Transport for London and the Department for Transport have reached an agreement over a second extraordinary funding and financing package worth up to £1.7 billion.
This will provide financial support until March 2021 and is focused on protecting services and ensuring London’s can continue to operate until the end of the financial year.
As with the national rail operators, buses and tram systems, the government will make up all the fare revenue which TfL has lost due to the Covid pandemic through this support package.
National taxpayers will also continue to fund free travel concessions to standard English levels and free travel to school for children who qualify under national legislation. Nearly all the package will be grants and £95 million will be loans.
The Mayor of London has also chosen to make £160 million in savings over the next six months in TfL and raise fares by RPI+1 per cent.
In the agreeing the bailout, the Mayor proposes that he could, pay for these concessions by retaining the central London congestion charge at its current level and by increasing the existing TfL element of the GLA’s council tax precept. He must make his final choice by January 2021, at the same time as he presents a plan for the long-term financial sustainability of TfL.
Expanding the congestion charging zone to inner London has been ruled out by both the government and the Mayor. The Freedom Pass for pensioners will continue as now, as it is not funded by TfL or the Mayor.
The two government special representatives will continue to sit on TfL’s board. A new Government-chaired government oversight group will monitor the implementation of the agreement and the sustainability plan.
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.”
Transport Secretary Grant Shapps said: “This deal is proof of our commitment to supporting London and the transport network on which it depends. Just as we’ve done for the national rail operators, we’ll make up the fare income which TfL is losing due to covid. Londoners making essential trips will continue to be able to use tubes, buses, and other TfL services, thanks to this Government funding.
“At the same time, the agreement is fair to taxpayers across the country. The Mayor has pledged that national taxpayers will not pay for benefits for Londoners that they do not get themselves elsewhere in the country.
“Over the coming months, as we look to move beyond the pandemic, I look forward to working with London’s representatives to achieve a long-term settlement, with London given more control over key taxes so it can pay more costs of the transport network itself. This agreement marks the first step towards that, potentially allowing a longer-term, sustainable settlement for TfL when the course of the pandemic becomes clearer.”