I'd also say to ask school exactly what is provided versus what the kids have to pay for themselves, and ask whether there's a recommended amount of spending money, and if there's an upper limit (or a lower limit if they're expected to pay for actual meals themselves). You probably also want to check what kit is required, and check ASAP that you've got it, or can borrow it.
Having been on trips like this in the past, usually hotel/hostel breakfast, a packed lunch and evening meal will be included, and usually all activities and transport, and the 'pocket money' is usually for souvenirs and snacks - so stuff like ice cream, drinks and cake in museum cafe, teddy from the gift shop, KFC from the services on the coach stop en route home.
For an optional extra activity, I'd imagine it'll be something along the lines of 'there's free time on Thursday evening around the hotel area, which has a cinema, bowling alley and arcade, where kids will be permitted to be if they wish', and your kids friends have said let's go bowling.
Or 'children will have a few hours on Wednesday afternoon as free time after our tour of Westminster around that area, we've set boundaries and talked about options of how to spend the time' and your kids friendship group have said 'oh let's go on the London Eye/ spend an hour in Starbucks/ go to xyz', rather than it being an official part of the trip. If it's a school organised group doing it, they should be able to give you the exact cost.
We always try to give an outline of what money we recommend as pocket money, and include the rest in the trip costs (so if lunch on day 2 is McDonald's, that's included in the trip costs paid by parents, we don't expect kids to bring it), but for city trips there's often opportunities for kids to spend money, and some we can't really avoid; eg service station on the way home, museum gift shop where kids are allowed to wander round in groups. I'd definitely say ask the school for recommendations on spending money, and then work out a plan for your daughters trip.
For future, I'd assume any residential trip will require spending money, and it's fair to ask when the trip info comes out whether kids will be allowed pocket money, and if there'll be a recommended amount, so you can plan for it in advance, alongside any specific kit they require. I'd also assume lots of day trips will require or allow some pocket money too. (Especially if you've got end of year 6 trips coming up this year too)
I'd also recommended, when you sign your kids up to trips, you have a discussion with them about spending money and how this will work - when I was younger, we'd often have to save up our own spending money for bigger trips, or we'd be told how much we'd get, and it was up to us to make up the rest we wanted, but obviously we'd be told about this reasonably far in advance, and we had pocket money, plus ways of earning money around the house and from family and family friends to allow this.
Could you speak to your friends and family about way your oldest could make some money? Stuff like babysitting, dog walking, car washing, bit of cleaning etc. It doesn't sound like you've got the spare cash to pay her for this, but do you have friends, family and neighbors that would pay her for this? If there's not time for her to earn it before the trip, she can use this to earn the money to pay your other child back ASAP, and then perhaps continue doing those things so she's got some regular spending money. She won't really learn to budget and save unless she gets the chance to practice that skill, so if you aren't able to provide her pocket money then it'd be good for her to earn it.
For this instance, thank your youngest very much for the kind offer, and if it's the only way, then take her up on it. Agree with your oldest how much you're willing to 'give' (that you'll pay your youngest back), and how much she will need to pay back herself. And perhaps also initiate some kind of discussion about other ways to thank her sister for the kindness of lending her the money.