London Mayor Sadiq Khan warns of fare rises and bus service cuts as transport funding deal agreed

Carolyn Sim reports on why a deal doesn't mean the end of problems on London transport

Millions of commuters could suffer fare rises and service cuts despite agreement over a funding package to protect London’s transport network. The Department for Transport confirmed it has struck a deal with Transport for London (TfL) to help the service cope with potential lost revenue caused by uncertainty over post-pandemic demand. TfL expects to receive around £1.2 billion of funding from the Government until the end of March 2024 to help should passenger numbers not recover at the rate budgeted for. But London mayor Sadiq Khan said a £740 million funding gap remains in TfL’s budget over the next 20 months, with fare increases and service cuts under consideration alongside efficiency savings. Mr Khan accused the Government of seeking to provoke further industrial action under the terms of the agreement, which require him to continue work on introducing driverless trains on the London Underground and seek pension reforms.

Assurances over revenue will enable TfL to commit to £3.6 billion on investment projects. These include new Piccadilly line trains as well as modernisations and upgrades, such as support for the repair of Hammersmith Bridge and extension of the Northern line.

'Funding gap of £740 million'

Mr Khan said: “We’ve got from the Government today an additional £1.2 billion towards revenue, £3.6 billion towards capital, but there’s a funding gap of £740 million over the next 20 months. “So we’ve got to find that with a combination of savings and increasing revenues, and that’s one of the reasons why I’m saying to London this deal is far from ideal but the alternative would have been basically handing the keys back and bankruptcy. “It’s going to be tough, we’re going to work incredibly hard – now we’ve got a deal done, we’re going to find a way to make savings.”

Mayor of London Sadiq Khan on the Waterloo and City Line underground line Credit: PA

Mr Khan said £1 billion has been saved from TfL’s operating costs in the last five years, adding: “The bad news is there could well be increases in fares coming during the midst of a cost-of-living crisis, which to me seems nonsensical, but also we could see some cuts in services to make sure our books balance. “What we can’t afford to do is to have an unbalanced budget and that’s why it’s really important for me to be frank and honest with Londoners about some of the consequences of this deal with the Government.”

Mr Khan said the deal means they have avoided the “managed decline” of TfL and major cuts to services and jobs, but he voiced concerns over conditions attached to it. He said this included a requirement for TfL to aim to find up to £100 million of savings in its pensions, adding: “That’s been designed, I think, to provoke industrial action because the Government is keen to play party politics with what I think should be part of our national recovery plan – that we should have TfL firing on all cylinders.”

Asked if the requirement for him to continue work on introducing driverless trains on the Underground network was similarly provocative, the Labour politician replied: “Yeah, for us to get to a position where we have driverless trains on the Underground, it’d cost billions and billions of pounds of money to change the trains, to change the signalling, to change the platforms, to change the infrastructure, some of the tunnelling, so it’s a ridiculous suggestion from the Government and it’s only done to provoke industrial action.”

A dispute over jobs and pensions has resulted in strikes hitting TfL services in recent weeks. The capital’s transport body has been reliant on money from the Government to keep services running during the coronavirus pandemic.

'Unwavering commitment to London'

The Government says its support now totals more than £6 billion. Transport Secretary Grant Shapps said: “For over two years now we’ve time and again shown our unwavering commitment to London and the transport network it depends on, but we have to be fair to taxpayers across the entire country. “This deal more than delivers for Londoners and even matches the mayor’s own pre-pandemic spending plans, but for this to work the mayor must follow through on his promises to get TfL back on a steady financial footing, stop relying on Government bailouts and take responsibility for his actions. “Now is the time to put politics to one side and get on with the job – Londoners depend on it.”

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