London ball

Charles Wright: What will the government do next for Transport for London?

With just 18 days to go until Transport for London’s latest bailout deal expires, the pressure and rhetoric rise on all sides.

TfL is big business: carrying four million or more passengers a day on the Tube in normal times, keeping the city moving and supporting jobs across the country. It was also progressing towards self-sufficiency, until Covid revealed the weakness of a system relying on tariffs for 72% of its revenue and left the network dependent on funding from Whitehall.

So what’s going on between TfL, the government and the town hall?


Whitehall has backed TfL with more than £4bn in funding to date, but through ‘contingent’ short-term deals. They say there will be no more bailouts after April next year.

It is this deadline, reluctantly accepted by Sadiq Khan, which poses the major challenge for TfL – to make up for this lost revenue and balance its books in 2023/24.

For the coming financial year, 2022/23, TfL estimates it needs around £1.1 billion in additional aid, including to enable it to comply with its legal obligation to balance its books, which the government recognized.

So the current stalemate is not so much about whether TfL avoids collapse in April, but about the price the government will make the beleaguered network pay for the next bailout.

For the government, the key key requirement is that TfL is identifying between £500,000 and £1 billion a year from April 2023 to close the budget gap, using only the ‘existing’ powers of the mayor and TfL.

This means Khan’s suggestion of a new tax on home deliveries is ruled out, along with his bid for the £500m-a-year vehicle excise duty that Londoners pay to the Treasury, of which only a small part is spent on London roads. The much-discussed ‘border fee’ on non-Londonians driving in the capital was also vetoed, as TfL confirmed at the London Assembly last week.


There is more than a little frustration at TfL headquarters that negotiations have not progressed beyond demanding a greater contribution from the mayor to balance the books while ruling out most of the upcoming suggestions.

“The main sticking point is the government’s insistence that City Hall make a bigger contribution,” TfL’s outgoing finance chief Simon Kilonback told the London Assembly last week. “But we haven’t been told what the government will decide on,” he added, perhaps offering a clue as to the reasons for his decision. recently announced departure for the private sector.

The government has also denied TfL any additional capital funding over the next three years, a move network leaders say hampers planning, undermines progress towards the goal of reaching ‘net zero’ of by 2030 and increases ongoing maintenance and renewal costs, making a “controlled decline” even more likely scenario.

Small-scale service cuts are already underway, and the government’s position has khan forced propose fare increases, changes to ticketing arrangements, a reduction in travel concessions for the over 60s and an increase in the council of mayor’s tax precept of around £20 a year from band properties D over the next three years.

With these measures only generating enough cash to close around half of the £500m-a-year funding gap, the government has so far not hesitated.


Government, City Hall and TfL are still a long way off, and the ball is currently in Khan’s court, with a deadline on Wednesday for him to bring more ideas to the table.

Options are limited, according to Kilonback, with Khan considering expanding ultra-low emission and congestion charging zones and/or moving to a more sophisticated road user pricing system.

“Dynamic” Tube fares – prices that vary to match demand – could also be considered and the government will continue to press for progress on so-called driverless trains and changes to TfL’s pension fund to reduce costs, although these are longer-term measures.

There may also be tough negotiations over fare levels and revenue, with the opening of the Elizabeth line this year set to bring in £1.3billion in fares over the next three years – although the figure be well below pre-Covid estimates – and the end of the “work from home” orientation perhaps bringing new momentum.

The process is a stark illustration of the extent to which London’s public transport system is now “micromanaged” by Whitehall, according to Nick Bowes of the Center for London. “The legislation makes it clear that TfL is devolved, but the GLA is circumvented and control exercised through conditions attached to funding instead,” he said. commented.

And if the town hall’s plans do not meet government approval, the final option is “pretty simple”, as TfL chief Andy Byford told members of the London Assembly. “If you don’t have the revenues but you still have the costs, the only option is the cuts. You cannot solve the problem by tightening your belt.


TfL will get through the next financial year, although a six-month deal with the government would allow Whitehall to keep the pressure on in the fall.

But questions remain about the unsustainability of TfL’s pre-Covid funding model, who should pay the subsidy the system will inevitably need and what the balance should be between tariffs and other sources of income as well as wider implications for London and the country if the network is allowed to decline.

How to meet the significant costs of grid decarbonization, if it is to happen by the target date of 2030, is another critical question.

As Kilonback told Assembly members: “We haven’t really discussed the common priorities for the transport system in London, what results we want to achieve and how they should be funded.” To date, political considerations have been at the forefront of discussions about TfL’s future. With the next mayoral election just over two years away, that may remain the case.

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