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2 May 2007 : Column GC57

Grand Committee

Wednesday, 2 May 2007.

The Committee met at a quarter to four.

[The Deputy Chairman of Committees (LORD BROUGHAM AND VAUX) in the Chair.]

Greater London Authority Bill

(Second Day)

The Deputy Chairman of Committees (Lord Brougham and Vaux): There will probably be a Division in the Chamber. If so, the noble Lord speaking will cease and we will adjourn for 10 minutes during the vote.

Baroness Hamwee moved Amendment No. 27:

The noble Baroness said: The amendment also stands in the name of the noble Baroness, Lady Hanham. It would alter the majority of Assembly Members required for the Mayor to get his budget from one third to a simple majority. I proposed “one third” because the Mayor’s proposed budget each year will be rejected only if two thirds of the Assembly vote against it and if two thirds agree an alternative budget. He needs, therefore, only a one-third majority backing.

At Second Reading I said that we were entitled to be informed by the experience of the past seven years, and that does not always mean personalising arguments. The system in issue, the votes that people exercise, the effect of those votes and the powers of those for whom people are asked to vote should be readily understandable if we want greater engagement with the political process generally. My seven years’ experience is that the public do not readily understand that the Assembly cannot block the Mayor’s budget when over half of its Members vote against it.

The Government’s argument seems to be that the GLA is based on the model of a strong executive Mayor and that the “two thirds”—or, as I would put it, “one third”—requirement is “entirely appropriate”. In what way is it appropriate other than that it was invented here?

Of course the current Mayor likes the arrangement; it is very handy. At the most recent budget meeting of the Assembly earlier this year, as each of the component parts of the budget—for the GLA and the four functional bodies—met with a vote of nine for and 16 against, the Mayor shouted “carried” from the public gallery. The Government might have been a little more comfortable if the current incumbent had shown greater subtlety, but he made the point very clearly.



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I appreciate, too, that the Government are keen on continuing to promote the strong mayor model, but that is not a universal view. Members of the Committee perhaps read comments by “Robocop”, Mayor Mallon of Middlesbrough, earlier this week, criticising the strong mayoral model, but I do not need to pray him in aid of this argument. It is not necessary to have this voting arrangement on the budget to achieve the strong mayoral model in London. The Mayor has all the executive powers. Even if 50 per cent plus one Assembly Members—a simple majority—voted against the budget, they would still have to agree an alternative, which would not be easy.

The largest proportion of the GLA budget, including all the functional bodies, is made up of grant from central government and from fares in the form of Transport for London’s income through the fare box. The Assembly is very limited in what it could alter in practice.

The design of the Greater London Authority should build on the PR system of election. One of its benefits is that Members have to look for ways of working together, which is generally a matter of finding common-sense solutions. I do not think that this arrangement for the GLA budget assists or reflects that.

At the point where the Assembly could bite and where this new system of government could be shown to be effective, the Government drew back. We now have a system that pleases few people, with the notable exception of the current Mayor. The fact that the current Mayor is such a notable exception in his view should sound a warning bell to us all. I beg to move.

Lord Hanningfield: It will not surprise the Committee to hear that we, too, support the amendment. Schedule 6 to the 1999 Act begins:

As the schedule progresses it becomes apparent that the Assembly can influence the budget only with a two-thirds majority. The amendment seeks to lower that bar, and we throw ourselves wholeheartedly behind it.

The Assembly is set up as a scrutinising body, yet the budget for the whole authority can be covered by a minority, with potentially well over 60 per cent of the Assembly against it. It is staggering that a matter of such importance for the whole of London, which affects all the authority’s functions, can be forced through by an individual faced with such ineffective scrutiny. I support everything that the noble Baroness, Lady Hamwee, said on that.

The proposal would give the Assembly the power only to amend not to prepare the budget, which would remain the brainchild of the Mayor.

Lord Harris of Haringey: The arguments in favour of the amendment seem to rest on the basis that the current Mayor of London is not a subtle person. The fact that he correctly pointed out that the Assembly

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had not amended his budget somehow proves the case argued by the noble Baroness, Lady Hamwee. But both speakers have glossed over the fact that this is a fundamental recasting of the relationship between the Mayor and the Assembly and of the nature of the Greater London Authority.

No doubt all sorts of models could be devised for the structure of Greater London governance. I sat in numerous meetings with some of the people in this Room in the mid-1990s, when we discussed different governance models. However, the Greater London Authority Act set up a particular structure. To change one part of it without recasting the rest is a dangerous way of proceeding. If it is really the belief that you need to have a different governance model, then let us review every aspect of it rather than simply changing one element at a time or, as will happen during the Bill’s progress, making a series of piecemeal changes which change some elements of the structure but not all of it.

There are very strong arguments for saying that the existing model, which says that the Mayor of London is a strong figure, is right for our capital city. Given that the Mayor of London has limited powers compared with mayors of similar cities overseas, it is important that he can exercise them fairly decisively and clearly.

There also seems to be confusion between the role of scrutiny and the role of decision, which surprises me because both noble Lords who have spoken so far are highly experienced in precisely that distinction. My experience, although admittedly I was on the London Assembly for only four years, is that its scrutiny of a number of aspects of the budget was extremely detailed and effective. It highlighted issues that needed attention, and they were, by and large, attended to. However, that is a different process from one of decision. To say that the Assembly by a simple majority is to determine the budget is to transfer the bulk of the Mayor of London’s power to the Assembly.

Will the Committee consider the implications of the proposal? You would have a Mayor, directly elected by the people of London, clearly visible and expected to carry out certain functions, who could not, without the support of the majority of the Assembly for those actions, guarantee that he would be able to take at least some of them forward. That would be less of a problem and have fewer consequences if there were a different system for electing the Assembly or if the Assembly was of a different type. As far as I can see, nothing in the amendments suggests that the Assembly election system should be changed. Indeed, I should be very surprised to hear the noble Baroness, Lady Hamwee, suggest a move away from a system of proportional representation for the Assembly. Yet only if there were a parallel system of election could you really argue that this was an appropriate way in which to determine the functions.

My objections to this amendment are, first, that the change should not be made without a fundamental review of how the entire GLA structure operates, and, secondly and perhaps more importantly, that London deserves strong leadership and governance, neither of which it will get through this proposal.



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Baroness Valentine: London First has always supported the strong mayoral model. Anything that seeks to confuse his role as the leader, accountable for his decisions, is a backwards step. In that sense, I entirely support what the noble Lord, Lord Harris, said. However, it is arguable whether this rule that there must be a two-thirds majority of the Assembly on the budget achieves what we seek. We all agree that the Assembly needs to be in a position to carry out effective scrutiny; I am not entirely clear that the rule enables the Assembly to hold the Mayor to account on whether he is spending his money wisely and well, as I would want it to be able to do, but not to decide how he spends his money. For example, he has probably spent too much money on buses, and it would have been good if someone had held him to account for that.

The other aspect of the current model that I dislike is that it has the unintended consequence of getting the Mayor to align with minority parties to get his budget through. That seems an unintended consequence on anybody’s part.

The conclusion that I reluctantly draw is that the current situation is the best that we can have, but I am concerned about financial accountability.

4 pm

Baroness Hanham: The noble Lord, Lord Harris, is correct in so far as we probably ought to change the whole system, but we are where we are with the GLA. This is a new Bill, with certain provisions that we are entitled to look at, and that undoubtedly includes the budget.

I had barely joined this House when the first GLA Bill was introduced, but I recall that there was an expectation that the Mayor’s precept would be remarkably low. Many spoke about whether he would be able to raise sufficient money from his budget at the level considered. The Bill went through on that basis. By extraordinary chance, the Mayor has managed to double—double—his precept since he came into power. Neither the Assembly nor the London electorate has been unable to stop him doing that. There is no doubt that he has found ways of ensuring that he can get from the London taxpayer a great deal more money than was ever envisaged.

There has to be some check on what the Mayor can do. Everybody foresaw such problems from the outset. The scrutiny role of the Assembly should include a holding power, particularly in relation to the budget and precept, and some way of tugging the Mayor back; otherwise, nothing will stop the precept from increasing, and it cannot keep going up at the current rate.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): I am grateful to the Committee for that short discussion, which is the start of a very important debate. It represents a debate that we will have in different forms about the Assembly settlement, which will work itself out as the Bill is discussed. This is probably the most important amendment in this group; it reflects some robust, yet relatively simple,

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political realities, to which my noble friend Lord Harris referred. As emphasised, inevitably it would undermine the GLA model of governance: a strong mayoral executive and an Assembly holding the Mayor to account through effective scrutiny.

I shall run through the changes that Members of the Committee would like to discuss. Obviously, the key change that we have introduced, which is very simple but important, deals with the procedure for determining the authority’s consolidated budget requirement. Clause 12 will give the Assembly, for the first time, its own component budget. That should not be underestimated, as it marks our commitment to giving the Assembly greater financial autonomy and a clearer focus on its scrutiny role. The Assembly has welcomed that, but it has opened up the debate about its powers to amend the budget.

The noble Baroness, Lady Hamwee, said that people did not understand the work of the Assembly, and we need to think about that. By giving the Assembly its own budget, that process will become more transparent and clearer. Under our revisions, which I want to run through briefly, Clause 12 provides for separate component budget requirements. The Mayor and Assembly budgets now make up six budgets rather than the four functional budgets that we had previously. Together they make up the consolidated budget requirement for the GLA group.

Clause 13 revises the procedures for determining the GLA consolidated budget simply to incorporate the new Mayor and Assembly budgets into the process. It is worth thinking about the process because part of my argument will rest on how these different stages offer different opportunities for checks and balances.

The Mayor must now prepare a first draft consolidated GLA budget after preparing six draft component budgets. He has to consult the Assembly before preparing both the Mayor and Assembly draft component budgets. He must present the draft consolidated budget to the Assembly on or before 1 February in the financial year preceding the one to which the draft consolidated budget relates. The Assembly must approve the first draft and the six draft component budgets it comprises, with or without amendment, by a simple majority.

I can tell the noble Baroness, Lady Valentine, that that is where the first stage of accountability kicks in. The simple majority will enable the Assembly to influence what is happening at that early stage. But the Assembly’s power to increase its own draft component budget by amendment has been limited by the Bill so that its annual percentage increase must not be more than the annual percentage increase in the Mayor’s component budget. We will talk about that in later amendments. For example, if the Mayor proposes a 3 per cent increase in his own budget compared with the previous year, against a 2 per cent increase in the Assembly budget, the Assembly may increase its own budget by up to 1 per cent. That calculation is set out in Clause 13(5).

Similarly, if the Mayor proposes to decrease his own budget by 1 per cent, the Assembly may not amend its own budget such that the decrease, compared

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to the previous year, is less than 1 per cent. That does not mean that the Assembly’s budget could never increase by more than the Mayor’s, year on year, but the Mayor would need to propose such an increase. Those arrangements would ensure that the Assembly could not award itself excessive increases in its budget, and that is reasonable.

The Mayor, informed by the Assembly’s considerations, must then prepare a final draft of the proposed consolidated budget, which it must approve, with or without amendment, before the last day of February in the financial year preceding that to which the budget relates.

Two contextual points were implied by the noble Baroness, Lady Hamwee. First, the Assembly does not have an option to reject the final draft budget. As my noble friend Lord Harris said, Schedule 6 to the Greater London Authority Act makes it clear that the Assembly must approve the final draft budget, either as it stands or by amending it by a two-thirds majority. Secondly, the Assembly has the power, if it so chooses, to amend the component budgets and, in so doing, amend the consolidated budgets. That is another check. There is nothing to stop that. The fact that the Assembly has not done that does not mean that it cannot do so. Therefore, by implication, that amends the consolidated budget.

Lord Hanningfield: I am not as familiar with the workings of the GLA as I am with those of Essex County Council. The noble Baroness said that the first draft must be passed by the Assembly. What if it does not pass the first draft? She said that it has to pass the later drafts. What if the Assembly rejected the first draft?

Baroness Andrews: That is the point I was trying to make. The Assembly does not have the option to reject.

Lord Hanningfield: I wish to clarify that the Assembly does not have the option to reject the first draft.

Baroness Andrews: No; that was built into the Act—it is a rather nice option, when you think about it.

Baroness Hamwee: After consultation, the Assembly can propose alterations to the first draft by a simple majority, but the Mayor is not required to accept them. However he is required—rather as he will now be required to respond to consultations on the strategy—to say why he does not accept them.

Baroness Andrews: I would not dispute that. The noble Baroness may wish to take advantage of an invitation to talk through with us some of those consultations before Report.

The Assembly’s ability to amend its budget is limited, and we will deal with that in later amendments. Why have we done it this way? We can all agree that it is right, timely and proper to give the Assembly its own

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budget. Its consolidated budget represents £11 billion of expenditure on strategic services: public transport, the police, fire and emergency services, economic development and regeneration, and the budget for City Hall. The budget process has worked well. It has been predictable and has delivered for London, particularly on policing and transport. The Bill involves as little disruption and change as possible.

In order to deal with unusual one-off payments, such as the Olympic precept, the authority’s chief finance officer may direct that specified amounts are left out of the budget requirement calculations for the purpose of determining that limit. We will come on to that in a later amendment.

As part of this complicated set of provisions, reflected in the amendments, a parallel set of “virtual” arrangements in Clause 14 makes similar provisions for subsidy calculations.

I listened to the arguments on the amendments but I cannot agree with them, because there are built-in checks and balances. First, the Assembly keeps its existing power to amend the first draft budget by simple majority, which allows it to give the Mayor a clear and early signal of concern, disagreement and controversy and enables him to change his later drafts. Secondly, it has the power to amend by a two-thirds majority, which ensures that, under the strong mayoral model, there is consensus on the budget. The challenge for the political parties in the Assembly—this is where we come to the realpolitik—is to work together to maximise its influence over the preparation of the budget. That is the democratic way of doing it, and I believe that it is better for the reputation of the Assembly if it galvanises its forces rather than our making arrangements for that to happen by guaranteeing a simple majority. With this new power over the budget, it will be able to focus on doing that. It would go down far better with Londoners if the Assembly were seen to have the courage of its convictions. I do not think it is necessary to have a PR system to build coalitions.

Two short quotations support the case. First, the GLA’s own website shows that the Assembly has made a distinct contribution to this process. It states:

That is confirmation of the positive power. Secondly, in the other place, the opposition spokesman Michael Gove said:

I think he meant the Assembly—

I think that that is a rallying cry. Referring to the strong mayoral model, Robert Neill MP said:

I am therefore not clear why noble Lords are trying to change the model, which the amendment would do. It would enable a narrow majority of Assembly Members to decide London’s strategic budget, it would overturn a successful model and, as my noble friend said, it

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would introduce real confusion between the scrutiny and executive functions. I heard what the noble Baroness, Lady Valentine, said about the benefits of that model and the certainty that it brings. It would create the risk that the Assembly would routinely take on the executive function of setting the budget and it would be a recipe for confusion.

There is one other, strong argument. Such a change would not stop at London; it would have implications for other local authorities run on the mayoral model. The two-thirds rule also applies to mayor-in-cabinet and mayor-in-council management models up and down the country. We need to think very seriously about the implications of introducing such a change.

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