Tube fares will rise and more bus services will be cut in the capital, mayor Sadiq Khan has warned after Transport for London agreed to accept a £1.2billion funding settlement from the government.
The deal, slightly improved on a “final offer” made in July by Transport Secretary Grant Shapps, was hailed by TfL as avoiding a “controlled decline” in its transport network.
But Khan warned it was “far from ideal” and still presented London with a £600m shortfall from its budget.
The Department for Transport said the settlement would ‘secure the long-term future of London’s transport network’ and match TfL’s pre-pandemic spending plans – although not adjusted for inflation.
The funding would enable investment to continue, including new Piccadilly line trains and other tube improvements, the DfT said. Hammersmith Bridge will be repaired and an annual investment of £80 million in active travel programs to develop walking and cycling infrastructure will be secured.
TfL’s board decided at an emergency meeting on Tuesday afternoon to accept the deal, nearly four weeks after ongoing short-term bailouts expired.
This brings TfL’s total Covid-era emergency funding to around £6billion. TfL’s finances have been wrecked by the coronavirus pandemic, with its budget largely dependent on revenue from Tube tickets. Ridership fell to 4% of normal levels in 2020 and only recovered about 70% of 2019 levels on weekdays.
Shapps said: “For over two years now, we have time and again shown our unwavering commitment to London and the transport network on which it depends, but we must be fair to taxpayers across the country.
“This deal does more than deliver Londoners and even matches the mayor’s own pre-pandemic spending plans, but for it to work the mayor must deliver on his promises to put TfL back on a stable financial footing, stop relying on bailouts government and take responsibility for its actions. Now is the time to put politics aside and get to work – Londoners depend on it.
Khan said a number of key concessions meant TfL could avoid “having to make the devastating cuts to vital transport services previously proposed – moving us away from the managed decline of London’s transport network”.
However, he added: “This agreement is far from ideal. The government still leaves TfL with a significant funding shortfall, which means we will likely have to increase fares in the future and continue to make some reductions in bus services.
He warned that “onerous conditions attached”, including a condition requiring TfL to work out options for reforming its pension scheme, were likely to cause more industrial action and disruption for commuters. The RMT union has already organized a series of strikes in the capital this year over the issue.
Khan said TfL had “no choice but to agree in order to complete the deal to prevent TfL from going bankrupt, to save the jobs of thousands of transport workers and to ensure that trains, tubes and the buses continue to circulate in our city”.
He added: “The sole cause of TfL’s financial crisis was the impact of the pandemic, so it is simply wrong to punish Londoners and transport workers in this way.”
TfL commissioner Andy Byford said the funding had always left a hole in the budget but “avoids the doomsday scenario”.
He said: “We stood up for Londoners and fought for a fair quantum. It’s not the three-year agreement we wanted, but it protects us longer than expected.
“We will need to progress with our plans to further modernize our organization and make ourselves even more efficient, and we will still face a series of tough choices in the future, but London will walk away from the controlled decline of the transport network.”
The deal secures a level of revenue until March 2024, but will still leave TfL looking for around £230million in further savings over the next two years.
The town hall, however, believes it has obtained enough concessions to avoid the worst cuts, avoiding having to abolish free travel for those under 18 and giving TfL some leeway on the controversial pension reform. He will now have to provide options rather than proposals for workers’ pensions – one of which, Byford said, would be to “do nothing”.
TfL’s funding deal means Tube fares must rise and bus services must be cut