After weeks of negotiations with the Government, we have finally reached an agreement on the funding needed to ensure Transport for London can continue to provide safe and efficient public transport as the city begins to emerge from the pandemic.
At a time when the national finances are under such stress, these have been understandably challenging negotiations. My team has worked tirelessly to get the best possible deal for London in very difficult circumstances.
The pandemic — during which our staff have worked so hard and so magnificently to keep London moving — has wrecked TfL’s finances. Our disproportionate reliance on fares income compared with other major cities meant that, when passenger numbers plummeted to levels not seen for 100 years, we had no choice but to rely on the Government for funding.
The agreement we have reached provides just over £1 billion in base government funding and further support should our passenger revenue income be lower than forecast until December 11. It means that we can continue to attract customers back and support the recovery of London, operating the near-normal levels of services that we are currently running and ensuring they are clean, safe and welcoming.
It also means we can advance with major projects such as the transformational Elizabeth line, the Northern line extension, expansion of the London Overground to Barking Riverside, upgrading signalling on the Circle, District, Hammersmith & City and Metropolitan lines and the major rebuild of Bank station. And it means we can continue with innovative and creative schemes to decarbonise transport by 2030 and to clean-up London’s air through the expansion of the Ultra-Low Emission Zone, further electrifying the bus fleet, promoting active travel — including more Santander cycles — and improving road safety.
But the conditions placed on us by the Government agreement and the amount of funding we will receive means we need to find a further £900 million of savings or new income this year compared with our approved Budget and on top of the £730million of savings already assumed in our business plan. This is challenging, but achievable. Our income from business rates has been higher than expected, we can use our cash reserve above the legal minimum and, due to the pandemic, we have spent less than was originally forecast. We will now work through this while protecting front-line services to deliver what London needs and to play our full part in the recovery.
Indeed, we had already set out to the Government a plan to become financially sustainable — transitioning to only needing support for capital investment projects that could meet the Government’s priorities. Much is already under way to rebuild our revenue through attracting people back to public transport. Almost 60 per cent of our pre-pandemic ridership is travelling again and that is set to increase further once the Government changes the message about working from home. The vast majority using our services again have said they felt comfortable doing so.
We are joining the Mayor and others in the biggest domestic tourism campaign that London has ever seen. We are also seeking to maximise our revenue through commercial development such as using our land for housing and rebuilding commercial advertising revenue.
But it is vital that we also use this next period to agree the longer-term settlement that TfL and London need. The Government has committed to working with us to get that done when this agreement expires. We will push hard for this so we can plan effectively and get maximum value from our contracts and supply chain.
To do this, and to be as efficient as possible, we must have the stability and certainty of five-year control periods for funding of major capital investment projects. Transport agencies around the world rely on governments for such investment.
Only through this long-term settlement can we play the role that we must play in supporting London’s long-term recovery so that an even better city can emerge and thrive once the pandemic is behind us.
And only a properly -funded transport network will enable a successful London to support economic growth and investment around the country.
Andy Byford is Transport for London commissioner