Yahoo Finance Transport for London needs 'two years of government support' to survive
The commissioner of Transport for London (TfL) said that the network needs financial support from the government for the next two years to survive.
Andy Byford said that “without government support” TfL will not be able to overcome the “decimation” that COVID-19 has “wrought” on the company’s finances.
“TfL absolutely will require additional subsidy for the next year and the year beyond that,” he told the BBC.
Byford added: “Obviously, we will do our bit to cut our costs, we have in the past taken a billion pounds off the cost base, there are further savings baked into this financial sustainability plan. So we we are saying that we will ourselves make changes.”
So far, TfL has been given two short-term coronavirus government bailouts worth around £3.7bn ($5bn) over the last eight months.
Last week, London’s transport body set out plans to prove how it will become self-sufficient in the long run.
TfL outlined a £15.8bn multi-year funding package from the UK government to maintain the capital’s infrastructure system and modernise the Bakerloo and Piccadilly lines.
It called for a new funding deal which will see TfL get a proposed £1.6bn a year from 2023 to 2030. Additionally, it’s also seeking a £3.1bn funding package for 2021-2022 and £1.5bn for 2022-2023.
READ MORE: Transport for London outlines £16bn multi-year funding package from government
Currently, TfL works without any annual government funding, relying instead on income from fares — which make up around 72% of total revenues. It also gets short-term agreements for specific projects, such as Crossrail.
Ultimately, the plan is to save TfL at least £750m. To achieve this, bus services and off-peak tube services would be cut by 4%, while the re-opening of the night services could be delayed.
Byford said that the coronavirus pandemic has pushed the company to “diversify” its revenue streams.”
“The pandemic has viciously exposed the dangers of over relying on revenues through the fare box,” he said. The TfL commissioner said that 72% fare box recovery is “almost unheard of” in world transport, adding that the “norm is around 40%” and that TfL needs to move away from that “fragile model.”
Fares are due to rise from 1 March, including a 5p increase for each bus journey to £1.55 and a 2.6% rise in travelcard season tickets.
The capital generates 23% of the UK's gross domestic product (GDP) and is a net contributor to the Treasury of £38.9bn.
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