This extra funding means we can get on with the job of supporting London's recovery from the pandemic.

During the period of this funding agreement, TfL will reach a financially sustainable position where we can fully fund day-to-day operations through our normal revenue sources.

In the longer term, we expect we'll still need more support to replace major assets and for enhancement projects - as is the case with almost all transport authorities around the world.

More information is in our press release on the funding agreement.

Funding sources

Fares income

Fares are the single largest source of our income and help to cover the costs of operating and improving our transport services. Decisions on whether to change fare levels are made each year by the Mayor, after consultation with TfL.

Other operating income

We generate income from the Congestion Charge, Ultra Low Emission Zone and other road network compliance charges. These charges support policies around London's roads, including reducing harmful emissions and congestion.

Commercial activities that generate income include advertising, property rentals and property sales as well as third-party sponsorship for Santander Cycles and the IFS Cloud Cable Car.

Collectively, these sources of income are around one third the amount we raise from fares.

Grants

Grants are received from central and local government. The main sources are:

  • Business Rates Retention - funded from a proportion of local business rates and paid to us from the GLA. This is the largest source of grant income to TfL
  • GLA precept - funded from Council Tax receipts and set annually by the Mayor
  • Crossrail funding from the GLA which goes towards completing the infrastructure for the Elizabeth line
  • Other capital grants, for example from the Housing Infrastructure Fund. These grants fund specific projects where we have agreements with other funding bodies, including central government
  • Under our funding agreement with government, we will receive grant to support operations and investment in our network in 2022/23 and 2023/24. This includes both a base level of grant and, if needed, a top up to our fares income to meet an agreed forecast

Borrowing

We have historically used borrowing to help finance investment in London's transport network. All of our borrowing is conducted in line with the provisions of the Prudential Code for Capital Finance in Local Authorities issued by the Chartered Institute of Public Finance and Accountancy.

We must stay within our authorised limit for external debt at all times, ensuring that any borrowing is prudent and affordable.

Given the reduction in our income during the pandemic, borrowing does not currently make up a significant source of our ongoing funding, although we do typically refinance our maturing debt.

When we return to a financially sustainable position, we'll review the potential for more borrowing.

Reinvesting in transport

We are committed to reducing costs and reinvesting all our income to run and improve services.

We are a public body, with no shareholders or parent companies, which means we can reinvest every pound of income in the transport network

For every pound we receive, around 80% is spent on the everyday running costs of the network and around 20% on renewing and improving it for the future.