Leon Daniels: Government control of Transport for London is not what the capital needs

The current war over transport between City Hall and Downing Street has its own distinctive qualities, but also highlights that some major upheaval in the way London’s transport is organised and delivered has happened roughly every 20 years for nearly a century.

We can trace this back to at least 1931, when the first plans were made to bring the numerous private bus and rail companies in the London area under the control of a new organisation called the London Passenger Transport Board (LPTB). This came into being in 1933, helped by a fine House of Lords performance in March of that year by the legendary Lord Ashfield, who went on to become the board’s first chairman.

Ashfield’s arguments swayed sceptical members of the Conservative-dominated national government of the time, enabling the LPTB to come into being in July. Its authority encompassed a 30-mile radius around Charing Cross and therefore included parts of the Home Counties, from Stevenage in the north to Horsham in the south.

The board brought co-ordination to a fragmented transport scene. This was delivered despite very tricky negotiations with the service providers, not least the various Underground companies. However, it was not a pure nationalisation. The acquired businesses were given cash and shares and continued to receive dividends.

The LPTB went through three phases during its existence: the years of impending war, the wartime operations period, and post-war rebuilding. In 1938 it made a statement that could have been written in 2022. It said there was a clear “conflict of duty” between maintaining financial stability and improving and developing facilities.

Full nationalisation did not come until 17 years after the LPTB’s conception. This was the policy of the immediate post-war government of Clement Attlee. The rebuilding work ahead was huge and the public sector was going to do it. On 1 January 1948 LPTB was transferred into the British Transport Commission (BTC), which took control of most of the UK’s inland transport activity including rail, docks & inland waterways, hotels and road transport. It was named as the London Transport Executive, though better known as simply London Transport. The LPTB shareholders were bought out using government-backed stocks.

When the Conservatives won the 1951 general election they sought to disband all of the regional executives apart from London’s – not for the last time there was thought to be too much political risk in potentially upsetting the capital’s public transport. A golden era began. Between 1948 and 1955 the capital’s bus fleet was substantially replaced and in 1959 construction of the first tunnels for the Victoria Line were authorised.

However, ridership had been declining: the 4.5 billion passengers on buses in 1950 had shrunk to 3.1 billion in 1962. By the turn of the decade the rise in private motoring had led to an annual downward trend becoming established as “normal”, hastened by a damaging seven-week bus strike in 1958.

By 1963 London Transport was reporting directly to the Minister for Transport and facing the familiar problem of needing to deliver comprehensive services with insufficient revenue. But in 1965 began four years of Labour government policy to hold down fares and compensate through taxation as part of its wider economic policy. However, subsidy is rather like heroin – once you are hooked it is hard to get off.

A new development in 1965 was the establishment of the Greater London Council (GLC). The government made a plan to shift its troublesome and cash-needy London Transport Board on to the new regional authority’s plate. Because the GLC covered a somewhat smaller area than the old LPTB and the original LT, bus services outside Greater London were transferred to the National Bus Company. (The privatisation of NBC saw them divided between four companies and, over time, they were further split, sold and resold. Today, they have curiously come full circle in all being owned by Arriva, a subsidiary of Deutche Bahn which also operates buses in London).

In 1970 a new version of London Transport was born. Devolution to local government was the trigger and a different type of political influence came to bear, with government cheerfully deflecting all criticisms on to the GLC. At the same time, repeated changes of political control of County Hall – where the GLC was based – caused services to be in continuous flux: the new London Transport came into being during the Conservative administration of Desmond Plummer. In 1973 Labour took control but lost again in 1977, when Horace Cutler became GLC leader.

Cutler’s relationship with London Transport chairman Ralph Bennett was permanently soured when he was refused entry to the organisation’s then headquarters at 55 Broadway in St James’s due to an administrative error. In 1980 Bennett was dismissed by him, though the immediate reason was a critical report by PA Consulting. Fuel was poured on the fire by Cutler’s board appointee Leslie Chapman, a former civil servant who had controversially driven major savings at the Property Services Agency. Not for the first or last time would appalling relationships between key players damage London’s transport.

In 1981 Ken Livingstone became GLC leader and took a radical approach, cutting fares by 33 per cent and making them flatter. Ridership immediately grew but so did the deficit. A legal challenge in 1982 by the London Borough of Bromley, a Conservative council with no Underground services, forced fares to be doubled. Ridership immediately fell and in the financial years 1982/3 the number of buses in London dropped to an all-time low – about half of what it is today.

In 1983 the Travelcard was born and relief from fares was granted by significantly discounted daily, weekly and monthly tickets. This fares strategy did not attract a similar challenge to that of Bromley. The popular policy of cheap fares, justified by Livingstone as a way for people to get to work or school and for leisure, did not go unnoticed by the government of Margaret Thatcher, whose broad principle was to lift the local tax burden. London stood out as doing the opposite. In 1984 Thatcher removed “the grossly mismanaged” London Transport from GLC control.  In 1986 she abolished the council itself and Livingstone with it – at least for the time being.

A new body, officially named London Regional Transport, reported to the Secretary of State for Transport. With the return to central control, the government looked to urgently privatise as much possible and again try to divest itself of a financial burden. Bus services were successfully franchised, becoming briefly subsidy-free in the mid-1990s. Some £233 million were raised by the consequent sale of the London bus companies.

The story was different with the Underground. Here there was choice between selling off the infrastructure or the operations. The government chose the former and it didn’t work. Costing and keeping control of century-old subterranean assets was too much for the private sector consortiums that took them on. They either failed or were sold back.

With the election of New Labour in 1997, devolution again became a favoured national government policy. Backed by strong lobbying from the London business community, the Greater London Authority was formed in 1999. With it came a new devolved transport authority for the capital –  Transport for London – and the return of Livingstone to the helm of London politics as its first directly elected Mayor. Established on 3 July 2000, TfL was a highway authority – responsible for a network of key roads – and put in charge of not only the bus service but also other modes including licensed taxis and the oversight of traffic control. The London Underground came under its wing three years later.

Mayor Livingstone delivered more cheap fares and higher volumes of public transport use. So started 15 years of continuous growth in ridership. New schemes to promote cycling were devised by Livingstone and implemented by his successor Boris Johnson, who was first elected Mayor in 2008. More effort was put into using the River Thames as a transport avenue. Livingstone also introduced the congestion charging, initially in the central zone before extending it west. Johnson promised to unwind the extension and did so, though he retained the central zone.

TfL turned out to be an excellent organisation – for the first time nearly all the elements of transport in London were co-ordinated through a single agency. Its second commissioner, Peter Hendy – now Sir Peter – who was appointed by Livingstone and kept on by Johnson, concentrated on improving service performance. He received a daily performance report every morning and sent it personally to the Mayor. This rigorous attention to performance caused reliability to rise in successive years and so did ridership, eclipsing that of other world cities and even the vaunted Asian metro systems.

The tricky funding balance between fares revenue and taxpayer contribution was laid before the London electorate every four years, providing democratic choice and endorsement. Throughout, TfL also sought to maximise additional income from its property portfolio and from advertising. Successive Mayors recognised TfL as their most potent and effective delivery machine.

Given the long period of growth in public transport use, rising in parallel with London employment and population, we might have been forgiven for thinking hiatuses such as those of 1933, 1948, 1970, 1984 and 2000 were a thing of the past. Had the boil of fares revenue versus taxpayer contribution finally been lanced? Even the most ardent promotor of free enterprise had to agree that the services were good, safe and plentiful and also accountable to London’s electorate.

It has turned out not to be so. It is certainly not inevitable that a national government of one party and a City Hall of another should be at odds and it is easy to forget that the first years of Sadiq Khan’s time as Mayor took place during the premierships of David Cameron and Theresa May and were relatively co-operative. The seeds of discord were sown when Boris Johnson became Prime Minister and installed much of his old mayoral team in Downing Street.

Relations between the new Mayor and his predecessor have been bad from the start. It is argued by some that if Khan’s administration had adopted a less critical stance towards Johnson’s government things could have worked out better for both sides. After all, despite devolution, contributions from the Treasury will always be needed by TfL – if not in cash then by bestowing consent to borrow – and the government can benefit from supporting transport provision that is popular, provides employment across the UK and develops skills.

But no sooner had Johnson won his 2019 landslide than the pandemic was upon us, TfL’s revenue collapsed and it was forced to go cap in hand to the government for money. Emergency funding has been provided for short periods with the government imposing numerous conditions, including fares rises, expenditure cuts and other measures not in Khan’s manifesto. And so we have another period of disruption and once again it is driven by the same old problem of too little fares revenue needing to be augmented by too much taxpayer contribution.

As we have seen, when this issue has arisen in the past it has been followed by structural change. TfL’s financial situation looks bleak at present. But it doesn’t need another 20 year shock. The American author Charlton Ogburn famously said that every time we got ourselves organised, we would be reorganised. It is “a wonderful method….for creating the illusion of progress while producing confusion, inefficiency and demoralisation,” he concluded.

What TfL needs is a mechanism whereby long-term funding is available from a range of sources, of which the Treasury would only be one. The balance is a matter for the voters. And it needs to be able to keep operating across the widest range of demand levels, including what we expect the landing position to be post-pandemic. In my view a return to public transport use of around 85 per cent of pre-pandemic levels seems reasonable, with hopefully less disparity between peak and off-peak use, enabling services to be organised more efficiently.

This time, changing the organisation’s role is not the answer. Tough times need strong and collaborative work between all the parties, including those in control of the money and those responsible for delivery. History helpfully shows that a fair balance between fare payer and taxpayer is difficult to achieve yet essential to deliver. TfL remains one of the best delivery machines in the public sector and can be a huge asset to politicians of all parties and walks of life.

Leon Daniels was Managing Director Surface Transport at TfL from 2011 to 2017.

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