29 March 2011 Last updated at 17:38 ET

Transport for London cuts £7.6bn from budget

Tube and bus passengers in London will face above-inflation fare increases over the next four years

London's mayor is to cut £7.6bn from the budget of Transport for London (TfL) over the next seven years.

TfL is already in the middle of a £5bn "savings programme" but the RMT union said the new cuts target "defies belief" and will lead to job losses.

The extra £2bn cuts will mean passengers could see fares rise by 2% above the inflation rate - an annual rise of 7% - for the next four years.

But Mayor Boris Johnson said the cuts would deliver "value for money".

Labour rival Ken Livingstone said passengers' wallets were being "aggressively squeezed".

TfL has an annual budget of about £9bn, and Mr Johnson said: "Through negotiations, savings and efficiencies, we have done what many believed to be impossible.

"The staggering £7.6bn in savings and efficiencies TfL is making means that every penny will be spent on delivering and upgrading services for the capital, providing even better value for money to fare and taxpayers."

'Broken promises'

The savings include £375m less for IT and a £460m reduction in bus subsidies, but TfL maintains that frontline services would be protected.

But TfL's business plan shows passengers would have to bear some of the burden of the shortfall created by the government reducing its contribution, BBC's transport correspondent Tom Edwards said.

For the commuter a 7% yearly rise would mean a single cash bus ticket which now costs £2.20 could be £2.90 in four years' time and a zone 1-to-4 peak-time travelcard on Oyster could go up from £10 to £13.10, he added.

TfL's new savings plan could mean above-inflation fare rises for four years

Over the next four years TfL plans to upgrade three Tube lines, deliver new trains on five lines, complete work on the London Overground rail network, make major progress on the Crossrail project, and extend the bike hire scheme.

Mr Livingstone said the mayor's plans for transport "increasingly involve aggressively squeezing the farepayer, combined with cuts to funding for the bus service and cuts that must start to hit front-line services".

"Once again, broken promises are the order of the day," he said.

The RMT's general secretary, Bob Crow, said: "These new cuts will drag the underground even deeper into the spiral of decline with breakdowns, failures and disruption a daily fact of life.

"We can expect a threat to hundreds more jobs while maintenance takes another hit, turning the underground into a death trap and a criminals paradise."

But London's transport commissioner, Peter Hendy said the next four years would be "among the busiest and most exciting in the history of London's transport network".

He added that TfL would ensure it was "as efficient and effective as we can be through our £7.6bn savings programme".