TfL could be forced to make emergency cuts as government funding deal drags on

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Transport for London is running on its cash reserves and could be forced to make emergency cuts as the deadlock over a long-term funding deal with the government drags on.

The most recent emergency rescue plan expired on August 3 after three short-term extensionsTfL having asked for more time to review the government’s “complex” draft long-term settlement proposals.

An extraordinary meeting of the TfL board was called on Tuesday evening to discuss the situation, with no financial support now in place for the first time since the start of the COVID-19 pandemic.

Details of the government‘s proposed bid have not been made public due to the ‘market-sensitive’ information contained in the plan, although London Mayor Sadiq Khan told board members that TfL was “unable to agree to” some of the conditions set out by the Department for Transport.

Mr Khan said: “The deal expired six days ago and it is extremely disappointing that we have not yet reached a conclusion. It’s not for lack of trying, I hasten to add, on TfL’s part. What I can say is that certain conditions we are unable to accept. They are not political in nature, but they have significant operational issues and policy issues that we simply cannot agree on.

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“Getting the right deal is vitally important, not just for Londoners and the London economy, but also for jobs and growth across the country.”

On top of the billions of pounds in capital funding TfL has requested to deliver large-scale projects over the next few years, it also needs an additional £900m in revenue support to keep services running until at the end of the exercise.

Board documents released ahead of Tuesday’s meeting revealed that TfL could be forced to consider issuing a Section 114 (S114) notice, which would limit any further spending, if support is not not granted.

The advice would mean that TfL is unable to balance its budget and “particular consideration should be given to the services that TfL is able to continue to perform within available funds”.

Board documents say, however, that “it is not considered necessary to issue an S114 report at this time”, as negotiations with the government on a new funding agreement are ongoing.

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