Transport for London
TfL Statement - TfL Funding Update (25th February)
Transport for London (TfL) recently (25 February 2022) issued the following update on Government funding:
Andy Byford, London's Transport Commissioner, recently said:
“Following discussions and negotiation over the last few weeks, I'm pleased that the Government has today confirmed an extension of its funding support for TfL through until 24 June 2022, for which we are grateful.
“There is no UK recovery from the pandemic without a London recovery and there is no London recovery without a properly funded transport network in the capital. The Mayor has already set out a range of proposals that will help support TfL's financial sustainability in the future but it is essential that agreement is reached with Government on longer term capital support during this funding period. This is crucial for the coming years if a period of the 'managed decline' of London's transport network is to be avoided.
“We will be meeting regularly to work towards agreement on the Government funding of the capital investment priorities shared by them, us and the Mayor. The Government has confirmed in this agreement that they support the operation and maintenance of essential and safe transport services in London, enabling us to continue our full and vital contribution to economic recovery and to support the Government's priorities on decarbonisation, air quality and making transport better for users.
“Working together, we must achieve this longer-term funding settlement. Only that would ensure London's transport network can remain safe, efficient and reliable, can continue to support the jobs and new homes that rely upon it and can support the economic recovery of the capital and the country as a whole.”
Notes to Editors:
TfL provides the following information to the markets:
Government support package
TfL announces that a funding and financing package (the "Fourth Funding Package") has been agreed between TfL and the Department for Transport ("DfT") to support transport services in London for the period from 26 February 2022 to 24 June 2022 (the "Fourth Funding Period"). The Fourth Funding Package will contribute towards TfL's revenue loss due to reduced passenger numbers using TfL services as a result of the pandemic.
The Fourth Funding Package comprises an Extraordinary Support Grant of £200m payable under section 101 of Greater London Authority Act 1999, paid in three instalments commencing on 29 April 2022. In addition, the Fourth Funding Package recognises that since the relaxation of Covid-19 restrictions the current circumstances continue to present ongoing financial challenges and uncertainty to TfL in predicting the future passenger revenue for the organisation, hence the Government will "top up" TfL's revenues with additional grant payments if they are lower than a pre-determined passenger revenue forecast. Conversely, if TfL's revenues are higher than the pre-determined passenger revenue forecast, TfL will be required to pay that excess to DfT at the end of the Fourth Funding Period. This provides TfL with certainty that it will receive income equivalent to £1.615bn in passenger revenue over the Fourth Funding Period in addition to the Extraordinary Support Grant of £200m.
As part of the Fourth Funding Package, TfL commits to deliver a plan by 31 March 2022 demonstrating the options that exist to achieve up to £400m of additional revenue or cost savings in 2022/23, in addition to delivering the previously agreed operating cost savings for the 2021/22 financial year. DfT acknowledges that TfL is facing further cost pressures in 2022/23 and therefore any proposals presented in this plan and the savings level of £400m will be considered and confirmed following a review of TfL's 2022/23 budget.
The Fourth Funding Package recognises that, in line with the current liquidity policy, TfL should continue to maintain cash reserves of an average of £1.2bn throughout the Fourth Funding Period. If during the Fourth Funding Period TfL's cash balances rise above an average of £1.2bn, then grant payments may, subject to consultation, be varied and/or deferred until such time as TfL's cash balances return to an average of £1.2bn. If at the end of the Fourth Funding Period TfL's cash balances exceed £1.3bn, there will be a process to adjust final payments made to TfL, by DfT, to account for this.
Government state a willingness in the short and medium term to provide grant funding for renewals and enhancements and will work towards an agreement for long-term capital support with an expectation that this agreement will be reached by 31 March 2022.The Fourth Funding Package includes a number of conditions, which includes the continuation and further development of initiatives commenced under previous funding agreements with DfT.
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