Calls are growing for the government to agree a long-term funding solution for Transport for London, after the latest emergency bailout of £200m was agreed right on deadline late last week.

The calls for a long-term solution came as the government agreed a fourth extraordinary funding settlement worth £200m until 24 June 2022, essential to ensure the continued running of London’s transport network.

Transport secretary Grant Shapps claimed the new deal also includes the potential for a longer-term capital investment settlement for TfL, but London mayor Sadiq Khan faces the daunting task of finding operating cost savings of up to £400m in 2022 to 2023 and also co-operating with the government in other areas before any long-term funding deal is agreed.

Transport secretary Grant Shapps said: “These support packages must be fair to all taxpayers and the settlement agreed today provides enough to cover lost revenue from the pandemic while the mayor follows through on his promises to keep TfL on the path to financial sustainability by 2023.

“In this funding settlement, the mayor will consult on the options he believes will raise between £500m and £1bn of additional yearly revenue from 2023. He will also be outlining options to achieve operating cost savings of up to £400m in 2022 to 2023 and delivering against TfL’s accelerated modernisation plan while making significant progress in moving the pension fund into a financially sustainable position.

“Throughout this period, government will continue to work closely with the mayor and TfL to ensure London’s transport system delivers for Londoners and contributes to the entire country’s economic recovery while maintaining the interests of national taxpayers.”

London mayor Sadiq Khan said: “While I welcome and am relieved about this funding, once again the government has just provided a short-term funding deal that will only enable TfL to continue running transport services for a few more months. This agreement makes reference to future capital investment for TfL, but it’s essential that this quickly turns into a concrete commitment from the government. The only way we will be able to avoid significant and damaging cuts to tube and bus services is if the government steps up and provides the longer term capital funding TfL urgently needs.    

“The pandemic is the only reason TfL is facing a financial crisis. TfL has a critical role to play in driving the recovery and it supports tens of thousands of jobs across the UK, but the government’s short-term deals are trapping TfL on life support and putting economic growth and jobs at risk. Over the next few months, I urge the government to engage with TfL and City Hall in good faith so that we can finally agree a fair, longer-term funding deal that will protect London’s transport network – for the sake of the capital and the whole country.”

Andy Byford, London's transport commissioner, said: "There is no UK recovery from the pandemic without a London recovery and there is no London recovery without a properly funded transport network in the capital. The mayor has already set out a range of proposals that will help support TfL's financial sustainability in the future but it is essential that agreement is reached with government on longer term capital support during this funding period. This is crucial for the coming years if a period of the managed decline of London's transport network is to be avoided. 

“We will be meeting regularly to work towards agreement on the government funding of the capital investment priorities shared by them, us and the mayor. Working together, we must achieve this longer-term funding settlement. Only that would ensure London's transport network can remain safe, efficient and reliable, can continue to support the jobs and new homes that rely upon it and can support the economic recovery of the capital and the country as a whole.”

Caroline Pidgeon, chair of the London Assembly transport committee, said: “We welcome today’s extension – but these continued delays to a long-term solution are not useful, and Transport for London is not a political football. For the sake of TfL’s capital and revenue, a permanent deal needs to be in place. The to-ing and fro-ing has gone on for long enough and it’s time Londoners were given some certainty over the future of their transport system. A longer-term financial settlement is what London and the rest of the UK urgently needs.”

Peter Hogg, Arcadis’ UK cities director, said:“It’s a telling sign of how we’ve become so used to a Punch and Judy narrative and ultra-short bail-outs that Mr Shapps’ ‘plan for a plan’ that takes TfL through to the end of June feels both quite strategic and refreshingly collaborative. What is important now is that both sides work collaboratively and in good faith to create a long term capital investment settlement that really sets London up with a strategic transport network that enables it to come out of the gates storming after the pandemic and cement its status as the world’s greatest city to live, work, visit and invest. Anything less ambitious would be an unforgivable gifting of London’s global city status to its many competitors.”

Darren Caplan, chief executive of the Railway Industry Association, said: “It is good that the government has recognised the need for certainty of funding and is willing to consider a longer-term capital settlement. However, today’s four-month extension does not help TfL or businesses to plan for the long-term and it fails to address uncertainty around vital railway upgrades. The government and TfL need to work closely on a multi-year funding settlement, enabling the capital’s railway and tube network to be renewed and enhanced in the months and years ahead, ultimately helping drive economic growth not just in London but right across the UK.”

Nick Bowes, chief executive, Centre for London, said: “Today’s announcement doesn’t negate the need for a long-term sustainable financial deal for TfL that allows proper forward planning and continued investment in the network. A serious of stop-gap funding deals is just kicking the can down the line – a state of permanent crisis within TfL is no way to run the modern public transport network London deserves."