The Department for Transport awarded £39bn to Transport for London yesterday, including £1.7bn towards settling debts accrued by Metronet, the collapsed tube upgrade contractor which is currently run under PPP administration.
Transport for London's total funding of £39bn until 2017/18 was confirmed by the Department for Transport (DfT) yesterday, as part of the recent Government Comprehensive Spending Review. Around £33bn will be paid as grant funding from DfT, with up to a further £6bn of borrowings by Transport for London.
The £39bn package will renew and expand London's transport network over the next decade. Money will go to Crossrail, the ongoing transformation of the Tube, preparations for the 2012 Olympics, and the expansion of rail and bus services and programmes to promote walking and cycling.
"London's transport network underpins the capital's economy, which benefits the whole of the UK. This settlement recognises the crucial role that transport plays in London's economic success, and the importance of completing the renewal and expansion of the network that we have been driving forward since 2000," said Mayor Ken Livingstone.
Peter Hendy, London's Transport Commissioner added: "This 10-year funding settlement will enable Transport for London to continue with the huge investment programme that is modernising and extending the Capital's public transport system, including Crossrail, upgrade of the London Underground and preparations for the 2012 Olympics. "Such a major programme of investment will enable us to support London's continued economic growth and development as one of the world's leading cities."
The current Transport for London Investment Programme runs until 2010. The detailed Transport for London programme beyond 2010 will be worked up over the coming months.
Significant progress was also made today towards bringing Metronet out of Administration. Metronet's lenders have exercised their Put Options under the PPP contracts.
The PPP contracts drawn up by Government effectively guaranteed that London Underground would reimburse Metronet's lenders at least 95% of outstanding approved debt six months after the start of any PPP administration. This is otherwise known as the Put Option.
London Underground will now pay around £1.7bn to Metronet's lenders and Government has provided an additional grant of £1.7bn as part of Transport for London's funding settlement to cover this. This is not included in TfL's £39bn 10 year funding settlement.
London Underground Managing Director, Tim O'Toole said: "Our priority remains the removal of Metronet from PPP Administration as quickly as possible. A great deal of progress has already been made and we remain on track to transfer the two Metronet companies to two dedicated Transport for London companies in the early part of 2008.
"Once under Transport for London control, we will work with the Mayor and Government to restructure Metronet's contracts to deliver track, train and signalling upgrades to increase capacity, along with station and security improvements."
Details of TfL's funding settlement to 2017-18 were confirmed in a Written Parliamentary Statement by the Secretary of State for Transport. The funding settlement was originally advised to TfL in October 2007 but remained a draft settlement until final confirmation was provided by Government today.
Of the £6bn of TfL borrowing around 40% is expected to be invested in Crossrail and this sum forms part of the overall £15.9bn Crossrail funding package.