15.05.20
TfL to receive £1.9bn bailout from Government
Since lockdown began Transport for London has continued to run services to provide transport for key workers or for anyone needing to carry out an essential journey.
Despite this, due to lockdown measures, passenger demand has fallen, with a 95% reduction in journeys on the London Underground. TfL have also had to furlough 7,000 staff in an attempt to reduce costs, and has declared a ‘safe stop’ of construction projects which were not seen as essential.
Therefore, resulting in an overall operating income loss of around 90% including non-passenger incomes, such as advertising revenue.
TfL released an announcement today (May 15th) explaining that: “It is expected that the recovery will take some time and that passenger income will continue to be severely impaired after the strict response measures are gradually eased.
“Whilst TfL has taken actions to reduce its costs during this period, through measures such as implementing the Government's Coronavirus Job Retention Scheme and a safe stop of non-essential construction projects, the severity of the impact is such that it will not be able to fully mitigate the loss without external support.”
TfL has prepared an interim view of its forecast financial position, assuming the prioritisation of essential services and activities. This interim view is based on revenue modelling that reflects TfL’s understating of Government’s Covid-19 scenarios. It presents a funding gap of up to £1.9bn in the first half of 2020/21 and over £3bn over the full year.
TfL also said in their statement that: “…after a period of discussions, an extraordinary funding and financing support package (the ‘Funding Package’) has been agreed between TfL and the Department for Transport to contribute towards TfL's forecast funding shortfall.
“The Funding Package is based on the assumption that the funding shortfall will be £1.6bn for the period 1 April 2020 to 17 October 2020 and comprises of an ‘Extraordinary Support Grant’ of £1.95bn payable under section 101 of the Greater London Authority Act 1999 (the ‘Grant’) and incremental borrowing by Transport for London from the Public Works Loan Board of £505m (the ‘PWLB loan’).”
In response to this announcement, London’s Transport Commissioner, Mike Brown MVO, said: “I welcome this support from Government which will help us continue to get London moving and working again, safely and sustainably.
“London’s transport network is absolutely fundamental to the economic, social and environmental health of the capital. Throughout the pandemic, transport workers have played a heroic role in the response to the virus –ensuring NHS and care staff have been able to get to work and save lives.
"We have worked closely with the Government and Mayor as part of the national effort to fight the virus, rapidly reducing passenger numbers to levels not seen for 100 years. This has meant that our fare and other revenue has fallen by 90 per cent.
"Enormous challenges remain, including agreeing longer term sustainable funding for transport in the capital. In the meantime, we will continue to do everything in our power to help deliver a successful recovery for our great city."