While tram and light rail only forms a fairly small part of Transport for London, the overall funding of the organisation is still kay to the future operation of London Tramlink and Docklands Light Railway and so the news that a new (and third) extraordinary funding package has recently been announced for TfL is still newsworthy for this site. The new package sees a further £1.08 billion in funding awarded to TfL but as with the previous packages there remains the requirement for savings to be made with a view to marking TfL more financially sustainable by April 2023. As you would probably expect despite the funding being confirmed the Mayor of London, Sadiq Khan, has been vocal in his criticism of the government stance during the negotiations saying that there are “very few options” available to make the savings which are expected as part of this deal and any longer-term deal.
The headline figure of this new settlement is that the DfT will provide financial support for TfL until 11th December 2021 worth £1.08 billion (with top-ups possible to make up for revenue lost during continued Covid restrictions up until December 2021). But its not as simple as the DfT saying to TfL here have this money as there are expectations that there will be further moves towards making the organisation financially sustainable by April 2023. These are expected to include progressing efficiency and cost-saving initiatives as well as identifying new or increased sources of revenue for TfL beyond 2023 (presumably with a consideration for things such as fare increases and possibly an enlarged congestion charging zone).
The DfT press release claims that the Mayor of London has agreed to the following:
- Deliver £300 million of savings or new income sources in 2021 to 2022
- Identify new or increased sources of revenue for TfL of between £0.5 billion to £1 billion each year from 2023
- Prepare a plan to accelerate TfL’s existing modernisation programme of £730 million by April 2023
- Review TfL’s generous pension scheme
- Prepare a revised medium-term capital investment programme
- Set aside at least £100 million to continue the delivery of healthy streets and active travel programmes
- Carry out a joint review with government of demand on London’s transport network to ensure service levels are appropriate
The Mayor is also due to be working collaboratively with the DfT on a programme for implementing higher levels of automatic train operation on the London Underground with this funding period seeing at least one Underground line converted to full automation with an on-board attendant. Although Mr Khan states in his own press release that he considers this a waste of money and will continue to fight against this idea.
Speaking about the deal, Grant Shapps, Transport Secretary, said: “This £1.08 billion financial package will support London and its transport network through the pandemic, and ensure it is a modern, efficient and viable network for the future. hroughout this process, the government has maintained that these support packages must be fair to taxpayers across the UK and on the condition that action is taken to put TfL on the path to long-term financial sustainability. As part of today’s settlement, the Mayor has agreed to further measures that will help ensure that.”
In his own response Mr Khan said (as part of a much longer press release): ““After some extremely tough negotiations, we have successfully managed to see off the worst of the conditions the Government wanted to impose on London, which would not only have required huge cuts to transport services equivalent to cancelling 1 in 5 bus routes or closing a Tube line, but would have hampered London’s economic recovery as well as the national recovery. The Government is still insisting that TfL look at options to raise a further £500m to £1bn of revenue per year by 2023. I have been clear to the Government that there are very few options to do this and forcing TfL to impose draconian additional measures on London would be unacceptable. So I will continue to work with the Government to identify an appropriate source of funding. But I am hopeful that as London bounces back from the pandemic, and income from fares continues to increase, we’ll be able to avoid introducing any unfair measures on Londoners, as the additional fares revenue may be able to meet Government demands.”
Andy Byford, London’s Transport Commissioner, was a bit more conciliatory in his comments: “The conditions placed on us by the Government agreement and the amount of funding we will receive means we need to find a further £900m of savings or new income this year compared to our approved Budget and on top of the £730m of savings already assumed in our Business Plan. We will work through this while protecting front line services to deliver what London needs and to play our full part in recovery, decarbonisation, improving air quality and promoting active travel.”
With this funding deal in place it gives some degree of financial stability for TfL up until December but there will still remain the question of what happens beyond this as London and the rest of the country (hopefully) continues to come out of the Covid restrictions.