The pandemic, which has left London’s transport system deserted for months, has decimated revenue and sparked an ongoing row between the city’s mayor and the UK government over funding for current deficits.
Transport for London (TfL), which runs the underground ‘Tube’ network and buses in the UK capital, has received billions of pounds from the central government over the past two years to stay afloat.
This followed the fall in passenger numbers on the network as people were repeatedly told to stay home to stop the spread of Covid-19.
Now, as numbers pick up with the easing of all restrictions, the Conservative government has urged the Labor Mayor of London to find a sustainable funding model for state-owned TfL.
The issue has become clearer as central government grants maintaining the current level of service are due to expire without renewal on February 4.
Mayor Sadiq Khan has raised the specter of service cuts or even the closure of a metro line without new financial support, arguing that TfL is “fundamental to the capital’s success”.
“It is so important that the government urgently provides the long-term funding that TfL desperately needs so that we can keep services running and make much-needed improvements to our transport infrastructure,” he warned. Beginning of the month.
The Labor Party mayor, re-elected last year for a second term, is reluctantly proposing to raise the mandatory council tax in the next budget, which he says would ‘unfairly punish Londoners for the way the pandemic hit our transportation network”.
He wants the government to inject around £1.7billion to fund TfL until April 2023.
– ‘Devastated’ –
However, the Department for Transport said Khan was responsible for putting the system “back on a sustainable financial footing in a way that is fair to taxpayers, rather than continuing to push for bailouts”.
“We will continue to discuss further funding needs with TfL and the mayor,” a spokesperson told AFP.
The standoff reflects the inevitable rivalry between Khan, touted as a potential future Labor leader, and the government of Prime Minister Boris Johnson, himself a former mayor of London.
Both have accused each other of mismanaging the capital’s vast transport system.
TfL notes that the pandemic has “devastated” its accounts, with fares revenue falling 95% at the height of the first wave of coronavirus in 2020.
He was forced to dip into his cash reserves to keep services running while turning to the government for help.
Johnson’s administration has already pledged £4bn (€4.8bn, $5.4bn) in grants to keep the system running, as well as £600m in loans.
The financial crisis has also affected the capital’s new East-West Crossrail route, formerly known as the Elizabeth Line, with the stretched budget adding to delays and costs.
Other global cities have faced similar struggles, including Ile-de-France Mobilités (IDFM) in the Paris region, which needed government support in its 2020 and 2021 budgets.
Meanwhile, in the United States, “robust” financial support programs passed by Congress and the White House have helped replace ticket revenue lost to the shutdowns, according to Paul Skoutelas, head of the American Association of public transport, an industrial organization.
– ‘Delicate game’ –
But TfL, which derives nearly two-thirds of its operating revenue from tariffs – a much higher proportion compared to New York or Paris, where it is closer to 40% – has been particularly exposed.
“Before Covid, TfL was largely self-sufficient,” explained Taku Fujiyama, who heads the rail research group at University College London, noting that he received no major central government grants.
“Some cost-cutting measures are currently on the table,” he said, adding that dramatic line closures were unlikely, but minor service changes “may occur.”
“TfL have to play a tricky game,” Fujiyama told AFP.
“Central government would not give blank cheques, and TfL should demonstrate its efforts, while the mayor knows that a drastic reduction in services would be politically costly.”
With the threat of the Omicron variant now receding, passengers are coming back into the system, which helps revenue but still leaves a big void to fill.
Weekday passenger numbers were at 50% of pre-pandemic levels on the Tube and 70% on buses in mid-January, with TfL expecting both to reach 80% this year.
The company said it was exploring a number of ways to increase revenue, including through efficiencies, commercial real estate projects and consulting services.