Funding is at the heart of the debate over how to improve London’s transport and infrastructure.

Significant investment is needed both to maintain a network that has been undermined by Covid-19 and to carry out vital upgrades.

Rachel Reeves debate The first budget dominated the media last week. How will this impact Londoners looking to move to the capital?

Transport for London

Transport for London (TfL), the body which runs much of the capital’s transport network, has been brought to its knees by the pandemic and has for years called for a long-term funding deal to secure investment for the future.

No such agreement emerged from the budget. However, things have taken a more positive turn over the past year.

This long-term agreement is expected to come during the spring spending review. In the meantime, TfL will have to make do with some £485 million for its capital renewal programme.

The problem is no longer if TfL has enough money to keep London’s network up to speed, rather it is a question of whether it has enough cash to invest in the billion-dollar critical infrastructure improvements needed, such as the Bakerloo and Central lines, as well as major projects such as Crossrail 2.

Half a million won’t be enough for that, but it is more than what Mayor Sadiq Khan wanted, who had lowered expectations ahead of the announcement to “something in excess of £250 million”.

Pessimists would point to unanswered calls for money for the Bakerloo extension and the DLR extension to Thamesmead.

But current funding will be used for works such as providing new rolling stock to the Picadilly line and Elizabeth line, which need additional capacity to serve Old Oak Common HS2 station.

We’ll have to wait and see in the spring. The response from transportation and business groups following the budget has been mostly calm, a sign of an understanding that good things could come in the future.

Expect a stronger response if nothing materializes next year. Relations between Khan and the government have improved since the general election, but tensions over funding could easily escalate if Labor fails to reach a longer-term deal.

In the meantime, TfL’s financial situation appears to be improving. The operator recorded an operating surplus of £138 million in the last financial year, mainly due to the success of the Elizabeth line.

Planned strikes by the RMT union were called off last week, giving TfL a big boost, but Aslef members are still ready to cause disruption. Whether or not disputes continue will be essential to the continued smooth running of TfL.

TfL prices

Any fare increases on TfL will be set by Khan, which has chosen to freeze rates for five of the last eight years.

Reeves revealed in his statement that regulated rail fares across the UK will rise by 4.6 per cent from March 2 next year, one per cent above the inflation measure of the July Retail Price Index (RPI).

A post-Budget letter to Khan from Transport Secretary Louise Haigh has since suggested that the amount of investment in London’s transport received over the next few years could depend on whether the mayor agrees not to not freeze prices again.

The tariff increase will be considered the “baseline” for negotiations, he said. TfL has sometimes been criticized for making too much of its revenue from ticket fares, as opposed to other sources of income.