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Evening Standard
Evening Standard
World
Ross Lydall

Sadiq Khan's transport plans face rethink after Government approves only half of mayor's £500m 'wish list'

Sadiq Khan is expected to have to abandon some transport projects after receiving only half the investment funding he requested from the Government.

The Department for Transport announced on Monday morning that it had awarded Transport for London £250m in capital funding for the 2024/25 financial year.

But TfL had wanted £500m a year over the next four or five years – with the mayor last week warning of the risk of “managed decline” of the capital’s public transport system if all the money was not forthcoming.

The cash should be sufficient to safeguard the £2bn Piccadilly line upgrade, which will see a fleet of new trains enter service from 2025.

The new Piccadilly line trains undergo testing in Germany (Ross Lydall)

But the lack of a multi-year deal raises questions about hopes of upgrading the Bakerloo line, which currently has the oldest trains in the country, with Tube bosses increasingly concerned about reliability and delays on the line.

Longer-term ambitions of extending the DLR over the Thames to Thamesmead may also be kicked further into the long grass.

The funding letter from the DfT to the mayor also makes clear that "TfL should plan prudently for 2025/26 and beyond, noting the fiscal constraints [the Government] is operating within".

Last week the TfL board was unable to approve its draft business plan because of the uncertainty over which projects it could fund.

Mr Khan told the board he was “incredibly worried" about the ramifications of a shortfall of cash and said: "I have seen presentations that cause me great concern."

The Department for Transport said on Monday that the £250m award took its investment in TfL to more than £6.6bn since 2020, largely due to the amount of emergency funding needed during the pandemic.

It said the latest cash would “bolster manufacturing jobs and suppliers around the country”, as half the new Piccadilly line trains will be assembled in Goole, east Yorkshire.

Rail Minister Huw Merriman said the deal would “have a tangible, positive impact not just for people travelling in and around the capital but also the millions who visit every year”.

He said: "It is fair for Londoners and taxpayers, underpinning projects that will support hundreds of skilled manufacturing jobs in our vital rail sector.

"We have invested billions into the capital’s transport system in recent years. This investment must be well managed in a way that doesn’t unfairly burden the pockets of taxpayers and motorists."

But TfL commissioner Andy Lord said: "It is good news that we have now reached an agreement with the Government on the capital support that they will provide over the next year, and we are grateful for the support.

“However, we will now need to reassess our recent draft business plan and address the impact of the continuing shortfall in funding. That work is underway so that we can confirm as soon as possible what we will deliver for London."

TfL is due to make its first ever “operating surplus” this financial year – probably in excess of £100m – but was seeking Government support for major projects.

The £500m a year it sought was about a quarter of its £2bn a year capital programme.

The fact that it has received only a one-year deal - with another single-year deal likely next year - probably highlights the uncertain political climate and looming General Election as much as the need for belt-tightening in Whitehall.

TfL no longer gets any annual Government subsidy to help it run the Tube and bus network but instead benefits from about £2bn a year in retained business rates paid by the capital’s firms.

TfL expects to make an “operating surplus” of almost £500m a year by 2026/27 due to higher fares revenue, property income and cost savings, according to its draft business plan.

TfL’s fares income is expected to increase by 11 per cent in 2024/24 to £5.6bn, driven by a six per cent increase in demand and a five per cent rise in the amount paid by passengers, including a crackdown on fare evasion.

As part of the £250m funding deal, TfL is required to set out in July its “plan to maintain and strengthen its finances going forward, while continuing work to reform its pension scheme and seeking efficiencies in its investment programme”.

The Bakerloo fleet, which dates to 1972, is the oldest in the country and is the 14th busiest railway in the UK.

But TfL has already been forced to reduce frequencies from 22 to 20 trains an hour and warns that “failures will become more unpredictable” the longer it is forced to rely on the clapped-out trains.

“The trains will get older and older and they will get more challenging to put into service each day,” said TfL chief capital officer Stuart Harvey.

Mr Khan said on Monday: “I’m relieved that we have agreed this one-year capital funding deal with DfT, which will enable us to make vital upgrades to our transport network, including upgrades to the Piccadilly line.

"This one-year funding will also mean we are protecting and creating jobs around the country, including in Goole where many of these state-of-the-art trains are being made.

“However, it’s still vitally important that we agree a decent long-term funding settlement from the Government that allows us to plan and invest for the infrastructure London will need over the coming decades.”

Transport Secretary Mark Harper said: "This Conservative Government is providing London’s transport system with a £250m boost – following on from billions of support in recent years. The Government has expressed ongoing concern about the management of TfL by this mayor.

“Our capital city deserves a Mayor who can balance the books without taxing the poorest motorists, or relying on taxpayers to prop them up."

Tory mayoral candidate Susan Hall said: “I am pleased that the Government has stepped in to ensure we get these upgrades, despite the Mayor of London’s wasteful spending.

“Sadiq Khan has spent too long treating Londoners like walking cash machines, ramping up taxes to cover his shoddy spending - he's left London's finances in a mess.

"As London mayor I'll sort out TfL's finances and make sure Londoners get a better deal than they are under Sadiq Khan."

John Dickie, chief executive of BusinessLDN, said: “A capital funding deal for TfL was on the Christmas wish list for Londoners and businesses across the capital so it is a relief that a one-year settlement has finally been reached.

"This will provide some short-term certainty but it is now important that a multi-year funding deal is agreed to enable London and suppliers across the country to plan for the future with confidence.

"A world-class public transport network is vital to keep London moving, retain its position as a global city and support jobs across the country.”

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