Londoners may face tax hikes to pay for Tube as passengers stay away

Londoners face having to pay more in taxes to make up for TfL’s lost income (Picture: Getty Images)

Tax rises could be needed to save London’s public transport network after experts predicted passenger numbers will never return to pre-pandemic levels.

Transport for London is expected to see demand for tubes, buses and trains fall by a fifth even as the country returns to normal post-lockdown, according to credit agency Moody’s.

It means a longer term solution is needed to fill the black hole in the operator’s finances after a number of emergency bail-outs during the crisis.

Mayor Sadiq Khan, who is standing for re-election in May, claims the Government is forcing TfL to raise fares and cut free travel for older people and under-18s.

But transport expert Tony Travers, from the London School of Economics, told The Telegraph that of all the options to rescue TfL, ‘The most likely is some kind of permanent tax fix that would need to be found.’

Moody’s said passenger numbers will never recover from the pandemic as thousands of people’s habits have changed forever and home-working is likely to remain widespread.

London relies much more heavily on fare income than equivalent public transport networks in New York and Paris.

All are expected to see a similar fall in passenger numbers but TfL will lose 12% of its income while the drop in the other cities is expected to be closer to 8%, according to Moody’s.

LONDON, ENGLAND - OCTOBER 15: A passenger in a bus wears a face mask on October 15, 2020 in London, England. The city is on course for an imminent tightening of coronavirus restrictions, as cases continue to rise in Britain and its response fragments. (Photo by John Phillips/Getty Images)

Some bus services may be cut back to save money (Picture: Getty)
Passenger numbers are not expected to ever return to pre-pandemic levels (Picture: REX)

A long term deal on TfL’s finances could not be agreed with the Department of Transport before the pre-election shutdown period and instead an emergency bail-out was extended by seven weeks.

Among the options previously considered for raising more money for TfL were extending the congestion charge zone to within sight of the M25 and a reduction in bus services.

Mr Khan has also asked central Government to handover £500m in road tax – a proposal that was rejected by Transport Secretary Grant Shapps.

London’s transport system relies heavily on fare income (Picture: Reuters)

An inflation-busting 2.6% increase in fares – one of the conditions placed on the bail-out in November – has already come into force.

Mr Travers told the Telegraph further steep fare increases would be at odds with the country’s green ambitions, with politicians keen to encourage people to leave their cars at home. Cutting service levels would also be at odds with climate change commitments.

This leaves few other options but to look at a ‘permanent tax fix’, according to the academic.

Mr Khan has blamed the pandemic for the perilous stats of TfL’s finances but his critics say his policy of freezing fares for the last four years have added to the woes.

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