TfL tonight agreed a £1.6bn bailout deal with central government after London mayor Sadiq Khan warned that without an emergency cash injection the transport system would run out of cash.
The bailout is made up of £1.1bn in cash with a £500m loan.
Number 10 has attached a number of conditions to the bailout including the return of a full tube service.
Other conditions include a review of TfL’s finances and government officials taking seats on the board that oversees the transport operator.
A mayoral source said: “The government has belatedly agreed financial support for TfL to deal with covid-19 – as they have for every other train and bus operator in the country.
“But they have forced ordinary Londoners to pay a very heavy price for doing the right thing on covid-19 by hiking TfL fares, temporarily suspending the Freedom Pass at busy times and loading TfL with debt that Londoners will pay for in the long run.”
Conservative mayoral candidate Shaun Bailey said: “What has happened tonight in London is extraordinary. Sadiq Khan has been exposed as being such an incompetent mayor, that the government have had to take control of the TfL board and its finances as a condition of the bailout that he had to beg them for.
“As the upcoming review of TfL’s finances will show, the coronavirus highlighted existing structural flaws within TfL’s balance sheet – the primary cause was our profligate mayor.
“Once the virus recedes there will be a day of reckoning and Khan will be held to account. When he eventually decides to face the London assembly, he better be ready to explain why TfL’s finances were in such a sorry state.
“I have only one question for the mayor for now. Given you haven’t completed a single major infrastructure upgrade since you took office, where did all the money go?”
Earlier Khan warned that TfL would cut bus and tube services if it did not receive a bailout today.
Speaking to LBC, Khan said: “Being blunt, today is the last day. Unless the government gives us confirmation of the grant we need, then the consequences could be quite severe and the ramifications for all of us will be huge.
“Because we are required to keep two months’ money to pay for services, we’ll have to start reducing services”.
TfL has to issue a Section 114 notice if its cash reserves fall below £1.2bn, which would have happened today, Khan said.
This notice is the equivalent of a public company going bust and means strict spending restrictions will be implemented.
TfL has suffered a 95 per cent drop in Tube fares and an 85 per cent drop in bus fares due to the covid-19 lockdown.
Transport secretary Grant Shapps earlier signalled that any bailout of TfL could lead to an increase in fares which have been frozen since 2016.
“It’s very important in providing a rescue package that TfL and the London mayor can work with that we don’t end up in a situation where those outside the capital are unfairly carrying the burden,” he said.
“Sadly…fares do end up having to rise with inflation, if not there’s less money going into the system. If you have consistent freezes, it means that less money is going into the system.
“You can’t, then, have an unfair settlement where other British taxpayers are effectively bailing out the system.”