London business groups: TfL funding deal ‘vital’ to capital’s economy as Khan warns on ‘managed decline’

LONDON business groups, think-tanks and property firms have warned the capital’s transport network needs a long-term funding settlement from central government or risk ‘decades’ of damage. 

Transport for London’s (TfL) latest emergency bailout with the Department for Transport runs out Friday – risking what the network’s chiefs have described as “managed decline” of the service. 

City A.M. understands the transport secretary Grant Shapps has not responded to a request for a meeting but officials on both sides are engaged in last-minute talks.

TfL bosses have been campaigning for a long-term settlement from Whitehall to fill the hole in the coffers produced by lockdowns, but have instead received four short-term bailouts – with a raft of savings requirements attached. 

A failure to agree a long-term deal would put improvement and maintenance works on the back burner as well as serious service reductions, including the slashing of dozens of bus routes. 

The capital’s system is unusually reliant on fare revenues compared to other global cities, meaning it was more heavily affected by the almost total collapse of passenger revenues. 

Last night groups such as London First, the Centre for London and the boss of property company Derwent London have written to the DfT calling for the government to “leave no stone unturned in reaching a lasting and sustainable settlement” with TfL. 

“It is clear that support from government is needed to maintain London’s transport infrastructure to avoid it descending into a ‘managed decline’ state that could take decades to undo. This decline could cost the wider economy in excess of £12 billion over a ten-year period,” the letter – also signed by the London Chamber of Commerce and the Night Time Industries Association amongst others – reads.

“At a time when many competing capital cities and commercial hubs across the world are stepping up their long-term investment, London – a ‘shop front’ for international investment – should benefit from sustained investment and financial support,” it continues.
Last night Mayor Sadiq Khan told City A.M. the groups were “right to express their concerns” to Ministers. 

“It is imperative the Government works with me to finally agree a fair, long-term funding deal that will protect London’s transport network – not just for the sake of the capital but for the economic wellbeing of the whole country,” he said. 

Khan has previously accused the government of “inciting” strike action through its demands for significant savings. 

The DfT did not respond to a request for comment but has previously said it has “repeatedly shown our commitment to supporting London’s transport network” via previous bailouts. 

Khan told City A.M.: “London’s transport network is the backbone of our capital helping to connect residential areas with commercial districts and ensuring Londoners can participate fully in the life of our city – without it firing on all cylinders, there can be no economic recovery. That is why the capital’s leading property and business groups are right to express their concerns to Ministers about the importance of capital funding for TfL – concerns that I share.

“Without a long-term capital deal, TfL will be forced to begin preparing for a managed decline scenario. That could mean bus services in London being reduced by 18 per cent – equivalent to one in five, and a nine per cent reduction in tube services, equivalent to closing an entire line. This would have serious consequences for Londoners, commuters, and businesses up and down the country.”

The letter was co-signed by:

Debbie Akehurst, Chief Executive, Hatton Garden BID
Penny Alexander, Chief Executive, Baker Street Quarter Partnership
Nick Bowes, Chief Executive, Centre for London
Richard Burge, Chief Executive, London Chamber of Commerce and Industry
Dee Corsi, Chief Operating Officer, New West End Company
John Dickie, Chief Executive, London First
Ruth Duston OBE, Primera Corporation
Alexander Jan, Chair, Central District Alliance
Michael Kill, CEO – Night Time Industries Association
Tony Matharu, Chairman, Central London Alliance
Ros Morgan, Chief Executive, Heart of London Business Alliance
Simon Pitkeathley, Chief Executive, Camden Town Unlimited
Gareth Roberts, Chair, City Property Association
Paul Williams, Chair, Westminster Property Association / CEO Derwent London PLC

Charles Begley, Chief Executive, London Property Alliance