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TfL commercial trading arm could generate ‘tens of millions’

Work is already underway for TfL to potentially establish a commercial trading arm, which could help the organisation achieve its ambitious savings targets.

Under its business plan, the transport body aims to achieve £800m in efficiency savings a year for the next five years without affecting frontline services.

In a question session this morning, members of the London Assembly Budget and Performance Committee challenged Mike Brown MVO, who became TfL transport commissioner in 2015, as to why TfL had not supplied information on its plans to meet the target before the meeting.

Brown replied that evidence was “already emerging” that suggested TfL would be able to meet the targets, with the organisation achieving a quarter-on-quarter drop in actual spending for the first time since it was founded.

Ian Nunn, TfL’s chief finance officer, agreed that the organisation was “slightly ahead” on savings. “I’m encouraged by the speed at which this whole cost-reduction programme has covered pace,” he continued. “We need to retain that pace and indeed accelerate it over the coming months.”

The business plan also includes proposals to establish a TfL commercial trading arm, which Brown and Nunn said had already received expressions of interest from other cities around the world who wanted to purchase TfL help with their own transport projects.

Brown added that work was underway to establish what structures were needed to make the trading arm viable, but that it would be constrained by the Greater London Authority Act. He refused to give a date for when the arm would be established, but Nunn said that at a “very conservative” estimate, it could generate “tens of millions” income.

In addition, Brown said the £4bn savings could be made by cutting agency staff and reducing duplication in TfL, instead focusing on “things that are going to make a real difference to London and the travelling public”.

For example, the organisation currently has cases of different teams engaging in separate discussions with the same supplier. Brown added that TfL had suffered in the past from being made up of different organisations that were added at different times. London Overground, which TfL now controls, didn’t exist when the organisation was founded in 2000. Operation of the Overground has been franchised to Arriva Rail London since 13 November 2016.

“The organisation [TfL] had evolved over time, but hadn’t had a proper review of how our functions work and operate across the board,” Brown added. “This is a hugely exciting opportunity for us to do what is absolutely necessary and take a radical fresh approach to how we structure the place.”

When asked whether the reforms would lead to a loss of jobs and skills, Brown answered that TfL needed “the right skill and capability to deliver not just [the] business plan but the mayor’s transport plan”.

He insisted he was “absolutely convinced” that this was possible in combination with the TfL savings plan, and could even “free up” talented female and BME staff who are currently “stifled by slightly Byzantine organisational structures”. However, TfL has previously been criticised for the safety impact of cutting London Underground staff.

Brown also said TfL welcomed plans to fully devolve business rates to the Greater London Authority and that TfL finances would be “arguably more secure”, with London mayor Sadiq Khan guaranteeing the organisation’s budget.

When asked about predictions that TfL’s fares income could be £1.9bn less than expected over the next four years, Valerie Shawcross CBE, deputy mayor for transport and deputy chair of TfL, said she expected a ‘significant’ overall increase in fares income because of Crossrail, enhancements to the Tube network and the Night Tube.

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Melvyn   05/01/2017 at 00:01

Sadiq Khan announcement of £200 million for improved tube access with Harrow On The Hill and Newbury Park to be first Stations to benefit if a far better way of investing money instead of needlessly buying buses which should be largely funded by private bus companies. Improved access will generate more fare revenue as it will allow more people to use the underground and it helps speed the rate passengers enter and leave stations something that will become even more important if the number of trains per hour continues to rise as bad access means passengers are still trudging up stairs from one train when the next train arrives. As for building commercial revenue I have noticed a take away coffee shop has been installed at platform level at Westminster Station thus generating rental income for TFL to invest in the network. While TfL has a large number of old stations that need upgrading including those built in the prewar expansion and so combining upgrade with property development can provide improved and more accessible Stations with housing for Londoners .

Pdeaves   06/01/2017 at 12:56

When the article states: "... already received expressions of interest from other cities around the world who wanted to purchase TfL help with their own transport projects", does this really mean 'purchase', or 'hire'? I would hope the latter, rather than sell one bit of TfL to any separate metro undertaking (which would then mean TfL may need to set up its own, equivalent, company to do that work, which it may sell, and so the cycle continues!).

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