Department of Transport agrees to fund Transport for London

The Department for Transport has agreed to support transport services in London for the period from February 26 to June 24.

The Fourth Funding Package will contribute towards Transport for London’s revenue loss due to reduced passenger numbers using TfL services as a result of the pandemic.

The Fourth Funding Package comprises an Extraordinary Support Grant of £200m payable under section 101 of Greater London Authority Act 1999, paid in three instalments commencing on 29 April 2022.

If TfL’s revenues are higher than the pre-determined passenger revenue forecast, TfL will be required to pay that excess to DfT at the end of the Fourth Funding Period.

This provides TfL with certainty it will receive income equivalent to £1.615bn in passenger revenue over the Fourth Funding Period in addition to the Extraordinary Support Grant of £200m.

As part of the Fourth Funding Package, TfL commits to deliver a plan by 31 March 2022 demonstrating the options that exist to achieve up to £400m of additional revenue or cost savings in 2022/23, in addition to delivering the previously agreed operating cost savings for the 2021/22 financial year.

DfT acknowledges that TfL is facing further cost pressures in 2022/23 and therefore any proposals presented in this plan and the savings level of £400m will be considered and confirmed following a review of TfL’s 2022/23 budget.

The Fourth Funding Package recognises that, in line with the current liquidity policy, TfL should continue to maintain cash reserves of an average of £1.2bn throughout the Fourth Funding Period.

If during the Fourth Funding Period TfL’s cash balances rise above an average of £1.2bn, then grant payments may, subject to consultation, be varied and/or deferred until such time as TfL’s cash balances return to an average of £1.2bn.

If at the end of the Fourth Funding Period TfL’s cash balances exceed £1.3bn, there will be a process to adjust final payments made to TfL, by DfT, to account for this.