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Financial investigation casts doubt over TfL pledges

Pledges to improve London’s transport services from the new mayor, Sadiq Khan, could be under threat because of Transport for London’s (TfL’s) straitened finances, a new report from the London Assembly Budget and Performance committee warned.

Between 2014 and 2016, TfL’s revenue has reduced by £2.8bn. Its failed contract with Bombardier on the Sub-Surface Upgrade Programme has cost it £900m, as well as £270m in lost fare income, and it has spent £1bn on the Northern Line extension and an extra £240m on changes to the tube station at Battersea Power Station. The revenue it earns from bus fares and business rates is also volatile.

The report warned that a number of Khan’s promised transport reforms will cause a further cost to TfL. For example, the promised fare freeze will cost £640m, whilst a new ‘Bus Hopper’ ticket will cost £30-35m.

Efforts to raise money by selling TfL’s property could also be limited by Khan’s requirement for affordable housing to be built on the sites.

The London mayor’s office has already identified a number of efficiency savings for TfL after Khan pledged to reform the organisation’s finances as part of his campaign, but these will only amount to £117m over two years at most.

Gareth Bacon AM, Conservative chair of the cross-party committee, said: “Major capital investment in the transport network is needed to keep London moving as its population continues to grow. But the funding to support this investment is now at risk. Government funding will be cut to zero faster than TfL had previously expected. And the mayor’s fares freeze will put another dent in TfL’s finances.

“Will TfL be able to deliver the mayor’s transport priorities? What we heard in this investigation hasn’t exactly filled us with confidence.”

In addition, the report said that the UK’s exit from the European Union (EU) could have a negative financial impact on TfL, including a decline in passenger numbers and the value of its property, a downgrading of its credit rating, and a loss of EU staff and funding.

The committee recommended that TfL’s next business plan should include an impact of the cost of leaving the EU.

The report also cast doubt on Khan’s offer for TfL to take over the troubled Southern franchise.

It said: “We are sceptical of the mayor’s claim that TfL is ready to take over from Southern at short notice; we therefore urge the mayor and TfL to continue lobbying the government for further rail devolution, but not to rush into arrangements that might damage TfL’s reputation and finances, and lead to no improvement for passengers.”

It recommended that the TfL board rigorously scrutinises any proposals for TfL to take over suburban rail services such as Southern and Southeastern.

“There is no guarantee that this will be profitable, and we do not want TfL to be distracted from its vital role in London at such a challenging time,” the report added.

Transport secretary Chris Grayling recently said he doesn’t “believe for a moment” that TfL is capable of running Southern.

Among other recommendations, the committee said that TfL should publish transparent fare data before the next mayoral elections to inform candidates’ pledges; publish the full costs of the fare freeze, Bus Hopper and an expansion of concessionary fares; and set out clear plans for achieving savings and efficiencies.

A TfL spokesperson said: “We welcome the committee's report and will set out our finances later this year in a revised Business Plan which will deliver all of the mayor's commitments to London."

(Image c. Yui Mok from PA Wire/Press Association Images)

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Lutz   12/09/2016 at 21:35

You can always rely on the numbers to cut throw the flim-flam. You would hope that there were sufficient safeguards in place to stop TfL from becoming a political football, but after the Boris Bus I guess not.

Nick K   12/09/2016 at 22:02

I'm wondering how TFL can justify £240million on the Metropolitan Line Extension to Watford Junction. I can't imagine the farebox being much more than £500thousand a year, most journeys being extensions of those already made: there are reasonable local bus services, not needing the severe flight of stairs at Watford High St. We were due to have a local update meeting next week but I gather it's been postponed until after a major TFL-wide review in the next couple of weeks...

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