Ken faces budget blues

Ken Livingstone is facing four years of battles with the London Assembly as opposition parties prepare to join forces to oppose his "excessive" spending plans.

The Conservatives and Liberal Democrats are this week expected to enter an alliance allowing them to control key Assembly committees.

It comes after Mr Livingstone was returned for a second term after defeating Tory Steve Norris, but saw Labour's control of the

Assembly wiped out.

Labour was reduced to seven seats in last week's vote, the Lib-Dems have five and the Greens and the UK

Independence Party two each. With nine members, the Tories are now the largest group.

Although the Mayor is not a member of the Assembly, he appears before it regularly and has to have it approve key appointments and his annual budget.

All parties met over the weekend and more meetings are planned for tomor row. But the Evening Standard understands-2000. that the Tories and Lib-Dems are set to form an unofficial coalition.

This could end large increases in the Mayor's share of the council tax, which has risen from ?123 to ?241 a year for the average London household since

It could also force him to trim the size of the City Hall bureaucracy, now 650, to divert money to front-line services.

One Lib-Dem source said: "We are likely to go with the Tories. There is a clear indication that the Assembly will create problems for the Mayor when he's trying to get his budget through."

A Tory Assembly member said: "We are prepared to work with other parties to maximise the Assembly's leverage over the Mayor."

But Labour insiders warned against overstating the Assembly's influence. The Mayor's key task, they said, would be securing sufficient government cash to pay for high-profile pledges such as more police and better transport.

Party chiefs have also begun talks with the Greens, whose two Assembly members could give Labour the nine votes it needs to safeguard the Mayor's budget. Green leader Darren Johnson, however, will not be "writing out any blank cheque just to prop Labour up."

He said he would back plans to extend the congestion charge zone into west London but not the building of the Thames Gateway Bridge.

"There would have to be quite significant changes, and Green amendments taken on board, before we were able to sign up to a budget."

Last Thursday's elections saw UKIP emerge as a political force in London - although the party remains committed to abolishing the Assembly.

It also saw the departure from the Assembly of both Labour group leader Lord Harris and his Tory opposite number Eric Ollerenshaw.

Home Secretary David Blunkett may spark a political row by nominating Lord Harris back onto the Metropolitan Police Authority, which he chaired until his defeat last Thursday, as an independent member.

Nicky Gavron will be reappointed as Deputy Mayor tomorrow, when the Tories also meet to pick a new leader. Both Bob Neill or Roger Evans are in the running.

The new chair of the Assembly, currently Lib-Dem Baroness Hamwee, is likely to emerge mid-week, and to be formally appointed on Friday.