Sadiq Khan and Transport for London chiefs have reached agreement with the government over future funding of the capital’s transport network, with the Mayor warning that a remaining “significant funding gap” means fare increases and some bus service cuts are “likely” and that a requirement for TfL to “come up with options for reform of TfL’s pension scheme, at pace” could lead to more industrial action by public transport workers.
The government’s latest offer, which will last until 31 March 2024, was discussed primarily behind closed doors at an urgent TfL board meeting today, at which Mayor Khan said he and TfL’s top team had been “fighting tooth and nail for the best funding deal for our city” during more than a month of “really tough negotiations”.
In a statement released shortly after the stock exchange ended business for the day, Khan said TfL can now move away from the “managed decline” scenario TfL had described unless certain improvements were made to the government’s offer having secured “a number of key concessions from the government which mean we will be able to avoid TfL having to make the devastating cuts to vital transport services previously proposed”.
Khan called the staff pensions review one of a number of “onerous strings attached” to the deal, which he said he and TfL “have had no choice but to accept in order to get the deal over the line to avoid TfL becoming bankrupt, so save the jobs of thousands of transport workers and to keep trains, tube and buses running across our city”.
In a separate statement, TfL commissioner Andy Byford said TfL “expects to receive further base funding of around £1.2bn from government” covering the funding period which “gives TfL ongoing revenue support should passenger numbers not recover at the rate budgeted” – a provision Byford describes as “crucial at a time of ongoing economic uncertainty”.
Byford says the money “helps us avoid large-scale cuts to service and means that we will commit £3.6bn to capital investment over the period” adding that “around £200m of new capital funding from government” has been committed “beyond previously budgeted sources like business rates”, which were fully devolved to City Hall in 2017 under an arrangement made by Boris Johnson when he was Mayor.
Byford too points to “an unfunded gap in our budget” but says that good progress has been made on how best to fill it. “We are confident that we will achieve an outcome that allows us to balance our budget and maintain our minimum cash balance,” he said, confirming that the “managed decline” scenario can now be avoided.
Transport secretary Grant Shapps, writing on Twitter at the same time as Khan’s statement was released, said the deal will “support nearly £3.6 bn of projects” and ordered the Mayor to “follow through on his promises to keep TfL on the path to financial sustainability by 2023”.
Shapps’s political future is unclear due to the resignation of Johnson as Prime Minister and the continuing contest to succeed him, which will not be resolved until 5 September.
Johnson’s special adviser on transport Andrew Gilligan, a former media supporter of the PM who is understood to have been closely involved in the long-running funding wrangles that followed the huge impact on TfL’s fares revenue during the pandemic, is expected to move on when Johnson goes. Gilligan was registered as attending the board meeting online in his capacity as the government’s “special representative”.
Nick Bowes, chief executive of think tank Centre for London, said there will be “a huge sigh of relief from Londoners and London’s businesses” in response to the funding deal news. He added: “For two years, this crisis has rumbled on, causing untold damage to TfL, eroding confidence in the city and leaving Londoners worried that the buses and tubes could stop running at any moment.”
Full details of the deal, which Byford has described as extremely complex, are expect to be published soon.
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