Government imposes ‘conditions-based’ funding support as TfL chief says ‘further £900m of savings or new income’ must be found

Government imposes ‘conditions-based’ funding support as TfL chief says ‘further £900m of savings or new income’ must be found

Transport for London says it must find ways to produce nearly £1 billion in further savings or new sources of income before the end of the year on top of spending cuts already planned under what the government has called a “conditions-based” extension of its financial support for the capital’s transport agency.

In a letter to Sadiq Khan, transport secretary Grant Shapps tells him TfL must make cuts of £300 million in the current financial year on top of the £730 million already planned, and that from 2023 it must increase revenue by up to £1 billion a year using “existing powers and compared to current plans”, with further above-inflation fare increases required from January.

In response to the funding package, TfL commissioner Andy Byford said, “The conditions placed on us by the government agreement and the amount of funding we will receive means we need to find a further £900m of savings or new income this year compared to our approved budget”.

Other conditions imposed include TfL carrying out a “joint review” with the government of passenger demand “to ensure service levels are appropriate” and entering into a series of “funding period work programmes” which must be completed to Shapps’s satisfaction if the government is to “consider” reducing its “supervision” of the devolved transport body.

TfL is told it must freeze pay in line with government policy towards the public sector and the Mayor is described as having “agreed” to “review” what the government calls TfL’s “generous pensions scheme”. The letter says TfL must “take all reasonable steps to avoid industrial action during the funding period and if necessary will be expected to take all reasonable steps to mitigate the impact of any industrial action”.

A minimum of £100 million must be spent on “continuing the delivery of healthy streets and active travel programmes”, a requirement likely to reflect the personal enthusiasm of Boris Johnson’s transport adviser and erstwhile media supporter, Andrew Gilligan, for riding a bicycle. The figure must encompass “the urgent delivery and operation of a temporary walking and cycle ferry” pending the repair of Hammersmith Bridge.

Khan has expressed disappointment with the latest package, which provides £1.08 billion – payable in six instalments – to enable TfL to run what commissioner Andy Byford has called “near full service levels” until 11 December, assuming passenger levels recover to the extent currently forecast.

“This is not the deal we wanted,” the Mayor said, but added that “after some extremely tough negotiations we have successfully managed to see off the worst of the conditions the government wanted to impose on London” claiming these would have amounted to service cuts “equivalent to cancelling one in five bus routes or closing a Tube line”.

Transport secretary Grant Shapps said the package will means the capital’s transport network continues to run while “ensuring crucial reforms are accelerated to ensure TfL becomes financially sustainable in the long term”.

However, Richard Burge, chief executive of the London Chamber of Commerce and Industry, said “the level of savings required of TfL raises the concern that this will result in a worsening of service. Questions remain about the government’s commitment to having a public transport network at the heart of London’s success as a global city.”

John Dickie, chief executive of business group London First, expressed disappointment that the latest settlement is for only six months and said “cutting funding at the point we need to get people back into London is no way to rebuild the economy.”

The government says Khan has “agreed to work collaboratively with DfT [Department for Transport] on a “joint programme for implementing higher levels of automatic train operation on the London Underground” with “progress” towards converting at least one Tube line “to full automation, but with an on-board attendant” being made “within the funding period”. A business case for converting the Waterloo & City line must be ready within 12 months and one for the Piccadilly line within 18 months.

Khan describes this condition as being “forced to undertake some early development work on the business case for driverless trains” and says he has “made it crystal clear to ministers that we will object to any future requirement to force TfL to implement driverless trains on the London Underground” on the grounds that it would be “a gross misuse of taxpayers’ money”.

Under the terms of the previous emergency funding arrangement, which came into effect in the autumn, TfL at the start of this year provided the government with proposals for becoming financially self-sufficient in the long term. Khan confirmed at his Mayor’s Question Time session last week that the government had never responded them.

However, in a separate letter to Khan accompanying the new package, Shapps says he wants to “reiterate” that TfL’s suggestion that it be allowed to retain Vehicle Excise Duty raised in London rather than almost all of it being spent elsewhere in the country – an idea which enjoys cross party support on the London Assembly – is regarded by him as “in effect a permanent government grant” and therefore unacceptable.

Shapps also writes that TfL’s suggestion of that a daily Greater London Boundary Charge of £3.50 could be levied on vehicles registered outside the capital each time they entered the capital “cannot be right”.

Last updated at 14:27 on 1 June 2021.

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