Conservative London Assembly members (AMs) have clashed with Sadiq Khan this week over his plans to freeze Transport for London fares, with the question of who pays for the capital’s transport services and how much set to be a key issue over the ten weeks until the mayoral election on 2 May.
TfL chief Andy Lord and Mayor Khan’s chief of staff, David Bellamy, confirmed at separate Assembly meetings yesterday that the fares freeze, funded for 2024/25 through a £123 million injection of Business Rates income, would continue to be funded by City Hall in future years, meaning fares could be held at current levels throughout the next mayoral term.
“My expectation is that it is a recurring amount, so not just for one year. It’s moving forward as well,” Lord told the Assembly’s transport committee. Bellamy later confirmed to the budget committee that “the money is there so that the fares freeze is funded into the future”.
Khan himself added that TfL is expected to cover the loss of income caused by the freeze – which could amount to some £500 million or more over the mayoral term – through further savings and efficiencies. But if those were not forthcoming “we have to look into the contributions we should make,” he added.
TfL has already squeezed £1.6 billion of recurring savings out of operating costs since Khan came into office in 2016, said Bellamy. Lord said the network was on track to deliver an extra £650 million of savings by March 2026, and, under Khan, would be breaking even this year, “for the first time in its history”.
But AM Neil Garratt, leader of the Tory group, called the fares freeze a “false economy”. Rather than freezing fares, he suggested, the extra money should be added to TfL’s capital budget, particularly in the light of continuing motor problems with the more than 30-year-old Central line fleet.
Members had earlier heard from Lord that the one-year capital funding deal agreed with the government in December had left TfL £250 million short of what was required, with plans to replace the 50-year-old Piccadilly line fleet kept on track only by re-phasing payments to contractors Siemens, adding costs in future years.
TfL was able to fund three-quarters of its capital budget requirement from its own income, he said, a “huge improvement on previous years”. But it still needs longer-term capital funding in line with other major transport agencies, including Network Rail and Highways England, he added. “We don’t have any funding certainty beyond March 2025.”
Khan’s transport deputy Seb Dance added that a £500 million programme was already underway to replace Central line trains. He agreed with Labour AM Elly Baker that it was “not appropriate” for Londoners to be “asked to pay through continually rising fares to plug the gap in long-term funding”.
Later, Khan told the budget committee that while capital funding support from government was not adequate, the fares freeze would benefit all passengers as well as encouraging more people onto the network. “It is important to support Londoners and the London economy in the cost-of-living crisis,” he said.
City Hall’s final spending plans for 2024/25, presented to the budget committee, confirmed a continuing shift towards calling on Council Tax payers to foot more of the bill for TfL. A £20 increase in Council Tax earmarked for TfL, primarily down to conditions attached to the network’s Covid funding deals, will see London households contributing some £244 million towards the network, compared to £6 million pre-pandemic. It’s a marked change from the Boris Johnson period as Mayor, when fares went up by 42 per cent in all during his mayoralty.
TfL still remains heavily dependent on income from fares, with City Hall budget papers showing passengers across the network contributing more than £5.5 billion towards annual operating costs of some £8 billion.
Khan’s final budget, including an overall council tax hike of 8.6 per cent, £37.26 for Band D payers, will be voted on by the Assembly tomorrow, with any amendments requiring a two-thirds majority of AMs to pass.
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