The Mayor of London probably has more control over how we get around the city and how much we pay to do it than over any other area within their City Hall ambit. But the years since Sadiq Khan’s election in 2016, and his taking the chair of Transport for London (TfL), have demonstrated not only the opportunities but also the considerable constraints, financial and political, on the Mayor’s transport powers.
One of the largest public transit agencies in the world, TfL is ubiquitous in London, running directly or overseeing the London Underground, the city’s bus services, the Docklands Light railway, some suburban rail routes, London’s trams, river boats and more, including black cab and private hire regulation, the “Red Route” strategic road network, traffic lights across the city, and now the long-awaited Crossrail Elizabeth Line.
It is a big public sector business, with 25,000 staff, direct operating costs approaching almost £6 billion in 2019/20, plus an annual capital spend on maintenance, new trains, signalling and wider improvements of some £2 billion.
Khan’s predecessors, benefiting from relatively generous government funding and growing passenger numbers, were able to chalk up noteworthy if sometimes controversial achievements: the Oyster Card and the congestion charge under Ken Livingstone and, for Boris Johnson, cycle hire, New Routemaster buses and even the Emirates Airline cable car.
The current Mayor hasn’t been so lucky. His first term has increasingly been about money, or the lack of it. Growth in Tube ridership stalled and bus passenger numbers went down. There were delays to Crossrail coupled with escalating costs just as government grants dried up. And then came the pandemic.
Even Khan’s flagship achievements – freezing fares (those set directly by TfL) and the innovative Hopper fare, allowing unlimited journeys at a flat rate within an hour of touching in – have been dragged into an argument about “profligacy”, as political opponents have it, at a time when, uniquely for major capital city transit systems, TfL has become dependent on fares income for 72 per cent of total revenue.
Others point to TfL’s operating deficits being reduced by 71 per cent – representing “huge progress putting TfL’s finances on a stronger footing”, according to Khan – and some £1 billion in operational costs taken out of the organisation since 2015/16, offsetting the estimated £640 million impact of the fares freeze over four years.
With the impact of the pandemic self-evident, the Prime Minister’s pre-election attempts to pin the blame for TfL’s current problems entirely on Khan have been widely debunked. But it’s also not disputed that, as eminent transport academic Professor Stephen Glaister has written in a wider review of the history of the mayoralty, “TfL’s financial position by the end of 2019 had already left the Mayor in a weak position” even before the March 2020 “stay at home” order pushed the organisation to the brink.
One high-profile casualty of funding constraints was Khan’s 2016 manifesto promise for a cycling and walking bridge between Rotherhithe and Canary Wharf. Road maintenance has been reduced and station and signalling upgrades have been postponed. It leaves the contentious Silvertown road tunnel under the Thames as perhaps the major outcome so far of the Mayor’s capital programme.
And further constraints have become apparent on Khan’s wider legal duties to develop an overall strategy for “safe, integrated, efficient and economic transport facilities and services” in the capital, beyond those provided by TfL. The current Mayor’s Transport Strategy, published in 2018, aims for “active” travel modes – walking, cycling – and public transport – to make up 80 per cent of trips in the capital by 2041, up from 63.2 per cent in 2019.
But the eye-catching plan to pedestrianise Oxford Street was thwarted by Westminster Council, highlighting City Hall’s lack of direct control over key parts of the network, and there’s been a need for constant negotiation with the boroughs, which control 95 per cent of London’s roads – 14,000 kilometres compared to Khan’s 580.
Centre for London analysis last year suggested the shift to active travel had stalled, with Khan’s target unlikely to reached until 2075, while a burgeoning “car-led” recovery from the pandemic is increasing the pressure on attempts to curb traffic volumes overall. More recent disputes over “low traffic neighbourhoods” plus a reluctance to push ahead with exploring new road user pricing schemes have also underscored the political as well as practical difficulties of balancing the needs, and demands, of different road users.
It all adds up to big choices facing whoever wins the 6 May election and further fraught negotiations with Whitehall, with the current temporary government bailout deal set to run out on 18 May 18 and balancing the books “as soon as possible” high on the agenda.
Turbulent times: transport in London since 2016
Transport, and transport policy, is, of course, inextricably bound up with demand, funding, performance and politics – and all of those have been in play since Sadiq Khan moved into City Hall. London’s population was forecast to grow to almost 11 million by 2041, generating some six million addition trips a day by that date.
It was a time of optimism: increasing passenger numbers were expected to see revenue increasing and TfL set itself a target of balancing the books on day-to-day spending by 2022/23, even as government grant dwindled and the Mayor pushed ahead with his pledge to freeze fares. But the city’s population was starting to grow more slowly – by just 0.6 per cent in 2019, the slowest rate of growth since 2004. Growth in ridership on the Tube was stalling too and bus ridership numbers were in steady decline.
A mix of factors were in play: wider economic impacts on disposable incomes; increasing congestion; reallocating road space reducing journey speeds and reliability; plus more working from home and more online shopping, all causing a decline in passenger numbers which, as Centre for London warned in late 2018, “could have a significant impact on Transport for London’s long-term revenues”.
The situation was compounded by the axing of government grant, agreed between Johnson and the then Chancellor George Osborne, which came into full effect in March 2018, reducing TfL revenues by some £700 million a year. Additional Business Rates retained by City Hall and put into TfL did not make up the difference. Those oft-quoted figures show the impact; TfL is now reliant on fares for 72 per cent of its income, compared to 38 per cent contribution from fares in New York, 38 per cent in Paris, 47 per cent in Madrid.
The same year also saw TfL hit by delays and cost overruns on the Crossrail scheme, which had been due to open in December. By late 2020, total costs, originally estimated at £15.4 billion, were expected to reach £19 billion, with the opening date pushed back to 2022.
The new rail route, linking Reading and Heathrow in the west to Shenfield and Abbey Wood in the east via 21 kilometres of new tunnelling under Central London, had been approved under Livingstone and started under Johnson, with the project jointly overseen by TfL and the government. But Khan was left to pick up the bill – £852 million in additional borrowing agreed at the end of last year, and, perhaps even more significantly, up to £1.3 billion in fares revenue foregone by 2024 because of the delays.
Capital spending was being squeezed too, as TfL began to run up against its borrowing limits under a 10-year agreement with government dating from 2007, with no new long-term deal on offer from Whitehall. By May 2019, TfL’s director of city planning, Alex Williams, was warning the London Assembly that the organisation, which had enjoyed sustained investment up to and after the 2012 Olympics, was “maxed out in terms of our borrowing”.
At 31 March 2020, TfL’s overall debt was at a record £11.7 billion, costing some £500,000 a year to service. The bulk of that debt, though, representing investment since 2004, was accrued before Khan moved to City Hall – £1.95 billion under Livingstone, and the majority, £7.2 billion, under Johnson. Again, TfL under Khan was largely paying for his predecessor’s spending, not his own.
Warning lights were beginning to flash. “Even before the [coronavirus] crisis TfL’s revenue base needed attention…TfL’s income was taking a hit, which had led to planned station and signalling upgrades being postponed,” reported Centre for London. High-profile upgrades to Camden Town station and new signalling on the Piccadilly Line were delayed.
TfL itself noted in its 2019/20 Annual Report that, pre-Covid, the organisation was “already facing” financial challenges “in relation to the loss of the operating grant from central Government, the impact of a subdued national economy, and the delay to the opening of the Elizabeth line”. TfL funding for proactive road maintenance on borough roads was effectively paused in 2018.
An “underlying softness in demand and passenger revenue, largely caused by economic uncertainty,” had been apparent since 2019, an early 2020 TfL financial update said, and an authoritative independent review commissioned by Khan confirmed a funding challenge, which,“even before the…pandemic”, was “forcing the deferral of some asset renewals and threatening TfL’s ability to achieve its future objectives”.
Nevertheless, under Khan, TfL continued to make progress towards covering its costs, eating away at the deficit inherited from Johnson, building up vital reserves, and forecasting a £1 billion operating surplus on the Tube by 2021/22 – cash which not only subsidises the bus network but also road maintenance, since virtually none of the £500 million Vehicle Excise Duty the government collects annually from Londoners is spent in the city (of which more below).
Finance chief Simon Kilonback reported in 2020 that “tight cost control and efficiency measures” had enabled TfL to reduce its “like-for-like” operating deficit from £1.5 billion in 2015/16 to a forecast £200 million in 2019/20. “Our net cost of operations in 2018/19 will be one third of what it was in 2015/16, if the operating grant is excluded,” he said. “This consistently strong performance shows we are on the right trajectory to deliver a surplus on net cost of operations by 2022/23.”
In March last year, Covid-19 changed all that: Tube journeys down 96 per cent, bus trips down 85 per cent, and revenues slashed by up to 90 per cent, leaving TfL dependent for its very survival on government support amounting now to some £3 billion. The pandemic laid bare the underlying weakness of TfL’s funding model, summed up starkly by Kilonback in the 2019/20 annual report as “not sustainable”, with Khan’s independent review quantifying projected funding gaps at “£0.5 billion to £1 billion a year from the mid-2020s onwards”, including day-to-day costs, renewals and investment.
And the crisis ignited debate about new ways to pay for the transport system which London, and arguably the country, needs to underpin the economic strength of the capital. For Khan, the focus is on retaining the £500 million Vehicle Excise Duty paid by Londoners, none of it spent in the capital, despite 90 per cent of trips by London car owners being made entirely within the city – and a quarter of London’s road journeys made by people living outside its boundaries.
In the heat of the election campaign though, it is his alternative proposal, for a daily charge on drivers entering London, which has generated most controversy, despite it being merely an option or bargaining counter at this stage. Meanwhile an alternative consensus is growing for a modern road user charging system, more sophisticated than the flat rate congestion charge, which could address the challenges of congestion, pollution and equity.
Khan’s record
In 2016, candidate Khan made a big promise to keeping travel in London affordable by freezing the public transport fares within his control throughout what was then expected to be the usual four-year term (other fares are regulated in accordance with government guidance), freeze cycle hire charges too and introducing the Hopper ticket, which City Hall claims has made more than 500,000 journeys cheaper.
He’s also maintained the the over-60s free travel Oyster card and concessions for young Londoners, winning a battle with government last year to keep them in place, albeit funded by a £15 hike in City Hall’s share of Council Tax. An early quick win was pulling the plug on Boris Johnson’s Garden Bridge scheme, after a damning review of the controversial project by Margaret Hodge.
The term has also seen the successful introduction of the world’s first Ultra Low Emission Zone (ULEZ), resulting in a 37 per cent reduction in nitrogen dioxide levels in its first 10 months of operation, with plans made to greatly expand the zone to the north and south circular roads in October this year.
Night Tube services were delivered too, having stalled under Johnson, and progress was made on protected cycle routes, under the stewardship of London’s first ever Walking and Cycling Commissioner, Will Norman.
There was another significant appointment too, with Andy Byford moving from New York to replace Mike Brown as Commissioner, a widely-welcomed vote of confidence in TfL from one of the leading public transport managers in the world.
Investment continued, albeit constrained by finances, on upgrading the Circle, District, Hammersmith & City and Metropolitan lines – some of the oldest Underground lines in the world – the Northern line extension into Nine Elms, the Overground extension to Barking Riverside, new Piccadilly Line trains and the Silvertown tunnel.
Some progress was made on electrifying the bus fleet and on lorry safety, with 20 mph limits introduced on TfL roads in Central London and new regulations on visibility standards for HGVs. Khan also met his target of installing 300 rapid charging points across the capital. Funding to complete Crossrail was finally secured at the end of last year, and the project brought under TfL’s direct control. This shields the government from blame for any further setbacks but is also a vote of confidence in Byford, who had lobbied hard to take over the scheme.
There were setbacks too, notably the blocking of what would have been Khan’s flagship project, Oxford Street pedestrianisation, by Westminster Council, and the failure to secure control over more suburban rail routes – accompanied by the leaking of a 2013 letter from Chris Grayling, later Transport Secretary, vowing to keep the services “out of the clutches of any future Labour mayor”.
Shoring up TfL’s finances in the short term, an achievement in itself, has also come at a cost, in delayed schemes including Piccadilly Line signalling upgrades and improvements to Camden Town tube, while a major 2019 shake-up of bus services in central London, cutting underused services, has been followed by slower progress in reallocating capacity to outer London.
Khan’s high-level strategy, to shift travel to sustainable modes, has had mixed results too, with private transport still constituting the single largest mode of travel in the capital and growth in cycling, according to TfL’s latest Travel in London report, appearing to have “stalled in more recent years”. The report shows cycling volumes declining 2.7 per cent between 2018 and 2019, with cycling making up 2.4 per cent of daily trips in 2019, compared to 2.2 per cent in 2015. Overall, it records “slower than expected progress towards the Mayor’s aim of an 80 per cent share for active…modes”.
Recent City Hall attempts to boost active travel, against the threat of a “car-led” recovery, have also proved controversial, despite polling showing majority support for initiatives such as low traffic neighbourhood schemes barring through traffic from residential areas. Khan’s Streetspace plan, funded by government, suffered a setback in January when traffic restrictions on Bishopsgate in the Square Mile were ruled unlawful in the High Court, and last month temporary cycle lanes on Kensington High Street were scrapped by Kensington and Chelsea council.
Looking forward
Londoners, six in 10 of them at least, tend to think City Hall rather than the government has most control over transport. And while this may underplay the constraints, particularly governmental, on the Mayor, it is also the case that Londoners have significantly more faith in Labour than in the Conservatives when it comes to custodianship of public transport.
Attempts, not least by the Prime Minister, to paint Khan as entirely responsible for TfL’s financial difficulties, therefore seem not to be cutting through as the election approaches, though Khan himself seems conscious of the argument, positioning himself in his manifesto as a safe pair of hands. “I’ve focused on improving TfL’s finances, making it more efficient and reducing expenditure on consultants,” he says. “As part of achieving long-term financial sustainability, I’ll ensure TfL continues to be lean and efficient…”
It’s a more understated and consensual approach than has been generally seen in the fraught negotiations to keep TfL alive over the past year. For Londoners, and all others who rely on transport round, to and from the city, the question now will be whether that is enough to secure the long-term settlements needed.
OnLondon.co.uk provides in-depth coverage of the UK capital’s politics, development and culture. It depends greatly on donations from readers. Give £5 a month or £50 a year and you will receive the On London Extra Thursday email, which rounds up London news, views and information from a wide range of sources, plus special offers and free access to events. Click here to donate directly or contact davehillonlondon@gmail.com for bank account details.