£1.7 Billion ‘Eleventh-Hour’ Bailout Agreed to Keep London’s Transport Running

Commuters wear face-masks during morning rush hour on the Victoria Line of the London Underground in central London on Oct. 16, 2020. Tolga Akmen/AFP via Getty Images

London’s tube trains and buses will be able to keep running until next March after a new bailout agreement was reached between the government and Transport for London (TfL).

The government announced the 1.7 billion pound ($2.2 billion) bailout package of “extraordinary funding” on Sunday.

It comes just days ahead of a second national lockdown set to start on Thursday and last 28 days amid the ongoing CCP virus crisis.

The government said the new funding will “make up all the fare revenue which TfL has lost due to the COVID-19 pandemic.”

This is in line with its support for national rail operators, buses, and tram systems across the country, the government said.

A pedestrian wearing a mask walks past parked buses as England prepares to enter into a second lockdown in London on Nov. 1, 2020. Justin Tallis/AFP via Getty Images

Transport Secretary Grant Shapps said the deal proves the government is committed to supporting the capital and “the transport network on which it depends.”

“Londoners making essential trips will continue to be able to use tubes, buses, and other TfL services, thanks to this government funding,” he said.

But the Mayor of London, Sadiq Khan, said in a statement from City Hall that the “eleventh-hour” bailout package was “not ideal”.

He said the only reason the deal was needed was because “fares income has almost dried up since March.”

He also said the negotiations to reach it had been “an appalling and totally unnecessary distraction” from the main concerns for Londoners of tackling the virus and protecting jobs.

Khan said that during negotiations, however, he had “succeeded in killing off the very worst Government proposals,” which had included expanding the Congestion Charge zone, cutting free travel for older and younger Londoners, and increasing fares by more than previously agreed.

Under the agreement, free travel for older and younger Londoners, a level of concessions above the rest of England, which national taxpayers fund, will have to be funded by City Hall rather than by the government.

Going forward, the state will only fund concessions for Londoners to the same level as other areas in England, and Khan will have to find the rest if he wants the higher concessions in the capital to continue, the government said.

‘Fair to Taxpayers’

Shapps said “the agreement is fair to taxpayers across the country”.

The government said the mayor had chosen to find £160 million ($207 million) in TfL savings this financial year and not raise fares above inflation plus 1 percent.

Khan could potentially fund the concessions by keeping the congestion charge at the increased fee level agreed in an earlier bailout in June and by a “modest” increase in council tax, City Hall said.

By January 2021, Khan is obliged to choose among the options, the government said, and also put forward a long-term plan to ensure the financial sustainability for TfL by 2023.

This might include selling off “non-operational” assets such as land and property, according to a settlement letter (pdf) from the government to Khan dated Oct. 31.

Shapps said that depending on what happens during the ongoing course of the pandemic, the bailout agreement marks a “first step” toward a long-term settlement with London.

The government wants to give the capital “more control over key taxes so it can pay more costs of the transport network itself,” he said.

TfL said in a statement that, before the pandemic, it “was on the path to achieving a level of financial self-sufficiency almost unheard of for transport authorities around the world.”

Andy Byford, London’s Transport Commissioner, said, “Reaching this agreement with the government allows us to help London through this next phase of the pandemic.”

The bailout deal follows a quarrel earlier this month between Khan, London’s Labour mayor, and Prime Minister Boris Johnson, a Conservative.

Khan had accused Johnson of lying after the PM blamed him for bankrupting TfL and after Khan made a statement condemning the strings attached to the government’s TfL rescue proposal, which Khan said was “ill-advised and draconian”.

Lily Zhou contributed to this report.