Extraordinary Funding and Financing Agreement for Transport for London

Lord Rosser Excerpts

Thursday 9th December 2021 Lords Chamber

[Lord Rosser (Lab)]

I congratulate my noble friend Lord Davies of Brixton on securing this very timely debate. We well remember Mr Chris Grayling when he was Secretary of State for Transport making it clear that he was not handing over responsibility for any rail services to TfL because that would mean giving them to a Labour mayor—full stop. There was no consideration of what was logical or in the best interests of London and Londoners, just a crude display of party-political antagonism on his part. The next few days will show whether we are going to see a similar approach to determining policy on TfL from the current Secretary of State for Transport.

Since the onset of Covid, Transport for London and TfL staff have kept London’s transport network going at the behest of the Government and in line with government guidance, thus enabling key workers in particular to get to and from their vital work—vital work that cannot be carried out from home. Inevitably this has led to a major hole in TfL’s finances, as numbers of passengers travelling during the pandemic— and therefore income—fell dramatically and still remain well down on pre-pandemic levels. If Sadiq Khan had been as profligate as his immediate predecessor as mayor, under whom debt increased fourfold, the financial position would be even worse. The latest confusing announcement from the Prime Minister yesterday on new Covid restrictions—which by an interesting coincidence was made on the same day that the main news story until then had been the Christmas party at 10 Downing Street—is almost certain to have a further adverse effect on TfL revenue, as my noble friend Lord Adonis said.

Previous financial settlements during Covid have all been, at the Government’s insistence, on a short-term basis, and the necessary financial support has been forthcoming only with strings attached, with the Government telling the London mayor—a mayor with a recently renewed mandate from the people of London —what policy changes he must accept before that financial support will be provided.

We now appear to be going through the same process again, with the deadline just a couple of days away. The Secretary of State does not seem keen to work with the mayor in the interests of Londoners and the London economy. Perhaps like Mr Grayling, this is because he is a Labour mayor, and the Secretary of State, one suspects, wishes once again to use the considerable leverage he has to in effect impose policy changes.

The Government argue that they act in the interests of all taxpayers. This is a surprising claim from a Government who wasted billions of pounds—way in excess of anything that Transport for London needs to keep its vital transport network going—on a largely failed test and trace system, and who handed out major contracts to political sympathisers without competitive tendering.

The Government claim that TfL has more than enough money to keep services running at their current levels, when the reality is that TfL needs at least £245 million for the rest of this financial year and £1.1 billion for next year. That is based on a “managed decline” scenario in investment and services which will only make the situation worse in the future. As it is, TfL has already reduced its planned spend on enhancements and extensions by £5.7 billion over the next 10 years. The Government seem to think that there is no link between running services and capital funding. Government support has to cover both. Investing to maintain and improve the transport infrastructure is vital to sustaining the quality and reliability of rail and bus services.

The Government claim that they want to give TfL a longer-term deal. But in the October 2020 funding deal the Government said that:

“During the course of the H2 Funding Period, HMG want to work with TfL on long-term plans with an aim to be in a position where a longer-term settlement is possible from March 2021 when this funding package expires.”


Needless to say, with this Government, a long-term settlement did not materialise in March 2021 or any time since, and the spending review did not grant any of the funding TfL requested.

TfL, the mayor and London’s businesses have been clear that TfL has been playing, and continues to play, a central role in the economic recovery of London and the UK as a whole. We shall find out in the next day or two whether the Government can finally bring themselves to recognise that too.