Hammersmith Bridge and Piccadilly Line trains included in £6 billion package

Deal secures financial stability for network until March 2024

After months of protracted negotiations, Transport for London (TfL) and the Department for Transport (DfT) have finally agreed on a long-term package of funding for the capital’s transport network.

Before the agreement, TfL was having to rely on cash reserves to keep its operations running. The current deal should ensure the financial stability of the organisation until 31 March 2024.

Full details of the agreement have yet to be published, but the government says that it amounts to over £6 billion and matches the Mayor’s own pre-pandemic spending plans.

TfL is to be given £1.2billion up front to cover existing deficits and there is nearly £3.6 billion being made available for investment in the network. Projects that will be funded include the repair and full reopening of Hammersmith Bridge (with a caveat from the DfT that costs must be kept under control) and new trains for the Piccadilly line as well as modernisation of the District, Metropolitan, Hammersmith and City and Circle lines. A project to extend the Northern Line is also being provided with funding.

The Mayor has also agreed to continue investigating the introduction of driverless trains across the London Underground network which the government believes could help with longer term sustainability.

No mention is made in the announcement of the deal, which was completed on Tuesday 30 August, of the upgrade to signalling on the Piccadilly Line which would significantly boost the regularity of trains and allow a stop to be introduced at Turnham Green station.

£80 million each year is being put aside for active travel schemes.

The deal also sees the establishment of an independent property company that will start on 20,000 homes on TfL’s land within ten years.

The Mayor has made commitment to submit a proposal for the reform of the staff pension fund and continue the introduction of revenue generation programmes such as the extension of the ULEZ to outer London.

He said that the “good news” was that the bailout means TfL will no longer have to make “devastating cuts” to services but warned that the situation was still “far from ideal”.

He added, “The Government is still leaving TfL with a significant funding gap, meaning we will likely have to increase fares in the future and still proceed with some cuts to bus services. There are also onerous strings attached, such as the Government’s condition requiring TfL to come up with options for reform of TfL’s pension scheme at pace, which could well lead to more industrial action and more disruption for commuters.

“These are things we have had no choice but to accept in order to get the deal over the line to avoid TfL becoming bankrupt, to save the jobs of thousands of transport workers and to keep trains, tubes and buses running across our city.”

Despite the deal having been agreed, TfL must still find an additional £230 million before March 2024, with a four per cent cut to bus services across London on the cards – less than the 18 per cent cut forecast had a deal not been reached.

Siân Berry AM, Chair of the London Assembly Transport Committee, said, "We welcome the news a deal has been done -- it was a long time coming.

"TfL made it clear to Government that it would need £927m for the remainder of this year, as well as a long-term capital funding deal to support London's economic recovery. There is still a significant gap and we are concerned about potential cuts to services and transport improvements that may now follow.

"During the pandemic, train operating companies nationally received continuous financial settlements, totalling more than £10.4 billion to 24 July 2021. In contrast, TfL has received numerous short-term funding settlements from Government, totalling around £4 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.”

Transport for London Commissioner Andy Byford said, “This agreement, which was hard won, means that we can now get on with the job of supporting London’s recovery from the pandemic - to the benefit of the whole country. There is no UK recovery without a London recovery, and no London recovery without a properly funded transport network.

“The agreement with Government means that across the funding period, TfL expects to receive further base funding of around £1.2bn from Government until March 2024 and gives TfL ongoing revenue support should passenger numbers not recover at the rate budgeted, which is crucial at this time of ongoing economic uncertainty. It helps us avoid large-scale cuts to services, and means that we will commit £3.6bn to capital investment over the period, with around £200m of new capital funding from Government beyond previously budgeted sources like business rates, which were devolved to the Mayor in 2017. The agreement also allows us to increase our asset renewal programme to help ensure our network remains reliable, and means we can restore our Healthy Streets programme, making our roads safer, and more attractive for those walking and cycling.

“The support offered by Government left an unfunded gap in our budget, which we have been working hard to identify how we will fill. This work has made good progress and we are confident that we will achieve an outcome that allows us to balance our budget and maintain our minimum cash balance. We will need to progress with our plans to further modernise our organisation and make ourselves even more efficient, and we will still face a series of tough choices in the future, but London will move away from the managed decline of the transport network. We are grateful for the support of both the Mayor and the Government as we now set out to continue serving the capital and investing in safe and reliable services for the millions of people who need them.”

September 3, 2022