London Councils

Minutes of the London Councils Leaders’ Committee held on 15 July 2014 Mayor Jules Pipe chaired the meeting

Present: BARKING AND DAGENHAM Cllr D. J. Rodwell BARNET Cllr Richard Cornelius BEXLEY Cllr Teresa O’Neill BRENT Cllr M. A. Butt BROMLEY Cllr Stephen Carr CAMDEN Cllr Sarah Hayward CROYDON Cllr Tony Newman EALING Cllr Julian Bell ENFIELD Cllr Doug Taylor GREENWICH Cllr Denise Hyland HACKNEY Mayor Jules Pipe HAMMERSMITH & FULHAM Cllr Stephen Cowan HARINGEY Cllr Claire Kober HARROW Cllr David Perry HAVERING Cllr Roger Ramsey HILLINGDON Cllr Ray Puddifoot MBE HOUNSLOW Cllr Amrit Mann ISLINGTON Cllr Richard Watts KENSINGTON & CHELSEA Cllr Nicholas Paget-Brown KINGSTON Cllr Kevin Davis LAMBETH Cllr Lib Peck LEWISHAM Cllr Alan Smith MERTON Cllr Stephen Alambritis NEWHAM - REDBRIDGE Cllr Jas Athwal RICHMOND UPON THAMES Cllr Lord True SOUTHWARK Cllr Peter John SUTTON Cllr Ruth Dombey TOWER HAMLETS - WALTHAM FOREST Cllr Clyde Loakes WANDSWORTH Cllr Ravi Govindia WESTMINSTER Cllr Melvyn Caplan CITY OF LONDON Mr Mark Boleat LFEPA - CO-PRESIDENT Lord Andrew Adonis

Apologies:

CO-PRESIDENT Baroness Joan Hanham CO-PRESIDENT Baroness Sally Hamwee LEWISHAM Mayor Sir Steve Bullock HOUNSLOW Cllr Steve Curran NEWHAM Mayor Sir Robin Wales TOWER HAMLETS Mayor Lutfur Rahman WALTHAM FOREST Cllr Chris Robbins WESTMINSTER Cllr Philippa Roe EQUALITIES Cllr Marie Pye

Ex officio (under the provisions of Standing Order 2.2)

CAPITAL AMBITION Mr Edward Lord JP OBE CC GRANTS Cllr Paul McGlone

In attendance:

Isabel Dedring, Deputy Mayor Transport, GLA Jeremy Skinner, Head of Strategic Projects and Policy Evaluation, GLA Jeff Jacobs, Head of Paid Service, Executive Director, Communities and Intelligence, GLA Fiona Fletcher-Smith, Executive Director for Development, Enterprise and Environment, GLA Professor Tony Travers, LSE and London Councils officers

1. Declarations of interest

Cllr. Sarah Hayward (Camden, Labour) declared an interest in item one as a member of the London Fire and Emergency Planning Authority. No other interests were declared.

2. Minutes of Leaders’ Committee held on the 11 March 2014

Leaders’ Committee agreed the minutes of Leaders’ Committee held on the 11 March 2014.

3. Welcome to new members

The Chair welcomed the new and returning borough leaders attending the meeting.

4. London Infrastructure Investment Plan 2050

The Chair invited Isabel Dedring, Deputy Mayor Transport and Jeremy Skinner, Head of Strategic Projects and Policy Evaluation at the GLA to address the meeting.

Ms Dedring began by pointing out that Mr Skinner was the lead officer and then explained that: • In the London Infrastructure Development Plan the Mayor was creating a long-term plan for Housing, Transport, Waste and Energy • It followed the publication of the London 2020 Vision and London Finance Commission (LFC) reports • It was not party political and would go forward whatever the outcome of the general election in 2015 and the Mayoral election in 2016 • A draft version of the infrastructure report would be published at the end of July to inform further discussion and she would be happy to attend a further meeting of Leaders’ Committee to that end and it was envisaged that the final report would be published at the end of the year.

Mr Skinner then made a presentation:

• The GLA hoped to hold sessions with groups of councils during the consultation period and further discussions with London Councils. • He was grateful for the support of London Councils’ officers and members in helping with the development of the plan, including assessing the overall needs and costs in schools and housing.

There were three critical messages to be got across:

• The overall magnitude of London’s growth that was anticipated • The need to overcome the fractured delivery of infrastructure so that it worked better for London • How much the plan might cost and how it might be paid for.

Growth

• The work on the infrastructure plan was timely in that London was about to enter an unprecedented era of growth. It was thought London would exceed its population peak of 1939 as early as next year. During the nineteen-eighties manufacturing industry had declined in London and although there had been an expansion in the ‘knowledge economy’ particularly financial services, population had fallen. However, most predictions now envisaged a period of sustained economic growth in London with population reaching 11,000,000 by 2050. While there would continue to be debate about whether growth was good, it reflected the success of London’s economy in generating jobs. Jobs attracted people and in a global marketplace, there was little to stop London from growing. Preparation was vital. Infrastructure underpinned everything • Combined with the relative backlog in infrastructure investment, increasing expectations, and the need to improve quality of life, even as the city grew, London’s growth translated into significant demand for new infrastructure • While London was relatively dense, it still had significant reservoirs of brownfield land that could be developed with the appropriate remediation, transport and other infrastructure. While the question of the Green Belt would eventually have to be confronted, not until 2025 under current projections at the very earliest - as sites for growth had been identified within London’s boundaries - and possibly much later.

Delivery

• The delivery of London’s infrastructure was faltering under various systems of infrastructure provision, with a mixture of competitive markets in mobile telephone services, monopolies like BT Open Reach and Thames Water, duopolies like BT and Virgin for NGA fibre broadband, and public services including TfL and the local road network in London. Three ways of bringing greater integration, forward planning and efficiencies were being proposed:

o In the absence of any statutory power, the Mayor’s soft power would be used to convene the leaders of these organisations. The initial purpose would be to achieve common understanding regarding London’s growth in more detail – its pace, opportunity areas within the capital, the demographic profile and so on; thereafter to develop more integrated approaches to London’s growth and to deliver projects more efficiently.

o Secondly, to tackle the lack of any statutory requirements to deliver infrastructure in a more co-ordinated way. There were various options here, but one would be to lobby for a statutory duty on infrastructure providers and their regulators to have regard for the London Plan and other strategic planning documents.

o Third, some of the regulations that prevent the delivery of infrastructure ahead of demand, particularly in energy were being tackling with national Government.

Cost

• To give a flavour of the content of the infrastructure programmes within the plan, the following was being proposed:

o A series of transport investments to support London’s economy, expand the transport network to enable new areas of housing to emerge and improve quality of life. Schemes included, for instance, a significant transformation of the south London rail network so that it resembled more a true Metro service, with higher frequency services

o An approach to public realm and green space that considered it in terms of a potential network of green infrastructure providing multiple benefits – recreation, space for walking and cycling, wildlife, shade, flood protection and a generally more attractive environment, which would become increasingly valued as the city continued otherwise to get more crowded and busy.

o Relatively modest investment in fibre broadband, 4g, wifi and future ICT technologies such as 5G, on which R&D was underway, to deliver superfast connectivity from mobile and fixed devices wherever you were in London.

o Significant investment in our electricity sub-station network, enabled by better regulation, and greater incentives for more local energy production to provide both more energy and greater resilience.

• All these and more resulted in a significant bill. The headline was a potential doubling of the overall capital costs, but this was before savings and contributions from fiscal devolution (which would be discussed further in the Governance of Fiscal Devolution report later on the agenda), more integration, the higher economic growth that would be expected from investment, technological advances, efficiencies from having a transparent pipeline of projects and much better leverage of publicly owned assets. Fiscal devolution was vital. Just as the Victorians went through a massive period of infrastructure investment during a similar period of growth, so can we.

The Chair called for questions and comments and the following came from members of the committee:

Cllr Ravi Govindia (Wandsworth, Conservative) commented:

• That he did not see any reference to Primary Care • In the case of electricity substations it was important to safeguard land where the need for infrastructure was predicted

• There was a danger that the report would be too top-down and the role of local authorities with their detailed local knowledge should not be forgotten

Cllr Ray Puddifoot MBE (Hillingdon, Conservative) asked whether the intention was to seek to build on Green Belt land after 2025?

Cllr Alan Smith (Lewisham, Labour) argued that attention not only needed to be paid to electricity sub-stations, in addition:

• Integrated thinking was needed on the micro-generation of energy through waste recovery

• Ninety-eight per cent of processed water was not used for what it was supplied for and the storage of rain water and use of ‘grey water’ needed to be considered.

Cllr Denise Hyland (Greenwich, Labour) expressed her support at hearing of the advocacy of a metro-type train system in south London and urged that better public transport should accompany river crossings.

Cllr Stephen Carr (Bromley, Conservative) supported the approach to tackling London’s housing shortage on a regional, not solely London, basis.

Cllr Richard Watts (Islington, Labour) asked of the status of the plan and at what stage would it be possible to engage with it on a project-by-project basis?

Cllr Ruth Dombey (Sutton, Liberal Democrat) supported the adoption of a long-term view but asked how the projects would be paid for?

Cllr Tony Newman (Croydon, Labour) asked what would be considered to be ‘short-term’ and cited the case of taking forward the tram scheme in his borough as an example of delays that could occur.

Cllr Lib Peck (Lambeth, Labour) mentioned the cost of tackling population pressure on schools.

Ms Dedring, Mr Skinner and Ms Fletcher-Smith responded as follows: • They agreed on the point about the absence of any reference to Primary Care but it had been excluded because the scope of the project was becoming too great and, in addition, the Mayor had instigated the London Health Commission to consider a range of related issues in that area.

• The point about the detailed knowledge of local authorities was accepted which was why the sessions with groups of boroughs were being set up during the consultation

• It was not being said that the Green Belt would need to be built on after 2025 merely that brownfield sites would be exhausted by that date

• The analysis of opportunity areas had suggested that there was enough land available, but that it needed a lot of remediation and transport infrastructure to free it up

• They accepted the points about the water supply system. Modernisation of the gas supply system was far ahead of water supply but costs per kilometre would come down dramatically as innovation in making and reinforcing pipes continued

• In response to the question about status, it was not a formal planning document

• On costs there had been an extensive bottom-up cost assessment. The doubling of costs mentioned in the study meant that it would be unlikely to come to fruition in the current financial climate but it was included in the hope that new revenue streams would be identified

• On the ‘short-term’ point officers were actively pursuing the tram project in Croydon but could not guarantee its delivery. If there were concerns over specific projects, a member of the GLA team should be contacted

• A rudimentary costs assessment had been made for schools but no view has been taken beyond the current London Plan timescale.

The Chair thanked the speakers and summed up by saying that the proposals were all logical but the issue would be how they would be paid for.

5. Governance of Fiscal Devolution

The Chair invited Professor Tony Travers of the LSE to introduce the item and he did as follows:

• It was just over one year on from the publication of the findings of the London Finance Commission (LFC) in May 2013

• There had been several previous reviews of regional and local government finance in England

o Layfield, Raynsford, Lyons

• Powers had been devolved to Scotland, Wales (up to a point) and Northern Ireland

o Calman, Holtham, Silk

• The Greater London Authority Act, 1999 was the nearest England had got to a ‘devolution’ but:

o Few financial powers were devolved o Boroughs were not given new devolved powers

• The UK was a highly centralized democracy with a very low ratio of tax raised at local/national level, only 1.7% compared to 4.6% in France, 9.1% in the US and 10.4% in Germany

London within the UK

• London was very unusual by international standards in having such a small tax-base

• There was little powerful evidence (either way) that devolution impacted on growth

• Scotland and Wales had managed since 1999 without apparent mishap

• London’s tax ‘export’ was likely to grow in the years ahead: growth in tax paid was likely to exceed growth in public expenditure A wider tax base was needed

• Council tax was too small and was also capped

• There was a need for a wider tax base

o • Property taxes appeared well-suited to operation by London government

o Council tax, business rates, Stamp Duty land tax o The government itself originally proposed 100% business rate retention • Back to the pre-1990 system…

o Council tax needed improvement • It would depend on decisions to be made post-reform • Any reforms under LFC proposals would see revenues kept in London

o Stamp Duty land tax was awkward and may, potentially, undermine investment • London could reform it and operate it more sensibly

The tax proposal

• Was that the full suite of property taxes would be devolved to London government

o Council tax and business rates would be linked o Rates then set locally • There would be protections for businesses • To include the power to hold revaluations and to determine banding etc • Taxes devolved to London would be offset by £-for-£ cut in Whitehall grants

Other taxes and charges

• LFC also proposed that Government should pass legislation which would allow London government to introduce new, smaller, taxes, e.g.:

o Tourist tax • Also, to allow greater freedom in relation to charges for services • Any new revenues would be available to London but need not be used • 100% of revenues would be retained in London

Advantages of reform

• London government would be more autonomous

o Over 50% of London government spending would be locally-funded o It would be good for pluralism and democracy • It would be easier to fund capital investments from this wider tax base • The Mayor and the boroughs would have a bigger incentive to stimulate growth

Other cities in England

• LFC had considered London only • But, no reason why Greater Manchester, Leeds city region or Birmingham should not see similar reforms • Since May 2013, London (GLA and London Councils) had worked with Core Cities to promote devolution to city regions

What had happened since May 2013 – nationally

• There had been a debate about ‘Devo-max’ for Scotland • And continuing responses to Lord Heseltine’s ‘No Stone Unturned’ report • Lord Adonis and Labour leader, Ed Miliband had also suggested greater financial autonomy for city regions • In the previous week, a CLG Committee had published a report which proposed devolution of financial powers to city regions

What had happened since May 2013 - London Councils and GLA

• London Councils and GLA officials had worked on the details of how taxes might be devolved to London government

o Some taxes were more appropriate for the GLA o Others, more appropriate for boroughs • There was a need for machinery to decide whether boroughs or the GLA (or both) would operate which taxes • And for on-going operation of the taxes • There would be a ‘One Year On’ event in the following week at the House of Commons Conclusions

• London had a large economy and robust city government system

o Its population and GDP were both bigger than Scotland and Wales combined • Increasing local fiscal autonomy would strengthen accountability and democracy

o In the longer term, more radical options might be considered • London needed to be ready for reform

The Chair asked for questions or comments

Cllr Ravi Govindia asked, with devolution of money and powers, how would boroughs be able to control a more rapacious Mayor?

Cllr Richard Cornelius (Barnet, Conservative) pointed to the taxes raised in London being spent in the Home Counties.

Professor Travers responded by saying:

• Governance machinery would have to include safeguards so that the Mayor could not override the boroughs and vice versa, through a complex (but not over-complex) voting system • The ‘greater south-east’ had not been looked at but he had been in contact with local authority leaders in the south-east who were interested in an analogous devolution to their region. The reason a property tax was favoured was that it was immobile, its boundaries were clear while an income tax would potentially have caused greater difficulties • He concluded on a separate subject, by alerting Leaders to work he was doing with London Councils to mark the fiftieth anniversary of the creation of the London boroughs in their present form. Chief Executives had been contacted and Professor Travis hoped that there would be a high level of responses to the request for information from each borough

6. Growth Deal, Devolution and Wider Public Sector Reform

The Chair introduced the report saying:

• The details of the London Growth Deal were announced on 7 July 2014 and included approval for a series of ‘pilots’ which would give London local government the opportunity to demonstrate its ability to deliver on agreed aspects of the growth agenda. The pilots included a particular focus on help for those furthest from work to move into the labour market.

• London’s Growth Deal also included a commitment to opening discussions with London government on the commissioning and design of the next phase of employment support programmes and a commitment that success in the pilots would unlock progressive steps towards further local service integration across London.

Leaders’ Committee agreed to:

• Note the progress with the London Growth Deal, including the pilots and an agreed approach to New Homes Bonus. Note the progress of related work, which sought to advance London’s aspirations within the wider sphere of devolution & public service reform.

7. Proposed Changes to the Governance of the Fire Service

The Chair introduced the report saying:

• The Secretary of State for Communities and Local Government was consulting on proposed reforms of fire service decision making in London, following a request made by the Mayor of London • His proposition was to invoke an order using the power provided by the GLA Act, amending the composition of LFEPA so that:

o the number of Assembly members be reduced from eight to six; o the number of London Borough councillors be reduced from seven to five and o the number of Mayoral appointees be increased from two to six.

• The closing date for the consultation was 29 July 2014.

• The report set out the lines a response to the consultation by London Councils could take. Cllr Teresa O’Neill (Bexley, Conservative) informed the Committee that her party would be unable to support a response on the lines set out in the report and instead, suggested that the party groups should either make separate responses or that any London Councils’ response should make clear that it did not carry the support of the Conservative group.

Cllr Sarah Hayward (Camden, Labour) said she thought that her fellow-members of the London Fire and Emergency Planning Authority (LFEPA) would be disappointed that London Councils response was not on a cross-party basis. She thought that the current Mayoral proposal was not based on any existing model and that, while it may be possible to be confident that the present Mayor would make fair and impartial appointments, there could be no guarantee that future Mayors would.

Cllr Ray Puddifoot argued that the proposal was akin to the Mayor’s Office for Policing and Crime (MOPAC) and that any Mayor should have greater control over the Fire Authority.

Cllr Clyde Loakes (Waltham Forest, Labour) said that he had been under the impression that Executive members had already adopted a position opposing the Mayor’s proposals, as an acceptance of them would represent a ‘rolling-over’ in the face of the Mayor’s proposals, allowing random names to be put forward to the Fire Authority with no accountability.

Cllr Peter John (Southwark, Labour) argued that ‘rolling-over’ did not set a good precedent for other issues, such as fiscal devolution.

Cllr Govindia responded by saying that his party’s approach did not represent a ‘rolling-over’ but merely the acceptance of a proposal for a system that worked.

The Chair concluded by saying:

• The draft response contained in the report represented valid questions to put to the Mayor • There were historic reasons why the original system had been put in place • The proposed change would move London away from the system that operated in the rest of the country • He could not see how acquiescing in the Mayor taking on the proposed powers was anything but a retrograde step for the boroughs.

Cllr Ruth Dombey (Sutton, Liberal Democrat) expressed her party’s support for the response as drafted in the report and Cllr Stephen Carr (Bromley, Conservative) his wish to abstain from any vote on the matter.

Leaders’ Committee agreed that a formal London Councils response be developed, drawing on the draft lines set out in the report and that it should be made clear that that response did not enjoy the support of the Conservative group.

8. Pensions Working Group: Progress report and proposed next steps towards a London LGPS CIV

The Chair introduced the report by giving some background on it, including that 28 boroughs had now given notification to London Councils Chief Executive that they had passed resolutions in support of the recommendations made by the 11 February Leaders’ Committee.

Leaders’ Committee agreed the draft consultation response attached as an appendix to the report.

9. Minutes and Summaries

Leaders’ Committee agreed to note the minutes and summaries

• Capital Ambition board meeting held on 6 March 2014 • Transport and Environment committee meeting held on 13 March 2014 • Audit committee meeting held on 20 March 2014 • Grants Committee meeting held on 26 march 2014 • Greater London Provincial Council meeting held on 31 March 2014

Action Points

Item Action Progress

7. Proposed Changes to the Governance of the PAPA/Strategic Response Fire Service Policy submitted

• A formal London Councils response be developed, drawing on the draft lines set out in the report that made clear that that response did not enjoy the support of the Conservative group.

8. Pensions Working Group: Progress report and PAPA/Fair Response proposed next steps towards a London LGPS Funding submitted CIV

• Submit the response