Sadiq Khan has warned London Assembly Members that time is running out to avert the collapse of Transport for London, saying the capital’s public transport network will run out of money on 17 October 17 and that negotiations with Whitehall to have a new deal in place by the end of this month had begun “in earnest” only yesterday.
The Mayor also told a plenary session of the Assembly today that a government review of TfL finances, structure and governance, set up to inform future funding arrangements with a 31 August deadline, is still to report.
The eleventh-hour bailout agreed between TfL and government in May saw £1.6 billion funding provided for the period to mid-October only. TfL budget proposals now under discussion with Whitehall would require a further £2 billion for the second half of 2020/21 plus £2.9 billion to see the network through 2021/22, AMs heard.
The dramatic drop in passenger numbers in London has seen TfL – almost totally reliant on fare income to cover costs – losing £100 million a week, Khan said. He called on the government to recognise the importance of the network for London and the country as a whole: “If the government wants a national recovery it needs a London recovery. Our city and our country need TfL working properly.”
And again he warned the government against “punishing” Londoners for following lockdown rules by avoiding public transport. “My worry is that the government will play party politics,” he said. “But it is not right for party allegiances to get in the way of what is right for our capital city.”
The Mayor confirmed that City Hall is seeking long-term 10-to-15-year government funding, coupled with more devolved power to raise its own money. “A sustainable transport system is vital for the capital,” he said. “The last 20 years have shown the progress that an integrated transport authority can make for the prosperity of our city. If we had more devolution we could be in charge of our own destiny.”
One option would be more City Hall control over the £500 million in vehicle excise duty collected annually from London’s vehicle owners, none of which is currently allocated towards road maintenance or construction in the capital, the meeting heard.
Khan also condemned the “lie” that TfL’s “cupboard was bare” before the pandemic crisis. TfL finance chief Simon Kilonback confirmed a £1 billion reduction in operating costs since 2016, deficits reduced by 86%, cash balances up by 31% and plans in place for the network to break even by 2022.
TfL is obliged to run as a “going concern” to provide sufficient confidence to lenders and service providers, with major investment projects such as the replacement of the Piccadilly Line’s 50-year-old trains running over many years and bus companies requiring significant security to underpin their own investment in services, Kilonback said. TfL has nevertheless been required to spend £1 billion of its own reserves as the pandemic struck, he added, in contrast to national train operating companies which had been “bailed out on day one”.
Kilonback also confirmed that TfL budget assumptions were based on running a full service, allowing passengers to travel safely, and the likelihood of a second infection peak in the winter, with continuing reductions in fare income. Ridership was currently forecast to remain 70% down on pre-pandemic levels, returning to 80% of pre-pandemic ridership only by April 2022 if social distancing measures come to an end in May next year.
And he warned that there was no “easy money” to come out if funding is cut. “The only things we could do going forward would be linked to reduction of services”.
Khan’s transport deputy Heidi Alexander, also at the meeting, proved sceptical of “First Ride Free” plans reportedly being considered by the government and TfL, offering a free trip into the capital as part of efforts to encourage people back to the West End.
“I’m not sure people’s reluctance to come back to central London is about the price of a tube ticket,” she told assembly members. “We need to remain very conscious of the possibility of a second wave. We don’t want to encourage a lot of people all back at the same time. We have to maintain social distancing on the network.”
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