Future projects could be delayed if Transport for London (TfL) is forced to find more savings to cover its current £1bn deficit, a top TfL boss has admitted.
During a grilling from the London Assembly transport committee, TfL chief financial officer Simon Kilonback confirmed that some future schemes could be cancelled or delayed if the transport body needs to find more savings on top of the £400M in savings planned for this year.
For this financial year (2018/2019), TfL is facing a £1bn black hole in its budget as it transitions away from relying on government funding. It is confident it will return to the black in 2021/22 through a rigorous programme of cost savings.
Last year it was forced to find an extra £200M of savings after passenger revenue came in lower than forecast. The savings mostly came from cancelling back office projects such as IT upgrades, not recruiting new staff and putting controls on using consultancy services.
“Clearly when we have to come up with a legally balanced budget every year we will look at every means at our disposal to ensure we deliver a balanced budget,” Kilonback told Assembly member Caroline Pidgeon.
“We would concentrate in the first instance on investment that we have planned but not committed to as yet for the future, and will review those in the first instance if we need to find further savings.”
Kilonback also admitted he is only “a six or seven out of ten” sure of delivering TfL’s five-year business plan due to “economic unknowns”, although Kilonback added he is confident he will stick to TfL’s budget this year.
Recently the Independent Investment Programme Advisory Group (IIPAG) watchdog warned projects could be halted in the middle of construction due to financial pressures from low fare revenue.
Under scrutiny from the London Assembly transport committee, TfL director of customer experience Shashi Verma revealed December 2019 poses a crunch period for TfL’s finances if the Elizabeth Line does not open on time.
Speaking about the next opening deadline of December 2018, when services will start running from Paddington to Abbey Wood and Liverpool Street to Shenfield, Verma said: “If that income did not show up on the Elizabeth line, it would show up on the Underground. So the risk to income from a delay in the Elizabeth line is very small for the next phase.”
He added: “There is of course more of a risk if the Elizabeth line did not open all the way to Maidenhead and Reading, and through-running, in December 2019.”
The first three phases of the Elizabeth line will add “negligible” income for TfL, as passengers will mainly be made up of those who would use other lines. But the Elizabeth line’s full opening in December 2019 will generate an extra £300M of new income each year.
In January TfL deputy chair Val Shawcross warned a late Crossrail start is TfL’s “biggest revenue risk”.
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