Mayor should improve his budget setting process

• Important lessons can be learned from the last financial year to improve the effectiveness and transparency of the £19 billion GLA Group budget. As the 2023-24 budget setting process has just begun, these lessons are especially important for upcoming scrutiny.
• The London Assembly Budget and Performance Committee found that total MOPAC reserves on 31 March 2022 were £569 million and recent MOPAC financial performance suggests this eye-wateringly large reserve is not being used.
• TfL's capital underspend includes £185 million for capital renewals. This covers maintenance of its rolling stock and road network, which is a concern. The state of good repair has fallen on the carriageways that TfL operates and maintains from between 90 to 95 per cent to 87 per cent. At the same time TfL raised £1.8 billion for capital projects, but only spent £1.4 billion. 
• The Metropolitan Police Service's capital expenditure at £247 million was £138 million (36 per cent) below the original 2021-22 budget of £385 million. There were underspends in areas such as property services, digital policing and digital transformation. 

The Budget and Performance Committee has published a letter today to the Mayor of London outlining a series of improvements to be made to the GLA Group budget and reporting processes.

The letter makes a number of recommendations:

• TfL should prioritise its backlog of road maintenance and disclose how it made its 2021-22 operational savings without an impact on services. They should also set out how significant capital funding surpluses will be used and what plans are being made to update the pension scheme, which was a condition of the recent funding deal with the Government. 
• MOPAC should review its capital programme for 2022-23 and reallocate any optimistic budget allocation. MOPAC should consider overprogramming its capital programme for future years to ensure the delivery of a full capital programme each year. MOPAC's current plans for revenue reserves should be assessed for deliverability and, where appropriate, the reserves should be considered for alternative uses.
• The core GLA should review the delivery of affordable home starts through the year and the Committee would like to see how an unanticipated £202 million funding in the final quarter of 2021-22 delivered value for money.
• GLA performance reporting should be reviewed and amended so that changes in forecast and budget follow logic and any variance of expenditure against budget is supported by clearer commentary.

Peter Fortune AM, Chairman of the Budget and Performance Committee, said:

"The Mayor's £19 billion budget is an important matter for London, as key budgets are set when it comes to policing, transport and building the homes the capital needs. On behalf of Londoners the Budget and Performance Committee goes through the draft budget forensically and we are scrutinising the delivery of the Mayor's budget for 2022-23. However as a Committee, we have uncovered a number of concerning issues in terms of the transparency and effectiveness of quarterly performance monitoring within the GLA Group and this impacts the budget setting process.

"TfL should prioritise its backlog of road maintenance to ensure Londoners are kept safe on our roads, now that it has agreed a financial settlement with the government. The Met has also underspent in a number of vital areas, such as digital policing and property and we will keep a close eye on this under-performance.

"Mayor Sadiq Khan must take forward these cross-party recommendations, so that Londoners continue to receive the vital public services they need and the financial health and performance of the GLA Group is monitored tightly. Reporting needs to be done in a coherent and robust way, to ensure that Londoners get value for money for every pound spent."