Transport for London (TfL) has been identified as the most indebted local authority body in the United Kingdom, according to a new analysis by the TaxPayers' Alliance (TPA). The transport body holds approximately £13.9 billion of the record-high £155 billion total local authority debt across the country.
Combined with the Greater London Authority's (GLA) £4.7 billion, GLA bodies collectively owe £20.1 billion, the highest debt of any category of local authority in the 2025-26 financial year. This represents a significant financial burden on the capital's transport and governance structures.
Reasons for the Debt
TfL officials attribute the £13.9 billion debt to borrowing for "a range of transformational projects," including Underground station upgrades, accessibility improvements, signalling upgrades, and new trains on the Docklands Light Railway (DLR) and Piccadilly Line. The transport body is funded through central and local government grants, fares, and road network charges such as the Congestion Charge and Ultra Low Emission Zone (ULEZ).
Despite the debt, TfL has reported an operating surplus for the past three years, meaning its income covers operational costs and partly funds renewals and capital expenditure. Any surplus is reinvested into further capital improvements to minimise additional borrowing.
The GLA notes that borrowing enabled the delivery of major projects like the Elizabeth Line and the Northern Line extension, which have driven jobs and growth. A GLA spokesperson stated: "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."
TaxPayers' Alliance Criticism
Benjamin Elks, grassroots development manager at the TaxPayers' Alliance, criticised the Mayor of London, Sadiq Khan, for the debt levels. He said: "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. This practice was effectively banned in 2020 under the previous government after many local authorities incurred large debts when asset values fell below purchase prices, while still having to repay the full borrowed amount with interest. Under new rules, authorities must confirm they do not intend to borrow primarily for yield.
TfL and GLA Defence
A TfL spokesperson defended the borrowing strategy: "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."
The GLA spokesperson added: "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."
Risks of High Debt
While borrowing for large projects is common among local authorities, high debt levels pose risks. Servicing debt—paying interest and repaying the principal—can consume funds needed for essential services. Several English councils, including Croydon, have effectively declared bankruptcy via Section 114 notices in recent years, indicating that income will not cover outgoings. However, there is no suggestion that TfL or the GLA are close to issuing such notices. Nonetheless, the more debt they hold, the more taxpayer money is diverted to repayments rather than services.
