Londoners risk tax raid as Sadiq Khan grapples with tube funding crisis Business

TfL bosses are stuck in talks with the government over a long-term bailout deal worth £ 15.8 billion. Ministers have already distributed more than £ 3 billion to keep services running in the capital over the past year.

Sadiq Khan has threatened to charge drivers up to £ 5.50 a day to enter Greater London to cover the shortfall unless he is allowed to keep the road tax collected in the capital. Both options were rejected by Transport Secretary Grant Shapps, who said earlier this year: “I don’t think he can just plunder the national budget.”

With town hall and Westminster unable to come to an agreement before a pre-election communications blackout began last week, Mr Shapps has proposed a seven-week extension of current central government funding which runs out on March 31.

Mr Khan, the frontrunner to be re-elected for another four years in May, has regularly clashed with Boris Johnson over the alarming state of TfL’s finances last year. The Prime Minister said Mr Khan had bankrupted TfL’s finances. In response, the mayor – who froze tariffs for four years starting in 2016 – said Mr Johnson’s remarks were a “blatant lie”.

Tony Travers of the London School of Economics presented a number of options for putting TfL back on a stronger financial footing. He said: “Most likely is some kind of permanent tax solution that should be found.”

Mr Travers said another option is a substantial reduction in services, but added that cutting public transport would contradict the government’s climate change commitments to reduce car use. A third option to increase tariffs more sharply would also contradict the country’s green ambitions.