Transport for London (TfL) is being urged to work out how much of a financial hit a second fares freeze would make amid “unprecedented” financial pressures.
The London Assembly Budget and Performance Committee has today released its report into TfL’s finances.
The report warns: “TfL’s current plans for beyond 2020 are based on fares going back up again. Whether or not to freeze fares is a political choice, but one that needs to be made with the full information at hand. This Committee was surprised to hear that TfL has not even modelled a second fares freeze yet and we call for this to be done as soon as possible.”
The report says TfL is running a deficit of £1bn for 2018/19 and the Mayor of London’s current fare freeze will cost it £640M over four years. It also says that loss of Crossrail revenue from the delayed opening are compounding its problems.
Committee chairman Gareth Bacon AM said: “TfL clearly has some way to go to become a financially sustainable public body. The first-term partial fares freeze will end up costing TfL at least £640M; a second-term freeze could be substantially more, and it is simply not sustainable if TfL is to claw its way out of a perilous financial situation.
“Freezing fares is a political decision that the Mayor can take but Londoners deserves to know exactly how much it will cost.
“The public rightly demand value for money and good transport services but the organisation running most of the services in London cannot be left out in the cold through unsustainable policies.
“TfL needs to have a period of calm in which they make sensible, sure-footed and long sighted financial decisions as part of a concrete plan to get out of the financial doldrums it has found itself in.”
The committee is calling on the government to make plans to devolve Vehicle Excise Duty revenue to London. It also says TfL should look into new forms of advertising to raise cash.
A Transport for London (TfL) spokesperson said in response: “As the Committee notes, we continue to grip operating costs with more than £500M per annum in savings so far and raising more revenue through our property, advertising and other commercial assets. This strong track record of cost reduction and broadening revenue streams is enabling us to work towards an operating surplus while dealing with the difficult challenges of the withdrawal of £700M per annum in government operating grant and a subdued economy that has resulted in lower revenues.
“We particularly welcome the gommittee’s call to government for a sustainable way in which to fund the maintenance of London’s road network, support for developing our advertising and property strategies and their recognition that London must maintain its world-class transport network through steady and sustained investment.
“Passenger income this financial year is in line with budget, with income and ridership on London Underground currently ahead of budget, partly offset by lower demand for buses. Customers have also benefited from a four-year fares freeze on TfL services, which has helped sustain demand. Our five-year Business Plan to be published by the end of the year will describe how we will manage the financial impact of the delay to the Elizabeth line while continuing to improve transport for everyone in London.”
Pictured is the lowering of the tunnel boring machine for the Northern Line extension.
Like what you’ve read? To receive New Civil Engineer’s daily and weekly newsletters click here.