TfL faces tough choices after £250m settlement with DfT

The DfT has reached an agreement with Transport for London (TfL) for £250m in capital funding for the next financial year. This is considerably less than the previous award of £1.2bn for the year up to March 2024. 

TfL said that the settlement means it will have to reassess its draft business plan and address the impact of the continuing shortfall in funding.

The payment of £1.2bn followed four short-term emergency deals, totalling about £5bn, since the first Covid-19 lockdown in March 2020.

In a letter to London Mayor Sadiq Khan, Transport Secretary Mark Harper said the settlement will enable TfL to continue to deliver its current capital programme and its committed major capital projects, prioritising the Piccadilly Line Upgrade Phase 1. The funding should not be used for any other purpose or to fund any new capital activity, Harper stated.

“TfL remains responsible for managing risk across its capital programme and will continue to identify and realise capital efficiencies in its capital programme,” he said. As part of the settlement, Tfl would ontinue its work to reform its pension scheme. 

The DfT would work with TfL “to consider its future capital funding needs as part of the Department’s Spending Review submission,” Harper said. However, TfL should “plan prudently” for 2025/26 and beyond, noting the “fiscal constraints” the Government is operating within.

Andy Lord, London's Transport Commissioner, said: “Through a huge effort to reduce costs and rebuild our ridership and revenue following the pandemic, TfL is now on track to be financially sustainable in terms of its day-to-day operations. We are also able to cover the cost of the majority of our capital investment.”

Alongside London’s business stakeholders and others, TfL has consistently made the case that additional Government support for capital investment in transport is needed “if we are to be able to continue to deliver vital improvements to London’s transport network, unlock new homes and support growth across London and the UK”, said Lord.

“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.”