Tag Archives: TfL Budget

TfL Business Plan and Budget for the Next 5 Years – More of the Same

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London Road

Transport for London (TfL) have published their Business Plan to cover the next 5 years and a Budget for the next year. The latter has already been approved by the London Assembly.

I shall pick out a few key points from these long documents which are certainly worth reading if you have the time – see https://tfl.gov.uk/corporate/publications-and-reports/business-plan .  Bear in mind that as always, it’s money that drives the political and policy decisions – in this case the apparent desire of the Mayor to build a bigger empire and control more of our lives. So private transport will be discouraged and he wants more money from central Government and from Londoners to fix his self-inflicted budget problems caused by fare freezes, Crossrail delays and reckless expenditure on cycle infrastructure.

The delays to Crossrail and its rising cost run through the whole document like an albatross around the Mayor’s neck. Crossrail is now unlikely to open until 2021 which means £750 million in lost revenue as against that expected, hitting the TfL budget. In addition the delays and extra work means extra costs of up to £650 million and it’s not clear where that money will be coming from. There are very optimistic forecasts in the Business Plan for income from Crossrail – for example £884 million in 2023/24. Will it really be achieved?

Diesel Buses, one of the major sources of air pollution in the capital, are to be replaced to a large extent by 2,000 zero-emission buses by the end of the 5-year business plan period, but the whole fleet will not be zero-emission until 2037. However they will be at least Euro VI compliant soon. There is also a commitment to install 300 rapid Electric Chargers for other vehicles by the end of 2020.

Note that the London bus network has been reduced partly due to falling passenger numbers and income no doubt but there is also a reduction in central London offset by increases in outer London.

TfL Transport Commissioner Mike Brown reiterates the commitment to Vision Zero to reduce road casualties despite the fact that the policy has had negligible impact to date – see a previous blog post on that subject. He also commits to tripling the amount of “protected” Cycling space which will mean more underused cycle lanes. But he is also committing to make 73 junctions safer which may assist cyclists.

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. None of this is being spent on the road network of course other than some maintenance.

So far as the road network is concerned, the maintenance of road surfaces including the repair of pot-holes has been reduced in the last two years which the documents concede has caused a deterioration in road assets. However there is a commitment to “gradually restore the condition of highway assets, with a focus on those that contribute more to walking, cycling and public transport” whatever that means. Does that mean they will fund repairs to bus lanes but not the rest of the road?

On Hammersmith Bridge whose closure is causing major problems in West London, the document only says that £25 million has been allocated to pay for preliminary work but no contract will be awarded to repair the bridge until Spring 2020 and it might take several years to complete the work. It is unclear where the money required will come from. The Rotherhithe Tunnel will be refurbished within the next 5 years – cost of around £140 million, and work done on the A40 Westway. Work on the Silvertown Tunnel should commence in 2020 and complete by 2025.

As regards the ULEZ, the Budget document finally discloses some financial figures. In 2018/19, the ULEZ will contribute most of the £215 million improvement in operating income in the current year, but with implementation costs of £58 million, i.e. a net £157 million which is somewhat more than previously forecast (see   https://tinyurl.com/y4w6pwuk ). As the Budget document only covers the year 2019/20 and no details are provide in the Business Plan the impact of the extension of the ULEZ to the North/South Circular is not apparent but the Mayor clearly intends to push ahead with that (assuming he gets re-elected).

The Business Plan indicates that fares income is expected to rise at around RPI which ignores the fact that Sadiq Khan has already promised to continue to freeze public transport fares if he gets re-elected, at least for 2020. So 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. This results in more traffic congestion and more air pollution which most Londoners would prefer them to fix. The persistent financial mismanagement by the Mayor will also come home to roost sooner or later.

A good example of the result of his policies is actually shown in a photograph of an east London street in the Business Plan document. A long queue of traffic in one lane with the bus lane unused and few cyclists in the cycle lane! See above.

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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Shepherds Bush and Kensington Consultation Responses and TfL Budgets

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The Mayor and Transport for London (TfL) have published the results of their consultation on proposed changes to roads in Shepherds Bush and Kensington (Wood Lane, Notting Hill Gate, etc). The proposed changes will increase journey times for road users and hence also increase congestion – see https://tinyurl.com/yzxhb9m8 for our original report. As one person commented on that article: “Another example of the Mayor’s determination to punish the motorist under the misguided ploy of improving air quality. This latest proposal will in fact worsen air quality by delaying traffic flow”.

The TfL Consultation Report also correctly quotes our comments on the consultation where it says we “Was very critical of the online consultation material, branding them a ‘disgrace”. There were no costs given for the scheme and the questions were biased to get the required answers.

There were 5,386 response to the consultation and many people agreed that it would encourage cycling, walking and use of public transport. That’s hardly surprising is it when they realised that private vehicles will be delayed.

The consultation was also biased because there were 58,539 emails sent out to people asking them to respond but it was only sent to “people who use public transport or cycle in the area”. In reality Oyster Card and Contactless customers, so private vehicle owners were excluded.

Even with all this manipulation, they still managed to get 2,151 people who argued that the proposals would cause traffic congestion or delays, and 1,565 people who said the proposals would worsen air quality. There were also particular concerns about the Holland Park area and the removal of trees.

The London Borough of Hammersmith & Fulham supported the proposals but Kensington & Chelsea borough have objected. TfL have developed revised proposals which include saving more trees and discussions are continuing. At least this shows how strong local opposition to a scheme can cause TfL to reconsider. But the whole process of TfL consultations is ethically flawed.

You can read the TfL Consultation Report here: https://consultations.tfl.gov.uk/roads/wood-lane-notting-hill/ 

Crossrail delays and TfL budget impact

Other news is that TfL have announced that Crossrail (the Elizabeth Line) opening date is to be delayed yet again and it not going to open until 2021. It was originally scheduled to open in 2018. Problems with signalling systems seem to be the cause, and costs are ramping up so it is now likely to come in at over £18 billion. This demonstrates how large rail projects are enormously expensive and are approved with over-optimistic budgets and projected timescales. This is why HS2 should be cancelled now before even more money is wasted on a scheme with a poor cost/benefit ratio.

The additional delay to Crossrail opening will result in another big hole in TfL’s budget because there were many millions of pounds of income expected from fare paying passengers on the new line.

But TfL have devised one way to improve their cash income. They are changing the auto top-up level for Oyster Card users from £10 to £20. This will mean that TfL will be holding much higher balances of customer money than before. The exact impact has not been disclosed but I hope to report more information on this at a later date.

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Crossrail and Demonstrations – Disastrous Impact on Mayor’s Budget

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The BBC have reported that Crossrail (otherwise known as the “Elizabeth Line”) could be delayed until 2021. A senior source associated with the project has apparently told the BBC that testing of the trains and signalling was proving difficult and none of the new stations on the line are yet complete.

This will cause major problem for Sadiq Khan because the income from passengers on the line was going to help fill the yawning operating deficit of Transport for London (TfL) in 2019-2020. This was already forecast to be a negative £1.44 billion in that year. Or “net revenue expenditure” as TfL prefer to euphemistically call it, when it is a simple case of massive losses where revenue does not even cover operating costs let alone capital expenditure.

TfL expected to get £170 million from passenger fares on Crossrail in the current financial year and £350 million next year (2020-2021). That’s going to have a major negative impact on the deficit in TfL.

The delays to Crossrail are also likely to mean even more capital expenditure than on Crossrail than was forecast in the current financial year – that’s another few billion pounds probably.

Postscript: TfL have subsequently confirmed the central section of the line is likely to open within a 6 month window stretching from October 2020 to March 2021. Losses may be mitigated by running trains between Reading and Paddington from the end of this year. But Bond Street station completion is running well behind schedule.

Demonstrations Not Helping

Much of TfL’s income comes from Bus and Tube fares at present. The current demonstrations by Extinction Rebellion are severely disrupting bus operations and no doubt reducing fare income. As many as 50 bus routes run through Oxford Circus, Oxford Street and Regent Street alone. Is that why the Mayor initially supported the demonstrations but has now changed his tune? The threat to disrupt the Underground services must have been the last straw.

The additional overtime for police officers to control these demonstrations may also be running into millions of pounds which the Mayor will have to pay for.

The Mayor suggests in his latest tweet that his concern is about the safety of the public, but as usual with Sadiq Khan the truth may be otherwise – it’s about money! There is also the problem that the Mayor is up for re-election in May 2020 and by then his financial budget will be looking quite appallingly bad. With no more give-aways possible to bribe the electorate with this time around, he has a real problem!

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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TfL’s Business Plan and Budgets – Financial Profligacy

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The Mayor of London has published a Business Plan for TfL for the next five years plus a Budget for 2018/19– see https://tfl.gov.uk/corporate/publications-and-reports/business-plan. The Business Plan is much as outlined in his adopted Transport Strategy so he aims to get the proportion of journeys taken by walking, cycling or public transport up to 65% by 2024 when it’s about 63% today. That’s despite the recent lack of progress in achieving that goal as highlighted in our previous article on London travel trends here: https://tinyurl.com/ybtchctj

For east Londoners he is committing to progress that vanity project called the Rotherhithe bridge, but there should be new Woolwich ferry boats delivered in 2019, progress on the Silvertown Tunnel and the document mentions a budget for “renewal” of the Rotherhithe Tunnel.

But the bad news for all Londoners is that the Mayor intends that TfL will continue to run a big financial deficit until 2021. That date does of course coincide with the expansion of the ULEZ zone to the North/South Circular which will be providing more income and also the Elizabeth Line (Crossrail) should also be in operation by then which will also assist. There is a small surplus budgeted for in 2022/23.

Another item of bad news for all Londoners is that “proactive” street maintenance budgets will remain at zero so we will see more short-term and reactive patching. This is surely a short-sighted financial approach. Has the Mayor not heard of the phrase “a stitch in time saves nine”.

The delays to Crossrail and falling bus usage have been two causes of the short-term deficits but the Mayor continues to hobble himself with the promise he made to freeze public transport fares so as to get elected. The Mayor claims to have reduced “like-for-like” operating costs in the last two years but that is a claim that is difficult to verify and overall income/costs are what matter.

One consequence of this financial ineptitude is that TfL are having to borrow more money. Debt has been, and will continue to rise rapidly based on the budgets. It will be 175% of revenue in 2018/19 (revenue not profits note), and financing costs will be 7.5% of revenue in that year. That does not look like a sound financial strategy to anyone familiar with the financial world. The Mayor is just in the process of building up a big problem for his successor.

What is remarkable about the two aforementioned documents is the lack of detail on where the Mayor is actually spending money, e.g. the proposed capital expenditure. We just get headline titles such as £116 million to be spent on “Healthy Streets”, £80 million on “Air Quality”, £114 million on “Public Transport”, etc. There is also little detail on operational income and expenditure. The budget for 2018/19 has to be approved by the London Assembly and there is a bit more detail in this version submitted to them: https://tinyurl.com/y78cjoyq

So for example it shows (on page 37) that the introduction of the ULEZ (for central London only in 2019) will cost around £40 million. But the revenue from it seems to be just dumped into “other income” so it is impossible to evaluate the cost versus benefit of it.

Here are some simple questions one could ask that are not answered by these documents such as:

  • How much money is being spent on Cycle Superhighways, Quietways and other cycle projects?
  • How much does the Santander Cycle Hire scheme cost to run, or does it make a profit? What is being invested in expansion of that scheme?
  • How much is TfL spending on funding wide-area 20 mph schemes in local boroughs?
  • What will be the real costs and income from the ULEZ, both before and after expansion?

There is simply insufficient detail provided to answer these questions. These documents do not provide enough financial detail to judge the merits of the Mayor’s plans at all. One suspects a lot of dubious projects and expenditure are being concealed in these public relations documents.

But there is one thing for certain. There is no budget to improve the road network in London so as to increase capacity and reduce traffic congestion. With London’s population expanding, that is a serious omission.

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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Emirates Cable Car, Bike Hire and TfL Finances

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The London Evening Standard recently ran an article that suggested the Emirates Cable Car might be sold off or scrapped. The Cable Car runs across the Thames at Greenwich, cost about £60 million to build and opened in 2013. Passenger numbers have been lower than forecast with it mainly being used by tourists. I used it once but it’s a very slow means to get across the Thames at that point, even allowing for delays at the Blackwall Tunnel.

Does it lose money? According to the information provided by a recent FOI Act request, the numbers are as follows for the 12 months to Jan 2017: Income £9.2 million, Operating Costs: £6.0 million. But £3.3 million of the income comes from Emirates Airlines sponsorship under a deal that runs to 2021, so it barely breaks even ignoring the sponsorship money. Why an airline would wish to subsidise this slow and unreliable mode of transport (it frequently breaks down or has to stop in high winds) was never very clear.

On break-even if they don’t renew sponsorship it might be argued it is worth retaining, but obviously the construction cost will never be recovered, and even exceptional maintenance costs might be unaffordable. The Mayor and TfL have some tough decisions to make on this one.

The Standard also suggested that the Santander Bike Hire (formerly Barclays) might be scrapped to save money. It costs £21 million per year to run, of which TfL pays £3.6 million according to the Standard article. It might have encouraged more cycling in London, although users of these bikes are some of the worst behaved cyclists from my observations – perhaps because tourists unfamiliar with London traffic and road rules tend to use them. However, there are now some commercial alternatives who operate a “dockless”, pick up and drop off anywhere system. It might must be that after just a few years the technology is obsolescent.

Both subjects are of course under the spotlight because of the pressure on the Mayor’s Transport Budget where he has seriously miscalculated the funding needs and the impact of his past promises to his electorate. Another aspect that TfL are examining according to an FT article is the exemption from the London Congestion Charge (a.k.a. “tax”) for taxis and PHVs (mini-cabs). The latter have proliferated with such operators as Uber creating a lot more traffic congestion. Why they should be exempt was never very clear, although the argument is perhaps that they offer a public service similar to buses. But it’s not very clear why buses should be exempt either, particularly as they create a lot of congestion.

Bearing in mind the need for the Mayor to raise money, and the fact that he is threatening to cancel Uber’s licence, the expected outcome is surely going to be something like this: Yes we won’t cancel your licence after all but you’ll need to pay the Congestion Charge, or a specially large annual licence fee. Is that a deal?

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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TfL to Lose £1 billion per Year

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 “TfL expects £1bn deficit by next year”. That was the headline in an article in today’s Financial Times. Apparently they have seen an internal email written by finance director Patrick Doig that the organisation faced an operating loss of £968 million in 2018/19 which he said was “clearly not a sustainable position…”. The deficit in the current financial year is expected to be £785 million this year which shows how rapidly its position is being eroded.

There are several reasons given for this erosion in their financial position – the Mayor freezing public transport fares (estimated cost £640m) did not help, but the big problem is falling revenue from users. Both bus and underground journey numbers have been unexpectedly falling.

Is this because more people are not travelling, e.g. doing internet shopping and working from home? Or is it because they have chosen to travel by bike (usage is growing), or find it is as cheap and a lot more comfortable to call Uber? Or perhaps it’s because some London residents are selling up and moving to the country with house prices peaking in London, or returning to homes in the rest of Europe. Perhaps those French, Polish, Romanian and other residents are worried about their future after Brexit? Perhaps they just got tired of life in London, unlike Dr Johnson who did not have to suffer the mediocre standards in TfL’s public transport provision.

The Mayor has only recently published his Business Plan for the years to 2022/23 (see this article: https://freedomfordrivers.blog/2018/01/17/tfl-business-plan-mayor-sadiq-khan-wants-more-money/ ). But you can see exactly why the Mayor is so keen to raise as much as £300 million from Londoners via the Ultra Low Emission Zone (ULEZ) charges. As we have said before, the ULEZ is about money, not about improving the health of the population or cleaning up London’s air.

A comment in the FT article was by Gareth Bacon, London Assembly Conservative Members, who said there was now “serious cause for concern” about Mr Khan’s “cavalier” financial stewardship of TfL.

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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New Mayor’s First Acts

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As readers will be aware, Sadiq Khan has been elected to Mayor of London, soundly beating Zac Goldsmith who ran a rather lacklustre campaign. The new Mayor has moved rapidly to implement some of his policy initiatives which includes a freeze on public transport fares for 4 years. Previously it was suggested that it would leave a £1.9bn hole in Transport for London’s budget but the Transport Commissioner, Mike Brown, says that he will deliver it. Exactly how is not yet clear but obviously TfL’s expenditure will be reduced and staff cut back, so support for local road safety and other schemes is likely to be reduced. Perhaps TfL could stop wasting money on speed cameras as one element of expenditure that has little benefit – for example the £15m alone proposed for average speed cameras on arterial London roads?

In addition to that financial gap, the new Mayor has also announced a new “Hopper Fare” that will enable bus passengers to take two trips for the price of one so long as they are both within one hours. This will be introduced in September this year. And what is the cost of this? Another £30m hit to TfL’s budget it is estimated but it will benefit a huge number of people according to Mike Brown.

Needless to point out perhaps that Mr Khan is the son of a bus driver. Is this going to be regime for bus users, whereas Boris’s became one for cyclists? We shall see no doubt.

Another initiative already announced is an attack on air pollution (Mr Khan apparently suffers from asthma so has a personal interest in the matter), with a formal policy consultation in weeks on a number of measures. These include extending the Ultra-Low Emission Zone (ULEZ) to the North/South Circular Roads and bringing it forward to be earlier than 2020; introducing ULEZ standards for HGVs from 2020, planning for a diesel scrappage scheme (assuming central Government will support it); introducing ULEZ standards earlier for double-decker buses and cleaning them up in outer zones plus putting cleaner buses on certain corridors. It also seems likely that the “Boris Bus” (aka. New Routemasters) will be replaced for new orders by other vehicles.

Such changes will of course assist in plugging the budget gap because people may not find it easy to change to compliant vehicles quickly enough so will end up paying the surcharge for non-compliant vehicles. Oddly enough the people most affected by these changes are likely to be Mr Khan’s own election supporters – namely the poorer section of the community that is running older cars.

Comment: air pollution in London is certainly a cause for concern but it has been steadily improving. Diesel vehicles are many times better than they used to be but it takes time for the installed base of vehicles to change. However the main problem is not private cars, but buses, HGVs, LGVs and taxis. In addition transport is only one element that makes up air pollution in London. Construction alone is a major factor, particularly when transport associated with it is also high.

Unfortunately the impact of air pollution on medical problems and life expectancy is grossly exaggerated by the advocates of banning vehicles. Any proposals to reduce air pollution by restricting the use of certain vehicles may have little impact in practice and have enormous financial costs. Let us hope that the proposed public consultation gives us a proper cost/benefit analysis of the proposals that are on the table before asking our opinions. There was certainly none done for the original ULEZ proposals which included many vehicles in the restrictions which would have negligible impact on air pollution.

Roger Lawson