The Mayor of London, Sadiq Khan, has today set out proposals which show he has managed to limit the increase in council tax to less than half of what his opponents predicted – despite huge
pressure from Government Ministers to increase the tax in order to fund public transport and policing in London.
The Mayor is increasing his share of council tax bills by £2.63 a month on average (£31.59 a year) from April.
The proposed increase includes £15 a year that, if introduced, will be used to help secure ongoing vital free travel on Transport for London (TfL) services for young people and people aged over 60. The Government wanted to cut free travel for under 18’s and concessionary travel for over 60’s as part of the Covid funding deal for TfL but the Mayor refused to accept these conditions.
The Transport Secretary, Grant Shapps, has told the Mayor that he expects council tax will have to go up in London to fund public travel.
Before the pandemic, Sadiq had hugely improved TfL’s finances during his Mayoralty, reducing it’s operating deficit by 71 per cent since he came into office, increasing cash balances by 13 per cent and reducing like for like operating costs.
A proposed additional £15 will also go directly to the Metropolitan Police who have faced massive Government cuts since 2010– a rise that is priced in by the Home Office as Ministers have not provided funding for the inflationary pressures facing the Met, or the extra £159m their own independent review for the costs of policing the capital.
The Mayor’s opponents had predicted a much steeper increase in council tax – with some London Assembly Members saying they expected council tax to go up by 21 per cent. In reality the Mayor has managed to limit the increase to less than half of this level and is proposing a 9.5 per cent rise.
Sadiq has been left with no choice but to propose this increase to help secure ongoing free travel after the Government attached a series of draconian conditions in return for funding during last year’s emergency TfL negotiations.
In particular, Ministers made it clear to the Mayor that if Londoners were to retain current free travel concessions, the Mayor would need to raise income to cover their costs. These concessions are more important than ever for the poorest Londoners at a time of economic uncertainty.
The Mayor was forced to agree to the Government's terms to keep the network running after fares income decreased dramatically due to the pandemic as Londoners did the right thing and stayed at home. By contrast, the Government provided the country’s private rail operating companies with 18 months of funding with no conditions attached.
TfL forecasts that the cost of relevant travel concessions for 2021-22 is between £110m and £130m. The proposed council tax increase will raise in the region of £43m, leaving between £67m and £87m to be covered by projected Congestion Charge income.
Temporary changes to the scope and level of the Congestion Charge were brought forward in June 2020 in accordance with the Government funding settlement for TfL in May 2020. It is expected that these changes will need to remain in place for the first six months or so of the next financial year owing to the ongoing impact of the pandemic, and to ensure people return to public transport and not the car as restrictions are eased. The income from this will therefore be used to support free travel for young people and the over 60s.
Sadiq has vowed to do everything possible to help London recover from the pandemic and to protect frontline services, even though the Government refused fully to refund the GLA Group for the money it has spent tackling the pandemic or for the income lost as a result.
The Mayor is also extremely concerned about the impact of Government cuts on policing and last month announced that he is providing additional funding from City Hall to protect frontline policing this year and help plug some of the financial gap caused by Covid-19.
With additional Government funding limited to funding police officers, and not the inflationary and other pressures faced by the Met Police budget, the Mayor is also proposing to increase his share of council tax that goes towards policing by £15 a year (Band D), in order to protect policing services. This will raise around £43m in total for policing.
This additional income will be used to meet a range of existing demands that Government refuse to meet. Priority will be given to further development of neighbourhood policing in some areas, with an additional 650 officers dedicated to work in neighbourhoods and town centres and high risk areas, focused on crime reduction, improving confidence and safety in these vital places. It will also support a continued focus on providing police officers with the tools and support they need to tackle violent crime, and better engagement and involvement of London’s diverse communities in priority areas to improve trust and confidence in policing.
As confirmed in December, the Mayor will also increase his share of council tax that goes to the London Fire Brigade by £1.59 a year, as the Brigade works to implement the changes recommended by the Grenfell Tower Inquiry.
In total, this means that the Mayor is proposing to increase his share of council tax bills by £31.59 a year from April, or 9.5 per cent, meaning that an average Band D household will pay £363.66 to City Hall. Almost half of London households are in Bands A to C and will therefore pay a lower amount of council tax to City Hall.
The Mayor of London, Sadiq Khan, said:
“With a lot of hard work, I have been able to limit the council tax increase this year to less than half of what some expected, in the face of huge pressure from Government Ministers to increase council tax to pay for public transport and policing in the capital.
“I fully recognise that in many households, finances are more stretched than ever before because of the pandemic and this decision is not taken lightly. Council tax is a regressive tax but the Government have left us with little other option.
“The Transport Secretary told me that he expected council tax would have to go up in London and the Home Secretary assumed a huge increase rather than funding the police properly.
“I promise all Londoners that every penny of this will be put to good and efficient use keeping our public transport system running and keeping Londoners safe.”
Like all transport authorities and the private train companies, TfL's income has plummeted as a result of ongoing reduced ridership and this has had a particularly damaging impact on TfL, as it is one of the only major cities in Europe not to receive a regular Government grant to cover its day-to-day operations, with fares making up over 70 per cent of its operating budget pre-pandemic.
