Sadiq Khan Urged to Clarify Spending Plans for London's Budget Windfall
The Mayor of London, Sadiq Khan, has been formally instructed to provide detailed explanations regarding how additional funding identified in next year's draft budget will be allocated. This demand comes directly from the London Assembly's Budget and Performance Committee, which has raised concerns about transparency in financial planning.
Substantial Funding Increases Create Budget Surplus
London's financial outlook has improved significantly with several unexpected funding boosts. Business rates revenue has exceeded projections by £138.8 million, while the Home Office has provided an extra £112 million for Metropolitan Police settlements. Additionally, the Mayor's decision to increase the policing portion of the Greater London Authority precept to £15—compared to the originally assumed £9.57—will generate a further £17.7 million for police funding.
Perhaps most notably, City Hall anticipates saving more than £50 million from the £148 million originally earmarked for Universal Free School Meals. This substantial saving results from the national government's expansion of eligibility criteria to include all families receiving Universal Credit, reducing London's financial burden for this programme.
Assembly Demands Greater Budget Transparency
Neil Garratt, Chair of the Budget and Performance Committee, has written directly to Sir Sadiq Khan requesting clarification on planned expenditure levels. The letter emphasises the need for the London Assembly to "engage with the budget proposals on a fully informed basis" and acknowledges the unusually high degree of uncertainty surrounding the 2026–27 budget process.
Mr Garratt stated: "The Committee recognises that the 2026–27 Consultation Budget has been developed in the context of an unusually high degree of uncertainty, driven by national funding reforms and the timing of Government decisions. The Committee acknowledges that some degree of uncertainty is unavoidable at the consultation stage."
The letter further requests that the Mayor's final budget document should specifically address how additional certainty and flexibility from recent settlements, combined with savings from reduced Universal Free School Meals expenditure, will influence priority-setting and resource allocation across the Greater London Authority Group.
Transport Projects and Funding Questions
The correspondence also raises questions about the Docklands Light Railway extension to Thamesmead, a project approved by ministers last year following extensive lobbying. While construction is scheduled to complete by 2033 at an estimated cost of £1.62 billion, significant uncertainties remain regarding funding arrangements.
The Committee has asked for further detail on financing mechanisms, including clarification on how the full project cost will be covered, how the Greater London Authority will raise its contribution, and what specific financial support the national government intends to provide. Currently, the project is planned to be funded through upfront borrowing with government support and future revenue returns, though exact figures remain unspecified.
Assembly Recommends Spending Priorities
Last week, the London Assembly passed a non-binding motion suggesting that any additional funding discovered should be directed toward two key areas: increased resources for the Metropolitan Police and accessibility improvements at Transport for London stations. While Mayor Khan must respond to this recommendation when presenting his final budget later this month, he is not obligated to accept the Assembly's suggestions.
Mayor's Office Responds to Scrutiny
A spokesperson for the Mayor of London told the Local Democracy Reporting Service: "The Mayor’s draft budget focuses on delivering on the issues that matter most to Londoners, while making the best use of taxpayer funds, as we continue to build a fairer, safer and greener London for everyone. There has been significant uncertainty surrounding the Budget process this year as we have awaited a number of funding decisions from the Government. The Mayor is committed to engaging with the London Assembly transparently throughout the Budget setting process and will publish his final Budget later this month."
The ongoing budget discussions highlight the complex financial landscape facing London's administration, with multiple funding streams creating both opportunities and challenges for transparent financial planning. The Mayor's forthcoming budget presentation will be closely scrutinised for how it addresses these substantial financial developments while maintaining accountability to London's elected representatives.
