By Marcus Leach

Mayor Boris Johnson faces his toughest financial decisions yet as he sets next year’s budget for key services used by Londoners, a new report from the London Assembly warns.

The Assembly’s Pre-Budget Report highlights the challenges the Greater London Authority (GLA) is facing as it looks for new ways of generating finances to make up for reductions in central funding. In his next budget, the Mayor faces important and difficult strategic decisions which will inevitably have consequences for Londoners.

Later this year the Mayor will announce how money is being allocated for police, fire, transport, economic development, housing and regeneration in the capital during 2012/13. The budget is the current Mayor’s fourth since taking office and the second since the Government’s Comprehensive Spending Review which heralded a four year cut in public spending to reduce the national deficit.

The Budget and Performance Committee sets out a number of questions for the Mayor around issues he must address in his budget including:

- Substantial exceptional costs from the 2012 Olympics, including potential costs associated with the stadium after the Games and uncertainty around outstanding land liabilities.
- The bill - £190 million and rising —faced by police from August’s disturbances and the extent to which central government will meet these costs.
- The challenge for the police of finding the scale of savings required by cuts to its government grant.
- The potential effects of savings programmes on transport services.
- Reduced overall funding for economic development and housing.
- The transfer of HCA assets and liabilities to the GLA which is yet to be fully resolved.

“As the overall pot of money reduces, it is crucial the Mayor carefully weighs up the consequences of the decisions he makes and spends what money there is wisely," John Biggs AM, Chair of the London Assembly Budget and Performance Committee, said.

“It is becoming increasingly challenging for the Mayor to protect services that millions of people in the capital rely on every day. This looks set to be his toughest budget yet.

“We want the Mayor to provide clear evidence of how he is addressing the concerns we raise in our report to reassure Londoners that he has fully considered the potential effects of the difficult decisions that lie ahead.”

The report calls for greater clarity on GLA long-term borrowing, given that capacity to borrow money to support Mayoral objectives may already have been reached, and sets out options for the Mayor around use of council tax revenues. The report also raises questions about the potential consequences of reallocating funding from fire services to bolster police resources.

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