London mayor threatened with loss of TfL


Ministers have threatened to take direct control of Transport for London unless mayor Sadiq Khan accepts a package of measures including higher council tax, a much larger congestion charge zone and higher Tube and bus fares in return for rescue funding.

The mayor is seeking a £4.9bn settlement for the next 18 months to bail out TfL, whose passenger numbers and revenues have shrunk since Covid-19 restrictions were introduced in March. The government gave an initial sixmonth package worth £1.6bn to the transport authority in May.

Last Friday the deadline for the increasingly acrimonious talks was pushed back by another two weeks and the board of TfL will be holding a crunch meeting today.

Earlier this month Grant Shapps, transport secretary, wrote to Mr Khan setting out a long list of demands in return for any financial rescue package, according to a letter seen by the Financial Times. Mr Shapps proposed a sixmonth funding deal to March 2021 dubbed "the H2 deal" ahead of a longerterm settlement.

But the transport secretary warned that the government's support for London would "take a different form" if the two sides fail to strike an H2 deal or if its terms are not met. Instead he threatened to seize control of TfL and run it from Whitehall. "We will be taking reserve legislative powers allowing us if necessary to direct TfL," he said. "This would be combined with a further series of short-term funding settlements."

The threat to undermine Mr Khan comes at a fraught time for English devolution — with ministers having failed to find a compromise this week with civic leaders in Greater Manchester over Covid-19 restrictions.

In his letter Mr Shapps said he expected Londoners to pay more through a supplement to their council tax to help improve TfL's finances.

He also made clear he expected the mayor to begin "pensions and workplace reform" at TfL, accelerate the "inadequate" progress on implementing driverless trains, cut fare concessions for children and pensioners and implement a fares increase of more than the "RPI inflation + 1 per cent" model agreed in May. The mayor has imposed a fares freeze over the past four years.

The transport secretary urged the mayor to extend the central London congestion charging zone to cover the same areas as the "Ultra Low Emission Zone" from October 2021.

In a reply on October 6, Mr Khan said he was concerned about an initial delay to the negotiations, leaving TfL "right against the wire". He compared the imposition of stringent conditions on London with the government's "continued blank cheque" for the rail industry with only minimal conditions.

He rejected Mr Shapps' demands, saying the government should restore the central operating grant that has been phased out in recent years.


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