… Perhaps its also worth pointing out that Assembly members have by etssetcf


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									                                                                                    Appendix 1

The Chair: If we turn back to item 5, which is representatives not, as you will all have realised,
of the Association of London Government, who in fact were not able to be with us today, but
we’re hoping to look for another date to meet them, to talk about budget issues out of the heat
of the consultation period which goes on around the end of the year annually.

Welcome to all of you, and thank you all very much for coming. I’ll ask you to introduce
yourselves in a moment and say whatever you’d like to say by way of your introduction before
we ask you questions. If you’d like to introduce yourselves?

Irving Yass: I’m Irving Yass. I’m the Director of Policy at London First.

Clare Convey: I’m Clare Convey. I look after Public Affairs at London First.

Jane Calvert-Lee: Jane Calvert Lee. I’m London Director of the CBI.

Lucinda Turner: Lucinda Turner, Senior Policy Adviser with the CBI.

Justine Lovatt: I’m Justine Lovatt. I’m an economist at the London Chamber of Commerce
and Industry.

The Chair: Thank you very much. If you would like to start off yourselves with anything that
you would like to say by way of introduction - shall we start with London First?

Irving Yass (London First): Commenting generally on the prospects for the GLA budget,
transport is still the key issue, certainly for our members, and I suppose for other organisations
as well. We all remain worried that London’s competitiveness could be undermined if we don’t
get the improvements that are planned to the transport system. If we look at that agenda,
there is obviously the need to upgrade the Tube and we very much hope that after all the
arguments about the PPP [public/private partnership], that the Mayor and Transport for
London [TfL] will make the new arrangements work and that we will begin to see real

That’s just as important really in terms of the operation of the Tube, the part of the work that
will remain within the public sector, the management and day-to-day running of the operation,
as much as the investment in maintenance and upgrading. We’re certainly looking for an early
decision on Crossrail. That is not an immediate budget issue since there is funding for taking
forward the preparatory work but future financial issues are going to be really important.

On congestion charging; it’s essential that we do get successful implementation and that, from
a budgetary point of view, we get revenue coming on stream soon. I’ll come to that in a

Continuing the improvement of the bus services and getting on with work on new river
crossings. We would certainly like TfL to take forward work on that to the point where there
can be some form of public/private partnership or PFI [private finance initiative] to take forward
the preparation and construction.

Apart from transport, the two main priorities as far as we are concerned are affordable housing,
which really means increasing the overall supply of housing in London. We don’t see that there
is a future in arguing about the division of a cake that is not big enough, we really do need to
increase the housing. Secondly, on policing, to carry on with the work of on increasing police
numbers and particularly the police presence and further tackling the issue of crime and the
perception of crime in London.

Obviously all of those have budget implications. We would be looking to a time where there
would be a concentration of priorities - to try to spend more on fewer things, as it were, where
that’s possible.

Just a general point on the management: we will certainly go on lobbying for increased
resources for London, we must go on arguing for more, and we will do what we can working
with our colleagues and with the Mayor, to lobby for more resources. We need to look to
delivery in the remainder of the Mayor’s term and, given the lead times for new projects, this is
bound to involve some expenditure on preparatory work, and we need very good project
management and professional advice. We’d like to see the maximum use made of the private
sector, both in terms of know-how and as a source of investment. The GLA can’t do everything

It’s really important that we have transparency in the GLA budget. Speaking for myself, I know I
found the budget documents in the run-up to the last consultation very difficult to understand.
I did not see four million pounds anywhere for [legal] action on the Underground for example.
We would like to see how the trade-offs shape up in the run-up to the next budget.

Particularly important in relation to transparency is the issue of additionality - that where there
is a specific funding for a particular activity, that that should be very clear, particularly in regard
to congestion charging. We’d very much like to see the expenditures that are going to be
funded by congestion charging income separately identified. At the moment, TfL lumps it
together with the Government grant and other sources of income and then sets priorities across
the whole range of its activities. It would make the case for congestion charging much more
strongly and it would be more transparent if we could see which specific transport items are
going to be funded through congestion charging.

If there is a shortfall in the budget, there is the issue of whether there should be an increase in
the precept, and certainly we as a business organisation don’t really feel competent to express
any views on increases in the precept. That’s very much a matter for elected members. We
hope there would be other ways of meeting funding gaps through either increasing other forms
of income or savings. Perhaps we can catch up with those issues later on.

Jane Calvert Lee (CBI): If I could follow on from London First on the costs of London
Government, I think you must be very careful about an increase in costs. We notice that in the
run-up to the GLA referendum, the Government claimed that core Authority costs would be no
more than 3p a week. I understand now that, on a band D council tax bill, the actual cost is 13p
per week. So already we’re seeing a huge increase in estimated costs. Clearly we understand
that the Authority has to attract the right skills, particularly project management skills, and that
we’re in a competitive market. Nevertheless, we think more could be done in reducing costs.
Most of our members are in cost-cutting mode rather than in increasing budgets. I’m not sure
that they would welcome any increased spending on the administration of the London

What also concerns us is that there are a number of policy priorities which seem to pull in
opposite directions, which leaves policy makers and the business community concerned about
what the overall direction of the GLA is. Indeed, we’ve surveyed a group of our members, a
snapshot survey which included 100 of our largest members as well as members of the London
Council, and the 100 largest companies would include most of the FTSE 100 companies.
Interestingly, 70% of them thought that the Mayor could and should be able to deliver
improvement to London, but, in fact, only 21% considered that he had, which is disappointing.
They pointed to problems with moving around London as one of the major manifestations of
the Mayor’s term of office, in a very negative light.

We would endorse most of the points that London First have already made about priorities and
the need to get on with delivering real improvements. There is much concern about the level of
costs that’s gone into litigation, which has caused huge delays in much needed investment on
the Tube. We hope that we will see, in the next couple of months, work starting on that

We find it rather disappointing that the Mayor hasn’t taken more of a championing role in trying
to improve the public realm in London. That’s obviously not his responsibility, but he could
have played a role in cleaning up the environment. A lot of our large companies said that they
reckoned that the state of London deterred future investment and certainly was counter-
productive when inviting, for example, their parent companies over to London to consider
future investment and they saw the state of our infrastructure. We thoroughly endorse what
London First has said in that respect.

I think we’ll get on to some of the details and recommendations as we go through.

Lucinda Turner (CBI): We do endorse the view that transport remains the number one priority
issue for London. Tube and community rail services came out at the top of the survey followed
by traffic management, bus services and major new projects. I think what is seriously
concerning our members is that they are very worried about this horrendous period they see in
between now and the actual delivery of enhanced capacity which will be achieved with the
major projects. What they need to see are some quick wins. There are some things that can be
done, can be focused on, in the shorter term to make conditions better: sorting out the traffic
lights; sorting out and co-ordinating street work; school travel plans, innovative ways of getting
children to school; looking at the design of trains, there all sorts of issues. Otherwise we are at
risk of companies thinking that they don’t want to be in London anymore. There is a very
serious concern.

With congestion charging, although we are supportive of the principle and remain so, we’re not
yet convinced. We’re still not convinced that enough is being done to actually attract people
from their vehicles rather than drive them out of London just by making conditions unbearable
for them. I think that’s the key issue.

Using resources widely is also important - for instance the work that is going on in Trafalgar
Square: is it twenty-four hour work? is the work being done as quickly as possible? It may
increase the direct cost to the Assembly or to the Mayor in the short term, but the cost to
business and the wider costs for London in the longer term have got to be a significant factor in

Whilst we need to press for the major projects and we are joining with the Mayor, London First
and everyone else in arguing the need for greater investment in London, we do need to focus
on the short term as well.

Justine Lovatt (LCCI): First of all, I’d like to thank you for inviting us here today. I’m sorry
that Peter Bishop, our Chief Executive, can’t be here. It’s unfortunate it clashed with the British
Chamber of Commerce AGM.

Firstly, we’d like to talk about some general principles. We welcome the work the GLA is doing.
We believe the public sector has got an important role to play in the London economy, and in
particular the police service, the fire service and in relation to transport.

We are concerned about council tax because it affects business; it takes money out of the
pocket in the population, and stops spending for private sector businesses. Also, if there are
large council tax rises it may increase people’s wage demands. Therefore, we would like the
GLA to try and keep the budget increases to a minimum, preferably to be no more than in line
with inflation.

We’re also concerned that the London economy and various sectors of it are struggling at the
moment. Our forecasts predict a 1.9% growth in the London economy this year, and particular
sectors are being hit, like manufacturing and the City. We don’t think it’s a good time to put
through big tax rises.

The GLA was also set up to be a slim-line authority and we feel it should try and stay that way
as much as possible. We are concerned by reports that GLA communications staff have received
salary increases of 21%, and by press releases about excessive staffing at the GLA. We’d like to
see administration kept to a minimum wherever possible.

We’re very much in favour of spending on the police and on an increase in police numbers. Our
members are very positive about that. We believe, however, that savings can be made by an
efficiency drive in the Metropolitan Police. We also believe that the central Government grant
for the London police should be increased to recognise the need for more police in the capital.

Businesses are generally extremely concerned about crime. In December 2001, we did a
business crime survey which found that 40% of businesses in the London area had been a victim
of crime in the last 12 months. Around half of the respondents who had reported less than
100% of crime said that they didn’t report a crime because they had no confidence in the police
response, which is of serious concern. We asked them what measures they thought were
effective in reducing crime: 66% believed video cameras are very effective; 60% believed there
should be a faster police response; and 54% believed tougher sentencing is very effective.

We are also very concerned about transport. We believe there should be more private
involvement in the transport sector, and we also believe there should be an emphasis on the
quality of the transport service, providing a reliable service which runs on time, as well as on the
quantity of service. We’re particularly concerned about the quantity of service at peak times
that is vital to business. At off-peak times, at night, we’re not concerned about the level of

We’re concerned about the growing level of bus subsidies and would prefer the bus service to
run with no subsidies.

The London Development Agency [LDA] has no budgetary impact, so we haven’t commented
on that.

The Fire & Emergency Planning Authority [LFEPA] is obviously an essential service, and we
support an increase in the rate of funding at the rate of inflation. We are obviously concerned
about the threat of strike action, but do not believe that a 40% pay rise is justified.

Eric Ollerenshaw: I didn’t quite hear those figures on crime. It was a percentage who didn’t
report crime? Was that half?

Justine Lovatt: Yes, it was 48% of respondents reported less than 80-100% of crime.

The Chair: Thank you. I think this was something that Piers Merchant [LCCI] was talking about
when we saw him earlier in the year. I wonder if I could start with spending priorities. Jane, I
think you said that they seem to be inconsistent, and Irving talked about being more rigorous
with priorities. I wonder whether the two of you would like to expand on that a bit?

Jane Calvert-Lee (CBI): There is obviously an increased cost in the council tax. As I think
Justine [Lovatt, LCCI] mentioned, it takes money out of the pockets of those that work and do
business here in London. So, they are conflicting targets. But also on affordable housing, the
Mayor’s proposals have set rather inflexible targets or thresholds in the amount of affordable
housing that needs to be provided, but that will inevitably increase the cost overall of
development in London. One needs to look at some of these proposals in the round rather than
just looking at one particular target.

Lucinda Turner (CBI): It’s just the old catch-phrase: ‘joined-up thinking’ or ‘joined-up
government’. In some areas we feel that that’s somewhat lacking and we would look to the
Mayor to provide leadership there. I think the affordable housing issue is a key one if there is a
50% target. We are hearing, and it’s not just loose threats, from developers, that they might
well move out of London. Already I think it’s only eight out of the top twenty house builders in
the UK actually still operate in London, and we need more houses built in London. The last
thing we want to do is lose more developers from London, and it’s the areas that are most in
need of regeneration that are likely to be less able to support the higher affordable housing
target. The LDA is striving for economic regeneration, and we’ve got a target that was imposed
by the Mayor that is going to affect that. There are conflicting targets across the GLA family.

The Chair: I’m going to discourage Members from spending time on areas which we know will
be investigated by other Committees but are there any spending priorities where you think there
are inconsistencies? You’ve mentioned the issue of tax versus services but is there anything else
that you want to bring to our attention?

Jane Calvert-Lee (CBI): We welcome the recruitment of new police in London, but it doesn’t
seem to go hand in hand with productivity improvements. I understand that there was going to
be a management consultant brought in to achieve fairly strenuous cost savings, but they were
either abandoned or found to be unachievable. We don’t believe that, because they were fairly
modest savings that were being sought, and certainly in businesses they would have been

Similarly, in looking at the Fire Authority, I see that it has the fourth poorest performance in
England and Wales for meeting fire attendance standards, and that the number of shifts lost
due to sickness is dropping, but it’s still 20% above the national average. I don’t think we’re yet
convinced that there has been the strenuous management improvement that one hoped to see
by bringing together the four agencies within the GLA.

Lucinda Turner (CBI): I think that is also reflected in the percentage of crimes detected,
which is lower than any other force. It’s 15.8% in London, I think, and the metropolitan average
is 24.7%. We accept that there may well need for increases in investment and we would
welcome it, but it has got to be tied to improvements in efficiency and improvements in output.
We’ve got to see some results from the greater investment going in.

Irving Yass (London First): First of all, we strongly support what the CBI say on housing.
Generally, on the LDA budget, the LDA is now in a position where some resources are coming
free in the sense that it inherited a lot of commitments under existing programmes, and that
dead weight is now beginning to be lifted. There is now more resource available, as it were,
which the Agency has discretion over. We would certainly like to see that concentrated in a
limited number of specific areas, rather than try to spread their programmes widely across the
whole of London and have less impact in any one area.

In particular, we think that we would like to see a concentration on making land available for
housing, decontaminating and bringing sites forward for housing.

On the police, and indeed on some other activities, there is this issue of efficiency. I think what
we would like to see is some benchmarking, to see how the London operation compares with
operations elsewhere. In the case of police, it may be that there isn’t a true comparator within
Britain, but for instance how does the MPA budget compare with New York police. It would be
interesting to see that kind of benchmarking.

On transport, I think there are two areas that we think need looking at in particular. One is that
the cost of the bus improvements has been escalating enormously and, although we very much
welcome the improvements which are very evident in the London bus services, there is a
concern about the level of cost there and how they are rising. We are particularly against a
freeze on fares. Where you have got an increase in costs and real improvements coming
through, it doesn’t seem necessarily the best use of resources to hold fares down to what is now
a relatively low level. I know the Mayor is committed to a fares freeze on buses, but if budgets
are tight then I think one shouldn’t rule out the possibility of looking at bus fares.

Secondly, there does seem to be a great deal of money being spent at the moment on various
forms of traffic calming in London. Our members are very concerned about the fact that traffic
is moving more slowly. There is real concern that the traffic system is not improving. I think
that will make it more difficult to accept congestion charging if traffic isn’t moving more freely.
We need to look at how much is being spent on traffic calming measures that may not
necessarily be very productive in terms of the way London functions.

Trevor Phillips: Let me just deal with the point you made about transport. I’d be interested to
know what your members make of an organisation which has 8% increase in patronage after a
300% increase in the subsidy which is I think what you were referring to in relation to buses. I’d
be very interested to know what private sector managers think about that.

I also wonder what your view is about the TfL estimate that they can manage 20,000 extra
people going through a modal shift as a result of congestion charging. Do you believe it?

Jane Calvert-Lee (CBI): They’re sceptical.

Lucinda Turner (CBI): We’ve done a lot of consultation with members about bus services and
about the whole transport system. As I said earlier, we remain to be convinced that they have
done enough to attract people out of their cars. Although there may be the provision of
enough bus capacity, is it in the right places, is it the right kind of capacity, and will people want
to travel on buses while they still remain unreliable, partly because of the traffic chaos we’ve got
generally on our roads? Reliability is the key indicator for our members: commuters want reliable
services. As Irving [Yass, London First] said, perhaps cost is slightly less of a factor for our
members than reliability, and I don’t think the reliability, or the perception of the service, is at a
point yet where people will be willing to switch to buses in large numbers. We launched our
‘London bus brief’ in July, and we’ve run a campaign within our membership to promote buses
and bus use, because, traditionally perhaps, our members haven’t been associated with bus use.
But I have to say the general feedback is sceptical.

Irving Yass (London First): Purely in terms of capacity, I think probably it can be managed in
the sense that the relative numbers of car users who might be switching is fairly small in relation
to the total use of public transport. As I said, the percentage increase in people using public
transport is not that great. I agree with what Lucinda [Turner, CBI] was just saying, that it’s
really about the quality of the service that’s available that’s important and whether people are
going to stop using their cars. What is going to be a problem is the quality of service that’s
offered, the commuter rail services and the buses.

I think there’s a particular issue about bus information. People who are not regular bus users
don’t know where they go, they don’t know how long it takes to get anywhere and how long
they have to allow. I think there does need to be a much bigger push on information about bus
services to attract a lot of new users. The other issue is about traffic management.

Trevor Phillips: I don’t think we want to go too far into [London Assembly] Transport
Committee business. But have you got any thoughts about the priority for congestion charging
revenue? Secondly, are you as opposed as you were previously to the additional or alternate
use of workplace charging, given where we are now?

Irving Yass (London First): To take that last point first, we did a study of workplace charging
about four years ago, and what that showed was that it’s a pretty good way of raising money.
The response we had was that something over 90% of businesses who were questioned on it
said that they would go on using the same number of parking spaces and would simply pay the
tax on them. So, it would raise quite a lot of revenue, but it wouldn’t have much impact on
traffic. There are also some practical issues which are quite difficult to sort out. I’m not sure we
need to go into detail here, but I think there is quite a lot of work involved in that - it’s not
quite as easy as one might think.

In terms of the priority for using the revenue, I think in the short term it’s got to be
improvements in the bus services. But, again, subject to the caveats about not simply winding
up the costs. Traffic policing is very important. I think the initiatives on actually paying for
dedicated police to monitor bus lanes and try and sort out traffic is very important and would be
money well spent in the short term.

In the longer term, congestion charging money could be used for things like some of the
intermediate mode schemes, either the dedicated bus roads or the light rail schemes. I do think
it is very important that TfL sets out the programme that’s going to be financed from
congestion charging. Then, if the revenue is up or down, then it’s that programme which put

forward faster or put back a bit and it’s all very, very clear. If it simply gets lost in the totality of
the TfL budget, then we won’t know what’s happening.

Lucinda Turner (CBI): One of our priorities is the use of the revenue for some form of PFI or
some securitisation of the revenue. That would help in many respects. It would help with the
additionality because it would be a clear, separate revenue stream earmarked for a specific
project. It would also stop it being frittered away on many different things, and the people who
are paying the charge can actually see that the money is going directly into something that
would not otherwise have happened or wouldn’t have happened as quickly. It could help speed
up the delivery process of one of either the intermediate schemes or one of the more major

On the workplace parking idea, I’d just like to add that we do remain implacably opposed to
workplace parking for various reasons, but mostly because it doesn’t actually influence what we
want to influence.

Justine Lovatt (LCCI): We’d like the money from congestion charging to go back into public
transport, probably with more emphasis on the Tube than on buses. You can’t really charge
people and not provide an alternative. We don’t really think you should be subsidising bus
transport. I think we would be opposed to workplace charging.

Trevor Phillips: You don’t think we should be subsidising bus transport at all?

Justine Lovatt (LCCI): No.

The Chair: Can I just take up two points? Firstly, securitisation of the revenue stream, I
suspect, would need Treasury approval.

Lucinda Turner (CBI): We’ve been talking to TfL about this. You could do it through a PFI
without TfL having the power.

The Chair: What I was going to say was, if you’re going to encourage the Mayor to pursue that
line, please put pressure on in other places as well. Secondly, I don’t want to get into the detail
of transport services, but if London First has detailed ideas about how bus service can better be
sold to those that you deal with - I know because we see the press releases about the wonderful
things that TfL is doing - can you, again, let TfL know and do copy us with detailed ideas.

Eric Ollerenshaw: This may be more a question for London Chamber rather than the others,
because, I think, in the latest estimates of congestion charge income, over half the income will
come from the poor people who are trapped either side of the line, who are going to do a bit of
shopping or whatever in the smaller shopping centres around London. Is there any information
on the impact there on the smaller commercial sector, the smaller retail sector, in terms of
damage or not damage in terms of congestion charging?

Justine Lovatt (LCCI): We have been getting a number of calls from smaller businesses who
are very concerned about the impact that congestion charging will have on their businesses.
Our overall policy remains in favour of congestion charging, but there is a split in our
membership: some are in favour; some are against. We’re generally in favour because of the
transport problems in London. We think that we’ve got to have an emergency solution for
emergency times. We do have a number of members who are violently opposed to congestion
charging because of the impact it will have on their businesses.

Eric Ollerenshaw: I wonder if there’s been any calculation in the business sector of the
increased costs in terms of their support services and delivery services in Central London and
how that’s going to be met?

Jane Calvert-Lee (CBI): Certainly one large utility provider has calculated that running the
administration of the congestion charging would be something like £80,000 a year and would
involve two extra members of staff. A smaller firm does not have the option to take on extra
staff. It would be a case of someone having to work even more hours or longer hours -
probably the boss - to make sure that their vehicles are pre-registered because, of course, the
penalties for not pre-registering are pretty high.

Lucinda Turner (CBI): Some of the larger companies with fleets will be facing thousands and
thousands of pounds in the cost of the charge even without the administration. We estimate
that congestion itself costs business very, very heavily. What is difficult to tell ahead of the
introduction of the scheme is whether the scheme will be effective in actually reducing traffic
and allowing companies to deliver more reliably, get around quicker, and make cost savings in
that way. Unless there is significant reduction in congestion, it will be very difficult to actually
schedule more deliveries in a day with the marginal time savings of each trip. You need fairly
significant time savings over the day to schedule in another delivery, otherwise all that will
happen is your driver will be able to finish 15 or 20 minutes earlier at the end of the day, rather
than being able to make another delivery. It’s very difficult to tell at the moment, but we really
are very hopeful. We need to be hopeful that the scheme will actually be effective and will
actually be the quid pro quo in terms of reduced times and increased reliability.

Eric Ollerenshaw: Has there been any calculation in terms of costs and impact and whether
that will displace smaller business, and the concomitant costs of that and so on, anywhere?

Lucinda Turner (CBI): We did survey our members as to what they thought the actual costs
would be, but it’s very difficult to tell because they don’t know what the other side of the
equation is, as to what will be the impact in the end.

Eric Ollerenshaw: Out of interest, can you say which utility that was?

Lucinda Turner (CBI): I’m afraid we can’t.

Mike Tuffrey: I want to talk about the process of consultation rather than the detail.
Everything you’re saying is very helpful in terms of guiding our own questioning, but obviously
it’s the Mayor and functional bodies who bring forward the details of their budget. My question
is about the extent to which you’ve been involved directly with them, either having been
consulted by the Mayor before he issued his budget guidance in May, or since then. Or what
arrangements have been made between now and the end of the year to actually engage with
you directly?

Clare Convey (London First): From last year’s experience, as I think you probably know, it
was all done fairly quickly and we would probably have liked a lot more time to have actually
considered what was in the budget. This process would have been extremely helpful then. I
appreciate you hadn’t got the budget any earlier, I think, than we had. I think there’s probably
still a certain amount of patchiness in terms of each of the different areas that we will get
involved with. At the same time, I think most of the bodies we see on a basis which means that
we get an input into them. Throughout the year we probably have to be more pro-active
ourselves in terms of telling them what we think on those issues, although we do have very

regular meetings with the Mayor as the business organisations together. They are fairly wide
discussions and, perhaps, not as detailed on budget issues as we might like.

Lucinda Turner (CBI): You’re asking whether we’ve been directly approached this year about
the budgetary process. We haven’t, no.

Eric Ollerenshaw: And there are no arrangements yet so to do in terms of the Chamber?

Justine Lovatt (LCCI): Not as far as I’m aware.

The Chair: You’ve not been consulted or had a discussion in the business forum about the
budget guidance which the Mayor has issued?

Executive Director of Finance and Performance, GLA: I was just going to clarify the
position on that, as has been previously reported to the Assembly. The Mayor is equally
concerned about the fact that the statutory consultation has, by its nature, got to take place in
a very narrow time-frame. This happens after we get the announcements on Government grants,
which is at the tail end of November, if not early December, and in a time-frame that will assist
the boroughs in actually issuing council tax bills. This is what gives us our time-frame for dealing
with the budget and dealing with the Assembly on the budget. It’s quite a small time-frame.

There were concerns about the statutory consultation process last year and we have already
committed to, and are currently discussing with the Functional Bodies, the process through
which they will generate a dialogue prior to the formal consultation with a minimum number of
consultees that the Mayor would normally consult with, and also encourage them to bring in
other consultees into that process. That is currently going on at the moment between ourselves
and the Functional Bodies with the aim of them having that dialogue with stakeholders in
London before they make their submissions to the Mayor in November.

Mike Tuffrey: In terms of statutory consultation, I didn’t think there was a statutory duty to
consult the business community through the Mayor’s office – is that right?

Executive Director of Finance and Performance, GLA: He has a statutory duty to consult
and he does include the business sector within that consultation.

Mike Tuffrey: He chooses to. The issue I’m trying to get to is the extent to which the
business community specifically is being consulted and whether firm arrangements have been
made to consult the business community directly through the Mayor’s office in a way that was
better than last year. What we’re hearing is that there have been no arrangements yet and
you’re saying that that’s because it’s too early, essentially.

Executive Director of Finance and Performance, GLA: What we’re saying is that we’re
currently putting that in place at the moment with the Functional Bodies.

Lucinda Turner (CBI): I have to add one caveat, in that the LDA is consulting with us, but not
the Mayor’s office.

Mike Tuffrey: Its budget or its corporate plan?

Lucinda Turner (CBI): Both.

The Chair: I’d like to check with Anne [McMeel, Executive Director of Finance and
Performance, GLA] whether the work that the Functional Bodies will be doing about
consultation fits in with the Mayor’s guidance which actually lists clearly set policy objectives?
Is there anything that you can add about the bits of this jigsaw?

Executive Director of Finance and Performance, GLA: I can add a bit about that and then
Martin [Clarke, Head of Strategic Finance, GLA] will say something about the consultation

We select a whole range of issues for consultation, through the various processes on strategy,
the Mayor’s budget in the last year and the policies that are generated in various parts of either
this building or within the Functional Bodies. The budget consultation process is not the only
forum within which the Mayor consults London about his priorities. The business plan and
budget process, if you like, is a formalisation of bringing all those other policies together and
how the business of the GLA and the GLA Group will be taken forward to reflect the Mayor’s
policies as dealt with in several different forums. The guidance reflects what are, at that
moment, the Mayor’s declared policies and priorities. I would not have expected any of them to
have come as a surprise to any of the business representatives in the room at the moment, in
that they do have regular meetings with the Mayor and there are statutory consultation
processes for much of the work of the GLA and the Functional Bodies in taking forward the
Mayor’s strategies.

Head of Strategic Finance, GLA: I confirm that the statutory duty which applies to local
authorities which requires them to consult with representatives of the business community does
also apply to the GLA. The business communities are statutory consultees in their own right, in
addition to those that the Mayor, who has the power to decide to consult who he thinks
appropriate, liaises with. We’re now just finalising the programme of consultation we want the
Functional Bodies to undertake with all the key stakeholders. That will cover the next eight-
week period, in time for the Functional Bodies to be informed of stakeholder issues or concerns,
before they finalise their budget submissions. At the same time this should allow consultees to
really understand the Mayor’s strategies, priorities and issues for the Functional Bodies.

When the Mayor does consult, the organisations should then be a lot better informed than
somebody just getting the information for the first time. That process, in fact, will be starting
next week with the Society of London Treasurers, and also next week the Mayor’s office -
probably via our office - will be writing to the business community with our proposals for
meetings of each of the Functional Bodies. When the Mayor met with the London Business
Forum he gave that commitment and we’re taking that forward.

The Chair: The reason that I’ve been talking particularly about the budget guidance, which
was issued in May or June, is that this is a new piece of process this year - the Mayor issuing
guidance that early. Just to pick out one item, for instance, businesses might want to have
been informed that the Metropolitan Police Authority [MPA] is now required to identify
efficiency savings to allow that component of the precept to be restricted to inflation of 2.5%,
full year costs of the additional offices and so on. That sort of thing is in here, and I hope that
we can try and find ways of making sure that we join up so that the information is freely
available very early.

Head of Strategic Finance, GLA: As I say, I’m just finalising some guidance for the
Functional Bodies, and that guidance does make it clear they’ve got to be explicit in explaining
what is the impact of the Mayor’s priorities when they’re drawing their budget together, so that
information should come through.

The Chair: Are we going to be copied in on what’s going on there? That would be helpful.

Head of Strategic Finance, GLA: I’m more than happy to, and we will also be involved with
the Functional Bodies when they have their dialogue to ensure that information is provided.

Mike Tuffrey: Just to finish on that first point: it would be helpful for us at the Assembly if,
during the course of the whole consultation process, [the business representatives] could report
back to us on precisely that point, the extent to which you feel you are being properly
consulted. The point from the Assembly’s side is that we are only part of the equation and this
meeting is not the formal, proper consultation that you should be having with the Mayor.

It is, though, very easy for businesses to say ‘don’t tax us and you must get your act together’. I
would put it back the other way and say ‘what can you do to help everybody in London?’ The
point has been made about the buses, you have made the point about utilities. But if we’re
talking about congestion and utilities digging up holes in the road and leaving them for what
appears like months etc. etc. I’m not expecting a detailed response this morning - I’m just
putting down a marker. My own [Assembly] Committee, the Economic and Social Development
Committee, has on its work programme the role of the private sector in helping the economic
and social regeneration of London and we will be asking for your input on that. Comments on
affordable housing saying we’ve got to get the economy and society moving in London but
we’re not forcing private developers to have large proportions of development in affordable
housing, for example, are not particularly welcome. We’re looking for you to respond and
reciprocate in this process.

Lucinda Turner (CBI): We completely accept the point that business does need to get
involved. With specific respect to street works, we ran an event in combination with Central
London Partnership, bringing in the utilities and the public sector and we are currently taking
forward an action programme on that, trying to bring both sides together in order to develop a
better partnership approach between the utilities and the local authorities.

On affordable housing, we want to look for innovative solutions which will be a ‘win’ for
everyone and we are working with business to see what we can do and what development can
sustain in terms of targets. On the wider issue of affordability, because it affects the both
private and public sector employees, we are looking at what employees can do in terms of low-
cost loans, how to increase supply overall, and how to make the LDA focus on remediation site

The Chair: With regard to exchanging information, Jane [Calvert-Lee, CBI], would you be able
to share the results of the survey that you mentioned of certain your members, or is it
confidential within the organisation?

Jane Calvert-Lee (CBI): It was a snapshot, electronic survey of a combination of our largest
members, our council members and our technical experts, people with a particular interest in
London, and we would be happy to provide the results.

Jennette Arnold: Does this information have a City and Zone 1 bias or does it cover the
Greater London business community.

Jane Calvert-Lee (CBI): The density of our membership is very much concentrated in the
central areas, although we do have members throughout the Greater London area. The main
concentration, though. is in the central business area.

Jennette Arnold: You’ve got a particular view and the Assembly will have to note that and
understand that the rest of London’s business might not share your views, especially on the
issue about whether or not people should have access to subsidised buses so that they can get
to work if they live outside of Zone 1 and 2.

Lucinda Turner (CBI): That’s not our view.

Jane Calvert-Lee (CBI): With regard to the presentation of the accounts themselves and the
time scale. I appreciate the tight schedule you have between government allocation and the
creation of documents that we can look at. I think last year we were given a week and it was the
week before Christmas. Is it going to be the same this year and should we have date already in
our diary set aside for that meeting?

Executive Director of Finance and Performance, GLA: There’s a slight confusion of
process here, Chair. Consultees have four weeks to respond to the Mayor’s budget
consultation. In the last cycle, the Mayor’s consultation started a week before businesses were
having a meeting with the Assembly’s Budget Committee, which is a separate process. The
Assembly is looking to scrutinise the Mayor’s budget and is seeking opinion to do that. The
consultation on the Mayor’s budget is not part of that in terms of businesses. People have four
weeks to respond to us, normally from the middle of December to the middle of January.

We try very hard to get the Government to make announcements earlier than the end of
November but haven’t succeeded yet. The Assembly is looking for a view, so that it will inform
them when they’re responding to the Mayor’s budget. It is just fortuitous, or actually possibly
not fortuitous, that you had the Mayor’s consultation document the week before you were
coming to talk to the Assembly.

Head of Strategic Finance, GLA: Due to the feedback received on the presentation of
budget information last year, we’ve been looking, over the summer, at how the Functional
Bodies’ information is put together. Some changes are being made, particularly in respect of
Transport for London. That’s the one area where we have the biggest trouble trying to get it
intelligible. It will be a revised format coming forward.

We try and respond to any feedback before the Mayor’s budget comes out. Depending on
where people’s interest lies, some people find it extremely useful and helpful, and others can’t
find what they are interested in. We’ve still got to get the balance right. We’re trying to keep
[the draft budget] a sharp document without overwhelming with details. We also always aim to
be on hand to give any information or clarification if necessary.

Executive Director of Finance and Performance, GLA: There’s always going to be a
problem in terms of trying to get that balance between what is a high-level document and the
detail that people are interested in within some of these organisations. The consultation
document does provide a contact point and the consultees should use it.

Clare Convey (London First): With regard to the outer London businesses and the recent
representation on sub-regional partnerships, they can probably give you the view of their
particular area and what some of issues around those are in a lot more detail than we could as a
panel on the organisation.

The Chair: What would be an acceptable precept increase next year? Justine said, “Not more
than inflation”. Do [CBI and London First] want to comment on that?

Lucinda Turner (CBI): We should strive for as low as possible and not above inflation. The
caveat is, if we and the electorate can be persuaded that the increase is justified and worth it in
terms of results, that might change the picture. The objective should be to keep it as low as

Irving Yass (London First): As business organisations, we have to tread very carefully
because it is a matter for elected members. There’s business interest in keeping it as low as

The Chair: Last year, there was some discussion about the precept taking money out of the
economy. Do you have any evidence about the impact of the current budget, which was an
increase over last year, on spending power and on profitability? That may be far too detailed a
question and perhaps too early to be asking it.

Clare Convey (London First): It probably is. The other side of that, from the electorate’s and
our perspective, is that it’s about what the money has been spent on and has there been a
difference in what we might have seen? That’s all about transparency in terms of the next
budget, if we can see where the money might go.

Lucinda Turner (CBI): It’s about making sure the investment that is made is productive. It’s
not necessarily just taking money away, but it’s putting it back in. Judging the impact of that as
opposed to the impact of September 11 and the troubles with global economy, business is
having a hard time at the moment. There are strains in the business community in the City. The
financial sector is suffering and jobs are being shed. Judging the kind of impact of the precept
on business in London as opposed to wider fiscal fact is very difficult.

Trevor Phillips: It’s not very helpful to say that. The argument was advanced rather forcibly
last time. It could equally be argued that any extra money off the precept that is spent on
infrastructure could enhance access to good and services. If you’re going to make this
argument, you have to offer us something to help us advance it, otherwise it’s pointless. It’s a
rhetorical argument and you’re the only people who can genuinely tell us whether or not
businesses are finding that spending has been diverted because of rises in council tax. It would
be very helpful if you could tell us that rather than saying that it probably ought to happen. It
is arguable that exactly the opposite might be true.

Lucinda Turner (CBI): I thought I had just said that the opposite could be true and was partly
true if the investment was directed to further enhancements in infrastructure and productive

Trevor Phillips: Do you have any thoughts about an exercise that could demonstrate (a)
whether it is true in any way shape or form and (b) what sorts of target for the extra investment
might enhance discretional spending and what would damage it. Otherwise, this is a non-
argument and the Mayor would reasonably say to us, “You tell us the business can’t do that”
but the fact that I can get on the tube to Canada Water means that I am spending an extra £20
on my Sunday lunch and that’s going into the pockets of business. Tell me where the council
tax is coming out of businesses’ pockets? We need help on this.

The Chair: This may be something we need to pursue later. The question from me was
phrased quite deliberately using the term ‘evidence’ because, as Trevor says, we do need help.
Perhaps we should leave that thought with you.

Lucinda Turner (CBI): We’d be happy to provide information especially on this, and the
actual investment and productive investment.

The Chair: One final, completely unrelated question: are there any particular business sectors
that should be drawn to the Mayor’s attention as needing particular help from him through his
forthcoming budget?

Jane Calvert-Lee (CBI): We welcome the support that he’s already given to tourism and there
is an initiative under way which seems to be supporting that, which the business community is
fully behind and involved in. The City financial services sector is suffering but that is mainly due
to global factors and not anything much that the Mayor could do to help. I suspect that related
industries like retailing will start to see a downturn because of less discretionary spending.

Unless there is a reduction in interest rates today, manufacturing is suffering considerably and
there’s still evidence that manufacturing is moving out of London, and the UK in general.

Justine Lovatt (LCCI): The sector which needs most help is manufacturing. The City is
suffering but that is largely a global factor. Manufacturing output levels in London are below
1995 levels and this is quite a cause of concern.

Irving Yass (London First): There is concern about what’s happened in the
telecommunications and IT world.

Lucinda Turner (CBI): With respect to the telecommunications industry, the public sector
does have a key role particularly in the promotion of broadband. It’s 98% accessibility to the
broadband within London but there’s only about 2% take-up. That is extraordinarily low. There
does need to be a driver for greater take-off and it’s not actually coming because of the
troubles that the industry has had. It’s unlikely to be coming directly from the industry over the
next few years. Anything the public sector and the Mayor can do in leading the way on the
take-up of broadband and developing those programmes and products that are going to carry
on driving that, is something that could be very helpful.

Clare Convey (London First): It also comes back to what we were saying right at the very
beginning about spending more money on fewer things; like prioritising transport, which would
probably do a lot more to help all the sectors generally, than specific things that would be aimed
at certain individual sectors.

The Chair: Thank you.


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