Rishi Sunak must bury the hatchet with Sadiq Khan and finalise a £5.7bn bailout of London's debt-ridden transport network to stave off disaster, some of the capital's biggest companies businesses have said.
The Chancellor needs to urgently reach an agreement with the London Mayor over the future of Transport for London (TfL) or face the capital grinding to a halt, according to a slew of executives including the bosses of British Land, Canary Wharf Group and Heathrow airport.
The warning came as the transport authority prepares for an emergency meeting to discuss the lack of progress in securing a long-term funding deal from Westminster.
TfL, which is chaired by Mr Khan, was plunged into crisis earlier this year after the coronavirus lockdown sparked a collapse in passenger numbers.
In a letter to Mr Sunak co-ordinated by lobby group London First, bosses said: “The stakes are extremely high for the future of London and the UK. London’s transport network is critical national infrastructure and TfL must have sufficient funding for both its operations, at normal service levels, and their maintenance. This is essential to tackle any further waves of the virus.
“A lack of funding now will lead to unreliable services in the short term and a need for more funding later on, to catch up with core maintenance and renewal of track, trains, signals, roads, tunnels and bridges.
“Reducing funding in the short term is a false economy, which will ultimately deter investors, developers, and enterprise from doing business in London – in turn restricting economic growth and productivity, and putting essential jobs at risk.”
Covid blew an initial £1.9bn hole in TfL's finances when workers were ordered to stay at home. Westminster then plugged the gap in return for a number of concessions, such as rowing back on fare freezes and allowing two of Boris Johnson’s aides to serve as TfL board observers.
Mr Khan has now requested a further £5.7bn to keep trains, buses and the underground running for the next 18 months.
Downing Street appointed KPMG to assess TfL’s future needs after handing over the emergency funding earlier this year.
City Hall then responded with its own review by a panel that includes National Infrastructure Commission member Bridget Rosewell, former Office of Rail and Road chairman Stephen Glaister, and Sir Jonathan Taylor, former vice-president of the European Investment Bank.
Experts say the negotiations put TfL's parlous finances at the centre of an increasingly politicised stand-off between Mr Johnson's Conservative government and Mr Khan's Labour-led administration.
London's workers are particularly dependent on public transport, compared with other parts of the country:
The letter backers, who also included engineers Arup and AECOM and law firms Allen & Overy, Pinsent Masons and Eversheds Sutherland, echoed concerns raised by new TfL commissioner Andy Byford more than two months ago.
Mr Byford, credited with turning around public transport networks in New York and Toronto, told The Telegraph that securing a sustainable funding deal for London was the “holy grail”.
He is particularly keen to shift the service's dependence on fares, or "farebox", which have generated more than 70pc of TfL funding compared with 38pc in the likes of Paris and New York.
In their letter to the Chancellor, the London business leaders said: “It is also crucial to recognise that TfL’s funding model has been too highly geared towards its farebox. TfL needs to have a more diverse and robust funding arrangement over at least a five-year period, which makes it less reliant on uncertain fare income.”
A spokesman for TfL said: "We continue to discuss our immediate funding requirements with the Government and hope these discussions can be concluded successfully soon, so we can help London through this next phase of the pandemic.
"We are doing what we can to minimise costs and aim to continue operating a full service across our network while our funding discussions continue."