Transport department confirms long-term TfL funding settlement

It includes more than £1.1bn in additional grant funding designed to “unlock” almost £3.6bn worth of critical infrastructure investment. These upgrades include new Piccadilly line trains and the modernisation of the District, Metropolitan, Hammersmith and City, and Circle. 

For capital and operational support, the government will fund the difference between the network’s costs and revenue up to an agreed annual envelope. The overall funding amount will be worth £598m between 30 August 2022 and 31 March 2023, and £565m in the 2023 to 2024 financial year. 

The settlement letter requires TfL to modernise and control its operating costs, to make it a modern, effective, efficient and financially stable operator. 

According to London’s Evening Standard, prior to the deal being announced, transport chiefs held a meeting to discuss whether to accept the terms or risk it having to effectively declare itself bankrupt. 

Commenting on the news, TfL commissioner Andy Byford said the support offered allows it to increase its “asset renewal programme” and to ensure its network “remains reliable”. 

He added: "The support offered by the government left an unfunded gap in our budget, which we have been working hard to identify how we will fill. This work has made good progress and we are confident that we will achieve an outcome that allows us to balance our budget and maintain our minimum cash balance. 

“We will need to progress with our plans to further modernise our organisation and make ourselves even more efficient, and we will still face a series of tough choices in the future, but London will move away from the managed decline of the transport network. 

“We are grateful for the support of both the mayor and the government as we now set out to continue serving the capital and investing in safe and reliable services for the millions of people who need them."  

London Mayor Sadiq Khan - however - said that, while the deal means TfL will avoid “having to make devastating cuts to vital transport services previously proposed”, it’s “far from ideal”. 

He added: “The government is still leaving TfL with a significant funding gap, meaning we will likely have to increase fares in the future and still proceed with some cuts to bus services. 

“There are also onerous strings attached, such as the government’s condition requiring TfL to come up with options for reform of TfL’s pension scheme at pace, which could well lead to more industrial action and more disruption for commuters. 

“These are things we have had no choice but to accept in order to get the deal over the line to avoid TfL becoming bankrupt, to save the jobs of thousands of transport workers and to keep trains, tubes and buses running across our city.   

“The sole cause of TfL’s financial crisis was the impact of the pandemic so it’s simply wrong to punish Londoners and transport workers in this way. Levelling up the country should not be about levelling down London.   

“We will now be working flat out to mitigate the impact of the conditions required by the government so that we can maintain a world-class transport network in our city, which is so crucial as we strive to continue building a greener, fairer and more prosperous London for everyone.”