Transport for London says it will need £6.4bn in funding support

Capital’s network hit by sharp drop in passenger revenues during lockdown

Transport for London has said it will require £6.4bn in funding support across the next two years as it struggles to plug a huge financial shortfall resulting from coronavirus crisis measures.

The continued hit to passenger numbers as a result of the UK’s lockdown means the network will need total funding of £3.5bn from the government for this financial year, according to a revised budget released on Friday.

The sum, an increase of £300m from previous estimates, includes a £1.6bn rescue package committed in May for the first half of the year.

The slow return of passengers after the lockdown means TfL will require an additional £2.9bn for the full financial year 2021-22, according to the budget, although uncertainty over how the network will recover from coronavirus means this is a rough estimate.

“Coronavirus has had a devastating effect on TfL’s finances, which rely on fare income,” Sadiq Khan, London’s mayor, said. “TfL’s revised budget, should sufficient funding be provided by the government in the months ahead, will keep services running safely and support London’s recovery from the pandemic.”

The forecast highlights the extent of the crisis facing TfL, which saw its finances slashed when it was forced to close its services to everyone except key workers during the lockdown. Passenger numbers dropped by more than 90 per cent while the network continued to spend £600m a month on running costs.

TfL stressed that the estimates were subject to change depending on the impact of coronavirus. Projected passenger income could be £500m more or £235m less than its central forecast, it said.

Some engineering projects have been paused and TfL was negotiating with the government over additional funding for the already-delayed Crossrail scheme, the budget document said. Other capital investment, including investments on extensions on the Northern Line and at Barking, would continue.

“Inevitably, very difficult choices have had to be made about the pace at which projects can be funded and completed,” Andy Byford, London’s new transport commissioner, said.

London’s Labour-led mayor’s office is now in talks over how much of the needed £3.5bn the government will provide. It follows a strained agreement on May’s initial payment, which came with conditions including a financial review and government representation on TfL’s board. 

The Department for Transport said the review would put TfL on a “sustainable footing for the future” and would protect “vital transport services across London”.

Shaun Bailey, the Conservative who is running against Mr Khan in the 2021 mayoral elections, blamed TfL’s finance woes on the current mayor’s mismanagement.

“Sadiq Khan wants another TfL bailout. He’s blaming coronavirus again,” he wrote on Twitter on Friday. “But the virus didn’t cause four years of negligence.”

TfL said it had been in a strong financial position before coronavirus, on course to reduce its operating deficit by 86 per cent while increasing its cash balance by 31 per cent.

It said its reliance on fares, which constitute 70 per cent of income, had left it in a vulnerable position during the pandemic. Earlier this week it launched an independent review into long-term funding, which it said would run alongside the government’s.

“The pandemic revealed that the current funding model, with its unusually heavy reliance on fare revenue, simply doesn’t work when faced with such a shock,” Mr Byford said.

Crossrail's board announced on Thursday that the central section of the project would not be opened next summer as planned because activity had been suspended as a result of the lockdown.

“We have a comprehensive plan to complete the railway but existing schedule pressure, along with Covid-19, have impacted the programme and time has been lost,” Mark Wild, Crossrail’s chief executive said. 

“Further work is being undertaken to finalise our detailed recovery plan, which re-sequences the remaining work.”