Government must stop treating TfL like a ‘problem child’ says finance chief

Government must stop treating TfL like a ‘problem child’ says finance chief

It’s time for the government to stop treating Transport for London like a “problem child”. That was the message from the agency’s finance chief Simon Kilonback as he outlined its case for a further £2 billion bailout at the TfL board meeting today.

The call came as auditors warned in TfL’s 2019/20 annual report and accounts, approved at the meeting, of “material uncertainty” over the availability of future resources and, therefore, TfL’s “ability to continue to operate the current level of services” after 17 October, when the current £1.6 billion government bailout ends.

Reliance on fares income for almost three-quarters of its revenue has left TfL particularly vulnerable, as passenger levels slumped by 90 per cent during the pandemic crisis, Kilonback reminded board members. By contrast, fares provide just 37 per cent of public transit revenue in Hong Kong, and 38 per cent in New York and Paris, alongside government grants and income from a range of local funding sources.

In the current crisis, with Tube travel back to only a quarter of pre-crisis levels, Kilonback’s budget report emphasised that “funding from government must cover our fixed operating and capital costs where our revenue has fallen as we can no longer to afford to cover these costs ourselves”. 

Healthy balances had initially enabled TfL to sustain itself for a period, but investment was now on hold, while £1.4 billion a year was needed simply to keep existing services running safely and reliably, he added, warning that the system could need financial support for “several years to come”.

The stakes are high, with TfL’s first bailout hedged with conditions including an above inflation fares hike, increases to the congestion charge, curbs on cheap travel for older passengers and free travel for under-18s, and a Whitehall review not only of TfL’s finances but also its governance and structures.

The bailout also saw two government representatives appointed to the TfL board – Andrew Gilligan, the somewhat controversial cycling commissioner during Boris Johnson’s mayoralty and now a Number Ten adviser, and former senior Department for Transport official Clare Moriarty

The pair were in online attendance for the first time as Kilonback and TfL’s new commissioner Andy Byford, fresh from the helm of the New York Transit Authority and once a foreman at Regent’s Park Underground station, set out their stall on funding and on TfL structures too. 

Transport in London is central to national recovery from the pandemic crisis, said Kilonback, pointing out that 55 pence in every pound invested by TfL supports jobs outside the capital.

“We need certainty, so that we don’t have to go back to government every time there is some sort of demand shock,” he said. “TfL is part of the national infrastructure system and needs to be regarded as part of the national solution – not as a problem child, as we seem to be currently.”

Byford added: “I will be building a compelling case for public transport financing in London – sustainable, affordable, predictable, long-term – allowing me as your commissioner to plan and provide transport services in the capital with confidence, moving away from the hand-to-mouth existence we are currently having to follow.

“We’ve demonstrated over 20 years the benefits of having an integrated planning and delivery organisation for public transport in London, which is the envy of transport organisations around the world. We will make the case that that has to be preserved.”

Moriarty said that TfL needs to work with the government, particularly on costs and opportunities for savings, as well as the future shape of demand and provision.

The meeting also heard confirmation from Crossrail chair Tony Meggs that the already delayed £18 billion project would not see its central section between Paddington and Abbey Wood open next summer, as previously hoped.

A revised timetable is expected in August, along with confirmation of further cost overruns on top of up to £650 million extra costs revealed last year, Meggs said. But a forecast would not be published without “rigorous analysis and independent checking”.

Problems had started “a long time ago”, said Mayor Khan’s transport deputy Heidi Alexander, and the current project managers had “inherited a bit of a mess,” said Byford. A six week “blockade” of 24/7 working on the scheme will begin shortly.

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