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RNS Number : 8874C

Transport For London

25 February 2022

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 (as it forms part of Retained EU Law as defined in the European Union (Withdrawal) Act 2018).

Transport for London ("TfL")

25 February 2022

Government support package

TfL announces that a funding and financing package (the "Fourth Funding Package") has been agreed between TfL and the Department for Transport ("DfT") to support transport services in London for the period from 26 February 2022 to 24 June 2022 (the "Fourth Funding Period"). The Fourth Funding Package will contribute towards TfL's revenue loss due to reduced passenger numbers using TfL services as a result of the pandemic.

The Fourth Funding Package comprises an Extraordinary Support Grant of GBP200m payable under section 101 of Greater London Authority Act 1999, paid in three instalments commencing on 29 April 2022. In addition, the Fourth Funding Package recognises that since the relaxation of Covid-19 restrictions the current circumstances continue to present ongoing financial challenges and uncertainty to TfL in predicting the future passenger revenue for the organisation, hence the Government will "top up" TfL's revenues with additional grant payments if they are lower than a pre-determined passenger revenue forecast. Conversely, if TfL's revenues are higher than the pre-determined passenger revenue forecast, TfL will be required to pay that excess to DfT at the end of the Fourth Funding Period. This provides TfL with certainty that it will receive income equivalent to GBP1.615bn in passenger revenue over the Fourth Funding Period in addition to the Extraordinary Support Grant of GBP200m.

As part of the Fourth Funding Package, TfL commits to deliver a plan by 31 March 2022 demonstrating the options that exist to achieve up to GBP400m of additional revenue or cost savings in 2022/23, in addition to delivering the previously agreed operating cost savings for the 2021/22 financial year. DfT acknowledges that TfL is facing further cost pressures in 2022/23 and therefore any proposals presented in this plan and the savings level of GBP400m will be considered and confirmed following a review of TfL's 2022/23 budget.

The Fourth Funding Package recognises that, in line with the current liquidity policy, TfL should continue to maintain cash reserves of an average of GBP1.2bn throughout the Fourth Funding Period. If during the Fourth Funding Period TfL's cash balances rise above an average of GBP1.2bn, then grant payments may, subject to consultation, be varied and/or deferred until such time as TfL's cash balances return to an average of GBP1.2bn. If at the end of the Fourth Funding Period TfL's cash balances exceed GBP1.3bn, there will be a process to adjust final payments made to TfL, by DfT, to account for this.

Government state a willingness in the short and medium term to provide grant funding for renewals and enhancements and will work towards an agreement for long-term capital support with an expectation that this agreement will be reached by 31 March 2022.The Fourth Funding Package includes a number of conditions, which includes the continuation and further development of initiatives commenced under previous funding agreements with DfT.

For further information, please contact:

Transport for London

5 Endeavour Square

London E20 1JN

Email: GroupTreasury@tfl.gov.uk

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