[ad_1]
London Mayor Sadiq Khan gave the government an ultimatum saying that if Transport for London does not receive a ransom today, the operator will have to cut underground and bus services.
Speaking to LBC, Khan said: “To be frank, today is the last day. Unless the government gives us confirmation of the grant we need, the consequences could be quite severe and the ramifications for all of us will be enormous.
Read more: TfL has a loss of £ 4 billion as the operator seeks government bailout
“Because we are required to keep the money for two months to pay for services, we will have to start cutting services.”
However, political opponents said the mayor was more to blame for TfL’s financial situation than the coronavirus outbreak.
Under government law, TfL will have to issue a Section 114 notice if its cash reserves fall below £ 1.2 billion, which will happen today, Khan said.
This notice is the equivalent of bankruptcy of a public company and means that strict spending restrictions will be implemented.
A TfL source said: “Every hour that passes, we get closer to the point of having to issue a 114.”
A government spokesman said he was in “advanced negotiations” with TfL:
“It is absolutely vital that the priority is to reach an agreement that keeps critical services up and running for those passengers who must use public transport to get to work, ensuring that we keep London moving safely.
“That means protecting key routes, rapidly increasing the number of services available, and protecting the interests of taxpayers in the long term.”
TfL fee revenue decreased 90 percent
Over the weekend, TfL was reported to be in negotiations with the government over a bailout worth up to £ 2 billion.
The coronavirus has decimated the network’s finances, more than 80 percent of which comes from passenger revenue.
Khan added: “In the past two months we have lost more than 90 percent of our rates and advertising, so is the congestion charge.
“We have spent £ 600m a month paying for services and received little or nothing for our clients. At the start of this crisis, we had a cash reserve north of £ 2.1bn, but that is running low. ”
Read more: TfL needs a ransom, but no one should give the mayor a blank check
However, Conservative spokesman for the London Assembly, Keith Prince, said the mayor’s comments were “useless and alarmist”:
“Transport to London will inevitably need a financial bailout to continue operating during this crisis, but TfL has £ 1.2 billion in reserves that are sufficient to operate the network for two months,” he added.
Conservative mayoral candidate Shaun Bailey said Khan had “failed in his job as president of Transport for London”:
Listen to our daily City View podcast as we map out the economic consequences and business impact of the coronavirus pandemic.
“The coronavirus highlighted the existing structural flaws in the TfL balance sheet: it is not the main cause.
“The past four years have shown that Khan cannot be issued a blank check. As a condition of any bailout, Khan must show Londoners how he will rebuild TfL’s finances once the virus recedes. “
TfL set for loss of £ 4 billion this year
According to documents from an emergency finance committee earlier this week, TfL is on track to make a loss of £ 4 billion this year as a result of the crisis.
The operator has prepared an emergency budget in an attempt to balance its finances, but the government needs to close a £ 3.2 billion funding gap in 2020.
Read more: Sadiq Khan: There will be no quick return to normality for TfL
The crunchy talks come as the government has asked public transport providers to increase service levels to help the UK’s first steps in its coronavirus recovery plan.
In order to allow passengers to socially walk away safely while traveling, TfL has said it will only be able to run services from 13 to 15 percent of passenger capacity.
Khan said: “Ironically, at a time when the government wants us to increase services, we may have to cut them because the government is not providing the grant support we need.”
TfL is the only public transport operator in Western Europe that operates without a government grant, added the mayor.
Speaking at Tuesday’s meeting, Deputy Mayor for Transport Heidi Alexander said the situation was “now critical”:
“We have to reach an agreement with the government on this in the next 48 hours,” he added.
Read more: Candidate Mayor Shaun Bailey: TfL bailout was “inevitable”
The Times reported that any bailout could come with conditions, such as downsizing projects like the long Bakerloo line.
