It is just over two years since Andy Byford took full command of Transport for London, a job he described for London TravelWatch in June as “the hardest I’ve ever done” because of “these never-ending, exhausting, frustrating negotiations with government over funding”. He spoke of having to put together seven budgets during that time, and described trying to run TfL “almost week by week without knowing what your funding looks like” as “almost intolerable”.
He’s sounding more cheerful now. Yesterday the TfL board agreed its latest funding settlement with the government – the fifth since pandemic lockdown strictures devastated TfL’s finances in the spring of 2020. It is by some distance the longest, running until the end of March 2024 rather than just a few weeks or months. Both Byford and Sadiq Khan have been presenting it as a significant improvement on the draft deal first placed before them, albeit, in the Mayor’s words, “less than ideal“.
Speaking to On London by phone, Byford describes the new settlement as “the best deal we could have struck in the current circumstances”. He says the funding is sufficient to avoid cuts to bus and Tube services that would have been “disastrous” and “draconian” and that the many conditions included in the deal’s 16 tightly-typed pages contain details far less devilish than the Department for Transport had initially proposed. The “managed decline” scenario TfL had previously described has been officially averted.
“We argued steadfastly,” Byford says, pointing out that on 27 July transport secretary Grant Shapps described the government’s offer as its final one, but that negotiations led to a “fourth iteration of that deal, because we put up a fight for London. We’ve progressively achieved more in terms of quantum and a watering down of the conditions to a point where we could recommend it to our board and have a successful outcome”.
Just under £1.2 billion will be provided over the deal period, which should enable TfL to keep its cash balance healthy and protected against the effects of passenger numbers not reaching the levels expected as economic uncertainty continues.
TfL is also able to spend £3.6 billion on capital investment, which will ensure that the new Piccadilly Line trains being built in Goole can be paid for, along with the continuation of work on major projects including modernisations of the overlapping Circle, Hammersmith & City, District and Metropolitan Lines, the financing of the ongoing Northern Line trains contract (“a backstop in case we’re unable to service the cost of that deal,” Byford says), the Silvertown Tunnel and the Docklands Light Railway stock replacement programme (paragraph 17).
Byford stresses what has been agreed about staff pensions – the “emotive topic” as he calls it at the heart of recent Tube strikes. “All we have agreed to is, again, to look at options. We have not proposed any changes, we have not agreed to propose any changes. What we have said is that we will work with government to look at potential options, of which one will be doing nothing.”
The deal itself requires TfL to “submit two categories of options” for reform of the present scheme by the end of September “all of which will aim to reduce future service liabilities by circa £100 million” and by the end of January 2023 to “agree with HMG [Her Majesty’s Government] a final detailed proposal for any recommended changes”. On London understands that City Hall regards the inclusion of the words “aim to” in this section as a significant concession from the government compared with with its original language, which stated a requirement rather than an aspiration.
An independent review of TfL’s finances, commissioned in July 2020 by Mayor Khan and the TfL board and published in December 2020, described the current pensions scheme as “outdated” and as “expensive and unreformed” with the figure of £100 million mentioned. But Byford is quite strident on this theme. “I have not said and neither has the Mayor that the pension scheme is overly generous,” he says. “What we have said is we will work with government in a calm and measured way, ideally in conjunction with our unions. We will look at ways to make it more financially secure and stop the inherent volatility of the scheme.”
That other recurring hot topic, so-called “driverless trains”, is also addressed in nuanced terms, in the deal, with TfL committing to continuing to work with the DfT “to develop the evidence required to make a strong case” and so on.
“You can’t just take the cash and not expect some conditions,” Byford says of this. “The government has made clear throughout that they want us to at least look at technology such as driverless trains, so in this settlement we are to continue along that path, looking at the technology.” Where might the path lead? “I think it’s a long way off,” Byford says. “It would cost billions, it would be extremely difficult to do, but if that’s the price for getting financial security for a longer period, then we’ll continue to look at that.”
The RMT has already denounced the deal and warned of further strikes, with general secretary Mick Lynch claiming it “will likely see our members’ pensions attacked and further pay restraint in future, coupled with driverless trains”. And the wider politics of TfL funding have growled and rumbled on in what has become the familiar way.
Shapps has repeated his usual line about the deal being “fair to all taxpayers”, words that have seemed designed to perpetuate the politically useful myth that Labour-leaning London is subsidised by other parts of Britain when the opposite is true. Byford has reproduced his recurring mantra that “there is no UK recovery without a London recovery, and no London recovery without a properly funded transport network”.
Asked if he finds Shapps’s “fair” comments annoying, Byford says, with a small chuckle, “I don’t get involved in the politics. It’s very murky water to get into.” It is a conventional wisdom that as well as the DfT and the Treasury, Boris Johnson’s special adviser on transport Andrew Gilligan, a former media ally of the outgoing Prime Minister who was also appointed a government “special representative” entitled to attend TfL board meetings, has provided his own input into the machinations. “All those players were involved,” Byford says, though he declines to go into “the minutiae of exactly how the negotiation unfolded”.
Byford left his previous job as boss of the New York City Transit Authority after clashing with New York governor Andrew Cuomo, but says “the level of political activity and debate here is fundamentally different to what I faced in New York”. He accepts that such things come with his position: “In any transport system there is going to be some element of politics, because we are recipients of public funding and everyone has a view on transport.” He is more keen to praise his negotiating team for grinding out “a settlement for TfL that enables us to move forward, that keeps the system going, that protects jobs and enhances our ability to finish off projects”.
However, in line with the Mayor, he limits his pleasure with the deal itself to calling it “acceptable” and still leaving “a gap in the funding, which we will need to address”. City Hall sources say the £3.6 billion for capital spending, which Shapps has characterised as covering TfL plans drawn up in 2019, would need to have been more like £4.2 billion if inflation and other factors had been taken into account. TfL itself says that balancing its budgets will mean finding savings on top of those already made of around £90 million during this financial year and a further £140 million in 2023/24.
This adds further pressure to the annual discussion about TfL fares, with what Byford calls the “balancing act” between “protecting the budget so that you keep the system moving” without going beyond “a tipping point” at which public transport travel becomes so expensive that people “get back in their cars”. The new deal, in its own words, “assumes a rise in fares for 22/23 and 23/24” and says that if the Mayor decides not to put fares up “no additional funding will be provided by HMG”.
London fares are related to national rail fares, whose usual benchmark is the rate of inflation – a number currently going through the roof. What will happen to fares in London next year? “That will be decided nearer the time,” Byford says. “It will be a matter for TfL and the board and the Mayor.” Byford’s job has just become a little easier, but he still has plenty of work to do.
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