Rail franchises operators & contracts

13.02.18

Union calls for government intervention after near-£1bn TfL deficit revealed

The RMT has urged the government to reverse plans to cut grant funding for TfL after it was discovered that the company could suffer from a budget deficit of nearly £1bn in 2018-19.

The news comes after the Financial Times revealed details indicating that the capital’s transport body could continue to rack up its deficit, which is already expected to hit £785m this year.

In internal emails sent by the company’s surface transport division finance director, Patrick Doig, it was discovered that the gap could rise as high as £968m – a situation which Doig said was “clearly not a sustainable position.”

While there are some suggestions that a fall in customer numbers and an increase in costs has caused the rising deficit, the union has pointed to the future removal of the government’s revenue grant as a major pitfall.

Mick Cash, general secretary of the RMT, said he was attempting to set up a meeting with the government’s minister for London, Jo Johnson, in order to discuss the issue.

“RMT is not only campaigning for proper funding of London transport we are also making it clear that we will be resisting any transport austerity in London, and the associated threat to jobs, services and safety, with every tool at our disposal including the use of industrial action if necessary,” he explained.

TfL: Deficit expected to drop by 2022-23

However, while Cash called the issue a “crisis”, TfL officials say the £968m figure is the summit of the company’s deficit which is then expected to drop dramatically between now and 2022-23 as its business plan comes into effect.

The plan aims to bring the transport body to meet an operational surplus despite the loss of central government grant funding, and a spokesperson for TfL pointed to the £153m drop in year-on-year costs achieved last year, for the first time in the organisation’s history, as an example of positive movement.

In a statement, the organisation said: “Through our recently published budgeted and balanced business plan, we are continuing to invest record amounts in the transport network to deliver a wide range of improvements and make London a fairer, greener, healthier and more prosperous city for everyone.

“Our extensive efficiency programme has already helped reduce operating costs this year by £194m and is ahead of budget and more than offsets any reduction in revenue. The introduction of the Elizabeth Line later this year will further improve ridership across the capital and transform journeys for millions of people.”

The plan would see TfL operate with a deficit until 2021-22 when it would achieve a surplus of £78m rising to £153m the next year.

By the end of the plan’s implementation period, it is hoped that London will be one of the only major cities in the world which operates a public transport and road system completely free of government funding.

While some have pointed to London mayor Sadiq Khan’s price freeze as one way in which TfL could be losing money, officials from the organisation have said that the policy, along with the expansion of the new Hopper fare has helped maintain passenger numbers despite falling figures for services run by Network Rail in London.

Top image: TfL

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Comments

Lutz   13/02/2018 at 10:24

The claim that TfL passenger numbers are not decreasing contradicts reports and statements release by TfL in the last month or so. In addition to the fare-freeze affecting revenues, development of the cyclist infrastructure has likely cannibalised fares revenue and added to infrastructure maintenance costs in another department. Add to that there is plenty of evidence from other sources that shopping centre and high street foot-fall is down about 2% from last year, and visits to entertainment facilities are also down as people move to adopt on-line services and thus have less need to make use of public transport. It is claimed that this reduced patronage of high-street services is due to people feeling they have less to spend, but the marked increases in on-line spend suggests that this is not the case. You could also add to the pot the marked increase in violence on London streets since the current Mayor took office.

Desiro's Witness   13/02/2018 at 13:09

Interesting article. So am I reading this correctly that the deficit is expected to only increase from £785m to £968m, despite the government grant of £700m disappearing over night? According to my maths, this sounds like a major efficiency achievement that the Mayor should be applauded for given the circumstances. The other elephant in the room not mentioned here is Uber. There is no doubt that they would have abstracted lots of revenue, all founded on shady terms of employment, whilst at the same time adding to general congestion which allegedly has hit bus journey times in places. There is no doubt that the rise of this company has caused TfL's accountants some concern, although it looks like they may have found an elegant way out. Of course central government will have none of that (or, for that matter, that no other city in the western world has a public transport system completely paying for itself) and will make it all about the fare freeze, just as a political tap-in, even though it's a complete red herring in my view.

Rich   13/02/2018 at 13:27

What is the situation with the pension deficit ?

Lutz   13/02/2018 at 17:15

@Rich GBP 5.3 Billion about this time last year.

Steve B Collins   13/02/2018 at 17:43

Well, the government could definitely intervene. It could provide the capital funding to enable every tube train to operate without any on-board staff. That would significantly cut running costs once fully implemented in about a decade.

Melvyn   13/02/2018 at 20:30

@ S.B Collins I reckon those who talk like you should be gathered together and left on a tube train deep beneath London with no staff on board ! Even the DLR operates with controllers on board who often drive the trains ! This seems to be more about sour grapes following Londoners rejection of Tory Mayoral Candidate... As for saving money well fleets of bendy buses which need fewer buses and drivers and thus cost less to operate could be introduced into outer London !

Jimbo   13/02/2018 at 21:43

So if TfL finances are so bad the RMT are sticking up for them, does this mean the RMT will stop its industrial action against TfL, which further helps to reduce TfL's income? Besides, what business is of the RMT's? How is a staff representation body responsible to ensuring TfL is financed properly? This is just more political posturing from a body that has caused so much damage to public transport funding.

Jerry Alderson   16/02/2018 at 17:30

Re: London Underground operating without any staff on-board its trains. It's going to be difficult because the London Underground system is so old. However, many modern systems do operate without anyone one board - even at the stations either. I was in Nuremberg last weekend, and Lines 2 and 3 have no drivers or other on-board staff (i.e. they are GoA4). Some of the old Line 2 trains have cabs but there is no one in them. The new trains have no cab. It's great looking out of the window at the front and rear. I was surprised to discover that there are no platform-edge doors on the Nuremberg GoA4 system. They use radar to detect people and objects on the track. Many of the Nuremberg stations are also completely unstaffed. (There at no ticket barriers.) Everything is controlled and monitored by an operations centre. It is very slickly run indeed. I was very impressed. I have also travelled on the GoA4 metros in Copenhagen (again, excellent) and both Line 1 and Line 14 in Paris. It is clearly the future, though it will be a long time coming to London.

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