Two years since he became London Mayor, Sadiq Khan’s transport policies, including what he requires of Transport for London (TfL), are as sharply contested now as they were during his election campaign. The focus of attention then was the impact a four-year fares freeze might have on the transport agency’s finances, which were already under pressure due to the tapered removal of government financial support for the transport network’s day-to-day operation.
Khan’s confidence that the budget numbers could still add up was underpinned by TfL’s own assumption that public transport passenger numbers would continue to rise, as they had been for decades. So although a fares freeze implied less cash coming in than would have been the case had the inflation-plus fares rises under Boris Johnson continued, it also seemed reasonable to expect that more and more fares would carry on being paid by more and more people and, even that the freeze might help sustain this projected rise, because fares hikes tend to put some people off.
Arguments have continued about the effects of the freeze, with London Assembly Conservatives insisting that it is contributing to starving TfL of funds it needs for investment. In November, the purchase of replacement trains for the Jubilee and Northern Lines was effectively cancelled, though TfL ascribed this to the passenger number fall-off, rather than the freeze.
What no one disagrees about is that TfL’s finances look pretty strained. The organisation’s most recent business plan anticipates an operational deficit of nearly £1bn in 2018/19. As City AM reports, an assessment by the independent investment programme advisory group (IIPAG) compiled for TfL’s audit and assurance committee says that TfL’s finances are “under greater pressure than at any time since the IIPAG was formed in 2010”.
The IIPAG’s quarterly review also says that a changing emphasis on the infrastructure being funded, is “introducing new risks to TfL”. The shift is towards projects concerned with improving air quality, station accessibility and the “healthy streets” programme, which includes spending on dedicated cycling infrastructure. Unhappily, the group notes “a number of instances where there appears to be a reluctance to face up to cost increases when projects are underway, or where funds are simply not available to deliver the preferred option” (see paragraphs 4.17 and 4.18).
What will happen next? Khan’s 2016 manifesto said that the fares freeze would be “funded by making TfL a more efficient and profitable organisation, not by cuts to spending on better services and more capacity”. TfL’s progress with its consulting operation, which aims to sell its expertise to other cities around the world, provides some welcome reassurance. Establishing a TfL “trading arm” was another Khan manifesto promise, and is clearly being kept. But honouring that broader pledge is looking tricky.
A great deal now depends on the Elizabeth Line – Crossrail – opening on time at the end of this year and instantly creating a big, new TfL revenue artery. Putting up the congestion charge, another option for increasing income, was ruled out in Khan’s manifesto, which promised to maintain the charge “at its current level”.
The Mayor cannot be blamed for a failure to foresee the costly drop in Tube passenger numbers, which has been variously attributed to more home working, dreadful peak time overcrowding, fear of terror attacks and a Brexit effect. That does not change the fact that he, who chairs TfL’s board, his incoming new deputy for transport Heidi Alexander and TfL chiefs have some exacting challenges ahead if the Mayor’s transport programme is to be delivered convincingly.