Home Business News Mayor proposes council tax increase due to lack of government funding

Mayor proposes council tax increase due to lack of government funding

by LLB political Reporter
19th Dec 23 10:21 am

The Mayor of London, Sadiq Khan, has announced that he is planning an increase in council tax next year as part of his budget proposals in order to provide urgent funding to the police and London’s other vital public services.

This follows the government’s failure to properly fund the Metropolitan Police Service, Transport for London (TfL) and the London Fire Brigade (LFB).

Over recent months, the Met has had to bear even more pressure than usual for its unique national policing activities.

It’s currently dealing with the greatest period of sustained pressure on its resources since the Olympics in 2012, with a large increase in the number of marches, protests and national events taking place in the capital.

But the government has refused to provide the additional funding needed, instead confirming that it will be maintaining the National and International Capital Cities (NICC) grant for 2024/2025 at £185m – a real-terms cut.

These national policing responsibilities should be fully funded by the government, not Londoners. The Met has outlined that the annual funding shortfall to support the additional costs of policing a capital city is now around £240m. This is having a tangible impact on the service the Met can provide Londoners, adding huge financial pressure to an already stretched police service that has faced over a decade of cuts by the government.

Overall, the Government’s policing settlement for London, which was published on 14 December 2023, confirms that the Met’s funding will only increase by 3.5 per cent next year compared to 6 per cent across the rest of the country.

Due to the continued lack of national investment in London, the additional pressure the Met is facing and the need to ensure the urgent cultural and performance police reforms can continue at pace, the Mayor is planning to step in by increasing the policing precept part of council tax by £13 per year – the equivalent of £1.08 a month (Band D).

The Mayor’s budget consultation proposes investing £1.056bn of council tax and business rates funding to the Mayor’s Office for Policing and Crime (MOPAC) in 2024-25 – a nearly 80 per cent increase in annual funding compared to the previous Mayor.

Historically, more than 80 per cent of funding for the police in London comes from national Government and less than 20 per cent from regional government. But because of the inadequate funding from national Government, the share of funding from City Hall for the police is now close to a quarter.

The Mayor is also planning in his proposals for an increase of 2.99 per cent in the non-police precept, allocated in full to the London Fire Brigade to ensure the LFB can continue to respond quickly to major fires and continue to make the changes needed after the Grenfell Tower Inquiry. This is the equivalent of 36p a month (Band D).

The Government’s removal of TfL’s operating grant in 2015 made London’s transport network over-dependent on fares income, which created a financial emergency when the pandemic hit.

Through prudent and effective financial management, the Mayor has managed to navigate TfL through the financial crisis caused by the pandemic, with TfL on track to deliver an unprecedented operating surplus this year. The Mayor has also protected and improved services wherever possible, including the introduction of the Superloop bus network in outer London.

While providing temporary funding during the pandemic and some short-term funding for key transport infrastructure in London, the government has left TfL with a significant funding gap and has insisted that the Mayor raises additional revenue as a condition of emergency COVID-19 funding deals – with Ministers explicitly proposing that he raises council tax to do so.

This means that, as previously announced, the Mayor has been left with no viable alternative but to plan to increase council tax by the equivalent of £1.67 a month (Band D) next year for transport, as approved by the government, to ensure that London can maintain a world-class public transport network.

Therefore, in total, council tax is likely to rise by an additional £37.26 a year for an average Band D household – the equivalent of £3.10 a month.

The budget process requires the Mayor to formally propose council tax levels for 2024-25 in January. However, it’s clear from the government’s recent policy statements that its underfunding of London’s key public services will continue. So the Mayor is using this consultation budget to be upfront with Londoners and to announce now that council tax will need to rise.

The Mayor of London, Sadiq Khan, said, “The last thing I want to do is increase council tax, but against the backdrop of the government’s refusal to provide enough support for London’s essential public services, I have no viable alternative but to use all the levers at my disposal to provide urgent funding from City Hall, particularly for the police.

“The Government has announced that policing in London is set to get just over half the percentage increase in funding compared to the rest of the country.

“How can this be right when the Met has had to undertake a huge amount of national policing activities over recent months without any additional funding from the government?

“This is putting an enormous strain on an already stretched police service. That’s why I’m having to step in with additional funding from City Hall to ensure the police in London can bear down on violent crime, continue to reform and make our city safer.

“We are going through a challenging time in London due to the state of the national economy, the impact of austerity and the cost-of-living crisis. But I’m confident that this budget will not only support and improve our public services in our city, but help us to continue building a fairer, greener and safer London for everyone.”

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