LONDON (BLOOMBERG) - London's transit system will get a £1.6 billion (S$2.7 billion) bailout to plug a shortfall in revenue caused by the coronavirus lockdown, according to two officials with knowledge of the matter.
The package comprises a £1.1 billion grant and a £500 million loan, the people said, asking not to be identified as the details are private. One of them said the bailout came with attached conditions.
The aid comes after Mayor of London Sadiq Khan earlier warned that Transport for London, which operates the transit system, could run out of cash by the end of Thursday (May 14).
TfL gets about half its funding from fares, but subway trips have plummeted since the country went into lockdown and bus journeys are temporarily free. A congestion charge levied on vehicles in the city center and a toll on cars and vans that emit high levels of pollution were also suspended, hitting income further.
The transport manager will have to get the subway and the capital's buses back to 100 per cent service as soon as possible as one of the conditions of the package, according to one of the officials. Other conditions include government officials having the right to attend TfL board meetings, a review into the authority's financial position, regular reporting of staff absenteeism and government advertising about the pandemic on the subway.
Speaking to LBC Radio on Thursday, Khan said TfL's £2.1 billion cash reserve is now running out.
He warned services would have to be reduced if the government didn't provide money to help.
"Being blunt, today is the last day," he said.
NO 'UNFAIR SETTLEMENT'
At a press conference on Thursday, Transport Secretary Grant Shapps had a warning for Khan, who hasn't raised most transit prices for several years.
It's important "that we don't end up in a situation where people from outside the capital are unfairly carrying the burden," he said.
"If you have consistent fare freezes, it means that more money isn't going into the system. And you can't then have an unfair settlement, where other British taxpayers are effectively bailing out the system, albeit that the system in this case is in trouble because, clearly, of coronavirus."