Transport for London has borrowed to fund Underground station upgrades, new DLR trains and accessibility improvements
Transport for London (TfL) was the most indebted local authority body in the UK last year, it has emerged.
New analysis from the TaxPayers’ Alliance (TPA) shows the transport body holds almost £14billion of the record high total £155billion of local authority debt in the UK.
TfL officials said the current £13.9billion of debt was down to borrowing to undergo “a range of transformational projects” on the network, including upgrading Underground stations, ensuring accessibility improvements, upgrading signalling and rolling out new trains on the DLR and Piccadilly Line.
They also noted that for the past three years, TfL has made an operating surplus.
The transport body is funded through a mixture of central and local government grants, fares income from travellers, and road network compliance charges such as Congestion Charge and ULEZ.
In addition to reinvesting any income into large capital projects, TfL has struggled with traveller numbers failing to fully recover since pre-pandemic times, as well as struggles over fare evasion and collecting unpaid fines.
The Greater London Authority (GLA) was second to TfL in the debt list, with £4.7billion of their own, though officials insist borrowing levels have enabled them to unveil the Elizabeth Line and the Northern Line extension in recent years.
As a whole, GLA bodies held £20.1 billion of debt in 2025-26, the highest of any category of local authority.
Benjamin Elks, grassroots development manager at the TaxPayers’ Alliance, told the Local Democracy Reporting Service (LDRS): “Londoners will be horrified that GLA bodies are sitting on more than £20 billion of debt, with TfL alone owing an eye-watering £14 billion.
“Under the Mayor’s watch, taxpayers and farepayers are being left exposed to a mountain of borrowing while basic transport performance remains a constant source of frustration. Sadiq Khan must get a grip on City Hall’s finances, rein in TfL’s debt pile and stop treating Londoners as an endless cash machine.”
Over a third of the debt for both TfL and the GLA was originally loaned from the Public Works Loan Board (PWLB) and used to purchase commercial property until the practice was effectively banned in 2020 under the previous government. This practice saddled many local authorities with large debts because the value of those assets fells below the amount they bought them for in some cases. Meanwhile they still had to pay back the full amount they borrowed with interest.
Under the new rules, authorities have to confirm they do not intend to borrow primarily for yield – purchasing property or other assets in order to generate a profit if their value goes up – at any point during the borrowing cycle.
A TfL spokesperson said: “Borrowing has been, and remains, an important source of financing for Transport for London (TfL) and supports its capital investment programme which supports not only the city, but the wider UK through its extensive supply chain.
“All incremental borrowing raised by TfL is in line with its planned prudent limits authorised by its Board and within its own affordability limits. TfL borrowing is monitored by each of the three global credit rating agencies who have all recently reaffirmed TfL’s credit quality.
“Borrowing is only used to fund capital expenditure, and for the past three years, TfL has made an operating surplus, meaning its income covered the cost of operating its business while also partly paying for renewals and capital expenditure. Any operating surplus is then reinvested into further capital improvements, therefore minimising the need for additional borrowing.”
A GLA spokesperson told the LDRS: “Being able to borrow has enabled the GLA and TfL to deliver great things for London, including the Elizabeth Line and the Northern Line extension – two huge infrastructure projects that have driven jobs and growth in London and around the country.
“The GLA sets an annual balanced budget that focuses on delivering on the issues that matter most to Londoners and all debt is fully funded.
“We operate under local authority rules, but the GLA and TfL are not councils and provide transport services for more people than the population of Scotland and Wales combined. That’s why it’s wrong to compare our borrowing levels with local councils.”
What does having such a big debt mean?
It’s common practice for local authorities to borrow large sums of money to finance big projects, though they are obliged to ensure they only borrow what they can afford. In the case of the GLA, the Local Government Act states that the Mayor is responsible for determining how much the authority and its functional bodies like TfL can afford to borrow.
The main risk associated with having a large debt pile is that servicing that debt – paying back the interest and paying off the borrowed sum – can take up vital funds needed to keep services running. A number of local authorities in England, including Croydon, have effectively declared bankruptcy (Section 114) in recent years because of this. While local authorities can’t actually go bankrupt, a Section 114 notice declares that income for the forthcoming year will not cover outgoings.
There’s no suggestion TfL or the GLA are close to issuing Section 114 notices, however the more debt they hold the more taxpayer money is used to pay it off rather than funding essential services.
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