Ministers and Transport for London (TfL) have agreed a new four-month funding settlement but the transport authority has still not secured the longer-term solution that it has sought.
Under what is known the Fourth Funding Package TfL will receive an Extraordinary Support Grant of £200m payable for the period from 26 February to 24 June to help mitigate its revenue loss due to reduced passenger numbers as a result of the pandemic.
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In recognition of continuing uncertainty over future passenger revenue, the Government will top up TfL's revenues with additional grant payments if they are lower than a pre-determined passenger revenue forecast but TfL will be required to pay any excess if its revenues are higher than forecast.
TfL said this provides it with certainty that it will receive income equivalent to £1.615bn in passenger revenue in addition to the £200m.
Under the deal, TfL has committed to deliver by 31 March 2022 a plan ‘demonstrating the options that exist to achieve up to £400m of additional revenue or cost savings in 2022/23, in addition to delivering the previously agreed operating cost savings for the 2021/22 financial year’.
London's transport commissioner, Andy Byford, said: 'The Mayor has already set out a range of proposals that will help support TfL's financial sustainability in the future but it is essential that agreement is reached with Government on longer-term capital support during this funding period.
'This is crucial for the coming years if a period of the managed decline of London's transport network is to be avoided.
‘The Government has confirmed in this agreement that they support the operation and maintenance of essential and safe transport services in London, enabling us to continue our full and vital contribution to economic recovery and to support the Government's priorities on decarbonisation, air quality and making transport better for users.’
Transport secretary Grant Shapps said the Government had repeatedly shown its commitment to London and the transport network it depends upon over the past two years by providing close to £5bn in emergency funding.
He said: 'These support packages must be fair to all taxpayers and the settlement agreed today provides enough to cover lost revenue from the pandemic while the Mayor follows through on his promises to keep TfL on the path to financial sustainability by 2023.'
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