Transport for London: Mayor could raise council tax to cover funding

The Mayor of London has proposed a £20 council tax rise over three years to cover Transport for London (TfL) costs amid uncertainty over government funding.

TfL is facing a £1.9bn budget black hole and has warned of massive cuts to bus, Tube and road services.

The current financial deal has been extended until 17 December.

The government said it was "committed to supporting London's transport network through the pandemic".

The Department for Transport (DfT) said the extension was to allow for clarification from the Mayor's office on financing options.

London Mayor Sadiq Khan said TfL's funding issues had been caused by coronavirus, and that fears over the new Omicron variant and current work from home guidance meant agreeing a funding deal was key.

Mr Khan said: "The Government is still refusing to properly fund TfL and ministers are effectively holding London to ransom, threatening to withhold all emergency funding unless even more significant additional revenue is raised from Londoners for TfL.

The mayor added that to save TfL from collapse he was "left with no alternative" but to raise council tax by £20 a year, over the next three years.

The three-year hike in council tax would raise an estimated £172 million annually.

"This is not something I want to do, but we're being forced down this route by the Government's refusal to properly support TfL or to enable us to raise additional revenue fairly by devolving powers," he said.

He also warned that there would be "significant cuts to bus and tube services" and concession tickets for over 60s may need to be phased out.

"Only a proper, long-term funding deal with the Government, including additional capital funding, will avoid these damaging cuts," he said.

By Tom Edwards, BBC London transport correspondent

TfL has a big, big funding gap due to a drop in passengers and it is in talks at the moment to get help from the government. The deadline is Friday. Part of the conditions of the deal are for the Mayor to raise an extra £500-£1bn.

In exchange Government says it might be able to help with about £300m until April. Longer-term funding is unclear.

The Mayor is now proposing a £20 a year rise in council tax and a phasing out of the over-60s free travel as well as rezoning of some stations. He'll need to pull all of those levers to raise the cash. There will also probably be service cuts.

But he wants to make it clear he is being forced into this. He is also trying to get his version of the deal out first.

But the government hate negotiations in public - in effect here by press release - so who knows what the impact of this will be?

The DFT said it had "repeatedly shown our commitment to supporting London's transport network through the pandemic".

It has provided more than £4bn in emergency funding to Transport for London, they said.

A DfT spokesperson said: "We received a response from the Mayor on income generation proposals which can move TfL towards a financially sustainable future, in a way that is fair to the national taxpayer.

"However, these were provided past the original deadline and Government has asked the Mayor for further clarifications in order to be able to assess those options, before discussions take place on a further funding settlement."