Letter on GLA Group 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 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.