Transport for London (TfL) could 'in effect' declare itself bankrupt if it doesn't secure a long-term funding settlement with the Government, the London mayor's office has warned.
The warnings came amid the latest round of crisis talks with the Department for Transport (DfT), which secured another temporary extension of the current funding deal until 25 February.
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A Transport for London (TfL) spokesperson said: 'We have agreed with the Government that our existing funding agreement will be extended until 25 February so that these discussions can be concluded.
'Working together, we must achieve a longer term capital funding settlement of at least three years that ensures London's transport network can remain reliable and efficient, can support the jobs and new homes that rely upon it and can support the economic recovery of the capital and the country as a whole. We hope these discussions can be concluded successfully soon.'
Before the latest extension was agreed, London mayor Sadiq Khan had warned that if the Government doesn't give a clear indication of the support it is willing to provide, TfL would not be able to offer certainty as to whether it can balance its budget, as it is legally required to do.
This would mean TfL’s chief finance officer could ultimately issue 'a report under section 114 of the Local Government Finance Act 1988 - in effect declaring TfL bankrupt'.
A spokesperson for the Mayor of London had said: '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.
'Some 43,000 jobs outside London depend on TfL’s investment. 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.'
TfL requires financial support because of the enormous impact of COVID travel restrictions on its fare income.
On 1 June 2021, TfL announced that an extraordinary funding and financing support package had been agreed with the DfT to support transport services in London and contribute towards TfL's forecast revenue loss due.
The funding package initially provided support for the period from 29 May 2021 to 11 December 2021 and was subsequently been extended to 18 February 2022.
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