TfL ‘sticking plaster’
London Mayor describes deal with Government to provide at least £1.6bn funding for TfL as a “sticking plaster”.
“I want to be completely honest and upfront with Londoners - this is not the deal I wanted. But it was the only deal the Government put on the table and I had no choice but to accept it to keep the Tubes and buses running.”
That was the frank response from London Mayor Sadiq Khan, criticising the deal that he has agreed for the Government to provide at least £1.6 billion funding until October 17 2020, to keep Transport for London operating.
In a statement on May 15, Secretary of State for Transport Grant Shapps explained that the deal involves an Extraordinary Support Grant of £1.1bn payable under section 101 of the Greater London Authority (GLA) Act 1999, and a further loan facility from the Public Works Loan Board of £505m. This can be boosted by a further £300m of grant and loan should revenue loss be higher than forecast.
“The settlement for TfL was needed for two reasons. Most important is the significant fall in revenue caused by COVID-19. However, an important secondary factor was the pre-existing poor condition of TfL’s financial position as a result of decisions made over the last four years,” said Shapps.
In a statement, Khan called the deal a sticking plaster and said: “The Government is, in effect, making ordinary Londoners pay the cost for doing the right thing on COVID-19.
“The Government has also insisted that, unlike the deals done elsewhere in the country, TfL takes on £505 million of additional debt. This will undo the hard work we’ve put in to fix TfL’s finances over the last four years - when TfL’s operating deficit has reduced by 71%.
“The old model for funding public transport in London simply does not work in this new reality. Fares income will not cover the cost of running services while so few people can safely use public transport.”
Khan added that there will have to be negotiations surrounding either permanent Government funding, giving London more control over key taxes, or a combination of both.
Shapps defended the move by stating that around half of all bus and rail journeys are made on TfL services, and that the capital is by far the most public transportdependent place in the UK.
“Combined with significant cost increases and delays to Crossrail, this left TfL in serious financial difficulty even before the public health emergency,” he explained.
“It is important that the rescue package takes steps to put TfL
back on a sustainable footing while ensuring fairness for the wider British taxpayer. As a result, the mayor intends to adhere to the proposal in TfL’s own business plan that fares should increase by RPI + 1% on all modes in January.”
Khan has previously promised to freeze fares. Shapps said other parts of the agreement included: restoring services to 100% of pre-COVID levels as soon as possible; easing congestion by the temporary suspension of free travel for over-60s in the morning peak; and temporarily suspending free travel for under-18s all day.
Shapps added that an immediate and broad-ranging Governmentled review of TfL’s future financial position and structure will be carried out.
London Transport Commissioner Mike Brown welcomed the move, adding that TfL’s network is “absolutely fundamental to the economic, social and environmental health” of the capital.
“We have worked closely with the Government and Mayor as part of the national effort to fight the virus, rapidly reducing passenger numbers to levels not seen for 100 years. This has meant that our fare and other revenue has fallen by 90%,” he said.
“Enormous challenges remain, including agreeing longer-term sustainable funding for transport in the capital.”