Transport for London is to receive £1.08bn in government funding in the second half of 2021, supporting continued service in the wake of the Covid-19 pandemic and accelerating the ongoing process of reform.

The funding package will support TfL after pandemic-related disruption, and encourage further reforms.

Financial support is available until 11 December 2021, on the condition that it will also help identify cost savings and new or increased revenue streams for the organisation. It’s hoped that TfL will become financially sustainable by April 2023.

Mayor of London Sadiq Khan has agreed to a target of £300m savings or new income sources this year and next, and £0.5bn to £1bn each year from 2023. TfL is to accelerate its £730 modernisation programme by April 2023, while earmarking at least £100m for additional healthy streets and active travel programmes and preparing a medium-term capital investment strategy.

Cost-saving measures will address TfL’s “generous” pension scheme and a joint review, carried out with government support, will examine demand on London’s transport network to ensure it meets adequate service levels. At least one London Underground line will become fully automated, and a joint project with the borough of Hammersmith and Fulham will use no more than one-third government funding to reopen Hammersmith Bridge – though not necessarily to motorists.

Transport secretary, Grant Shapps, commented: “Throughout this process, the government has maintained that these support packages must be fair to taxpayers across the UK and on the condition that action is taken to put TfL on the path to long-term financial sustainability. As part of today’s settlement, the Mayor has agreed to further measures that will help ensure that.”

The latest round of funding brings government support for TfL to over £4bn, and follows two previous emergency support packages agreed in April and October 2020. Agreements for this latest round build on commitments from previous support packages.