Transport for London bailout talks hit a crossroad

The future of Transport for London (TfL) has reached a critical crossroad as tensions rise between the government and Mayor Sadiq Khan’s office.

TfL passenger numbers and revenues have plummeted since Since Covid-19 restrictions were first introduced back in March, triggering pleas for an emergency rescue package to keep services running.

In May, the government granted £1.6bn in funding for the transport authority, which announced on Friday that a last-minute extension of that bailout had been secured to cover another two weeks.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

TfL’s board is holding a crunch meeting today as Khan seeks a settlement from Downing Street to prop up services for the next 18 months. The BBC says TfL bosses have asked for a £5.7bn package, while the Financial Times puts the figure at £4.9bn.

‘Triple whammy’

Talks between the two sides have become “increasingly acrimonious”, with ministers are threatening to take “direct control” of TfL unless Khan agrees a package of measures in return for rescue funding, says the FT.

According to the London mayor’s office, ministers want to “extend the £15 Congestion Charge Zone to the North and South circular roads in 12 months’ time”, “increase fares by more than Retail Prices Index+1%” and “introduce a new council tax precept charge in London for an unspecified amount”, the BBC reports.

Khan has said he “cannot accept” the conditions attached to the bailout, warning that Londoners would be hit with a “triple whammy of higher costs at a time when so many people are already facing hardship”.

“The government should be supporting Londoners through this difficult time - not making ill-advised and draconian proposals which will choke off our economic recovery”, he said. “Ministers already forced TfL to bring forward proposals to increase the cost and hours of the congestion charge in May - now they want to expand it to cover four million more Londoners.”

H2 deal

Government figures are growing increasingly frustrated with what one source described as “Khan’s bluster”, City A.M reports.

The FT has seen a letter sent by Transport Secretary Grant Shapps to the mayor earlier this month setting out a long list of demands to be met in return for any financial rescue package.

Shapps proposed a six-month funding package - dubbed the “H2 deal” - ahead of a longer-term settlement.

The government’s support would “take a different form”, however, if the two sides fail to strike an H2 deal or if its terms were not met, the minister warned.

“We will be taking reserve legislative powers allowing us if necessary to direct TfL,” he said. “This would be combined with a further series of short-term funding settlements.”

In a letter of reply on 6 October, Khan turned down the set to demands and insisted that a rise in council tax for Londoners would “place even more reliance on an already broken form of taxation and would be regressive”.

Increasing fares faster than inflation would be a “huge economic mistake”, he wrote, and expanding the congestion zone “would have a catastrophic effect on the economy of inner London and beyond”.