Transport for London has agreed a funding settlement with the Department for Transport, averting widespread cuts to services.

The deal includes base funding of about £1.2 billion until March 2024, and provides a financial safety net if passenger figures and revenue do not continue to recover as TfL is hoping.

But there is still an unfunded gap in the budget which TfL is now ‘working hard to identify how we will fill’, according to transport commissioner Andy Byford. However, he is welcoming the avoidance of a managed decline in the level of TfL services, which could have included the closure of an Underground line.

The settlement has come at the end of many months of uncertainty, in which modest injections of cash were made at intervals while the talks went on.

As part of the agreement, the Mayor has agreed to continue work on the introduction of driverless trains on London Underground, something the transport secretary believes is ‘key in London maintaining its position as Europe’s greatest transport network’.

Andy Byford said: ‘After weeks of negotiation, we have today reached agreement with Government on a funding settlement until 31 March 2024. This agreement, which was hard won, means that we can now get on with the job of supporting London’s recovery from the pandemic – to the benefit of the whole country. There is no UK recovery without a London recovery, and no London recovery without a properly funded transport network.

‘The agreement means that TfL expects to receive further base funding of around £1.2 billion from Government until March 2024 and gives TfL ongoing revenue support should passenger numbers not recover at the rate budgeted, which is crucial at this time of ongoing economic uncertainty. It helps us avoid large-scale cuts to services, and means that we will commit £3.6 billion to capital investment over the period, with around £200 million of new capital funding from Government beyond previously budgeted sources like business rates, which were devolved to the Mayor in 2017. The agreement also allows us to increase our asset renewal programme to help ensure our network remains reliable, and means we can restore our Healthy Streets programme, making our roads safer, and more attractive for those walking and cycling.

‘The support offered by Government left an unfunded gap in our budget, which we have been working hard to identify how we will fill. This work has made good progress and we are confident that we will achieve an outcome that allows us to balance our budget and maintain our minimum cash balance. We will need to progress with our plans to further modernise our organisation and make ourselves even more efficient, and we will still face a series of tough choices in the future, but London will move away from managed decline. We are grateful for the support of both the Mayor and the government as we now set out to continue serving the capital and investing in safe and reliable services.’

TfL added that it will need to save £230 million between now and 2024, and that it was looking at potential sources of further funding if the savings cannot be achieved.

Labour's London Assembly transport representative Elly Baker said: ‘The government’s punitive deal with TfL comes too late and adds insult to injury for Londoners living through an unprecedented cost of living crisis who did the right thing by staying away from public transport during the pandemic.

‘While it takes away the danger of the most drastic service cuts, there are still far too many unnecessary and damaging conditions attached and passengers will bear the brunt of the considerable funding gap.

‘With money ring-fenced by the government for walking and cycling I remain concerned about public transport. TfL will face tough choices over service cuts and fare rises in the future if they are to balance the books. This deal has left them with no choice.

‘Conditions imposed around staff pensions and pay rises are stoking the fires of industrial action – Ministers must take responsibility for this, especially when transport workers' pay packets are being stretched more and more.

‘The Government hasn’t played fair during this two-and-a-half-year process. There is no UK recovery without a London recovery, and that requires a properly funded transport network.

‘This is not the deal Londoners deserved. I will continue to scrutinise it as the impact becomes clearer.’