TfL has reached an agreement with the Government for up to £1.8bn of funding to compansate for the loss of revenue due to coronavirus
The funding agreement has been reached to enable Transport for London (TfL) to continue to support the capital for the remainder of the financial year as discussions on longer-term sustainable funding continue.
The funding and financing support package agreed between TfL and the Department for Transport will ensure funding is available to TfL to address its forecast funding shortfall, arising from the loss of passenger revenue as a result of the coronavirus pandemic and will provide TfL with a core amount of £1bn for the period between 18 October 2020 and 31 March 2021. It will consist of an Extraordinary Support Grant of £905m and incremental borrowing by Transport for London from the Public Works Loan Board of £95m.
The funding amounts assume that the passenger demand over the support period will stay at approximately 65% of pre-coronavirus levels, higher than the ridership assumptions in TfL’s revised budget, published in July 2020, which forecast a funding shortfall of approximately £2bn for the second half of 2020/21.
Recognising high level of uncertainty in predicting the future passenger revenue over the support period, the funding package permits modification of the total amount of support up or down depending on actual passenger revenues. It is expected to provide approximately £1.8bn of funding based on the amount of passenger revenue assumed in TfL’s revised budget, but this could increase if actual revenues are lower than that.
TfL will commit to contributing approximately £160m to the forecast funding shortfall in the form of additional income or savings through a mixture of lower capital and operating expenditure supported by stronger financial control measures.
Andy Byford, London’s Transport Commissioner, said: “Reaching this agreement with the government allows us to help London through this next phase of the pandemic. We will continue to work with the Mayor and the government on our longer-term funding needs. As always, our staff are working tirelessly to serve London’s people and businesses; supporting the city’s economy and providing an excellent, safe and reliable service to our customers every day.”
The current £15 a day congestion charge – which was introduced as a temporary measure – will be retained, as will its longer hours of operation from 0700 to 2200hrs on weekdays and at weekends and the current temporary removal of free travel in the morning peak for holders of 60+/older persons freedom pass will continue. London’s Evening Standard reported that sources close to the negotiations suggested this is likely to add between £30 and £50 to the Mayor’s share of band D council tax bills, though City Hall said the increase would be ‘modest.’
London TravelWatch director Emma Gibson told the newspaper: “We are relieved that TfL has agreed a new funding deal with the Government, averting the nightmare scenario of a virtual public transport shutdown in London.
“It is good news that free travel for under-18s and over-60s will not be removed and a huge relief for passengers that the proposed substantial fares hikes are no longer on the cards, although the planned inflationary rise in January will still hit many key workers and low income Londoners hard.
“No doubt more details will come out over the coming days, which will spell out how cuts of £160m will have to be made by TfL. This could mean that there are still some nasty surprises in store for Londoners, including cuts to vital services.”