Speaking on LBC this morning, Sadiq Khan warned bus and tube services would be slashed without an emergency bailout for the transport system.
He said: ‘We’re the only transport system in Western Europe that gets no government grant. We’re paid for ostensibly by the fares we bring in, the congestion charge and by advertising.
‘Over the last two months, we’ve lost more than 90% of our fares, advertising is down and so is the congestion charge. We’ve been spending £600 million a month to offer services and get nothing back.
‘At the start of this crisis, we had a cash reserve of more than £2.1 billion. That’s running out.
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‘We’re required by law to keep two months’ worth of money in reserve to pay for services.
‘We’ve been involved in weeks and weeks of negotiations with the government and it is really hard to get support from them. Being blunt, today is the last day.’
TfL will have to issue a Section 114 notice – declaring the company does not have the resources to meet its expenditure – under government law if its cash reserves fall under £1.2bn.
The notice is the equivalent of a public company going bust, and means strict spending restrictions will be implemented. Mr Khan says this will happen today.
‘Unless the government today gives us confirmation of the grant that we need, the consequences could be quite severe and the implications for all of us will be huge,’ he added.
‘I’m hoping the government today agrees a grant for TfL to help us to do our bit to help. But if they don’t, I’m very concerned about the consequences.
‘We’ll have to start reducing services. The only way to balance the books is to cut services.’
A government spokesperson said the cabinet was briefed today about the negotiations, which were at an ‘advanced stage’.
They said: ‘We are in advanced negotiations to agree a funding and financing package which will support Transport for London. Clearly, we will not prejudice those discussions by providing details of those negotiations at this time.
‘It is absolutely vital that the priority is reaching an agreement that keeps critical services running for those passengers who must use public transport to get to work, ensuring we keep London moving safely.
‘That means protecting key routes, rapidly increasing the number of services available and protecting the interests of taxpayers in the long-term.’
Despite the issues, images of packed tubes and buses have surfaced this week as the capital starts to return to work.
It comes after TfL furloughed 7,000 of its staff from the end of April for an initial period of three weeks as a result of the coronavirus pandemic.
The company revealed last month its revenue through fares – its main source of income – had dropped by 90%. This is because of government advice to stay at home and only travel if it is essential.
As a result the number of tube journeys has dropped by 95% and bus journeys in London by 85%.
London’s transport commissioner Mike Brown MVO said: ‘The transport network is crucial in the fight to tackle coronavirus and it will play a similarly vital role in supporting the country’s economy as it recovers from the pandemic.
‘We have significantly cut our costs over recent years but nevertheless the success of encouraging the vast majority of people to stay at home has seen our main revenue, fares, reduce by 90%.
‘We are now taking steps to use the government’s Job Retention Scheme to further reduce our costs where work has been paused because of the virus, while at the same time supporting our staff financially.
‘Our work with the government about the support that we need are ongoing and are constructive. We hope for an urgent agreement so that we can continue to provide the city with the vital transport it needs now and going forward.’
Sadiq Khan initially warned at the end of April the capital’s transport network would need to be scaled back unless the government stepped in.
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