Greater London Authority (GLA) funding and council tax

This Assembly notes the recent shift in the main source of Greater London Authority (GLA) funding from government grants to retained business rates.

This Assembly recognises that despite the benefits of recent reforms to the business rates system – which provide a greater financial incentive for the Mayor to promote economic growth in London – there remains great volatility and uncertainty in this key income source from year to year. 

Within this context this Assembly is concerned by the Mayor’s stated intention to cut the GLA’s share of council tax by a further £19 (or six per cent) in 2016-17, of which £12 would arise from a planned reduction in the GLA’s contribution towards the cost of the 2012 Olympic and Paralympic Games.

This Assembly believes that the Mayor’s current plans will place unnecessary financial constraints on the next Mayoralty as well as dramatically restricting the future activity of the GLA, since a cut in the precept next year would recur every year thereafter and the scope to reverse this change is now limited to no more than 2 per cent of the GLA’s share of council tax, beyond which a costly local referendum would be triggered. This is a strategic decision for London and is best taken by a Mayor with a future in the civic leadership of our City rather than to be taken as a gesture by an outgoing Mayor with one foot out of the door. 

This Assembly therefore calls on the Mayor to commit to freeze the GLA’s share of council tax in 2016/17 in order to give the next Mayor the ability to use the additional income arising from the partial withdrawal of the Olympic precept to finance the future infrastructure needs of London, in particular the delivery of new affordable homes.