Tag Archives: TfL Finances

TfL Board Meeting and Finances

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TfL Board Meeting and Finances

gold colored coins near calculator

There was a Transport for London (TfL) Board Meeting on the 9th of August to discuss negotiations with the Government on finance. Such meetings should be public but in fact almost all the meeting was closed to the public; even the Government representative who has a seat on the board was excluded.

But there is an interesting board paper that spells out the dire financial position of the organisation – see link below. In summary they need £900m in Government subsidies to stay afloat in the current financial year, i.e. to offset the shortfall in revenue from the pandemic.

The paper says this: “The 2022/23 TfL Budget is based on a ‘managed decline’ scenario. This involved significant service reductions, deteriorating asset condition and no new enhancement schemes. This not only would mean that we will fail to make progress on critical priorities such as safety, decarbonisation and air quality, but it would trap London’s transport network in a vicious circle of deteriorating services and declining demand. Avoiding managed decline is critical to supporting the London economic recovery, and therefore the national economic recovery, following the pandemic”.

In essence they want to continue spending instead of cutting their cloth to meet the new circumstances. They need £1.2 billion just to balance the budget in the current financial year and even more for “longer-term capital funding to avoid the managed decline scenario”.

Looking at TfL as a business (which is what it is) this is surely pure hogwash. Businesses that do not reduce their expenditure to match income end up going bust. As will TfL unless they change their approach.

It’s interesting to look at who is on the board of TfL. It’s full of academics, trade unionists and politicians, not business people. And it’s chaired by Sadiq Khan. This is one of the key problems. Until TfL is taken out of the control of the Mayor and the board is replaced by people with business experience of running transport organisations, nothing will change. They will continue to rely on Government (i.e. taxpayer) hand-outs rather than taking the tough decisions necessary.

Roger Lawson

Board Paper: https://board.tfl.gov.uk/documents/s18400/board-20220809-item03-Update%20on%20TfL%20Funding.pdf

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Making London Transport Sustainable

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The battle over funding for London’s Transport goes on.  At the time of writing the government has granted a paltry 7-day extension of funds to TfL while demanding Mayor Sadiq Khan comes up with alternative proposals for how he will generate an extra £500m – £1bn a year to fund his apparently unsustainable transport system.  This while at the same time the Government is encouraging people to work from home again, significantly reducing public transport usage once more. In granting this 7-day extension it’s interesting to note the plans proposed by Khan, which the government rightly rejected.  These were:

•         A return of VED paid by London car owners to TfL

•         A Greater London Boundary Charge, charging motorists who come from outside London into it £3.50 a day.

•         A levy on deliveries made for online purchases, targeting delivery drivers.

Other ideas still on the table include raising the Congestion Charge and ULEZ tax rates.  The latter would be after the recently expanded zone failed to raise the income anticipated. Khan may speak of how it has reduced the number of polluting vehicles, but you do not introduce a new tax without planning on it raising substantially more revenue in the future.

What do all the above have in common? They are all targeting private motor vehicles – the car and delivery vans. Khan’s message is crystal clear: he wants to raise money from drivers rather than tackle the basic problem that public transport users in London do not pay for the cost of the services that are provided. It’s unsustainable.

Fundamental reform is needed to make transport in London more sustainable. Only then will Sadiq Khan need to stop asking the Government for more bail-outs.

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Spend, Spend, Spend – Andy Byford’s Solution to TfL’s Financial Problems

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An article in the Financial Times this week (17/9/2021) spelled out how the London Transport Commissioner is looking to solve the financial problems of Transport for London (TfL). Andy Byford who heads TfL called on the Government to provide £17 Billion of funding over the next decade.

TfL has certainly been badly affected by the pandemic with a big reduction in income as people have avoided travelling on the Underground and on buses. They have already had several temporary bail-outs to keep operations running although the Government imposed a number of conditions on their financial support. Usage of buses and the tube is increasing but it may be a long time, if never, before it returns to the same levels as seen before the pandemic as working from home (WFH) or hybrid office use has become adopted.

Mr Byford hopes to achieve financial stability by the financial quarter ending in March 2022. But that is a hope rather than a certainty. That will not include funding for replacing diesel buses by electric ones, the purchase of trains for underground lines nor any major new projects. It is also dependent on Crossrail opening on the long-delayed schedule and providing extra income. Mr Byford suggests that without extra “investment” (i.e. spending money he does not have), London’s transport network could enter a doomsday scenario of managed decline.

In other words, instead of using profits from existing operations to maintain and improve the network, he wants the Government to donate large sums of money out of our taxes to help him implement grandiose plans. This is surely no way to run a business – and make no mistake TfL is a business not just a public service.

Mr Byford seems to want to follow the typical socialist mantra of spend, spend, spend to solve his financial problems. Surely there is a better way.

FT Article:  https://www.ft.com/content/60e63984-dad6-4fed-ae9c-9c0888b74bb6

Roger Lawson

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Turning London into a Ghetto

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We have covered the disastrous mismanagement of the finances of Transport for London (TfL) in several previous articles. That came home to roost when the coronavirus epidemic reduced people’s inclination to use public transport thus reducing TfL’s income and resulting in the need for Government bail-outs.

The latest wheeze by Mayor Sadiq Khan to fix his financial difficulties is the proposal to charge anyone who drives into London from outside a tax of £3.50 per day (or £5.50 for more polluting vehicles). The whole of the Greater London Authority (GLA) area which is that within the M25 would be subject to the “charge” (i.e. tax) so yet again we have the situation that those who have to pay the tax are not represented because they have no say in who gets elected as Mayor of London. This is totally undemocratic.

There are estimated to be 1.3 million journeys into London from outside each week which are mainly into the outer suburbs. But it would seem the Mayor is keen to turn London into a ghetto of cyclists and public transport users. Even with the new tax which might raise £250 million per year, it won’t solve the financial difficulties of TfL. It’s still likely to need another bailout from the Government of another £3 billion.

There was an interesting article in the Daily Telegraph last week that reported that the UK population is “in the biggest fall since the Second World War”. The over-population of our crowded island, particularly in London and the South-East, has been one of my major concerns for some years. This has led to congested transport systems and a major shortage of homes.

The population reduction is not because of deaths from Covid-19 which have only risen slightly above the normal levels but an “unprecedented exodus of foreign-born workers” resulting in a fall of 1.3 million in 2020. The largest fall was in London where it may have been 700,000. The article also suggests there is likely to be a “baby bust” as couples delay starting a family which might push the birth rate to its lowest on record according to estimates from PWC.

Such a reduction in the population of London will have negative consequences for the economy in general and particularly for the finances of TfL so the proposals for more taxes and Government bail-outs may only be a short-term fix to TfL’s financial difficulties. They still have not faced up to the issue that the public transport network needs to be downsized to meet the demand.

The proposed Greater London “boundary charge” will be the subject of a feasibility study and later public consultation before it can go ahead. It will clearly require permission from central Government. You can read more about this and other proposals to fund TfL in the “Financial Sustainability Plan” – see http://content.tfl.gov.uk/financial-sustainability-plan-11-january-2021.pdf

Although some reductions in bus services are proposed to save money, TfL are also proposing to go into commercial property development so as to generate more income. It was of course the speculation in commercial property development that got the London Borough of Croydon into such major financial difficulty that they have effectively become insolvent. Perhaps this is not such a wise idea after all?   

An interesting chart from the Plan is this one:

It shows how underground train usage has been reduced to a small fraction of former levels by the pandemic and bus usage is not much better. Traffic levels are also below normal and cycling rose during the summer but has since fallen back to previous levels. There is no cycling revolution in London as some people claim.

The Plan also suggests that with the demand for active travel growing “to capitalise on enthusiasm during lockdown we should invest in reallocating road space from private cars in a way that allows for mixed use” (see page 38). So it looks like we see even more money wasted on cycle lanes and worse gridlock in London.

The Plan also proposes Road User Charging as a way to finance the Mayor’s Transport Strategy (see page 94). In other words, this is likely to be another way to raise taxes on Londoners.  

In total, these proposals will hasten the destruction of London’s economy and encourage even more people to leave London to live elsewhere. Certainly anyone reading the Plan will get the urge to do so.

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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Sadiq Khan Bailed Out Again and Legal Action Over LTNs

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A deal was done over the weekend to keep Transport for London (TfL) afloat – at least temporarily. The Mayor’s Press Release issued yesterday (see below) was headlined “Mayor sees off plan to extend C-Charge as deal reached on TfL funding” which is a typical bit of political point scoring from Sadiq Khan. There was of course an enormous amount of opposition to extending the Congestion Charge (a.k.a. Tax) to a wider area as so many people would have been affected. But the Mayor has had to concede to some changes to keep London’s public transport system functioning until next March.

Some of the details are:

£1.8 billion of Government grant and borrowing made available – but note the increase in borrowing when TfL already has too much debt.

Concessionary fares will remain for older and younger Londoners.

Public transport fares will only increase as previously agreed.

Transport for London to make £160m of savings this financial year, and City Hall will need to raise additional income to protect concessions for older and younger Londoners for future years – if the Mayor wants to continue these. But where is he going to make those savings or raise the additional income from? It does not say.

A modest increase in council tax is to be looked at and the temporary changes to the central London Congestion Charge that were introduced in June 2020 will remain, i.e. they are likely to become permanent.

As one commentator said, this looks like kicking the can down the road as it will not solve the basic imbalance between income and expenditure in TfL over the next 6 months so come next March some tougher decisions will need to be made. It is very unlikely that the impact of the Covid-10 epidemic will have disappeared by then.

Postscript: the full terms of the bail-out have now been published in the Government’s letter to Sadiq Khan. See https://tinyurl.com/yyyxnvnp . You can see why he might be furious over the outcome because it makes it clear that TfL will remain under Government scrutiny and the Mayor has to come up with a sensible and “sustainable” financial plan for it.

Legal Action Over LTNs

The Daily Telegraph has reported on the commencement of legal action against Low Traffic Neighbourhoods (LTNs) in Enfield which we covered in a previous blog post. See link below to full article. It refers to “Emergency Traffic Orders” when I think it is talking about Temporary or Experimental Traffic Orders introduced under the Emergency Procedures introduced in June because of the Covid-19 epidemic.

The Telegraph articles also refers to legal challenges being mounted in Croydon and Lambeth. The OneLambeth campaign are raising funds for the legal challenge – see https://www.gofundme.com/f/OneLambeth . Please support them.

It will be worthwhile to follow these legal cases and we hope to report more details in due course.

Just to show how strongly the residents of Crystal Palace (Croydon) feel about the road closures, see this YouTube video of a demonstration over the weekend:  https://www.youtube.com/watch?v=sMrQna7tFmM

Telegraph Article: https://www.telegraph.co.uk/news/2020/10/31/green-roads-council-becomes-first-taken-court-campaigners-say/

Emergency Traffic Order Procedures: https://tinyurl.com/ybns7rwx

Mayor of London Press Release: https://www.london.gov.uk/press-releases/mayoral/mayor-reaches-deal-on-tfl-funding

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Motorists to Pay for Sadiq Khan’s Financial Incompetence?

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Newspapers have reported that the Government is imposing tough conditions for another bail-out of Transport for London (TfL). TfL are in severe financial difficulties as most of their income comes from fare paying passengers on buses and the London underground. But passengers have declined very sharply as they are avoiding the risk of Covid-19 infection on public transport and many City workers have moved to work from home.

TfL have already had £1.6 billion from the Government in May to keep them afloat, but it is reported that they are asking for another £2 billion for this financial year alone, with another £2.9 billion later.

Taking into account the population of London that means every man, woman and child in London will be paying the equivalent of £700 each in taxes to keep TfL afloat. A completely ridiculous sum!

The Government is allegedly requiring TfL to extend the Congestion Charge zone – presumably to the North/South Circular – plus increases in public transport fares and cancellation of free travel for children and older people.

Clearly tough decisions are required unless the Government comes up with some cash, TfL may be forced to issue a Section 114 notice – the equivalent of a public body going bust. Such a Notice inhibits any new expenditure which would severely hamper the Mayor and TfL. But would that be a bad thing when so much money is currently being wasted on daft road schemes and cycle lanes?

The basic problem is that while customers have disappeared, TfL have continued to run unchanged services which no commercial business would have done. They should have reduced services to save money, i.e. matched services to customer demand. What is the point of running trains or buses with nobody on them? It’s financial lunacy. They are also suffering from past financial mismanagement and delays to the Elizabeth line which meant they had no financial buffer to cope with the epidemic.

But who is going to pay for these problems? Apparently the motorist which is quite unjust.

I have sent the following email to my Member of Parliament  – I suggest readers do the same:

To Robert Neill, M.P.

Dear Bob,

I see that according to press reports the Government is demanding tough measures from Sadiq Khan and TfL to keep the latter afloat. That includes an extension of the Congestion Charge (a.k.a. Tax).

It is absolutely unacceptable that motorists should be required to bail out Sadiq Khan and the management of TfL as a result of their financial incompetence.

The Government should simply say “no more hand-outs – you need to adjust your revenue and costs on public transport so that they match”. Otherwise they should let it go bust and take over direct control of the organisation and institute some sensible management. That includes cutting out all those expensive cycle lanes and other traffic schemes that do not generate any revenue at present but cost hundreds of millions of pounds.

Yours, Roger Lawson  

Twitter: https://twitter.com/Drivers_London

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Mayoral Election Postponed and Transport Price Freeze Unfrozen

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Among last weeks epidemic news and financial turmoil, two important items of news for Londoners sneaked out. First the election for Mayor of London has been postponed – possibly for a year, along with other local Government elections due in May. With Sadiq Khan well in the lead in the polls, that might be welcome news for other candidates as it will give them more time to gather supporters.

One of the current Mayor’s vote winning policies at the last election was his promise to freeze public transport fares. That proved popular with many Londoners despite the fact that it was financially rash and has resulted in a big deficit in Transport for London (TfL) finances and limited investment in new transport services. The Mayor has now decided to drop that commitment but he is committing to limit rises in Underground fares to inflation and continuing to freeze bus fares – if he gets re-elected of course.

Is that wise? One thing he appears to have overlooked is that TfL finances depend to a great extent on fare-paying passengers. Bus trips have been falling and the coronavirus impact will undoubtedly reduce the numbers travelling on London buses and the underground substantially as more people work from home and events in London are cancelled. Nobody is going to be travelling on crowded public transport if they can possibly avoid it by walking, cycling or getting taxis instead.

This might have a very severe short-term impact on TfL’s finances as a lot of TfL’s costs are fixed so any hit to revenue results in big financial losses. But TfL is already loaded with debt due to the fares freeze so may no longer be credit-worthy. That will be a real problem for the new Mayor whoever it is.

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