Thread by @garius

I'm not saying you HAVE to read my article on TfL's finances, but I kinda need to point out that TfL is a LOCAL AUTHORITY about 24hrs from beginning the Section 114 process.

And if you are a local government nerd, you are going WAIT OH SHIT WHAT right now.

This matters. #thread

https://twitter.com/lonrec/status/1260248264420589569

So what's a Section 114?

Well local authorities - ya know, your local council - have to agree annual budgets by law. They then have to STICK to those budgets throughout the year. Obviously.

The moment they can't. Their CFO HAS to initiate the Section 114 process. By law.

Now anyone in local government will tell you that a Section 114 is a proper 'sit down. stop shaking. have a glass of whiskey' moment. for a CFO.

It's basically a stop order:

STOP! NOBODY DO ANYTHING NEW UNTIL WE CAN DO A NEW BUDGET!

Because it's very serious. It means you have, or are imminently about to, run out of cash you can use. Reserves you are allowed to use. Borrowing you had already secured permission to use.

It doesn't mean you don't HAVE money somewhere maybe. But not to hand.

Now the regs aren't stupid. They don't mean you literally can't do ANYTHING. They just mean you can't do anything that that's going to incur NEW costs that isn't in your minimum statutory obligations, until you rebudget. And when you budget, those min stat obs get priority.

Still with me? Okay good.

now local authority minimum statutory obligations are pretty boiler plate, they're designed to set out the super basic bits like road maintenance. process benefits etc that a council must, must do. They're a fallback there to ensure continuity.

"None of that is very Tfl-y is it?" You're thinking. And you're right.

So that's why the GLA Act included a bunch of special stat obs for TfL

But, well, nobody kinda thought it would ever be NEEDED, so they're a bit... limited

e.g. they DON'T include running the Tube. Or buses

Don't take my word for that. Here's the bit from the article where I quote TfL CFO Simon Kilonback. Unsurprisingly, he's read the Act too.

Shoutout to you, Simon, fellow local government nerd homie!

🚨🚨🚨 THIS DOES NOT MEAN THE TUBE AND BUSES WILL STOP RUNNING IN 24 - 48HRS IF A FINANCING AGREEMENT ISN'T REACHED WITH THE GOVERNMENT AND TFL. 🚨🚨🚨

What it WILL create, is an unholy legal mess that means those services may suffer cuts or problems until it is unpicked.

And that's why the next 24hr - 48hrs are critical to London.

Do not panic. Read the article. TfL and the government are talking. Hopefully a deal will be made.

But this DOES highlight just how unprecedented and serious TfL's financial situation is right now.

Oh, and also that you should ALL take a lesson from this:

If you are ever, ever asked to draft the minimum statutory obligations for a transport operator masquerading as a local authority.

PLEASE don't go. 'Pff. Nerd stuff. It'll NEVER matter'

Include 👏 Running 👏 Trains 👏

Because if you don't, I think Simon Kilonback will likely hunt you down, after all this is over, and kill you.

(Or at the very least give you a very stern talking to. He's actually a very nice man)