The Budget and Performance Committee met to discuss the 2026-27 Greater London Authority Group Budget, with significant focus on the provisional local government finance and policing settlement, the impact of changes to business rates, and the Mayor's equality objectives. The committee also reviewed the progress of GLA Group collaboration initiatives and the financial implications of various projects, including the DLR extension to Thamesmead and the London Fire Brigade's estate changes.

The 2026-27 Greater London Authority Group Budget

The committee received an update on the 2026-27 Greater London Authority (GLA) Group Budget, with particular attention paid to the provisional local government finance and policing settlement announced in December. Faye Hammond, Chief Finance Officer at the GLA, reported that the settlement was more favourable than anticipated, providing an additional £155 million compared to the draft budget control total. However, she expressed caution due to uncertainties surrounding National Insurance contributions and business rate levels. The police settlement was also more favourable, with an £112 million increase, though clarity is still needed on whether National Insurance costs are included.

A key concern discussed was the impact of business rate changes. While the GLA was allowed to retain £280 million of its accumulated business rates growth, the remaining amount is being phased back into the system over three years. There is ongoing uncertainty regarding the final National Non-Domestic Rates (NNDR) returns, expected at the end of January, due to the complexity of new system changes and potential business challenges to revaluations. The GLA holds a business rates reserve of approximately £107 million to mitigate potential shortfalls.

The committee also explored the impact of the budget on the Mayor's manifesto priorities, such as delivering 40,000 council homes and ending rough sleeping. The rough sleeping grant is continuing at the same level, supporting this priority.

Discussions also touched upon the budget process itself, with challenges identified around funding uncertainty and the macroeconomic environment. Changes in the process this year included more direct conversations with government and a greater focus on identifying savings.

Transport for London (TfL)

The committee discussed the funding for the Mayor's bus and trams fare freeze, which is expected to be paid for from GLA business rate reserves and is currently planned until July 1st. The exact cost is yet to be confirmed but is estimated to be in the region of £20-something million.

Regarding the DLR extension to Thamesmead, Faye Hammond explained that the GLA will be borrowing upfront to fund the project, with support from the government and future revenue from business rates and TfL fares. The estimated capital cost of the extension is £1.5 billion, excluding borrowing costs. Discussions are ongoing with the government regarding the heads of terms, with an announcement expected in spring 2026. The GLA is seeking a significant contribution from the government, and there is an agreement in principle for this support. Boroughs of Newham and Greenwich will also contribute a portion of the incremental business rates generated by the regeneration.

Metropolitan Police Service (MPS) and MOPAC

Elliott Ball, Assistant Director of Group Finance at the GLA, provided details on the provisional policing settlement. The core police grant is £111 million higher than assumed in the consultation budget, and the £15 flexibility on council tax per average band D property is worth an additional £17.7 million. However, detailed information on the settlement is still being sought, particularly regarding the National Insurance Contributions (NIC) and any ring-fenced funding. The committee noted that the MPS faces significant financial risks due to increasing demand for services, particularly in managing costs associated with protests. The MPS has budgeted for a 2% wage increase, but the actual cost of any national pay award is a potential budget risk. The committee also raised concerns about the underfunding of the MPS's National and International Capital City (NIC) grant, which was estimated to be £138 million short.

London Fire Brigade (LFB)

The London Fire Brigade faces a £12 million deficit in its submitted budget, partly due to modern firefighter training costs. Faye Hammond stated that while firefighter training is a key priority, the LFB needs to integrate these costs into its base budget to avoid annual financial gaps. The Brigade's reserves are not as resilient as other functional bodies, making it challenging to fund pay awards exceeding the budgeted 2%. The estimated cost of a 1% pay award increase is approximately £4 million. The move to the new LFB headquarters at Albert Embankment has increased capital financing costs, which will be reflected in the draft budget. The committee also inquired about the financial implications of the collapse of previous plans for the sale and redevelopment of Albert Embankment, with the LFB agreeing to provide this information.

GLA Group Collaboration

Mary Harpley, Chief Officer of the GLA, and Charly Hutson, Director of GLA Group Collaboration, discussed the influence of the collaboration program on the 2026-27 budget submissions. Initiatives include shared services, accommodation strategies, and collaborative procurement, which have delivered financial savings and cost avoidance. For example, the Treasury functions project is forecast to deliver £3 million annually, and collaborative procurement for non-permanent labour has saved approximately £8 million since 2021.

The rollout of the SuccessFactors IT platform for HR, payroll, and recruitment across TfL, the GLA, OPDC, and MOPAC was discussed. While this represents a significant one-off investment, it aims to drive economies of scale by reducing the number of systems used across the group. Confidence was expressed in the current cost estimates, though the complexity and duration of the rollout were acknowledged.

The committee also discussed the GLA's apprenticeship levy usage and the Loved and Wanted campaign. Tunde Olayinka, Executive Director for Communities and Social Policy, explained that the campaign is a cross-cutting initiative coordinated by Strategy and Communications, with contributions from various teams. The £1 million funding is intended to support community organisations and address issues such as hate crime. The committee requested a detailed breakdown of how this funding has been allocated and its key performance indicators.

Equalities

The committee examined how the Mayor's Equality Objectives are embedded within the budget and delivery plans. Rupinder Parhar, Head of Equalities, explained that these objectives are integrated into the 14 mandates and delivery plans, with a specific focus on reducing structural inequalities. The GLA Group submitted a response to the Equality and Human Rights Commission's (EHRC) consultation on updated codes of practice, highlighting concerns about resourcing for necessary changes. The committee also discussed the implications of the For Women Scotland versus Scottish Ministers judgment regarding the definition of sex within the Equality Act, noting that the GLA's approach is currently on a case-by-case basis pending final government guidance.

The committee requested further information on how investment in the Metropolitan Police Service and London Fire Commissioner's culture transformation programmes is improving outcomes for groups with protected characteristics.

Mayor's Decision Lists and Work Programme

The committee noted the Mayor's Decision Lists for August to December 2025 and the Budget and Performance Committee's work programme and meeting dates. The next meeting was scheduled for 26 January 2026.