Sadiq Khan’s transport plans face rethink after government approves only half of mayor’s £500m ‘wish list’

Sadiq Khan is expected to be forced to abandon some transport projects after receiving only half of the investment funding he requested from the Government.

The Department for Transport announced on Monday morning that it had awarded £250 million of capital funding to Transport for London for the 2024/25 financial year.

But TfL had wanted £500 million a year for the next four or five years; Last week the mayor warned of the risk of a “managed decline” of the capital’s public transport system unless all the money arrives.

The cash is expected to be sufficient to protect the £2bn upgrade of the Piccadilly line, which will see the new train fleet come into service from 2025.

But the lack of a multi-year agreement raises questions about prospects for improving the Bakerloo line, which now has the oldest trains in the country; tube bosses are increasingly concerned about the reliability of the line and delays.

Long-term ambitions to extend the DLR across the Thames to Thamesmead could also be taken further.

DfT’s funding letter to the mayor also states that “TfL should plan prudently for 2025/26 and beyond, mindful of financial constraints.” [the Government] operates within the

Last week TfL’s board failed to approve the draft business plan due to uncertainty about which projects it could fund.

Mr Khan told the board he was “incredibly worried” about the consequences of the cash shortfall, saying: “I have seen presentations that have given me great concern.”

The Department for Transport said on Monday that the £250 million award brings its investment in TfL to more than £6.6 billion since 2020, largely due to the amount of emergency funding needed during the pandemic.

Stating that half of the trains on the new Piccadilly line will be assembled in Goole, east Yorkshire, the company said that the latest cash obtained will “support manufacturing jobs and suppliers across the country”.

Rail Minister Huw Merriman said the deal “will have a tangible and positive impact not only for people traveling in and around the capital, but also for the millions of people who visit each year”.

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He said: “It is fair for Londoners and taxpayers to support projects that will support hundreds of skilled manufacturing jobs in our vital rail sector.

“We have invested billions of dollars in the capital’s transport system in recent years. This investment needs to be well managed so as not to place an unfair burden on the pockets of taxpayers and motorists.”

But TfL commissioner Andy Lord said: “It is good news that we have agreed with the Government on the capital support they will provide next year and we are grateful for the support.

“However, we will now need to re-evaluate our latest draft business plan and address the impact of the ongoing lack of funding. This work is ongoing so that we can confirm as soon as possible what we will be delivering to London.”

TfL is due to achieve its first “operating surplus” this financial year (possibly in excess of £100 million) but was seeking Government support for major projects.

The £500 million a year was around a quarter of the £2 billion a year capital programme.

The fact that he has only received a one-year deal (with another single-year deal likely next year) likely highlights the need for austerity in Whitehall as well as the uncertain political climate and looming General Election.

TfL no longer receives any annual Government subsidies to help run the tube and bus network, instead benefiting from around £2bn a year in backlogs paid by capital firms.

TfL expects to achieve an “operating surplus” of around £500 million a year by 2026/27 due to higher ticket revenue, property income and cost savings, according to its draft business plan.

TfL’s ticket revenue is expected to rise by 11 per cent to £5.6bn in 2024/24. This increase is due to a 6 percent increase in demand and a 5 percent increase in the amount paid by passengers, including a crackdown on fare evasion.

As part of the £250 million funding deal, TfL must set out in July its “plan to maintain and strengthen its finances going forward, while continuing to reform its pension scheme and seek efficiencies in its investment programme”.

Dating back to 1972, the Bakerloo fleet is the country’s oldest fleet and the 14th busiest railway in the UK.

But TfL has already been forced to reduce frequencies from 22 to 20 trains per hour and warns that “failures will become more unpredictable” the longer it is forced to rely on closed trains.

“Trains will get older and harder and harder to put into service,” TfL chief capital officer Stuart Harvey said.

Mr Khan said on Monday: “I am relieved to have agreed this one-year capital funding agreement with the DfT, which will enable us to make vital improvements to our transport network, including improvements to the Piccadilly line.

“This one-year funding will also mean we are creating and protecting jobs across the country, including in Goole, where many of these state-of-the-art trains are built.

“However, it is still vital that we agree a reasonable long-term funding deal from the Government that allows us to plan and invest in the infrastructure London will need in the coming years.”

Transport Secretary Mark Harper said: “This Conservative Government is providing a £250 million boost to London’s transport system, following billions in support in recent years. “The government has expressed ongoing concerns about TfL being run by this mayor.

“Our capital deserves a Mayor who can balance the books without taxing the poorest drivers or relying on taxpayers to support them.”

Conservative mayoral candidate Susan Hall said: “I’m delighted that the Government has stepped in to ensure we get these upgrades, despite the Mayor of London’s wasteful spending.

“Sadiq Khan has spent a lot of time treating Londoners like walking cash machines, raising taxes to pay for his shoddy spending; It left London’s finances in shambles.

“As mayor of London, I will handle TfL’s finances and ensure Londoners get a better deal than they got under Sadiq Khan.”

John Dickie, chief executive of BusinessLDN, said: “A capital funding deal for TfL has been on the Christmas wish list of Londoners and businesses in the capital, so it is a relief that a one-year deal has finally been agreed.

“This will provide short-term certainty but it is important now that a multi-year funding agreement is agreed to enable London and suppliers across the country to plan for the future with confidence.

“A world-class public transport network is vital to keep London moving, maintaining its position as a global city and supporting jobs across the country.”