Wednesday, July 11, 2012

Number Crunching

Tuesday was very busy with the Budget Committee meeting in the morning, a brief break for lunch, then the Audit Panel meeting in the afternoon. Lots of numbers with everything presided over by Labour Chairman John Biggs.


Chief of Staff Sir Edward Lister, appeared at the committee to update us on the challenges faced by the GLA. He agreed that 2012/13 would be a very difficult year with diminishing resources whilst demands continued to grow. He also predicted that the coming four years would be equally, if not more, challenging. All parts of the GLA needed to make savings:

Transport for London £24 million
Metropolitan Police £148 million
London Fire Brigade £29.5 million
GLA HQ £3.7 million

Members felt that TfL could provide greater savings, but these would be retained within the organisation to protect the essential transport upgrades.

I urged Sir Edward to fast track the shared service programme and unlock more of the economies of scale that come with combining functions under the GLA umbrella. I also suggested that we look outside the GLA, seeking opportunities to share administrative functions with local authorities - even reaching out beyond the old GLC boundary which has proved to be an 'Iron Curtain' preventing cross border cooperation in the past.

Sir Edward confirmed that he was concentrating on property rationalisation, facilities management and procurement where the greatest savings were likely to be made. The process of contracting for the required services would focus managers' minds and eliminate bureaucracy and waste.


Last month the committee heard from Tottenham MP David Lammy and local traders who told of their problems finding support after the 2011 riots. This time the insurance companies appeared to give their side of the story. David Williams from AXA stated that they had handled 300 claims of which only two had been refused. Whilst they were alert to fraud, the biggest problem was under insurance. For example, one shop had been holding a large quantity of tobacco which was not covered by their policy. Another business sought to claim over £300k on a policy covering £25k.

Representatives from Haringey and Croydon councils claimed that some insurers and loss adjusters had been less helpful. Often they were dealing with people who did not speak English well, so interpreters were required. The complexity of insurance terminology made this situation worse.

They also claimed that loss adjusters had demanded receipts and records from businesses where everything had been burned out. In one case a loss adjuster mislaid the receipts they were given and the claimant had - unwisely perhaps - failed to keep copies.

The insurers stated that premiums would not increase for the affected areas as the level of risk was not seen to have changed. However the under insurance experienced by many businesses did mean that their costs would go up, steeply in some cases. A new version of the Riot Damages Act was required, but some state involvement was essential as otherwise the risk would be uninsurable.

Given this state of affairs, I asked if insurance products were really suitable for these communities. Costs and risk levels have already led to credit unions providing alternative banking services in some parts of the capital. I suggested it was time for credit unions to consider providing tailored insurance products as well.

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