HomeGovernanceDeadline for TfL funding looms

Deadline for TfL funding looms

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As the deadline looms for a new funding agreement from the Government for Transport for London (TfL), so calls have been made for a long-term settlement.

However, whether this happens remains unknown. On 15 June the secretary of state for transport Grant Shapps said that government had provided £5 billion of support but had not seen the required level of savings. “TfL is behind on those savings,” he said.

This followed calls by the deputy mayor of London for transport Seb Dance stating that there had been “a frustrating lack of progress with the Government in agreeing a long-term funding deal.” He warned that without a long-term deal TfL will be forced, by government, to carry out major cuts to bus and Tube services. This, he said, would be disastrous for the capital’s economic recovery.

There have been four funding packages agreed by the British Government and TfL since the start of the pandemic, with the latest due to expire on 24 June. The latest package was agreed in late-February but came with conditions that TfL had to show how it could raise an extra £400 million through either additional revenue or cost savings.

Concern has been raised consistently about the lack of long-term support for TfL by Government. The support is required due to the way TfL is funded. More than 70 per cent of its income had been received through fares. In comparison, metro systems in cities such as Paris, Madrid and New York receive Government subsidy, with only around 40% of their revenue reliant on fares.

However, the pandemic has had a huge impact on this, with ridership dropping to less than 5 per cent during the first lockdown. This had a massively negative impact on TfL’s finances.

Subsequently, the introduction of more working from home and restrictions on sporting events and theatres meant that many people also did not make social journeys for a lengthy period. Figures released on 15 June show that on 13 June there was only 65 per cent of pre-Covid passenger levels using the Underground, and 80 per cent of bus users. At weekends this has been higher, with 88 per cent recorded on both modes the day before. There is a small percentage increase on Tuesdays, Wednesdays and Thursdays compared to Mondays and Fridays which is in line with the suggestion that more office workers perform remote working at the start and end of the working week.

The longest agreements, so far, have been six months long, while a funding package due to expire on 11 December 2021 received short-term extensions to 18 December 2021 and then 11 and 18 February 2021. Just before the first expiration, Grant Shapps criticised mayor of London Sadiq Khan for leaking his concerns to the press.

TfL has also previously stated that without the long-term funding agreements, upgrades to various Underground lines cannot take place and that some fleets due to be replaced in the Deep Tube Upgrade programme will not be removed from traffic until the 2040s, meaning they would be around 70 years old. Furthermore, TfL has warned of cuts to services if there is not enough funding.

Sadiq Khan has been forced to axe his fares freeze for TfL services as well as looking at cost-cutting. Earlier this year there was a management reshuffle at senior level with roles merged and staff leaving the organisation.

Furthermore a DfT representative now attends TfL board meetings as part of the funding agreements.

Speaking to Inside Track editor Richard Clinnick at the launch of the Elizabeth line at Woolwich on 24 May, London transport commissioner Andy Byford said of the funding: “we’re aiming for a minimum of three years. Certainly Government recognises the benefit of settling with TfL on a long-term capital basis but there is a lot of negotiation to be before then that now Crossrail is open gets my full attention.”

The capital will be waiting to see if the commissioner’s full attention was enough to convince Government to provide a long-term settlement.

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