TFL secures £1,600,000,000 emergency bailout

The government has agreed to a £1.6 billion bailout package for Transport for London (TfL) to keep tube and bus services running until September.

It comes after Mayor Sadiq Khan warned the body was close to running out of money and would have to operate a reduced service to survive.

The deal breaks down as £1.1bn in cash and a £505m loan, The Daily Mirror reports. The government has also made a number of demands in return for the funding, including the return of 100% tube services.

London’s Underground network saw a 95% decline in passenger numbers as a result of coronavirus lockdown, while bus usage dropped by 85%, causing a drop in income.

The reduced service has caused concern this week as people were encouraged to go back to work. The government has been criticised for encouraging people to avoid public transport when many people in London don’t own a car or live too far away from their places of work to walk and cycle.

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TfL has been in talks with ministers for several weeks over a grant, as it requires £3.2 billion to balance its proposed emergency budget for 2020/21.

At today’s Downing Street press briefing, Transport Secretary Grant Shapps said he was ‘optimistic’ of finding a solution.

He indicated that tube and bus fares in London would rise as part of a coronavirus government bailout.

Mr Khan has frozen single fares on the London Underground, buses, DLR and trams since he became mayor in May 2016.

But speaking at the briefing, Mr Shapps said it was ‘very important’ that as part of a rescue package ‘we don’t end up in a situation where people from outside the capital are unfairly carrying the burden’.

He warned that consistent fare freezes mean ‘more money isn’t going into the system’ stating: ‘You can’t then have an unfair settlement, where other British taxpayers are effectively bailing out the system.’

Earlier, Mr Khan told LBC radio that TfL was legally treated like a local authority, which meant ‘we have to’ balance the books.

‘We’d have to reduce the bus services we provide, we’d have to reduce the Tube services we provide, to save money’ he said.

‘If we don’t get the deal done today, the CFO (chief financial officer) of TfL has legal duties that he has to follow.

‘At a time when the government is wanting us to increase services to get into the recovery phase, we might be required to cut services because the Government is failing to give us the grant support we need’.

TfL has been using its cash reserves to meet the £600 million monthly bill of operating services.

Mr Khan said TfL had been negotiating with the government for around six weeks and criticised how long it took for a solution to be found.

‘I’m unclear about why the Government are waiting until the 11th hour to agree a deal,” he said.

‘It is really bad form.’

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