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Session 2002 - 03
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Delegated Legislation Committee Debates

Greater London Authority (Allocation of Grants for Precept Calculations) Regulations 2003

Sixth Standing Committee on Delegated Legislation

Thursday 13 March 2003

[Mr. Derek Conway in the Chair]

Greater London Authority (Allocation of Grants for Precept Calculations) Regulations 2003

2.30 pm

Mr. Desmond Swayne (New Forest, West): I beg to move,

    That the Committee has considered the Greater London Authority (Allocation of Grants for Precept Calculations) Regulations 2003 (S.I. 2003, No. 225).

It is with great relief that I rise to speak. I am anxious to hear what the Minister has to say. Indeed, I have thought of little else all morning. I am particularly concerned about the amounts of P1 and P2, to which the Minister referred only moments before the start of our proceedings. Without delaying the proceedings further, I shall allow him to deal with those important matters.

2.31 pm

Mr. Edward Davey (Kingston and Surbiton): I have some concerns about the regulations, especially about the overall budget set by the Greater London Authority. I hope that the Minister, in describing how P1 and P2 were arrived at, will reflect on the rather large council tax precept that the Mayor of London has imposed on the council tax payers of London. It has gone up by more than 29 per cent., which will increase council tax bills by nearly 3 per cent. in most London boroughs. That huge rise is topped only by Conservative-controlled Wandsworth. Most other boroughs have kept their budgets under control, but their council tax bills are nevertheless high because of problems caused by Government grant funding and they are struggling. It seems particularly irritating, when they are having to make such a large impost on their residents, that the Mayor should decide to pass such a budget.

I am sure that the Minister will have been briefed about the fact that Liberal Democrat and Conservative GLA members voted against the Mayor's budget, and that the huge increase in the GLA precept went through only because Labour GLA members did not oppose it. That was a shame, because alternative budget proposals set out by other GLA members would have resulted in good efficiency savings. For example, one wonders why the Mayor's publicity budget appears to be growing significantly in the run-up to next year's GLA elections.

If my memory serves me right, I have read the explanatory notes correctly and my briefing is correct, the amounts for P1 and P2 concern grants for the whole of London minus the City of London. I see an official nodding in agreement, so I am at least on the right track. I wonder how the formula is derived. The Minister was not a member of the Standing Committee that considered the Greater London Authority Bill,

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but we debated those issues then. There is concern in the capital that the City of London may be getting more than its fair share.

Will the Minister assure the Committee that, in calculating P1 and P2, the residents of London outside the City will not be disadvantaged in any way, particularly in a year of such large council tax increases? I hope that he will explain, in a detailed reply, exactly why P1 and P2 are shared as they are, and reassure us that the rest of London is not featherbedding the City.

2.34 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Mr. Christopher Leslie): Having spent some hours preparing to debate this statutory instrument, I am tempted to share my detailed knowledge about sections 88 and 89 of the Greater London Authority Act 1999, but I shall not do so.

The hon. Member for Kingston and Surbiton (Mr. Davey) came close to hitting on what the statutory instrument is about, although most of his contribution was not related to the substance of it. He was talking about the budgets set by the Assembly and the Mayor. That is a matter for them, not for the Government and not for this legislation, whose sole purpose is to allow the GLA to calculate the appropriate precepts for council tax payers both in the City of London and the other London boroughs. It does not limit the freedom of the Mayor or the Assembly to determine how much the GLA should spend in total or how much it should spend on individual services; those are local decisions to be taken locally.

Why are we proposing to tell the GLA how to split its revenue support grant and its national non-domestic rate amount between police and other non-police services? First, the Secretary of State is required by statute to make that determination. I refer anyone who wishes to pursue that matter to sections 88 and 89 of the 1999 Act. Those sections deal with how the GLA calculates its council tax and I do not recommend them as light bedtime reading.

To understand why the primary legislation requires us to make the determination that is before us, it is necessary to delve a little into local government finance. I shall try to be brief. In common with all local authorities that raise money directly from council tax payers, the GLA receives a share of redistributed national non-domestic rates, revenue support and police grant. The GLA is also paid a general GLA grant, chiefly for administrative purposes.

Most authorities can work out their level of council tax by subtracting the amounts of RSG and NNDR from their budget requirement—that is, the excess of their estimated expenditure over estimated income for the year, from such sources as fees and charges, after having taken account of any transfers to or from reserves. In other words, councils set their budgets, see the gap that is left above total grant and set their council tax accordingly. However, there is a problem with the GLA, in that while it provides fire, transport and most other services throughout its whole area—

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that is, to London boroughs and to the City of London—it does not have any part in the provision of police services within the City of London. The City has its own police force and has, therefore, to be treated separately for the purposes of precepting from the GLA.

If the GLA set a single council tax precept, part of the cost of the Metropolitan police would be met by council tax payers in the City of London. That would be unfair to council tax payers in the City because they would then pay twice for policing services—once in part of their bill to pay for the City's own police force and again for services funded by the GLA.

Mr. Tony Banks (West Ham): Has the Minister ever thought it anachronistic that the City of London has its own police force? It would be much simpler for him to explain the ramifications of the statutory instrument if the City were brought within the purview of the Metropolitan police, where logic would argue that it belongs.

Mr. Leslie: Indeed, while that thought had occurred to me in preparing for this debate, we have no plans to change those arrangements, despite pressure from various hon. Members.

Mr. Davey: I wonder whether the Minister would think again. It is clear from interventions and noises on his own side that the majority of the Committee might be in favour of reviewing the split. [Interruption.] As has been suggested, the Minister may take the view that we should review this position. Perhaps he will want to withdraw the statutory instrument and speak to his colleagues to find room for legislation to end this ridiculous split.

Mr. Leslie: I am afraid to say that the statutory instrument has already taken effect and we are reviewing it because Opposition Members prayed against it. Indeed, the official Opposition were so keen to debate it that they prepared in advance—they had decided to make it one of their big lines of attack against the Government. It is for them to decide why they did so.

Mr. Swayne: It has become absolutely clear why we tabled our prayer. That aside, am I right in thinking that the revocation of the regulations would not have the effect that hon. Members seek and that this might be a matter for the Home Secretary, not the Office of the Deputy Prime Minister?

Mr. Leslie: Even if it were possible to annul the statutory instrument, I am not sure that that would affect the existence of the City of London police. However, it might affect grants that are to be given retrospectively and I doubt that anyone would want that. We must have realistic planning for all police services, even if people take different views of their constitutional arrangements.

Mr. Davey: I accept what the Minister says, but Parliament surely has a chance to put down a marker. Members on both sides of the Committee want to send the Government the clear message that it is time to review the issue and by supporting this prayer they can be a catalyst for changes in the Government's thinking.

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The Chairman: Order. The Minister may be tempted to discuss Metropolitan police reform, but I am sure that the Committee wants to concentrate on the statutory instrument.

Mr. Leslie: I am glad to have your strictures, Mr. Conway, although I did not want to go down that avenue in any case.

Harry Cohen (Leyton and Wanstead): My hon. Friend the Minister said that he had done a great deal of homework for our meeting. Has he satisfied himself that the City gets the same policing as other parts of London and that it does not, because of its separate police force—that is what the regulations are about—get preferential policing? People in my constituency are pleased that we are getting more police officers, but we want a better service still. We do not understand why the City of London should get preferential treatment.

Mr. Leslie: Grants are allocated according to the formula, with which all hon. Members will be intimately familiar from reading the local government finance report. Expenditure on local policing is a matter for local democratic accountability and is determined by the police authority, whether it is the Metropolitan police authority or the City of London police authority.

To avoid double payment by City residents, the GLA must have two sets of council tax calculations—one for police services and one for all other services. Council tax payers in the City pay the GLA only for non-police services, while council tax payers in London boroughs pay for police and non-police services. That ensures that City residents do not cross-subsidise services for council tax payers in the London boroughs. That is not the simplest of arrangements, but it is necessary if the system is to be fair.

To undertake the two separate sets of council tax calculations, the GLA must split its revenue support grant and its national non-domestic rate—its formula grant—between police and non-police services. In some circumstances, that will be straightforward and the GLA will be able to work out the appropriate split directly from the grant formulae in the local government finance report. However, that is not always the case, as the calculations for 2003–04—the coming financial year—illustrate. Due to the way in which floors and ceilings work and the positions of the police and fire services in the GLA area, it is not possible to derive a split in revenue support grant between police and non-police services from the formulae in the 2003–04 local government finance report.

The legislation provides for that situation. Sections 88(3) and 89(5) of the 1999 Act require the Secretary of State to prescribe how the GLA should split the overall amounts of revenue support grant and national non-domestic rate between police and non-police services. When the split can be derived directly from the finance report, that is what we shall do. Since that is not possible this year, we have discussed the issue with the GLA and prescribed the split as in the statutory instrument. The 1999 Act requires the

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Secretary of State to inform the GLA how it should split its share of redistributed national non-domestic rate and its revenue support grant entitlement between police and non-police services to calculate its precepts for the City and for the London boroughs. That is what we are required to do and that is what we have done.

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This is an important, if technical, matter and I hope that the Committee will allow the statutory instrument to stand.

Question put and agreed to.


    That the Committee has considered the Greater London Authority (Allocation of Grants for Precept Calculations) Regulations 2003 (S.I. 2003, No. 225)

Committee rose at fifteen minutes to Three o'clock.

The following Members attended the Committee:
Conway, Mr. Derek (Chairman)
Banks, Mr.
Cohen, Harry
Davey, Mr. Edward
Dowd, Jim
Hope, Phil
Leslie, Mr.
Ruddock, Joan
Swayne, Mr.
Woolas, Mr.


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Prepared 13 March 2003