Transport finances on brink as London awaits government funding deal, says Andy Byford

Transport finances on brink as London awaits government funding deal, says Andy Byford

More government cash for beleaguered Transport for London is on its way, the London Assembly’s Budget and Performance Committee heard today. But the network was still waiting to find out how much it will receive or what conditions the government will seek to impose, TfL commissioner Andy Byford told AMs. 

The delay is leaving TfL on a cliff edge similar to that it faced as its money drained away in April of this year, the new commissioner warned. “We are awaiting a letter, which we are told is imminent. But we need to be talking right now. We are at the point where this is really serious – the point where we have to be able to confirm we are a going concern.” 

Following an initial £1.6 billion government bailout in May after the pandemic saw fares income, which normally makes up almost three-quarters of its revenue, slump by 90% TfL is seeking £2 billion support through to April next year, plus £2.9 billion for 2021/22.

Initial government funding runs out on 17 October, but TfL finance chief Simon Kilonback has already warned that the network – treated as a local authority rather than a public utility – could fall foul of legal requirements to maintain a balanced budget if a further settlement is delayed. No bailout would leave officials with no option but to issue the Section 114 notice effectively confirming TfL could no longer pay its way and setting in train a spending freeze and significant cuts in services.

“We need that full amount,” Byford said. “It’s not a figure plucked out of the air. We’re not expecting a blank cheque, but we do need sight of the conditions and enough time to have proper negotiations.” With “British understatement”, the commissioner added, “not to know what your budget is, with days to go, is suboptimal to say the least”.

City Hall transport deputy Heidi Alexander warned AMs that a long-term deal was needed in order to safeguard arrangements with bus and train operators and suppliers. “Six months is not good enough when you need to be placing big contracts and making investments,” she said. “This needs to be resolved, not just for London but for the health of the whole UK economy.” 

There was more certainty though for young passengers, with Byford confirming that the complexities of suspending free travel for under-18s, demanded by the government as a condition of its initial bailout, mean that journeys will continue to be free until at least spring next year.

Extra school buses have already increased capacity, easing concerns about overcrowding and lack of social distancing during term time, Byford said. And while the government had agreed to exempt primary pupils from the fares hit, the difficulty and costs of setting up new borough systems to manage eligibility and exemptions for 12 to 18-year-olds is delaying implementation.

The government needed to be clear about its intentions, added Alexander. “It’s being said to me that we can’t have a system where children in London get one thing and children in Barnsley get something else. But London is a lot more dependent on public transport than elsewhere. This is levelling down not levelling up.”

The fast-moving nature of London politics was confirmed during the meeting, as a statement went public announcing that the Crossrail or Elizabeth Line project has been fully handed over to TfL.

The complex project, with 26 miles of new tunnels through Central London, is nearing the end of its construction phase, with operational testing due in the new year on the central section of the new line, the meeting heard. 

The scheme, over budget and behind schedule, needs a further £1.1 billion, with discussion underway between TfL and the government on meeting the extra cost. But commitments had been made, Byford said, adding that his is to “no further slippage, no further call for funding.”

The is less clarity though about the longer-term future of TfL itself, with Byford revealing to general astonishment among committee members, that a Whitehall-commissioned KPMG review of TfL governance and funding arrangements had been provided to him in draft, but with two-thirds of its content redacted.

A complete copy has been requested, Byford said, confirming that both the government review and a similar exercise commissioned by Mayor Khan, are expected to be finalised shortly. The mayoral review is intended for publication, Alexander said, while the committee agreed that questions would need to be asked if the government review does not become available in full.

A webcast of the meeting can be viewed here.

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1 Comment

  1. Kyle Harrison says:

    If London public transport is in much less demand, especially in traditional peak times, surely at some point cuts have to be made to services?

    London has spent thirty years used to always being able to base everything on future growth. It might now have to get used to a new era of decline, fewer people using parts of the city they once used, fewer commuters and maybe fewer people generally living in the city. Not the problem of gentrification but of degentrification. It’s certainly a whole new mindset that London policy makers might have to develop.

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