The threat to services across the Transport for London network has been averted following the announcement of an £1.8 billion funding agreement. It was widely reported that without this new funding package services may have to be cut on the trams, rail and bus networks and this new cash injection will help TfL maintain current service levels for the next few months.
In an official press release TfL has said that before the pandemic they were “on the path to achieving a level of financial self-sufficiency almost unheard of for transport authorities around the world. But the pandemic has massively impacted TfL’s finances and significantly reduced fares revenue, necessitating ongoing financial support from the government.” With passenger numbers falling drastically without additional government funding TfL had said they would have to cut services as they would not have the cash to continue operating.
The total funding package could reach £1.8 billion but will be subject to actual levels of passenger revenue. A core amount of £1 billion will be for the period between 18th October 2020 and 31st March 2021 but is dependent on certain changes at TfL including the continuation of the temporary Congestion charge changes and the removal of free travel for holders of 60+/older persons freedom pass in the morning peak.
It also assumes that the passenger demand over this period will be at approximately 65% of pre-coronavirus levels. However, as there is some uncertainty over this (and TfL’s own models suggest it will be lower) the total amounts can be increased or decreased depending on actual passenger numbers.
In addition to up to £1.7 billion from government TfL have agreed to make £160 million in savings over the next six months and that fares will be raised by RPI +1%
TfL and DfT will continue to discuss longer-term sustainable funding beyond the end of this period.
Andy Byford, London’s Transport Commissioner, said: “Reaching this agreement with the government allows us to help London through this next phase of the pandemic. We will continue to work with the Mayor and the government on our longer-term funding needs. As always, our staff are working tirelessly to serve London’s people and businesses; supporting the city’s economy and providing an excellent, safe and reliable service to our customers every day.”
Grant Shapps, Transport Secretary, said: “his deal is proof of our commitment to supporting London and the transport network on which it depends. Just as we’ve done for the national rail operators, we’ll make up the fare income which TfL is losing due to COVID-19. Londoners making essential trips will continue to be able to use tubes, buses, and other TfL services, thanks to this government funding. At the same time, the agreement is fair to taxpayers across the country. The Mayor has pledged that national taxpayers will not pay for benefits for Londoners that they do not get themselves elsewhere in the country. Over the coming months, as we look to move beyond the pandemic, I look forward to working with London’s representatives to achieve a long-term settlement, with London given more control over key taxes so it can pay more costs of the transport network itself. This agreement marks the first step towards that, potentially allowing a longer-term, sustainable settlement for TfL when the course of the pandemic becomes clearer.”