Transport for London’s existing funding deal with the government, which was due to expire today has been extended, again, to 4th February 2022.
The decision gives both sides more time to negotiate the terms of a long-term settlement to secure the future of London’s public transport services, which were thrown into some disarray by the latest Covid restrictions. It would not have helped that the Department for Transport (DfT) says that TfL’s own submissions for a funding package were delivered late leaving little time to study them before agreeing on a deal.
On 1st June 2021, TfL announced that an extraordinary funding and financing support package had been agreed between TfL and the DfT to support transport services in London and contribute towards TfL’s forecast revenue loss due to reduced passenger numbers using TfL services as a result of the pandemic.
The Funding Package initially provided support for the period from 29th May 2021 to 11th December 2021, which was later given a one-week extension to 17th December 2021, to allow TfL to continue discussions with the government in relation to further financial support.
Following further discussion, the terms of the Funding Package have now been extended again to last until 4th February 2022, and TfL has until 19th January to outline its proposals for a long term funding settlement.
Andy Byford, London’s Transport Commissioner, said: “The Government has today confirmed an extension of its funding support for TfL through until 4 February, for which we are grateful. The Mayor has also set out a range of proposals that will help support TfL’s financial sustainability.”
At the heart of the issue is how TfL will be able to recover its finances following the collapse of fares income caused by the pandemic and to adapt its long term finances to the post-pandemic world. TfL is seeking £1.9 billion over the next couple of years, while the DfT is seeking assurances that it hasn’t asked from other transport operators in the UK, namely that TfL is able to return to breaking even in its operating costs within a couple of years.
To do that, TfL is expected to need to raise an additional £500 million to £1 billion in revenue per year to offset the drop in passenger fares. That is coincidentally pretty much in the range of the central government grant that TfL used to receive until it was cut off in 2018.
All the existing terms of the funding deal remain unchanged.
The Mayor of London, Sadiq Khan, said: “The Government is still refusing to properly fund Transport for London which has been severely affected by COVID, yet again only providing a short-term funding deal that will only last a matter of weeks. This means that nothing has changed in terms of TfL having to plan on the basis of a managed decline of the capital’s public transport network.”