Explanatory note the Greater London Authority’s bespoke treatment
Published 17 December 2025
Applies to England
© Crown copyright 2025
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This note outlines how the Greater London Authority (GLA) is treated within local government funding reform; and sets out why the GLA requires bespoke treatment and the underlying assumptions that have informed these allocations.
Context
The Greater London Authority has unique responsibilities for police, transport and fire services. These include the Metropolitan Police, which has a national role, and Transport for London and London’s fire services, which face unique pressures. Bespoke treatment is essential to maintain these vital, front-line services across London.
The GLA is generally funded by council tax and retained business rates, some of which it receives instead of government grant. The Fair Funding Assessment does not capture the full range of services which the GLA is responsible for providing. To address this, the measurement of the GLA’s income is adjusted to align it with services in scope of the Fair Funding Assessment.
In recognition that the GLA’s retained business rates growth is used to support services, such as the Metropolitan Police and Transport for London, which are outside of the Local Government Finance Settlement, and to prevent a reduction in funding to London’s fire and rescue services, the GLA will retain a portion of its locally retained business rates growth past the reset, i.e. beyond April 2026.
Assumptions made within the GLA’s bespoke treatment
| Funding component | Assumption |
|---|---|
| GLA funding in scope of funding reform | i. The measurement of the GLA’s income is adjusted to align it with services in scope of the Fair Funding Assessment. The service in scope is Fire and Rescue services. ii. Business rates income from historical grants rolled in as part of the GLA’s business rates retention arrangement from 2013/14 (before the introduction of the GLA’s enhanced retention arrangement) is excluded from redistribution and will remain with the GLA. This makes up c.87.8% of the GLA’s 2025/26 Baseline Funding Level. The calculation of the GLA’s 2025/26 income baseline excludes funding which is out of scope of redistribution. iii. The proportion of Employer National Insurance Contribution Grant funding that relates to the GLA’s role as a Fire and Rescue Authority (12.2%) is in scope of redistribution. The remaining proportion should remain with GLA. |
| Council Tax | i. All Council Tax flexibilities available have been taken up. ii. As set out in the Fair Funding Review 2.0 Annex K on Resource Adjustment, the GLA value here is an estimate of other functions that council tax finances for the GLA. In effect it is proposed that the GLA would have a resource adjustment using only the fire tier share applied to the total tax base of the London boroughs – 2.3%. |
| Business rates growth | i. The GLA will retain £280m of its total locally retained business rates growth. This is based on how the GLA use this income on the Metropolitan Police, Fire and Rescue and Transport for London. ii. The GLA’s total locally retained growth is made up of both business rates growth and grant compensation for historical under-indexation of business rate multipliers. Of the £280m, c.£105m will be directly added to the GLA’s 2026/27 Baseline Funding Level. In recognition that all business rates funding relating to under-indexation is being transferred to Revenue Support Grant (RSG), c.£175m will be added to the GLA’s RSG allocation. The GLA will then forego this funding under its enhanced business rates retention arrangement. |
See Key Information Tables for the GLA’s allocations
Legacy council tax grant funding for the Metropolitan Police Service
The GLA Metropolitan Police Service will continue to receive funding from the Local Government Finance Settlement in recognition of legacy council tax grant funding. For the Metropolitan Police Service, the government is at a minimum maintaining the existing £44.8 million London Policing allocation for the duration of the multi-year Settlement.