Londoners are braced for the capital's transport system to grind to a halt this weekend as cash-strapped TfL burns through the last of its funding.
Eleventh-hour talks for a £1billion bailout between ministers and Sadiq Khan have stalled because of sticking points involving the Government's conditions for a deal.
The Mayor is refusing to sign up to an expansion of the congestion zone to the North and South Circulars, which is believed to be the price of receiving funding.
He believes such action would punish millions of Londoners who are already facing new Tier 2 Covid-19 restrictions amid a surge in infections.
A proposed extension to the congestion charge zone has come under fire from both sides of the political divide, with a source close to Tory Shaun Bailey's mayoral campaign telling MailOnline: 'If this is really under consideration in Government they should think again and fast.'
But rivals also accuse Mr Khan of exposing himself to such harsh demands after 'bankrupting' TfL with mismanagement during his tenure.
Eleventh-hour talks for a £1billion bailout between ministers and Sadiq Khan have stalled because of sticking points involving the Government's conditions for a deal
Extending the congestion zone to the North and South Circular would hit the pockets of millions of Londoners
Relations between Government and City Hall are already sour, with Mr Khan yesterday accusing ministers of not going far enough to tackle the virus and calling for a 'short national circuit-breaker'.
In May the Mayor accepted a £1.6billion TfL funding agreement with Government, which came with the condition of a hike in the congestion charge to £15.
He branded the cash boost a mere 'sticking plaster' and is calling for a £5.7billion long-term solution for the next 18 months.
Yet if he fails to give ground and negotiations with ministers remain deadlocked, Tube and bus drivers have been warned that crucial transport services may stop running.
TfL staff have been given a Section 114 warning, meaning that London's transport system could cease to function as early as this weekend, according to LBC.
A City Hall source said TfL cannot simply 'turn London's transport system off overnight'.
But former head of buses and surface transport at TfL Leon Daniels disagrees and said it is perfectly possible services could grind to a halt.
He told LBC: 'As it would be with any business if you can't pay your obligations, can't pay for staff or contracts, can't pay your energy bill then you have to bring it to a halt, and that's the situation we're in now.'
Both Government and the Mayor say they are working urgently to thrash out a solution, but are at loggerheads over the conditions.
A source close to Mr Khan told MailOnline: 'Conditions such as extending a £15 congestion charge to the North and South Circular and taking free travel away from children and older people would be totally unacceptable to the Mayor and he would not ask Londoners to accept them in these exceptionally difficult times.'
Extending the congestion zone to the North and South Circular would hit the pockets of millions of Londoners, and has also come under fire from senior Conservatives.
Tory mayoral candidate Shaun Bailey said: 'Under no circumstances would I back an extension of the congestion charge zone, regardless of who proposes it... Any extension would hit hard working Londoners in the pocket and be a death knell for small businesses.'
But Mr Bailey said the very reason an expansion is on the table is because of financial mismanagement from City Hall.
Mr Bailey said: 'Khan has near bankrupted TfL and hung a closed sign over London.'
Mr Khan maintains that TfL's financial woes are down to plummeting passenger numbers during the pandemic.
During the peak of the crisis TfL's revenues dropped 95 per cent as people were instructed to work from home and footfall on carriages fell.
It has risen slightly since lockdown was initially eased after the first wave, but today Mr Khan said passenger numbers will not return to pre-pandemic levels in the immediate future.
He told LBC: 'I said back in May the deal we had for six months will be a sticking plaster, we need a sustainable deal.
'For the foreseeable future there will not five million journeys on our Tube, five-and-a-half million on our buses.'
Tory mayoral candidate Shaun Bailey said: 'Under no circumstances would I back an extension of the congestion charge zone, regardless of who proposes it'
Tube and bus passengers are rising, but Mr Khan said passenger numbers will not return to pre-pandemic levels in the immediate future
Coronavirus positive tests in London have increased dramatically since the beginning of September but changes in recent weeks suggest the rate of rise is slowing down, with a 37 per cent increase in the seven days to October 7, compared to the almost double 84 per cent in the third week of September
The Mayor added that the Government should not punish Londoners for 'doing the right thing' and avoiding public transport - especially when such conditions have not been imposed on private rail providers.
He said: 'The facts are that the Government gave the privatised rail operators 18 months funding with no strings attached, but is saying to TfL we'll give you a six-month deal with strings attached.'
The Department for Transport refused to disclose the details of its funding offer but stressed that negotiations with the Mayor are underway.
A DfT spokesperson said: 'The Government continues to engage with Transport for London and the Mayor on the impacts of Covid-19 on TfL's finances.
'These discussions are ongoing and will ensure London has a safe, reliable network while delivering a fair deal to UK taxpayers.
'Discussions are underway, and it would be inappropriate to disclose further details at this stage.'How Devon, Oxford and Coventry all have higher Covid-19 infection rates than London - but only the capital will be forced into tougher social distancing rules tomorrow
By Sam Blanchard for MailOnline
Devon, Oxford and Coventry all have higher coronavirus infection rates than London but will face no lockdown rules when the capital moves into Tier Two tomorrow.
Health Secretary Matt Hancock and London Mayor Sadiq Khan yesterday confirmed a ban on people meeting in indoor spaces will begin at midnight tonight in the city. The tough social distancing rule mirrors what is in place in Covid hotspots in the North of England, where the country's second wave is running rampant.
But London's infection rate is significantly lower than in those areas, and is below the average for the country as a whole, which is approximately 160 cases per 100,000. It is lower even than other areas that don't have any extra rules at all, abiding only by social distancing and the rule of six, according to Department of Health statistics.
While the 32 boroughs of London recorded an average of 99 Covid-19 cases per 100,000 people in the week up to October 10, the figure was 159 in Coventry and 154 in Oxford during the same period. Not a single borough of London currently has an infection rate that high, with the 147 in Ealing the city's highest.
It stood at 146 per 100,000 in Bristol, in Bournemouth there were 139 cases per 100,000, in Bath 115 and in Devon - driven by an outbreak in the university city of Exeter, where the rate is nearly 400 - the average was 106.
All those areas are in the South of England which is not facing any regional restrictions like the Midlands, North West and North East are, where some areas with lower infection rates are locked down to protect them from nearby outbreaks.
The entire of London may be heading into lockdown earlier than other areas - most of which have had significantly higher infection rates before facing new rules - because Mr Khan egged on the Government to toughen its stance in the city, and also because outbreaks can spread faster between boroughs because the population moves around so much.
It comes as Londoners are braced for the capital's transport system to grind to a halt this weekend as the cash-strapped TfL burns through the last of its funding. Eleventh-hour talks for a £1billion bailout between ministers and Sadiq Khan have stalled because of sticking points involving the Government's conditions for a deal.
The Mayor is understood to be refusing to sign up to an expansion of the congestion zone to the North and South Circular in particular. But rivals say he has been backed into a corner after 'bankrupting' TfL with mismanagement during his tenure in City Hall.
The decision to place London into a Tier Two lockdown today sparked fears around 200,000 people in the city's centre could lose their jobs in hospitality this weekend. An industry spokesman warned the drastic restrictions would see a 'maximum squeeze on revenue and no support'.
Numerous areas have infection rates higher than the average number of Covid-19 cases per 100,000 people in London, which was 99 up to October 10, but remain at Tier One on the lockdown scale.sonos sonos One (Gen 2) - Voice Controlled Smart Speaker with Amazon Alexa Built-in - Black read more
(London average calculated as the mean of individual areas' infection rates, not taking into account population differences)Exeter (397) and Devon as a whole (106) Coventry (159) and surrounding parts of Warwickshire including Rugby (107), Warwick (104) and Stratford-on-Avon (103) Oxford (154) North Lincolnshire (150) Bristol (146) Bath (115) Bournemouth, Christchurch and Poole (139) Windsor and Maidenhead (114) East