TfL funding deal: compromise, micromanagement and relief

TfL funding deal: compromise, micromanagement and relief

Last week’s meeting of the London Assembly’s transport committee was so full of interest I decided against writing a quick news report in favour of something more detailed – and here it is. The committee’s guests were the now outgoing Transport for London commissioner Andy Byford, deputy mayor for transport Seb Dance and Patrick Doig, TfL’s group finance director. The theme of the meeting was the 20-month funding agreement reached with the government right at the end of August and what it means.

At an emotional level it meant relief. Dance, who took up his role at the start of this year, described clinching the deal as meeting “an existential challenge in terms of whether it was possible to avoid some very drastic cuts to service provision”.

Byford, who’s been wrestling with the Department for Transport and Boris Johnson’s transport appointees since taking up the commissioner’s job in the summer of 2020, spoke of “the best deal we could have got in the circumstances” after a long and “frustrating” process. He’d wanted a five-year settlement and, at the outset, would have settled for three. His relative contentment with 20 months speaks volumes about the grief he and his colleagues have endured.

Doig said he was confident the deal would see TfL through to the end of March 2024, when it expires, especially as the Greater London Authority has provided a loan facility – for up to £500 million – to help TfL cover a remaining funding gap put at £230 million. “The consequence of no deal was far, far worse than even our managed decline budgets,” he said. “It’s almost unthinkable what that could have meant for London,” Doig said.

The deal also represents a complex compromise between Whitehall and TfL. Byford acknowledged that he could have done without some of the conditions placed on the additional £1.2 billion “funding injection”, which means a “calamitous” TfL’s managed decline scenario has been avoided, but reiterated that some of those conditions had been “softened” during negotiations “to the point that they were fair and deliverable”.

Calling the original government offer “very, very prescriptive” about what TfL was allowed to do with the generally separate funding for operating the transport systems and and investing in them, Byford said he had managed to secure the more normal flexibility between the two. Doig described this aspect of the deal as “crucial”, as it has enabled TfL to balance its budget.

During the pandemic, when muttering that TfL had been “mismanaged” by Sadiq Khan, Conservative critics rarely specified that what they meant was that they thought fares should be higher and that transport unions should be forced to accept less favourable employment terms and benefits. Where have we ended up with those two issues?

On fares, Dance explained that assumptions about them in the deal are “based on the projected fare rises for national rail”, which have yet to be determined by the government. Elaborating on this, Doig said the funding settlement is “predicated on the assumption that the Mayor decides to match national ail fare increases” and that these are assumed to be of 4% next March and the March after.

He added that, of course, that could change, as the DfT had been “at pains to point out”. TfL fares remain the Mayor’s decision, but the deal says if the Mayor wants to set fares at a level lower than the amount national rail fares rise by, government funding “would be reduced accordingly”.

Doig confirmed that the current assumption is that the next new fares structure will come into effect in March, continuing the change from January that began during the pandemic. Asked if free travel for over-60s before 9am will be restored – having been taken away as a condition of the very first funding deal – Dance said a decision will be taken “very soon”, meaning before the end of this calendar year.

On pensions, Dance, underlining what Byford had previously told On London, that the deal requires TfL to “explore options to change TfL’s pension” but no more. “Throughout this process, TfL has been clear that ‘no change’ is one of the options,” he said. “We don’t consider it right to make changes to the pension scheme for the sake of it” and if any are made “they have to be carefully and considered, in conjunction, of course, with scheme members”.

A “preferred course of action” will have to be set out by TfL by 31 January next year, Dance said. He added that any reform would “potentially involve government legislation” and therefore not be easy to implement. Byford was adamant that “we would not have agreed to conditions [in the deal] that were unfair to our colleagues”.

Performative calls for “driverless trains“, a term with union-neutering connotations in the ears of the public, has, for years, served Boris Johnson’s craving for applause. But the funding deal seems to implicitly accept that introducing such vehicles in London, whatever “driverless trains” precisely are, would be hugely difficult and expensive, whatever Grant Shapps says about Paris.

“There are a number of unique circumstances” in London, Dance said, “between what was done in Paris and what would be possible in London” and pointed out that what was done on Line 1 in the French capital “took well over a decade” to complete, and in that city they don’t have tunnels as deep as London’s which would need to have trackside walkways built in to them.

This would “effectively mean an entire tunnel-widening project” and much more, Dance said. TfL and City Hall are “looking at it” as instructed. Byford reeled off a list of further obstacles. “For the cost and the time involved” a  “far better use of funds” would be to upgrade current signalling systems, he said. To chase after driverless trains would be “a folly” in his view. Conclusion? As ever, “driverless trains” aren’t going to happen.

There were questions about buses from committee chair Sian Berry of the Green Party, who wondered if the savings TfL still has to make – £90 million during this year, £140 million to come – means bus services will suffer. A consultation about changing and reducing services went out in the summer, to significant dismay. Byford said responses are still being assessed, but stressed that a bus mileage reduction of 18% once feared has now shrunk to 4% by 2024/25.

“Typically, what we’re talking about is central London where there is already a very, very high level of bus provision,” Byford said, “in some cases a bus literally every 15 seconds. I’m thinking of the likes of Holborn or other places that are intensely trafficked, customers wouldn’t really notice the difference.” When will TfL’s work be complete? “Soon,” Byford said.

Then there was funding for active travel, including money allocated to boroughs for schemes on their local roads. In short, there’s no less of it than there was – not enough, fears Dance, to mean the Mayor’s targets, though he hoped they could improvise. A sum of £80 million can be spent on TfL’s roads and £69 million is to be available to boroughs, until the latest deal.

Liberal Democrat Caroline Pidgeon inquired about the governance arrangements, which take up six paragraphs of the voluminous, 62 paragraph deal – an array of overseers, appointees and reporting procedures, including an oversight group chaired by a DfT director with representation from the Treasury and Number 10, which will meet every quarter. Was all this government presence threading through TfL’s own structures going to be problematic?

Byford said “time will  tell” but his feeling was that, on the whole, “it’s an improvement on that which has been in place to date”. He made particular mention of an oversight group specifically for active travel, describing it as “a much more intrusive entity, where we really were being micromanaged”.

The trouble with that type of thing is that it can cause morale issues, Byford said, “If experts feel that they really are not being listened to or suffocated by government oversight and if there is political pressure put on them. He was not mentioned by name, but an impression was formed that no-one is mourning the exit of Andrew Gilligan, Boris Johnson’s special adviser on transport who chaired the active travel group.

TfL morale was damaged through the two-and-a-half years of near constant funding negotiations, Byford said: “It had a really bad effect on the whole organisation.” The comment chimes with a remark by a GLA insider who said the long pandemic months of grappling had had a draining effect on City Hall too. There is, for now, a little respite. But sometime late next year it will all begin again.

Watch the whole of the transport committee meeting here.

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Categories: Analysis

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