Transport for London (TfL) may have to declare itself bankrupt if it is unable to secure ‘vital’ long-term funding from the Government within a matter of days, the Mayor’s office has warned.
Sadiq Khan is still locked in talks to secure a new funding deal after the previous emergency agreement expired on Friday.
A spokesperson for the Mayor of London warned it is ‘vital’ that a ‘long-term funding deal’ is agreed to properly maintain transport services across the capital, adding: ‘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.’
Without an indication from the Government that funding will be provided in the coming days, TfL will be unable to offer certainty over whether it can balance the books.
One of the contingency measures under consideration is issuing a report under section 114 of the Local Government Finance Act 1988 – in effect declaring TfL bankrupt.
In a letter to Transport Secretary Grant Shapps last week, the London Assembly Transport Committee said TfL is being ‘paralysed’, with the lack of a long-term funding deal leaving it unable to start new projects since last summer.
A Department for Transport spokesperson said: ‘We have repeatedly shown our commitment to supporting London’s transport network throughout the pandemic, providing over £4.5 billion in emergency funding to Transport for London and pledging a further billion pounds of capital investment every year up until at least 2024/25 – all at a time of significant pressure on the national finances.
‘We’re aware that TfL are still feeling the after-effects of the pandemic, but it is the mayor’s responsibility to accelerate overdue reforms that will ensure TfL becomes financially sustainable in a way that is fair to taxpayers.
‘Discussions are ongoing and we will provide an update in due course.’
A Transport for London spokesperson said: ‘We continue to discuss our funding requirements with the Government.
‘There is no UK recovery from the pandemic without a London recovery and there is no London recovery without a properly funded transport network in the capital.
‘We hope these discussions can be concluded successfully soon.’
Manuel Cortes, general secretary of the Transport Salaried Staffs Association said: ‘What Londoners needed today was a sustainable funding deal which ended the pickpocketing – agreed by Boris Johnson when he was London mayor – that deprived TfL of hundreds of millions of pounds as its operating grant from central government was abolished in an act of Tory vandalism.
‘No other capital city in the industrialised world runs its public transport network without an operating grant. Sadly, the Tories have refused to even agree a suitable funding package.
‘Londoners have already had a ticket price rise a full percentage point above the rest of our country forced on them by a Tory Government which seems determined to run TfL into the ground.
‘Without an affordable, accessible public transport network there is no way we can meet the challenges of climate change.
‘It beggars belief that Rishi Sunak can afford to write off £4.3 billion of Covid fraud, yet Grant Shapps cannot find enough in his budget to give TfL and Londoners a break as the Tories cost of living crisis deepens.’
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