TFL agrees further funding package with Government
THE DEPARTMENT for Transport and Transport for London have reached agreement for a further funding package. Among the conditions are studies for the possible conversion of two Underground lines to driverless operation. The deal, which was sealed on June 1, concerns the period from May 29 to December 11 and is the latest in a series of funding packages agreed to maintain the capital’s transport services during the pandemic.
TFL receives no direct Government funding and is almost wholly reliant on farebox income, which since March 2020 has been in short supply due to the pandemic and subsequent lockdowns. Even today ridership levels are around 60% below PRE-COVID-19 levels.
The newly agreed package includes an extraordinary support grant of £1.08bn, with the Government also agreeing to provide top-up grants if fares income is lower than forecast, with TFL repaying any excess. This gives TFL certainty that it will receive £1.78bn on top of the £1.08bn grant. As mentioned, the Government has insisted on various conditions that must be met if TFL is to become financially sustainable by no later than April 2023. Consequently, TFL will need to make several changes to working practices in order to save money. Financially it needs to save and/or generate new income of at least £300m in the 2021-22 financial year. That said, it already has a funding shortfall compared with the budget for 2020-21, meaning it will need to find savings or generate new income of around £900m by using its cash reserves, generating additional non-passenger income and reducing or deferring costs. Furthermore, TFL must produce new or increased sources of revenue of £500m to £1bn/year from 2023 onwards, as well as accelerating its existing modernisation programme, which would see £730m of recurring savings by April 2023.
The DFT and TFL are also to review options for longer term reform to the funding framework, governance and oversight.
Also part of the funding deal is a Dft-led joint programme to examine the introduction of driverless trains on the London Underground network. According to DFT this “has the potential to offer a more punctual, reliable, customer responsive and safer service that is less susceptible to human error”. The first step is for the Mayor of London and DFT to establish a joint programme to implement Grade-of-automation 3 (driverless but with an attendant, as on the Docklands Light Railway), with the aim of progressing to the conversion of at least one line, subject to a viable business case.
The first line is likely to be the Waterloo & City Line, since it only has two stations, and a business case is expected to be ready within a year. This will be followed by a similar study for the Piccadilly Line within 18 months. DFT and TFL will work together on these, and also for the wider potential for GOA3 across the rest of the network.
Secretary of State for Transport Grant Shapps said: “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.”
Mayor of London Sadiq Khan said: “The short-term settlement was yet another sticking plaster, and not the deal that TFL wanted. 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 one in five bus routes or closing a Tube line but would also have hampered London’s economic recovery as well as the national recovery.”
General Secretary of the RMT union Mick Lynch called the deal: “A disgraceful stitch up of a deal.” He added: “Attacks on workers’ pensions are wholly unacceptable, while driverless trains are unwanted, unaffordable and unsafe.” [ED – strange that the Victoria Line and Docklands Light Railway, both around for years, are perfectly safe…?]