MD2666 Repurposing the 2020-21 GLA: Mayor’s Budget

The GLA: Mayor budget for 2020-21 was approved by the Mayor under MD2619 on 10 March 2020. The Covid-19 pandemic and subsequent lockdown caused a reduction in economic activity in London which is expected to have a devastating impact on London’s economy and consequently the council tax and business rates income received by the Mayor is expected to fall significantly. The Mayor’s Budget Guidance has set out a requirement for the GLA to take steps to accommodate a funding reduction of between £26m and £28m in the GLA: Mayor 2020-21 budget.

In response, the GLA has conducted a thorough review of the GLA: Mayor 2020-21 budget and its objectives (at Appendix C). This has considered all directorate programme and non-programme revenue budgets, after affirming expenditure already committed through contract or grant agreement, or where it is funded directly by third parties and therefore cannot be used for other purposes. Changes are proposed to the budget as set out in this form.

Savings identified

In summary, the process identified a series of savings from each of the directorates totalling £20.1m. A summary of the savings is shown in Table 1 below, along with the 2019-20 underspend and the proposed carry forwards where expenditure previously expected in 2019-20 will now take place this year. These changes are within the overall envelope of the Mayoral budget for 2020-21 approved under MD2619 and does not alter the Mayoral component budget council tax requirement as approved by the Assembly (without amendment) at its meeting on 24 February 2020.

Table 1. Savings summary

The budget review process has identified programme savings of £14.1m. These savings are allocated across Directorates as set out in the table below. Savings are derived from a combination of stopping programmes entirely and scaling back programmes but continuing with a degree of activity. A detailed list of those programmes where savings have been found is at Appendix A.

Table 2. Savings by directorate (£’000)

The GLA currently has roughly 160 staff vacancies waiting to be filled (though this figure is constantly moving). Of these, 44.5 remain after excluding those which: have an offer made to successful candidates, are filled by agency staff, or are funded by third parties. Executive Directors have agreed to deliver savings equivalent to the 44.5 vacancies that are currently available, which in aggregate equates to £3m in 2020-21. In doing so the GLA will take into account their impact on the delivery of Mayoral objectives, programmes and projects.

Proposed budget carry forwards from 2019-20 to 2020-21 were reviewed to see if they were necessary to meet a contractual commitment or otherwise appropriate to approve. Those meeting this test are presented for approval and comprise £6.9m for revenue and £53.3m for capital. The capital carry forwards are offset by £170.1m of accelerated spending in 2019-20; largely the Affordable Housing Programme. Details are set out in Appendix B.

Allocation of savings

The Mayor’s Budget Guidance explains that there is a high-level of uncertainty around the level of savings that need to be delivered. Subsequent to its publication, on 2 July 2020 the Government made an announcement regarding funding for local and regional authorities in England. This stated that any loss of tax income in 2020-21 could be repaid over the subsequent three financial years, and that the Government would consider what if any further support they should provide following the Spending Review expected to take place this Autumn.

Given this uncertainty and the need to maximise the support for Londoners impacted by Covid-19, it is considered appropriate for the GLA to meet half of the expected savings target at this time. This halving in the savings target for the GLA: Mayor for 2020-21 should also be applied to the savings target for the GLA: Assembly. Accordingly, the Mayor is asked to approve an equivalent reduction in the GLA: Assembly’s 2020-21 savings target from £0.9m to £0.45m in line with the reduced savings target for 2020-21 for the GLA: Mayor.

Should further Government help not be forthcoming, this would imply a call on reserves or an allocation of the remaining savings to 2022/23 and 2023/24 (given the significant savings target to be met for 2021/22). This will be determined as part of the 2021/22 budget process, as more information becomes available.

Table 3. Allocation of savings

Creating a Recovery Fund

Throughout this process, we have been cognisant of the desired overall outcomes identified by the London Recovery Board, listed at paragraph 2.2 of this decision. Previously-planned activity has been assessed against these outcomes and where it is considered to make a material contribution to these objectives, the activity has been continued.

It is recognised that the impact of Covid-19 on London is still emerging, and the London Recovery Board and supporting partners are at an early stage of identifying the most important interventions to support London’s social and economic future. Therefore it is necessary to set aside funding for priorities as they emerge over the months ahead. The approach taken to the allocation of savings enables a ‘Recovery Fund’ initially of £6.6m to be established for this purpose, from which £1.2m of recovery expenditure is confirmed in this repurposed budget.

The transition period following the UK’s exit from the European Union is expected to end on 31 December 2020. It is unclear whether any agreement will be reached between the UK and EU; regardless, there is expected to be a major impact on our economic relationship with our major trading partner and unless the UK Government changes its stance, this will have to be managed at the same time as the impact of Covid-19.

Whatever the precise outcome of the ongoing negotiations, the Mayor expects the consequent changes to be adverse for the UK economy and they will be felt alongside the impact of Covid-19. In many cases, it will not be possible to disentangle the effects of them both and a co-ordinated response will be required, that uses the resources set aside in the Recovery Fund to minimise the harm to Londoners.

While expenditure from the Recovery Fund will be determined in line with GLA decision making processes, it is recognised that it is desirable to consult partners on our plans, reflecting the approach being taken to London’s recovery and also the need to align and maximise resources amongst partners to achieve the maximum impact. Governance processes for the London Recovery Board and the supporting Taskforce and working groups are currently being established and will enable appropriate consultation to take place ahead of formal GLA decision-making.

In reviewing the existing budget, a small number of areas were identified where expenditure needed to be committed urgently and any consultation with partners involved in the work of the London Recovery Board could not wait for the establishment of processes to do so. These projects are listed in Table 4 below and are proposed for funding out of the £6.6m allocated to the Recovery Fund. As usual, more details on these projects will be provided in the subsequent GLA decision form.

In addition, the importance of continuing the GLA’s strategic role in small scale community grant-making was recognised. Some grant funding programmes have been temporarily paused, including the Mayor’s Culture Seeds fund, enabling these funds to be strategically integrated into the Recovery Programme. A strategic cross-GLA and partnership approach to civil society and community grant making will now be developed as part of the Recovery Fund to continue to deliver these programmes and benefits for Recovery, including on social equality, cultural engagement, cohesion and mental health.

Table 4. Initial allocations from the Recovery Fund

The objective of the proposals set out in the paper is to arrive at a re-purposed GLA: Mayor’s 2020-21 budget in light of the in-year savings requirement set out in the Mayor’s Budget Guidance for 2021-22. The revised objective budget table is set out in Appendix D.

This exercise has been guided by the desired overall outcomes identified by London’s Recovery Board chaired by the Mayor:

• reverse the pattern of rising unemployment and lost economic growth caused by the economic scarring of Covid-19;
• support our communities, including those most impacted by the virus;
• keep young people safe and providing further opportunities;
• narrow social, economic and health inequalities; and
• deliver a cleaner, greener London.

The allocation of resources to the Recovery Fund will further the above outcomes, and help address the consequences for London of the UK’s exit from the European Union.

Under s 149 of the Equality Act 2010 (‘the Equality Act’), as public authorities, the Mayor and TfL must have due regard to the need to eliminate unlawful discrimination, harassment and victimisation, and to advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not when exercising their functions. This is known as the Public Sector Equality Duty (“PSED”). Protected characteristics under the Equality Act are age, disability, gender re-assignment, pregnancy and maternity, race, religion or belief, sex, sexual orientation, and marriage or civil partnership status (the duty in respect of this last characteristic is to eliminate unlawful discrimination only). In line with best practice, the impact on groups who also have the potential to be socially excluded, in this case, people on low incomes or from deprived communities, should also be considered notwithstanding that these specific attributes are not protected under the Equality Act but may be common to people with protected characteristics.

In line with the Mayor’s ‘Inclusive London’ Equality, Diversity and Inclusion Strategy, the previously approved 2020-21 GLA: Mayor budget (MD 2619) included a wide range of measures which had positive equalities outcomes, particularly for Londoners who face disadvantage, unfairness or discrimination. This budget review has been conducted with regard for this strategy, the requirements of the Equality Act and the outcomes identified by the London Recovery Board. Accordingly, expenditure which has been continued following the savings exercise which has positive impacts on equalities includes:

• significant commitments on affordable housing;
• work with employers and others to ensure that London’s economy is fair and inclusive;
• supporting skills development, including through the devolved Adult Education Budget (AEB) and apprenticeships;
• giving young people the best chances by investing in London’s further education sector and supporting a wide range of programmes across London through the Young Londoners Fund;
• the promotion of volunteering as a path to acquiring skills and accessing new employment opportunities;
• an expanded social integration programme that includes reducing inequality and tackling the specific barriers faced by some groups of Londoners as a key component;
• work to reduce health inequalities, in line with the Mayor’s Health Inequalities Strategy, including new partnerships and support for action across the full range of the GLA’s work; and
• identifying and implementing actions to make further progress in reducing gender and ethnicity pay gaps within the GLA, including by further improving our recruitment and talent management practices.

In accordance with the PSED and the London Equality, Diversity and Inclusion Strategy officers will undertake an assessment at the appropriate levels of the likely significant impacts of the proposals set out in this Form on the groups mentioned at paragraph 3.1 above as matters are taken forward and refined.

The key risks and issues are set out in the table below.

Links to Mayoral strategies and priorities

The repurposing of the budget will direct funding over the year to the implementation of the Mayor’s strategies, which are viewed as being aligned with the outcomes adopted by the London Recovery Board and in many cases, the impact of Covid-19 has made the delivery of the strategies even more urgent for the wellbeing of London and Londoners.

Conflicts of interest

There are no conflicts of interest to note from those involved in the drafting or clearance of this decision form.

Financial issues are integral to this decision form.

The GLA: Mayor budget for 2020-21 was approved by the Mayor under MD2619 in accordance with the GLA Group council tax requirement and budget setting procedures of Part III of the GLA Act 1999. There is no proposal to amend the overall envelope of the approved GLA: Mayoral budget for 2020-21 and its council tax requirement, which forms part of the GLA precept issued to billing authorities in March. The Mayor may amend budget lines and make savings to the approved budget within the approved council tax requirement envelope as circumstances require during the financial year.