Transport for London’s board members were in celebratory mood on Wednesday as the capital’s transit authority formally marked breaking even on its £6.7 billion annual running costs for the first time ever – just four years after its revenues collapsed catastrophically as the Covid pandemic struck the city.
Achieving an operating surplus of £138 million in March this year was a “remarkable turnaround” said finance chief Rachel McClean. It was a story of “improving financial health and improving financial performance through the year,” with ridership and revenues up across the network and running costs down £100 million on 2020/21, added finance officer Patrick Doig.
Passenger journeys overall were up by nine per cent on 2022/23 to a total of 3.6 billion, amounting to 88 per cent of pre-pandemic levels, the board heard, with particularly strong performances from the new “Superloop” outer London bus network and from the Elizabeth line, which had seen more than 350 million journeys since it opened. Income from fares was up 20 per cent, to £5.2 billion.
The proportion of Londoners using active ways to travel – walking, cycling or public transport – was also going up, from 62.3 per cent in 2022 to 64.2 per cent in 2023 against City Hall’s target of 80 per cent by 2041 following an inevitable pandemic dip.
There was good news as well from the credit rating agencies, TfL chiefs reported, with leading agency Moody’s this month upgrading TfL’s credit score, citing “significant improvements” in operating performance – a move which will reduce the network’s borrowing costs.
TfL’s new standalone housing development company Places for London, launched in 2023, was also on track to meet its challenging target of delivering 20,000 new homes on TfL land by 2031, the board heard. More than 4,300 homes had been built or started at the end of March 2024, with the company already providing a £15 million boost to TfL coffers.
And a drop in income from road user charges – down in 2023/24 to £948 million from £956 million in the previous year – was chalked up as a positive result of greater compliance with Ultra-Low Emission Zone and Congestion Charge rules. That has now been confirmed in a TfL report showing 96 per cent compliance with ULEZ standards and roadside pollution in outer London down by an average of 3.5 per cent.
Recent election results gave the board further cause for optimism, with TfL commissioner Andy Lord reporting an early meeting with government officials following Sadiq Khan’s meeting with new transport secretary Louise Haigh and “productive engagement” with Whitehall underway.
“We are making the case strongly that investing in London transport is not just about improving journey times. It is also about driving economic growth in London and elsewhere,” said Lord.
The success of the Elizabeth line highlighted the importance of investment in transport, the board heard. The new line had significantly boosted the capital’s post-pandemic recovery, directly supporting more than 100,000 additional homes and some 420,000 new jobs within three kilometres of the line, adding an estimated £42 billon to the UK economy. In addition, a £370 million contract for new trains had secured the immediate future of the Alstom train manufacturer in Derby.
With the Northern line extension to Battersea Power Station already supporting the delivery of 20,000 new homes and 25,000 new jobs, and thousands more dependent on currently unfunded schemes including the Bakerloo Line and Docklands Light Rail extensions and further “Metroisation” of suburban rail, the case for long-term funding was “even stronger on the positive impact on jobs and growth,” said McLean.
But it wasn’t uniformly good news, with McLean warning that the network still faces significant challenges. It remained hampered by the previous government’s short-term capital funding deal lasting only till next March and by Underground ridership in particular still lagging behind pre-pandemic levels despite recent improvements.
That slow recovery has meant that vital revenue from fares was already down since March on budget forecasts, with a combination of working from home, a sluggish economy, the continuing impact of the cost-of-living crisis and even slower than expected population growth in the capital all pushing ridership below initial estimates. “There is work to do to get ridership up,” said McLean. “The Elizabeth line is our saviour at the moment in terms of additional ridership,” added TfL’s chief strategy officer Alex Williams.
The message was that TfL may have turned the financial corner in impressive fashion but, like London as a whole, is not out of the woods yet as the “new normal” continues to evolve.
Much depends now on the stance of the new Labour government towards the capital, which remains a significant engine of the UK economy as a whole – with initial optimism following the Transport Secretary’s pledge last week after meeting Khan that “this government will work with our capital, not against it”. For TfL, for the city and for the country, there is a lot at stake.
Watch the TfL board meeting in full here. X/Twitter: Charles Wright and OnLondon. Support OnLondon.co.uk for just £5 a month or £50 a year and get things for your money too. Details here.