TfL funding crisis: Government extends £200m deal but Sadiq Khan warns services could still be cut

Cash-strapped Transport for London has struggled as the pandemic dealt repeated blows.

Emergency funding for Transport for London (TfL) has been extended for four months.

The deal, worth £200 million, is the fourth funding settlement of the pandemic and takes Government support close to £5 billion.

The government said the settlement includes conditions to put TfL on track to financial sustainability by 2023, and includes the potential for a longer term capital settlement “dependent on the mayor and TfL’s co-operation”.

However, London Mayor Sadiq Khan has described the deal as a "relief" but characterised it as a short-term bandaid that would not save services from cuts in the near future.

The settlement comes amid a challenging period for the capital's public transport network, as commuters face imminent fare hikes, Night Tube strikes are set to continue until June, and a separate fresh round of strikes on the London Underground was confirmed for next week.

Tube driver pay is also in the spotlight, after ITV News London exclusively revealed Underground drivers are set to receive a bumper pay-rise from the cash-strapped service.

Ahead of Friday's announcement, Londoners had been warned to brace for council tax hikes to plug the gap in the city's transport network funding.

The mayor said he was being forced to increase council tax by £31.93 a year on average - or £2.66 per month in order to help prevent the network from collapsing.

Transport Secretary Grant Shapps said of the TfL funding settlement: “Over the past two years, the government has repeatedly shown its commitment to London and the transport network it depends upon by providing close to £5 billion in emergency funding.

“These support packages must be fair to all taxpayers and the settlement agreed today provides enough to cover lost revenue from the pandemic while the mayor follows through on his promises to keep TfL on the path to financial sustainability by 2023.”

Credit: PA

Andy Byford, London’s Transport Commissioner, said: “Following discussions and negotiation over the last few weeks, I’m pleased that the government has today confirmed an extension of its funding support for TfL through until June 24 2022, for which we are grateful.

“There is no UK recovery from the pandemic without a London recovery and there is no London recovery without a properly funded transport network in the capital.

“The mayor has already set out a range of proposals that will help support TfL’s financial sustainability in the future but it is essential that agreement is reached with government on longer term capital support during this funding period.

“This is crucial for the coming years if a period of the ‘managed decline’ of London’s transport network is to be avoided.

Night Tube. Credit: PA

“We will be meeting regularly to work towards agreement on the Government funding of the capital investment priorities shared by them, us and the mayor.

“The government has confirmed in this agreement that they support the operation and maintenance of essential and safe transport services in London, enabling us to continue our full and vital contribution to economic recovery and to support the government’s priorities on decarbonisation, air quality and making transport better for users.”

Mr Khan said: “While I welcome and am relieved about this funding, once again the government has just provided a short-term funding deal that will only enable TfL to continue running transport services for a few more months.

“This agreement makes reference to future capital investment for TfL, but it’s essential that this quickly turns into a concrete commitment from the government.

“The only way we will be able to avoid significant and damaging cuts to Tube and bus services is if the government steps up and provides the longer term capital funding TfL urgently needs.

“The pandemic is the only reason TfL is facing a financial crisis. TfL has a critical role to play in driving the recovery and it supports tens of thousands of jobs across the UK, but the government’s short-term deals are trapping TfL on life support and putting economic growth and jobs at risk.”