London’s transport authority could declare bankruptcy if the government does not provide support for it in a matter of days, Sadiq Khan’s office has warned.
Transport for London (TfL), which funds most of its operations through fare revenue, saw its income collapse during the pandemic because of a sharp reduction in passengers. The government provided a series of short-term funding deals to keep the public body afloat but the latest one ran out at midnight on Friday without an extension being agreed.
Passenger footfall has still not recovered, with Tube ridership just 59 per cent of pre-pandemic levels according to new figures. Meanwhile, TfL bus ridership has returned to around 75 per cent.
“We are still in negotiations with the government about a new funding deal for Transport for London and hope to be able to finalise a deal in the coming days,” a spokesperson for the Mayor of London said on Saturday. “It’s vital that the government provides TfL with the long-term funding deal it needs to properly maintain vital transport services in the capital.”
The spokesperson said 43,000 jobs outside London depended on TfL’s investment and that “if the government refuses to deliver the funding TfL needs, it could impact TfL’s UK-wide supply chain, hitting jobs and growth and holding back the economic recovery in London and across the UK”.
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Mr Khan’s office said one option being considered if the government refused support was issuing a report under section 114 of the Local Government Finance Act 1988 – effectively declaring TfL bankrupt. The transport authority manages the London Underground, Overground, DLR, buses, other public transport, and also looks after major roads in the capital.
The organisation previously suggested that without a long-term funding settlement it would have to take London’s transport system into a period of managed decline, which could even go as far as potentially closing a Tube line. But the government said the Mayor of London must find more money or somehow reduce costs.
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“We have repeatedly shown our commitment to supporting London’s transport network throughout the pandemic, providing over ￡4.5bn in emergency funding to Transport for London and pledging a further billion pounds of capital investment every year up until at least 2024-25 – all at a time of significant pressure on the national finances,” a spokesperson for the Department for Transport said.
They added: “We’re aware that TfL are still feeling the aftereffects of the pandemic, but it is the Mayor’s responsibility to accelerate overdue reforms that will ensure TfL becomes financially sustainable in a way that is fair to taxpayers. Discussions are ongoing and we will provide an update in due course.”
A Transport for London (TfL) spokesperson said: “We continue to discuss our funding requirements with the government. There is no UK recovery from the pandemic without a London recovery and there is no London recovery without a properly funded transport network in the capital. We hope these discussions can be concluded successfully soon.”