OPINION - How Sadiq Khan gets a deal for TfL

·6-min read
Minister for London Paul Scully: “We absolutely do want to give TfL a longer-term deal.”  (BEIS)
Minister for London Paul Scully: “We absolutely do want to give TfL a longer-term deal.” (BEIS)

It will be a "financial apocalypse" and "impending disaster" which could "drag London back to the 1970s." As a new TfL deal deadline approaches, Sadiq Khan and his supporters have once again been scouring the dictionary of doom. We are told that unless the government gives him £1.7 billion, TfL will collapse. It'll axe a hundred bus routes, close a whole Tube line, end its entire capital investment programme.

Sounds serious, doesn't it? So why isn't anyone panicking? Why is the story not dominating airtime even in London, and why was it little mentioned outside? I think it's because we've been through this melodrama so many times before. Every time, in fact, that the Mayor is coming up to the end of one of his six-month bailout terms.

Just in case anyone is worried, I'll say this. In the next deal we will commit, as we have before, to making up TfL's loss of fare revenue from covid. TfL's main source of income is therefore guaranteed by the state - at a cost so far to national taxpayers of more than £4bn.

TfL's second-largest source of income, business rates, is also guaranteed. As the Mayor usually omits to mention, this is what he was given to make up for the ending of permanent government grant. It will raise £1.8bn for TfL this year, £800m of which is used for day-to-day capital maintenance to keep the system running safely.

TfL's third-largest source of income, road user charging, is rising sharply because of the Mayor’s much-enlarged Ultra Low Emission Zone and increased congestion charge. TfL's advertising and commercial revenues are recovering, and council taxpayers are contributing an extra £45m to TfL this year.

In total, therefore, excluding grants for Crossrail but including our emergency support, TfL's income this year will in fact be about the same as it was in the last year before the pandemic. And beyond even this, there is TfL's financial reserve, which it said on 24 November was £1.65bn, slightly higher than on the eve of the crisis.

What this all means is that there is, and will be, more than enough money to keep services running at their current levels, and there is no basis whatever for Khan’s threat to cut them. He clearly doesn't even believe it himself. Over the last three weeks, with the restoration of the Night Tube, the Night Overground, and a full timetable on the Waterloo & City line, he has been increasing services, not reducing them. He is also considering cutting the hours of the congestion charge by a third (costing TfL about £70 million a year) and plans to pay £12 million in bonuses to TfL's senior management: not the actions of a man who is strapped for cash.

In this latest outbreak of sabre-rattling, Khan is trying to link two things which aren't linked. He's threatening to cut services in the short term unless he gets capital funding from us for the long term. We've said many times that we will help TfL with major enhancements like new trains and signalling. We absolutely do want to give them a longer-term deal. But three things stand in the way. First, the Mayor's behaviour. Negotiations of this importance cannot be conducted through threats, spin and press releases.

The second issue for us is what the long term looks like. The investment programme demanded by Khan and TfL managers - massive expansions of central London commuter stations like Holborn, increasing TfL's train fleet over its current size - is essentially the same as it was before the pandemic, save that it is actually larger in scale than what TfL was spending before. The Mayor appears to assume that everything will go back to exactly how it was, only more so, with ever-growing numbers of people commuting into central London in the morning rush hour five days a week.

Well, it might do. But with peak-hour commuting to central London still less than half its pre-pandemic levels, it's too soon to make multi-billion pound bets that it will do. With travel likely to be more discretionary in future, maybe some of the money would be better spent on making services more attractive to passengers and cheaper to run? More bus lanes, perhaps, as Birmingham is doing, so buses can travel faster, and fewer vehicles are needed to operate the same frequencies. Driverless trains, as Glasgow is doing, so services are less interrupted by strikes.

The pitch from the Mayor to national taxpayers is: "Give me your money and let me do whatever I want with it." But TfL went into the pandemic already weakened by Sadiq Khan’s poor stewardship. Its debt rose by almost a third under him, from £9.1bn in 2016 to £11.7bn on the eve of Covid. His four-year fares freeze cost it a further £1.5 billion (the usual figure of £640m excludes the effects of compounding.) Crossrail was on time and on budget when he took office - but is now four years, and around £5 billion, adrift. Each of these problems pre-dated the pandemic.

So that's the third issue for us: getting the Mayor to take more financial responsibility. Exactly a year ago, Khan's own Independent Review into TfL’s finances – which he commissioned, whose members he appointed, and whose work had no government involvement – said explicitly that the Mayor should not seek a permanent grant from Whitehall, but should instead raise more money for TfL himself. It rightly pointed out that this was the only way to get the control over his destiny that he seeks. And it set out a series of options for raising that money.

As a condition for doing the next deal, Sadiq agreed to tell us which of the options he wanted to pursue by November 12. More than three weeks on, he has still not done so. Distracting attention from his unwillingness to make difficult choices is no doubt another reason for the Mayor's latest PR blitz.

We have paid, and will continue to pay, for TfL because we see it as essential for London, and a model for the rest of the country. That support is why TfL's staff and services are at no risk, unless the Mayor wants them to be. They should never be used as weapons to make political points. We need focus and constructive engagement to get this right and we will play our part to keep London moving through its recovery.

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