Grant Shapps orders urgent TfL finance review after £1.6bn bailout

A woman wears PPE on the London Underground
AFP via Getty Images

An immediate review into Transport for London’s finances in the wake of its £1.6 billion coronavirus bailout has been ordered by the Government.

It came as a war of words broke out between Mayor Sadiq Khan and Transport Secretary Grant Shapps over the true state of TfL’s cash crisis and how much was caused by the loss of millions of passengers due to the lockdown.

Mr Shapps, in a statement to Parliament last night, said the Mayor’s stewardship of TfL, which he chairs, over the last four years had left it in “serious financial difficulty” before the virus reached the UK.

He said: “The settlement for TfL was needed for two reasons. Most important is the significant fall in revenue caused by Covid-19.

“However, an important secondary factor was the pre-existing poor condition of TfL’s financial position as a result of decisions made over the last four years.

"Combined with significant cost increases and delays to Crossrail, this left TfL in serious financial difficulty even before the public health emergency.”

Mr Shapps said, to help prevent further bailouts being required, there would be “an immediate and broad ranging Government-led review of TfL’s future financial position and structure”.

Whitehall sources today said it would probably take “weeks” for the terms of reference to be decided and an expert appointed.

One suggested that TfL may simply be asked to conduct a review under government oversight.

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Mr Khan reacted angrily, accusing Mr Shapps of making a statement that was “at best misleading”.

He said: “TfL’s finances were in much better shape immediately before Covid-19 than the mess I inherited from the Prime Minister [Boris Johnson] when he left City Hall.

“Over the past four years we have reduced TfL’s operating deficit by 71 per cent on a like-for-like basis and increased cash reserves by 16 per cent.

"Like-for-like operating costs have fallen each year, which has never happened before.”

Disagreements between both sides emerged within hours of detail of the bailout being announced on Friday morning.

The Government said it was the Mayor’s decision to hike the congestion charge from £11.50 to £15 from next month.

Mr Khan said last night that the requirement that TfL “urgently bring forward proposals to widen the scope and levels” of the C-charge and ultra-low emission zone levy was a “Government red line” to enable the bailout to be secured.

Both central London road levies had been suspended when lockdown began on March 23 but were reintroduced yesterday.

A woman is seen wearing a protective face mask on a platform at North Acton station
REUTERS

Today it emerged that a temporary rush-hour ban on pensioners using the Freedom Pass and the 60+ Oyster card, which allow free Tube and bus travel, would only apply in the morning, not also in the evening as first feared.

Business analysts said the review of TfL’s finances could be crucial if it were published near next May’s mayoral elections, which were postponed for a year by coronavirus.

TfL finance documents seen by the Standard show it had increased its cash reserves by about £800 million in a year, to almost £2.1 billion, prior to the pandemic.

This was largely due to a backlog in spending on capital projects. Its total debt had risen from £9.8 billion in 2015/16, when Mr Johnson ended his term as mayor, to £11.9 billion by last December.

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