Mr Micawber, a character in Charles Dickens’ David Copperfield, is perhaps best known for this observation:
“Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.”
Pity, then, those tasked with preparing Transport for London’s latest business plan, with money tight and, to extend the Dickens analogy, having had to be battled for with a Scrooge-like central government. The result is that the plan provides financial “certainty” only until March 2024. Reminiscent of the stop-go funding model that was the bane of Britain’s nationalised industries in the 1970s, this makes it difficult for TfL to plan over the long term. Compare all this with the heady days of a ten-year funding deal made back in 2008 – at the time of the global financial crisis no less – and you can see just how different the political landscape has become.
In Sadiq Khan’s words, “the agreement [with government] was far from ideal and left a significant funding gap.” Despite landmark improvements, such as the opening of the Elizabeth Line – paid for in large part by Londoners and London businesses – the extended Northern Line and the improvements to Bank station, TfL is already around £2.5 billion behind on its less eye-catching capital renewals. Forgoing this investment, which should have occurred during the last five years, risks parts of the transport system going into long term decline, as was the fate of New York’s subway in the 1980s.
There is a need to find yet further savings too, amid the curse of rampant inflation. An additional £600 million of economies will have to be made in each year up until 2025/26. For an organisation with a £10 billion plus cost base, that may or may not be achievable. But it is hard to see how it can be done without being tempted to further hollow out capital assets or impair service levels. This challenge is made harder by the fact that TfL has such a wide remit. In the good old bad old days of London Regional Transport – a de facto nationalised industry – business plans would be focused on the Underground and buses. Today’s “combine” is involved in everything from building houses to a “green project pipeline” as well as regulating taxis and minicabs.
Perhaps most worryingly there is the major challenge of a collapse in farebox revenue. The TfL plan calls for growing new revenue sources by £500 million by next year. As other On London contributors have noted, TfL became more reliant on passenger income than any other major system in the world. This allowed successive governments to boast about value for money for the taxpayer, with passengers making a “fair contribution” to the cost of “their” system. But then Covid came along. Despite a comparatively solid recovery in demand – currently hovering at around 80% of previous levels – TfL is grappling with a billion-pound black hole in income from fares.
Before the pandemic, government policy in the UK was geared to making our city centres into thriving, densely packed places of productive employment, served in London’s case by sustainable modes of transport such as railways, the Tube and buses. In the capital and in the wider south east, the season ticket system, though pricey, meant holders were able to make extra journeys at no additional cost to themselves.
This was not only good for London’s theatres, museums, restaurants and retailers but also environmentally sustainable. It put downward pressure on car use and encouraged people to increase their use of public transport. Crucially, all-week working helped to make our economy more productive by generating so called agglomeration benefits. And yet, remarkably, there appears to be little appetite among policy makers to think about incentives to maintain this driver of growth.
Perhaps in true Micawber style TfL is putting a brave face on the headwinds it is confronting. The business plan heralds 94 brand new trains for the Piccadilly Line and a further 43 for the Docklands Light Railway. There is a commitment to a zero-emission fleet of electric buses that could be entirely diesel-free by 2034 and, more controversially for some, the new £1.2 billion Silvertown Tunnel. This rare beast of a private finance project is designed to finally do away with interminable jams north and south of the Blackwall Tunnel by increasing capacity and also charging users of both the new tunnel and the old one.
Joining the dots between the existing congestion charge, an Ultra Low Emission Zone set to extend across all of Greater London next year, and the tolls on those road tunnels and it is evident that the financial future of TfL lies significantly in the wallets of motorists. Indeed, the TfL plan makes explicit reference to exploring “integrated road-user charging” – a remarkable development compared to where central government policy is.
As part of its settlement, TfL was told explicitly it could not use central government monies for schemes that involved the extension of charges to drivers. But even in the most optimistic of scenarios it is fanciful to imagine that TfL’s funding needs can be entirely realigned away from a dependence on national government. For that to happen, further, radical devolution to the capital would have to take place, and this government has shown no interest in following such a path.
Mr Micawber’s other famous quotation was of course that “something will turn up”. With a general election slated to coincide with the end of its latest business plan’s life, TfL could be forgiven for hoping a new national government that is more sympathetic to London and its citizens will turn out to be that something.
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