Transport for London (TfL) has secured another short-term funding agreement with the government that will run for the next four months, until 24th June 2022.

This, the fourth funding package offered by the government, will contribute towards TfL’s revenue loss due to reduced passenger numbers using TfL services as a result of the pandemic. As part of the agreement, TfL will receive special grant of £200 million, paid in three instalments from the end of April, and the Government will “top up” TfL’s revenues with additional grant payments if they are lower than expected due to the effects of the pandemic.

Conversely, if TfL’s revenues are higher than the pre-determined passenger revenue forecast, TfL will be required to pay that excess to DfT at the end of June 2022. This provides TfL with certainty that it will receive income equivalent to £1.615 billion in passenger revenue over the next four months, in addition to the Extraordinary Support Grant of £200 million.

Andy Byford, London’s Transport Commissioner, said: “Following discussions and negotiation over the last few weeks, I’m pleased that the Government has today confirmed an extension of its funding support for TfL through until 24 June 2022, for which we are grateful.”

“The Mayor has already set out a range of proposals that will help support TfL’s financial sustainability in the future but it is essential that agreement is reached with Government on longer term capital support during this funding period. This is crucial for the coming years if a period of the ‘managed decline’ of London’s transport network is to be avoided. ”

As part of the Funding Package, TfL commits to deliver a plan by 31st March 2022 demonstrating the options that exist to achieve up to £400 million of additional revenue or cost savings in 2022/23, in addition to delivering the previously agreed operating cost savings for the 2021/22 financial year. The DfT acknowledged that TfL is facing further cost pressures in 2022/23 and therefore any proposals presented in this plan and the savings level of £400m will be considered and confirmed following a review of TfL’s 2022/23 budget.

The deal between the DfT and TfL is described as recognising that, in line with the current liquidity policy, TfL should continue to maintain cash reserves of an average of £1.2 billion, as is needed to maintain its debt ratings. If the cash balance rises above that though, then the £200 million grant may, subject to discussions, be clawed back by the government.

The difficulty with that clause is that it almost penalises TfL for doing a good job, because if they cut costs or raise revenues over the next few months, they won’t get to keep the money they saved.

In their joint statement, the government stated a willingness in the short and medium-term to provide grant funding for renewals and enhancements and will work towards an agreement for long-term capital support with an expectation that this agreement will be reached by 31 March 2022. The package includes a number of conditions, which includes the continuation and further development of initiatives commenced under previous funding agreements with DfT.

One of those previous agreements is to conduct a review into TfL’s pension scheme, which is currently underway, and although it hasn’t reported its findings yet, is one of the reasons for next week’s RMT strike.

The Mayor of London, Sadiq Khan, said: “While I welcome and am relieved about this funding, once again the Government has just provided a short-term funding deal that will only enable TfL to continue running transport services for a few more months.”

“The pandemic is the only reason TfL is facing a financial crisis.  TfL has a critical role to play in driving the recovery and it supports tens of thousands of jobs across the UK, but the Government’s short-term deals are trapping TfL on life support and putting economic growth and jobs at risk. Over the next few months, I urge the Government to engage with TfL and City Hall in good faith so that we can finally agree a fair, longer-term funding deal that will protect London’s transport network – for the sake of the capital and the whole country.”

The “small print” of the letter from the DfT outlines more detail of the funding agreement.

The DfT is also still insisting that TfL spend money researching driverless trains, even though it’s pretty widely accepted that the billions it would cost to implement would at best shave a few tens of millions off TfL’s costs.

TfL will also be required to stick to the government pay policy, while receiving government funding — which is going to be a fun set of negotiations with the unions.

TfL may also be unable to reintroduce a regulation requiring face masks to be worn, as there’s a clause in the small print requiring the DfT to sign off on any communications messages about travelling on public transport. It’s well known that the government was annoyed that TfL retained the mask mandate when the rest of England removed it.

TfL is also being told to supply weekly financial reports to TfL and copies of all meetings it may have with financial lenders.

Any additional services, such as reopening the rest of the Night Tube will require DfT approval. The DfT is also retaining its two representatives attending TfL board meetings and its committee meetings.

In essence, it reads like a manifesto for micromanagement of TfL by the DfT, and is de-facto a takeover of London’s transport network by the government.

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10 comments
  1. LMonroe says:

    Grant Shapps has no spine, he has given in to Khan’s empty threats to services and capital investment.

    Khan and his puppet Byford were being successfully squeezed with no way out, and yet they have walked away with a bailout for four whole months whilst only having to save miniscule sums from the long-term TfL budget.

    There should have been far more onerous conditions put on any bailout – no pay rise for any TfL staff except the lowest paid, cuts to staff numbers, moving to DC pensions (not a meaningless review) etc.

    • Ilforddave says:

      Agreed

    • Shanon says:

      Pathetic comment. This is a government that was more than happy to bailout/ provide guarantees to private train companies and yet decided to punish London for voting Labour. Your hero Boris Johnson left TFLs finances in a parlous condition and sought to place the blame on his successor. Well done Major Khan for not yielding

  2. Brian Butterworth says:

    “The DfT is also still insisting that TfL spend money researching driverless trains, even though it’s pretty widely accepted that the billions it would cost to implement would at best shave a few tens of millions off TfL’s costs.”

    Perhaps, but the ability to get rid of the Londoners-hating double-strike-days RMT is priceless.

    • ianVisits says:

      Not anything like cost effective — even if trains are driverless, you can still have strikes, as people who ride the DLR will confirm.

    • Iain Failure says:

      Depends on when they are implemented. If they replace existing rolling stock at the end of its lifespan, then those are costs which would need to be born anyway. And also depends on Grade of automation. If you have no staff on the train whatsoever then then the effects of strikes are somewhat mitigated

    • ChrisC says:

      Boris had 8 years to progress driverless trains when he was in charge and did nothing meaningful about it.

      And driver less trains are a whole lot more than just having a new train.

      There needs to be a whole infrastructure in signals and tracks to make sure trains stop where they are supposed to and the doors open and close properly.

      That takes time and money to install and implement. It’s not something that happens overnight.

    • Iain Failure says:

      Who said anything about overnight? None of the current rolling stock on the underground is due for replacement until the end of the decade. Boris probably came up against the same hurdle – it doesn’t make financial sense to do it when there’s still asset life left.

      The exception is the Piccadilly line, for which new trains are currently being built – and which would be capable of driverless operation if that became the preferred operating model and the requisite infrastructure were there. Yes that infrastructure is tricky, but there are already Platform Edge Doors on sections of the Jubilee line (not saying that will work everywhere on the network but there’s a precedent).

      Looking globally, there are about 50 driverless metros worldwide, and eyes are on Glasgow to see what happens with their approach of driverless operation even in deep tunnels; safety cases and thresholds aren’t necessarily set in stone.

      TfL would be silly, in my view, if they didn’t try to at least future-proof themselves for potential driverless operation in the future.

    • Keith says:

      Probably the easiest line to implement driverless trains on would be the Waterloo & City. Given that it’s the shortest line with only two stations the cost of implementing would presumably be considerably lower than on other lines.

  3. Joey Jones says:

    This is nonsense. London Reconnections published an in depth article about the pie in the sky driverless train proposals. This is a government that isn’t willing to cough up money for fire safety in housing after Grenfell, so where would the funds come from to introduce walkways which would be required under current fire safety legislation to enable driverless trains? I suggest you read that before regurgitating tired old lines about the RMT.

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