact on the environment and promote sustainable development. Ensure the safety of major new developments such as Heathrow Terminal 5, Crossrail and those in the Thames Gateway. A public affairs programme to campaign for improvements including fitting new sprinklers in new and refurbished premises where the risk justifies it, promoting fire safer cigarettes and reducing the disruption and danger caused by fires involving acetylene cylinders. Deliver the new fire safety enforcement regime. Deliver a multi-year programme to improve ability to provide immediate emergency care, including the provision of defibrillators on every fire engine. Prepare for the 2012 Olympic and Paralympic Games and for improvements in community safety as part of the Games legacy. Implement agreed strategies for working with young people and older people Work with London Boroughs and social housing landlords to ensure all social housing is fitted with smoke alarms and sprinkler systems are fitted in homes of those most vulnerable.

Continue to increase the number of black and minority ethnic (target 12 per cent in 2008-09) and women firefighters (target 4.5 per cent in 2008-09) and to provide services which meet the needs of London’s diverse communities.

Proposed budget requirement 3.5 The Fire Authority’s gross expenditure is proposed to be £453.4m. After deducting fees, charges and other income and the application of reserves, the budget requirement for 2008-09 is £405.1m. This is £13.6m higher than that for 2007-08.

Explanation of budget changes 3.6 The key changes in income and expenditure areas between years and that projected for the following two years for each of the main service areas are set out in the table overleaf. The changes in 2008-09 relative to 2007-08 can be summarised as follows:

Changes in the Fire Authority’s spending plans 2008-09 £m 2007-08 budget requirement 391.5 Changes due to: Inflation 10.1 Growth in existing services and programmes 2.7 New initiatives and service improvements 4.1 Savings and efficiencies -6.7 Decrease in specific grants 1.2 Changes in use of reserves 2.2 2008-09 budget requirement 405.1

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Section 3 – London Fire and Emergency Planning Authority

Service analysis Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Community safety 37.2 42.8 37.6 38.8 39.9 Firefighting and rescue 317.5 308.4 324.2 335.0 343.9 Firefighter pensions 61.2 57.4 61.1 62.3 63.7 Emergency planning 1.0 1.2 1.0 1.0 1.0 Central services 2.2 1.9 2.2 2.2 2.2 Budgets to be allocated - 6.0 - - - Savings to be agreed -2.0 - - -4.2 -6.5 Net service expenditure 417.1 417.7 426.1 435.1 444.2 Capital financing costs 10.3 9.9 11.9 12.1 12.8 External interest receipts -4.0 -6.5 -4.4 -4.0 -4.0 Specific grants -9.5 -10.3 -8.3 -8.3 -8.3 Net revenue expenditure 413.9 410.8 425.3 434.9 444.7 Transfer to/from reserves -22.4 -19.3 -20.2 -9.6 - Budget requirement 391.5 391.5 405.1 425.3 444.7

Inflation 3.7 Inflation is budgeted to be £10.1m in 2008-09. This includes the cost of known pay awards and provision for general price inflation on other non-staff budgets.

Committed growth 3.8 The full year effect of 2007-08 budget decisions and those items of expenditure which are unavoidable or to which the Authority is contractually committed adds £2.7m to LFEPA’s budget for 2008-09 and future years.

Increases in service levels and new initiatives 3.9 There are also new initiatives, which add £4.1m to expenditure in 2008-09.

Savings and efficiencies 3.10 The budget proposals include cashable efficiency savings of £6.7m in 2008-09. LFEPA has already achieved the Government’ three-year target of £19.5m efficiency savings to be achieved by March 2008 and is currently on course to exceed the national fire service targets by some £14m (70 per cent).

Reserves 3.11 The 2008-09 budget is supported by use of £20.2m reserves, of which £19.5m is from earmarked reserves and £0.7m is from the general reserve. Earmarked reserves being applied are London Resilience (£0.8m), pensions (£1.0m) and PFI (£17.7m). General reserves are projected to be £8.6m at March 2010, which is 2 per cent of the budget requirement.

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Section 3 – London Fire and Emergency Planning Authority

3.12 The table below shows the proposed balances on both capital and revenue reserves, including a switch to general reserves from the balance sheet in respect of the lease for new headquarters.

LFEPA reserves Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Opening balances 61.1 65.1 43.8 23.0 13.4 Transfers to/from: Earmarked reserves -4.9 -5.2 -20.1 - - General reserves -12.3 -16.1 -0.7 -9.6 - Closing balances 43.9 43.8 23.0 13.4 13.4

Further information 3.13 Further analysis and information on the LFEPA budget is provided in Appendix C

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Section 4 – Greater London Authority: Mayor of London

4.1 The Greater London Authority is set up to enable the Mayor to deliver strategies for dealing with London-wide issues. It provides coordination and focus for how the GLA Group shall work together to achieve the Mayor’s priorities and deliver effective regional government in the capital. It is also enables the London Assembly to carry out its scrutiny and investigative role. The Greater London Authority Act 2007 introduces separate component budgets for the Mayor and Assembly and this section sets out the proposals for the Mayor’s component budget only.

4.2 The GLA Act 2007 (and the Further Education and Training Act 2007) also introduced new lead roles for the Mayor on housing and adult skills in London, a strengthened role over planning in the capital and additional strategic powers in respect of waste, culture and sport, health, climate change and appointments to the boards of the functional bodies. The number of mandatory mayoral strategies will increase from eight to 12, plus the Employment and Skills Strategy, produced by a board chaired by the Mayor.

4.3 Key achievements over the last year include: publishing and starting the process of implementing the London Climate Change Action Plan; helping towards the establishment of the Clinton Climate Initiative $5bn fund to help cities make commercial buildings cleaner and greener; establishment of the £79m ‘London Youth Offer’ which will address concerns over the high levels of child poverty in the capital; funding for youth services and target the most deprived and hard to reach young Londoners; getting approval for Crossrail which makes it possible to provide an effective transport infrastructure to underpin London’s future growth and publishing the draft housing strategy setting out plans for 50,000 more affordable homes and a doubling in the supply of homes for social rent in the capital.

Key deliverables 4.4 While the Mayor of London provides strategic direction and leadership, much of the delivery takes place through the members of the GLA Group and other partners such as the boroughs, private and not-for-profit bodies. The aims and objectives for the GLA, which are set out below, reflect the GLA’s strategic role.

Global warming and improving London’s environment in a sustainable way Reduce greenhouse gases and other harmful emission and promote sustainable, decentralised energy. Ensure London is prepared for the impact of climate change. Consume fewer and recycle more resources. Improve access to London’s environment. Expand and improve transport provision in London Deliver improvements in public transport performance, especially London Underground. Ensure delivery of key transport infrastructure projects. Achieve a more sustainable transport network.

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Section 4 – Greater London Authority: Mayor of London

Improve public safety Oversee a fall in crime in the capital. Ensure Londoners feel safer. Reflect the diversity of London in its police and fire services. Be prepared for terrorism and other major emergencies.

Deliver sustainable growth within a changing global marketplace Regenerate London to deliver sustainable improvement in the living standards and quality of life of all Londoners. Increase employment opportunities and productivity to enhance London’s position as Europe’s leading world city. Promote London at home and abroad as a world class city Support the successful delivery of the 2012 Olympic and Paralympic Games. Promote London as a leading world city for the 21st century – socially, culturally and economically. Remove social inequality and increase social inclusion Remove the barriers preventing Londoners getting out to work. Promote fair business practices. Ensure a fair share of economic prosperity for minority groups. Increase housing supply and reduce homelessness Accelerate the increase in London’s housing supply and affordable homes.

4.5 The effective implementation of London’s Climate Change Action Plan remains the Mayor’s priority. Key deliverables for the GLA in 2008-09 include:

Increase the international political significance of the Large Cities Climate Change Group (of which London is a prominent member). Reduce carbon emissions by using a joint tendering process to improve the energy efficiency and insulation of major buildings within the GLA group. Publish and implement Climate Change Adaptation, Business Waste and Municipal Waste strategies. Build on the work already done across the group to implement sustainability and diversity into the GLA group’s procurement function. 4.6 Other priorities for the GLA in 2008-09 include:

Delivery of the 2008 Mayoral and London Assembly elections. Delivery of the Mayor’s Youth Offer. Ensuring the 2012 Olympic and Paralympic Games generate a permanent legacy which maximises the social economic and cultural benefits to London.

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Section 4 – Greater London Authority: Mayor of London

Budget requirement 4.7 Including the financial contribution to the public sector funding package for the 2012 Olympics and Paralympics Games, the Mayor's proposed gross expenditure is £131.9m. After deducting fees, charges, investment income and the application of the election and general reserves, the budget requirement for 2008-09 is £127.8m. This is £10.8m higher than that for 2007-08. Of this £9.7m reflects expenditure on the Museum of London and new burdens which are covered by a transfer to the GLA general grant. The remaining increase in expenditure represents an increase of 0.9 per cent.

Explanation of budget changes 4.8 The changes in 2008-09 relative to 2007-08 can be summarised as follows:

Changes in the Mayor’s spending plans £m 2007-08 adjusted budget requirement 117.0 Changes due to: Inflation 1.5 Net savings in existing services and programmes -0.2 New initiatives and service improvements 0.4 Additional savings and efficiencies -2.6 Elections -11.1 Olympic and Paralympic Games funding agreement -2.1 Museum of London 9.3 Change in use of reserves 15.6 2008-09 budget requirement 127.8

4.9 The key changes in income and expenditure areas between years and that projected for the following two years for each of the main service areas are set out in the table overleaf.

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Section 4 – Greater London Authority: Mayor of London

Service/directorate analysis Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Mayor’s Office 12.7 13.2 12.4 12.9 13.1 Media and Marketing 3.6 3.6 3.7 3.8 4.0 Policy and Partnerships 11.8 11.4 10.9 11.3 11.7 Finance and Performance 7.6 7.9 7.5 7.7 7.9 Corporate Services 20.1 19.6 20.4 20.8 21.2 Chief Executive 0.3 0.3 0.3 0.4 0.4 Olympic Funding Agreement 60.8 60.8 58.7 59.1 59.6 Museum of London - - 9.3 9.5 9.7 Elections 18.5 12.1 6.6 0.4 0.4 Capital financed from revenue 2.5 3.2 2.6 1.7 1.8 Savings to be allocated - - -0.5 -0.5 -0.5 Net service expenditure 137.9 132.2 131.9 127.1 129.3 Interest receipts -2.2 -2.9 -2.7 -2.7 -2.7 Specific grants -1.7 -0.6 -0.1 -0.1 -0.1 Net revenue expenditure 133.9 128.7 129.1 124.3 126.5 Transfer to/from reserves -16.9 -11.1 -1.3 6.9 7.1 Budget requirement 117.0 117.6 127.8 131.2 133.6

Inflation 4.10 Inflation is budgeted to add £1.5m to GLA (Mayor of London) costs in 2008-09.

New initiatives and service improvements 4.11 Planned increases in the Authority’s activities add £0.4m in 2008-09 to the budgeted costs relative to 2007-08. These are set out below.

Budget Plan Plan 2008-09 2009-10 2010-11 £m £m £m 5.6 full time equivalent additional staff posts 0.3 0.3 0.3 Youth services programme budget (two years only) 0.1 0.1 - Total 0.4 0.4 0.3

Savings and efficiencies 4.12 The budget proposals incorporate cashable efficiency savings of £2.6m in 2008-09, including target savings for efficiencies to be secured from the ‘Delivering More Together’ programme, which represents savings that should result from the work streams currently in progress. In total the Authority’s savings represent 6.2 per cent of controllable expenditure, and exceed the Government’s target.

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Section 4 – Greater London Authority: Mayor of London

4.13 In addition non-cashable efficiencies continue to be delivered across the Authority, in part derived from a programme of efficiency reviews. In the past year this has led to non-cashable savings arising from the move to a greater number of framework agreements, a reduction in time spent on letting contracts and the streamlining of processes.

4.14 The review programme also delivers improvements in the quality of services. Over the past year examples have included improvements in the commissioning of publications, and the management of events held in City Hall. While some growth is being proposed in respect of the Government’s review of GLA powers much of the additional work is being contained within existing resources by teams across the Authority.

2012 Olympic and Paralympic Games 4.15 In the revised Memorandum of Understanding between the Government and the Mayor of London, signed in June 2007, the Mayor agreed, subject to the Greater London Authority’s decision-making processes, that a financial contribution from the council tax payer would be made to support the cost of staging the games. As part of the bid, both the Mayor and the Government signed guarantees confirming the amounts to be funded by council tax (up to £625m) and other funding sources, and pledging to take all necessary measures to ensure that London will fulfil its obligations under the host city contract, which was signed with the International Olympic Committee on London’s bid being successful. The Mayor has agreed to fund a further £300m and the new agreement with Government confirms that this will not be met from either council tax or transport fares.

4.16 The financial contribution to support the cost of staging the games forms part of the component budget of the Mayor of London. Therefore, reflecting the Mayor’s intention that the amount to be raised through the council tax precept would be £20 a year at the band D household level and that there are an estimated 2.93 million band D equivalent households, the amount included in the GLA’s component budget is £58.7m.

Reserves 4.17 The expected movements in reserves are:

GLA reserves Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Opening balances 30.5 30.5 19.4 18.1 25.0 Transfers to/from: Election Reserve -13.8 -7.1 -1.3 4.6 4.6 Other earmarked reserves -2.8 -5.1 1.0 2.3 2.5 General reserves -0.3 1.1 -1.0 - - Closing balances 13.6 19.4 18.1 25.0 32.1

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Section 4 – Greater London Authority: Mayor of London

4.18 The most significant movement on the earmarked reserves in 2007-08 relates to the 2008 Mayor and Assembly elections. About two-thirds of the expenditure for the election will be incurred in 2007-08, hence the transfers from the election reserve in both 2007-08 and 2008-09. After 2008-09 the reserve, which is expected to be £5.8m at March 2009, will be built up in preparation for the 2012 elections. These costs will be kept under review.

4.19 At 31 March 2008 the general balance is expected to total some £4.3m which represents just over 3 per cent of the proposed 2008-09 net revenue expenditure, or just over 6 per cent when the amounts included in respect of the Olympic Funding Agreement and the Museum of London are excluded on the basis that they are covered by specific sources of funding. The general balance includes a contingency of £0.2m. In light of this it is considered prudent to release £1m of these balances to support the budget process for 2008-09. This will be kept under review.

4.20 Further analysis and information on the GLA budget is provided in Appendix D.

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Section 5 – Greater London Authority: London Assembly

5.1 The GLA Act 2007 introduces a separate component budget for the London Assembly in respect of the Assembly members, employees of the Authority who normally work as support staff for the Assembly or Assembly Members, goods or services procured solely for the purposes of the Assembly and the London Transport Users’ Committee (London Travel Watch).

Role of the Assembly 5.2 The aims of the Assembly are to:

Hold the Mayor of London effectively to account. Conduct effective investigations into issues that matter to Londoners. Represent the views of Londoners and raise issues of concern on their behalf. Sponsor and monitor London Travel Watch.

Key deliverables 5.3 The Secretariat has seven overarching objectives that guide its work in supporting the Assembly. The Secretariat supports the Assembly to achieve these aims and its objectives reflect this. The Secretariat is also responsible for planning and managing Mayoral and London Assembly elections (although the cost of the 2008 election is included within the Mayor’s component budget). Deliverables specific to 2008-09 are as follows:

Support the new Assembly to establish effective structures and processes to fulfil its statutory duties. Support the Assembly to scrutinise the Mayor’s exercise of new powers transferred to him by the GLA Act 2007, including those in relation to planning, housing, waste, health inequalities and climate change. Devise and implement an effective induction process for new Assembly Members following the GLA elections in May 2008. Support the Assembly to develop an effective confirmation hearings process once the relevant provisions of the GLA Act come into force. Publicise the scrutiny work of the Assembly and its committees via the media and directly to stakeholders. Encourage public attendance at Mayor’s Question Time, in particular targeting equalities groups. Develop accessible publicity material explaining the role of the Assembly and its composition. Respond effectively to consultations from the Head of Paid Service on creation and deletion of posts in the core GLA.

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Section 5 – Greater London Authority: London Assembly

Budget requirement 5.4 The Assembly’s requirement for 2008-09 is £8.7m. This is £0.1m or 1.4 per cent higher than the equivalent budget figure for 2007-08.

Explanation of budget changes 5.5 The changes in 2008-09 relative to 2007-08 can be summarised as follows:

Changes in the Assembly’s spending plans £m 2007-08 adjusted budget requirement 8.6 Changes due to: Inflation 0.2 Savings and efficiencies -0.1 2008-09 budget requirement 8.7

5.6 The key changes in income and expenditure areas between years and that projected for the following two years for the Assembly are set out in the table below:

Service analysis Original Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Assembly and Group Support 4.3 4.0 4.4 4.5 4.6 Committee Services 0.5 0.4 0.5 0.5 0.5 Directorate Business Support 0.5 0.5 0.5 0.5 0.5 Scrutiny 1.0 1.1 1.1 1.1 1.2 External Relations 0.3 0.3 0.3 0.3 0.3 London TravelWatch 1.6 1.6 1.6 1.7 1.7 Elections & Special Projects 0.1 0.1 0.1 0.1 0.1 Legal and other direct services - - 0.2 0.2 0.3 Net service expenditure 8.3 8.0 8.7 8.9 9.2 Interest receipts - - - - - Specific grants - - - - - Net revenue expenditure 8.3 8.0 8.7 8.9 9.2 Transfer to/ from reserves - - - - - Budget requirement 8.3 8.0 8.7 8.9 9.2

Inflation 5.7 Inflation is budgeted to add £0.2m to GLA (London Assembly) costs in 2008-09.

Savings and efficiencies 5.8 The budget proposals incorporate cashable efficiency savings of £0.1m in 2008-09.

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Section 5 – Greater London Authority: London Assembly

Reserves 5.9 At present the Authority’s accounts do not specifically earmark any reserves for the Assembly. However, within the existing reserves there is £260,000 relating to the Assembly on the basis that the Mayor and Assembly members introduce a resettlement grant scheme for elected members who serve their term and are not re-elected in accordance with the new power for such a scheme provided by the GLA Act 2007. It is therefore intended to identify this amount in an earmarked reserve for the Assembly as part of the closing of the 2007-08 accounts.

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Section 6 – Transport for London

6.1 The financial framework for TfL’s Business Plan is the groundbreaking deal achieved in 2004 with the Government. Innovatively, this gave TfL a five-year grant settlement lasting until March 2010, and allowed, for the first time, borrowing from the financial markets under the prudential borrowing regime to provide further support for its five- year plan. The implications of Spending Review 2007 have yet to be fully appraised and are not included in this plan so this document only covers the remaining two years of the current settlement to 2009-10. The impact of Metronet going into administration is also excluded.

6.2 TfL has secured all-party support and the backing of top business leaders and unions for Crossrail, which was given the go ahead in October 2007. It will support future population and job growth, particularly in the West End and Canary Wharf, by adding a 10 per cent increase in public transport capacity. It could add a net benefit of £37bn to UK GDP over 60 years. The funding implications of Crossrail are not considered in TfL’s current Business Plan, although it is not expected to impact materially on TfL’s plans in the period up to 2009-10.

6.3 Significant achievements to date include successful implementation and extension of the central congestion zone and the revitalisation of the bus network, (which is forecast to carry over 2.1bn journeys in 2007-08) including CCTV and step-free access on all vehicles. Substantial investment has been put into modernisation and refurbishment of London Underground which is expected to carry a record 1.1billion journeys in 2007-08.

Key deliverables 6.4 In its updated Business Plan, TfL continues to focus on the delivery of its Investment Programme, as well as on further operational improvements. TfL’s plan focuses on supporting economic development by improving the public transport system given the population growth expected over the next 20 years.

6.5 The Mayor’s Climate Change Action Plan sets out a list of objectives and a framework within which TfL’s Business Plan operates, particularly in respect of reducing carbon

emissions. As CO2 emissions from public transport constitute only 13 per cent of total transport emissions in the Capital, a key aim will be to continue exerting influence on modes outside TfL’s direct control i.e. cars and motorcycles and road freight.

6.6 TfL’s focus will be on encouraging more people to use public transport and/or to walk and cycle, as well as promoting a progressive shift of freight from road to more sustainable modes such as rail and water. Against a background of growing demand for

public transport, CO2 emissions per passenger kilometre will fall, but the provision of

additional public transport capacity may result in an increase in TfL’s CO2 emissions, despite their best efforts to improve operational efficiency and adopt low-carbon technologies. However, this should be more than offset by an overall decrease in total transport sector emissions due to the modal shift facilitated by public transport investment.

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6.7 The key outputs and deliverables of the Business Plan and Investment Programme include:

Improving Rail & Underground Services Substantial improvements towards an estimated overall reduction in journey time on London Underground (LU) of 13 per cent and an estimated 25 per cent capacity increase across the LU network by 2020, the renewal of 280km of track, leading to higher reliability and an improved ride quality and enhanced station facilities, including CCTV, Help Points and high-quality audio and visual information. New trains will be introduced on to the Victoria line from late 2009 as part of a line upgrade. They will include accessibility improvements such as designated wheelchair spaces, audio announcements and better ventilation. All District line trains will be refurbished by 2009. The Piccadilly line extension to Heathrow terminal 5 will open in 2008 and is expected to serve three million customers a year by 2010. A LU station target of 33 per cent step free access by 2013, with twenty five per cent of Underground stations step free from platform to street by 2010. LU power upgrades to meet PPP requirements plus provision of a new radio system across the whole of the network (already introduced on the East London, District, Circle and Hammersmith and City lines). Major congestion relief schemes at Paddington, Tottenham Court Road, Bank, Bond Street, Vauxhall and Finsbury Park. Short-term works are to be carried out by 2008 to improve the flow of customers in the ticket hall area at Covent Garden. This will enable the station to stay open for seven days a week in normal conditions. Improvements at Finsbury Park (including a secure cycle park) and Greenwich station, as well as signage and other enhancements at various interchanges, were completed in 2007. Now, a programme of further enhancements at strategic interchanges are being evaluated, including at Victoria Transport Interchange, Waterloo, Elephant and Castle, Ealing Broadway and Tottenham Hale. The construction of 55 new DLR railcars due to enter service from 2008. Extensions being developed on the DLR network such as the one from King George V station under the river to Woolwich Arsenal. The tunnel under the river was completed in July 2007, and the extension itself is due to open in 2009. Expansions of capacity are also planned to allow three-car trains on the Bank-Canary Wharf- Lewisham and the Stratford-Poplar branches. TfL took over responsibility for the Silverlink Metro (now known as the London Overground) in November 2007. TfL will deliver a number of improvements, including enhanced frequency, improved service and security and, as from late 2008- 09, new trains. The additional policing on the North London Line, introduced in 2006, will be enhanced.

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East London Line extension Stage 1, linking Dalston Junction in the north to West Croydon and Crystal Palace in the south (opening in 2010), with the 'Dalston Curve' linking the line to the North London Line to Highbury and Islington and beyond. Oyster availability is now being extended to National Rail, starting with the London Overground in November 2007. It will then be progressively rolled out across all other stations within the Travelcard boundary in London by March 2010. Better bus services Expansion of the numbers of high frequency basis and 24 hour buses. More than two thirds of bus routes operate on a high-frequency basis (at least five buses an hour), and more than 100 routes run a 24-hour service. Since 2004, 141 bus lane schemes delivering 3,000 kilometre hours per week ‘protection’ to bus services have been installed, many in partnership with the boroughs. These will continue throughout the Plan period. The iBus project – rolling out from 2007 – will provide a new bus radio and communications system that will give passengers better information. Walking and cycling Extending the LCN+ (London Cycle Network plus) to become a 900-km network of cycle routes of which more than 500km were completed by March 2007. Creating more green cycling routes. Expanding cycle parking at schools and stations. Providing cycle training for all year 5 and 6 schoolchildren, and ‘Bikeability’ cycle training for adults. Continuing with improvements to new and upgraded crossings, pavement widening, dropped kerbs, subway improvements, better lighting and security and other enhancements for pedestrians. Subject to consultation, the south side of Parliament Square will be closed to traffic and integrated into an enlarged garden area, with pedestrian improvements in Bridge Street. If the plan goes ahead, work would be completed by December 2010. TfL is working with the Central London Partnership and the Boroughs on the Legible London project (This is a scheme to help people find particular places with a simple and reliable wayfinding system).

Reducing CO2 Emissions and improving traffic demand management Continue with Travel Demand Management Plans. Every school should have a travel plan by 2009. An ‘eco driving’ marketing campaign (linked to the national DfT programme) which will aim to educate motorists towards more environmentally friendly car usage.

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Subject to consultation, TfL is considering the introduction of “emissions influenced” 2 charging (i.e., varying the charge according to the CO2 given off by various vehicles ) from late 2008. Continuation of the climate change fund.

Bus CO2 emissions overall will decline due to the greater number of Euro IV standard buses in the fleet. (These are estimated to have five per cent lower fuel consumption than those they replace). Further reductions will be delivered by increasing the numbers of hybrid buses. (New diesel hybrid buses emit between 30-40 per cent less

CO2 than a standard diesel.) Further trials of hydrogen-fuelled vehicles, including buses, cars and vans, with the aim of expanding TfL’s hydrogen fleet as a whole. TfL is developing its energy sourcing strategy over the next year to identify the most effective ways to decarbonise its energy supply. This will be through investigating alternative zero/low carbon energy procurement strategies and the further development of decentralised energy opportunities i.e. on-site generation. In addition, TfL will continue to deliver environmental improvements to its building stock. The sustainable transport town centre scheme in Sutton (for 2006 to 2009) will be progressed, where TfL and the Borough are working in partnership to encourage people to walk, cycle and use public transport and pilot other opportunities to reduce congestion. Encouragement of sustainable freight operations through the eight proposals contained in the London Freight Plan, launched in June 2006. Backing responsible procurement Responsible Procurement is being implemented in new contracts on a case-by-case basis and is being addressed as the procurement strategy is developed

The TfL Group Furniture Contract incorporates sustainable timber principles and timber terms conditions will be added to the Standard Services Contract and the Purchase Order Terms and Conditions will be amended to include the relevant Sustainable Timber clauses. Coping with the effects of climate change A programme to reduce temperatures in tunnels and stations is in development. The new overground train fleet which will start to enter service in 2008 will have air conditioned carriages. TfL has assessed the flood risks for its operations and carried out an audit to check on the flood management plans for LU stations.

2 The proposal being considered is a lower than standard charge for vehicles with CO2 emissions of less than

120g/km, and a higher charge for those whose CO2 exceeds 225g/km.

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Improving the Health of Londoners Access to childcare, education, adult training, employment, housing, health services and good quality food providers is a crucial factor in terms of health. Encouraging walking and cycling reduces obesity and benefits heath. Continued delivery of the road safety programme with the aim of achieving by 2010 the Mayor’s casualty reduction targets announced in 2005 - the overall target is to reduce the number of people killed or seriously injured by 50 per cent over the 1994- 98 average by 2010. The introduction of the proposed London-wide Low Emission Zone, which, from 2008, will require HGVs, coaches, taxis and buses to meet Euro III emission standards. Minimising pollutant emissions. All buses have been fitted with particulate filters since December 2005 leading to a substantial reduction in polluting emissions. Initiatives such as hybrid buses, which reduce pollution, also cut noise and reducing noise has health benefits. TfL is also striving to cut noise, foster biodiversity and promote reduction, reuse and recycling of waste. New buses are already quieter, and LU and London Rail are looking into the issue of noise from public announcements. As an employer, the 2004-05 to 2009-10 Health Improvement Plan for staff is continuing to be rolled out. Managing the road network During the next three years 300 lane kilometres of carriageway on the Transport for London Road Network will be resurfaced or reconstructed. A programme of traffic signals modernisation is to continue, and, from 2010, a new modern traffic control system will come into being. It will replace those signals that are more than 30 years old. Supporting Thames Gateway regeneration Two bus-based transit schemes to serve the proposed bridge are under construction: East London Transit stage 1a (Ilford-Thames View Estate opening in 2009), and Greenwich, Waterfront Transit stage 1 (Abbey Wood-Woolwich-North Greenwich, opening in 2011). Improving access and providing Door-to-Door Transport Services Forty seven LU stations are now step free from platform to street level. A further 22 will be step free by 2010. Visual displays and audio announcements are to be provided on all buses, benefiting all passengers but especially disabled or older people. Introducing free travel on the Dial-A–Ride service from January 2008. Introducing better equipped Dial-a-Ride vehicles. By the end of the Plan period most of the fleet will have been replaced with improved vehicles. Delivering the Olympics Some £13bn will be invested in enlarging and upgrading the TfL network of which £5.6bn will be invested to meet the transport needs of the 2012 Olympic and Paralympic Games.

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Section 6 – Transport for London

The Venezuela Agreement 6.8 The Mayor’s 2007 agreement with the Venezuelan oil company provided for payment of 32 million US Dollars (calculated as 20 per cent of the UK price of the fuel used by London’s bus fleet) in exchange for providing technical assistance to Venezuelan cities in areas such as transport and town planning. The agreement is intended (and for budgetary purposes is assumed to be) budget neutral.

6.9 This ‘energy funding contribution’ is being used by TfL to support a 50 per cent discount on bus and tram travel for Londoners in receipt of Income Support. The value of the travel sold to photocard holders up to December 2007 was £2.1m. Other costs including promotion, photocard production and database development are also reclaimable under the agreement. Income received, representing the first installment, has been £7.5m.

6.10 The main areas of assistance to be provided by TfL, to the Venezuelan Government, have been identified as

To assist with the creation of a organisational structure in Caracas capable of delivering the necessary transport improvements in an integrated manner To assist in the development of bus priority To assist with the implementation of a urban traffic signal control centre To assist with improving intermodal interchange between the metro and other modes To advise on major highway improvements required to improve traffic flow.

Budget Requirement 6.11 TfL’s gross expenditure in 2008-09 is budgeted at £7,699m consisting of expenditure on its operations, capital projects, debt servicing and contingency. Deducting income of £3,547m leaves £4,151m to be met by funding from external sources and reserves. While the bulk of the funding is in the form of Transport Grant from Government, TfL will continue to borrow under the Prudential Borrowing regime as agreed with Government. The level of borrowing is expected to increase steadily totalling £3.1bn over the five years to 2009-10.

6.12 TfL’s budget requirement (which is the amount to be raised in the GLA council tax precept) for 2008-09 is £12m, which remains unchanged on the current year.

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Explanation of budget changes 6.13 The changes in 2008-09 relative to 2007-08 can be summarised as follows:

Changes to the TfL’s spending plans £m 2007-08 budget requirement 12 Changes due to: Inflation 134 Existing projects (includes overprogramming) 526 Fees, charges and ticket/trading revenue -59 New initiatives 93 Services increases 225 Efficiencies, other savings and budget reductions -186 Working capital movements -116 Transport grant -51 Prudential borrowing -290 Reserves movements -276 2008-09 budget requirement 12

6.14 The key changes in income and expenditure areas between years and that projected for the following two years for each of the main service areas are set out in the table overleaf.

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Service analysis Budget Forecast Budget Plan 2007-08 2007-08 2008-09 2009-10 £m £m £m £m Income Traffic income -2,654 -2,699 -2,825 -2,967 Congestion charging income -341 -331 -357 -377 Other income -300 -295 -305 -321 -3,295 -3,325 -3,487 -3,665 Operating costs London Underground 2,633 2,519 2,676 2,881 Surface Transport 2,536 2,568 2,644 2,725 London Rail 173 183 311 330 Corporate Directorates 381 374 398 325 5,723 5,644 6,029 6,261 Net capital expenditure London Underground 419 418 597 816 Surface Transport 297 219 314 260 London Rail * 427 415 822 315 Corporate Directorates 74 54 23 3 Property Sales -52 -68 -30 -68 Third Party Contributions -177 -143 -218 -164 Group Level overprogramming -70 -11 -68 -69 918 884 1,440 1,093 Other Interest income -74 -94 -60 -40 Debt servicing 111 112 162 227 Group items 7 7 40 42 Contingency 28 28 28 28 Net services expenditure 3,418 3,256 4,151 3,946 Movements in working capital 129 69 13 -25 Transfer to/from reserves -337 -115 -613 -506 Specific grants -2,598 -2,598 -2,649 -2,803 Prudential borrowing -600 -600 -890 -600 Budget requirement 12 12 12 12 * London Rail incorporates the North London line from November 2007. Note: The total prudential borrowing in 2006-07 was £604m, of which £464m was allocated against capital expenditure in that year. The remaining £140m will be allocated against capital expenditure in 2008-09. The authorised borrowing for 2008-09 remains at £750m. This is consistent with the Prudential Code. 6.15 The above table includes estimates of net capital expenditure3, which include provision for over-programming of £165m for 2007-08, rising to £219m by 2009-10 (see overleaf). This provision recognises that there are stages of the investment plan that

3 Net capital expenditure less prudential borrowing is the amount of capital expenditure to be charged to a revenue account in the local authority accounting regime

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are not entirely under TfL control.

6.16 The provision for over-programming is held at group level, and within the two larger modes as follows:

Overprogramming Budget Forecast Budget Plan 2007-08 2007-08 2008-09 2009-10 £m £m £m £m London Underground 45 21 60 100 Surface Transport 50 41 50 50 Group level 70 12 68 69 165 74 178 219

Inflation 6.17 Inflation is estimated to add £134m to TfL’s costs in 2008-09. This is based on an underlying inflation assumption of 2.7 per cent and the expected costs of bus contracts being tendered in 2007-08 and 2008-09 where the actual costs of operating these services have increased in real terms over the contracts being re-tendered.

Committed growth 6.18 The full year cost of existing service levels and the additional cost of on-going capital projects is estimated to add £526m net to TfL’s costs in 2008-09.

Fees, charges and ticket/trading revenues 6.19 The estimates for traffic income reflect the fares package for 2008 announced by the Mayor in September 2007. This package freezes bus fares at 2007 levels (including the reduction of weekly bus pass fares introduced in September 2007) and provides for tube fare increases of c4 per cent, reflecting 2007 inflation, and an RPI increase in January 2009. The estimates also reflect the western extension of the Central London Congestion Charge which was introduced in February 2007.

Increases in service levels and new initiatives 6.20 Planned increases in service levels and new initiatives service add £318m in 2008-09 and £205m in 2009-10.

2008-09 2009-10 £m £m Increase in service levels 225 161 New initiatives 93 44 Total 318 205

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Savings and efficiencies 6.21 TfL’s efficiency programme was established in 2002-03 with an original savings target o £1bn by the end of 2009-10. TfL now plans to save over £1.3bn (cumulative) by the end of this period. In addition to the continuing operational and back office efficiencies, the future additional efficiency initiatives include:

Additional procurement savings targets on controllable (reducible) spend across TfL. Continued focus on delivering efficiencies through the contracting arrangements relating to the bus network, and additional operational efficiencies as a result of reducing cash on buses. Further operational savings relating to the on-going successful implementation of Oystercard. Savings on road maintenance contracts which were brought in-house from 1 April 2007.

6.22 In addition to these planned savings and efficiencies, stewardship of the GLA Group convergence programme was passed to TfL in 2007. For TfL it is anticipated that a saving of £1m could be saved in 2008-09 and an additional £1m a year thereafter.

Grant funding 6.23 Grant funding for the current year, the budget for 2008-09 and subsequent planned funding for 2009-10 is set out in the table below.

Grant funding Budget Forecast Budget Plan 2007-08 2007-08 2008-09 2009-10 £m £m £m £m Transport Grant 2,544 2,544 2,528 2,651 Olympic Delivery Authority 5 5 80 94 Overground Funding 35 35 41 39 Dalston Junction Works - - - 19 Langdon Park (DCLG Funded) 14 14 - - Specific Grants 2,598 2,598 2,649 2,803

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Reserves 6.24 Total reserves are forecast to reduce from the current level of £1,473m to £239m by the end of 2009-10, as follows.

Tfl reserves Budget Forecast Budget Plan 2007-08 2007-08 2008-09 2009-10 £m £m £m £m Opening balances 1,473 1,473 1,358 745 Transfers to/(from): LUL reserves provision - - - -170 Earmarked reserves -337 -115 -613 -336 General reserves - - - - Closing balances 1,136 1,358 745 239

Managing risk 6.25 The risk management framework within London Underground includes a comprehensive review process of costs, timescales and probabilities in order to assess the level of risks in project delivery and operational activities, and to manage and reduce the level of such risks. The London Underground budget includes specific provisions within the PFI and PPP programmes to allow for the costs of identified risks impacting on the business. This approach for budgeting for risk recognises the complex and contractual inter-relationships between the Underground, the PPP Infracos and PFI contractors. The Underground budget also includes a general provision for other risks outside the PPP and PFI contracts.

Earmarked reserves 6.26 In order to manage its investment and borrowing programme TfL has created an earmarked capital reserve that will be required to meet its capital commitment over the plan period. The Government funding settlement for London Underground includes specific provision for the completion of transitional projects at the time of the implementation of the PPP contracts. These projects are planned for completion in future plan years. The reserve will be fully utilised by March 2010.

LU reserve 6.27 In addition to the Underground budgets for risk areas, the Government funding settlement includes provision to establish a reserve provision to manage future business risks for major unplanned and unforeseen expenditure. The forecast level agreed by Government of £170m was achieved in 2005-06. Given recent events, including the administration of Metronet BCV and SSL, TfL has been in dialogue with Government to agree if this reserve is to be required in future. TfL’s business plan assumes the utilisation of this reserve in 2009-10.

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General reserves 6.28 TfL’s general reserves are expected to remain at £239m in the period to 2009-10. This represents approximately 2 per cent of TfL’s gross budget. It is considered that this level of reserves is appropriate to meet general requirements.

Further information 6.29 Further analysis and information on the TfL budget is provided in Appendix E.

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Section 7 – London Development Agency

7.1 The Mayor’s revised Economic Development Strategy was launched on 20 January 2005, providing the strategic framework for the long-term economic development of the capital. The LDA plays a leading role in implementation of the Mayor’s strategy, working with other delivery stakeholders

7.2 The Mayor sets the targets for the LDA, part of them reflecting the national target Framework which applies to the other Regional Development Agencies, while some of them, such as Childcare or Affordable Housing, focus on London’s specific needs.

7.3 The Mayor will set an overarching growth objective in consultation with Government which will set an overall target for sustainable improvements in the economic performance of London resulting in Gross Value Added per head over the period 2008- 2012. This objective is consistent with the Mayor’s Economic Development Strategy. In accordance with this framework the Mayor will set the output targets that will drive the LDA delivery programme. The outputs and supporting indicators are being developed as an integral part of the LDA’s Corporate Investment Strategy, which is currently out for consultation.

Key deliverables 7.4 Mirroring the EDS, the Investment Strategy has the following key deliverables:

To support the delivery of the Mayor’s London Plan, promote sustainable growth and economic development Develop and implement with partners a coherent land use strategy for London. Ensure a London wide brownfield land use strategy drives design, climate change, public realm, social infrastructure and affordable housing considerations. Drive forward the development and physical regeneration of the Lower Lea Valley and Thames Gateway Remediate and/or invest in reclaiming and developing brownfield land. Fund land remediation through the ODA for the Olympic Park and ensure the benefit to London of the Olympic Land Legacy extends beyond the Olympic site through the Legacy Masterplan Framework. Facilitate the delivery of housing units to support London’s future growth and development in the Thames Gateway and other priority regeneration areas (including seeking to achieve a 50 per cent affordable housing target). Deliver an improved and effective infrastructure to support London’s future growth and development Enable key projects to progress or unlock the development of land that is currently beyond the market, maximising the quality of design and appropriateness of development on key sites in LDA ownership through procurement, design, joint ventures and project management.

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Deliver healthy, sustainable, high quality communities and urban environments Build exemplar projects covering Combined Heat and Power, waste handling facilities and housing and stimulate the private sector to expand and improve the sustainability of the built environment Bring forward the development of exemplar low carbon homes and by ensure the minimisation of carbon emissions in new developments. Enable home owners to put energy saving measures in place by an expanded green homes service. Offer practical information on ways to improve sustainability in design and construction by rolling out the sustainable design and construction toolkit. Ensure that Londoners have access to fresh, healthy food. Enable organisations to minimise their impact on the environment through the provision of advice and support on green business practices. Remediate land that is contaminated, protect and develop wildlife habitat, create green space, waterside access and other amenity. Support the implementation of the London Climate Change Action Plan Implement an integrated carbon accounting system in the LDA. Support the development of infrastructure for the development of sport, in support of the Mayor’s strategic role for sport in London, including new sporting and youth facilities, club infrastructure, green spaces and play areas. Tackle barriers to employment Work with partners to implement the London Skills and Employment Strategy developed by the LSEB Ensure that Olympic and other capital investments deliver jobs, skills and development opportunities for Londoners. Continue to develop and run childcare programme with a focus on improving take-up and impact on employment. Continue to build the London Employment and Skills Taskforce (LEST) Action Plan, with partners in line with the emerging findings of the Adult Skills Strategy, maximising the investment in basic skills, including ESOL, to allow disadvantaged Londoners to access the labour market. Reduce disparities in labour market outcomes between groups Provide information and support to employers to enable them to improve their equality and diversity employment and procurement practices, through Diversity Works for London and other initiatives. Build the Agency’s understanding of the needs of key groups including particular BAME communities, refugees, and ex- offenders and work with community-led organisations to implement outreach and implement worklessness projects targeted at these specific groups.

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Section 7 – London Development Agency

Implement London ESF 2007-13 programme with targets for specific groups. Address the impacts of concentrations of disadvantage Identify geographical areas of specific need and opportunity and drive forward partnership approaches Develop a coherent programme of work with appropriate providers and build on the successful locally delivered bespoke services Work with partners to realise the vision for the Lower Lea Valley with a focus on creating thriving centres, housing, social infrastructure and employment opportunities to improve economic and social inclusion in the 5 host boroughs and surrounding neighbourhoods. Address barriers to enterprise start-up, growth and competitiveness Rationalise and improve business support programmes, better integrating it with the other LDA programmes and opportunities such as the Olympics Offer tailored support to businesses who are owned, run by or employing key target groups. Promote the Mayor’s Supplier diversity and sustainable procurement initiative, which seeks to ensure the social and environmental implications of procurement choices right through the supply chain are fully taken into account. Maintain London’s position as a key enterprise and trading location Run a comprehensive programme of engagement with large employers . Support bespoke sub-regional interventions to improve trade and business location, retention and growth. Continue to ensure that London businesses have the information and services that they need to assist them to trade abroad. Improve the skills of the workforce Work with the London Skills and Employment Board to: - ensure appropriate investment in skills development is made by employers and training providers. - promote a culture of learning/training within the workforce and help employers - exploit opportunities for innovation (e.g. intellectual property training). Improve links between employers and further education and higher education to increase the relevance of training. Work with individuals and employers to promote the provision and uptake of higher level skills where other partners are unable to intervene. Expand provision of skills essential for ensuring carbon minimisation. Maximise the productivity and innovation potential of London’s enterprises Provide individual firms, in particular those facing specific barriers (including BAME and women-owned enterprises) with specialist and targeted innovation support by enabling them to link up with better generic business support services and resources.

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Section 7 – London Development Agency

Support the networking and clustering of businesses and provide coherent marketing and promotion for London and create a better coordinated innovation environment and encourage collaboration between firms. Ensure a coherent approach to marketing and promoting London. Promote and market London to leisure and business visitors whilst advocating quality improvements to tourism infrastructure and services. Host and manage a programme of major events in London. Invest in improved skills and practices in the tourism sector Develop and implement campaigns and events to support the London brand and promote London’s diversity and multiculturalism. Use the opportunity the 2012 Olympic and Paralympic Games presents to build relationships with key emerging markets and improve the quality and accessibility of London’s tourism accommodation. Promote London’s commitment to a low carbon environment. Work in partnership to look at ways of reducing the impact on the environment of tourism in London.

Explanation of budget changes 7.5 The key changes in income and expenditure areas between years and that projected for the following two years for each of the main programme areas are set out in the table overleaf. The changes in 2008-09 relative to 2007-08 can be summarised as follows:

Changes on the LDA’s spending plans 2008-09 £m 2007-08 budget requirement Nil Changes due to: Reductions in programme expenditure -14.0 Reductions in Olympic spending -110.0 Increase in programme support 0.3 Increase in grant funding -0.7 Increase in other income -3.3 Reduction in prudential borrowing 127.7 2008-09 budget requirement Nil

7.6 The grant settlements for 2009-10 and 2010-11 make reductions to the LDA’s core grant, from £389.7m in 2008-09 to £384.6m in 2009-10 and £375.6m in 2010-11.

7.7 The key changes in income and expenditure areas between years and that projected for the following two years for each of the main Service Areas are set out in the table overleaf.

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Service analysis Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Revenue expenditure Programme Costs 212.3 212.3 204.1 221.7 223.7 Olympic costs –financing 9.2 9.2 19.7 24.9 28.1 Other Revenue Costs 30.1 30.1 29.4 29.6 27.4 Total Revenue Costs 251.6 251.6 253.2 276.2 279.2 Capital Costs Olympic Costs 315.8 315.8 195.3 118.1 78.2 Olympic Contingency 100.0 Other 73.0 73.0 68.2 51.3 39.2 Total Capital Costs 388.8 388.8 263.5 169.4 217.4

Total Expenditure 640.4 640.4 516.7 445.6 496.6 Income Core government funding -389.0 -389.0 -389.7 -384.6 -375.6 Capital receipts -11.8 -11.8 -34.5 - -11.9 Repayment of grant swap 16.9 16.9 28.1 - - Project specific income -25.2 -25.2 -17.0 -18.0 -14.7 Borrowing -231.3 -231.3 -103.6 -43.0 -94.4 Total Income -640.4 -640.4 -516.7 -445.6 -496.6 Budget requirement Nil Nil Nil Nil Nil

7.8 An analysis of expenditure by programme is as follows:

Programme analysis Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Support the delivery of the 17.2 17.2 13.8 12.4 10.6 London Plan Deliver an improved and effective 33.5 33.5 33.8 31.2 27.6 infrastructure Healthy sustainable high quality 27.6 27.6 29.0 31.4 33.7 communities and urban environments Tackle barriers to employment 40.7 40.7 43.4 45.7 46.9 Reduce disparities in the labour 15.7 15.7 19.7 22.4 21.0 market Address impacts of concentration 7.6 7.6 7.5 7.90 8.2 of disadvantage Address barriers to enterprise 52.2 52.2 44.0 39.6 33.8 start up, growth and competitiveness

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Programme analysis Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Maintain London’s position as 13.3 13.3 12.2 12.7 10.9 key enterprise and trading location Improve the skills of the 12.3 12.3 5.2 6.2 6.5 workforce Maximise the productivity and 30.0 30.0 26.0 26.0 26.2 innovation potential of London’s enterprises Marketing and promoting 35.1 35.1 36.7 36.5 36.5 London Olympic Legacy 315.8 315.8 195.3 118.1 178.2 Total Programmes 601.1 601.1 466.6 390.0 440.1 Interest – Olympic Financing 9.2 9.2 19.7 24.9 28.1 Policy and Programme Support 28.1 28.1 27.4 26.7 25.4 Contingency 2.0 2.0 3.0 4.0 3.0 Total Expenditure 640.4 640.4 516.7 445.6 496.6

Note: The 2008-09 budget reflects a major redefinition of the LDA’s expenditure programmes as compared to 2007-08. Consequently although it is possible to present the overall 2007-08 budget in a way that is compatible with 2008-09, the forecast figures are not available in the new analysis.

7.9 Policy and Programme Support covers the Agency’s staffing and running costs, with those staff costs relating to programme development and delivery recharged to the appropriate programme.

7.10 In addition to the above analysis, the LDA manages European Social Fund and European Regional Development Funds. These are matched funding programmes which run for 7 years from 2007, totalling £330m and £120m respectively.

Capital Programme 7.11 The expenditure analysis above includes planned capital expenditure. An analysis of capital expenditure is included in Section 9. Capital spending for 2008-09 is £263.5m including £195.3m for 2012 Olympic and Paralympic Games capital spending.

Savings and efficiencies 7.12 The Core grant to the LDA has been increased only marginally in 2008-09 (from £389.0m to 389.7m). Grant levels are scheduled to be reduced in the following 2 years (to £384.6m and 375.6m). Over the three years the real terms reduction is, assuming inflation at 2.5 per cent, approximately 11 per cent. The LDA has been undertaking an internal review to identify opportunities for administrative efficiencies in the coming financial year. As a result, a programme of efficiency savings will be presented to the LDA Board in February 2008. The Agency has also established an Improvement Programme designed to identify further administrative efficiencies in future

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Section 7 – London Development Agency

years through the fundamental review of administrative processes and the scope for improvement or rationalisation.

7.13 Within this figure the Government are requiring the LDA, like other RDAs, to reduce their administration budgets, which includes Policy and programme support costs and staff recharges to programmes. The reductions required by Government are £3.1m in 2008-09, £2.4m in 2009-10 and £3.2m in 2010-11. The LDA has not yet agreed the detail of these reductions.

Reserves 7.14 The LDA is constrained by the rules attached to its grant on the income streams that can be used to fund reserves. The Department for Business, Enterprise and Regulatory Reform requires the retention of a £2m contingency fund for 2008-09 from within the grant allocation to replace the central contingency that was previously held by the DTI for all RDAs. The LDA has determined that it needs to provide for a further contingency of £1m on top of this requirement in 2008/09 against the potential costs of reorganisation to deliver future efficiency targets.

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Section 8 – Consolidated budget requirement and funding

Consolidated budget requirement 8.1 The budget proposals set out in Sections 2 to 7 provide for a consolidated budget requirement for 2008-09 of £3,148.6m (£3,061.8m in 2007-08).

Budget requirements 2007-08 2008-09 £m £m Metropolitan Police Authority 2,532.7 2,595.0 London Fire and Emergency Planning Authority 391.5 405.1 Greater London Authority 125.6 136.5 Transport for London 12.0 12.0 London Development Agency - - Total 3,061.8 3,148.6

General government funding 8.2 This requirement will be met in part by government grants and non-domestic rates.

Government grants 2007-08 2008-09 £m £m Non – Domestic Rates 951.8 995.2 Revenue Support Grant 159.7 138.5 Police Grant 1,026.7 1,053.3 General GLA Grant 38.3 48.0 Total 2,176.5 2,235.0

8.3 The difference between the consolidated budget requirement and government funding, and after taking account of any surplus on borough collection funds, represents the amount to be raised from council tax payers by issuing precepts on the City and the London boroughs.

Council tax for police services 8.4 The estimated amount to be raised for police services is as follows:

Council tax for police services 2007-08 2008-09 £m £m MPA budget requirement 2,532.7 2,595.0 General government funding -1,883.7 -1,930.0 Amount for police services 649.0 665.0

8.5 This is equivalent to a band D council tax of £227 for 2008-09 in the London boroughs (£224 in 2007-08).

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Section 8 – Consolidated budget requirement and funding

Council tax for other services 8.6 The estimated amount to be raised for other services is as follows:

Council tax for other services 2007-08 2008-09 £m £m GLA, TfL, and LFEPA budget requirements 529.1 553.6 General government funding -292.8 -305.0 Share of borough net collection fund surplus -2.8 - Amount for other services 233.5 248.6

8.7 This is equivalent to a band D council tax of £83 for 2008-09 in the City and the London boroughs (£80 in 2007-08).

Funding analysis by body 8.8 There are two sets of council tax calculations because the Metropolitan Police District does not include the City. Although the statutory arrangements only require a distinction to be made between police and other services, a summary of spending, funding and the resultant council tax attributable to each body is provided in Appendix I.

Funding of national, international and capital city activities 8.9 As the regional tier of government for the capital city the GLA provides services delivered by the Metropolitan Police Service, the London Fire and Emergency Planning Authority and Transport for London which have a national and international dimension and which contribute to London’s resilience for acts of terror or other emergencies. There is specific grant support from central government in respect of these roles, but this does not cover the full cost of providing these services so that there is a contribution from local taxpayers.

8.10 As Transport for London only raises £12m from the precept there is no impact on local taxpayers from any resilience expenditure. The proposals for the Metropolitan Police Service budget include additional expenditure for counter terrorism in 2008-09 but this will be constrained to the increase in Government grant so will also not impact on local taxpayers.

8.11 The London Fire and Emergency Planning Authority budget proposals include additional expenditure of £2.1m for resilience in 2008-09 which is equivalent to £0.72 at band D. However, extra expenditure on these activities is part of the overall budget and business plans and the proposals for savings and efficiencies and use of reserves will mitigate the actual impact on the local taxpayer.

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Section 9 – Capital Spending Plan

9.1 In accordance with the requirements of the GLA Act 1999, as amended by the Local Government Act 2003, a capital spending plan has to be approved by the Mayor covering the functional bodies, and sent to the Secretary of State (DCLG), London Assembly and the functional bodies by the end of February 2008. Although not statutorily required, the GLA will be included in the plan.

9.2 The plan has to be in four sections.

Section A – a statement of the resources each functional body will have for capital expenditure by virtue of capital grants and capital receipts.

Section B – a statement of the resources each functional body expects to have for capital expenditure from borrowing.

Section C – a statement for each functional body of total capital expenditure (including credit arrangements) that the Mayor expects the body to incur.

Section D – a breakdown of this total capital spending showing how much the Mayor expects the body to meet out of capital grants, capital receipts, borrowing and revenue.

9.3 As part of the capital spending plan, the Mayor also develops borrowing proposals under the Prudential Code, as required by the Local Government Act 2003.

Metropolitan Police Authority 9.4 The capital spending plan reflects the approved capital strategy which focuses on:

Impact on delivery of MPS strategic objectives. Continuation or completion of projects where significant investment is already committed. Delivery of significant capital or revenue savings. Delivery of business benefits with particular emphasis on performance improvement.

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Section 9 – Capital Spending Plan

MPA draft capital plan 2008-09 2009-10 2010-11 £m £m £m Provisioning Group/ Major Initiative Property Services 66.6 194.3 216.7 Directorate of Information 147.1 135.6 78.7 Transport Services 19.9 18.9 20.9 Miscellaneous equipment 0.3 0.3 0.3 C3i Programme 7.9 - - Safer Neighbourhoods 15.0 38.0 - Less overprogramming: Property Services -12.0 -12.0 -12.0 Directorate of lnformation -48.0 -48.0 -48.0 Total 196.8 327.1 256.6 London 2012 Olympic and Paralympics Games Property based schemes 3.8 36.0 14.7 Technology based schemes 16.6 18.5 7.7 Transport based schemes 4.5 5.1 7.8 Total 24.9 59.6 30.2 Counter Terrorism Property based schemes 10.4 23.4 21.0 Technology based schemes 7.5 12.5 4.0 Transport based schemes 1.5 1.5 1.5 Total 19.4 37.4 26.5 Grand total 241.1 424.1 313.3 Funding: Capital receipts 84.8 99.5 75.0 Borrowing 40.0 38.0 40.0 Capital reserves 15.0 6.0 6.0 Capital grants & other contributions 98.7 153.4 101.6 Revenue contributions 2.6 2.6 2.6 Total funding 241.1 299.5 225.2

More detailed work will be carried out on the service demands and anticipated project costs for 2009-10 and beyond. This work will be carried out during 2008-09 to ensure the best match with strategic objectives is achieved and proposals for increasing capacity can be assessed. The programme requirements for 2009-10 and beyond should therefore be regarded as indicative at this stage and further reports will be considered by the MPA aligning longer term plans to available resources and the affordability of the programme in terms of the forward budget plans.

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Section 9 – Capital Spending Plan

9.5 The financing costs in the Service Analysis table relate to Minimum Revenue Provision and external interest payments on capital expenditure as shown in the table below:

Capital financing costs 2008-09 2009-10 2010-11 £m £m £m Minimum revenue provision & 21.6 21.6 21.6 external interest Total financing costs 21.6 21.6 21.6

9.6 Associated revenue expenditure relating to the capital programme is shown below:

2008-09 2009-10 2010-11 £m £m £m Revenue expenditure 27.7 36.3 39.6 Total revenue expenditure 27.7 36.3 39.6

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Section 9 – Capital Spending Plan

London Fire and Emergency Planning Authority 9.7 The projections shown will be subject to change in light of the final Property PFI bid and decisions taken on the Asset Management Plan in January 2008. The Authority’s capital programme has been developed to support achievement of its overall objective of making London a safer city. Overall, the projected capital expenditure at this stage for the Authority in 2008-09 amounts to £39.6m.

LFEPA draft capital plan 2008-09 2009-10 2010-11 £m £m £m IT projects 1.0 0.2 - Control and communications project 4.3 3.5 1.1 Community fire safety 1.9 - - Procurement projects 3.7 2.0 0.5 New Headquarters and disposal of 8 Albert Embankment 2.5 - - Fire House 0.5 - - Resilience projects 3.2 2.4 0.1 Refurbishment of fire stations 5.6 4.4 2.4 Extensions of fire stations 0.7 1.8 0.5 New/Replacement fire stations 2.5 2.3 2.1 London Safety Plan 4.0 3.5 0.2 Other property projects 5.1 0.6 0.5 Sustainability projects 1.6 0.8 - Minor improvements programme 1.8 1.9 1.9 Others 1.2 1.4 0.8 Total projects 39.6 24.8 10.1 Funding: Capital receipts 21.0 - 10.1 Prudential Borrowing 14.0 22.5 - Capital reserves 1.4 0.7 - Capital grants + other contributions 3.2 1.6 - Total funding 39.6 24.8 10.1

9.8 The financing costs in the Service Analysis table relate to minimum revenue provision and interest payments on capital expenditure as shown in the table below.

Capital financing costs 2008-09 2009-10 2010-11 £m £m £m Minimum revenue provision 4.7 5.1 5.8 External interest 7.2 7.0 7.0 Total financing costs 11.9 12.1 12.8

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Section 9 – Capital Spending Plan

Greater London Authority 9.9 The capital programme reflects the medium term financial plan.

GLA draft capital plan 2008-09 2009-10 2010-11 £m £m £m City Hall City Hall – lease related 0.4 - 0.2 – non lease related - 0.4 - Total City Hall 0.4 0.4 0.2 ICT Infrastructure PC Base Units 0.1 0.1 0.2 Monitors - - 0.1 Laptops - - - Printers - - 0.1 Servers/File Storage/UPS 0.4 0.4 0.4 (uninterrupted power supply) Network Infrastructure - - - Telephone Infrastructure 0.4 - - MS Software Licences 0.4 - - Total ICT Infrastructure 1.3 0.5 0.8 ICT Development Meeting the challenge of Climate 0.1 0.1 0.1 Change Delivering Sustainable Economic Growth 0.1 0.1 0.1 Promoting London as a World Class City 0.4 0.3 0.3 Listening to London 0.1 0.1 0.1 Supporting the work of the London 0.1 0.1 0.1 Assembly Managing the Organisation 0.1 0.2 0.2 Total ICT Development 0.9 0.9 0.9 Museum of London 1.6 1.6 1.6 Total Capital Expenditure 4.2 3.4 3.5 Funding: Revenue 2.2 2.2 2.1 AARA (Accommodation, Asset 1.9 1.1 1.3 Replacement and Adaptation) Reserve External funding 0.1 0.1 0.1 Total funding 4.2 3.4 3.5

9.10 The GLA does not undertake any borrowings so no interest/financing costs are shown in the revenue budget. The table overleaf shows the split of funding between capital and revenue reserves:

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Section 9 – Capital Spending Plan

Financing 2008-09 2009-10 2010-11 £m £m £m Capital expenditure financed by revenue and reserves 2.6 1.7 1.8 Capital expenditure financed by capital reserves - 0.1 0.1 Total financing 2.6 1.8 1.9

Transport for London 9.11 TfL expects to spend £1,688m on capital projects in 2008-09, funded from government grants, revenue contributions, borrowing, third party contributions and transfers from earmarked reserves. The TfL business plan is based on the Government’s agreement to allow TfL to borrow under the prudential borrowing regime. In order to ensure that borrowing is both affordable and sustainable, TfL ensures that with its Business Plan recurring income exceeds its recurring cost. Overall levels of borrowing planned are well within the levels found in Europe, and debt service ratios would be within the average level for AA rated transport entities.

Draft TfL capital plan 2008-09 2009-10 £m £m London Underground 597 815 London Rail 822 315 Surface Transport 307 250 Corporate Directorate 30 14 Gross Capital Expenditure 1,755 1,393 Less group level over-programming -68 -69 Total expenditure 1,688 1,325 Funding: Capital receipts 248 232 Prudential Borrowing (mainly from 890 600 PWLB and EIB)* Revenue contribution 550 493 Total funding 1,688 1,325 Note: totals do not agree due to rounding differences *£140m of Prudential Borrowing included in 2006-07 is to be allocated to fund capital projects in 2008- 09.

9.12 TfL’s annual prudential borrowing will peak at £890m (including £140m carried forward) in 2008-09 from £600m in 2007-08. As a result of increased borrowing, the debt servicing costs are showing an upward trend.

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Section 9 – Capital Spending Plan

Capital financing 2008-09 2009-10 £m £m Debt Servicing costs Minimum revenue provision 70 97 Interest payable 92 130 Total financing costs 162 227

9.13 New initiatives for capital expenditure is shown in the table below:

New Initiatives 2008-09 2009-10 £m £m On train information screens for LU 11.6 - Accommodation 13.5 - Upgrades to Central & Bakerloo - security 5.9 Train crew accommodation 9.3 - Student/child photocard 3.0 - Development of emissions-related congestion charging 2.5 - LU Network wide service information boards 2.4 - Station accessibility 2.4 - Sustainable freight 0.5 - Asset management graphic asset portal 2.2 - Replacement of emergency radio systems on London Underground 1.6 - Improvements to power supply on SSL one of two Metronet infracos 1.5 - Improvements to Oyster including agent terminals 1.3 - Station signage improvements 1.1 - Investment in congestion charging - 13.0 Investment in Thames Gateway Bus Transit Schemes - 12.1 LU signalling improvements to District & Piccadilly - 7.5 Upgrading power capacity of District Line trains - 0.9 Other (less than £1m) 2.9 - Total 61.7 33.5

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Section 9 – Capital Spending Plan

London Development Agency 9.14 The key feature of the capital expenditure under each of the EDS objectives is to:

Maximise house building to meet the Mayor’s aspirations as set out in the Mayor’s Housing Strategy and the Place Making Programme. Acquiring land to achieve amalgamation/overcoming complicated land ownership, the funding of tactical small scale infrastructure and the Olympic land legacy programme. Delivering the Mayor’s Climate Change programme that includes the Green Homes Initiative, climate change, decentralised energy, waste management and the Sustainable Design and Construction Toolkit. Work with LSEB to deliver an appropriate skills programme for London, support the delivery of the Joint Mayoral/ Central Government programme for young people and the Childcare programme. ESF London Programme. Regional and local intervention to increase locally based jobs and skills programmes. Run large scale programmes for debt finance, risk capital, forms on new and innovative business. Comprehensive programmes of engagement with large employers. Encourage innovation with a particular focus on small and medium sized enterprises Effectively market and promote London to increase revenue from visitors, students and business investors.

9.15 The LDA draft corporate plan provides for spending of £263.5m on capital projects in 2008-09, funded from government grants, capital receipts and prudential borrowing.

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Section 9 – Capital Spending Plan

Capital plan 2008-09 2009-10 2010-11 £m £m £m Programme Expenditure Support the London Plan 13.8 12.4 10.6 Improved and Effective Infrastructure 33.8 31.2 27.6 Healthy Sustainable Communities & Environments 0.5 0.6 - Tackle barriers to employment 5.7 - - Reduce Labour Market Disparities 0.1 - - Address Concentration to Disadvantage _ 1.0 - Tackle Barriers To Enterprise 4.0 - - Maintain London as key enterprise location - - - Maximise Productivity and Innovation 9.4 5.1 - Contingency 1.0 1.0 1.0 Total programme expenditure 68.2 51.3 39.2 Olympic Expenditure Land acquisition costs 29.0 11.2 - Contingency 8.5 5.7 2.9 Remediation 78.6 11.2 3.2 Professional fees 2.6 1.5 1.0 Management 1.6 1.5 - Bid support costs - - 0.1 LDA additional support 50.0 50.0 50.0 Gross VAT 25.0 37.0 21.0 LDA Further Olympic funding contingency - - 100.0 Total Olympic expenditure 195.3 118.1 178.2 Total capital expenditure 263.5 169.4 217.4 Funding for Olympics: Grant funding 85.3 75.1 71.9 Swaps -28.1 - - Capital receipts 34.5 - 11.9 Prudential borrowing (mainly from PWLB) 103.6 43.0 94.4 Total 195.3 118.1 178.2 Funding for Programme Expenditure: Government Grants 68.2 51.3 39.2 Total funding 263.5 169.4 217.4

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Section 9 – Capital Spending Plan

Borrowing 9.16 The above capital programmes would require new borrowing of some £907.6m. Under the Local Government Act 2003, it is the Mayor who determines borrowing limits for the GLA group and these decisions will be taken later on in the budget process.

Borrowing 2008-09 2009-10 2010-11 £m £m £m Metropolitan Police Authority 40.0 38.0 40.0 London Fire & Emergency Planning Authority 14.0 22.5 * Greater London Authority - - - Transport for London 750.0 600.0 * London Development Agency 103.6 43.0 94.4 Total 907.6 703.5 134.4

* to be determined

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Appendix A – Progress on 2007-08 key deliverables

(1) Metropolitan Police Authority

Continue to develop the Safer Neighbourhoods programme with particular consideration of wards with bigger populations to address anti-social behaviour, fear of crime and re-assurance and visibility, including completion of recruitment target of 4,562 PCSOs by April 2007. Safer Neighbourhoods Teams work to a minimum model of 1 Sergeant, 2 PCs and 3 PCSOs (1:2:3). This was increased to a 1:2:6 model for wards with a population greater than 14,000 as shown in the 2001 population census. All 630 Safer Neighbourhoods Teams were fully resourced to these levels by 1 January 2007. The MPS has achieved the recruitment target of 4,562 PCSOs. Develop an anti-social behaviour control strategy to deliver a coordinated and effective approach to anti-social behaviour. The ASB Control Strategy was developed in 2006 to tackle identified areas of anti-social behaviour that were common in the vast majority of wards in London. The success of the 2006 strategy has built the foundation for a partnership-led ASB control strategy under the supervision of the ASB Respect Board for 2007. Make progress towards delivering a 10 per cent reduction in carbon emissions from current levels by March 2010.

The MPA has allocated £5.725 million to reduce CO2 emissions by 10 per cent by 2010, with the implementation of building energy efficiency technologies and staff awareness campaigns. The MPS has established a Climate Change Action Plan (CCAP) programme and appointed a Programme Manager, supported by a Project Engineer and delivery team. The MPA/S Environment Report 2006-07 highlights that the building energy consumption has decreased by 11 per cent on 2005-06 (4 per cent when adjusting for weather variations), which has resulted in a 7.5 per cent decrease in building carbon emissions. Vehicle fleet carbon emissions are stabilising and decreased by 1.25 per cent in 2005-06, and emissions from air travel decreased by 26 per cent in the same period. Reduce overall crime in line with the national Public Service Agreement target by 15 per cent, with particular emphasis on violent crime by March 2008. The MPS contribution towards the national Public Service Agreement target is a reduction of over 19 per cent. Over the first three years (i.e. by April 2007) the Met achieved a reduction of 13.4 per cent against the baseline (2003-04). So far this year the Met has achieved a further reduction of 8.7 per cent. If this level of reduction is sustained for the remaining four months of the financial year the MPS expect to make an overall reduction of 21 per cent through the lifetime of the PSA - exceeding the target level of 19.4 per cent. Continue to improve the sanction detection rate towards meeting the Public Service Agreement target of offenders brought to justice by April 2008. The current offenders brought to justice target was surpassed last year, and the MPA is on course to do so again this year. Projections for the end of the year are far in excess of the Public Service Agreement target. Projections for the end of the year are 217,188 OBTJ, in excess of the PSA target (195,103).

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Appendix A – Progress on 2007-08 key deliverables

Have in place a range of measures to improve performance in relation to counter terrorism, security and protection with supporting IT and accommodation for the new Counter Terrorism command. A Continuous Improvement Unit (CIU) has been established and achievements to date include: The development of performance indicators to reflect the wide range of activity undertaken. Well-defined processes for reporting performance publicly to the MPA Processes that enable managers at all levels to be held to account for performance. The development of risk management processes at business group and OCU level. The intelligence functions within the CTC are due to move to Cobalt Square towards the end of 2008. Undertake planning and preparation for the 2012 Olympic and Paralympic Games, including completion of the co-location of the MPS Olympics Team with other partner agencies by May 2007. A draft security strategy has been produced which outlines the approach for delivering a safe, secure and resilient 2012 Olympic and Paralympic Games. In early 2007 co-location of the MPS Olympics team with other partner agencies was completed. Create a Met Intelligence Bureau to bring its collective intelligence assets together within a single framework. The Met Intelligence Bureau (MIB) was created in April 2007 and all collective units will be fully in place within Cobalt Square by February 2008. Produce a Hate Crime Strategy, in consultation with partners, by September 2007. The MPS is committed to improving service delivery to victims and potential victims of hate crime. It will continue to improve within its own area of responsibility. Roll out victim focus desks to improve communications with, care for and keep victims informed through the criminal justice process. The roll out is planned to be fully complete and in place by the end of December 2007. Actively engage all communities as in accordance with a Community Engagement Strategy launched in December 2007. The MPS continues to broaden its engagement across London and is looking to new methods to identify emerging communities, for example the Somali and Latin American communities.

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Appendix A – Progress on 2007-08 key deliverables

(2) London Fire & Emergency Planning Authority

Reduce accidental fires in people’s homes by 5 per cent (equating to a reduction to 6,002 in 2007-08). Accidental dwelling fires have continued to fall during the first six months of 2007-08. The figure of 6,054 for the 12 months ending September 2007 is a further 3 per cent improvement over 2006-07 and is within 10 per cent of the 2007-08 performance target. Reduce the number of accidental fire-related deaths in the home by 20 per cent (equating to a reduction to 53 in 2007-08). After rising in the first quarter of 2007 (due to an exceptional 12 deaths in April alone), deaths arising from accidental fires in dwellings have remained consistent. the figure for the 12 months ending September 2007 (37) is a slight increase over the 2006-07 year end figure, and remains outside the 2007-08 performance target. Reduce deliberate fires by 10 per cent (equating to a reduction to 17,279 in 2007-08). Consistent with the last three years, deliberate primary fires have continued to fall, with the figure for the 12 months ending September (4,755) being within target for 2007-08 and the lowest12 month total in the last four years. Reduce hoax calls by 5 per cent (equating to a reduction to 3,677 in 2007-08). The data for the first two quarters of 2007-08 show incidents attended continued to fall. The figure for the 12 months ending September 2007 (2,973) demonstrates a continued reduction since the policy was introduced in April 2005. This represents a further 6 per cent improvement over the 2006-07 year-end total and is already within target. Maintain the current time it will take on average for the first fire engine to arrive at an incident (While reviewing how LFEPA might improve on the targets of 65 per cent in 5 minutes, 90 per cent in 8 minutes in 2007-08). The first fire engine arrived at incidents within 5 minutes 59.59 per cent (2006-07) and 59.62 per cent (12 months to end September 2007). The first fire engine arrived at incidents within 8 minutes 90.05 per cent (2006-07) and 90.39 per cent (12 months to end September 2007). Improve the time that it takes a second fire engine to attend incidents across London (target of 75 per cent in 8 minutes, 90 per cent in 10 minutes in 2007-08). The second fire engine arrived at incidents within 8 minutes 82.74 per cent (2006-07) and 82.35 per cent (12 months to end September 2007).

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Appendix A – Progress on 2007-08 key deliverables

(3) Greater London Authority

Global warming and improving London’s environment in a sustainable way. During May 2007, the Mayor took part in the C40 Large Cities climate summit in New York, which brought together Mayors and senior representatives from major cities around the world. The summit secured a deal to create an immediate $5bn fund to help cities make commercial buildings cleaner and greener. As part of the Mayor’s programme to tackle climate change Transport for London announced in August the start of the public consultation on proposals to charge cars with the highest greenhouse gas emissions £25 to drive in the present central London Congestion Charging Zone, combined with a 100 per cent discount for the cars with the lowest emissions. Expand and improve transport provision in London In October it was announced that Single Tube, bus, DLR and tram fares will be frozen from January 2008. The 2008 fares package builds on others – the now free Dial-a-Ride door-to- door fares for older and disabled Londoners and the half price travel scheme for Londoners on Income support. Crossrail has been granted approval. It will provide the transport underpinning for the greatest centres of London’s business - the City, Canary Wharf and the West End - as well as linking these areas of high jobs growth to the areas of greatest deprivation in east London and opening up the areas of new housing development in the Thames Gateway. Improve public safety Crime in London has continued to fall through 2007-08 and is now at a ten year low. Police have recorded a 6.1 per cent drop in the number of offences committed in the six months from April to September, 28,000 fewer offences than for the same period the previous year. Incidents of robbery, violence and hate crime have all decreased. The Met now has record numbers of police, and dedicated police teams located in every single neighbourhood in the city. There are 31,000 police officers employed by the Met – the greatest number in its history. In addition, there are now 21 Safer Transport teams – consisting of two sergeants, one constable and at least 18 police community support officers - operating at major transport networks throughout outer London and making passengers journeys safer. Deliver sustainable growth within a changing global marketplace. The draft housing strategy was published in September 2007, setting out plans for 50,000 more affordable homes delivered in London over the next three years. This represents a fifty per cent increase in the delivery of affordable London homes and a doubling in the supply of homes for social rent that in the capital. The draft skills and employment strategy for London was published in October 2007. Backed by the £560m London Learning and Skills Council’s annual adult skills budget the final strategy will recommend the steps that must be taken to meet the skills and employment challenges facing London’s businesses and citizens. The aim is to ensure that employers can recruit Londoners with the right skills for the job, to sustain and enhance London’s successful and globally competitive labour market. It also puts forward proposals so that, whether they are in work or not, Londoners have the right support to acquire new skills and succeed in the workforce.

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Appendix A – Progress on 2007-08 key deliverables

Promote London at home and abroad as a world-class city ‘Your 2012’, was published in July 2007, setting out the legacy opportunities and ongoing benefits that hosting the Olympic and Paralympic Games in London in 2012 will bring. The publication highlights initiatives that are already underway and making real, lasting improvements and also suggests ways that individuals and businesses can become involved. The Mayor visited India in November 2007 to promote closer ties between the capital and India in business, tourism, education and the creative industries. The Mayor took part in a series of meetings, seminars and conferences on the theme of 'London and India: Partners in Globalisation'. The Mayor’s trip included, signing a city-to-city partnership agreement with the Chief Minister of Delhi, signing a tourism agreement in Delhi, meetings with key Indian businesses and opening two offices - The London India Office - Delhi and The London India Office - Mumbai, to promote business, trade, culture and tourism between London and India. Remove social inequality and increase social inclusion A £79 million ‘London Youth Offer’ was allocated in December 2007, which will fund services for young people in the capital. £20 million of this will come from the LDA and £59 million from DCSF. The programme will increase the range of services for teenagers, provide more support for parents and give young people new opportunities to gain new skills and raise their aspirations. This is part of a package of measures from the Mayor and Government to address concerns over the high levels of child poverty in the capital, increase funding for youth services and target the most deprived and hard to reach young Londoners.

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Appendix A – Progress on 2007-08 key deliverables

(4) Transport for London

Improving Rail & Underground Services TfL will take over responsibility for the Silverlink Metro (to be known as the London Overground) in November 2007. TfL will deliver a number of improvements, including enhanced frequency, improved service and security and, as from late 2008, new trains. The additional policing on the North London Line, introduced in 2006, will be enhanced. TfL took over responsibility for London Overground on 11 November 2007 and is now working to improve frequency, service and security. London Overground passengers benefited immediately through Oyster pay as you go ticketing and staff at every station at all times when services are operating. Station improvements will follow, delivered as part of TfL’s Investment Programme, with all stations cleaned and repaired by spring 2008 and refurbished with more Help Points, CCTV, better lighting and customer information systems by the end of 2010. East London Line extension Stage 1, linking Dalston Junction in the north to West Croydon and Crystal Palace in the south (opening in 2010), with the 'Dalston Curve' linking the line to the North London Line to Highbury and Islington and beyond. The replacement of 21 bridges along Kingsland Viaduct has been completed. Further construction work is underway to replace track and signalling equipment and the construction of four new stations with step free access at Dalston Junction, Haggerston, Hoxton and Shoreditch High Street. The East London Line will close on 22 December 2007 for major extension works and reopen by summer 2010 as part of the London Overground network. Oystercard ticketing on all National Rail stations in London, starting from 2008. From January 2008 Oystercard ticketing will be available at additional London stations on the C2C, One, Chiltern Railways and First Great Western lines. The remaining stations will be able to accept Oystercard ticketing from January 2009. Docklands Light Railway extensions and capacity upgrades are planned, including the extension from King George V under the river to Woolwich Arsenal (opening 2009), from Canning Town to Stratford International (opening in 2010), and the three-car upgrade between Bank and Lewisham (completion is due in 2009). Works on the tunnel extending the DLR under the River Thames to Woolwich Arsenal was completed on time as the boring machine broke through to the south side of the Thames in July 2007. The £203m, 2.5km extension will link Woolwich south of the river with King George V, in North Woolwich, one stop away from London City Airport. Work has started on the £174m DLR extension to Stratford International station. It is expected that railway services will commence in 2010. In May 2007 TfL awarded a £200m contract to upgrade the DLR so an extra third carriage can be added to trains to provide additional capacity for passengers.

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Development of the DLR Barking Reach extension to Transport and Works Act powers. A public consultation on route options was undertaken in 2007 and the Transport and Works Act is on course to be submitted by mid 2008. Stratford regional station will be improved by the addition of a second platform on the line from Bow Church (under construction and due to open in 2007). A second new platforms opened in 2007 are Stratford Regional station providing additional passenger capacity allowing the DLR to run trains to and from Stratford alongside each other. An additional 46 railcars are being built for the DLR and all will be in service by 2010, 22 to support Olympic transport requirements, 24 to support Woolwich Arsenal and three-car running. An order of 55 rail cars has been placed. Following testing, all cars will be operational by 2010, and many will be in use before this time. The PPP will deliver huge increases in network capacity through a series of line upgrades, including work on the Jubilee line in 2009. Under the PPP contracts, a rolling programme of modernisation or refurbishment of every Underground station is planned. In July 2007 Metronet was placed into administration. It is expected that TfL will take them out of administration in January 2008. There will then need to be an assessment of the programme to deliver the PPP. Re-prioritised London Underground station accessibility programme towards a target of 33 per cent step free access by 2013, with twenty five per cent of Underground stations step free from platform to street by 2010. LU is progressing the step-free programme towards meeting these targets, and 48 of LU stations are now step free. LU power upgrades to meet PPP requirements plus provision of a new radio system across the whole of the network (currently introduced on the East London, District, Circle and Hammersmith and City lines in 2006). £2bn digital radio Connect system is now being rolled-out across the Tube on the Circle and Metropolitan lines, next followed by the Hammersmith & City, Bakerloo, Victoria, Piccadilly, Waterloo & City, Central, Northern and Jubilee lines. Of this£0.5bn will be invested in the plan period. LU timetable changes to enable later running on Friday and Saturday nights from May 2007, offset by one hour later starts on Saturday. This has been delayed, as the financial package put forward was not agreed by the Unions. New trains will be introduced on to the Victoria line from late 2009 as part of a line upgrade. They will include accessibility improvements such as designated wheelchair spaces, audio announcements and better ventilation. All District line trains will be refurbished by 2009. 43 eight-car trains are being built by Bombardier for the deep-tube Victoria Line, and 75

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District line trains are undergoing refurbishment, including completely renewed interiors. exteriors newly painted in LU's red white and blue livery. CCTV in carriages. dot matrix information (DMI) displays. and accessibility measures, including tip-up seats to accommodate wheelchairs, buggies and luggage. Additional British Transport Police will be in place on the Underground and on the National Rail network to enhance security, starting from March 2007. In 2003, there were 450 BTP officers for LU. This has now risen to over 700 officers. As a result, crimes on the Underground and Docklands Light Railway have gone down by 2.1 per cent this in 2007 despite ever increasing numbers of passengers on the network. The Piccadilly line extension to Heathrow terminal 5 will open in 2008 and is expected to serve three million customers a year by 2010. The Piccadilly line extension to Heathrow Terminal 5 was handed over by BAA to London Underground in July 2007 to start trial operations, ahead of its opening in March 2008. Better bus services Further bus expansion (in terms of operated km) by 4 per cent from 2005-06 to 2009- 10 (36 per cent over 1999-2000 levels), continuing a 100 per cent accessible fleet with every bus fitted with CCTV. More people are travelling on London buses now than has been the case since 1965 and bus ridership has increased by 45 per cent since 1999-00. Bus mileage in London is now higher than at any time since 1957, with 475 million km expected to be operated in 2009-10. The excess waiting time, the measure of reliability on high-frequency routes, has dropped to 1.1 minutes from 2.1 minutes in 1999-2000. The iBus project – rolling out from 2007 – will provide a new bus radio and communications system that will give passengers better information. The iBus is now being rolled out by TfL on a garage basis and buses will be equipped with the new iBus systems over the next four years. Key benefits of the new systems for passengers include precise real-time information on board buses with new ‘on board next stop’ visual displays and audio announcements. Bus station improvements, bus shelter replacement and the bus priority programme will continue. Over 70 per cent of London’s bus stops now have shelters, up from 58 per cent in 1998. Continuation of enhanced transport policing on bus routes through the Transport Operational Command Unit (TOCU) of the MPS, funded by TfL. Funding has been dedicated for an additional 378 Police Community Support Officers, 21 Police Constables and 42 Sergeants to patrol on and around London's transport network. Known as Safer Transport Teams, new Police Community Support Officers (PCSOs) will work to provide visibility and reassurance and cut crime, disorder and anti-social behaviour on and around public transport.

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Trials of ten hydrogen fuel cell buses to begin in 2008-09 and expanding the existing trials of hybrid diesel electric buses. TfL signed a contract in November 2007 for five hydrogen fuel cell buses and five hydrogen internal combustion engine buses, due to be in service in 2009. Walking, cycling and travel demand management Schemes to provide safe and attractive environments for cyclists include cycle training, cycle parking, access improvements and the completion of 850km of the London Cycle Network plus (LCN+) by 2010. There has been an 83 percent increase in cycling levels on London’s major roads since 2000-01, and TfL has increased investment in cycling from £5.5m in 2002 to £38m in 2007-08. On behalf of London, TfL won the right to host the start of the Tour de France ‘Grand Depart’ in July 2007. In September 2007 the Mayor launched London Freewheel, a major new cycling event for all Londoner’s, which saw over 38,000 cyclist of every age an ability taking part in the largest mass participation cycle ride the capital has ever seen. Working with boroughs around 6,000 additional on-street stands have been installed and a major programme providing over 10,000 spaces with modern facilities at over 400 schools. TfL continues to work with boroughs and other organisations to fund improvements that create a better environment for walking, including the world squares project, completion of six strategic walking routes and a programme of improvements. In November 2007 TfL launched Legible London, designed to provide better information for people who want to explore the Capital on foot. The Bond Street trial, which is the prototype for a future London-wide pedestrian information system, consists of 19 on-street signs displaying all the information pedestrians could require when walking in the area. Legible London will be rolled out to central and east London by 2012, and other major town centres by 2015. TfL will continue supporting the London boroughs’ local area schemes, and it is intended that every school should have a travel plan by 2009. 53 per cent of the capital’s schools now have a travel plan. Sustainable transport town centre scheme in Sutton (for 2006 to 2009), where TfL and the Borough are working in partnership to encourage people to walk, cycle and use public transport and pilot other opportunities to reduce congestion. TfL is working with the London Borough of Sutton on a three-year 'Sustainable Town Centre' pilot scheme to bring together existing school workplace and personal travel planning in one borough. Continued delivery of the road safety programme with the aim of achieving by 2010 the Mayor’s casualty reduction targets announced in 2005 - the overall target is to reduce the number of people killed or seriously injured by 50 per cent over the 1994- 98 average by 2010. In the 12 months to the end of June 2006 there was a 40 per cent reduction in the number of

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Appendix A – Progress on 2007-08 key deliverables people killed and seriously injured on the Capital’s roads compared to the Government’s road safety baseline period (1994-1998). There has been a 38 per cent reduction in the number of people slightly injured against a 2010 target of 25 per cent. Sustainable freight operations are being encouraged through the eight proposals contained in the London Freight Plan, launched in June 2006. The London Freight Plan was approved by TfL Board in October 2007. The introduction of the proposed London-wide Low Emission Zone, which, from 2008, will require HGVs, coaches, taxis and buses to meet Euro III emission standards. The Low Emission Zone will be launched on 4 February 2008 initially covering heavy older diesel-engined lorries. This will extend to coaches and buses in July 2008 to meet Euro III emission standards. The western extension of the Central London Congestion Charge will be implemented from February 2007, coupled with customer improvements, including ‘pay-next-day’ and more payment outlets at petrol stations. On 19 February 2007 the Central London Congestion Charge was extended west to cover most of the boroughs of Kensington and Chelsea, and Westminster, accompanied with a package of measures to enhance bus services and ease payment. Managing the road network Road maintenance and renewal will continue, and bridge and tunnel safety schemes at several locations – including the A40 Hanger Lane – will be completed. TfL are continuing with work on a number of major road improvements including at Gants Hill, Blackwall Tunnel, A3 Malden Junction, A406 Bounds Green and they are consulting on plans to improve Highbury Corner roundabout and surrounding open space. The town centre relief road at Coulsdon is due to open in January 2007 and construction of the A406 North Circular Road improvement scheme at Bounds Green will begin, subject to planning permission, in 2009. A public realm scheme for Parliament Square will be completed by 2010-11, subject to consultation. The Coulsdon Relief Road has opened creating a major bypass on the A23 London to Brighton that will remove 80 per cent of traffic from Coulsdon town centre. The project will make the town centre safer and improve conditions for bus passengers, walkers and cyclists. Planning permission for Bounds Green scheme was granted in July 2007, and, subject to the necessary consents, TfL are due to start construction in 209 with completion expected in 2011. TfL are planning public realm improvements to Parliament Square to create a high quality public space to improve connections, access and safety to the Square in keeping with the square's international importance. Detailed analysis and stakeholder consultation as well as traffic modeling and environmental assessment work is underway.

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A modern traffic signal control system replacing equipment that is more than 30- years-old is to be deployed starting from 2010. London has approximately 6,000 sets of traffic signals, 1,200 CCTV cameras and 100 variable message signs (VMS), all owned and managed by Transport for London (TfL). Work continues to replace traffic signals across the network. The number of signal schemes completed increased from 290 in 2005-06 to 637 in 2006-07, and TfL is on target to deliver over 700 schemes by the end of 2007-08. Reviews of traffic signal timings increased from 544 in 2005- 06 to 637 and TfL are on target to deliver over 750 reviews in 2006-07, with a further 900 next year. In addition TfL provide business and road users with real time information on the operation of the road network at www.tfl.gov.uk/trafficnews and www.trafficradio.org.uk. Supporting Thames Gateway regeneration Subject to the outcome of a planning inquiry, construction of the Thames Gateway Bridge could begin in 2009 and the bridge would then open in 2013. In July 2007 the Government decided not to determined the planning application for the Thames Gateway Bridge, but to reopen the public Inquiry. This will add delay to the delivery of this important crossing, which is crucial to supporting plans for an extra 160,000 houses in the Thames Gateway region and up to 42,000 additional jobs in the area. Two bus-based transit schemes to serve the proposed bridge are under construction: East London Transit stage 1a (Ilford-Thames View Estate opening in 2008), and Greenwich, Waterfront Transit stage 1 (Abbey Wood-Woolwich-North Greenwich, opening in 2010). Work continues on the development of these projects. The East London Transit will run from Ilford to Dagenham Dock, via Barking, from Autumn 2009. The Greenwich Waterfront Transit will run from Autumn 2011 from North Greenwich to Abbey Wood via Woolwich and Thamesmead. River and coach services River Services will continue to manage nine passenger piers, including those at Central London locations such as Westminster and Bankside. It will also continue to provide financial support to the river bus route from the Savoy to Masthouse Terrace and Greenwich. Thames Clippers was formed in 1999 and has expanded rapidly, now carrying 1 million passengers a year. Since 2007 TfL has contracted Thames Clipper boat services to operate the commuter route between Embankment (Savoy pier) and Docklands. Thames Clippers now carry 1 million passengers a year and operate a scheduled service using a fleet of 6 high speed catamarans between Woolwich and the West End, serving 11 piers adjacent to busy commercial and residential areas. Refurbishment at Victoria Coach Station, including ticket hall improvements, will be completed in 2007. The coach station will continue to provide interchange facilities for an estimated 10 million passengers and 400,000 coaches per year serving both the UK and mainland Europe. Victoria Coach Station celebrated 75 years of service in March 2007 and TfL continues to invest heavily to improve facilities since taking over the running of the station in 2000.

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Door-to-Door Transport Services TfL will continue to provide funding for the London Boroughs’ Taxicard scheme. Since November 2001 TfL has funded the Taxicard service, which is used by over 80,000 members to make more than 1.2 million trips a year. TfL will provide £12m funding to the Taxicard scheme in 2007-08. Additional funding for door-to-door transport services pending the outcome of the review into door-to-door transport currently in progress. The Mayor has announced that from 1 January 2008 Dial-a-Ride door-to-door fares for older and disabled Londoners will be abolished. The move will benefit around 50,000 people who currently pay to take 1.2million journeys a year. TfL will progress the door-to-door transport consultation during 2008. London’s Transport Museum The museum will re-open in summer of 2007 following an extensive refurbishment, funded by TfL, the Lottery and commercial sources. There will be more exhibition space including several new themes, and a greatly enhanced building environment including an array of photovoltaic cells on the roof which will provide a substantial proportion of the museums electricity requirements. The London Transport Museum re-opened on 22 November 2007 following a major refurbishment, including the creation of new galleries to enable more of the Museum’s important collections to be seen by the public. Crossrail Crossrail – the largest single transport improvement planned in the UK – is being developed via Cross London Rail Links Limited, a 50/50 joint venture between TfL and the DfT. TfL is continuing to promote Crossrail as being vital to London's future. The Mayor welcomed the Prime Minister’s announcement on October 2007 that Crossrail is to go ahead. Expanding London’s public transport capacity by 10 per cent, Crossrail provides the largest addition to London’s transport system for more than fifty years. TfL will take over sole ownership of Cross London Rail Links Limited, the company promoting and developing Crossrail, which the Crossrail Bill receives Royal Assent next year. The line is due to open in 2017.

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(5) London Development Agency

As with previous years, it should be noted that the profile of LDA’s delivery plans is weighted towards the second half of 2007-08 therefore the figures cited here only represent a mid-year position. The LDA is seeking to make sure that the investment it makes towards increasing London’s housing stock will lead to 50 per cent of those homes being ‘affordable’ i.e. socially rented, shared ownership, key worker, other intermediate or a combination of these.107 housing units facilitated so far this year, representing 6.3 per cent of its annual target. Current affordability is at 40 per cent. To remediate Brownfield land 4.8 hectares remediated so far, this is 8.6 per cent of annual target £70.7m investment levered in this year, 24.4 per cent of annual target. People assisted to get a job as a direct result of LDA activity (Employment Support) So far 17,509 people have been supported into employment, 58.4 per cent of its annual target. To support a childcare place take up rate of 55 per cent Over the past few years the Agency has made significant capital investment in the creation of childcare places in London. It also provides revenue support to subsidise the cost of childcare places, the overall intent of which is to provide the parent with affordable quality reliable childcare provision whilst the parent is in employment. The take up rate is included this year as a high level target for the first time. So far this year the actual take up rate is 41 per cent, this is only 14 per cent short of the full annual target. To support adults in gaining basic skills 1,545 adults were supported in gaining basic skills so far this year, 20.3 per cent of the annual target. To support adults to achieve full level 2 or equivalent skills as a result of LDA programmes 1,941 adults supported in gaining level 2 skills so far this year. 27.3 per cent of its annual target. To assist people in their skills development as a result of LDA programmes (Skills General) So far this year 22,411 adults have been assisted in their skills development, 59 per cent of its annual target. To directly assist businesses to improve their performance The LDA has provided support to 22,845 businesses to improve their performance, 65.3 per cent of its annual target. To create new businesses which demonstrate growth after 12 months 578 have demonstrated growth so far this year. This represents 16.1 per cent of our annual target.

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To create jobs 8,746 jobs have been created so far this year. This is 50 per cent of the annual target. This year the Agency has set additional targets for Business Support, these are: Business Support – Collaborations, Business Support Pre Qualification Questionnaires (PQQs) and Business Link Intensive Support. Business Support – Collaborations The LDA has engaged in 244 business support collaborations so far this year, 48 per cent of its annual target Business Support – Pre Qualification Questionnaires 1,852 Pre Qualification Questionnaires have been submitted so far, 77.2 per cent of our annual target. Business Link Intensive Business Support The Agency is responsible for ensuring that Londoners receive quality business information, diagnostic and brokerage (IDB) service. In pursuit of this the Agency has contracted the service delivery to SERCO Regional Services Ltd (SRS) who have been providing this service since April 2007 - 1,973 businesses supported. 39.5 per cent of the annual target.

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Appendix B – Metropolitan Police Authority

Table 1: Subjective analysis

Subjective Analysis Budget Budget Plan Plan 2007-08 2008-09 2009-10 2010-11 £m £m £m £m Police Officer Pay 1,709.3 1,779.2 1,823.6 1,869.4 Police staff (civil staff) pay 545.7 575.6 602.8 627.9 Police staff (PCSO) pay 144.1 147.1 147.3 147.4 Police staff (traffic warden) pay 11.9 11.4 11.4 11.5 2,411.0 2,513.3 2,585.1 2,656.2 Police officer overtime 116.4 121.2 121.7 122.7 Police staff (civil staff) overtime 29.8 30.1 29.6 29.6 Police staff (PCSO) overtime 1.1 1.0 1.0 1.0 Police staff (traffic warden) overtime 0.5 0.5 0.5 0.5 147.8 152.8 152.8 153.8 Total pay & overtime 2,558.8 2,666.1 2,737.9 2,810.0 Employee related 34.3 42.6 40.7 40.9 Premises costs 209.5 229.1 244.2 252.1 Transport costs 58.1 62.1 62.2 62.4 Supplies and services 419.8 460.1 497.3 527.3 Savings to be agreed - - -40.5 -64.1 Capital financing costs 21.6 21.6 21.6 21.6 Total running expenses 743.3 815.5 825.5 840.2 Discretionary pension costs 29.2 29.2 29.2 29.2 Total revenue expenditure 3,331.3 3,510.8 3,592.6 3,679.5 Income -288.2 -302.2 -299.1 -299.1 Specific grants -506.4 -613.6 -641.3 -668.5 Total income -794.6 -915.8 -940.4 -967.6 Net revenue expenditure 2,536.7 2,595.0 2,652.2 2,711.9

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Table 2: Change in existing services and programmes

Committed changes 2008-09 2009-10 2010-11 £m £m £m Committed Expenditure MPA – community engagement 0.6 0.6 0.6 Rental and related contractual liabilities 2.3 6.6 7.6 London pay lead 2.1 4.1 4.1 Airwave special schemes 2.0 2.0 2.0 Other committed expenditure 8.8 8.8 8.8 15.8 22.1 23.1 Committed Reductions Airwave -7.8 -12.0 -12.0 Progressive reduction in housing-related allowances -5.0 -9.9 -14.9 Met Time -3.6 -3.6 -3.6 C3i (command, control, communications & information) – -2.5 -4.1 -4.1 Operational Services C3i – Directorate of Information -2.3 -2.3 -2.3 Other committed reductions -6.5 -6.5 -6.5 Employer’s pension contribution -4.3 -4.3 -4.3 -32.0 -42.7 -47.7 Demand-led Continuation of Existing Operational Policies Forensics 3.6 7.2 7.2 Forensic Medical Examiners 1.5 3.0 3.0 Interpreters 1.0 2.0 2.0 6.1 12.2 12.2 Cost Pressures Support costs of IT projects into service 5.7 11.7 17.8 Estate modernisation 4.6 9.6 14.6 Cost pressures of revised capital programme 4.0 4.0 4.0 14.3 25.3 36.4 Reorganisation of Support Service Delivery Transforming HR 4.0 4.0 4.0 4.0 4.0 4.0 Contractual Price Increases Facilities management works 8.0 11.1 14.2 Increase in cost re Association of Train Operating Companies 2.1 2.1 2.1 Police National Computer increase in annual charges 1.5 1.5 1.5 TfL – loss of vehicle recovery contract 0.4 0.4 0.4 12.0 15.1 18.2 Sustainable Procurement London Living Wage 3.0 4.0 4.0 3.0 4.0 4.0

Total net committed change 23.2 40.0 50.2

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Table 3: New initiatives

New Initiatives 2008-09 2009-10 2010-11 £m £m £m Enhancing Capacity Firearms training capacity - 10.0 10.0 Enhancing capacity and the introduction of electronic targeting New proactive teams 2.0 2.0 2.0 Tackling guns, gangs, organised crime and Trident Operations 2.0 12.0 12.0 Systems Improvement Eagle Corporate Network 2.0 6.0 7.0 Creation of a secure, MPS-owned facility for accommodating systems protectively marked as SECRET Other systems improvement 2.5 2.5 2.5 Upgrade and replace the current MPS internet/intranet capabilities and forensics project which to reinvestigate serious crimes / murders 4.5 8.5 9.5 Demand-led Evidential services & other covert technology services 1.7 2.7 3.7 Meet the continued growth in demand, both in terms of volume and complexity of cases for digital forensic services Additional aid requirement to police Wembley events 1.6 1.6 1.6 Requirement to meet the policing needs of the new Wembley Stadium Maintenance of helicopters – pressure not funded in 2007-08 0.6 0.6 0.6 Costs associated with the servicing of the new MPS helicopter fleet Other 2.0 1.5 0.9 Costs associated with the recruitment of additional Metropolitan Special Constable, reinstatement of an unachievable saving identified on Station Reception Officers 5.9 6.4 6.8 Performance Further rollout of Integrated Borough Operations (IBO) 4.5 18.5 18.5 Funding for IBO staff when the local authority funding initiatives end Transforming HR – restructuring costs 4.1 4.1 4.1 Provision for unavoidable redundancies, as many of the cashable savings are derived from an HR service with fewer staff Borough Partnership - 320 Police Officers (2 year deal) 3.9 3.9 3.9 Working with Local Authorities to support the delivery of LAA performance targets Central Communications Command 2.5 2.5 4.1 Costs associated with the Central Communication Command achieving target performance levels MPA 0.5 0.4 0.4 Increase capacity within MPA 15.5 29.4 31.0

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New Initiatives 2008-09 2009-10 2010-11 £m £m £m Income No Witness No Justice – loss of ISB funding & increased coverage 2.7 2.7 2.7 Expands the staffing level to provide better support to witnesses from the reporting of crime through the Criminal Justice process Uncertainty around income from IND for leasing of cells 1.2 1.2 1.2 Adjustment made to better reflect likely income prompted by lack of cells to lease to Immigration and National Division (Border and Immigration Agency) as originally planned 3.9 3.9 3.9 IMPACT Programme – Bichard Inquiry Management of Policing information, IMPACT & other projects 6.5 6.5 6.5 To develop a framework to assist the MPS to identify, develop, prioritise, implement and monitor a range of incremental projects to comply with MoPI guidelines by December 2010 6.5 6.5 6.5 Funded Pressures National Strategy for Police Information Systems Datacentre 6.0 6.0 6.0 Costs associated with the introduction of the NSPIS datacentre Territorial Policing – supervision for Safer Transport Teams (TfL) 2.1 2.1 2.1 Shortfall in TfL income balanced by request for additional grant (£2.1m) – provides supervision for the safer transport teams of PCSOs Central Operations – provide officers to support TfL 1.9 1.9 1.9 Funding for the provision of Traffic Officers which were funded on a one-off basis by TfL in 2007/08 Designated Detention Officers – end of Home Office grant 6.5 6.5 6.5 Funding to continue the employment of Designated Detention Officers as there is no certainty that the current Home Officer grant will continue TfL funding -4.0 - - Income received from TfL to cover the supervision for Safe Transport Teams and Officers to support TfL Other funding -12.5 -12.5 -12.5 Income received to cover the National Strategy for Police Information Systems Datacentre and Designated Detention Officers - 4.0 4.0 Funded from Specific Grants MPS share of national counter-terrorism bid (with Treasury) 30.0 30.0 30.0 MPS bid for additional resources to support counter-terrorism operations Further Designated Security Posts expenditure for mandated posts 29.2 29.2 29.2 MPS bid for additional resources to meet the overall requirement for security posts

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New Initiatives 2008-09 2009-10 2010-11 £m £m £m Revenue element of Olympics preparation 40.1 67.8 95.0 MPS bid for additional resources to support the preparation for the London 2012 Olympic and Paralympic games 99.3 127.0 154.2

Total new initiatives 137.6 197.7 227.9

Table 4: Savings and efficiencies

Savings and efficiencies 2008-09 2009-10 2010-11 £m £m £m Realignment of functions within Territorial Policing 4.3 4.3 4.3 Reduction in management structures on boroughs and in TPHQ 3.1 4.4 4.4 Rationalise the Finance &Resources function across boroughs and 2.0 2.0 2.0 reductions in other devolved budgets Reduction in Central Operations Police Officer & Staff posts 0.7 0.7 0.7 Analysis charges, staff costs & overtime in Forensic Services 1.5 1.5 1.5 Other operational overhead savings 3.3 4.0 4.0 Cash freeze on non-pay inflation 7.5 7.5 7.5 Transforming HR 3.0 12.0 14.0 Procurement – outsourcing service programme/efficiency savings 2.1 2.2 2.2 Rationalise use of temp/external staff & reduce supplies & services 1.2 1.7 2.0 Overhead efficiencies activity – Phase II 1.0 1.0 1.0 Other support overhead savings 7.4 11.0 12.3 Realign the funding within Territorial Policing to better meet demand 6.5 7.5 3.5 Improvement to Criminal Justice and volume crime processes 5.4 7.2 7.2 Increase in cost recovery – Heathrow 2.5 2.5 2.5 Rationalise front office function in police stations 1.8 1.8 1.8 Third party funding for existing Specialist Operations activity and 1.8 3.6 5.3 counter-terrorism efficiency savings Change delivery of forensic medical care & custody services - 3.2 12.7 Funding for Police Officers & Staff for Integrated Borough 1.5 - - Operations Other operational non-overhead savings 7.7 11.1 12.2 Procurement Opportunity & Spend Analysis project (PROSPA) 2.8 2.8 2.8 Reduced ICT costs secured through negotiation 1.6 3.7 4.1 PSD – reactive repairs 1.5 3.0 4.5 Other support non-overhead savings 1.6 3.6 3.6 Savings to be agreed - 40.5 64.1 Total savings and efficiencies 71.8 142.8 180.2

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Appendix C – London Fire and Emergency Planning Authority

Table 1: Subjective analysis

Subjective Analysis Budget Budget Plan Plan 2007-08 2008-09 2009-10 2010-11 £m £m £m £m Operational staff 232.0 240.4 248.8 257.1 Other staff 58.1 58.4 60.3 62.3 Employee related 8.9 8.9 9.4 9.6 Pensions 60.8 58.1 59.3 60.7 359.8 365.8 377.8 389.7 Premises 27.1 27.3 28.2 29.0 Transport 24.1 24.5 25.5 26.5 Supplies and services 19.2 19.4 20.0 19.3 Third party payments 0.5 0.4 0.4 0.4 New initiatives 4.0 4.1 3.2 2.3 Savings to be agreed -2.0 - -4.2 -6.5 72.9 75.7 73.1 71.0 Capital financing costs 10.3 11.9 12.1 12.8 Total revenue expenditure 443.0 453.4 463.0 473.5 Total income -29.1 -28.1 -28.1 -28.8 Net revenue expenditure 413.9 425.3 434.9 444.7

Table 2: New initiatives

New Initiatives 2008-09 2009-10 2010-11 £m £m £m Risk management & prevention 1.0 1.0 1.0 Safeguarding Children Database Home Fire Safety Visit Practitioners to continue to fit specialist fire alarms for vulnerable groups (e.g. hard of hearing, visually impaired people) Community Action Team –an integrated unit providing a greater number of staff with both community engagement and arson prevention expertise. Fire and Arson Analysts Resilience & new dimensions 0.2 - - Specialist Detection Identification Monitoring Vehicle Providing an effective & efficient emergency response 0.4 0.4 0.1 Command Simulation training at new command units. Provision of an all-wheel drive appliance to enhance response to difficult to reach incidents Provision of new hosereels to enable optimum efficiency of water/foam use

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Appendix C – London Fire and Emergency Planning Authority

New Initiatives 2008-09 2009-10 2010-11 £m £m £m Co-operation & joint working 0.4 0.6 0.5 An initiative to introduce a national digital radio system, to provide improved information systems Development of Schools Team Staff & workforce development 0.5 0.1 0.1 Various initiatives Finance & resources 1.5 1.0 0.5 Additional software support Additional desktop support Property PFI specialist advisors Cyclical Building Maintenance Day to Day Building Maintenance Communications 0.1 0.1 0.1 Improved LFB website Public Affairs – improvements in external communications

Total new initiatives 4.1 3.2 2.3

Table 3: Savings and efficiencies

Savings and efficiencies 2008-09 2009-10 2010-11 £m £m £m Risk management and prevention 0.2 0.2 0.2 Staff and workforce development 2.0 1.4 1.4 Finance and resources - Rents & rates payable 2.3 2.3 2.3 - Firehouse savings 0.7 - - - Additional income from MFB Act 0.3 0.6 1.2 - Short-term interest 0.4 - - - Other miscellaneous finance and resources savings 0.4 0.3 0.5 Governance & performance management 0.2 0.2 0.2 Communications 0.1 0.2 0.2 Savings to be agreed 0.1 4.2 6.5 Total savings and efficiencies 6.7 9.4 12.5

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Appendix D: Greater London Authority: Mayor of London

Table 1: Subjective analysis

Subjective analysis Budget Forecast Budget Plan Plan 2007-08 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Staff costs 34.2 34.2 34.3 35.3 36.3 Premises costs 11.1 9.3 11.4 11.1 11.2 Supplies and services 41.5 43.0 37.5 32.2 32.9 Olympic funding agreement 60.8 60.8 58.7 59.1 59.6 Capital financed by revenue and 2.5 3.2 4.2 3.3 3.4 reserves Total revenue expenditure 150.1 150.5 146.1 141.0 143.4 Income -14.1 -18.9 -14.3 -14.0 -14.2 Interest receivable -2.2 -2.9 -2.7 -2.7 -2.7 Total Income -16.3 -21.8 -17.0 -16.7 -16.9 Net revenue expenditure 133.8 128.7 129.1 124.3 126.5

Table 2: New initiatives and service improvements

New initiatives and services improvements 2008-09 2009-10 2010-11 £m £m £m Mayor’s Office 0.2 0.2 - Management and Support services Policy and Partnership 0.1 0.1 0.1 Corporate Services 0.1 0.1 0.1 Media and Marketing - - 0.1 Total 0.4 0.4 0.3

Notes: (1) These new initiatives contain provision for 5.6 (full time equivalent) additional staff. These are:

A part time evaluation and development manager and a full time project officer to help deliver the Mayor’s youth offer. A press officer to provide additional capacity around environment and climate change An environment team post to help develop and maintain the London Atmospheric

Emissions Inventory and London Energy and CO2 Emissions Inventory A geographic systems engineer to support datasets on the GLA corporate database A support officer for the Technology Group.

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Appendix D: Greater London Authority: Mayor of London

Table 3: Savings and efficiencies

Savings and efficiencies 2008-09 2009-10 2010-11 £m £m £m Additional treasury management income 0.5 0.5 0.5 Additional income from sale of data and publications 0.1 0.1 0.1 Total additional income 0.6 0.6 0.6 Increase in vacancy factor from 4.5% to 5.85% 0.4 0.4 0.4 No increase for inflation on programme budgets and other areas 0.4 0.4 0.4 where it is contractually avoidable Reduced revenue financing for capital expenditure 0.2 0.2 0.2 Savings of 15%-20% in insurance premiums 0.1 0.1 0.1 Reduced GLA wide spending on consultancy, printing, other 0.4 0.4 0.4 supplies and services, and running costs reflecting the outcome of efficiency reviews and use of new technology (numerous individual items less than £50,000) Total additional savings 1.5 1.5 1.5 Target saving for further efficiencies to be secured from the 0.5 0.5 0.5 ‘Delivering More Together’ programme Total 2.6 2.6 2.6

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Appendix E – Transport for London

Table 1: Subjective analysis

Subjective analysis Budget Forecast Budget Plan 2007-08 2007-08 2008-09 2009-10 £m £m £m £m Income Fares revenue -2,654 -2,699 -2,825 -2,967 Congestion charging -341 -331 -357 -377 Enforcement income -95 -69 -79 -81 PCO & VCS fees -32 -33 -35 -36 Advertising income -91 -80 -89 -98 Rental income -53 -54 -55 -58 Other income -29 -59 -48 -47 -3,295 -3,325 -3,488 -3,664 Operating expenditure Employee expenses 1,191 1,228 1,246 1,271 Premises 144 164 166 156 PPP Payments 1,343 1,282 1,381 1,561 PFI payments 254 268 300 319 Bus contact payments 1,517 1,498 1,592 1,711 Rail and Franchise Payments 116 120 175 206 CCS & other road services 116 102 87 95 Maintenance & repair 105 110 115 110 Local authority payments 182 191 174 168 Professional and consultancy fees 73 90 115 95 Engineering Project Management 102 115 90 101 and other technical consultancy Ticket commissions 36 39 54 58 Customer information 58 66 71 51 Insurance 40 34 34 33 Computing costs 131 135 135 97 Traction current 73 56 66 71 Bad debt provision 97 91 102 101 Other expenses 145 55 124 59 5,723 5,644 6,029 6,261 Net Capital Expenditure Capital expenditure 1,147 1,095 1,688 1,325 Capital receipts -52 -68 -30 -68 Third party contribution -177 -143 -218 -164 918 884 1,440 1,093 Other Interest Income -74 -94 -60 -40 Debt servicing 111 112 162 227 Group Items 7 7 40 42 Contingency 28 28 28 28 Net service expenditure 3,418 3,256 4,151 3,946

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Appendix E – Transport for London

Table 2: Increases in service levels and new initiatives

Increases in service levels and new initiatives 2008-09 2009-10 £m £m Increase in service levels London Underground PPP 33.2 141.5 Increasing LU service levels 5.4 2.6 Operational upgrades 10.6 2.8 Programme management 2.1 - Underground operation of overground stations 3.7 - Terminal 5 2.4 - PFI Connect 2.8 -2.3 Surface Transport Traffic Control Room 3.0 - London Cycle network 8.6 - Revenue protection 2.2 0.4 A406 Regents Park implementation 4.6 4.6 Taxi card 6.3 1.3 Taxi licensing 2.7 - LEZ 1.7 - Woolwich ferry 1.5 -0.8 London Rail London Overground 72.8 - London wide Oyster on National Rail 28.2 - Woolwich Arsenal extension 8.8 12.7 North London Railway Operations 6.5 - Oystercard expansion 4.4 - Corporate Directorates Marketing and Travel Demand Management 3.3 0.2 All Modes: Other 9.7 -2.0 Total increases in service levels 224.5 161.0 New Initiatives London Underground Power supply, capacity and signalling improvements 1.5 8.4 Installation of more energy-efficient, extra low cost conductor rail to the sub-surface rails Station signage 1.1 - New station entrance canopyt Oyster changes 2.3 Rollout of Oyster Ticket vending machines to ticket agent’s premises Emergency radio systems 1.6 - Replacement and enhancement of emergency response radio systems

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Appendix E – Transport for London

Increases in service levels and new initiatives 2008-09 2009-10 £m £m Station accessibility 2.4 - Step free accessibility at Kingsbury and South Kensington station. Platform gap fillers improve platform to train interface at sub-surface platforms, bringing improved safety, reduced dwell times and improved accessibility Train crew accommodation 9.3 - Provision of train crew accommodation essential to delivery of train line upgrades Security upgrade Central and Bakerloo 5.9 - Installation of train door alarms and CCTV to improve on train safety and security On train screens 11.6 - On-train screens to provide customers with timely, reliable and accessible real time information Service information boards 2.4 - Provides Electronic Service Upgrade Boards (ESUBs) across network delivering consistent real time information and improvements to safety and security, station ambience and reduced crowding Surface Transport Transport policing 4.4 8.5 Increased policing provision Thames Gateway bus transit - 12.1 Student /child photocard 3.0 - Costs of issuing student/child photocards Bus garages 5.3 -5.3 Costs to relocate a bus garage to West Ham Congestion charging 2.5 19.0 Feasibility costs for emissions related charging Sustainable Freight 2.4 0.4 New freight initiative to improve the transportation of freight around London and encourage best practice in freight operators Freewheel cycling 1.0 1.0 Corporate Directorates Future Ticketing project 11.0 - Oyster card replacement/development Climate Change Fund 5.0 - Funding to support climate change initiatives such as trial for Hybrid buses and Hydrogen Powered vehicles Accommodation 13.5 - Empress Replacement Building Fit out (North Greenwich)

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Appendix E – Transport for London

Increases in service levels and new initiatives 2008-09 2009-10 £m £m Graphic Management Asset portal 2.2 - Builds on CAD system to allow users to make informed decisions All Modes: Other 5.0 0.1 Various small projects Total new initiatives 93.4 44.2

Table 3: Savings and efficiencies

Efficiency targets Budget Forecast Budget Plan 2007-08 2007-08 2008-09 2009-10 £m £m £m £m Back Office Procurement 73 77 74 75 IM and staff programme 33 25 43 65 Marketing & other 20 25 20 21 Sub total 126 127 137 161 Operating Bus contract savings 58 64 86 76 Tube Lines refinancing 2 2 2 2 Road maintenance contracts 3 7 4 5 LU operating efficiencies 17 17 22 24 LU contractual efficiencies 5 5 3 - Rail operations 2 2 4 3 Sub total 87 97 121 110 Total Annual Efficiencies 213 224 258 271 Grand total (cumulative)* 789 800 1,047 1,318 *Cumulative efficiencies from April 2003 were £576m at April 2007.

Notes

(1) TfL’s efficiency programme was established in 2002-03 and measures annual and cumulative savings against that base year.

(2) TfL directs the expenditure of over £7bn of public funds each year. A considerable proportion is committed through PPP, PFI and long-term contracts. For example, bus operating contracts are for 5-years, the PPP is the subject of a 30-year contract and the DLR franchise is let on a 7-year contract.

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Appendix E – Transport for London

(3) These contracts limit the proportion of the TfL budget which can be reduced in the short term. Reducible costs are those elements of the budget that can be influenced to a greater or lesser degree, and are considered to be:

Staff related costs including non-operational support activities such as HR, Finance. Expenditure on those activities which are not subject to contract e.g. reactive maintenance of bus stops and shelters or Where contracts are due for renewal e.g. approximately 20 per cent of bus network contracts are renewed each year or Those elements of service delivery which can be varied within the terms of the contract e.g. an element of the PPP.

(4) An estimate of TfL’s reducible costs is shown below:

2007-08 2008-09 2009-10 £m £m £m Gross expenditure 6,703 7,786 7,727 Reducible costs 1,741 1,829 1,707 Percentage 26% 23% 22% (Gross expenditure is total operating expenditure plus capital expenditure less third party revenue).

(5) TfL’s efficiency programme is 13 per cent of reducible costs in 2008-09 rising to 16 per cent in 2009-10:

Efficiency target 2007-08 2008-09 2009-10 £m £m £m Reducible costs 1,741 1,829 1,707 Efficiency target 224 258 271 Percentage 13% 14% 16%

(6) As part of the SR2004 settlement, the DfT set TfL a target to deliver £125m of efficiencies a year by 2007-08. TfL’s achievements to date exceed the DfT target mainly through recyclable cash savings, and this continues into 2008-09 in which year TfL is forecast to deliver £258m of efficiency gains.

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Appendix E – Transport for London

Table 4: Application of net congestion charging revenue It is anticipated that net revenue of £99m will be generated from the congestion charge in 2008-09. An indicative attribution on how this revenue will be applied in line with the Congestion Charging scheme order is shown below.

Congestion charging £m Bus network improvements: Continued enhancement of London’s bus infrastructure. Improvements will be made to bus 79 stations to provide accessibility and space, including Golders Green. The replacement of bus shelters will continue and by 2010 there will be 5,000 solar powered illuminated bus stops. The iBus project started in 2007 and will provide a new bus radio and communication system that will give passengers better information. A range of transport policing activities to continue to improve safety and security for bus passengers. Borough plans: 2 Funds will be allocated to London Boroughs for local transport improvements. Roads and bridges: 10 TfL to continue to support programme for improving the quality of street conditions and bridges, including reconstructing and resurfacing carriageways and footways, upgrading and strengthening structures. Road maintenance and renewal will continue, and bridge and tunnel safety schemes at several locations including the A40 Hanger Lane. Road safety: 2 London has been successful in reducing casualties and has met the national target of 40 per cent reduction in the number of people killed or seriously injured some five years early. As a result of this achievement, the Mayor has set TfL a new higher target of a 50 per cent reduction by 2010. Investment will continue on road safety measures on TfL roads and on borough roads via LIP funding, in conjunction with measures adopted by the police and boroughs. Measures to reduce road casualties include: engineering schemes at road accident hotspots. installing safety cameras at appropriate sites and road safety campaigns. Environment: 3 Costs arising from the implementation of the London wide Low Emission Zone from 2008 for lorries, buses, coaches and taxis. This scheme is designed to move London closer to achieving national air quality objectives and EU limit values in support of the Government’s national air quality strategy and EU legislation. Support for further trials of hydrogen fuel cell buses. Sustainable freight operations are being encouraged through the London Freight Plan proposals. Walking and cycling: 3 TfL will continue a programme of improvements for pedestrians, both on its own roads and on borough roads. Investments will include building new pedestrian crossings, upgrading existing ones and widening footpaths to encourage walking. Investments in cycling initiatives will continue, designed to create and sustain an environment that will enhance the attractiveness of cycling. Initiatives are intended to broaden the range of people who choose to cycle in London and achieve an 80 per cent increase in the number of trips by 2010. Congestion charge net income 99

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Appendix F – 2012 Games and legacy

Metropolitan Police Authority Security, safety and resilience arrangements for London 2012 are being coordinated by the Metropolitan Police and a multi-agency Olympic Security Directorate (OSD) has been established. The OSD allows for fully integrated planning from the outset, covering the protection of the construction site as well as the Games themselves in 2012. The current Metropolitan Police estimates of expenditure are: revenue - £40.1m, £67.8m and £95.0m and capital - £24.9m, £59.5m and £30.2m, over the three years to 2010-11 respectively.

The grant settlement to fund this expenditure has not yet been announced, but spending will be restricted to the level of grant available.

London Fire and Emergency Planning Authority The London Fire Brigade has a vital role in ensuring we deliver a safe and secure Olympic and Paralympic Games in 2012. A dedicated project team has been set up and funding in the region of £0.8m for 2008-09 is currently being sought from the Department for Communities & Local Government.

Greater London Authority The GLA has committed to raise up to £625m from London council taxpayers as a contribution to a public sector funding package for the 2012 Olympic and Paralympic Games. The GLA budget includes the estimated sum of £58.7m to be raised in 2008-09, increasing by 0.75 per cent per year in 2009-10 and 2010-11.

The present forecast, based on a continuing marginal increase in the council tax base is that £550m would be raised by a band D amount of £20 for 9 years and a final year band D amount of £5 (providing a present value for the sum raised of £512m based on the Treasury discount rate of 3.5 percent). To raise the full £625m, if required, would need a band D amount of £20 for 10 years and approximately £9 in year 11, giving rise to a present value of £571m.

In addition the GLA plans to spend an estimated £0.7m a year on staff and programmes to ensure that, in preparing for the Games, the Mayor’s strategies and priorities are delivered to create lasting benefits for communities and businesses both in east London and right across the capital. The in-house unit also assists the Mayor in meeting his obligations under the Host City contract.

Transport for London Transport schemes for the 2012 London Olympics are being designed to leave a lasting legacy, combining existing projects near the venues with specific additional improvements. The schemes are split into two parts:

Schemes which already formed part of TfL’s 5 year Investment Programme and would be delivered in time for the Games. Additional Olympic specific schemes funded wholly or partly by the ODA and LOCOG.

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Appendix F – 2012 Games and legacy

Pre-existing Tfl funded schemes 2005-06 2006-07 2007-08 2008-09 2009-10 £m £m £m £m £m East London Line extension 30.6 44.7 186.0 444.4 123.8 Extensions/improvements in capacity on 27.1 34.1 97.4 139.6 49.2 DLR Piccadilly line extension to Heathrow - 0.1 0.3 3.8 5.5 Terminal 5 Improvement to the A13 0.1 - 1.1 5.8 3.1 East London Transit - 0.1 0.3 3.8 5.5 Greenwich Waterfront Transit 0.9 0.9 3.3 12.1 5.0 Olympic route instrumentation - 0.1 2.4 0.6 12.7 NLR signalling & infrastructure works - 3.0 9.4 56.9 92.2 Total 58.8 83.0 300.2 667.0 296.9 * The PPP will deliver huge increases in network capacity through a series of line upgrades, including the Central line, Jubilee line and Northern line upgrades. Under the PPP contracts, a rolling programme of modernisation or refurbishment of every Underground station is planned. Note: the totals for the tables above and below may not agree due to rounding differences

Additional ODA/LOCOG funded 2005-06 2006-07 2007-08 2008-09 2009-10 schemes £m £m £m £m £m Conversion of North London Line to DLR 3.5 23.1 56.2 126.4 182.4 operation, 3 new stations, extension to Stratford International, and improvements in DLR capacity and resilience (ODA contribution £78.1m) Enhancement of London Cycle network to - - 0.3 1.1 5.3 provide cycling opportunity for spectators and workforce Enhancement of walking routes in vicinity of - - - 0.4 1.7 London Olympic Park and venues Olympic transport control centre (LOCOG - - - 4.7 4.7 scheme) LU: upgrade of West Ham station, station - 0.2 1.0 5.5 4.3 operations rooms at key interchanges, and improved resilience on Central Line Total 3.5 23.4 57.5 138.1 198.4 London Development Agency The LDA is acquiring and remediating the land for the Olympic Park and providing up to £250m as part of the updated public sector funding package for the Games.

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Appendix F – 2012 Games and legacy

Prior years 2007-08 2008-09 2009-10 2010-11 £m £m £m £m £m Land assembly and remediation 517.1 325.0 165.0 93.0 56.3 Public sector funding package contribution - - 50.0 50.0 50.0 Further Olympic Funding Contingency - - - - 100.0 Total 517.1 325.0 215.0 143.0 206.3

Over the period to 2010-11, £522m of the cost of acquiring and remediating the land is to be funded by prudential borrowing and from asset disposals. The balance is funded by core Government grant.

In the revised Memorandum of Understanding between the Government and the Mayor of London signed in June 2007 the Mayor has agreed to fund a further £300m towards the cost of the Games which will be paid in tranches of not more than £100m beginning in 2010-11. The LDA has made a contingency of £100m towards this in 2010-11.

The LDA is also playing an integral role in realising the economic benefits of the Games for London both in the run up to 2012 and beyond. An Olympic Opportunities and International Promotion team has been established within the LDA to take this forward. Some of the their current initiatives are the London Employment and Skills Taskforce and a 2012 Business Club which has been set up to help:

Promote and develop jobs and skills opportunities created by the 2012 Olympic and Paralympic Games by bringing together local businesses and the GLA target business groups. Mobilise the business community to that target businesses are able to access the right ‘knowledge bank’ in order to benefit from the wider Olympic Opportunities.

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Appendix G – Climate change

Introduction The Mayor sets Climate Change Policy for the GLA group. The Mayor and Deputy Mayor will continue to take leading roles in increasing the international political significance of the Large Cities Climate Change Group (of which London is a prominent member).

The Mayor’s first Strategic Housing Investment Plan introduces guidelines which encourage exemplary levels of environmental performance, including moving to zero carbon emissions. The Mayor will want to see these guidelines applied across the board in all new housing regardless of tenure. The revised London Plan proposes to require new developments to be as energy efficient as possible from the outset, to require decentralised energy provision and to generate 20 per cent of their energy needs on site from renewable energy sources.

The Climate change Action Plan identified five key internal areas of focus for the GLA group. Planned progress on these is outlined below.

Improving the energy efficiency of buildings and appliances The Mayor’s Office, the GLA Environment Team and the LDA will be leading on carrying forward major marketing campaigns, including the DIY Planet Repairs and the Green Homes and Insulation campaigns. The LDA lead on the Better Buildings programme which focuses primarily on landlords, and the actions they can take to improve the energy efficiency of their buildings. The MPS and LFEPA will continue to use earmarked funds to reduce their building based carbon emissions. Design for London will disseminate good practice in relation to sustainable design. The LDA will continue to support a range of initiatives offering advice on ways to reduce carbon emissions and adverse environmental impacts. Maximising use of decentralised energy and related savings at appropriate GLA group sites Reducing carbon emissions from the GLA group by using a joint tendering process to improve the energy efficiency and insulation of major buildings within the group. The LDA’s Decentralised Energy Delivery team will work to increase London’s capacity to deliver locally generated energy and a Biomass supply chains/gas-from-waste schemes and continue to fund exemplar projects such as the Zero-carbon Gallions Park project. LFEPA will use earmarked funds to installing micro-renewables across the LFEPA estate where practicable. The MPS plans to introduce renewable technologies in the development of the MPS’s five new custody centres. A photovoltaic system will be installed in the London Transport Museum.

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Appendix G – Climate change

Promoting staff energy-savings behaviour at home and at work by running ongoing staff campaigns The London Sustainable Development Commission have introduced a London Leaders programme, which calls on leaders from across London and from all walks of life to join the LSDC and commit to working towards a more sustainable city to act as catalysts to promote a wider movement for change and demonstrate the type of leadership and action needed for sustainable development. The GLA group has introduced initiatives to encourage staff to improve environmental performance, for example the GLA’s network of Environmental Champions and TfL’s internal competitions between different buildings with prizes for those with the most improved performance. Minimising emissions from travel and vehicles, including ensuring all vehicles are smallest, cleanest vehicle appropriate to the task

To incentivise the purchase of low CO2 emitting cars, the Mayor has proposed the incorporation of an emissions-based pricing structure into the existing congestion charging scheme. TfL will continue with the Transport Demand Management Plans, including the target of every school having a travel plan by 2009. TfL will lead an ‘eco driving’ marketing campaign (linked to the national Department for Transport programme) which will aim to educate motorists towards more environmentally friendly car usage. Sustainable travel plans for staff are being developed within each functional body. The GLA group will minimise travel where possible, through increased use of video and teleconferencing and the introduction of offsetting where flights are unavoidable. The sustainable transport town centre scheme in Sutton (for 2006 to 2009) will be progressed. TfL will encourage sustainable freight operations through the implementation of The London Freight Plan. TfL will trial of ten hydrogen fuel cell buses beginning in 2008-09 and expanding the existing trials of hybrid diesel electric buses.

Bus replacement with diesel-electric hybrid buses will reduce CO2 emissions from the bus fleet by 30-40 per cent. Following high green procurement standards for contracting all goods and service The GLA group established a central Responsible Procurement Team in 2007. This will continue to develop in 2008. The Mayor’s Green Procurement Code will continue.

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Appendix H – Savings & efficiencies and Delivering More Together

Savings & Efficiencies

Savings and efficiencies 2008-09 2009-10 2010-11 £m £m £m Metropolitan Police Authority 71.8 142.8 180.2 London Fire & Emergency Planning Authority 6.7 9.4 12.5 Greater London Authority – Mayor of London 2.6 2.6 2.6 Greater London Authority – London Assembly 0.1 0.1 0.1 Transport for London 258.0 271.0 not available London Development Agency 3.1 8.2 17.2 Total 342.3 434.1 212.6

The savings shown in the table above are cumulative, using the 2007-08 budget as the base. The figures include new savings, in addition to those already identified, to be agreed in each year to deliver these budget plans as follows:

2008-09 £3.1m (0.9 per cent of the total) 2009-10 £49.8m (11.5 per cent of the total)

Savings Targets The Metropolitan Police Service’s efficiency programmes for the three years to March 2008 are projected to deliver savings of £332m, which are £108m over the 3 per cent target of £224m set by the Home Office. The Home Office have set a target of £309.8m to be achieved in the period 2008-09 to 2010-11. This represents 9.3 per cent of forecast Gross Revenue Expenditure in 2007-08. Current forecast savings for 2008-09 are on target to meet the 3-year savings.

LFEPA achieved the Government three-year target of £19.5m efficiency savings, to be achieved by March 2008, during 2006-07 and is currently on course to exceed the national fire service targets by some £14m (70 per cent).

In line with the Government’s efficiency agenda, the Greater London Authority is expected to produce an Annual Efficiency Statement (AES) showing 2.5 per cent efficiency savings each year between 2005-06 and 2007-08. Over this period, it is anticipated that savings of £7.4m will be delivered, against a target for the three years of £4.1m. In response to the 2007 comprehensive spending review, new efficiency targets have been set by central government. Plans are currently being drawn up for new efficiency reviews to meet these new targets and to bring the GLA’s spending in line with the Budget Guidance for 2009-10 and 2010-11.

As part of the Spending Review 2004 settlement the Department for Transport set TfL a target to deliver £125m of efficiencies a year by 2007-08. This was based on achieving a 2.5 per cent year on year saving against the gross cash grant made available to TfL. Achievements to date exceed the target mainly through recyclable cash savings.

The Government required the London Development Agency to achieve savings of £24.6m for the three years ending in March 2008, which the Agency is on course to achieve.

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Appendix H – Savings & efficiencies and Delivering More Together

Delivering More Together Over the past year the Delivering More Together (DMT) programme has established a framework for greater convergence between the Greater London Authority (GLA), the functional bodies (Transport for London, London Development Agency, London Fire and Emergency Planning Authority and the Metropolitan Police Authority) and the MPS. This framework focuses on the development of the GLA group’s role as the regional government for London by:

Engaging with all the members of the GLA group to translate our priorities into effective delivery at operational level. Optimising the impact of the GLA group by working more effectively together and making the best use of scarce resources across the group.

The programme currently comprises 37 active projects and 37 delivered projects across the following workstreams:

Workstream Active Delivered Environment 1 4 Equalities 3 2 Property & Facilities Management 1 2 Financial Services 3 2 Human Resources 9 3 Information, Research & Analysis 6 8 IT infrastructure - 3 Legal 1 - Procurement 12 8 Promoting London - 1 Sponsorship 1 - Stand-alone initiatives - 4 Total number of projects 37 37

Stewardship of the programme was taken over by TfL in June 2007 and the steering group has given six projects priority status. The programme’s flexible approach allows each organisation to determine whether or not it will participate in a specific project based on the business case and what that organisation feels it is able to contribute. Not all projects will be relevant to every organisation, nor are all projects expected to deliver savings – some, for example, will improve the quality of the service that is delivered.

As projects are at various stages of development and more will be added to the programme from time to time (3 new procurement projects have recently been added), it is not possible to estimate the total savings that the programme is likely to deliver. The programme is still in its early stages and projects that can be evaluated at this stage are expected to deliver annual savings in the region of £1m.

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Appendix I – Spending and financing summary

Table 1 GLA and functional body analysis

Budget requirement

Gross Specific Other Net Reserves Budget expenditure grants income expenditure requirement £m £m £m £m £m £m Metropolitan Police 3,510.8 -613.6 -302.2 2,595.0 - 2,595.0 Authority London fire and Emergency 453.4 -8.3 -19.8 425.3 -20.2 405.1 Planning Authority Greater London Authority 153.7 -0.6 -15.3 137.8 -1.3 136.5 Transport for London 6,821.0 -2,649.0 -3,547.0 625.0 -613.0 12.0 London Development Agency 406.7 -389.7 -17.0 - - Nil Total Other Services 7,834.8 -3,047.6 -3,599.1 1,188.1 -634.5 553.6 Total GLA Group 11,345.6 -3,661.2 -3,901.3 3,783.1 -634.5 3,148.6 Note: The above table excludes TfL and LDA capital expenditure included within the budget proposals contained with sections 5 and 6.

External financing

Total to be Police General RSG/NDR Council Band D financed Grant GLA Grant Tax Amount income £m £m £m £m £m £ Metropolitan Police 2,595.0 -1,053.3 - -876.7 665.0 227.02 Authority London Fire and Emergency 405.1 - - -257.0 148.1 50.46 Planning Authority Greater London Authority 136.5 - -48.0 - 88.5 30.15 Transport for London 12.0 - - - 12.0 4.09 London Development Agency - - - - - Nil Collection fund surplus -5.6 -5.6 -1.90 Total Other Services 548.0 - -48.0 -257.0 243.0 82.80 Total GLA Group 3,143.0 -1,053.3 -48.0 -1,133.7 908.0 309.82

2007-08 band D amount: £303.88

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Appendix J – Key dates

13 February 2008 Mayor to present his final draft consolidated budget to the London Assembly

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Appendix K – Changes to budget consultation paper

Mayor’s foreword Deleted – superseded by the Mayor’s background statement.

Section 1 – Introduction and overview LFEPA budget requirement 2008-09 increased and 2009-10 reduced by £0.3m. GLA: Mayor budget requirement reduced by £0.3m in 2008-09, 2009-10 and 2010-11.

Section 2 – Metropolitan Police Authority Paragraph 2.5: Net growth in existing services and programmes amended from £19.6m to £23.2m, reflecting reduction in employer’s pension contributions and increased spending. Paragraph 2.5: New initiatives and service improvements amended from £141.8m to £136.4m, representing 20 posts to tackle guns, gangs, organised crime and Trident operations (£2m) and MPA growth (£0.5m), offset by £7.9m reallocated to existing services. Paragraph 2.5: Savings and efficiencies amended from £73.6m to £71.8m, representing reinstatement of 7 Territorial Support Group and 9 Traffic posts (£1.2m) and deletion of Central Communications Command’s 1 per cent vacancy factor (£0.6m). Paragraph 2.5: Transfers to reserves in the 2007-08 forecast amended from £4.2m to £18.8m. Service Analysis amended to reflect above changes. Paragraph 2.6: Added reference to £7.5m of budgeted inflation being assumed as a saving. Paragraph 2.7: Figure amended. Paragraph 2.8: Figure amended. Paragraph 2.9: Total amended and Home Office savings target for 2008-09 to 2010-11 adjusted from £283.5m to £309.5m. Paragraph 2.10: 2007-08 forecast movement on reserves amended from £4.2m to £18.8m, as incorrect figure used.

Section 3 – London Fire and Emergency Planning Authority Paragraph 3.6: Service analysis amended to reflect increase of £3.2m in Community Safety budgets and compensating reduction in Firefighting and Rescue. Paragraph 3.11: March 2009 amended to March 2010. Reduced use of reserves in 2008-09 and increased use of reserves in 2009-10 by £0.3m.

Section 4 – Greater London Authority: Mayor of London Increased interest receipts by £0.3m in 2008-09, 2009-10, 2010-11.

Section 7- London development Agency Interest costs on Olympic borrowing now shown separately. New table added at 7.7

Section 8 – Consolidated budget requirement and funding LFEPA budget requirement increased by £0.3m. GLA: Mayor budget requirement reduced by £0.3m.

Mayor’s draft component and consolidated budgets 2008-09 110

Appendix K – Changes to budget consultation paper

Section 9 – Capital Spending Plan Funding in MPA table amended as follows: (i) Capital reserves reduced by £7.9m to £15m; (ii) Capital grants increased by £7.9m to £98.7m.

Appendix A- Progress on 2007-08 key deliverables TfL cost figures amended as follows: DLR tunnel - from £180m to £203m; DLR Stratford extension –from £238m to £174m; Victoria line new trains-from 47 to 43; 2007-08 cycling investment – from£36m to £38m; 2010 people slightly injured target reduction - from10 per cent to 25 per cent; Additional – overall capital expenditure on DLR line upgrades will be £278m; Additional- Cost of LU digital radio Connect system in the period will be £0.5bn; Additional- Bus mileage of 475m km expected to be operated in 2009-10.

Appendix B – Metropolitan Police Authority Tables amended to reflect changes noted in Section 2.

Appendix C – London Fire and Emergency Planning Authority Details of new initiatives added.

Appendix D – Greater London Authority: Mayor of London Treasury management income increased by £0.3m in 2008-09, 2009-10 and 2010-11.

Appendix H – Savings & efficiencies and Delivering More Together GLA: Mayor savings & efficiencies increased by £0.3m in 2008-09, 2009-10 and 2010-11. TfL savings amended for 2008-09 and 2009-10 (not available for 2010-11). Home Office savings target for the police for 2008-09 to 2010-11 amended from £283.5m to £309.8m.

Appendix I – Spending and financing summary LFEPA use of reserves reduced by £0.3m. GLA: Mayor other income increased by £0.3m.

Appendix J – Key dates Updated.

Appendix K – Changes to budget consultation paper New appendix summarising changes to the budget consultation paper in the light of the Mayor’s draft consolidated budget proposals.

Mayor’s draft component and consolidated budgets 2008-09 111

Appendix K – Changes to budget consultation paper

Main changes to draft consolidated budget paper:

The Mayor’s budget proposals Updated.

Metropolitan Police Authority Budget requirement increased by £1.2m to pay for No Witness, No Justice programme.

London Fire and Emergency Planning Authority Use of reserves in 2008-09 reduced, and in 2009-10 increased, by £m.

Greater London Authority: Mayor of London Budget requirement increased by £0.1m reflecting the impact of the increased tax base on the Olympics element of the precept.

Council tax precept Amended from £311.25 to £, reflecting the above changes, the increase in tax base of 0.92 per cent (compared with the previously forecast increase of 0.6 per cent) and a Collection Fund surplus of £5.6m.

Further changes to draft consolidated budget paper:

The Mayor’s Budget Proposals 5.11: £4m altered to £5m (£4.5m rounded up rather than down).

Component Budget Calculations TfL: Expenditure increased, and Contingency reduced, by £40m Summary: Amended to reflect the above alterations.

Section 2 – Metropolitan Police Authority 2.6: £5.7m changed to £7.5m – typo.

Section 7 – London Development Agency 7.7: Programme costs amended in all five columns of table, other revenue costs amended in first two columns only and other capital costs amended in all five columns. Total expenditure remains unaltered in each year.

Section 9 – Capital Spending Plan 9.4: 2009-10 – £35.9m amended to £36.0m and £59.5m to £59.6m; 2010-11 – £78.6m amended to £78.7m, £256.5m to £256.6m, £7.8m to £7.7m and £30.3m to £30.2m. All rounding.

Appendix B – Metropolitan Police Authority Last line of Savings and Efficiencies table, narrative amended from ‘Other support non- overhead’ to ‘Savings to be agreed’.

Mayor’s draft component and consolidated budgets 2008-09 112

Appendix K – Changes to budget consultation paper

Advice on 2007-08 Financial Monitoring MPA: November amended to October and £5.8m amended to £5.7m.

Mayor’s draft component and consolidated budgets 2008-09 113

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Draft consolidated budget 2008-09: Finance and legal advice

Page

Advice provided by the Executive Director of Finance and Performance

The budget process...... 116

2007-08 financial monitoring...... 120

Reserves and balances...... 123

Council tax and capping...... 129

Longer-term plans...... 131

Limit on Assembly’s power to amend Mayor’s budget for the Assembly...... 133

Advice provided by the Head of Law

Statutory budget process – legal issues ...... 136

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Advice on budget process

The Local Government Act 2003 places a duty on the Director of Finance and Performance, as the statutory chief finance officer, to report on the robustness of the estimates. This is covered within the information and advice provided below.

What were the arrangements for developing the budget proposals?

The budget process itself involved:

Budget guidance issued by the Mayor throughout the process; Budget development by functional bodies and both parts of the GLA; Budget submissions, which included budgets and business plans for the three years to 2010-11, scrutinised and approved by the functional bodies before formal submission to the Mayor; Mayor’s draft budget proposals considered, prepared and issued for consultation; Consultation; and Scrutiny by the Assembly’s Budget Committee throughout the process.

The Mayor issued formal guidance in June 2007 to the Greater London Authority and the functional bodies for preparing their budget submissions. The guidance sought submissions that would enable the Mayor to distinguish clearly the costs of providing the complete range of services provided by the GLA and the functional bodies and ensure that his policy objectives are an integral part of component budgets and that the means exist for their delivery.

There has been a series of meetings between functional bodies and the Mayor and other consultation, and these provided a vehicle to:

Review delivery of the 2007-08 budget and outcomes judged; Direct the 2008-09 budget process, ensuring that it remains valid and responsive to emerging needs and that budget information reflects the Mayor’s priorities; Ensure that there would be consistency and integration across the GLA group on relevant issues; Ensure that each body’s submission was delivered as required; and Ensure that the submissions could be readily consolidated into the Mayor’s budget proposals and issued for consultation.

How were sustainable development considerations addressed in the budget process?

In his general budget guidance this year the Mayor again made clear that mitigating the effects of and adapting to climate change was a major priority for the GLA and the functional bodies. A Climate Change Action Plan for London, which also contained policy recommendations for the GLA group was developed and published in 2007. Detailed consideration of the sustainable development elements of the budget plans for each functional body, in particular their plans for addressing climate change, will continue in 2008.

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Advice on budget process - continued

Following the budget it is planned, as last year, to publish a Budget and Sustainable Development report which will look at the way each member of the GLA Group has integrated environmental, health, social and economic factors into policymaking, budget setting and implementation. The report is part of an ongoing process of engagement across the GLA Group via the newly formed GLA Group Sustainable Development policy team.

Concern with equalities is part of a sustainable development perspective. The Mayor continued to emphasise the importance of the equality and diversity agenda in his budget guidance; his priorities included ensuring GLA services are provided by a workforce that reflects the diversity of London, ensuring the GLA group uses the procurement function to increase supplier diversity, and ensuring the group, wherever possible, prioritises the reduction of worklessness and child poverty.

The budget and equalities process will continue, with the annual report informing the future policy of the functional bodies as well as feeding into GLA group equality and human resource networks.

How can the estimates of income and expenditure be assessed as representing necessary and reasonable budget provisions?

To explain each component budget requirement, there is a service analysis showing the spending plans for the three-year period 2008-09 to 2010-11(with the exception of TfL whose planning period ends in 2009-10) with comparative figures for 2007-08 (both budget and forecast outturn). This analysis shows:

Net costs of providing the complete range of services provided by the body; Estimated specific grants; Capital financing costs (including capital expenditure charged to revenue); Transfers to and from reserves; Any other financial charges and adjustments; and The resultant budget requirement.

Careful attention has been given to explaining the changes from the equivalent figures for 2007-08. Explanations have been provided for the changes in terms of:

Inflation; Full year cost of existing services; New initiatives and service improvements; Savings and efficiencies; Changes in specific grants; Changes in use of reserves; and Any other relevant reasons.

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Advice on budget process - continued

More detailed information has also been provided in the public documents relating to the budget proposals considered by the functional bodies and the Assembly’s Budget Committee. The papers can be provided if required.

What internal and external scrutiny have the budget proposals had?

The budget proposals are based on submissions that have been subject to scrutiny and approval within the functional bodies. Developing budget proposals have been scrutinised by the Assembly’s Budget Committee and throughout the process further information has been provided in response to Assembly Budget Committee’s questions and recommendations.

The arrangements for consultation have included a dialogue with representatives of the not for profit sector and London Councils before draft budget proposals were published.

The budget consultation paper had been widely circulated to London borough councils, London MPs and London Councils, and a wide range of organisations including the London Voluntary Service Council, Transport for All, Consortium of LGTBVC Organisations, London Older People’s Strategy Group, London Sustainable Development Commission, London Civic Forum, London faith groups, trade unions, BAME representative organisations and representative London business organisations. It was also placed on the Greater London Authority website, enabling members of the public to make their comments. The views expressed in consultation have been taken into account.

Conclusion

The estimates have been put together by, or with the involvement of, qualified finance staff in the functional bodies and the GLA in light of that consultation and reflect an approval, scrutiny and challenge process as described above.

It is an inevitable part of any budget process that estimates have to be prepared before some proposals are fully developed, particularly those for new developments. However, there are processes within each of the GLA group organisations for proper consideration to be given to proposal details before expenditure is sanctioned. Budget discipline is supported by a controlled virement system, which maximises resource utilisation and allows emerging needs to be taken into account.

There are areas of risk and uncertainty in the budget. There are significant savings included in the budget and these will require positive management action. There is always the risk that the underspends forecast for 2007-08 will not be realised with the danger of a resulting shortfall in the budget funding. In that event the control system that operate throughout the group allow for component budgets to be reviewed and adjusted accordingly.

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Advice on budget process - continued

Some risks are mitigated by authorities’ insurance arrangements and by the existence of appropriate reserves. Across the GLA Group the risks associated with major contracts have been recognised and programmes to manage these risks introduced.

The Authorities’ take a prudent approach to achievability of income and recovery of debts due, making appropriate provision for bad debts, and full provision for realistic estimates of future settlements of known liabilities. The level of external borrowing by authorities is relatively low: TfL’s has increased significantly but the overall levels of borrowing planned over the next five years are well within the levels found in Europe, and the LDA’s borrowing is specifically for the Olympic land acquisition programme which is supported by the Government and will be offset by future land disposals. The borrowing arrangements provided for by the Local Government Act 2003 do make it easier for the cost of capital expenditure to be spread more equitably between council tax payers in 2008-09 and those in future years.

In respect of capital spending the Prudential Code introduced a rigorous system of prudential indicators, which explicitly require regard to be given to affordability, prudence, value for money, stewardship, service objectives and practicality. This is backed up by a specific requirement to monitor performance against forward-looking indicators and report and act on significant deviations.

Overall, on the basis of the information that has been provided to explain the Mayor’s 2008-09 budget proposals, including the need and justification of new developments, the estimates and budgetary provisions set out in this document represent reasonable and necessary financial provisions consistent with the powers and service obligations of the GLA and the functional bodies. Further advice on 2007-08 monitoring, reserves and balances, major areas for changes in expenditure proposed during the consultation process, capping, longer-term plans, the level of Government grants, council tax comparisons and calculations is also provided in this document.

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Advice on 2007-08 financial monitoring

What are the arrangements for monitoring in the GLA and the functional bodies?

There are systems in place for regular financial monitoring and reporting within each of the GLA group organisations. In addition, progress against budget and business plans is reported quarterly to the Mayor’s Management Board and the Assembly’s Budget Committee (or its monitoring sub-committee) for each member of the GLA Group. The report details spending against profiled estimates and provide explanations of significant variances and proposals for any necessary corrective action. Progress on new initiatives, performance against key indicators and outturn estimates against approved budgets are also identified and explained.

How does 2007-08 performance impact on the 2008-09 budget proposals?

The extent that this year’s variations impact on next year’s budget proposals are summarised below.

(a) Metropolitan Police Authority

The latest outturn for 2007-08, based on estimates at the end of November 2007, is an underspend of £15.6 million which includes £5.7 million of estimated additional costs relating to Operation Seagram (response to the vehicle-borne, improvised explosive device found in the Haymarket at the end of June 2007). The underlying forecast, excluding this operation, is an underspend of £21.3 million.

The key budgetary issues are forecast underspending of £30.0 million on police officer pay (due to workforce levels being below those budgeted within all Business Groups, £14.6 million on police staff pay and a forecast overachievement of income (£20.8 million), offset by projected overspends on police officer overtime (£18.8 million), premises costs (£7.9 million), transport costs (£5.7 million) and supplies and services (£14.6 million).

The latest outturn estimate for capital expenditure is an underspend of £2.4 million of the revised budget of £179.8 million, principally due to the re-phasing of project expenditure into future years, which is reflected in the Capital Spending Plan.

(b) London Fire and Emergency Planning Authority

The forecast for the year is an underspend of £1.6 million (0.4 per cent) at quarter two, due to over-recovery on other income and receipts (£4.2 million), a projected underspend on firefighters’ pensions (£1.6 million), and external financing costs (£0.1 million). However, this is offset by a projected overspend on total service expenditure (£2.3 million) and the use of additional income to achieve the savings target (£2.0 million).

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Advice on 2007-08 financial monitoring – continued

The Authority’s budget process included detailed analysis of under and overspending areas in order to determine whether 2008-09 budgets needed to change. In the light of the current underspend and additional income from interest receipts and from insurance companies, these, together with further identifiable savings, have produced a reduction of £6.7 million in the 2008-09 budget requirement that has been proposed by LFEPA and reflected in the draft component budget for 2008-09.

(c) Greater London Authority: Mayor of London

The 2007-08 forecast outturn figures are those as at the end of the second quarter except for expenditure in respect of the elections for which the forecast reflects an updated estimate of the incidence of expenditure over the financial years 2007-08 and 2008-09. The forecast underspend as at the end of the second quarter is £1.0 million. There are a number of offsetting variations; the predominant factors leading to this forecast position are a higher level of interest receipts than expected and an underspend on staff costs.

In preparing the detailed estimates for 2008-09, the forecast outturn and reasons for variances has been take into account in the review of budget provisions. The significant variances are also reflected in specific proposals for additional savings and efficiencies

(d) Greater London Authority: London Assembly

The forecast for 2007-08 as at the end of the second quarter shows an underspend of £0.3 million against the budget. This is primarily due to underspend on the staffing budgets within Assembly Support and savings on Supplies and Services for Assembly Support and Committee Services.

(e) Transport for London

Based on estimates at the end of Q2 2007-08 TfL's full year outturn was forecast to be £162m below budget, excluding a £900m provision for loans to the Metronet Administrator. The two Metronet PPP companies who are responsible for the BCV and SSL lines went into PPP Administration on the 18 July 2007. TfL has been working with the Appointed Administrators (Ernst and Young) to ensure that in the short term essential work continues to enable the continued safe operation of the Tube, and to develop a long-term viable solution for the Metronet businesses.

To this end TfL has provided loan facilities to the Metronet Administrator of up to £900m for 6 months, at market interest rates. This sum is currently being funded from TfL Group-wide earmarked reserves. The future arrangements for the undertakings of the Metronet companies are not yet confirmed and are outside of this budget submission, as is any addition support for these undertakings agreed with Government as part of the 2007 Comprehensive Spending Review. Further details of 2007-08 performance are available in the Q2 2007-08 Monitoring Report

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Advice on 2007-08 financial monitoring – continued

It should be noted that any fluctuations between Q2 2007-08 expectations and outturn will be managed through budget amendments based on the Q3 2007-08 forecast expenditure, and the use of reserves at the year end. TfL will manage its expenditure, within available resources, over the remaining years of the Government Settlement period through to 2009-10, arising from the 2004 Comprehensive Spending Review.

(f) London Development Agency

The latest forecast position at quarter two show a forecast overspend of £6 million for the year, but LDA anticipate taking action during the second half of the year to ensure that spending remains within budget. Total LDA expenditure totalled £264 million for the six month period to 30 September 2007, which is 41 per cent of the year end budget of £640 million.

Conclusion

An assessment of the current year’s financial outturn is always a crucial element in budgetary and precept deliberations for the forthcoming year. With further spending activity still to take place in respect of this financial year up to 31 March 2008 and with crucial closing of accounts transactions taking place beyond that date in finalising the Accounts for the GLA and the functional bodies, it is not possible to say that other variations will not arise.

The processes in place throughout the GLA group and the responsibilities placed on each chief finance officer do however ensure that the outturn position is closely monitored, controlled and taken into account in preparing the estimates of income and expenditure for 2008-09. In particular, each body monitors progress against delivery of their budget and business plans, instigating any necessary remedial action. In turn this monitoring is reported and reviewed by GLA finance and performance officers and considered by both the Mayor and the Assembly on a regular basis. As demonstrated by the information summarised above each body has been required to explain the extent that this year’s variations impact on, and are reflected in, next year’s budget proposals. Processes are also in place to ensure expenditure is controlled within the resources finally approved for each organisation. If any significant changes to the outturn forecasts emerge in the latest round of monitoring, advice will be provided on these in time for consideration of the Mayor’s final draft budget proposals

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Advice on reserves and balances

Section 25(1)(b) of the Local Government Act 2003 places a duty on the Director of Finance and Performance, as the statutory chief finance officer, to report on the adequacy of the proposed financial reserves. This is covered within the information and advice provided below.

What are reserves and balances?

When reviewing their medium term financial plans and preparing their annual budgets, authorities should consider the establishment and maintenance of reserves. Reserves can be held for three main purposes:

- a working balance to help cushion the impact of uneven cash flows and avoid unnecessary temporary borrowing – this forms part of general reserves; - a contingency to cushion the impact of unexpected events or emergencies – this forms part of general reserves; and - a means of building up funds to meet known or predicted liabilities – this is often referred to as earmarked reserves.

What are the appropriate amounts to be held in reserve?

The existing legislation requires authorities to have regard to the level of reserves needed for meeting estimated future expenditure when calculating the budget requirement. It is the responsibility of the finance director to advise the authority about the level of reserves it should hold and to ensure that there are clear protocols for their establishment and use. The protocols should set out

- the reason for/purpose of the reserve; - how and when the reserve can be used; - procedures for the reserve’s management and control; and - a process and timescale for review of the reserve to ensure continuing relevance and adequacy.

Although CIPFA, in guidance issued in June 2003, states that the Institute “does not accept that a case for introducing a statutory minimum level of reserves, even in exceptional circumstances, has been made”, it does confirm that “authorities, on the advice of their finance directors, should make their own judgements on such matters taking into account all the relevant local circumstances.”

An authority's external auditor has a responsibility to review the arrangements in place to ensure that financial standing is soundly based. This includes reviewing and reporting on the level of reserves taking into account their local knowledge of the authority’s financial performance over a period of time. It is not their responsibility to prescribe the optimum or minimum level of reserves for an individual authority or authorities in general.

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Advice: Below is advice on reserves and balances for the GLA and each of the functional bodies reflecting advice received from their own statutory chief financial officer.

(a) Metropolitan Police Authority

The Authority maintains working balances (the General Reserve) to manage uneven cash flows and avoid unnecessary temporary borrowing. These balances are also used to cushion the impact of unexpected events or emergencies. In addition earmarked reserves are used to meet known or predicted future expenditure. Provisions are established when the Authority has a financial obligation or liability as a result of a past event and that liability can be reliably estimated.

An essential element of medium term financial planning is an assessment of the adequacy of reserves and provisions.

The MPA/MPS has in place a risk management strategy and a system of internal control. Of particular importance in this context is the MPA/MPS budget monitoring policy. It ensures that regular budget monitoring is carried out, requiring approval for carry-forward of any underspending, and that any net overspending by MPS Business Groups is made good, unless other exceptional arrangements are approved by the Authority. The MPS has a good record in identifying budget pressures and taking appropriate remedial action. In particular the record of management action over the last few years, coping with large unexpected operational expenditure, is good and it is considered reasonable to expect that appropriate corrective action would be undertaken if further situations arise. These existing systems, controls and procedures provide a firm foundation from which the need for reserves and balances can be calculated with a reasonable level of confidence.

Risk Analysis The Service takes an active approach to managing risks and has developed a risk management framework to assess and manage corporate and directorate risks. The major risks that impact upon the medium-term financial plan are identified below:

Delivering Citizen Focused Policing Enhancing Counter-Terrorism Capability and Capacity Preparing for the 2012 Olympic and Paralympic Games Capacity and Capability Resources Partnership Working

General Reserve At 31 March 2008, the general reserve is expected to total some £38.9 million, which represents 1.5 per cent of the 2008-09 Net Revenue Expenditure. In line with MPA policy, when the Emergency/Contingency Reserve is taken into account the resources available total £61.9 million, which represents 2.4 per cent of the 2008-09 Net Revenue Expenditure. The Authority has a policy of maintaining a general reserve (including Emergency/Contingency Reserve) of at least 2 per cent of Net Revenue Expenditure.

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Advice on reserves and balances – continued

Given the current uncertainties facing the MPA/MPS there are no proposals at this stage to make available any of the current balance to reduce the budget requirement. The Treasurer considers the level of general reserve is considered adequate given the level of earmarked reserves maintained and the risks faced by the MPA/MPS.

Earmarked Reserves Contributions to and from earmarked reserves are not yet reflected in the 2008-09 budget requirement. These will be adjusted before the budget is finalised to reflect the most up to date position. The position on the main reserves maintained by the Authority was reported to the MPA Finance Committee on 18 October 2007.

Provisions A review of provisions has been undertaken. The remaining provisions are also estimated to be sufficient to meet known liabilities.

Use of Resources The Audit Commission continued to follow up the results of the Initial Performance Assessment of the MPA completed in 2004, assessing the Authority’s progress in developing and implementing its improvement priorities. They did this via a ‘direction of travel’ assessment based on the local government approach, but tailored individually to the context of the MPA. In addition the Audit Commission carried out an evaluation of use of resources, with the assessment scoring at level 2, performing adequately. Two of the five themes, financial reporting and financial standing have, however, been assessed to be performing well (level 3), with particular improvements noted this year in the arrangements for financial reporting.

Conclusion The Reserves are based on a detailed estimate of known liabilities and expenditure plans and a risk analysis of future expenditure arising from unforeseen events. The level of reserves is judged prudent in the context of the Authority’s Medium Term Financial Plan.

(b) London Fire and Emergency Planning Authority

The Authority maintains a general reserve. Besides providing a short-term safety valve for the authority, this reserve provides cover for risks in respect of overtime and modernisation, the ongoing risks of claims (including high insurance excesses) and low ability to stop significant proportions of spend in-year due to the majority of expenditure being fixed in the short term.

LFEPA Officers have had specific budget development meetings with GLA Finance Officers to update them on the use of reserves and re-examine options for a long-term strategy as part of the 2008-09 budget process. A high level of reserve use is proposed in 2008-09, mainly from the PFI reserve. In later years, the intention is to move towards a budget that is less reliant on the continued application of reserves, as this is not a sustainable position for balancing the budget in the longer term.

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Advice on reserves and balances – continued

The balance of revenue reserves, after application of £20.2 million in 2008-09 and £9.6 million in 2009-10, would amount to an estimated £13 million at 1 April 2010 (some 3 per cent of net revenue expenditure). It is considered that it is no longer necessary to maintain the current level of the PFI reserve.

Central Risk The 2008-09 revenue budgets continue to include a £2 million reduction – ‘Central Risk’. This represents an assumption that, taken as a whole, there will be budget underspending that is not attributed for financial planning purposes to reductions on specific spending lines.

Use of Resources In February 2007, the Authority was awarded scores of 3 (on a scale of 1 – 4) in each of the 5 areas assessed.

Conclusion The Reserves are based on a detailed estimate of known liabilities and expenditure plans and a risk analysis of future expenditure arising from unforeseen events. The level of reserves is judged prudent in the context of the Authority’s Medium Term Financial Plan.

(c) Greater London Authority: Mayor of London

The current estimate of GLA earmarked reserves as at 31 March 2008 is some £15 million, but this will mainly depend on the actual incidence of expenditure funded by the elections reserve in the lead up to the Mayoral and London Assembly elections in May 2008.

No changes are proposed to the Authority’s policy on reserves which is based on a comprehensive assessment of its needs and risks and appropriate reserves established to ensure that the Authority’s financial standing is sound and supports the achievement of longer term service objectives. In line with this policy the budget proposals provide for an increase of £0.5 million in the annual contribution to the Election reserve from 2008-09 in order to build up appropriate reserves for the 2012 elections. This increased contribution will be kept under review in light of the actual costs of the 2008 Elections and any additional contribution that might be secured from government.

At 31 March 2008 the general balance is expected to total some £4.4 million which represents just over 3 per cent of the proposed 2008-09 net revenue expenditure, or just over 6 per cent if the expenditure in respect of the Olympic Funding Agreement and the Museum of London are excluded on the basis that they are covered by specific sources of funding. In light of this it is considered prudent to release £1 million of these balances to support the budget process for 2008-09. This will be kept under review.

In the Audit Commission’s 2007 Use of Resources Assessment of the GLA, the Audit Commission found that the Authority is 'performing well', awarding a score of three.

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Advice on reserves and balances – continued

(d) Greater London Authority: London Assembly

Most of the GLA’s reserves are reserves relating to accommodation or to general cost issues (e.g. pay/grade redundancy reserve) and the Assembly and its staff effectively have access to these reserves on the same basis as the rest of the GLA. Additionally, within the existing reserves there is £260,000 relating to the Assembly on the basis that the Mayor and Assembly members introduce a resettlement grant scheme for elected members who serve their term and are not re-elected in accordance with the new power for such a scheme provided by the GLA Act 2007. It is therefore intended to identify this amount in an earmarked reserve for the Assembly as part of the closing of the 2007-08 accounts.

(e) Transport for London

TfL, as a large trading and project delivery organisation with potential for fluctuations in both costs and income levels, needs to hold reserves to enable it to maintain service delivery in unforeseen circumstances. Actual cash balances back all of TfL’s reserves.

The creation of a satisfactory level of reserves has been a financial priority for TfL since it was established in July 2000. Since that time, reserves have been built through modest additions and budget savings. TfL’s auditors, KPMG, have supported this policy of building an appropriate level of reserves.

TfL continued to score top marks following the Use of Resources and Direction of Travel assessments carried out by the Audit Commission. Building on its 'excellent' rating as part of the Initial Performance Assessment (IPA) in 2004, the Audit Commission concluded in its 'Direction of Travel' assessment that TfL continues to make 'good progress'. This was further reinforced by the review of its 'Use of Resources', where TfL was awarded the top score of 4 (performing strongly).

TfL’s reserves are forecast to be £239m at 31 March 2010, which is inline with the policy of maintaining an appropriate level of reserves for normal trading fluctuations as outlined above.

(f) London Development Agency

The LDA is constrained by the rules attached to its grant on the income streams that can be used to fund reserves. The Department for Business, Enterprise and Regulatory Reform requires the retention of a £2 million contingency fund for 2008-09 from within the grant allocation to replace the central contingency that was previously held by the DTI for all RDAs. The LDA has determined that it needs to provide for a further contingency of £1 million on top of this requirement in 2008/09 against the potential costs of reorganisation to deliver future efficiency targets.

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Advice on reserves and balances – continued

Conclusion

The above advice reflects the differing nature of the services provided by each organisation. Each body operates independently with its own statutory responsibilities for the proper administration of its financial affairs. The most recent external audit letters all report favourably on systems of governance, financial administration and risk management and this confirmed in the recently published Use of Resources Assessments.

The use of reserves over the plan period is summarised in the table below.

MPA LFEPA GLA TfL LDA Total £m £m £m £m £m £m Opening balances 1.4.08 149.2 43.8 19.4 1,358.0 3.0 1,573.4 Earmarked/capital reserves - -20.1 -0.3 -613.0 - -633.4 General reserves - -0.7 -1.0 - - -1.7 Balances 31.3.09 149.2 23.0 18.1 745.0 3.0 938.3 Earmarked/capital reserves - - 6.9 -506.0 - -499.1 General reserves - -9.6 - -9.6 Balances 31.3.10 149.2 13.4 25.0 239.0 3.0 429.6 Earmarked/capital reserves - - 7.1 - - 7.1 General reserves ------Balances 31.3.11 149.2 13.4 32.1 239.0 3.0 436.7

As can been seen in the table above, the most significant use of reserves concerns TfL where it was planned that reserves would be built up over a period before being drawn down by 2009- 10.

Of the forecast balance on reserves of some £426 million at 31 March 2011, some £227 million is held in general reserves (assuming TfL’s general reserves are unchanged during 2010-11), which, with budgeted provisions for contingencies, is adequate to meet reasonably foreseeable adverse changes and makes prudent provision for such changes.

There are no expected revenue account deficits in respect of previous financial years which would need to be provided for.

In conclusion there are no specific issues that need to be redressed in the 2008-09 budget setting process and the Mayor's budget proposals are consistent with the advice provided on reserves and balances. The issue of reserves and balances will however be kept under continuous review.

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Advice on council tax capping

What are the Government's “capping” powers?

The Government has powers to cap the GLA precept under the Local Government Finance Act 1992 and the Local Government Act 1999.

Advice

The Government has used its reserve capping powers to deal with increases in council tax that were deemed excessive, including police and fire authorities, although did not do so in respect of the last financial year. The Minister for Local Government has said that he is prepared to use them again, so the potential for capping must be considered. If the Secretary of State were to designate the authority for 2008-09, there would be the prospect of having to make savings to cover the reduction in income arising from the reduced precepts. Also the GLA would have to pay billing authorities' (the City of London and the London Boroughs) administrative and council tax collection expenses arising from the need for them to re-bill council tax payers following the GLA substituted precepts.

These billing authority costs are not readily quantifiable but would be substantial. The last survey of potential costs was undertaken in 1998 and this indicated that costs would exceed £5 million if every London billing authority had to re-bill. Costs are likely to be significantly higher now.

So in formulating its budget and its financing, it is necessary to consider whether the budget proposals would be likely to prompt the Secretary of State to initiate the capping process and, in particular to designate the authority for 2008-09.

The budget proposals for 2008-09 would result in a like for like increase in the budget requirement of 2.5 per cent (adjusting for the transfer of the Museum of London and new burdens) and a council tax increase of 2.0 per cent.

In his statement to Parliament on the Local Government Finance Settlement on 6 December 2007 the Minister for Local Government included the following in respect of capping:

“We expect the average council tax increase in England to be substantially below 5 per cent. We will not hesitate to use our capping powers as necessary to protect council tax payers from excessive increases.”

In respect of earlier financial years Ministerial statements have referred to the objective of keeping the average council tax increase only to less than 5 per cent rather than the additional emphasis this year to “substantially below.” What constitutes “substantial” is a matter of judgement for the Secretary of State, but this would not preclude increases in individual authorities being less than substantially below 5 per cent since the objective is to constrain the increase at a national level.

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Advice on council tax capping – continued

Although the objective is to avoid excessive increases in council tax, the Secretary of State is only required to include the increase in budget requirement and other criteria do not necessarily have to include the increase in band D council tax.

The Mayor has stated formally that he does not wish to propose setting a budget that risks being capped afterwards by the Government.

Legal advice on the capping process is provided on page 142.

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Advice on longer-term plans

What are the longer-term planning arrangements?

Financial and performance planning has steadily improved over the short history of the GLA Group and this has been recognised in the independent performance assessment regime reports to each organisation. Specific implementation plans, targets and deliverables are being developed to provide a full three-year framework (with the exception of TfL which is planning to 2009-10 for reasons already stated). These are reflected in the business plans developed across the GLA group and within the Mayor’s budget proposals.

The aim is to have three-year financial plans and business plans that are based on Mayoral objectives and priorities. This means ensuring that there are sound medium and long term financial plans within which all priorities and objectives are adequately funded.

Are all of the priorities and objectives identified and adequately funded?

The Secretary of State for Transport recognised that Transport for London would benefit from a greater degree of funding over its long-term, which would enable better financial and management planning for investing in London’s infrastructure and facilitate the provision of a first-class strategy for the 2012 Olympic and Paralympic Games. This was reflected in a five year funding plan for TfL, which included a Secretary of State commitment to take all possible steps to avoid any deviation from that plan. This agreement, which included support to TfL’s programme of prudential borrowing, and an existing agreement covering London Underground funding has provided TfL with an unprecedented long tem funding certainty. This is reflected in TfL’s business plan, which with close monitoring, project management and management of risks, can reasonably be expected to be delivered over its remaining period to 2009-10.

The Secretary of State also undertook to consider increasing funding in the event of exceptional unforeseen expenditure pressures falling to TfL; clearly the possible future expenditure that TfL may incur in relation to Metronet and the formation of a company to take forward Crossrail falls into that category. It is anticipated that this additional support will be finalised when the Metronet and Crossrail costs can be more exactly defined.

The government has also provided LDA with future funding figures, which over the next three years constitute a real terms reduction of 11 per cent. This reduction means that spending priorities for the LDA need to be carefully reviewed.

Following the outcome of Spending Review 2007 there is some certainty over the level of grant funding until 2010-11 for MPA, LFEPA and the GLA with the first ever three year grant settlement. The figures for 2009-10 and 2010-11 will still need to be confirmed annually on a formal basis, but the expectation is that these will not change significantly if they are subsequently amended.

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Advice on longer-term plans – continued

Conclusion

Considerable progress has been made to develop sound medium and long-term financial plans within which all priorities and objectives are adequately funded. The Government’s multi-year grant settlements mean that forward plans can be developed with a greater degree of confidence in respect of the net cost to council tax payers than in previous years. The integration of business planning and budgets across GLA group provides an effective framework for making further progress and to ensure that any uncertainties and changing circumstances are properly reflected in the budget proposals that will come forward each year for consideration and approval.

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Advice on the limit on Assembly’s power to amend Mayor’s budget for the Assembly

What is the budget for the Assembly?

Section 85 of the GLA Act 1999 as amended introduces separate component budgets for the Assembly and the Mayor so that for the purpose of budget setting the Assembly and the Mayor are separate constituent bodies. The component budget for the Assembly comprises the estimates for defined expenditure (essentially direct expenditure) and income, and appropriate contingencies and financial reserves. The component budget for the Mayor comprises the rest of the GLA.

The expenditure that is to be regarded as incurred by the Assembly in the performance of its functions includes any expenditure by the Authority in the performance of its functions which is incurred in respect of any of the following:

the Assembly Members; the Assembly secretariat (defined as employees of the Authority who normally work as support staff for the Assembly or Assembly Members); goods or services procured solely for the purposes of the Assembly; the London Transport Users Committee (London Travel Watch).

Expenditure incurred on accommodation in relation to the Assembly’s business, and goods and services provided or procured for the Authority in general are deemed by the legislation to be part of the Mayor’s budget.

The legislation defines the Assembly’s functions as:

such of the functions of the Authority as are exercisable only by the Assembly acting on behalf of the Authority; and

the Assembly’s function of acting jointly with the Mayor in the case of those functions of the Authority which are exercisable only by the Mayor and the Assembly acting jointly on behalf of the Authority.

What is the restriction on the Assembly changing its component budget?

The GLA Act 2007 limits the Assembly’s power of amendment in respect of its own budget requirement. The Assembly can only increase its budget (as proposed by the Mayor) by reference to the following:

If the Mayor’s proposed component budget for 2008-09 for the Mayor is greater than the component budget for 2007-08 then the Assembly cannot amend the Assembly’s component budget so that it would increase by more in percentage terms than the increase in the Mayor’s component budget.

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Advice on the limit on Assembly’s power to amend Mayor’s budget for the Assembly – continued

If the Mayor’s proposed component budget for 2008-09 for the Mayor is less than the component budget for 2007-08 then the Assembly cannot amend the Assembly’s component budget so that it would decrease by a smaller percentage than the decrease in the Mayor’s component budget

The 2007 Act uses the terms OM and NM in defining how this works in practice i.e. ‘Old’ Mayor and ‘New’ Mayor:

‘Old’ Mayor will be the component budget for the Mayor for 2007-08 (which will be designated by the chief finance officer)

‘New’ Mayor will be the Mayor’s proposed component budget for the Mayor for 2008-09 before any amendments

The percentage change in the Mayor’s budget from 2007-08 is calculated using these amounts.

The Assembly’s component budget for 2007-08 (which will be designated by the chief finance officer) is then increased by the same percentage. This figure then becomes what the Act terms ‘adjusted previous component budget requirement for the Assembly.’

What are the equivalent budgets for the Mayor and the Assembly for 2007-08?

There is a specific duty (section 15 of the GLA Act 2007) on the chief finance officer to consult the Mayor and Assembly on a split of the 2007-08 budget. This is to enable comparisons to be made with separate component budgets for 2008-09. This must be done before making a designation for 2007-08 by 31 December 2007 and this has been done.

Following that consultation the Executive Director of Finance and Performance (the GLA’s chief finance officer) has designated the following totals to be used in respect of 2007-08.

For the Assembly £8.574 million For the GLA £117.026 million

How is a like for like comparison ensured?

To facilitate a like for like comparison the chief finance officer may direct amounts to be excluded from the comparison of Mayor’s draft component budget requirement for the Mayor with the component budget requirement for the Mayor for the preceding year. The chief finance officer must have regard to any Secretary of State guidance on the direction.

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Advice on the limit on Assembly’s power to amend Mayor’s budget for the Assembly – continued

The Secretary of State has not issued any guidance on the direction but the Executive Director of Finance has directed that the GLA budgeted expenditure in respect of the Museum of London (£9.3million) and new burdens (£0.4 million) is to be left out of account in the comparative calculations. Although the budget requirement for the Mayor increases by these amounts, these items of additional expenditure have been fully funded by commensurate increases in general GLA grant in 2008-09 and therefore there is no impact on local council tax payers.

This is consistent with Government policy to adjust for transfers and new burdens and the adjustments it has made in showing the like for like increase in general GLA grant in 2008-09.

Can the Assembly amend Mayor’s budget for the Assembly?

Using the Act’s methodology and applying it to the draft budget figures, the Assembly cannot increase its own component budget to a figure above the Mayor’s proposal. This is because the Mayor is already proposing a budget of £8.692 million and the application of the Act is that the Assembly cannot amend its component budget to a figure above £8.643 million. This is exemplified in the table below:

Mayor’s Budget: Calculation of NM £m Proposed component budget requirement for the Mayor for 2008-09 127.800 Less: Museum of London transfer -9.300 Less: other new burdens, including new housing burdens funded in 2007-08 -0.395 Plus new burdens (housing) funded in 2007-08 0.105 NM 118.105 Less: OM (designated component budget requirement for the Mayor for 2007-08) -117.026 Amount NM is greater than OM budget requirement 1.079 Percentage Increase +0.9%

Assembly Budget: adjusted previous component budget £m Designated component budget requirement for the Mayor for 2007-08 8.574 Add: 0.9% percentage increase 0.077 Adjusted previous component budget 8.651

The figure of £8.651 million is the ‘adjusted previous component budget’ requirement for the Assembly. As the Mayor is proposing a budget of £8.692million the Assembly cannot increase its own component budget.

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Statutory budget process: legal issues

1 Overview

The Mayor is responsible for the preparation of the budget for himself and for the Assembly, which are now required to be differentiated, and for the component and consolidated budgets for the GLA group. The Assembly’s role is to scrutinise the budgeting decisions of the Mayor, to approve the Mayor’s Budget (with or without amendments) and to set a budget in the event that the Mayor does not to do so in time. The Assembly also has the power to amend their own budget to the extent that any increase proposed for the Assembly is proportionately less than that proposed for the rest of the GLA.

It is necessary to secure a financially balanced budget and a fair and reasonable balance between the discharge of statutory and discretionary responsibilities for the provision of services and the financial burden upon those required to finance the net cost. The Mayor and the Assembly have fiduciary duties in this regard.

The GLA’s major sources of revenue are council tax, grants paid by the Secretary of State and redistributed non-domestic rates, fares and net revenues from congestion charging. Subject to amendment, the Mayor sets the component budget requirements for both parts of the GLA and each of the functional bodies and together they constitute the consolidated budget requirement.

2.1 Council tax

The GLA is a major precepting authority. It raises money indirectly by issuing a precept to the London Boroughs in respect of the amount the GLA sets as its council tax. The method of calculating the GLA’s council tax is broadly similar to that of other precepting authorities, although for the GLA the budget requirement in respect of the Metropolitan Police Authority is treated separately. This is necessary because the GLA is responsible for the police service in the inner and outer London boroughs, but not in the City of London. Council tax payers in the City of London pay directly for their own policing.

Each London billing authority must include the precept when they calculate their own council tax bills (s.81 of GLA Act 1999). The London Boroughs then collect the precept from the council tax payers in their areas and pass it on to the GLA. The precept must state (a) the amount of the council tax which the GLA has calculated in respect of each category of dwellings, and (b) the amount it has calculated to be payable by the billing authority for the year.

The Mayor sets separate budget requirements for the Mayor and Assembly (s.85 of GLA Act 1999 as amended) and each of the functional bodies, which forms the basis of the calculation of the basic amount of council tax. A precept for any given financial year should be issued by March 1.

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Statutory budget process: legal issues – continued

2.2 Grants

The grants from the Secretary of State will include a revenue support grant, any additional grant, a special grant, a general GLA grant, a GLA transport grant paid for the purposes of Transport for London, a police grant and other specific grants.

2.3 Non-domestic rates

Non-domestic rates are distributed to local authorities in proportion to their relative needs and resources as assessed by Government and are shared between authorities according to the services they provide. This includes the GLA.

2.4 Congestion charging net revenues

Net revenues from congestion charging schemes introduced within ten years of the inception of the GLA are ring-fenced for spending on measures that support the Mayor’s Transport Strategy. The Secretary of State has approved the ten-year expenditure plan and approval of the Secretary of State will be required at four-yearly intervals for a programme of expenditure covering the next four years. (GLA Act, schedule 23 paragraphs 16 and 17).

2.5 Component and consolidated budget requirements

The GLA must calculate budget requirements for the Mayor and Assembly (s85 of GLA Act 1999) and that of the four functional bodies, Transport for London, London Development Agency, the Metropolitan Police Authority and the London Fire and Emergency Planning Authority. The component budget requirements together constitute the consolidated budget requirement (GLA Act, s.85).

The budget requirement for each body is calculated by determining the difference between projected expenditure and projected income including specific Government grants. Insofar as expenditure will exceed income, that amount is the body’s component budget requirement for the year (GLA Act, s.85(6)). The Mayor must also consult the Assembly and functional bodies and others as appropriate before preparing their draft component budget requirements: section 87 and Schedule 6.

In respect of all the calculations, it is the Mayor who must estimate the sums to be required and not the functional bodies. Accordingly, the functional bodies must provide the GLA with information at the request of the Mayor or the Assembly to facilitate this.

2.6 Procedure for determining the budget requirements

The sequence of events in the budget process is presented at the end of this appendix.

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The determination of the component and consolidated budget requirements is expected to take place between December (when central government’s provisional financial settlement is published) and before the end of February when the budget will be finalised (GLA Act, Schedule 6, paragraph 8). The Mayor, as the executive, makes representations to Ministers in relation to the financial settlement.

The Mayor, after consulting the Assembly and the functional bodies, must prepare a draft component budget for each of the constituent bodies, i.e. the Mayor and Assembly of the GLA and the functional bodies (Schedule 6, paragraph 2 GLA Act 1999 as amended). The Mayor must also consult such other bodies or persons as appear appropriate to him and consult representatives of non-domestic rate payers (s 65 LGFA 1992).

The draft consolidated budget must be presented to the Assembly at a public meeting on or before February 1st in the financial year preceding that to which it relates. If the Mayor fails to comply with these requirements, the Assembly must prepare draft component and consolidated budgets.

If approved without amendment, the draft consolidated budget is deemed to be the Authority’s consolidated budget for the year in question (Schedule 6, paragraph 4). After the Mayor presents the draft consolidated budget to the Assembly, the Assembly must approve it, with or without amendment by a simple majority of the members voting. The Assembly’s right of amendment in respect of their own budget is limited insofar as they cannot vote an increase which is proportionately more than that proposed in respect of the rest of the GLA. After the approval of the budget (or after such period as the Mayor considers reasonable having elapsed without approval), the Mayor must prepare a final draft of the consolidated budget. This can be:

the draft budget as amended by the Assembly; the draft budget as amended by the Mayor; or the unamended draft budget.

In the latter two cases, the Mayor must lay before the Assembly a written statement of his reasons for rejecting any amendments made by the Assembly (Schedule 6, paragraph 6). The Assembly must approve the budget with or without amendment by the end of February. The approved budget is the consolidated budget for the financial year. Any amendments by the Assembly require a two-thirds majority of the members voting (schedule 6, paragraph 8). The Assembly right of amendment in respect of their own budget is again similarly limited

If the Assembly fails to approve the budget before the last day of February, the final draft budget will be the Authority’s consolidated budget for the year (schedule 6, paragraph 9).

If the Mayor, having presented a draft budget, fails to present a final draft budget, the Assembly must meet and agree by simple majority the component budget requirement of each of the constituent bodies and the consolidated budget is deemed to have been agreed

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Statutory budget process: legal issues – continued accordingly (Schedule 6, paragraph 7).

The Mayor is required to publish the consolidated and component budgets as soon as practicable after they have been set. They must be kept available for inspection free of charge by the public at principal offices of the GLA for six years after publication (schedule 6, paragraph 11). Any person may obtain a copy of the document, on payment of a reasonable fee determined by the Mayor (Schedule 6, paragraph 11).

2.7 Consultation

Consultation is not defined in the GLA Act 1999. At common law, the essence of consultation is the communication of a genuine invitation to the consultee to make representations, the receipt and consideration of those representations by the consulting body, at a time when proposals are still in their formative stage. Thus for there to be sufficient consultation, sufficient information must be provided to the consultee, together with sufficient time to consider and put forward a considered response to be taken into account before the relevant decision is made. The decision-maker is required to consider but not to accept consultation responses. A rational reason is required for a decision to make or not to make changes in response to consultation replies.

2.8 Virement

It is possible for the GLA and the functional bodies to 'vire' (move) money between budget centres and this is a matter dealt with under the individual financial regulations of each body. However, the Assembly’s legal powers to amend the consolidated budget (whether the final draft or earlier proposal) do not extend to amending the budget centres within each body’s proposed budget, ie they cannot propose virements. The current limits on virements in the GLA Group are presented at the end of this Appendix.

2.9 Assembly Voting Arrangements

The Assembly has a duty to approve the final draft budget (with or without amendment) before 28 February in the relevant year.

The legislative framework is that defined by the GLA Act 1999 as amended by the GLA Act 2007.

“…the only amendments which are to be made are those agreed to by at least two-thirds of the Assembly members voting”.

An abstention is not a vote and the two-thirds majority must therefore be calculated by reference only to those Members voting either for or against a particular amendment.

The two-thirds figure required to agree any given amendment (at any given point in the

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Assembly meeting) will ignore any fraction and require the higher nearest whole number – e.g., if 23 Members voted, 16 Members would need to vote in favour of a proposed amendment for it to be passed.

The power is to make “amendments” rather than reject the entire budget. Amendments can be fundamental. Amendments should be rational.

The GLA Act provides for the Assembly to meet twice to consider the Mayor’s budget as set out above although, within reason, the Assembly can adjourn meetings which are not concluded and resume later. There is no limit to the number of times that the Budget Committee can meet.

The GLA Act 2007 introduces separate component budgets for the Assembly and the Mayor (amended s85) so that for the purpose of budget setting the Assembly and the Mayor are separate constituent bodies.

The limitation on the Assembly’s powers introduced by the act is that they “ cannot amend the Assembly’s component budget so that it would increase by more in percentage terms than the increase in the Mayor’s component budget”. There is an equivalent limitation where the Mayor’s component budget is decreased.

The provisions in the Act do not affect the Assembly’s ability to pass amendments by a two- thirds majority to the Mayor’s component budget. However, if the Assembly was able to pass an amendment reducing the Mayor’s component it could not use that reduction to increase it’s own component budget.

There is a specific duty (section 15 of GLA Act 2007) on the chief finance officer to consult the Mayor and Assembly on his designation of the Mayor and Assembly component budget for 2007-08. This is to enable comparisons to be made with separate component budgets for 2008-09. This must be done by 31 December 2007.

The chief finance officer also has the power to specify amounts to be left out of account

2.10 Information to be provided to the GLA, Assembly and the Mayor

The functional bodies must, at the request of the Mayor or the Assembly, provide such information relating to the financial affairs of the body as is required by the GLA for the purpose of any functions of the Mayor or the Assembly (s.110 GLA Act 1999). The information must be provided in the form and manner, and within such time, as is specified in the request. Information is defined in section 110(4) of the GLA Act 1999 to include information which the body has or can reasonably obtain, and information about the body’s plans or proposals relating to the finances or expenditure of the body or of any company in which the body has an interest. The Assembly also has its usual power to require attendance at its meetings and the production of documents.

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2.11 Minimum budget for the Metropolitan Police Authority

If it appears to the Secretary of State that the budget set by the GLA for the Metropolitan Police Authority is too low to restore or maintain an efficient or effective police force for its area, he may direct the GLA to increase the component budget requirement to a level not less than an amount specified by him in the direction (section 95).

2.12 The 2012 Olympic and Paralympic Games

Financial support proposed for the 2012 Olympic and Paralympic Games is through an addition to the component budget requirement of the Mayor. Under those arrangements the GLA has committed to and the Mayor and the Secretary of State for Culture, Media and Sport have agreed a ‘revised funding package’ that is set out in a revised Memorandum of Understanding on Funding (dated 27 June 2007). This agreement provides for £9.325 billion to help meet the costs of staging an Olympics in London in 2012 as follows:

£750 million from the Olympic Lottery £340 million from the Sports Lottery £1,085 million from the National Lottery £925 million from the Mayor of London (of which a maximum of £625 million would be met from Council Tax) £250 million from the London Development Agency £5,975 million from the Government (including the provision for wider security and policing)

The Mayor’s Funding from Council Tax will be no more than £20 per year (at band D), beginning in 2006-07 and ending in 2016-17.

In the revised Memorandum the Mayor has agreed to provide a further £300 million since the original Memorandum of Understanding on Funding, which was agreed in May 2003. The timing of its availability will be a matter for agreement between the Government and the Mayor, however, the first call on this funding will not be before 2010-11 and will be in tranches of no more than £100 million per year. The sourcing of the £300 million is a matter for the Mayor, but the Mayor has confirmed that it will not be found from either an increase in Council Tax or an increase in fares.

The setting of the GLA component and consolidated budget is a discretionary decision-making process for the Mayor and the Assembly in terms of their respective statutory roles. This discretion is not legally constrained by the arrangements which have been agreed for the financing of the 2012 Olympic and Paralympic Games but he and they would need to take due account of the nature and extent of those commitments and the consequences which would follow if for any reason the GLA and its functional bodies were not to honour those commitments.

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2.13 Capping and nomination

The budget requirement set by the Mayor can be “capped” by the Secretary of State under Chapter IVA of the Local Government Finance Act 1992 (the “1992 Act”) and Part 2 and schedule 9 of the Local Government Act 1999.

In deciding capping principles he can look at an authority's changes in budget requirement over a number of years and require a local authority to reduce its budget requirement over a number of years. He can also require authorities to reduce their budget requirements below those of previous years. In addition, the Secretary of State is able to exempt certain categories of authorities from budgetary controls, for example those with small budgets or those which provide only particular services. He is able to take into account factors such as the authorities' performance in delivery of best value, the support of local people for authorities' proposed budgets, and whether the council has beacon status, when deciding if the budget requirement is excessive. The powers of review by the Courts of arbitrary or unfair exercise of the capping powers are probably less available than in other local government matters because of the political judgements involved.

The reserve powers can operate as follows:

a) The Secretary of State first has to decide if the budget requirement is excessive. He will determine the set of principles he will use to decide whether or not the budget requirement set by a local authority is excessive after budgets have been set. The set of principles must contain a comparison with the budget requirement of a previous year. He can determine categories of authorities (which could be just one authority) and use a different set of principles for each category. b) If the Secretary of State decides that the budget requirement is excessive he has powers which include:

in-year designation as before; nomination and designation for the following year; notional budget requirement can be used for making comparisons instead of using actual budget; and designation could apply for a number of years, starting in-year or the following year.

Where an authority is designated for a year, the Secretary of State will inform the authority of the maximum budget requirement. The authority would normally expect to be told in early April. It would have 21 days to challenge this and expect to be able to put its case directly to the Minister.

A final decision is then made and because Parliament needs to approve any final cap any council tax re-billing would not normally take place before early June.

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After a challenge the Secretary of State may decide not to designate the authority for capping but could instead nominate it, in which case the designation would be deemed not to have taken place.

If an authority were nominated this would be expected to be in May or June. The Secretary of State will then decide whether to designate for the following year or set a notional budget requirement for the year in question.

The option of designation in the following year voids the need to re-bill council tax in-year. It is expected that authorities would be notified of the intention to do this soon after they had been nominated i.e. in May or June. However, they would not be formally designated until around the time of the provisional grant settlement in late November/early December when the following year's cap would be set. They would then have at least 21 days to challenge this ending around the time of the final grant settlement at the end of January/early February.

If an authority is not designated for the following year it will be given a notional budget figure instead. When the government came to make a year on year comparison of the budget increase the following year it would then use the lower notional figure. This would give a year's grace before any further action was considered.

There would be a right to challenge the notional budget figure in the same way that there is a right to challenge the cap when designated.

It is expected that when an authority is designated it would normally be required to reach the target cap in one year. However, the Secretary of State could instead allow an authority more time to reach a target and will specify by when it should be achieved.

If an authority is designated for the following year but subsequently sets a budget over the government's cap, it could be forced to set a lower budget in-year or it could be designated again for the following year.

2.14 Challenge to the calculation of the budget requirements

The GLA’s calculation of its budget requirements may not be questioned except by way of judicial review (s.107 of the GLA Act 1999 amending the Local Government Finance Act 1992, s.66). This restriction applies so long as the GLA’s calculation was made in accordance with the statutory procedures. This prevents such matters being raised by way of collateral challenge outside the strict time limits of judicial review, for example in proceedings to recover arrears of council tax.

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2.15 Grants between the GLA and functional bodies

Under sections 120 and 121 of the GLA Act 1999, the GLA and functional bodies can make grants to one another with the consent of the Mayor. If a grant is given the functional body or GLA giving the grant cannot attach conditions to the grant on how it is to be spent (apart from whether it is or it is not for capital purposes). In addition, the Mayor does have powers to give grants to bodies other than functional bodies by virtue of sections 30 and 34 GLA Act 1999 amongst other powers.

There are no express restrictions or guidance given in the legislation as to how the Mayor should exercise his discretion to give consent or to give grants. However, the decision must be lawful and not contrary to Judicial Review principles e.g. it must not be “Wednesbury unreasonable”. Save in exceptional circumstances, it might not be lawful for the Mayor to sanction a grant specifically for the purpose of reversing a budget decision taken by the Assembly.

2.16 Lawful and balanced expenditure

Expenditure or activities undertaken by the GLA or the functional bodies must, as statutory bodies, be based on the specific statutory powers given to each of those bodies respectively in their governing legislation. Expenditure should only be budgeted for activities which fall within those statutory powers and can only be spent for such purposes whether budgeted or not.

The GLA is required in the exercise of its general power under s30 of the GLA Act 1999 to secure, over a period of time, a reasonable balance between each of its principal purposes. The principal purposes are the promotion of economic development and wealth creation, promoting social development and promoting the improvement of the environment in Greater London. . The 2007 Act has increased the ambit of expected effects to include health and equalities and climate change. Although not a specific budgetary requirement, the budget process provides a suitable opportunity to consider the required balance of expenditure between the principal purposes in relation to those functions that are carried out under the general power

Steps To Budget Process

1. Mayor consults Assembly

2. Mayor prepares draft component budget for the GLA

3. Mayor consults each functional body

4. Mayor prepares draft component budget for each functional body

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5. Mayor prepares draft consolidated budget for himself and the Assembly, and functional bodies

6. Mayor consults Assembly and other appropriate committee or representatives of the Assembly on the draft consolidated budget

7. Mayor determines final contents of the draft consolidated budget and presents it to Assembly at a Public meeting and publishes it.

8. Assembly approves/amends by MAJORITY (subject to limitations in relation to their own budget.)

9. Mayor presents final draft budget with or without Assembly amendments (in the latter case with a statement of reasons) to Assembly at Public Meeting

10. Assembly’s approval without amendments deemed unless amendments approved by 2/3 MAJORITY (again subject to limitations in relation to their own budget.)

11. Final Budget made before the last day of February

NB: Some stages can occur concurrently and others are sequential. There are default arrangements if the Mayor or Assembly fail to discharge their schedule 6 functions.

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POWERS OF VIREMENT UP TO:

£10,000 £25,000 £50,000 £100,000 £1M £1M+ £25M £100M GLA Director Executive Director Approval of Mayor Approval of Mayor Approval of Mayor Approval of Mayor of Finance and in consultation with in consultation with in consultation with Performance Assembly Assembly Assembly MPA Commissioner delegates to Commissioner Commissioner Commissioner Commissioner MPA Finance Head of Business Group or delegates to Head delegates to Head delegates to Head delegates to MPS Committee person nominated by Head of Business Group of Business Group of Business Group Investment Board of Business Group or person or person nominated or person nominated nominated by Head by Head of Business by Head of Business of Business Group Group Group Virements below £1 million are reported to members via budget monitoring mechanism. Budget virements only made when permanent shifts of priorities or resources are planned. LFEPA Director or Head of Director or Head of Director or Head of Approval of Approval of LFEPA Approval of LFEPA Department LFEPA Department Department Can make a virement between budget heads within departments but virement between departments to be reported to members as part of quarterly monitoring TFL TfL Board (delegated to TfL Board TfL Board TfL Board TfL Board (delegated to TfL Board TfL Board TfL Board Chief Officers) (delegated to (delegated to Chief (delegated to Chief Officers) (delegated to Chief (delegated to (delegated to Chief Officers) Officers) Chief Officers) Officers) Chief Officers) Commissioner)

LDA LDA Group Directors and Chief Finance Officer 10% over the original project approved funding Over £10m - Mayor/DTI in level, greater than £100K up to £6m- Group accordance with DBERR’s Management Team; £6m to £10m - LDA Board delegation process

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