Road user charges for people driving into central London will be reintroduced on Monday 18 May under the terms of a £1.6 billion government bailout.
The Congestion Charge, Ultra Low Emission Zone (ULEZ) and Low Emission Zone (LEZ) were all suspended on 23 March when the Mayor of London, Sadiq Khan, asked Transport for London to help critical workers, including those working for the NHS, get around as easily as possible during the coronavirus crisis.
Transport for London (TfL) secured the emergency funding to keep Tube and bus services going until September. TfL has secured a £1.01 billion grant from the Department for Transport, as well as incremental borrowing from the Public Works Loan Board of £505m. The deal runs until October 2020.
Conditions attached to the DfT’s bailout will also see the congestion charge will also rise from £11.50 to £15 from 22 June.
TfL said the Congestion Charge would be reinstated in London on Monday and would run between 7am and 10pm, seven days a week. However, a system of reimbursement for NHS workers in place before the congestion charge was suspended on 23 March will be extended to care home workers.
The LEZ and ULEZ, which impose levies on the most polluting vehicles, will also come back into operation on Monday.
Under the new conditions children will no longer have free travel across London and restrictions on travel passes for people with a disability or over the age of 60 travelling will also be imposed during peak hours. Fares on buses will also be reintroduced.
Khan said the measures were designed to avoid a build up of traffic after the government urged people returning to work to avoid public transport.
TfL has seen a 90% loss of income since the beginning of the lockdown, with a 95% reduction in Underground journeys and an 85% reduction in bus journeys. TfL expects a funding gap of up to £1.9bn in the first half of 2020 and more than £3bn over the full year.
TfL had said it would have been forced to issue a Section 114 notice, the equivalent of a public body becoming bankrupt, if a deal had not been reached by the end of Thursday. Khan said the deal was necessary because coronavirus had had a “catastrophic” impact on TfL's finances. “I want to be completely honest and upfront with Londoners,” Khan said. “This is not the deal I wanted. But it was the only deal the government put on the table and I had no choice but to accept it to keep the Tubes and buses running.”
Khan continued: “The Government is, in effect, making ordinary Londoners pay the cost for doing the right thing on COVID-19. They want fares to go up next January, ending the four years fares freeze I delivered after the last election. They have insisted that free travel is temporarily suspended for Freedom Pass and 60-plus cardholders at peak times. We agreed it was the right thing to review the Congestion Charge.
“The government has also insisted that, unlike the deals done elsewhere in the country, TfL takes on £505m of additional debt. This will undo the hard work we’ve put in to fix TfL’s finances over the last four years – when TfL’s operating deficit has reduced by 71%.
The government said it has agreed a £1.6 billion funding and financing package for TfL to protect key services and help people to stay safe during the pandemic and supporting the capital’s gradual recovery from COVID-19.
The government has agreed a package of grants and loans based upon a series of conditions agreed by the mayor, Sadiq Khan. The agreement includes increasing service levels as soon as possible to ensure people can follow social distancing guidelines while on the network, making sure those who have no alternative to public transport can travel safely.
Besides the reintroduction of fares on buses and reinstatement of the Congestion Charge. London COVID-19 task force, comprising representatives of the government and TfL, has been established to oversee operational decisions during the crisis.
In order to reduce the risk of crowding and to encourage vulnerable groups to from using public transport at the busiest times when there is greater risk of transmission and it may not be possible to socially distance. The deal will thus see the temporary suspension of the Freedom Pass and 60+ card concessions to off peak hours. It will also see temporary suspension of free travel for under 18s and special arrangements will be made to ensure children eligible under national legislation can still travel to school for free. These changes will take place soon as practicable.
The mayor has agreed that the government will carry out an immediate review of the TfL’s future financial position and structure, including the potential for efficiencies. Two special representatives will represent the government on TfL’s board, its finance committee and its programmes and investment committee, in order to ensure best value for money for the taxpayer.
The mayor has also agreed to increase fares next year on all modes by RPI plus 1%, in line with the proposals in TfL’s own business plan, in order to put the organisation on a more sustainable footing.
There will also be a focus on promoting traffic management and active travel to maximise the benefits of the government’s £2 billion investment in cycling and walking, announced last week. These measures will include efforts to push forward new segregated cycles lines, pavement extension and road closures to traffic, making it easier for people to chooser greener ways to travel.
Transport secretary Grant Shapps said: “People should avoid using public transport and work from home wherever possible, but as measures are slowly lifted it is vital that Londoners who need to use TfL services feel safe and secure. We must drive an increase in services to support social distancing and ensure our capital keeps moving, driving the economic recovery of this country going forward.
“This deal will encourage a real move towards greener and healthier walking and cycling options, ease pressure on our public transport and provide certainty and stability for London’s transport services in the future.”
The full terms of the agreement will be published in Parliament at the first opportunity.
In a statement today, TfL said: “It is expected that the recovery will take some time and that passenger income will continue to be severely impaired after the strict response measures are gradually eased. Whilst TfL has taken actions to reduce its costs during this period, through measures such as implementing the government’s Coronavirus Job Retention Scheme and a safe stop of non-essential construction projects, the severity of the impact is such that it will not be able to fully mitigate the loss without external support.
“TfL announces that, after a period of discussions, an extraordinary funding and financing support package has been agreed between TfL and the Department for Transport to contribute towards TfL’s forecast funding shortfall. The funding package is based on the assumption that the funding shortfall will be £1.6bn for the period 1 April 2020 to 17 October 2020.
“In recognition that the current circumstances are likely to present ongoing financial challenges, a combination of future measures from TfL, Greater London Authority and the government will be implemented to enable TfL to maintain essential services and deliver a revised balanced budget over the remainder of the financial year. During the period in which the funding package is being provided to TfL, appropriate governance and oversight arrangements will be put in place, allowing the parties to work closely together.”
The Mayor of London’s statement
Sadiq Khan said: “We have just reached agreement with the Government on a funding package to allow TfL to run public transport safely in London for the next four and a half months. This was necessary because COVID-19 has had a catastrophic impact on TfL’s finances – as it has on every transport provider in the UK.
“I want to be completely honest and upfront with Londoners – this is not the deal I wanted. But it was the only deal the Government put on the table and I had no choice but to accept it to keep the Tubes and buses running. In the last few years, London has been the only major city in western Europe that hasn’t received direct Government funding to run day to day transport services since it was cut by the last Government. This means we rely very heavily on passenger fares to pay for the services we run. Fares income has fallen by 90% in the last two months because Londoners have done the right thing and stayed at home – so there simply isn’t enough money coming in to pay for our services.
“We are running as many services as humanly possible given the number of staff off sick, shielding or self-isolating. As staff are returning to work we are increasing services as fast as possible to get back to 100%. From Monday we aim to run around 85% of buses, 75% of Tubes, restore the Circle line and re-open some of the 37 closed stations.
“The Government is, in effect, making ordinary Londoners pay the cost for doing the right thing on COVID-19. They want fares to go up next January, ending the four years fares freeze I delivered after the last election. They have insisted that free travel is temporarily suspended for Freedom Pass and 60-plus cardholders at peak times. We agreed it was the right thing to review the Congestion Charge.
“The Government has also insisted that, unlike the deals done elsewhere in the country, TfL takes on £505m of additional debt. This will undo the hard work we’ve put in to fix TfL’s finances over the last four years – when TfL’s operating deficit has reduced by 71%.
“This deal is a sticking plaster. The old model for funding public transport in London simply does not work in this new reality – fares income will not cover the cost of running services while so few people can safely use public transport. Over the next few months we will have to negotiate a new funding model with Government – which will involve either permanent funding from Government or giving London more control over key taxes so we can pay for it ourselves - or a combination of both.
“TfL and City Hall will do all that we can to enable London’s recovery. We will run as many trains and buses as possible. But we need Londoners’ help. We must not use public transport unless absolutely necessary. People who can work from home must do so. Everyone must walk and cycle more. People should wear a face covering throughout their journeys. I promise to continue being as upfront and clear as possible with Londoners about the challenges facing our city. This is not the deal I wanted for our city, but together we can overcome the challenges we face.”
London Transport Commissioner Mike Brown's statement
“I welcome this support from Government which will help us continue to get London moving and working again, safely and sustainably. London’s transport network is absolutely fundamental to the economic, social and environmental health of the Capital. Throughout the pandemic, transport workers have played a heroic role in the response to the virus –ensuring NHS and care staff have been able to get to work and save lives.
“We have worked closely with the Government and Mayor as part of the national effort to fight the virus, rapidly reducing passenger numbers to levels not seen for 100 years. This has meant that our fare and other revenue have fallen by 90%. We now need to help London recover as restrictions on movement are gradually eased, with public health and more active forms of travel at the forefront of our thinking.
“We have been operating up to 70% of peak Tube services and over 80% of bus services with many of our staff ill, shielding or in self isolation. From next week we will further increase services beyond this as we progressively build towards restoring services to pre-COVID levels.
“To maintain social distancing wherever possible, the transport network needs to operate differently during this extraordinary period. In line with advice from the Government and Mayor we are encouraging people who can work from home to continue to do so to enable the people who must travel to do so safely. We are asking everyone to try and avoid the busiest times to support social distancing wherever possible, to wear non-medical face coverings when they do need to use public transport, and to walk and cycle whenever possible. We are providing extensive new cycling and walking facilities to support journeys by these means.
“Enormous challenges remain, including agreeing longer term sustainable funding for transport in the Capital. In the meantime, we will continue to do everything in our power to help deliver a successful recovery for our great city."
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