Transport for London may go bankrupt without extra funds, claims mayor
London’s transport authority could declare bankruptcy in a matter of days if the government fails to provide continued financial support.
Transport for London (TfL) saw its income severely reduced during the Covid-19 pandemic because of the sudden lack of passengers travelling on the network.
The government bolstered the public body, which relies on fare revenue to fund its operations, with a series of short-term funding deals. However, the latest ran out at midnight on Friday, and an extension is yet to be agreed.
It is understood that the mayor of London, Sadiq Khan, remained locked in negotiations through most of Saturday to secure a new deal.
“It’s vital that the government provides TfL with the long-term funding deal it needs to properly maintain vital transport services in the capital,” a spokesperson for the mayor said.
“Some 43,000 jobs outside London depend on TfL’s investment. If the government refuses to deliver the funding TfL needs, it could impact TfL’s UK-wide supply chain, hitting jobs and growth and holding back the economic recovery in London and across the UK.”
The spokesperson added that without a clear indication of government support “in a matter of days”, TfL with not be able to fulfil its legal requirement to offer certainty as to whether it can balance its budget.
One of the options network bosses will have to consider includes issuing a report under section 114 of the Local Government Finance Act 1988, which would in effect declare TfL bankrupt.
On Saturday, a TfL spokesperson said: “There is no UK recovery from the pandemic without a London recovery and there is no London recovery without a properly funded transport network in the capital. We hope these discussions can be concluded successfully soon.”
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