City Hall is hoping to secure a financial package from Downing Street, worth around £5billion, in order to fund Transport for London (TfL) for the next 18 months. In May the Government agreed a deal with the London Mayor worth £1.6bn, after passenger numbers plummeted due to coronavirus restrictions.
However, talks between Number 10 and City Hall continue to stall with a two-week extension granted over the weekend to reach an agreement.
Transport Secretary Grant Shapps issued a letter to Mr Khan earlier this month and proposed an initial six-month deal which is subject to a number of demands.
Increased measures including a hike in council tax, travel fares and the widening of the congestion zone to cover the same areas of the Ultra Low Emission Zone, are understood to be on the table.
According to a letter seen by the Financial Times, Mr Shapps said: “We will be taking reserve legislative powers allowing us if necessary to direct TfL.
“This would be combined with a further series of short-term funding settlements.”
In a reply on October 6, Mr Khan turned down the set to demands and insisted a rise in council tax for Londoners would “place even more reliance on an already broken form of taxation and would be regressive”
On expanding the congestion zone, he added: “This blunt approach would have a catastrophic effect on the economy of inner London and beyond.
“It would rightly be bitterly opposed by business groups, communities and local authorities.”
Deputy Mayor of London Heidi Alexander said there remains “differences to resolve” and condemned the practicality of expanding the congestion zone and increasing fares.
She told a meeting of TfL’s finance committee: “Neither the mayor or I can see how it would be right to charge people £15 to drive a mile from Wandsworth to Clapham, or from Catford to Lewisham, from October next year if the congestion charge was to be extended out to the North and South Circular.
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“Sadiq will continue to fight for appropriate longer-term funding for TfL, and a fair deal for Londoners.”
A Department for Transport spokesman said: “We have agreed an extension to the support period and to rollover unspent funding from the Transport for London Extraordinary Funding Agreement, allowing further time for negotiations for a new settlement.
“These discussions will ensure London has a safe, reliable network. It would be inappropriate to disclose further details at this stage.”
