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TfL to save £1.2bn through value engineering

Tube

Value engineering efficiencies up to £1.2bn will be delivered by Transport for London (TfL) in a bid to counter the disappearance of government funding for the transport body.

In a draft updated business plan for 2018/19 to 2022/23, TfL commissioner Mike Brown set out plans to save £1.2bn through value engineering measures on its capital investment programme. In 2016 TfL began its five-year cost reduction programme to compensate for losing its £700M per year government grant.

TfL is on track to beat its savings forecast for this year by £138M; it says it can go further over the remaining years of the cost-cutting plan through measures such as getting better value out of its supply chain.

Around £200M will be saved through bringing a 14-year private partnership maintenance contract with Amey in house by the end of this year. Amey had been managing maintneance across the Jubilee, Northern and Picadilly lines, which was a legacy of the public-private partnership (PPP) contract between the Tube lines and London Underground.

Major project updates are included in the 104-page draft, which confirms the Elizabeth line is on track to open fully in 2019. The four lines modernisation plan is set to finish within the five-year period, increasing capacity on the District, Circle, Hammersmith & City and Metropolitan lines by 33%.

Tunnelling on the Northern line extension finished earlier this month and the additional line from Kennington to Battersea Power Station is set to open in 2020.

Plans for Crossrail 2 and the Bakerloo line extension are ongoing, although no concrete information on funding was listed for either scheme. Mayor of London Sadiq Khan used the business plan to urge the government to push ahead with Crossrail 2.

“The Government must make a positive decision quickly on the funding proposals I have put forward for the scheme (including for how London will meet 50% of the costs during construction), to allow TfL to press ahead with preparing a Hybrid Bill for submission to Parliament in 2020,” he said.

Roads funding will be scrutinised over the next five years as the current cost of roughly £450M for operations and renewals of the capital’s roads is being cross-subsidised by public transport users.

“From next year we have to, for the first time, address the critical issues of London’s road network, including congestion, road danger, maintenance and air quality, without any Government operating grant,” says TfL in the report.

“Despite our progress, our current income sources do not cover the cost of operating, maintaining and renewing the road network, which includes major structural restoration to bridges and tunnels. It is essential we find a long-term source for funding roads.”

From 2021 around £500M paid by Londoners in Vehicle Excise Duty (VED) will be spent on roads outside the capital. Along with mayor of London Sadiq Khan, TfL is calling on the government to make sure the link between roads funding and VED also applies to London.

As of 2018/19, TfL will become one of the only major world cities to operate without government subsidies. The plan is expected to go before the TfL finance committee for approval next week.

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