TfL awarded government funding package

Usually the perception is London gets funding first and then the rest of the country has to wait to follow at a later date but during this Coronavirus pandemic it has been rather different with the regions transport undertakings being offered funding packages – although there have been complaints that these aren’t enough – whilst Transport for London continued to lose money with a threat that services may have to be suspended. The immediate threat of this happening have now been averted though as on Thursday 14th May it was announced a £1.6 billion package had been agreed – dwarfing many of the previously announced financial support to other areas of England.

In the immediate lead-up to this announcement from the Department for Transport, Mayor of London Sadiq Khan had gone on record as saying without any support TfL would have to apply for administration with the possibility that instead of increasing services they would have to cut further. The finances of TfL have been precarious for a while – possibly not helped but Mr Khan’s commitment to no fare rises for the last few years – and with a massive fall in passenger numbers and thus revenue the pandemic has accelerated this position.

The £1.6 billion package will enable TfL to increase services to allow for additional social distancing by those who have to travel on-board and although the press have mainly grabbed hold of the Tube and bus services it may well also assist the systems we are interested in – the Docklands Light Railway and London Tramlink.

It does, however, have some implications for the future with the Mayor having to commit to a RPI +1% fare increase next year to put the organisation on a more sustainable footing. Mr Khan has also agreed that the government will carry out an immediate and broad-ranging review of the organisation’s future financial position and structure, including any potential for efficiencies. Two special representatives will represent the government on the TfL board, its finance committee and its programmes and investment committee, in order to ensure best value money for the taxpayer.

In the immediate future the congestion charge will be reintroduced and increased to £15 – although NHS and care home workers will be exempt – whilst the previous suspension of fares on the buses will be reversed. Freedom Passes and 60+ card concessions will only be valid off-peak temporarily and free travel for the under 18s will be suspended for now with special arrangements made to ensure children eligible under national legislation can still travel to school for free.

The package is consists of a mixture of grants and loans and is based on Sadiq Khan agreeing to the measures outlined above. A London Covid-19 taskforce has been established to oversee any operational decisions during the crisis with the main focus at the moment being extending services.

Grant Shapps, Transport Secretary, said: “People should avoid using public transport and work from home wherever possible, but as measures are slowly lifted it is vital that Londoners who need to use TfL services feel safe and secure. We must drive an increase in services to support social distancing and ensure our capital keeps moving, driving the economic recovery of this country going forward. This deal will encourage a real move towards greener and healthier walking and cycling options, ease pressure on our public transport and provide certainty and stability for London’s transport services in the future.”

Mike Brown MVO, London’s Transport Commissioner, added: “I welcome this support from Government which will help us continue to get London moving and working again, safely and sustainably. London’s transport network is absolutely fundamental to the economic, social and environmental health of the Capital. Throughout the pandemic, transport workers have played a heroic role in the response to the virus -ensuring NHS and care staff have been able to get to work and save lives. 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 per cent. We now need to help London recover as restrictions on movement are gradually eased, with public health and more active forms of travel at the forefront of our thinking. We have been operating up to 70 per cent of peak Tube services and over 80 percent of bus services with many of our staff ill, shielding or in self isolation. From next week we will further increase services beyond this as we progressively build towards restoring services to pre-covid levels. Enormous challenges remain, including agreeing longer term sustainable funding for transport in the Capital. In the meantime, we will continue to do everything in our power to help deliver a successful recovery for our great city.”

The news that TfL were getting this pay-out led to Mayor of Greater Manchester, Andy Burnham, to again call on the government to provide more funding for Manchester as without it may be necessary to mothball the Metrolink network. On Twitter he responded: “And still Greater Manchester waits for a few million.” Linked to this six local authorities – South Yorkshire PTE, TfGM, Transport North East, Liverpool City Region CA, TfWM and West Yorkshire Combined Authority – have combined to write an open letter to the Department for Transport asking for additional funding for transport – these authorities include four with tramways and light railways.

In the letter they state: “We have done what the Government has asked of us in support of the approach the Government has taken in response to the COVID-19 pandemic. The financial consequences for our organisations have already been significant – with all our organisations losing the vast majority of their revenue from patronage. The costs of providing a reduced service for essential users during the lockdown period have not been fully met. You have now asked us to ramp up services as soon as possible now that the lockdown is being eased. The costs of doing this will be significantly higher than was the case during lockdown as we need to provide the biggest service we can, in order to maintain social distancing, whilst at the same time low passenger numbers will generate low levels of revenue. There are also the one-off costs of starting up networks again. At the same time, in order to keep bus companies operating we are being asked to continue to pay them to carry concessionary passengers (who because of COVID-19 are not travelling) and for socially necessary bus services (that because of COVID-19 are not being provided).”

“Without a sustainable funding package from Government something will need to give sooner rather than later. Those authorities outside London will need to concentrate their available and dwindling finances on the services they are directly responsible for (such as tram and light rail systems) rather than those which they are not (such as services which are not currently being provided by deregulated and commercial bus operators). As well as ensuring that there is the quantum of funding necessary, we also need to move away from the fragmented approach to funding public transport that we have experienced during the lockdown phase. An approach which has been both modally compartmentalised and on a ‘too little too late’ basis (with the exception of national rail services, which had all its costs covered on the day lockdown was announced).”

“We therefore need to move to single packages of funding support for transport authorities to cover the general and mode-specific costs of bus, mass transit and light rail, and devolved rail (backdated where necessary) which will fully close the funding gap created by COVID19 for the lockdown, restart and recovery phases. All of this also needs to happen immediately as we cannot continue to ramp up and maintain service levels whilst our income from patronage is decimated and with no sustainable funding solution from Government to fill the gap.”

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