Fares are set to rise across Transport for London services in return for the Government providing a £1.6bn emergency funding package.
The agency’s finances have been hit hard by the coronavirus shutdown which has seen passenger and journey numbers plummet by up to 95%, costing TfL much needed fare revenue – which accounts for almost half of all its income – plus advertising and commercial revenue and leaving the agency facing an estimated funding gap of up to £3bn.
Talks between TfL and the Government have been underway for weeks and in recent days both the agency and Mayor Sadiq Khan have sought to pile pressure on ministers by threatening to further reduce the already scaled back bus and tube services.
On Friday ministers confirmed a £1.095bn grant would be provided to TfL which is also being allowed to borrow an additional £500m.
The funding comes with a number of conditions, including that fares increase above inflation next January and that services return speedily to pre-pandemic levels. This condition could potentially cause TfL and City Hall problems with transport unions which had been pushing for a slower return to normal.
The deal also removes the ability for Freedom Pass holders to travel during peak hours, thereby reducing demand and helping to ease over crowding, suspends free travel for under 18s, and forces the Mayor to accept the imposition of Department for Transport representatives on the TfL board, effectively ending the agency’s two decades of full independence from Whitehall.
Announcing the funding, Transport Secretary Grant Shapps said: “People should avoid using public transport and work from home wherever possible, but as measures are slowly lifted it is vital that Londoners who need to use TfL services feel safe and secure.
“We must drive an increase in services to support social distancing and ensure our capital keeps moving, driving the economic recovery of this country going forward.
“This deal will encourage a real move towards greener and healthier walking and cycling options, ease pressure on our public transport and provide certainty and stability for London’s transport services in the future.”
Transport Commissioner Mike Brown welcomed the Government’s assistance which he said “will help us continue to get London moving and working again, safely and sustainably.”
He added: “We have been operating up to 70 per cent of peak Tube services and over 80 percent of bus services with many of our staff ill, shielding or in self isolation.
“From next week we will further increase services beyond this as we progressively build towards restoring services to pre-covid levels.”
In a separate statement, Mayor Khan branded the deal “a sticking plaster” which fails to take account of the capital’s needs and criticised ministers for “making ordinary Londoners pay the cost for doing the right thing on Covid-19,” by insisting on fares increases and providing some of the bailout via a loan.
Despite his complaint, the Mayor had previously indicated that some fares would rise if he was re-elected at the now delayed election and TfL’s own business plan had assumed sustained fares increases in the coming years.
His flagship fares freeze is estimated to have cost TfL around £600m over the course of his four-year term, money the agency might have had available to help it through the current crisis, though it would have still needed significant government support to fully offset the impact of the shutdown.
Mr Khan said: “I want to be completely honest and upfront with Londoners – this is not the deal I wanted. But it was the only deal the Government put on the table and I had no choice but to accept it to keep the Tubes and buses running.”
He added: “This deal is a sticking plaster. The old model for funding public transport in London simply does not work in this new reality – fares income will not cover the cost of running services while so few people can safely use public transport.
“Over the next few months we will have to negotiate a new funding model with Government – which will involve either permanent funding from Government or giving London more control over key taxes so we can pay for it ourselves – or a combination of both.”
Commenting on the deal, Emma Gibson, Director of passenger watchdog London TravelWatch, said: “It’s a great relief to Londoners to see this funding package in place but we are worried that the deal will mean fares hikes for transport users who can least afford them.
“Key workers and those who cannot work from home are often amongst the lowest paid and often have to travel long distances for work. Lower income Londoners are particularly reliant on the bus and London TravelWatch are seeking assurances that bus fares in particular will be kept as low as possible”
“70% of passenger rail journeys either start, finish or pass through London so having a good public transport system in London matters to the whole of the UK.
“Passengers in and around London already cover a higher percentage of operational costs than those elsewhere in the UK so its important that the costs of public transport are spread out fairly.”
Siobhan Benita, the Liberal Democrat candidate for Mayor, said Mr Khan’s hand had been “weakened” in negotiations with the Government because TfL’s finances “were in a mess before this pandemic”
She added: “Ultimately, it is hardworking Londoners who are going to foot the bill – with forced increases in fares, concessions scrapped and major improvement projects under threat.
“We now need to radical action to secure the long-term financial sustainability of TfL, including scrapping the £1billion polluting Silvertown Tunnel project and spreading the revenue-raising burden from public transport passengers to drivers, by introducing smart road pricing in the capital.”
Alison Moore, Chair of the London Assembly Transport Committee, said: “London’s transport system is the lifeblood of the city and it’s vital to the economic and social recovery of London in the midst of COVID-19, and as we emerge from it. It is essential that buses and Tubes continue to run, so that journeys that depend on public transport can made in ways that are safe for passengers and transport workers.
“We hope the Government is not exacting too high a price on Londoners when it comes to affordability. It is important to note that this financial support is for four and a half months only.
“It is vital that further discussions take place during this period and we will be looking closely at the details and implications of the financial deal and the caveats attached to it in future meetings, to ensure TfL can continue to deliver for all Londoners.”