The capital’s beleaguered public transport system faces continuing financial uncertainty, with possible budget shortfalls into next year of up to £2.5 billion, depending on passenger numbers and funding arrangements.
That was the warning from Sadiq Khan’s transport deputy Heidi Alexander and Transport for London finance chief Simon Kilonback, facing questions today at the London Assembly transport committee.
With TfL income down by 90 per cent since the pandemic lockdown, the network has been left with a “massive black hole”, Alexander said. Under current funding arrangements, with no operating subsidy from government, TfL is dependent on fares and other income to cover 80 per cent of its costs. “If passengers don’t come back, the funding model is broken,” she added.
Negotiations with the government over TfL’s £1.6 billion bailout deal, which supports the network until the end of September, had been “unnecessarily difficult”, Alexander revealed, with “political conditions” including the requirement to scrap free travel for under-18s, “crowbarred into the agreement at the last minute”.
With TfL requiring £1.4 billion investment a year simply to maintain a safe system, long-term funding arrangements were now urgently needed for the second half of 2020/21 and beyond, she said, urging the government to abandon “political game-playing in advance of next year’s mayoral election”.
The funding deal – a grant of just over £1 billion plus a £505 million loan – includes a government-led review of TfL’s “future financial position and structure”, plus a joint government and TfL “London Covid-19 task force” overseeing “operational decisions”.
Former City Hall officials from Boris Johnson’s time as Mayor are prominently involved, Alexander revealed, with task force meetings chaired by Sir Eddie Lister, Johnson’s chief of staff and now a senior Number 10 advisor, and Andrew Gilligan, also now in Downing Street and previously Johnson’s cycling commissioner, sitting on an “active travel” sub-group.
While there were no details yet on the review, decisions on future funding arrangements were needed before further negotiations get underway over the summer, Alexander said, with three options for the government: “To swallow its political pride and restore operating subsidy, devolve power to raise money to pay for services, or commit London to a low investment, low productivity future.”
Kilonback highlighted the severe impact of the crisis on TfL’s investment programme, with projects on hold pending long-term funding arrangements, and a short-term focus on Mayor Khan’s “Streetspace” plans reallocating road space to cycling and walking. Funding included £55 million as part of the TfL bailout, plus £25 million Department of Transport cash for borough schemes, the meeting heard, with 19,000 square metres of road already reallocated and more than 500 bids from boroughs being processed – again overseen by a joint working group of officials from DfT, Number 10, TfL and London Councils.
Getting the delayed Crossrail scheme fully into operation by the promised new summer 2021 date would also be “very challenging”, Alexander said, while plans to repair and reopen Hammersmith Bridge, at an estimated cost of £120 million, were also on hold. “If government will assist us with funding, we can make it happen”, she said. An update on Crossrail as well as more details on TfL capital programmes are due at the TfL board meeting next month.
Discussions are continuing on the government’s insistence that free travel for under-18s should be scrapped, Alexander added, with Khan and transport committee chair Alison Moore calling for a rethink.
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