Download 11. 2002/03 Growth bid - GLA Economics Unit RTF

Subject: 2002/3 Growth bid - GLA
Economics Unit
Report Number: 11
Date: 22 January 2002
Report to: Appointments Committee
Report of: Executive Director of Corporate Services
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Summary
1.1
As one of the Mayor’s key growth bids for 2002/3 this paper recommends the
establishment in principle of a GLA Economics Unit (‘GLA Economics’)
designed to provide a firm statistical and factual basis for policy decision
making by the GLA and its functional bodies. The basic content of the paper
has been agreed by the Chief Officers Group of TfL who have agreed funding
in principle. The LDA’s SMT will discuss, in early January, a proposal for its
Draft Corporate Plan from the Director of Strategy and Intelligence to provide
£300,000 in 2002/3 and £500,000 subsequently. The LDA board will
subsequently take a view on the proposal at its meeting in February.
1.2
This report presents the budget and appointment implications for the core
GLA. Its detailed proposals are consistent with work done within the core GLA
and a specific study commissioned for TfL, the LDA and core GLA (Rosemary
Scanlon, A Proposal and Plan To Establish a New Economics Unit within the
Greater London Authority, October 2001).
1.3
There are a number of growth bids being considered by the Assembly as part
of the Mayor’s proposed budget for 2002/3. Work is being undertaken
currently to complete job profiles and evaluations for new posts contained
within the growth bids for reference to the Appointments Committee to avoid
delays in the recruitment process should the funding be agreed. However the
preparatory work in relation to the proposed establishment of an Economic
Unit has been completed and the background to and rationale for the Unit is
set out below.
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2.1
Background
The GLA and its functional bodies (TfL, MPA, LDA, LFEPA) are responsible for
large-scale delivery of services, major investment decisions, and a series of
key strategies in London. Such decisions involve expenditures of billions of
pounds and impact on properties, businesses and jobs with a value of tens of
billions. It is therefore evident that it is only acceptable to formulate such
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policies on the basis of the very best available factual and statistical
information. Failure to do so would inevitably result in the waste of very large
sums of taxpayers’ money and impact negatively on both the livelihood of
Londoners and private firms. Such failure to set in place the necessary
factual and statistical underpinning for such decision and policymaking
would be a false economy.
2.2
The period since creation of GLA shows that the statistical base it inherited
for such decision-making is inadequate. Even such requirements as
long-term consistent data on output by sector, employment by borough,
employment by sector, examination of external projections regarding cyclical
economic trends in London did not exist. Nor, experience has shown, is it
possible to simply purchase these from external consultants. Work set in
chain in the Mayor’s Office and Policy and Partnerships Directorate of the
GLA in regard to major infrastructure projects, the Spatial Development
Strategy, and analysing trends within the London economy has shown radical
inconsistencies between external consultants projections, lack of
consistency between key variables, entirely unexplained projections in key
fields etc. The GLA must therefore acquire the ability to make its own
examination and collection of data and systematically interrogate and
challenge external consultants work (i.e. acquire an intelligent client
function).
2.3
For this purpose systematic review of the inherited statistical work of the GLA
has been undertaken throughout the last year. Proposals for an official
economic analysis group for London was also first recommended in 1998 in
a study commissioned by London Transport and FOCUS Central London
Observations of Economic Reporting in London, prepared by Rosemary
Scanlon1 and published by the London School of Economics. This report
found that London lacked a source of consistent and regularly available
research that could produce comprehensive analysis and forecasts of its
economy, and recommended that a new economic research group,
professionally staffed and led by a Chief Economist, be established for the
new London government.
2.4
In parallel with the work carried out by the GLA in the last year on factual and
statistical work aimed at informing the policy budget making process of the
GLA, TfL, in agreement with the London Development Agency (LDA) and the
Mayor’s Office, commissioned Rosemary Scanlon to prepare a proposal and
plan for establishing an Economic Analysis capacity within the GLA group.
Rosemary Scanlon prepared a report based on detailed interviews with Board
Members, Senior Staff of the Mayor’s Office, the LDA, TfL and external
experts. The report confirms that there was widespread concern over the
inadequacy of economic data and research available for policy making
1
Rosemary Scanlon is a consultant in urban and regional economics, and was Chief Economist of the Port
Authority of New York and New Jersey with responsibility for establishing a research group to conduct and
report on a wide range of economic, socio-demographic, and planning studies of the New York metropolitan
region. She also served as Deputy State Comptroller for New York City, reporting regularly on the New York
economy as part of the mission to monitor the city’s budget.
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regarding London and a perceived widespread need across the GLA and
functional bodies for a consistent and robust economic analysis and
forecasting capacity.
2.5
This was strongly confirmed by the experience of the Mayor’s Office and TfL in
commissioning forecasts of employment in London to serve as the basis of
the transport strategy and draft SDS, and in evaluating these forecasts in
more detail for the CrossRail project. The GLA calculated long-term
employment trends in London from past data and brought to light significant
discrepancies between these long-term trends and the original forecasts.
Considerable statistical and analytic effort was required, with high level
managerial resources, to even begin to sort out the different factors and
arrive at a firm basis for policy making.
2.6
This confirms the view, widely acknowledged among informed practitioners,
that neither a single consultant, nor a consensus of forecasts, nor an average
of forecasts, can substitute for direct interrogation of forecasts in the light of
observed reality and expert knowledge. A strategic authority has a duty to
bring to light the assumptions in a range of forecasts, critically evaluate them
and arrive at judgements based on all possible sources of information. In the
past year the wisdom of this course has been clearly acknowledged.
2.7
The need for this type of service is also highlighted by the Government’s
request for all Regional Development Agencies to put in place arrangements
for regional economic observatories. The current proposal is seen as a
potentially highly efficient means of jointly purchasing some of the analysis
needed by each of the partners and of providing the scope for building a
critical mass that will add value.
2.8
Discussions between the LDA, TfL and the Mayor’s Office established a clear
view that a GLA Economics unit should be established in the financial year
2002-2003. It is proposed that the unit should be located in the core GLA and
managed on behalf of TfL, the LDA and the core GLA. The Chief officers group
of the TfL agreed an annual budget of £500,000 on 29th October 2001. The
estimated cost of the unit is £1.3m a year, which will need to be funded by the
TfL, LDA and core GLA.
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Summary of proposals
3.1
Based on discussions across the GLA and the functional bodies the key
proposals are:

That a new Economics unit, to be called ‘GLA Economics’ and led by a
recognised and experienced ‘Chief Economist’, be established within the
Corporate Services Directorate of the core GLA to collect and analyse
data, and to report on the economy of London for the prime clients of the
GLA group (defined here as the Mayor and his office, the LDA and TfL).
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
That a management steering group is established with representatives
from the prime clients to steer the unit and its work programme.

That the unit is resourced by the prime clients.

That the Unit is located and managed within the core GLA, under a
statement of mission and regulated by service agreements agreed by the
prime clients and developed in a way to allow the prime clients to play an
active client role (ie specifying the outputs expected and providing a means
to track and record progress).

That the work products and ongoing processes of this new Unit be
conducted for the prime clients, with public dissemination free at point of
use through web reports, published reports, and media briefings.

That the Unit should comprise 12 staff, being: a Chief Economist; four
experienced middle-manager level economists with principal expertise in
transport economics, economic development, macroeconomics and labour
economics; four economic statisticians; two administrative staff assistants;
and a data manager. Proposed indicative salaries are £90K for the Chief
Economist and £60K for the manager-level economists.

That the functions of the Unit would include the delivery of a core work
programme ie provision and reporting of data, analysis of all key facts that
accurately portray the trends, drivers and composition of the London
economy, and the commissioning, scrutiny and selection of forecasts of the
London economy and labour force. The Unit would also deliver bespoke
work programmes for the funding partners including providing economic
inputs to TfL strategy development, business planning, forecasting, project
planning and economic impact assessment, to the LDA for regeneration and
urban development, and to the Mayor and the GLA for strategic planning.

That partnership oriented research be developed with other economic
development organisations in London e.g. Business Link for London,
Learning Skills Councils and Trade Partners UK.

That the unit conclude specific service agreements with the Data
Management and Analysis Group of the GLA to furnish regular reports on
London’s labour market, and integrate with DMAG in the provision of other
data outputs.

That the Unit establish working relationships, with London Business Board
and with academic and governmental organisations and other appropriate
partners that have a special research and business focus on aspects of the
London economy.

That the Unit operates with a high degree of professionalism, and achieves
recognised credibility as the Mayor’s and the Government of London’s
source for economic analysis of the London economy.
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Milestones for 2002/3
Milestone
Service level agreements
Performance Measure and date
Detail specification of regular reports,
analysis and delivery modes with core GLA,
TfL, LDA and DMAG by March 2002
Establish service and appoint Head and key
staff by April 2002
Establish priority work plan and
monitoring arrangements for
implementation against agreed targets and
timetables by June 2002.
Appointments
Work plan and monitoring
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Financial Implications
5.1
The cost of establishing and maintaining the proposed unit is estimated at
£1.3m in a full year and can be summarised as follows:
Item
Staff (12 posts)
Other
 Data and models
 Contracts
Accommodation (based on
City-Hall Costs)
5.2
2002/3
Full year
£000
£000
450
650
100
250
100
300
200
1,000
250
1,300
The proposals for funding this initiative can be summarised as follows:
Source
2002/3
£000
Contributions from functional
bodies
 TFL
 LDA
GLA
 Existing Data Management
budget
(2 posts, currently vacant)
 2002/03 budget growth bid (2
posts)
 City
Hall
accommodation
budget.
Total GLA
Total Resources
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Full year
£000
500
300
500
500
75
75
60
65
200
60
165
300
1,000
1,300
5.3
If approved, work on establishing the new team would start immediately. The
likely costs in the current year are estimated at £30,000 which can be
contained in the existing data management budget covering two vacant posts.
It is proposed to use recruitment and selection specialists to begin a search
for candidates for the Chief Economist post.
5.4
The cost of proposed contract work within the unit arises because the unit will


not carry out its own surveys but must ensure support for a number of
existing surveys
act as intelligent client for forecasts and consultancy from experts in the
field.
The centralisation of commissioning work should result in economies of scale
and savings in budgets across the GLA group over time
5.5
The staffing costs for the unit are based on provisional job evaluations. All
posts will however be subject to full estimations.
5.6
The staff in the team will be employed by the core GLA. The Authority will
therefore bear the staffing costs of any potential future restructuring of the
team. The agreements with the participating functional bodies will ensure
such costs, should they occur, are shared.
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Legal Comments
6.1
Section 67(2) of the GLA Act 1999 enables the Assembly, following
consultation with the Mayor, to appoint such staff as it considers necessary
for the proper discharge of the Authority's functions. In appointing staff, the
Assembly must have regard to the extent to which the Mayor has exercised his
powers to appoint his own staff, and to the Mayor's views about the exercise of
their own appointment powers. Under section 70(2) the Assembly may employ
staff on such terms and conditions (including those as to remuneration) as
the Assembly, after consultation with the Mayor, thinks fit.
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Recommendations
7.1
That subject to the approval of the growth bid in the 2002/2003 budget and
appropriate funding agreements with LDA and TfL, the GLA Economics Unit be
established with 12 posts within the Corporate Services directorate of the
core GLA.
7.2
That 2 posts of research & statistical analyst within the Data Management and
Analysis Group be deleted.
7.3
That service agreements be entered into with TfL and LDA for the provision
and funding of this service.
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1.1
That selection and recruitment specialists be approached immediately to
begin the search to fill the Chief Economist Post.
Background Documents:
this report:
The following documents were used in the preparation of
‘A Proposal and Plan To Establish a New Economics Unit within the Greater London
Authority’, Rosemary Scanlon, August 23, 2001
Contact Officer:
Telephone Number:
Manny Lewis
John Ross
020 7983 4124/4037
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