Headlines
ON OCTOBER 31, the UK Government agreed a second financial support package for Transport for London worth £1.8bn to allow tube and bus services to continue until March 31. The money is required to address the huge shortfall in revenue due to the drop in passenger numbers as a result of the coronavirus pandemic. The new funding follows on from the £1.6bn injection the Government made in May 2020.
The deal comprises an extraordinary support grant of £905m payable under section 101 of the Greater London Authority Act 1999, and incremental borrowing of £95m by TfL from the Public Works Loan Board. All of this assumes that passenger ridership will be around 65% of pre-COVID levels. However, the financial package can be adjusted in response to the actual demand, so the final cost could be higher or lower. In addition, TfL must contribute £160m to the forecast funding shortfall by generating additional income or by cost savings through a mixture of lower capital and operating expenditure supported by stronger financial controls. The existing temporary changes to the congestion charge will be maintained, but there will be no extension of the affected area.
The Government is to continue to fund free travel concessions to standard English levels and free travel for school children who qualify under national legislation. However, the temporary removal of free travel in the morning peak for 60+ Older Person’s Freedom Pass holders will continue. Government proposals to remove free travel altogether for under-18s and over-60s have been dropped, as well as proposals for
TfL fares to rise by more than the previously agreed RPI+1%.
The agreement requires the Mayor of London to raise additional money in future years, with the maintenance of travel concessions above national levels requiring new plans on how to fund them. This could include raising the council tax and extending or making permanent the temporary changes to the congestion charge. TfL is expected to provide a financial plan in January.
It is understood that negotiations were protracted and a deal was only reached with 15 minutes to spare before the previous arrangement was due to expire. This followed a two-week extension to the first deal from October 17 to the 31st. The announcement came amid an increasingly vociferous political debate concerning the longer-term funding agreement. On top of this, London entered Tier 2 COVID restrictions before the English lockdown, meaning passenger numbers and income were further reduced.
TfL Commissioner Andy Byford said: “The agreement will enable TfL to continue to support the capital for the remainder of the financial year as discussions on longer-term sustainable funding continue. 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.”
Secretary of State for Transport Grant Shapps said: “Just as we’ve done for the national rail operators, we’ll make up the fare income that TfL is losing due to COVID. 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 of the costs of the transport network itself.”