Transport for London (TfL) has issued an update on how the Covid-19 virus has affected its passenger numbers and how it intends to utilise its reserves to manage the forecast initial financial impact. This assessment has been based on Government scenarios for the impact of the virus on households over a number of weeks.
Suspension of road user charging to support critical workers
From Monday 23 March all road user charging schemes in the capital will be temporarily suspended until further notice. The Mayor of London, Sadiq Khan has asked for this move to ensure London’s critical workers, particularly those in the NHS, are able to travel round London as easily as possible during this national emergency. It also supports the supply chain, the effort to keep supermarkets fully stocked and the city’s continued operation.
Government advice is that people need to limit social contact and travel should only be undertaken if absolutely necessary. The roads need to be kept clear for the emergency services and critical workers who need to get around by car. Drivers are asked to consider the wider implications when thinking about using their vehicles.
To further support vital hospital staff getting into work during these challenging times, NHS workers will be given a code that waives the 24 hour access fee for Santander Cycles, meaning any journey under 30 minutes is free. In addition to free access, docking stations near hospitals are being prioritised to ensure there is a regular supply of bikes for medical staff to use.
In addition, to keep the public transport network running, TfL has reduced the number of stations open and are ensuring they are appropriately staffed.
Following the extraordinary measures that we have put in place this week, an update to the London Stock Exchange, that was issued today can be found here.
Our best forecast, based on government scenarios, is that the financial impact of the coronavirus could be up to £500m. We manage our finances prudently and have reduced our deficit hugely in recent years. This means that we can manage the impacts on our passenger numbers and finances that are currently envisaged. But, given the nature of the situation, we will be looking to the Government to provide appropriate financial support.
This is an evolving situation and the financial impact is difficult to predict. This will depend on the duration and severity of the spread of the Covid-19 virus. TfL’s current forecast, based on government scenarios, suggest that this could be a reduction in passenger income of up to £500m.
TfL’s current forecast for its end of year cash balance is expected to be more than £2bn. This means TfL is able to manage the initial impact of Covid-19. TfL will consider further budgetary flexibility to ensure it maintains its financial resilience but the Mayor and TfL will also be looking to the Government to provide appropriate financial support to ensure that the core transport network continues to operate safely and reliably to the benefit of the UK’s entire economy.
The key drivers of the reduction appear to be:
- a significant reduction in visitors to London, visible through the traffic on the Tube connecting the airports and central London;
- firms asking staff to work from home as part of their resilience planning; and
- continued underlying softness of demand, especially off-peak. This is likely to relate to consumers remaining cautious about their expenditure given the subdued economy and now the impact of Covid-19.
- All small and medium businesses on TfL’s estate, which make up 86 per cent of tenants, to get 100 per cent rent relief, starting from 25 March, for next three months
- 100 per cent rent relief to be provided to all tenants who operate in any London Underground station that is closed
- TfL will also work closely with larger businesses to review and agree bespoke packages of support
- Any ongoing negotiations on rent reviews and lease renewals are suspended and all existing tenants with rent outstanding will be given more time to pay