TfL Statement - Update on Government funding settlement

30 August 2022

Today, Tuesday 30th August, Transport for London (TfL) issued an update on its funding agreement with the government.

Transport for London Commissioner Andy Byford said:

“After weeks of negotiation, we have today reached agreement with Government on a funding settlement until 31 March 2024. This agreement, which was hard won, means that we can now get on with the job of supporting London’s recovery from the pandemic - to the benefit of the whole country. There is no UK recovery without a London recovery, and no London recovery without a properly funded transport network.

“The agreement with Government means that across the funding period, TfL expects to receive further base funding of around £1.2bn from Government until March 2024 and gives TfL ongoing revenue support should passenger numbers not recover at the rate budgeted, which is crucial at this time of ongoing economic uncertainty. It helps us avoid large-scale cuts to services, and means that we will commit £3.6bn to capital investment over the period, with around £200m of new capital funding from Government beyond previously budgeted sources like business rates, which were devolved to the Mayor in 2017. The agreement also allows us to increase our asset renewal programme to help ensure our network remains reliable, and means we can restore our Healthy Streets programme, making our roads safer, and more attractive for those walking and cycling.

“The support offered by Government left an unfunded gap in our budget, which we have been working hard to identify how we will fill. This work has made good progress and we are confident that we will achieve an outcome that allows us to balance our budget and maintain our minimum cash balance. We will need to progress with our plans to further modernise our organisation and make ourselves even more efficient, and we will still face a series of tough choices in the future, but London will move away from the managed decline of the transport network. We are grateful for the support of both the Mayor and the Government as we now set out to continue serving the capital and investing in safe and reliable services for the millions of people who need them.”  

Notes to editors

The funding agreement:

•    Guarantees our passenger revenue until March 2024, giving us much more certainty of the resources we will have available despite the ongoing uncertainty in passenger behaviour post-pandemic

•    Confirms our ability to deliver our committed transport investment, including purchasing new trains for the Piccadilly line and Docklands Light Railway, completing in-progress schemes like Four Lines Modernisation, the Bank station upgrade and the transformation of Old Street Roundabout, and finalising the transformational investment in the Elizabeth line

•    Allows us to increase renewals in our infrastructure above the level we had budgeted – helping us to protect the critical assets on which Londoners depend

•    Enables us to continue to invest in improving London’s streets, including borough roads, with around £80m per year spent on projects that benefit people walking and cycling

•    Enables us to invest in improving bus priority to help deliver our Bus Action Plan

•    Confirms we will work in partnership with the DfT and London Borough of Hammersmith & Fulham to reopen Hammersmith Bridge

Balancing TfL’s Budget:
The agreement with Government left a gap in TfL’s budget of around £740m across 2022/2023 and 2023/2024. In order to accept the agreement, we have had to identify measures which allow us to balance our budget. These include holding our cash balance at £1.2bn, assuming benefit from the inflation mechanism built into the agreement, and the release of contingency from our budget. This leaves us with a target for further savings of around £90m in 22/23 and £140m in 23/24 beyond the £730m per annum recurring savings programme we have  already committed to. We are now working through what combination of levers enable us to deliver this, including additional potential sources of funding if the savings cannot be met.