City Hall’s 2026/27 budget looks likely to be boosted by hundreds of millions in previously unexpected income and reduced costs, reports Kumail Jaffer, Local Democracy Reporter

Mayor of London Sir Sadiq Khan must explain where any surplus funding not accounted for in next year’s draft budget will be spent, the London Assembly’s budget and performance committee has said.

The capital is set to be better off due to business rates funding now being £138.8million higher than expected and an extra £112m from the Home Office in the Met Police settlement.

The mayor also announced his decision to raise the policing part of the Greater London Authority (GLA) precept to £15 – compared with the assumption in the consultation budget of £9.57 – meaning that a further £17.7m funding would be generated for policing.

City Hall is also expected to save more than £50m of the £148m ringfenced for universal free school meals due to the government’s decision to expand eligibility to all families on universal credit nationally.

Committee chair Neil Garratt has now written to Khan to ask him to clarify the level of planned spending as far as possible to allow the London Assembly to “engage with the budget proposals on a fully informed basis”.

In a letter to the mayor, he wrote: “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.

“In the final draft consolidated budget the mayor should address how the additional certainty and flexibility arising from recent settlements, and the savings expected from reduced expenditure on universal free school meals, inform decisions on priorities and resourcing across the GLA group.”

Garratt also raised the DLR extension to Thamesmead, which was greenlit by ministers last year after years of lobbying from the mayor and other stakeholders.

The project, which the Local Democracy Reporting Service (LDRS) revealed will take until 2033 to complete at a construction cost of £1.62billion, will be funded by borrowing up front with support from the government and future revenue returns.

However, the level of financial backing from the government is still unknown. The budget and performance committee has asked the mayor to provide “further detail” on the scheme when possible, “including clarification on how the full estimated cost of the project will be funded, how the GLA will raise its share of the cost, and what financial support the government intends to offer.”

Last week the London Assembly passed a non-binding motion recommending any extra cash found is put towards funding for the Met Police and for Transport for London (TfL) to spend on making more stations accessible.

Khan will need to respond to the motion when he presents his final budget later this month, but does not need to accept it.

A spokesperson for the London mayor told the LDRS: “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.”

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