Londoners To Fund £500 Million Bailout For Tube Network
A rescue deal agreed with the government last month had left a shortfall that threatened cuts to subway services.
(Bloomberg) -- London’s transport network will get £500 million ($567 million) in emergency financing after a rescue deal agreed with the government last month left a shortfall that threatened cuts to subway services.
The plan will see the Greater London Authority, which is part-funded through council tax, provide the facility to Transport for London out of its own working capital and cash reserves, Mayor Sadiq Khan said in a statement Wednesday.
The money will need to be withheld from later funding for TfL, which operates the Tube, Khan said, while the GLA will suffer a loss of interest and see its financial flexibility restricted. That could in turn push it into borrowing to fund expenditure it could otherwise have afforded, he said.
Labour mayor Khan and the Conservative government spent more than two years wrangling over long-term funding for TfL after the Covid pandemic saw passenger tallies and revenues collapse. With numbers yet to fully recover, a £1.2 billion agreement was finally reached on Aug. 30 after Khan agreed to savings including pushing forward with driverless trains and cuts to pensions.
The deal with former UK Transport Secretary Grant Shapps left a £230 million funding gap across the current and next financial years which if left unaddressed would forced “wide-scale service cuts,” the mayor said.
TfL can use the financing as needed between now and March 2024, when the government deal expires. It won’t provide for additional investment, only balancing the budget, so that planned bus-service cuts will need to go ahead.
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