The government’s latest “extraordinary funding and financing settlement” landed on Friday with 53 paragraphs of closely typed conditions. These underlined that, ever since Covid devastated Transport for London’s finances soon after the start of the pandemic as people stayed at home and stopped using public transport, London government’s devolved powers over transport policy, introduced early this century, have been effectively abolished and control appropriated by a combination of the Department for Transport and a man with a bicycle at Number 10.
The settlement gives TfL an additional £200 million to cover the period to 24 June. It brings the total provided by taxpayers since Covid hit to nearly £5 billion – a lot of money – and is the fourth short term package of its kind. All of them have come with copious strings attached, obliging TfL and Sadiq Khan to do things they would not otherwise have done under a tight micromanagement regime.
The Mayor, business group London First, think tank Centre for London, transport users’ watchdog London TravelWatch and TfL itself have repeatedly called for a much longer-term arrangement, arguing that this would enable TfL to bring about the capital’s recovery and attain a state of self-sufficiency more quickly.
While repeatedly declining to do this, ministers and others have maintained an accompanying commentary to the effect that TfL was already in a poor financial condition before the virus struck as a result of decisions Khan made during his first mayoral term. This appears to be their justification for sharply curtailing the autonomy of the Mayor in the policy area where his predecessors, including the Prime Minister, enjoyed their greatest influence and power.
It has been striking that through the two years of its remote control of TfL, the government has not conspicuously backed up its criticism of Khan in any detail. When the first “extraordinary settlement” was made, the DfT asked accountants KPMG to conduct a review of TfL’s financial position. This work has never been published and even TfL bosses have only been allowed to see part of it.
Fortunately for On London readers, Daniel Moylan, who was a member of TfL’s board throughout Mayor Johnson’s time, has provided a much fuller critique of Khan’s stewardship of TfL from a Conservative perspective. Daniel argues, among other things, that Khan’s four-year first term fares freeze and “hopper” bus fare were bad financial decisions and that a reluctance to get on the wrong side of the Tube unions has proved costly. He also focusses on Khan’s requirement that 50 per cent of new homes built on TfL land should be “affordable”, thereby failing to maximise income from the property development side of its activities.
Have Khan’s priorities amounted to reckless and irresponsible financial decision-making on such a serious scale that the government has a responsibility – a national one – to deprive London’s political leader of the ability to have TfL implement policies he was elected to put into effect, rather than providing him with the help he and TfL think they need to get London through the ravages of the pandemic and leaving them to get on with it?
The government is certainly behaving as if it believes so. Transport for London faced a challenge with making ends meet before the pandemic, one significantly arising from Crossrail failing to open in late 2018 – the blame game about that rumbles on – but it was not seeking any “bailout” at the time Covid struck. Prime Minister Johnson has asserted in the House of Commons that TfL was “effectively bankrupt” before the pandemic. The claim is strongly contested by City Hall.
Khan’s mantra during the 2016 election campaign was that TfL was “good, but flabby”. He argued that a four-year fares freeze was affordable if TfL slimmed down. He held conversations in advance of the election with the then TfL commissioner Mike Brown about how the cost of a fares freeze could be absorbed. Privately – for example after speaking to members of London First at CBRE in February 2016 – he expressed exasperation that media coverage was failing to recognise that he’d done this homework.
The Mayor did not intend to maintain the fares freeze into a second term. He announced on 13 March 2020, shortly before the postponement of the mayoral election originally scheduled for May of that year, that he would be maintaining it for buses but not for the Tube, the Overground or the Docklands Light Railway, though increases would not exceed the rate of inflation.
Inevitably, political calculations are at work in this affair, with both the Conservative government and the Labour Mayor playing to electoral galleries and the latter also mindful of election commitments. Khan, as some of those who’ve worked closely with him will attest, “likes a fight”. There is a view, including in Labour circles, that if he was less punchy he might get more of what he wants. As for the government side, there is a very strong sense of Johnson and those around him taking advantage of the pandemic to take over TfL a settle a few scores in the process.
Khan, and also TfL itself, are warning of a “managed decline” of London’s transport networks, including roads, in the absence of a satisfactory long term deal. This time last year, transport secretary Grant Shapps publicly dismissed TfL’s ideas for raising £500 million a year – a boundary charge on motor vehicles registered outside London entering the capital and allowing TfL to retain vehicle excise duty raised in the London rather than it being spent elsewhere in the country – within weeks of them being proposed.
Beneath the competing rhetoric, though, it is plain which side’s priorities are taking precedence. The 53 paragraphs of conditions set out what the government “expects” the Mayor to do in return for its help. They cover the introduction of so-called “driverless trains” – essentially greater automation – fares hikes, the creation of a separate TfL “commercial property company” with a business plan the government approves of, the retention of the current increased level and operating hours of the congestion charge, an offer of funds for a capital programme if the Mayor “co-operates”, and a repeat of the stricture that if TfL is to continue to offer free travel to children and 60-65 year-olds the government will not fund them on the grounds that they are “not typically available elsewhere in England”.
The latter condition (paragraph 32) highlights how complete the government takeover of TfL is and further demonstrates the influence of its political objectives on its approach.
The insinuation is that Londoners have been enjoying special privileges denied to others at their expense – a line that validates a populist anti-London falsehood widely believed in former “red wall” seats that the Tories want to hold on to. The truth is that a fares structure that builds in concessions for some groups of Londoners has, until the past two years, been an option exercised by devolved layers of London government within its budgets, not an unfair piece of favouritism which people in the north of England are forced to cough up for, as Shapps likes to say.
An irony is that the 60-65s’ concession was introduced by Boris Johnson prior to the mayoral election of May 2012 to help shore up the so-called “grey vote” against the advice of some around him. Another is that a national government led by Johnson which promised an end to a “Whitehall knows best” attitude and pledged “full devolution across England” is doing the exact opposite in the nation’s capital.
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