Wednesday 21 October 2020 3:54 pm

Business bodies slam government's TfL bailout conditions as a ‘mockery’

London business bodies have slammed the government’s demands for a potential bailout for Transport for London (TfL) as a “mockery”, accusing ministers of “railroading” policy through while the transport network is on its knees during the pandemic.

Ministers last night threatened to take direct control of TfL unless London mayor Sadiq Khan accepts a raft of conditions as part of any financial support package.

Khan has pushed for almost £5bn in emergency funding from the government to keep the network running for the next 18 months, after warning that current support measures have run dry.

The mayor today said he “cannot accept” the conditions attached to Whitehall’s potential bailout, adding that they would “hit Londoners with a triple whammy of higher costs at a time when so many people are already facing hardship”.

Leaked details of demands by transport secretary Grant Shapps included an extension to the congestion zone, council tax hikes for Londoners and higher-than-inflation fare rises.

‘Mockery’

London First, a business campaign group representing more than 200 companies in the City, said there was an “urgent need for the government to provide further short-term cash support” for TfL during the coronavirus crisis.

“Some of the policy ideas floated in recent days may have a role to play in the long term, but it will take time and cooperation to get them right,” said chief executive Jasmine Whitbread.

“Railroading these policies through as non-negotiable conditions attached to emergency support for an essential transport service used by millions of people daily is not the right way forward — and makes a mockery of the government’s commitment to devolution.”

The pushback comes after London saw a swathe of new restrictions come into force over the weekend, as the capital moved from Tier 1 to Tier 2 under the new local lockdown system.

Business bodies have warned the new restrictions, including an order to avoid public transport where possible, will “decimate” TfL, which has seen revenue plummet after months of reduced footfall in the capital. 

Details of the government’s proposed bailout conditions stoked further tensions today, with plans to hike council tax to offset funding drawing particular ire.

John Cullinane, tax policy director at the Chartered Institute of Taxation, told City A.M: “The risk is that maybe raising Londoners’ council tax bills is an early sign of the rows that could rage over the coming months and years over how to fill the big hole in the public finances left by coronavirus.

“It is important that there is an open and public debate about this, rather than government not acknowledging its existence but prompting less high profile local tax changes on people — and still with the risk of larger, unpleasant surprises down the track.”

Cullinane added: “We urge the government to consider in particular the impact of changes to council tax on low income people, especially those on a council tax support scheme.

“Lone parents, renters, and claimants in councils that already had relatively low council tax collection rates seem at particular risk of falling into council tax arrears as a result of being required to pay extra on their council tax bill because of coronavirus.”

‘All-out fight’

The National Union of Rail, Maritime and Transport Workers (RMT), which represents more than 80,000 staff across the transport sector, said it pledged to wage an “all-out fight” to protect jobs, pensions and working conditions from the government’s “savage cuts in TFL funding deal”. 

RMT general secretary Mick Cash said: “It is appalling that the government are targeting staff pensions amongst a range of other savage measures in this short-term funding deal. 

“I put them on notice that any attempt to hack away at our members pension rights will be met by an all-out campaign of political and industrial resistance.”

Cash said the pandemic had presented “difficult times for the staff who have kept London moving” adding that it was “a disgrace that they are now being set up for a battering in these cuts measures”.

Westminster reaction

Support for Shapps’ proposed bailout conditions was split across party lines, with furious Labour MPs warning the demands would destroy TfL after lockdown regulations hammered revenues across the network.

Shadow transport secretary Jim McMahon told City A.M. it was “extremely worrying that despite repeated requests, the government is offering only a papering-over-the-cracks funding package for TfL, with such punitive conditions.”

“If the government gives financial support to the privately operated rail network, it is inconceivable that it does not do the same for publicly owned transport providers like TfL, which need long-term secure funding during what could be a lengthy period in which they won’t be able to operate at full capacity.”

But Tory MPs have accused the mayor of playing politics during the pandemic, and urged Khan to seek a resolution with the government over a bailout deal.

Nickie Aiken, Conservative MP for the Cities of London and Westminster, told City A.M: “It’s clear that Khan has realised he has nowhere left to hide.”

“His appalling management of TfL over the past four years has brought the most important strategy transport network in the country to its knees. Rather than briefing the media and scaremongering what Londoners need and deserve is for the mayor to realised the mess he is in and work constructively with the government to find a workable solution.”

The TfL board is set to hold crunch meetings later today regarding the future of the rail network.

A spokesperson for the Department for Transport said it would be inappropriate to discuss the detailed discussions. “We have agreed an extension to the support period and to roll over unspent funding from the Transport for London Extraordinary Funding Agreement, allowing further time for negotiations for a new settlement.”

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