The Budget and Performance Committee met to discuss the 2026-27 Greater London Authority Group Budget. Key discussions focused on the Mayor's budget proposals, including funding for the Metropolitan Police Service, the London Fire Brigade, Transport for London, and affordable housing initiatives. The committee also reviewed the Oxford Street Development Corporation's budget and the GLA Group Collaboration Programme.

2026-27 Greater London Authority Group Budget

The meeting primarily focused on the 2026-27 Greater London Authority Group Budget, with invited guests including the Mayor of London, Sir Sadiq Khan, his Chief of Staff David Bellamy, and the GLA's Chief Finance Officer Fay Hammond. Discussions revolved around the provisional local government finance and policing settlements, and the impact of these on the GLA Group's finances.

Key points of discussion included:

• Funding Settlements: The provisional local government settlement was noted as being more favourable than initially anticipated, providing an additional £155 million compared to the draft budget. However, uncertainties remain regarding business rates and the final Metropolitan Police Service (MPS) settlement.
• Business Rates: Concerns were raised about the potential impact of business rate reforms and revaluations on GLA funding, with a cautious approach being taken until final figures are confirmed.
• Budget Balancing and Efficiencies: The Mayor outlined that all budgets are balanced, with efficiencies identified across the GLA Group. Specific areas mentioned included the phasing of London Fire Brigade (LFB) training activities and further savings at the Old Oak and Park Royal Development Corporation (OPDC).
• Free School Meals: The Government's expansion of free school meals eligibility to families on Universal Credit was discussed, with an anticipated reduction in the GLA's expenditure on Universal Free School Meals (UFSM) by approximately £50-60 million per year. This saving is expected to be reflected in the GLA's reserves.
• Transport for London (TfL) Fares Freeze: The Mayor's decision to freeze bus and tram fares until July 2026 was discussed, with the cost estimated at £17 million, to be funded from City Hall reserves. The exact cost and funding source were to be confirmed.
• Bus Ridership: A 4.5 per cent reduction in bus ridership in 2025-26 was noted, with TfL identifying 22 factors influencing demand, many outside of its control. Plans for bus service improvements, including enhanced bus priority, new vehicles, and technology investments, were outlined.
• Capital Renewals: TfL's capital renewals expenditure is set to increase to £856 million in 2026-27, an increase of £46.5 million. However, this remains below the estimated £1.1 billion to £1.2 billion required annually to maintain assets in a steady state of repair.
• DLR Extension to Thamesmead: The Government's approval of the DLR extension to Thamesmead was welcomed, with an estimated project cost of £1.5 billion. Funding is expected to be a joint effort between the Government, TfL, and the GLA, with borrowing up front to be repaid over time through business rates and Community Infrastructure Levy (CIL) contributions.
• GLA Group Collaboration: The programme has an £8 million budget for 2026-27 and aims to deliver efficiencies and shared services. Examples of financial benefits include £3 million per year from shared Treasury functions and £8 million in savings from a shared contract for non-permanent labour.
• Equalities Objectives: The Mayor's equality objectives are embedded within the GLA's 14 delivery plans, with a specific focus on reducing structural inequalities. The annual equalities report for 2024-25 is expected in late summer 2026.
• Loved and Wanted Campaign: This campaign, with a budget of nearly £2 million, aims to strengthen unity and social cohesion in London. £131,500 has been spent on the campaign itself, with £1 million allocated from the GLA budget for a community fund to support organisations delivering activities.

Key Recommendations:

The Committee made several recommendations, including:

• The Mayor to confirm the cost and funding source of the bus and tram fares freeze.
• TfL to set out clearly how the reduction in bus passenger journeys will be reversed.
• TfL to clarify the implications of underfunding capital renewals for the transport network.
• The Mayor to confirm how the DLR extension to Thamesmead will be funded and its impact on GLA budgets.
• The GLA Group Collaboration team to report progress on workforce collaboration projects in quarterly monitoring reports.
• The Mayor to strengthen expectations on functional bodies to consistently embed equality objectives in budget submissions.
• The Mayor to provide updated budget proposals and commit to further scrutiny as details become clearer.
• The Mayor to address how additional certainty and flexibility from recent settlements inform multi-year planning and risk management.
• The Mayor to set out the conditions and risks for reducing subsidy levels for the new affordable homes programme.
• The Mayor to provide a profile of expected expenditure for the new 2026-36 social and affordable homes programme.
• The new Social and Affordable Homes Programme to incorporate interim delivery milestones.
• The Mayor to set out expectations for the new programme regarding social rent, intermediate homes, accessible units, and unit sizes.
• The Mayor to keep the Committee informed of risks relating to business rate funding.
• The Mayor's Budget Guidance for 2027-28 to strengthen expectations on functional bodies regarding equality objectives.

The meeting concluded with the Committee noting its work programme and the date of its next meeting on 19 March 2026.