Boris Johnson has used today’s Downing Street coronavirus briefing to again suggest that Transport for London’s perilous financial position is primarily due to the fares policy of the capital’s Labour Mayor Sadiq Khan rather than the effects of the pandemic lockdown, which has caused a calamitous collapse in fares revenue, the source of 72 per cent of the transport body’s income.
The Conservative Prime Minister claimed that when he stood down as London Mayor in 2016 he, as chair of the TfL board, had left the transport body’s finances in “robust good order” and that Khan had “decided to blow them on an irresponsible fares policy” – a reference to Khan’s freezing public transport fares TfL controls since his election as Johnson’s successor.
TfL estimates the freeze has cost it £640 million over four years. Its income from fares during that period was about £20 billion. During the same period, TfL, under its now former commissioner Mike Brown, says it made cuts and other economies equivalent to the cost of the freeze.
Khan has responded with a statement that Johnson has “lied yet again”, saying “the only reason TfL’s finances have been decimated” is the huge and sustained fall in passenger numbers, which last April was as high as 95 per cent for rail and 85 per cent for buses.
In October, Johnson made the false assertion in the House of Commons that TfL’s need for financial support from the government was “entirely the fault of the current Labour Mayor of London” – comments which prompted Khan, who was chairing a TfL board meeting at the time, to state that the Prime Minister had “lied” to MPs. Khan, who is seeking re-election as Mayor, leads his Conservative rival Shaun Bailey by 25 percentage points, according to the most recent opinion poll.
TfL’s pre-pandemic projected income under Khan had already been hit by the failure of Crossrail’s Elizabeth Line service to open at the end of 2018 as originally planned. Tories have blamed Khan for a succession of delays in getting the new east-west railway going, although the project was jointly sponsored by TfL and the Department for Transport until it passed into the full control of TfL, now headed by Andy Byford, in October.
In a financial report published just before Johnson left office, TfL said its “nominal debt” stood at just over £9 billion. Three years later that had risen to over £11 billion, partly because of expected revenue from the Elizabeth Line not materialising and fall-offs in other public transport use. Khan says he has reduced TfL’s operating deficit by 71 per cent since Johnson’s time and improved its cash balances while having to cope with interest repayments on Johnson’s borrowings.
TfL’s dependence on fares became far heavier after Johnson agreed in 2015 with then Chancellor George Osborne that TfL’s operating grant from national government would be phased out, with the Mayor being allowed to retain a higher proportion of Business Rates raised in the capital. However, the Business Rate allocations to TfL have not matched the reductions in grant.
When TfL had to turn to the government for emergency support last spring, the government commissioned a report on its finances from accountants KPMG, which it has declined to make public. Byford, despite being TfL commissioner, has been allowed to see only part of it as negotiations have continued.
In an Evening Standard article in November, Transport Secretary Grant Shapps said it was right that fare concessions for over-60s and children should be directly met by London Council Tax payers because the government would not “force taxpayers in Exeter and Barnsley to fund benefits for Londoners”. In fact, London tax-payers contribute to spending in most of the rest of the country, including Exeter and Barnsley, to the tune over £3,000 a year per person.
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