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Sadiq Khan in row with ministers after ‘sticking plaster’ bailout to stop Transport for London collapse

Sadiq Khan in row with ministers after ‘sticking plaster’ bailout to stop Transport for London collapse

The London Mayor has hit out at the deal which he says he was forced to accept (PA)

3 min read

Sadiq Khan has hit out at ministers after they offered a "sticking plaster" bailout to protect Transport for London from collapse.

The London Mayor said Londoners were being forced to "pay the price for doing the right thing" after ministers demanded an end to fare freezes in the capital as part of the conditions for providing the £1.6bn bailout.

Mr Khan said he had been forced to accept the deal after the "catastrophic impact" of coronavirus on TfL's finances left them just days from running out of cash.

But in a statement on Friday, he said: "I want to be completely honest and upfront with Londoners - this is not the deal I wanted. But it was the only deal the Government put on the table and I had no choice to accept it to keep the Tubes and buses running.

"In the last few years, London has been the only major city in western Europe that hasn't received direct Government funding to run day-to-day transport services since it was cut by the last Government.

"This means we rely very heavily on passengers fares to pay for the services we run. Fares income has fallen by 90 per cent in the last two months because Londoners have done the right thing and stayed at home - so there simply isn't enough money coming in to pay for our services."

Speaking on Thursday, Transport Secretary Grant Shapps said the terms of the rescue package would mean those living outside of Lonon were not left "unfairly carrying the burden".

Other measures include a temporary end to free travel through the Freedom Pass and 60-plus cardholders scheme during peak times, while fares will rise by 1% above inflation from next year.

Meanwhile, the government said £505m of the total bailout would be provided to TfL as a loan, with the further £1.095bn handed over as a grant.

But Mr Khan said the "sticking plaster" deal would need to be renegotiated within months to ensure TfL could continue to run.

"The Government has also insisted that, unlike the deals done elsewhere in the country, TfL takes on £505 million of additional debt," he said.

"This will undo the hard work we’ve put in to fix TfL’s finances over the last four years – when TfL’s operating deficit has reduced by 71 per cent."

He added: "This deal is a sticking plaster. The old model for funding public transport in London simply does not work in this new reality – fares income will not cover the cost of running services while so few people can safely use public transport.

"Over the next few months, we will have to negotiate a new funding model with Government – which will involve either permanent funding from Government or giving London more control over key taxes so we can pay for it ourselves - or a combination of both."

Responding to the deal, Conservative Mayoral candidate Shaun Bailey, said: "What has happened tonight in London is extraordinary.

"Sadiq Khan has been exposed as being such an incompetent Mayor, that the Government have had to take control of the TfL board and its finances as a condition of the bailout that he had to beg them for.

"As the upcoming review of TfL’s finances will show, the coronavirus highlighted existing structural flaws within TfL’s balance sheet - the primary cause was our profligate Mayor."

He added: "Once the virus recedes there will be a day of reckoning and Khan will be held to account. When he eventually decides to face the London assembly, he better be ready to explain why TfL’s finances were in such a sorry state."

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