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The most senior civil servant at the Department for Transport has rebuked Transport for London for “a breach of good faith” over the premature disclosure of its latest £1.8 billion bailout from the taxpayer.

In a letter seen by the Evening Standard, Permanent Secretary Bernadette Kelly said she had “strong concerns” that details were given out a day ahead of a planned announcement by the department.

Ms Kelly said the disclosure was “disappointing” and asked for an explanation. She pointed out that the funding deal had “stock market and regulatory implications for TfL” and should have been announced to Parliament.

The top-level complaint is the latest twist in bad-tempered negotiations between the DoT and TfL, which is chaired by Mayor Sadiq Khan, over emergency funding for the capital’s transport system which has seen customer numbers plummet since the coronavirus pandemic.

A bailout was finally agreed late on Halloween which the department planned to release on the following Monday morning.  However, details, including that the Government had backed down on a fares hike, were unilaterally given out to the media by TfL and by the Mayor’s office the next morning.

Writing to TfL commissioner Andy Byford, Ms Kelly said: “I wanted to formally record the Department’s strong concerns …  It is, in our view, a serious breach of the good faith on joint working between DfT and TfL that was required in order to arrive at this agreement and is essential to its implementation.

“I would be grateful for an explanation of how this occurred and your assurance that there will be appropriate consultation on and co-ordination of any future announcements…”She said Grant Shapps, the Transport Secretary, had been expected to inform Parliament, given the scale of public funding involved.

A TfL spokesperson said: “The timing of our announcement was driven by our market disclosure obligations to inform our international lenders and bond investors at the earliest opportunity of the deal reached late on Saturday evening.

“We continue to work very closely with the Department for Transport on our funding requirements and on the response to the pandemic. We and the Department are also discussing formalising a protocol to ensure all parties can meet their obligations and coordinate communications in the future.”

The episode widened into a political controversy last night when Mr Khan was accused by Mr Shapps of a “failure to act in good faith”.

Writing to a Conservative member of Parliament’s Transport Select Committee,  the Transport Secretary wrote:  “Such announcements are governed by important precedents designed both to protect market sensitivities and respect Parliament – the guardian of taxpayers’ money. … Unfortunately, TfL and the Mayor chose to flout this procedure and instead issued a press release at around 7:30am on Sunday 1 November, without consultation or warning to the Government.”

A spokesperson for the Mayor denied any wrongdoing. “At no point did the Department for Transport ask City Hall to wait until a specific time before commenting on the funding deal.

“The announcement was therefore made strictly in line with market disclosure obligations to inform TfL’s international lenders and bond investors at the earliest opportunity, as had always been TfL’s intention. Anyone who is upset about the timing needs to take it up with the Government.”

Robert Largan, the select committee member who had raised concerns with Mr Shapps, said: “As a member of Parliament’s Transport Select Committee, I was concerned to see news about a taxpayer bailout emerge via a tweet from the Mayor.

“Announcements on this scale should be made to Parliament first by Ministers, but the Mayor’s behaviour shows a total contempt for Parliament; made all the worse by this being market-sensitive news.”

The High Peak MP said his own constituents were contributing to the bailout and asserted: “I’m shocked by disrespect the Mayor has shown to Parliament. I know that many of my colleagues share this concern and we are calling for an apology to Parliament.”

The affair took a new twist when Mr Khan’s Tory opponent in next year’s mayoral contest, Shaun Bailey, claimed the Mayor of London could face an “unlimited fine” for leaking embargoed information.

Mr Bailey has sent a letter to Regulatory Complaints at the London Stock Exchange asking it to investigate what he claimed was “a clear breach of the Market Abuse Regulation. “The information had the potential to significantly affect the price of TfL securities,” he wrote.

Responding to Mr Bailey, a London Labour official said:  “This is complete nonsense from the Tory mayoral candidate. TfL followed all legal advice and made the announcement strictly in line with market disclosure obligations.”

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