London mayor Sadiq Khan and rail industry leaders are amongst those calling for a long-term funding solution for Transport for London (TfL), after yet another last-ditch rescue agreement between TfL and the Department for Transport extended the current extraordinary funding financing arrangement to 4 February 2022.
In a timeline reported by TfL to the markets, the long-running saga initially saw TfL announce on 1 June 2021 that an extraordinary funding and financing support package had been agreed between TfL and the DfT to support transport services in London and contribute towards TfL's forecast revenue loss due to reduced passenger numbers as a result of the pandemic. The funding package initially provided support for the period from 29 May 2021 to 11 December 2021.
On 13 December 2021, just last week, TfL announced that the terms of the funding package had been amended to define the funding period as 29 May 2021 to 17 December 2021, to allow TfL to continue discussions with the government in relation to further financial support.
Now, following further discussion, the terms of the funding package have now been amended to define the funding period as 29 May 2021 to 4 February 2022.
But the latest short-term deal has been slammed as a stop-gap measure that forces TfL to plan a managed decline of the capital’s transport network, and leaves one of the country’s major transport networks clinging onto life-support.
London mayor Sadiq Khan, said: “The government is still refusing to properly fund Transport for London which has been severely affected by Covid, yet again only providing a short-term funding deal that will only last a matter of weeks. This means that nothing has changed in terms of TfL having to plan on the basis of a managed decline of the capital’s public transport network.
“As a condition of the emergency short-term funding TfL needs to avoid collapse, the government is forcing us to raise additional revenue in London through measures, like council tax, that will unfairly punish Londoners for the way the pandemic has hit our transport network. Despite these measures, only a long-term funding deal with the government, including additional capital funding, will be enough to avoid significant and damaging cuts to tube and bus services.
“The government needs to realise that a properly-funded transport network in London is an issue of great national importance. TfL has a critical role to play in driving the economic recovery in both the capital and the rest of the country. London’s net contribution to the treasury was £36bn in the year before the pandemic, and TfL contracts contribute around £7bn to the UK economy while supporting 43,000 jobs around the country.
“The Covid pandemic is the only reason TfL is facing a financial crisis, and it’s clear the pandemic is far from over. The government’s short-term deals are trapping TfL on life support, rather than putting it on a path to long-term sustainability. This damaging, unnecessary and clearly politically driven approach cannot continue. Over the next seven weeks, I urge ministers to start engaging with TfL and City Hall in good faith so that we can finally agree a long-term funding deal that will protect London’s transport network – for the sake of the capital and the whole country.”
Andy Byford, London's transport commissioner, said: “There is no UK recovery from the pandemic without a London recovery and there is no London recovery without a properly funded transport network in the capital. It is therefore essential that discussions with government continue so that we can agree the sustained long-term government funding that is vital for the coming years if a period of 'managed decline' of London's transport network is to be avoided. Working together we must achieve this longer term funding settlement that ensures London's transport network can remain reliable and efficient, can support the jobs and new homes that rely upon it and can support the economic recovery of the capital and the country as a whole. This vital job is far from done."
Darren Caplan, chief executive at the Railway Industry Association (RIA), said: “This funding extension will bring some temporary relief to businesses and passengers. The current situation is obviously difficult, with passenger numbers yet to return to pre-pandemic levels, and whilst we are confident numbers will return in the medium term, it is clear further immediate support is needed for TfL whilst fare revenue recovers.
“However, this is yet another stop-gap deal. What is really needed is a long-term funding settlement, similar to Network Rail’s five-year control period, which would provide the resources needed to steer London’s railways through the pandemic and ensure investment now for beyond Covid. Such certainty would enable businesses to invest - in what are challenging economic times - in the people, skills and capabilities needed to maintain and upgrade London’s rail and tube lines, as well as to keep costs down for the taxpayer which only a visible and certain pipeline of work brings.
“Certainty of longer-term railway investment also supports a wider supply chain right across the country, which employs hundreds of thousand of skilled workers. So whilst we hope this short term extension enables the government and TfL to deal with the current problems caused by the pandemic, we also need a multi-year deal to be agreed, to ensure the UK railway industry can not only continue to support sustainable public transport for millions of people in London, but also ultimately get better value for money for the taxpayer.”
Nick Bowes, chief executive at Centre for London, also called for a long-term funding solution to be found. He said: “While it is good news there’s emergency funding to allow TfL to keep the buses and tubes running the bad news is it’s only enough for a matter of weeks. Another rollover deal is not what London needs. An 18-month deal would have been much better to see the city through this difficult period and allow proper long term planning on funding of public transport in London. Instead, it’s more uncertainty, an inability to invest or plan long term, and more TfL people hours diverted into negotiations with the government at a time when this would be better spent keeping the network running during the rising threat of the omicron variant.
“Many will be watching what looks like a party political battle going on and wondering why in a time of crisis both sides can’t focus on what really matters: giving London the public transport system it needs to function and play its role as a driver of the UK economy.”