TfL may be forced to mothball more capital projects following £1bn funding deal

A report titled Delivering the Mayor’s Transport Strategy 2020/21 confirms that TfL's next round of major projects "will not be able to be delivered at the pace envisaged before the pandemic” with decisions now dependent on long term government funding.

Schemes such as Crossrail 2 and the extension of the Bakerloo line have already been pushed back, with TfL previously stating that neither scheme is likely to begin until the 2030s. 

However, the latest update suggests that other proposed TfL projects such as the West London Orbital (WLO) and a DLR extension could also be mothballed if a longer term funding deal is not struck with government. 

The WLO is a proposed new London Overground route from Hounslow to Hendon and Hampstead via the under-construction Old Oak Common hub. 

The latest report adds that the WLO is now “contingent on the outcome of discussions with the government on longer term funding”.

Last month the WLO was described as "key" to unlocking the full potential of the vast Old Oak Common site by a senior TfL offical. 

The report adds that options for the DLR extension from Beckton to Thamesmead will continue to be explored, although any decision is contingent on longer term funding being secured. 

Risks of further cuts to TfL’s capital programme come a day after the government and the transport body, which is chaired by the mayor of London Sadiq Khan, reached an agreement over a fresh £1.08bn of funding to see the body through to 11 December.

The deal comes with a number of significant conditions. A report compiled by TfL commissioner Andy Byford, and released ahead of next week's board meeting, reveals that as part of the government's funding conditions, TfL must either make cost savings or generate new income totalling £1.63bn this year.

The new government agreement added £900M of additional savings to £730M of recurring cost savings already agreed.

The report notes: “The conditions placed on us by the government agreement and the amount of funding we will receive means we need to find a further £900M of savings or new income this year compared to our approved Budget, on top of the £730M of savings already assumed in our Business Plan.

“We will work through this while protecting front line services to deliver what London needs and to play our full part in recovery, decarbonisation, improving air quality and promoting active travel.”

The new cost saving measures could see the fast-track of driverless trains on some Tube lines as well as increase the level of income derived from new housing built on TfL-owned land. 

TfL has already begun to rein in spending, with the report noting that £46M had been saved compared to its current budget, with spending in the 2020/21 financial year standing at £866M, down from £913M which had been budgeted.

The report notes: “Total spend on capital renewals and new capital investment for the financial year was £46M, or 4%, lower than budget, reflecting greater caution on capital spend approvals owing to funding particularly as we approached the end of the funding period.”

Further conditions of the bailout will see the Department for Transport and TfL conduct a joint review of actual passenger demand levels in July this year (for buses) and September (for Tube and rail) to prepare for a revised medium term capital investment programme. This will feed into a wider government spending review set to be announced in the autumn.

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