Investment in transport should be top priority for the capital – with time running out to take a radical look at Transport for London’s fare structures too, according to experts quizzed by the London Assembly’s budget and performance committee.
Economists and academics including Jagjit Chadha from the National Institute of Economic and Social Research, Tom Pope from the Institute for Government and LSE London director Tony Travers gave their views as committee members began their scrutiny of Sadiq Khan’s 2024/25 budget plans.
The Mayor’s gross annual revenue and capital budget tops around £19 billion in all, more than half of which goes on TfL. Continuing “epic” levels of economic uncertainty meant no easy options for City Hall as it planned next year’s spending, the experts agreed, with the transport network facing persistent challenges both on investment support from government and shortfalls in fare income.
The shift to working from home meant TfL could no longer continue to rely on early morning commuter cash, said Professor Travers (pictured). This meant other ways to boost passenger income were needed, reflecting new travel patterns, as well as new funding sources in the longer term. These could include Council Tax contributions, further congestion charges and devolved revenue-raising powers.
TfL and City Hall should also be probing the impact of hybrid working on productivity and looking to change fare systems to encourage workers to go to the office more often, said Professor Chadha. “London is a thriving world city,” he added. “Should it be so quiet on a Friday?”
Time was running out to make the changes needed, warned Pope. “The transport system is what makes London London,” he said. “The question is how we pay for it. We can wait one more year to see if we get back to pre-Covid levels, but not much more than that.” Adjusting Monday and Friday fares could provide important real time evidence of how changes might work, he said.
Chadha nevertheless struck an optimistic note. “We are living through some difficult times, and yet London is still a leader for the country and potentially a focal point for economic development,” he said. That meant not “wringing your hands and saying nothing can be done”, but acting on the constraints of growth, including transport.
That call was echoed by the capital’s business lobby group BusinessLDN, in a pitch to Chancellor Jeremy Hunt to use the upcoming Autumn Statement to bring forward “bold measures” to “improve the country’s economic performance and the capital’s competitiveness as a global city both now as well as in the longer-term”.
Those should include a commitment to transport investment and sustainable fares reform, the group said, citing recent research putting the value to the economy of TfL’s investment in its UK supply chain at £5.9 billion in gross value in 2022/23 alone, supporting more than 100,000 jobs nationwide supplying everything from engine and track components to station signage, escalator steps, zero emission buses and new trains for the Piccadilly Line.
“Transport is a critical enabler for the capital’s labour market and economy,” BusinessLDN said. “The Government must deliver clarity and certainty on long-term capital funding for TfL so that it can efficiently deliver the maintenance and upgrades that the network needs.”
TfL’s current funding deal with Whitehall runs out in March next year. The network has bid for £500 million in capital support for 2024/25, for projects including new Piccadilly line and DLR trains as well as for replacing the Bakerloo line fleet, which, at more than 50 years old, is the oldest operational train fleet in the UK. Investment plans also include new trams, Metropolitan and District line signalling upgrades and renewal work on the A40 Westway and the southbound Blackwall Tunnel, but new funding arrangements have yet to be secured.
Khan’s 2024/25 budget guidance, covering City Hall programmes, TfL, the Mayor’s Office for Policing and Crime, the fire service and mayoral development corporations, confirms that TfL fare income is still expected to be below 2019 levels next year. The guidance also suggests fares might rise by four per cent, and that a further £20 will be added to Council Tax bills to help fund TfL. The budget will be out for consultation in December and be finalised in February.
Watch the budget and performance committee meeting in full here. X/Twitter: Charles Wright and On London. If you value On London’s coverage of the capital, become a supporter or a paying subscriber to editor and publisher Dave Hill’s personal Substack for just £5 a month or £50 a year. In return you get a comprehensive weekly London newsletter and offers of free tickets to London events.