TfL funding crisis deepens with fresh row over pensions reform | Business News

The long-running impasse over the financing of London’s public transport system has deepened just days before its latest deal with the government is due to expire.

Sky News has learnt that Bernadette Kelly, the Department for Transport’s (DfT) most senior civil servant, wrote to Andy Byford, Transport for London’s (TfL) commissioner last week, to notify him that a formal dispute period under the terms of its funding settlement had been triggered.

In her letter, which has been obtained by Sky News from a Whitehall insider, Ms Kelly complained that TfL had failed to produce a recommended approach to reforming the organisation’s pension scheme in order to put it in “a financially sustainable position”.

“We also do not consider the subsequent responses, indicating that a recommended approach will be delivered in approximately 18 months, to be in line with our previous agreement, nor do they represent an ambitious timeline to resolve this issue”.

Overhauling TfL’s retirement scheme has been a long-standing point of dispute with the government, and has been among the factors in a string of strikes affecting London transport services in recent months.

The emergence of Ms Kelly’s letter comes just over a week before a four-month funding deal agreed in February is due to expire, with little sign that ministers are preparing to offer a more comprehensive long-term solution.

TfL has been mired in uncertainty over its future since the onset of the pandemic, with a slump in commuter traffic having a devastating impact on its revenues.

A series of short-term deals have triggered trenchant criticism of the government from business groups amid accusations that the delays have been politically motivated, and despite TfL meeting dozens of conditions imposed by Whitehall.

Sadiq Khan, the London mayor, warned last week that cuts to bus and Tube services under its “managed decline scenario” would need to begin imminently without a long-term financing plan in place.

Last month, TfL opened the long-awaited Elizabeth Line, or Crossrail, service, which Mr Byford hailed as “a truly historic day for the capital”.

Grant Shapps, the transport secretary, had previously criticised the timing of the announcement of the opening, which came shortly before the local elections.

Mr Khan has since written to the transport secretary and to Conservative MPs who opposed Boris Johnson in this month’s confidence vote on his leadership to urge them to seek an improved funding settlement for TfL.

A TfL spokesperson said: “The only reason we need support is because fares revenue collapsed during the pandemic.

“We are on track to achieve financially sustainable operations by April 2023.

“At that stage we will no longer need operational funding support from the government, but will need continued support for vital capital investment if we are to avoid disastrous consequences for London’s transport network, including the risk of managed decline.

“Without sufficient funding we will be forced to decrease service levels and reliability will fall.”

They added that talks with the government were ongoing “about the support we still require this financial year but it remains essential that agreement is also reached on longer term capital support”.

The DfT did not respond to a request for comment.