TfL has secured a six-month lifeline to keep London’s transport network running until the end of next March.

TfL was on the verge of facing the risk of a large scale shut-down had the funding not been agreed by last night, as it would have breached its legal authority to spend money. That could have seen London’s buses and trains taken out of service by Monday morning.

The funding deal, worth up to £1.8 billion is less than the £2 billion that TfL had been seeking, and is also based on passenger numbers that are higher than TfL was projecting, even before the latest lockdown announcement.

The funding assumes that passenger demand between now and next March will stay at approximately 65% of pre-coronavirus levels. This is higher than the ridership assumptions in TfL’s revised budget, published in July 2020, which forecast a funding shortfall of approximately £2 billion for the second half of 2020/21.

The funding deal is currently made up of a government grant worth £905 million, and a loan of £95 million – but this can be increased to an estimated £1.8 billion, depending on passenger numbers on the trains and buses. It could be higher if passenger numbers are lower than expected.

TfL is also being required to find an additional £160 million, either through increased revenue from somewhere, or cost savings — likely to be a mix of deferring capital investments, and lower operational costs.

The changes to the Congestion Charge will be maintained, although plans to expand the Congestion zone have been scrapped. The current removal of free travel in the morning peak for holders of 60+ / older persons freedom pass will also remain. There was no mention of the withdrawal of the under 18s travel pass.

They are also still negotiating over the £1 billion needed to complete the Crossrail project.

The Mayor of London says that plans to increase fares by more than the previously agreed “inflation plus 1%” from next year have been scrapped, but as part of the deal, London will also have to raise extra money in future years. Decisions about how this additional funding will be raised are yet to be made, but some of the options to be looked at include a modest increase in council tax as well as keeping in place the temporary changes to the central London Congestion Charge that were introduced in June 2020 — both would be subject to consultation.

Those decisions need to be taken by January 2021, at the same time as the Mayor of London presents a plan for the long-term financial sustainability of TfL.

The Mayor of London said that the deal is ‘not ideal’ but adds that he fought hard against the Government’s determination to punish London.

The funding deal expires at the end of next March, and TfL has already said that it will require more government support to see it through the following year as passenger numbers are still expected to be below normal levels.

Andy Byford, London’s Transport Commissioner, said: “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. As always, our staff are working tirelessly to serve London’s people and businesses; supporting the city’s economy and providing an excellent, safe and reliable service to our customers every day.”

Update – Although TfL and the Mayor of London say the funding deal is worth up to £1.8 billion, the Secretary of State for Transport, Grant Shapps says it’s worth £1.7 billion.

Update – Corrected comment about fare rises.

Update – More details have been provided by the Department for Transport into the funding settlement.

TfL will be required to produce by 11th January 2021 a plan with options as to how financial sustainability could be achieved by as soon as possible with a target date of the full year 2023. That plan will require TfL to agree in advance with the DfT as to what its long term network upgrades will be — effectively giving the government a veto over TfL.

TfL will also be expected to increase its land and property sales, and increase commercial income from other sources.

In the long term, it’s likely that any costs that TfL bears for offering free travel for under-18s, and free travel for people aged 60-65 will have to be borne entirely by London taxpayers. Free travel on buses for over-65s is a national government issue.

In relation to Crossrail 2, TfL has been told to prioritise safeguarding activity but also bring an
end to consultancy work as soon as possible.

TfL is to prioritise the delivery and operation of a temporary walking and cycle ferry for the Hammersmith Bridge, but the cost is coming out of TfL’s own budget with no government support — and TfL will have to pay £4 million towards the stabilisation of the bridge. The bridge has been owned by Hammersmith & Fulham Council following the abolition of the GLC in 1985, although TfL has been leading the taskforce to repair it.

The government is also still expecting TfL to investigate driverless trains, even though that’s already been dismissed as a lot of money spent to achieve very little.

And finally, the government may agree to remove its current oversight from TfL at the end of March 2021, if it thinks that is possible.

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25 comments on “TfL secures funding deal to keep London’s buses and trains running
  1. Well, I suppose we have to be happy about another of Mr Johnson’s U-turns.

    Just out of interest, if everyone in London was to pay a “TfL supplement” to fund the service for a whole year at 65% ridership and the same levels of fares, what would each band of household have to pay.

    I’m sure I’d be glad to pay an extra £50 a month, but £500 a month would be a bit of a squeeze.

    Google says “The average band D council tax bill in England for 2018/19 will cost £1,671” and there are “3.74 million London households by 2021”

    My Band D in Newham is only £1,383.28 a year so another £300 would only bring me up the average.

    Personally I’d love the idea of paying something extra to have the Bakerloo line extensions up and running and the rest of the tube stations converted to step free.

    • Back of fag-packet calculations…

      £1.8 billion shared between 3.74 million is £481 a year per Band-D household.

      So roughly, the largest homes would pay (x2) £962, the smallest (/2) £240 a year.

    • And what *I* would expect from this is:

      – abolition of the evening peak fares;
      – expand Zone 1 to include Canary Wharf and Camden Town;
      – merge zones 2 to 6 into a single zone
      – stop charging extra when switching from a local “train” service to a “tube” service at Zone 1 stations like Charing Cross, Waterloo and Victoria. The first trip you make into (or out of) Zone 1 should be inclusive, to match up with TfL Rail and London Overground.
      – free travel for children
      – free travel for the unemployed

    • Andy Thomas says:

      You have to bear in mind some people can’t easily afford rises like you’ve mentioned, some are struggling to pay rents and can’t easily afford public transport so walk a lot or cycle. Some people have been living here for years and cannot easily move for a number of reasons and again, it’s unfair for those that create space on our public transport network, or road network by choosing to walk or cycle to still have to be hit with an additional charge that they may well not be able to afford.

    • Andy Thomas: I agree! I get the point that some people in London are struggling, but that’s why I also suggested that children and job-seekers must get the pay-off of free travel.

      I guess that council tax collection is actually a more effective way of collecting money to pay for transport than contactless/oyster as it’s hard to evade.

      Of course, there would be much better ways to do it like a local income tax, but as that’s only been done in Scotland it seems unlikely that it could be implemented by 1st April 2021, whereas an uplift in the GLA section of everyone’s council tax bills is “easy”.

      I’m open to suggestions, I was just trying to work out what the starting point for a bigger share of the cost of travel in London being paid for by taxation would look like.

  2. Andy Thomas says:

    My opinion is that there shouldn’t be a charge that’s levied on everyone regardless, increasing council tax is such a charge as there are plenty of people that either don’t use public transport, or use it rarely, they should not be expected to subsidise those that do.

    I don’t think it would be a bad idea to get extra revenue from people that pay tax outside of London to have some sort of boundary levy added, such as ending zone 6 at the boundary and introducing a zone 7, limiting hopper fares to inside zone 6 and raising the bus fares outside of zone 6 to reflect the cost of running those services. A similar roads policy would be good also, leaving the congestion zone as it is and adding an outer zone, just a nominal amount of say £5, with residents given a 100% discount.

    I could just imagine the reaction of all those that commute from outside London and it would never happen, but I would be interested to know how much revenue is generated from those outside of London per head compared to those inside and to what degree they are being subsidised by Londoners, the same applies to the roads I would have thought.

    If that isn’t enough to make central government look at funding again then it should be considered.

    It would hit me a little as I travel from East London to Dartford a couple of times a week at least by car and public transport, but at least it would be fair.

    I’m sure there are many reasons why it’s impractical or would be blocked by government that are probably going to be pointed out to me, but it does seem better than a blanket tax on all Londoners regardless.

    • ianvisits says:

      The argument that “people who dont use a service shouldn’t pay for it” is not how taxation works. I don’t personally use many of the services that my taxes pay for, and I know there are services I use than the majority of people don’t, but they are still funded by general taxation.

      You can argue the level of taxation, and how it’s collected, but the notion that just because someone doesn’t use a service personally, they a) shouldn’t pay for it, and b) don’t benefit indirectly from it isn’t an argument that any government in the world would support.

    • Andy Thomas says:

      I agree with you as obviously we wouldn’t have a lot of things, like a comprehensive health service, the transport system, and much of our services and infrastructure as we know it today without general taxation.

      I was thinking more about the extra revenue that has to be raised and my thoughts around that side of it

    • Melvyn says:

      Time to stop subsidies to motorists and increase fuel duty to where it would have been if it hadn’t been frozen by Conservatives for last decade !

      Might even fund a new Hammersmith Bridge !

    • AG says:

      It wouldn’t hurt to have a more effective fare evasion scheme. I am a key worker and have been using the tram to get to work throughout this period. When TFL withdrew fare enforcement officials it became very obvious that folk just stopped paying. Before you come after me for extra rates please ensure those who travel also pay their fares.

    • MilesT says:

      There is well documented research covering the wider socio-economic benefits of good public transport, including ability to earn higher wages to accessibility to a wider pool of employment.

      So subsidising transport through taxation levied on non users in a locality is reasonable, morally, subject to normal democratic controls.

      That said, increases in good employment on work from home or from local office basis does weaken that argument somewhat, in favour of subsidising e.g. broadband improvements.

  3. Shaun McDonald says:

    At a variation in the tax raising, I wonder if having an additional supplement on income tax that goes to the council/area that you work and or live could be an option this way it would be closer to the ability to pay with those with more income paying more. Could even be used as a way to replace council tax in its current form.

    • Yes, this is a great idea. However, the main problem is how to implement it. At the moment the Scottish system allows for this by adding a suffix to people’s tax codes.

      I’m not sure this could easily be done to the 343 councils in the UK.

      The other problem is how much additional percentage points would each require and how straightforward would this be for people to understand?

      Would this uplift in tax be done to just the standard rate bit of people’s tax or would each council have to pick rates for different tax bands?

      And .. won’t people end up trying to tax shop the lowest possible rate by claiming they live in the place with the cheapest tax?

  4. Indie says:

    Keep all ticket offices open is a must on national rail. Safety, cust services and jobs.

  5. Cathy says:

    The national bus pass is provided to both men and women at the female state pension age – so currently 66 and rising.

  6. Anthony Skinner says:

    Fares for the over 66’s is a National Issue is correct BUT this is still required to be reimbursed to the operator by the County level local authority. So the taxpayers of London are already paying for that, albeit that the government direct grant is meant to pay for it.

  7. Lizebeth says:

    As an older person on a limited income, I would not be able to exist, should there not be free travel for seniors. Just as we paid taxes when we were working, for many services we ourselves did not use (as Ian says), we feel the younger generation should now pay for services they may not use, but support the Greater Good. There are rigorous criteria for obtaining a Freedom Pass — how can you possibly apply any for “the unemployed”? Fare evasion is ubiquitous, but staff are needed to prevent it. Taxing the wealthier among us is the ideal, but actually doing it in a fair manner has so far proven too difficult for even the canniest politicians to manage.

  8. Melvyn says:

    Looks like the cost of this settlement is Crossrail 2 however given how long it has been around beginning life as the Chelsea to Hackney Line in WWII Abercrombie Report perhaps it’s time to abandon it for easier to deliver projects.

    More likely that The Treasury has withdrawn Crossrail 2 funding to fund new High Speed North project in recently gained red wall seats !

  9. Jake says:

    As a London resident, I agree with the government that it would be unfair to make national government, e.g the taxpayers of the entire UK, subsidize London transport even more than they already do and have done.

    However, the problem with increasing council tax is that it means London commuters and TfL service users who live in the leafy suburbs of Kent, Surrey, Essex, Herts, Bucks etc don’t pay their fare share.

    A solution? Fund TfL entirely through London council tax, but then give London residents a discount on travel. If people in Epsom and Watford who so virulently opposed becoming part of Greater London dare kick up a fuss at having to pay higher fares than their neighbours on the other side of the GL boundary, then well they can happily petition their council to contribute to TfL’s finances.

  10. Andrew Gwilt says:

    So more extra funding for Transport for London. What about the rest of the UK (except Republic of Ireland and Northern Ireland). With the North of England probably still struggling due to the Coronavirus pandemic.

    I’m surprised that how London is getting more and more money than the rest of England, Wales and Scotland. As it’s the capital city of the UK.

    • ianvisits says:

      I wish you would check your figures before you comment – they are a matter of public record after all.

      £1 billion for London with heavy conditions vs outside London… an unconditional £3.5 billion (as at June 2020) for the rail networks, £456 million (up to Aug) for buses, plus an additional £256 million with unlimited ongoing funding until the pandemic ends.

  11. tops says:

    Would it perhaps be cheaper to sell Hammersmith Bridge (or relocate as a monument somewhere) and build a new one from scratch?

    • ianvisits says:

      The pedestrian-only garden bridge was estimated to cost £200 million – so a motor vehicle grade bridge would be even more expensive than that.

  12. Tina,Gee says:

    Trouble is tfl staff are told not to intervene when people tailgate through barriers or jump over barriers to evade fares. It happens all the time at Abbey Wood station. I was told they leave it to BT police but when do you see them on the tubes/trains? Too many people evading fares.

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