The funding standoff between Transport for London and central government has inched closer to a long-term settlement, with a further £200m agreed to keep TfL services running for the next four months.
Fares across TfL will rise next week as part of the ongoing talks, even as London Underground workers are due to strike because of the threat to jobs from budget cuts.
The government said the latest settlement, the fourth such deal, would take its emergency Covid aid to TfL up to nearly £5bn, and included “the potential for a longer-term capital investment settlement”.
However, it insisted that London’s mayor, Sadiq Khan, make more cost savings and consult on more revenue-raising to deal with the shortfall from the pandemic.
The new settlement, which will run until 24 June, could be increased if a new Covid variant hits, or reduced if revenues from transport return more quickly than anticipated.
The government said it had made an additional pledge to provide more than £1bn every year for capital investment in October’s spending review.
The transport secretary, Grant Shapps, said the government had “repeatedly shown its commitment to London and the transport network it depends upon”.
He added: “These support packages must be fair to all taxpayers and the settlement agreed today provides enough to cover lost revenue from the pandemic while the mayor follows through on his promises to keep TfL on the path to financial sustainability by 2023.”
Khan will consult on options to raise more revenues, with road charges in some form likely to be extended throughout London. He will also have to find cost savings of up to £400m in the next year and address TfL’s pension fund.
Khan said he was “relieved” to have the funding, but reiterated that the pandemic was the only reason TfL was facing a financial crisis. He added: “Once again the government has just provided a short-term funding deal that will only enable TfL to continue running transport services for a few more months.
“This agreement makes reference to future capital investment for TfL, but it’s essential that this quickly turns into a concrete commitment from the government. The only way we will be able to avoid significant and damaging cuts to tube and bus services is if the government steps up and provides the longer-term capital funding TfL urgently needs.”
Andy Byford, London’s transport commissioner, said: “Working together, we must achieve this longer-term funding settlement. Only that would ensure London’s transport network can remain safe, efficient and reliable, can continue to support the jobs and new homes that rely upon it and can support the economic recovery of the capital and the country as a whole.”
Tube and bus fares will rise in London from next Tuesday by an average of 4.8%, an additional 1% above the RPI inflation rate rise due for rail fares around the country.
The tube network will also be brought to a halt on Tuesday for the first of two strikes next week, brought by the RMT union. Services are also not expected to run on Thursday, the second strike day, and to be severely disrupted on Wednesday and Friday morning. Talks between TfL and the RMT ended on Thursday without agreement.
The union argues the funding agreements between the DfT and TfL would hurt staff. The RMT general secretary, Mick Lynch, said the strike was “because a financial crisis has been deliberately engineered by the government to drive a cuts agenda which would savage jobs, services, safety and threaten working conditions and pensions”.
Ongoing strikes by the union will stop weekend night tube trains resuming until at least June.
Strikes by the RMT will also affect TransPennine Express services on Sunday, with a series of further weekend strike dates announced on Friday. TPE said customers should plan travel carefully with severe disruption expected on its trains across the north of England.
