A package of funding has been agreed by the government and Transport for London.

At a finance committee meeting on 12th May, Transport for London revealed that it had a shortfall in its budget of around £3.2 billion for this year, 2020/2021.

The Department of Transport has announced the broad terms of deal:

  • A grant of £1.095 billion and a loan of £505 million, runs until October 2020
  • An increase fares next year on all modes by RPI plus 1%, in line with the proposals in TfL’s own business plan
  • A temporary suspension of the Freedom Pass and 60+ card concessions to off peak hours
  • A temporary suspension of free travel for under 18s [those in receipt of free travel to school still travel free to and from school]
  • Two special representatives will represent the government on TfL’s board, its finance committee and its programmes and investment committee, in order to ensure best value for money for the taxpayer.
  • An immediate and broad-ranging review of the organisation’s future financial position

It should be noted that the half a billion loan will be added to TfL’s borrowing. In proportion to its income, TfL are carrying a lot of debt already says londonreconnections.com

Understanding the relationship between debt and revenue is essential.

Explains the relationship between revenue and debt

From Monday, the congestion charge will be reintroduced (and it’ll rise from 22 June 2020).

The £11.50 congestion charge for people driving into the city will resume. At the moment this is only charged on weekdays, but from 22 June 2020 this will rise from £11.50 a day to £15, and the hours of operation will be extended to 7am until 10pm every day. This will be in place for one year, but could be made permanent.
The ultra low emission zone charge will return on Monday. This will be in operation for 24 hours a day (as it was previously) and there’ll be no change to the £12.50 cost for most vehicles.

Thanks to https://www.moneysavingexpert.com/

At the finance committee meeting, Deputy Mayor for Transport, Heidi Alexander said:

“My view is really this: We have to reach an agreement with Government on a funding package within 48 hours. The situation is now critical. There is no sustainable way forward without direct Government support so that TfL can play a full role in London’s recovery.”

The comments were made in the context that TfL has to balance its books like a local authority otherwise the Chief Finance Officer issues a Section 114 Notice. The Tfl Board were seeking to avert this.

The notice bans all new expenditure, with the exception of safeguarding vulnerable people and statutory services. It is only issued in the gravest of circumstances when the council is deemed “unsustainable” by chief finance officers.

The New Statesman

Labour’s London Mayor, Sadiq Khan said: “I want to be completely honest and upfront – this is not the deal I wanted for London. But it was the only deal the Tories would agree to and I had no choice but to accept it to keep the tubes and buses running at this crucial time.

The Tories are shamefully making ordinary Londoners pay the cost for doing the right thing on Covid-19. They insisted that TfL fares must go up next January – ending the four-year fares freeze we worked so hard to deliver since the last election. And they insisted that free travel is temporarily suspended for Freedom Pass and 60-plus cardholders at peak times and all the time for those under 18.

The Tories also insisted that, unlike the deals done elsewhere in the country, TfL takes on £505 million of additional debt. This will undo the hard work we’ve put in to fix TfL’s finances over the last 4 years and poses a real threat to the future of the organisation.”

Mick Cash, General Secretary of the RMT said: “It looks like Boris Johnson is back in charge of transport in London. We will not accept one penny of austerity cuts imposed by Whitehall or passed on by City Hall as part of this funding package and our resistance will include strike action if necessary.

“We are also deeply concerned that this is a sign of wider austerity conditions to be imposed on the transport industry across the UK”

The full details of the deal will be published in Parliament in due course.

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