Yahoo Finance TfL in talks with UK government about second bailout
Transport for London (TfL) is negotiating with the UK government about a second bailout to keep the capital's transport system functioning through the COVID-19 crisis.
TfL said in a brief statement on Friday it was in talks with the Department for Transport about "further financial support and a long-term capital funding deal to enable a strong and robust recovery from the pandemic."
The Department for Transport wrote to TfL on Thursday to propose a short-term extension of an emergency funding deal agreed last year. TfL is seeking almost double the size of last year's bailout. TfL said it was "currently reviewing the proposal and will respond in due course."
The Department for Transport last year agreed a £1.8bn ($2.5bn) bailout for TfL to help compensate for a collapse in passenger numbers during the pandemic. The funding deal is due to elapse at the end of this month.
TfL runs London's tube and bus network. The operator has faced a large funding shortfall after stay-at-home orders led to a collapse in passenger numbers. Social distancing measures have also limited the number of passengers that each vehicle can carry.
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"The pandemic has decimated TfL’s finances and exposed the current funding model... to be overly reliant on fare revenues," TfL wrote in a submission to ministers in January. "Due to the high fixed cost nature of transport infrastructure, reducing operating costs in line with reductions in demand has proved impossible in the short to medium term."
London mayor Sadiq Khan, who chairs TfL, last year pushed the government for a much larger bailout to help TfL through the crisis. Khan sought an 18-month long deal worth £4.9bn, the Guardian reported.
In January, TfL said it had been forced to run down its reserves by £800m despite government support. The operator has also been forced to find cost savings worth £160m.
TfL said it needed £3.1bn from the government to cover its costs in the coming financial year. TfL also asked the government to provide £1.6bn annually from 2023 onwards to help the network modernise and decarbonise, inline with government climate goals. In total, TfL has asked the government for more than £15bn in funding over the next 10 years.
"If London is to have a chance of recovery from the pandemic, closing services for permanent cost reductions should not be considered," TfL said in its January submission. "On the contrary, TfL needs to continue to invest."
