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Khan warns Londoners council tax could have to rise as TfL secures £1.8bn bailout

Written by on 1 November 2020

Sadiq Khan has warned Londoners their council tax bills could have to rise because of the “draconian” conditions attached to a GBP1.8bn government bailout of Transport for London (TfL).

The capital’s transport body said the agreement will enable it to continue operating until the end of March 2021.

The exact amount of money involved will be subject to passenger revenue in the coming months.

Image:
Sadiq Khan said the agreement was ‘not ideal’. File pic

It follows discussions between the Department for Transport and TfL, which is chaired by Mr Khan, to secure a six-month funding deal and prevent the collapse of the capital’s bus and Tube networks.

The mayor said the deal was “not ideal” but he fought hard to get to the “best possible place”, and claimed he had succeeded in “killing off the very worst government proposals”.

He insisted: “The only reason TfL needs government support is because almost all our fares income has dried up since March as Londoners have done the right thing.”

Asked in a later interview with Sky News whether people living in the capital should prepare for the possibility of higher council tax to fund TfL, Mr Khan said: “They should be as a consequence of the conditions imposed by the government.”

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Transport Secretary Grant Shapps said: “This deal is proof of our commitment to supporting London and the transport network on which it depends.

“Just as we’ve done for the national rail operators, we’ll make up the fare income which TfL is losing due to COVID.”

TfL said: “Discussions on longer-term sustainable funding continue.”

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The latest round of negotiations were aimed at preventing TfL from being forced to file a Section 114 notice – a process which would effectively declare it insolvent, and lead to services being severely curtailed.

The deadline for talks was Saturday night.

Amendments to the congestion charge introduced in June as part of a previous bailout – a 30% increase in the fee and longer operating hours – will remain in place due to the new deal.

Mr Khan said the government wanted TfL to extend the charging zone to the North and South Circular roads, covering around four million more Londoners.

Other proposed measures described by Mr Khan as “ill-advised and draconian” included above-inflation public transport fare rises.

Responding to the new agreement, Mr Khan said: “I am pleased that we have succeeded in killing off the very worst government proposals.

“I am determined that none of this will now happen.

“These proposals from the government would have hammered Londoners by massively expanding the congestion charge zone, scrapping free travel for older and younger Londoners and increasing TfL fares by more than RPI+1.”

Mr Khan said the negotiations have been “an appalling and totally unnecessary distraction at a time when every ounce of attention should have been focused on trying to slow the spread of COVID-19 and protecting jobs”.

A two-week extension to TfL’s funding was granted earlier this month amid a row between Mr Khan and ministers including Mr Shapps.

Last month Boris Johnson claimed TfL was “effectively bankrupted” before coronavirus, and proposals to hike charges were “entirely the responsibility” of Mr Khan.

Mr Shapps said: “The mayor has pledged that national taxpayers will not pay for benefits for Londoners that they do not get themselves elsewhere in the country.”

He added discussions will continue over the coming months to achieve a “long-term settlement”, which will include London being given “more control over key taxes so it can pay more costs of the transport network itself”.

City Hall said current passenger revenue projections mean the bailout is worth around GBP1.8bn in grants and borrowing.

TfL will carry out cost savings to make up a remaining GBP160m “gap” based on its forecasts.