London transport faces industrial action as the possibility looms of cuts in both jobs and services  resulting from Boris Johnson's funding settlement with the government. The London Mayor and  Philip Hammond. transport secretary have identified the  multibillion-pound upgrades to the tube system as a key priority.

The chancellor, George Osborne, has told departments to prepare for cuts of between 25% and 40%, with TfL facing deep cuts because it accounts for nearly a quarter of Department for Transport spending. Overhauling the Northern, Victoria, Piccadilly, Circle, District, Metropolitan and Hammersmith & City lines by 2018 will cost TfL about £10bn. Under the previous mayor, Ken Livingstone, TfL secured a £39bn funding settlement from 2010 to 2018. However, that is now likely to become a smaller four-year settlement The £16bn Crossrail scheme will have to be decided by the Treasury together with all the other capital projects from other departments across Whitehall.

Government sources claim Crossrail is unlikely to be scrapped, although the scope of the project could be curtailed. Peter Hendy, London's transport commissioner, said TfL would "not cease" to make the case for the upgrades but was also determined to protect frontline services. "This includes a commitment to all stations being staffed at all times, and to protecting the quality and volume of Tube and bus services so important to our customers and to businesses across the capital."

A DfT spokesperson said: "The decision about where to make savings following this autumn's spending review will be for the directly elected mayor. However, we have a shared commitment with the Mayor to economically-important projects such as Crossrail and Tube investment."