The real cost...what the Yes Campaign won't tell you

COST OF REGIONAL GOVERNMENT – SO FAR

Greater London Authority
When the Government published its White Paper on a London Assembly and Mayor, it pledged, ‘the cost of running the GLA is expected to be about £20 million per annum. Most of this will be met by central government from existing resources, but Londoners will contribute a small amount, for example, about 3p per week for those with a Band D council tax bill. Overall, there will be no increase in public expenditure’ (DETR, A Mayor and Assembly for London, CM 3897, March 1998).
Yet in reality, the administrative cost of the London Assembly and Mayor has soared to £60 million with London taxpayers footing the bill, costing triple the rate promised in the White Paper (administrative cost excluding TfL, MPA, LDA and LFEPA, source: GLA, Consolidated Budget 2003-04, February 2003, p.15).
This year’s GLA precept increase is £241 a year in 2004-05 on Band D bills (GLA Press Release, 18 February 2004). By contrast, in 2000-01, the precept for GLA services was £123 on Band D. Thus, the council tax precept has nearly doubled under regional government in London.
The GLA’s City Hall building is costing the taxpayer over £120 million (DTLR Press Release, 16 May 2002 explains City Hall is being paid for via a 25 year lease, with a 130,000 sq. foot net lettable floor area, at £36.50 per sq. foot, with rental increases at 3.5 per cent per year).
The White Paper stated that City Hall would employ ‘about 250 staff’ (CM 3897, March 1998, p.17) – yet every year since its creation, the number of staff has risen – from 280 in 2001 to 678 by 2004 (GLA, Budget and Business Plan 2004-05, April 2004, p.27). There are now too many officials in City Hall to fit in the purpose-built building.

Welsh Assembly
Before it was established, the Government’s White Paper estimated in 1997 that the additional costs of the Assembly would be ‘in the range £15-20 million, in addition to the running costs of the Welsh Office of around £72 million a year’ (Welsh Office, A Voice for Wales, 1997).
Yet the total running costs of the National Assembly for Wales and the Wales Office in 2002-03 were £177 million – an increase of 146 per cent (Richard Commission on the Powers and Electoral Arrangements of the National Assembly for Wales, March 2004, p. 215).
The Welsh Assembly’s new building is costing £55 million (BBC News Online, 24 June, 2003), yet the financial memorandum to Government of Wales Bill stated clearly that the costs to set up a new Assembly building in Cardiff would be just £17 million. This figure was reiterated by then Welsh Secretary, Ron Davies, who said that it would be ‘strictly adhered to’ (Press Association, 13 March 1998).

Scottish Parliament
The Scottish Parliament’s new building yet was originally forecast to cost between £10 million to £40 million: ‘Because of the range of sites under consideration and the variety of funding methods potentially available it is necessary to express the cost as a range of between £10 million and £40 million’ (Scottish Office, Scotland’s Parliament, July 1997, para 10.7). Yet the cost of the new building has soared to £431 million (Audit Scotland, Management of the Holyrood building project, June 2004).
The administration costs of the Scottish Office administration and then as succeeded by the Scottish Executive administration have soared from £149 million in 1997-98, to £194 million in 1999-00, to £242 million by 2005-06 – an increase of £95 million (Sources: Serving Scotland’s Needs, CM 4215, 1999, Scottish Executive, Investing in you: The Annual Report of the Scottish Executive, ch.9 and Scottish Executive, Annual Evaluation Report 2005-06, p.91).

Government Offices for the Regions
The Government Offices for the Regions were originally established to promote light touch, inter-departmental coordination. Yet this aim has been lost, and they have resulted in a significant increase in regional bureaucracy and regional secondary legislation. Even the Government has admitted, ‘among the array of separate regional and sub-regional bodies, the purpose and remit of some of these can be unclear, incomplete and sometimes overlap with others without clear reason’ (Cabinet Office, Reaching Out, February 2000).
The running costs of the Government Offices for the Regions for 2003-04 are now £124 million (Hansard, col. 1646W, 1 April 2004), compared to £86 million in 1997-98 (Hansard, col. 555W, 12 July 2000) – a rise of 44 per cent. The programme expenditure budgets have similarly grown in size, with ever-greater interference in the work of local councils.

Regional Development Agencies
Following their creation in 1999, Regional Development Agencies in England spent £76 million on general administration and £95 million on staffing in 2003-04 (Hansard, col. 247W, 11 May 2004).

COST OF REGIONAL GOVERNMENT – TO COME
Running costs of regional assemblies
Based on the per capita administrative cost of the London Assembly & Mayor, regional assemblies elsewhere in England would cost £360 million a year (Cost of regional assemblies outside London based on per capita cost of the London Assembly & Mayor of £8.41 per person - based on GLA net revenue expenditure in 2003-04, cited in GLA, Consolidated Budget 2003-04, February 2003, p.15).
Even the Government has conceded the cost would be high: ‘the annual running costs would be between £24 million for the smallest region in terms of the electorate and number of members and £33 million for the largest’ (ODPM, Draft Regional Assemblies Bill, July 2004, p.214). Yet given the fact that the London, Scottish and Welsh bodies have wildly exceeded their original government cost estimates, the final bill would invariably be far higher.

Set up costs of regional assemblies
The Government have stated that the introduction of elected regional assemblies would require the abolition of a tier of local government in two-tier areas – admitting ‘there will also be up-front costs of restructuring’ (ODPM, Draft Regional Assemblies Bill, July 2004, p.220).
During the last local government reorganisation, abolishing Humberside County Council (John Prescott’s local council) and restructuring local district councils, cost £53 million in one-off reorganisation administrative costs (Hansard, col. 658W, 18 November 1998). Using Humberside as a benchmark figure, abolishing the remaining 34 county councils in England could cost up to £1.8 billion in 1999 figures – equivalent to over £2 billion today.
In addition, academic research from Cambridge University has estimated that imposing unitary local government would cost £110 in transition costs per resident, with ‘no reasonable prospect that there would in fact be on-going savings except with unitary counties’. The estimated costs of recognising local government for all 34 counties in England would be £1.0 billion if replaced with unitary counties, £1.9 billion if there were two unitaries per county, £2.6 billion if three unitaries per county, and £3.5 billion if there were five unitaries per county (Michael Chisholm, Cambridge University in ‘Reorganizing Two-Tier Local Government for Regional Assemblies’, Public Money and Management, April 2004).

In addition, it is likely that a regional assembly will want to build itself a grand and expensive ‘palace for politicians’ like the Welsh Assembly, London Assembly and Scottish Parliament.
Funded by a regional council tax

Ultimately, taxpayers would foot the bill for the regional assembly, via the levying of its regional council tax – as in London.

The Government has explained, ‘the simplest means for an elected assembly to raise money from people within its region is a precept on the council tax. This is the means by which the Greater London Authority can raise additional funds and by which various other public bodies, such as county councils and police authorities, are partly funded. An assembly will set the level of the precept, but the money will be collected by councils in the region as part of the existing arrangements for collecting council tax… An elected assembly will also be allowed to set a higher precept within the region to fund additional spending if it considered this desirable. Regional assemblies will be accountable to their tax-payers and voters for the precept levels that they set and, as with council tax levels in local government, we would be reluctant to intervene in these decisions by placing a limit on an assembly’s precept’
(DTLR, Your Region, Your Choice, Cm 5511, May 2002, p.45-6).