The report highlights that TfL is facing a funding gap estimated at £20 billion over the next 20 years. Passenger numbers on public transport in London have not yet fully recovered to pre-pandemic levels, resulting in a reduction in revenue. As a result, TfL has received several short-term funding deals from the government, with the latest deal running until March 2024.
The NIC's report emphasizes the need for a new longer-term funding model for capital investment to allow for the enhancement and expansion of London's public transport network, which would unlock growth opportunities and additional housing.
Specifically, the report mentions the required improvements to TfL's train fleet and signalling infrastructure. Mayor Sadiq Khan has previously stressed the need for replacing the Bakerloo line's trains, which are the oldest on the network, dating back to 1972. He also emphasized the need for long-term funding certainty to upgrade the Piccadilly line's signalling system, parts of which date from the 1950s.
The NIC's recommendation to the government is to replace short-term funding deals for TfL with five-year funding settlements, sufficient to support both the renewal and enhancement of London's transport.
The government should work with the Mayor of London to establish priorities for public transport enhancements over the next 10-20 years and agree on the appropriate combination of grant support, retained business rates, and local mechanisms to finance them.
If the government cannot provide enough funding through grants, the Commission suggests devolving new powers to City Hall to enable London to raise more of its own funds through taxes.
The Department for Transport responded by emphasizing that it is the Mayor's responsibility to ensure TfL can provide transport services in the capital. They mentioned that they have provided over £6 billion since 2020, in addition to TfL receiving around a billion pounds every year in retained business rates.