The government is sending in City accountants to scrutinise Transport for London’s finances and business plan, as part of its controversial £1.6bn emergency funding agreement for the capital.
The Department for Transport (DfT) hired KPMG, one of the big four accountancy firms, this week.
TfL’s finances have been skewered by the coronavirus outbreak, which has caused its main source of revenue – London Underground fares – to evaporate.
The public has been asked to avoid the tube and buses as physical distancing rules mean safe capacity has been cut to about 15-20% of normal levels.
While the DfT bailed out private train and bus operators in March, it finalised a deal with TfL only last month, when a row broke out over conditions attached.
The government briefed that it was seeking conditions to ensure fairness for taxpayers, but the London mayor, Sadiq Khan, said he was being forced to raise fares and scrap concessions. He also reimposed, extended and increased the congestion charge, days after the government had urged the public to use private cars.
A DfT spokesperson said: “We have appointed KPMG for an independent review into TfL’s finances so we can understand its needs.”
The government has also insisted on taking two places on TfL’s board for oversight.
London’s public transport system is far from alone in having lost huge sums due to coronavirus. Metro mayors on Wednesday told the Commons transport select committee that many local transport services were likely to become unsustainable in their current form due to the impact of the coronavirus lockdown.
A TfL spokeswoman said: “We had reduced our operating deficit from £1.5bn to £200m and were on track to turn this into a surplus pre-coronavirus.” She said the funding deal had included an agreement to review TfL’s finances “to help inform continuing discussions about the government financial support that will be needed in the longer term”.
A spokesperson for Khan said: “We have agreed to a number of new structures, including a finance review, but ultimately the government need to realise this deal is just a sticking plaster.
“Either the government needs to provide us with sustainable funding or they need to devolve taxation powers so we can raise the funds ourselves.”
