The London Assembly’s budget and performance committee has today claimed London mayor Boris Johnson faces a £1.7bn hole in his transport budget due to falling fare revenue.
Fewer people will use public transport due to the recession, hitting the fare box. Revenue is expected to drop by between £3.2bn and £3.5bn. This will be partially offset by the lower inflation costs of the capital construction programme during the recession, making saving of between £1.8bn and £2.8bn, they say.
Their research concludes that Transport for London (TfL) faces a funding gap from between £400M and £1.7bn by 2018, with a £112M shortfall this year.
The London Assembly Budget and Performance Committee chairman John Biggs said: “Depending on the length and severity of the recession, the next few years will be very challenging for the Mayor and Transport for London. Finding ways to plug the gap that do not impact on services or place a large financial burden on fare payers will be difficult.
“The Mayor is not required to consult with Londoners about the fares, but we feel it is essential that he does so. Londoners need to know what the options are, especially since they will have to bear the burden of any increase.”
According to the RMT union, the £1.7bn figure is just the tip of the iceberg, and the state of London’s transport finances are far worse. “This £1.7bn cuts bombshell takes the total black hole facing transport in London to over £6bn. In the run up to the Olympics, it puts the entire future of services across the capital on the line,” said RMT general secretary Bob Crow.
“RMT have warned repeatedly that the threat to jobs is part of a wider package of savage cuts to the transport budget in London which can all be traced back to the failure of privatisation. These figures prove that point conclusively. The modernisation of the tube is under serious threat and the ability to deliver in time for 2012 is left in serious doubt.
“The solution is simple. Bring Tube Lines back under public control and draw a line under the privatisation disaster and then demand government investment to protect London’s transport services. If the government can find billions to bail out the banks then they can find the cash needed for world-class transport services. The alternative is real cuts in jobs and services and transport chaos,” he said.
However, the Mayor’s office and TfL have contested the London Assembly figures, saying the £112M shortfall this year has already been accounted for.
TfL’s managing girector finance Steve Allen said: “The £112M ‘shortfall’ referred to in this report has already been dealt with through our balanced 2009/10 Budget, published earlier this year. Therefore, we do not recognise the Assembly’s range of numbers.
“Clearly TfL is not immune from changing economic conditions and, among other things, we continue to seek further savings and efficiencies over and above the £2.4bn we are already delivering. However, lower RPI means that we also benefit from some lower costs.
“We will continue to closely monitor the economic outlook and will revise our longer-term Business Plan in the autumn, as we do each year,” he said.
The Mayor of London’s Transport advisor, Kulveer Ranger, said: “Every organisation has to deal with changing economic conditions. But it is unrealistic to predict that the economic climate will remain stationary until 2018.
“Therefore it is inappropriate to propose options based on that assumption. Every year the Mayor carefully reviews all of the relevant factors before deciding on a fair and affordable fares structure.”