Readers are probably aware of the financial difficulties of Transport for London (TfL) and hence Sadiq Khan. The fall in income has been devastating as people have avoided public transport because of the epidemic while TFL have continued to run the same frequency of services on buses and the underground. As these services are the main sources of income to TfL while costs have remained unchanged, the result has been a ballooning operational deficit. The Mayor is now asking for billions of pounds to keep TfL afloat.
He alleges that the Conservative Government is forcing him to extend the Congestion Charge (a.k.a. Tax) as a condition for supplying more money while the Government says that is only one of several “proposals” that they are asking the Mayor to consider to put the finances back in a stable position.
The Prime Minister alleged in the Commons that TfL had been put into a state of “bankruptcy” which was “entirely the fault of the current Labour Mayor of London” due to his policy on fares. But the Mayor described the Prime Minister as lying and has defended his financial record, blaming the problems purely on the Covid-19 epidemic. It’s basically a “blame game” so beloved of politicians.
But the reality is that I wrote negatively in January (i.e. before the epidemic hit) on the subject of TfL budgets and finances (see Reference 1 below). The article included these comments:
“Despite cutting operating costs, one of the few good things reported, there will be deficits of £307m, £493m and £513m in TfL (after “capital renewals”) for this year and the two following ones and barely break-even in 2022/23. As a result, the Mayor will have to substantially increase borrowing to cover that and large amounts of capital expenditure for both Crossrail and other network improvements. That includes £2.2 billion this year and next year, followed by £1.2 billion each year in subsequent years. Total borrowing will reach £12.3 billion within 2 years” and “…..the Business Plan may be totally unrealistic. In summary the Business Plan and Budget demonstrate an incompetent Mayor and senior management at TfL who wish to get us all cycling, walking or using public transport while the road network gets worse”.
But ignoring the blame game and past history, what can the Mayor realistically do to avoid TfL becoming bankrupt? These are the main options as I see them:
- Reduce services and cut staff (the major proportion of their costs) in TfL so as to match income.
- Increase bus and underground fares substantially, a politically unpopular choice as the Mayor has lauded his past fare freezes.
- Increase the Mayor’s precept on Council Tax, which would raise Council Tax for all Londoners. A politically unpopular choice for the Mayor as he comes up for re-election in May 2021 and local councils would blame the Mayor for the increases in Council Tax they have to impose.
- Expand the Congestion Charge over a wider area, or increase the charges on that or for the ULEZ – the latter is already planned to expand to the North/South Circular in October 2021.
Expanding the Congestion Charge zone would be deeply unpopular with drivers and there are enormous numbers of people who live within the North/South Circular and drive vehicles (about 3 million people with probably 50% of households owning a car). This is what Deputy Transport Mayor Heidi Alexander said at a recent TfL meeting: “Neither the Mayor nor I can see how it would be right to charge people £15 to drive a mile from Wandsworth to Clapham, or from Catford to Lewisham from October of next year …”.
There have already been over 100,000 signatures on a petition opposing an expansion of the Congestion Charge – see http://chng.it/7zNp6sHhm8 . Please sign it!
The Mayor is therefore faced with some very tough choices, hence his approach of blaming the Government no doubt. But it is his responsibility to make the choice.
I suspect there is going to be a mixture of all the above, or some other compromise, if the Government simply refuses to hand out more cash with no view of when TfL finances will be stable. That is something it should definitely not do.
The Freedom for Drivers Foundation has of course consistently opposed the Congestion Charge, a tax under another name. It is very expensive to collect and has not reduced congestion as claimed. See this web page for an analysis of the Charge and why we still oppose it: https://www.freedomfordrivers.org/congestion
We suggest the Mayor should choose options 1 to 3 only. It is not clear to us why drivers should pay to keep public transport afloat – they already pay billions more in taxes than the cost to maintain the roads. In reality part of the problem is that transport in central London is heavily used by commuters from outside London who do not pay the realistic costs of the provision of bus and underground services. Buses for example are subsidised by almost £1 billion per year in London, which is no doubt politically popular (even Boris Johnson bottled bringing it under control when Mayor). But that is one lunacy that should surely be stopped.
TfL Budgets have been driven by political populism for many years when it is in essence a business and should be run like one. Why should TfL who obtain income from public transport also have control of the road network? The result is bias against other forms of transport. It is surely time to remove TfL from the Mayor’s control.
Griff Rhys Jones wrote a very interesting article for the Spectator recently about the dire London transport situation. One of his comments was “The most effective planet-saving reforms would be to prevent commercial ‘centres’ and to spread ‘live-work’ across the entirety of London. Instead, we are once again pursuing outmoded and outdated ‘visions’. (Or ‘fantasies’, as London-wide protests by ordinary working people are calling them.) Our capital is a success because people inhabit it”. See Reference 2 below.
The Mayor’s Transport Strategy has certainly been very defective, apart from the budget lunacy and that is one reason why London was so vulnerable to the virus.
Reference 1: TfL Budgets. https://freedomfordrivers.blog/2020/01/17/tfl-business-plan-and-budget-for-the-next-5-years-more-of-the-same/
Reference 2: Spectator Article: https://www.spectator.co.uk/article/london-s-war-on-motorists-isn-t-helping-anybody
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So ABD would rather that TfL workers lost their jobs just so the 50% of Londoners that own a car don’t have to pay £15 to drive a mile from Clapham to Wandsworth?? Wow. The majority of them are quite capable of walking aren’t they? Cars over jobs….
There are fixed costs to running a transport network that remain the same if you run 1 service a day or 100, so cutting services by 50% won’t save 50%. A bit like the fixed costs of running a car – they stay the same if you use it a lot or hardly at all.
I suspect the solution will be a mix of all measures.
No business, and TfL is a business, can employ staff when they have no customers. The outcome if they do is always bankruptcy. TfLs costs are not fixed – they are variable and should be varied.
Excuses, excuses. I am not suggesting TfL be closed down. But they can vary their costs.
Postscript: One proposal that it is suggested the Government has made is that the free travel for schoolchildren and other concessionary fares such as the “Freedom Pass” for the elderly be dropped or curtailed. But I do not see how that helps the finances of TfL. The use of such concessionary fares is actually paid for by local boroughs in London and imposes a major burden on them. It might help the boroughs and might be a rational step because very obviously many Freedom Pass users could afford to pay for their train and bus fares, but it would not help TfL who would actually lose income as a result.