At a glance
- TfL is exploring new fare structures and customer reward schemes to boost ridership, while expecting motorists to contribute over £1bn a year through road-user charges
- Central and inner London bus services are facing cuts, meaning passengers face longer journeys or having to change between buses
- New Piccadilly line and DLR trains are due to enter service next year but no money has been set aside for major schemes such as Crossrail 2 or Euston and Euston Square Tube stations
New fares and “customer rewards” are under consideration by Transport for London as it attempts to lure more passengers back to the capital’s public transport network.
But an unspecified number of buses in central and inner London face being axed, resulting in many passengers facing “longer journeys” or having to change between buses to complete their journey.
TfL’s draft budget for 2026/27 also reveals that more than £1bn a year is expected to be paid by motorists due to London mayor Sir Sadiq Khan’s “road user charges”, such as the £18 congestion charge, Ulez and tolls on the Blackwall and Silvertown tunnels.
This is a £176m increase on TfL’s current road charging income, with £110m of the increase coming from the hike in the C-charge and the removal of the 100 per cent discount for electric vehicles from January 2, 2026.
TfL’s draft budget was published overnight on Tuesday and was being discussed at TfL’s board meeting on Wednesday.
The most intriguing line is in the foreward to the 60-page document written by TfL finance chiefs Rachel McLean and Patrick Doig.
They say TfL hopes that passenger numbers will return to 94 per cent of pre-pandemic levels by 2030, driven by encouraging more Londoners to use public transport – including the use of fare incentives.
They state: “We will also be exploring how innovative fare structures and customer reward schemes could deliver greater value for customers while supporting growth in ridership and revenue.”
Passengers are expected to pay £6bn in fares to TfL in the next financial year – up £400m on current levels.
It is thought that Sir Sadiq has encouraged TfL to examine how regular passengers can be encouraged to make more journeys.
However, he will be aware that a £24m initiative that scrapped peak fares on Fridays for 13 weeks last year “made no noticeable difference” to passenger numbers.
What’s in TfL’s new budget?
One key policy is the need to reduce the cost of running the London bus network – while also reducing delays to bus journeys, which have caused a continuous fall in bus usage.
TfL is incurring higher costs as it re-lets bus route contracts, which normally come up for renewal every five to seven years.
The budget states: “TfL has set a target to reduce bus journey times, which will mean fewer buses are required to deliver timetables.
“Overall total outer London bus services are forecast to increase, but central and inner London services are forecast to decrease to align with changing levels of demand in these areas.
“While the service changes are still subject to development and so the exact impact is not known at this stage, it could lead to longer journeys or additional changes for affected customers.”
The first of 94 new Piccadilly line trains should enter service in the second half of 2026. New DLR trains are also due next year.
The business plan enables signalling upgrades to be completed on the sub-surface Tube lines and the completion of the upgrade to the ageing Central line fleet.
But TfL only hopes to “make progress” on “plans for a new Bakerloo line fleet”.
Investment in “Healthy Streets” – namely cycle lanes, safer junctions and better pavements - will increase in line with inflation.
Oxford Street will be pedestrianised. TfL has submitted a business case to take on the Great Northern suburban rail route, which would enable more frequent train services to be provided to Crews Hill in Enfield, earmarked as one of two sites in London for new towns.
What’s not in the budget?
Crossrail 2 – despite the mayor being urged to make it a long-term priority – and capacity improvements to Euston and Euston Square Tube stations that will be required when HS2 finally makes it to Euston.
What’s happening with fares?
The pre-Budget announcement from Transport Secretary Heidi Alexander that national rail fares would be frozen has complicated matters for TfL.
Normally, the mayor changes TfL fares in line with national rail fares. But he was already under orders to implement an above inflation rise (RPI + 1) in TfL fares each year until 2030 in return for £2.2bn of funding in the June spending review.
However, it would be politically damaging to the mayor if he hikes Tube and Elizabeth line fares while the rest of the country enjoys a fares freeze.
Negotiations are believed to be underway between TfL and the DfT over an extra payment that would “plug the gap” in TfL’s budget if there is to be a fares freeze – with the impact on Travelcards also needing to be resolved.
Is TfL on course to make another “profit”?
Yes – for the third year in a row. TfL expects to make a £35.2m operating surplus this financial year, rising to £69.5m in 2026/27 and £533m by 2028/29.
When will we know more?
TfL is due to publish its 2026 business plan – which covers the period until 2029-30 – next week. It will be considered by the TfL finance committee on December 17.
Sir Sadiq is due to make an announcement on TfL fares by February, with the changes – or fare freezes - coming into effect in early March.
A TfL spokesperson said: “As we do on an annual basis, we have published our draft submission into the GLA Group consolidated budget, which is subject to consultation and will be finalised in February 2026.
“We will present our draft business plan for approval in due course, which will set out the detail of our investment plans to 2029/30, and will publish our TfL 2026/27 Budget in March 2026 next year.”
