Transport for London (TfL) announced today (21 February) that its current emergency funding agreement has been renewed for the second time, now extending it until this Friday (25 February). The transport authority, which has a current funding gap of around £1.9billion, has revealed it needs ‘a longer-term capital funding settlement of at least three years “.
Each of the four previous times TfL and the government negotiated an emergency funding deal, they only managed to agree on funding for a few weeks or months just to keep the system running. It’s called ‘operational funding’ because it’s what TfL needs to keep running on a day-to-day basis. As TfL Commissioner Andy Byford pointed out to the London Assembly Transport Committee on February 9, TfL must now secure “equity funding”, i.e. investment that allows it to buy all the new things it needs to replace old assets that will expire or to build new infrastructure that will be needed in the future. The issue of capital funding appears to be at a standstill, causing negotiations to come to a head.
The capital funding would help TfL upgrade the signaling system on the Piccadilly line to ensure new trains being built can operate efficiently, it could fund the construction of a long-requested DLR extension to Thamesmead and it can ensure Bakerloo line trains which are at risk of being one of the world’s oldest in passenger service can be replaced in a timely manner.
READ MORE: ‘ TfL’s funding crisis is the new Brexit and the sooner everyone realizes it the better’
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Negotiations continue as TfL and the town hall desperately try to open the Elizabeth line as quickly as possible and stem the drop in passenger numbers on TfL weekday services. Mayor of London Sadiq Khan said: “This extension of the current funding agreement until Friday 25 February will allow negotiations to continue.
“The pandemic is the only reason TfL is facing a financial crisis. I urge the Government to engage in good faith with TfL and City Hall so that we can finally agree a fair, long-term funding deal that will protect London’s transport network – for the benefit of the capital and from all over the country.
“London’s economy plays a huge role in the national economy and around 43,000 jobs outside of London depend on TfL’s investment. Failure by the Government to support TfL at this difficult time could impact TfL’s supply chain across the UK, affecting jobs and growth and stunting economic recovery in London and across the UK.
As part of the conditions attached to previous TfL funding deals, the government ordered TfL to reassess Tube workers’ pensions (resulting in a planned strike on March 1-3) and generate £500m new income or savings. Every TfL service is also being overhauled, with 300 buses having already been removed across 41 bus routes. In a worst-case ‘managed decline’ scenario, where TfL receives less money than it needs to keep the network thriving, 100 bus routes face the ax along with 9% of all metro services.
City Hall has told MyLondon it may consider declaring TfL bankrupt under Section 114 of the Local Government Finance Act 1988 instead of accepting a capital-damaging funding deal. An update on the negotiations is expected by the end of the week.
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