Fares rises in January, Freedom Pass peak use curtailed to shield vulnerable and DfT oversight are amongst conditions of support package

 
London mayor Sadiq Khan said the deal was not the one he wanted and described it as a “sticking plaster”

 
Transport for London secured a bailout from the government last night just hours before the organisation would have been forced to make cuts to its network and services.

Several sources have revealed that TfL was preparing to issue a Section 114 notice when its cash reserves, on which it has been largely relying on since the start of the lockdown and which had decimated patronage on London’s transport network, dipped below £1.2bn.

The Section 114 notice is an instrument that allows public sector bodies to implement immediate spending restrictions, creating breathing room to allow time for financial restructuring.

TfL and City Hall officials are believed to have requested around £2bn in funding, but the package agreed last night totals £1.6bn. This comprises an Extraordinary Support Grant of £1.095bn and incremental borrowing by Transport for London from the Public Works Loan Board of £505m.

Sources suggest this is a sticking plaster that will will see TfL over the next couple of months. The agreement does offer some flexibility though, given the continuing uncertainties in predicting demand and fare box income.

If the actual funding shortfall for the period is greater or less than £1.6bn, then the amount of the Grant and the PWLB loan will increase or decrease proportionately, up to a maximum of £1.9bn in aggregate. The funding requirement will be kept under review until October 17.

A combination of future measures from TfL, Greater London Authority and the government will be implemented to enable TfL to maintain essential services and deliver a revised balanced budget over the remainder of the financial year

“In recognition that the current circumstances are likely to present ongoing financial challenges, a combination of future measures from TfL, Greater London Authority and the government will be implemented to enable TfL to maintain essential services and deliver a revised balanced budget over the remainder of the financial year,” said TfL in a statement.

“During the period in which the Funding Package is being provided to TfL, appropriate governance and oversight arrangements will be put in place, allowing the parties to work closely together.”

This scrutiny includes the appointment of two government special representatives to TfL’s board, its finance committee and its programmes and investment committee. Regular financial updates will be provided by TfL to ministers and the DfT.

The government will also carry out an immediate and broad-ranging review of TfL’s future financial position and structure, including the potential for efficiencies.

Other conditions include a return to a full service on the TfL network as soon as possible. Fares will also be increased by RPI+1% in January, ending London mayor Sadiq Khan’s four year fares freeze.

The package will see the reinstatement of the Congestion Charge and Ultra Low Emission Zone from Monday and bus fares will be reintroduced.

It has been reported that the Congestion Charge will be restructured with fees hiked from £11.50 to £15 per day and operating hours extended from June. This would see the scheme operating seven days a week instead of weekdays only and between 7am and 10pm instead of 7am and 6pm.

The Freedom Pass concessionary fare scheme will be temporarily suspended in the morning and evening peaks in a move that aims to safeguard vulnerable older people by keeping them off the transport network at busy times. Disabled passengers will not lose their free travel entitlement in the peaks.

It will also see temporary suspension of free travel for under 18s and special arrangements will be made to ensure children eligible under national legislation can still travel to school for free.

Both of these changes will take place soon as practicable. Meanwhile, TfL will support the governments ‘Stay Alert’ message rather than the GLA’s ‘Stay at Home’ message.

I welcome this support from government which will help us continue to get London moving and working again, safely and sustainably

“I welcome this support from government which will help us continue to get London moving and working again, safely and sustainably,” said Mike Brown, London’s transport commissioner.

“London’s transport network is absolutely fundamental to the economic, social and environmental health of the capital.”

However, Brown admitted that enormous challenges remain for TfL, “including agreeing longer term sustainable funding for transport in the capital.”

Sadiq Khan said the deal was not the one he wanted and described it as a “sticking plaster”.

“The old model for funding public transport in London simply does not work in this new reality – fares income will not cover the cost of running services while so few people can safely use public transport,” he said.

“Over the next few months we will have to negotiate a new funding model with government – which will involve either permanent funding from government or giving London more control over key taxes so we can pay for it ourselves – or a combination of both.”

 
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