The government currently provides around £600m in grants each year to help offset some of the agency’s operating costs but in his latest spending review Mr Osborne announced that this cash will stop in 2018.
City Hall and TfL had expected the grant to continue until 2020 and today’s news will require the organisation to cut overheads and further develop plans to raise more money from commercial ventures sooner than anticipated.
Over the past few years it’s signed deals with supermarkets and other retailers to offer ‘click and collect’ services at stations, struck new sponsorship agreements and drawn up plans to become a major property developer.
Such schemes will now become ever more important to TfL’s finances and could limit the scope for future mayors to freeze or cut fares without first being able to guarantee either additional commercial revenue or identify savings to cover the costs of their policies.
Government will continue to provide funding for new upgrades and other infrastructure schemes and Mr Osborne confirmed today that £11bn would be provided for this by 2020/21 with further money available to develop plans for the new Crossrail 2 scheme.
Transport Commissioner Mike Brown said the money would allow TfL to “continue to modernise and improve London’s road, rail and cycling networks, its environment, air quality and accessibility.”
He added that today’s announcement meant that “tough decisions” would be necessary to protect and modernise frontline services while securing “more efficiently for fare and tax payers”.
Mr Osborne’s pledge to continue investing in transport schemes has been welcomed by Suzanne Moroney, London Director at the Institution of Civil Engineers, who said: “Through investing in London’s transport system, the Government can help unlock vital housing opportunities and boost the city’s productivity, ensuring London remains attractive for businesses and residents alike”
