London mayoral candidate Shaun Bailey has claimed that Transport for London’s (TfL) bailout bid was “inevitable” and would have happened even without the coronavirus crisis.
The Tory candidate told City A.M.’s daily podcast The City View that TfL was “bankrupt, virtually” and that its bid for a £2bn bailout from central government was because of Sadiq Khan’s handling of the transport body’s finances.
The Sunday Times reported yesterday that TfL had just £1bn in the bank and would run out of cash in two months without government support.
It has suffered from a 95 per cent drop in Tube fares and an 85 per cent drop in bus fares due to the Covid-19 lockdown.
A spokesperson for Khan called Bailey’s comments “total nonsense” and that the “sole cause of the financial challenge now facing TfL and all other transport operators is Covid-19”.
The hit to TfL’s finances from the virus could not have come at a worse time, after it had compiled an estimated £11bn in debt in recent years.
The transport body had a projected 2019-20 deficit of around £220m, which was a vast improvement on initial estimates.
TfL’s finances have been affected by the government reducing its contribution to the body by £700m per year, Crossrail’s budget blowouts and Khan’s fares freeze for single journeys implemented in 2016.
Bailey said today that the fault for TfL’s debts lay with Khan and that he would have had to ask for a bailout at some point even without the coronavirus crisis.
“I think it’s important for people to understand that TfL was bankrupt, virtually, before Covid and I think it’s really imoprtant that we do not allow the mayor to hide behind this outbreak,” he said.
“The fact TfL are going cap in hand [to the government for a bailout] was inevitable, even if we didn’t have Covid that was going to happen, but this has just sped that up.”
A spokesperson for the mayor strongly refuted Bailey’s claims.
They said: “This is total nonsense.
“Despite London being one of the only major cities in Western Europe without a government grant for day-to-day transport operations, Sadiq had ensured that Transport for London was in a strong financial position prior to the coronavirus pandemic – reducing its operating deficit by 71 per cent and increasing its cash balance by 16 per cent.
“The sole cause of the financial challenge now facing TfL and all other transport operators is Covid-19. Fare income has fallen by around 90 per cent as a result of lockdown.”