Transport for London warns of funding gap

The body responsible for overseeing public transport in London warned yesterday that there was a £400m to £500m shortfall in its business plan which might need to be bridged by higher fares or increased congestion charges on motorists.

Transport for London said it proposed to more than double spending on London's roads, buses and rail system from £765m this year to £1.74bn in 2007-08. In the last year, £1.2bn of the planned expenditure is expected to be met from public funds, according to the Government's 10-year transport plan. A further £130m will be raised from the £5 congestion charge which will be levied on motorists driving into central London from 2003 onwards.

But TfL officials said the remainder would have to come from fares, extra government grants, local taxation or higher congestion charges.

The plan, which envisages total spending of almost £10bn over the next seven years, will be submitted to the London Mayor Ken Livingstone and Greater London Assembly on Monday by the chief executive of TfL, Bob Kiley. Approval is expected in January or February.

In the early years, three-quarters of the budget will be spent on maintaining the capital's public transport services at current levels.

But plans for improving services include 3,000 new easy-access buses, more elongated "bendy" buses and measures to ease bottlenecks like a relief road for Coulsdon. The plans also envisage the start of work on the £2.5bn Crossrail line from Canary Wharf to Heathrow, an extension of the Docklands Light Railway to London City Airport and an extension of the East London Line to link Highbury and Finsbury Park with Clapham Junction.