Greater London Authority Bill

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, 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 before1 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 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.