London mayor Sadiq Khan has confirmed that some Transport for London (TfL) fares will be frozen again next year despite a budget deficit of around £500m.
The freeze was part of Mr Khan’s 2016 election manifesto. It does not apply to travelcards or daily or weekly capping - capping reflects travelcard costs - which will rise by 2.8% in line with July’s RPI inflation figure.
TfL is continuing to run a budget deficit of around £500m as a combined result of the fare freeze, falling passenger numbers, the loss of a £700m central government operating grant and delays to the opening of the Elizabeth line (Crossrail).
Earlier this month, it was revealed that the Elizabeth Line, which was due to open last December, will not open until at least 2021.
This will add up to £650m to its price tag and delay a valuable revenue stream.
London Assembly Member Shaun Bailey, who will be the Conservative candidate in next year’s mayor election, described the freeze as ‘putting major pressure on a shaky system’ and alleged that TfL had recommended a fares rise.
In September TfL commissioner Mike Brown criticised the Government for imposing limits on the transport authority’s borrowing and failing to provide it with long-term funding certainty.
Mr Brown told City A.M. that TfL’s borrowing caps were based on ‘no logic other than discussions within government as to what they should be’.
TfL is permitted to borrow for short-term working capital like other local authorities as set out in the Chartered Institute of Public Finance and Accountancy Prudential Code but is only otherwise allowed to borrow for capital investment.
Its maximum annual borrowing to fund capital expenditure up to March 2021 was set out in a letter from the then transport secretary, Chris Grayling in March 2017.
For 2019-2020, TfL's prudential borrowing cap is set at £500m. The cap fluctuates depending, in part, on financial performance in previous years.