UK: The Department for Transport has agreed a further funding package for Transport for London, with government conditions including studies for the possible conversion of two Underground lines to driverless operation.
The deal reached on June 1 covers the period from May 29 to December 11. It is the latest in a series of funding packages agreed to ensure the operation of the capital’s transport services during the pandemic.
TfL is heavily dependent on fares income, receiving no government funding for day-to-day operations before the pandemic. As a result, it has been hard hit by the crisis with current ridership being less than 60% of pre-Covid-19 levels.
The latest funding package includes an extraordinary support grant of £1·08bn. The government has also agreed to provide top-up grants if revenues are lower than forecast, with TfL repaying any excess. This provides TfL with certainty that it will receive revenues of £1·78bn on top of the £1·08bn grant.
The government has imposed a number of conditions on the deal, saying that it wants TfL to be financially sustainable by no later than April 2023. The authority will also be required to make progress on longer term reforms.
TfL has committed to deliver savings and/or new income of at least £300m in the 2021-22 financial year. However, it says there remains a funding shortfall compared with the budget for 2020-21, and it will also need to deliver savings and/or new income of £900m by utilising cash reserves, additional non-passenger income and reducing or deferring costs.
TfL is required to identify new or increased sources of revenue of £500m to £1bn/year from 2023 onwards, and to plan for accelerating its existing modernisation programme which would see the full £730m of recurring savings delivered by April 2023.
A review of TfL’s pension scheme is required to provide a list of options for reform by October 31, with a final report including a recommended approach to be completed by March 31 2022.
A joint review of demand will inform future service requirements and potential changes from 2022-23, along with a revised medium-term capital investment ‘appropriate to TfL’s financially constrained position and future demand scenarios post-Covid 19’.
DfT and TfL will also review options for longer term reform of the funding framework, governance and oversight.
Driverless trains
Attached to the funding deal is a DfT-led joint programme to study the introduction of driverless trains on the London Underground network, which has regularly been suggested by various politicians. According to DfT, this ‘has the potential to offer a more punctual, reliable, customer-responsive and safer service that is less susceptible to human error’.
The Mayor of London and DfT will work on a joint programme to implement Grade-of-Automation 3 (driverless but with an attendant, as used on the Docklands Ligfht Railway), with the aim of ‘progress towards’ the conversion of at least one line, subject to a viable business case.
A full business case for conversion of the self-contained two-station Waterloo & City Line to driverless operation is to be completed within 12 months, and for the more complex Piccadilly Line within 18 months. DfT and TfL will also conduct a 12 month review of the potential for GoA3 on the rest of the network, while TfL will lead market engagement into platform edge protection technology.
Responses
Secretary of State for Transport Grant Shapps said ‘the government has maintained that these support packages must be fair to taxpayers across the UK and on the condition that action is taken to put TfL on the path to long-term financial sustainability’.
Mayor of London Sadiq Khan said the ‘short-term settlement’ was ‘yet another sticking plaster’, and not the deal that TfL wanted. ‘After some extremely tough negotiations, we have successfully managed to see off the worst of the conditions the government wanted to impose on London, which would not only have required huge cuts to transport services equivalent to cancelling one in five bus routes or closing a Tube line, but would have hampered London’s economic recovery as well as the national recovery’, Khan said.
Although TfL was being ‘forced’ to work on the business case for automation, he had ‘made it crystal clear to ministers that we will object to any future requirement to force TfL to implement driverless trains’, which he believed would ‘cost billions of pounds and would be a gross misuse of taxpayers’ money at this critical time’.
Railway Industry Association Chief Executive Darren Caplan said ‘given the long-term nature of rail projects and the importance of certainty around upcoming work for the supply chain, transport bodies such as TfL cannot continue to operate on a series of short-term funding packages. RIA and our members have long called for a multi-year financial settlement for TfL, similar to Network Rail’s five-year Control Periods’.
General Secretary of the RMT union Mick Lynch called the deal ‘a disgraceful stitch up of a deal’, and said ‘attacks on workers’ pensions are wholly unacceptable while driverless trains are unwanted, unaffordable and unsafe’.
Manuel Cortes, General Secretary of the TSSA union, suggested that the package had been driven by government ideology ‘rather than fairness or good sense’. He said ‘our union is crystal clear, any attempt to use compulsory redundancies to implement these cuts will be met with industrial action ballots.’
