Government ‘continues to work’ on long-term deal for TfL to fund major schemes like Bakerloo extension

The transport secretary has told Sadiq Khan she understands the importance of infrastructure investment after yesterday’s Budget failed to set out a long-term deal for the capital’s transport network.

In a letter sent to the mayor of London yesterday, Louise Haigh said she recognised Transport for London’s (TfL) “significant contribution” to the government’s national missions and said they needed to work collaboratively together to ensure this continued.

“This begins with unlocking investment in critical transport projects that create an integrated transport network, provide value for money and create lasting benefits for the public,” she said.

TfL had a strained relationship with the previous Conservative government and had operated for a number of years on interim financial arrangements agreed in each case only after months of negotiation.

Haigh said TfL would not be expected to solely finance major capital enhancements and renewals from operating income.

In the Budget yesterday, the chancellor set out her plan to give £485m to fund TFL’s capital renewals programme in 2025-26, including funding for rolling stock on the Piccadilly and Elizabeth Lines.

While this was not the long-term settlement some had hoped for, Haigh told the mayor the government understood “the importance of long-term funding certainty to enable investment in critical upgrades to major capital projects”, giving the example of the Bakerloo Line Upgrade.

“The Department will continue to work with TfL with the aim to place it on a long-term financially sustainable footing as part of Phase 2 of the Spending Review,” she said.

Andy Lord, London’s transport commissioner, said: “We are very grateful that the Government has recognised the contribution that Transport for London makes to the national economy.

”This investment will ensure that London’s transport network can continue to support new homes, economic growth and productivity in the city, which is the country’s economic powerhouse.

”But it will also boost jobs, growth and opportunities across the UK. Throughout 2022/23 we spent £6.5bn with more than 2,000 suppliers, two-thirds of which were based outside of London and about half were small and medium businesses. This spending supported around 100,000 jobs across the UK. 

”We are pleased that, together with our suppliers, we can move on from the inadequate funding over recent years and get on with the vital work of making our city and our country work for everyone.”

In June, before the general election, TfL called on the next government to provider longer term certainty.

Patrick Doig, TfL’s group finance director, has previously warned that its maximum capital funding certainty was 19 months.

He said this has led to the major enhancements and renewals work to “slow down.”

“It was understandable during the pandemic […] but we now find ourselves in the position of being the only transport body in the country without long-term funding certainty.”