The Department for Transport (DfT) has extended its financial support to Transport for London (TfL) to 11 December 2021.
The funding package comprises an extraordinary support grant of £1.08bn, paid in six instalments commencing on 7 June 2021.
It includes plans to draw up a memorandum of understanding between the government, TfL and the London Borough of Hammersmith and Fulham to fund the reopening of Hammersmith Bridge – initially to pedestrians, cyclists and river traffic and, depending on cost, to motorists.
The deal builds on commitments from the previous support packages and sets out further measures to be taken to ensure TfL is financially sustainable by April 2023. These include progressing efficiency and cost saving initiatives and identifying new or increased sources of revenue for TfL beyond 2023.
The previous funding package – worth between £1.7bn and £1.8bn – was agreed in November last year. It was due to end in March but was extended until last month, with plans to agree a new deal following the mayoral election.
Transport secretary Grant Shapps said the package “will support London and its transport network through the pandemic, and ensure it is a modern, efficient and viable network for the future”.
He added: “Throughout 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 addition, the funding package recognises that there are material factors beyond TfL’s control that give rise to a high level of uncertainty in forecasting passenger revenue during the 2021 funding period, particularly as government guidance on dealing with the pandemic develops.
Therefore, the government will top up TfL’s revenues with additional grant payments if they are lower than a pre-determined passenger revenue forecast. Conversely, if TfL’s revenues are higher than the pre-determined passenger revenue forecast, TfL will be required to repay that excess at the end of the 2021 funding period.
London transport commissioner Andy Byford said the pandemic has shown that TfL’s financial model “with such a disproportionate reliance on fare revenue” is “not fit for purpose”.
Byford said the funding agreement will enable TfL to run “near full levels of service to stimulate London’s recovery and deliver a host of improvements like the Elizabeth line, Northern line extension and expansion of London Overground”, but also emphasised the need to agree a longer-term settlement going forward.
He added: “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.”
London mayor Sadiq Khan also called for a longer term plan, describing the “short-term settlement” as “yet another sticking plaster”.
“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,” he said.
“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.”
Department of Civil EngineeringDepartment of Civil Engineering – International Burch University (ibu.edu.ba)