Sadiq Khan launches finance review of London transport network after coronavirus impact
Sadiq Khan has today launched an independent review of Transport for London’s (TfL) long-term funding and financing options.
The panel will carry out its work in parallel with the government’s already-announced review of the transport network.
TfL’s finances have collapsed in recent months due to the coronavirus pandemic, with passenger revenues plummeting more than 90 per cent year on year.
As a result, ministers were forced to bail out the capital’s transport operator to the tune of £1.6bn, attaching a number of conditions to the rescue package.
Among these was a commitment to carrying out a review of TfL’s financial position and future funding structure.
Earlier this week the Department of Transport set out its terms of reference for the review, which include exploring alternative operating models for the future of TfL.
This set alarm bells ringing in some quarters, with fears that it could pave the way for the privatization of the operator.
London’s mayor will appear before MPs today to discuss the impact of the coronavirus on the capital’s transport systems.
In a statement, Khan said that the coronavirus had made it clear that the current funding system was “not fit for purpose”.
“It is vital that we find a new solution to support not only London but the wider economy, so I am really pleased that an independent panel of experts will review TfL’s long term funding and financing options”, he said.
Before the pandemic struck, TfL was forecasting that it would reduce its like-for-like operating deficit by 86 per cent by the end of the year compared to when Khan took over in 2016.
It has already increased its cash balance by 31 per cent to £2.2bn.
However, in 2018 it was decided that the government would stop paying TfL’s operating grant, leaving it dependent on fares for 70 per cent of its income.
According to minutes released ahead of a TfL board meeting later this month, passenger revenue has taken a £183m hit from the pandemic.