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Transport for London spared from major cuts

Transport for London (TfL) has survived the Comprehensive Spending Review with less than an 8% cut in planned capital spending, but road spending has been badly hit.

London mayor Boris Johnson has secured vital London transport investment with Crossrail to go ahead with full scope and Tube upgrades safe. The Western Extension of the Congestion Charging Zone will be scrapped, as planned, and all concessionary fares remain.

But Transport for London will seek to make £300M in savings by cutting funding for road maintenance and investment, the electric vehicles programme, small scale local projects and walking and road safety campaigns.

The ruling marks a massive victory for Johnson, who had argued hard for London to be treated as a special case due to its position as Britain’s economic hub.

Approximately one-third of TfL’s funding comes from a direct grant from the Department for Transport (DfT). Following the government’s Comprehensive Spending Review, TfL’s overall grant funding from the DfT has been reduced by £2.17bn in total over the four years covered by the review, or 21% in real terms in 2014/15, when compared to the base year of 2010/11.

However, the overall DfT grant is just one element of TfL’s funding, which also includes fares, borrowing and other sources of revenue, such as advertising and commercial partnerships.

By 2014/15, this means the cut represents less than 8% of TfL’s planned expenditure on capital investment, excluding Crossrail and frontline services.

The reduction in DfT grant funding to TfL will partly be covered by increased ridership on the Tube, bus and rail network, which has bounced back more strongly than originally assumed this year. This stronger fare revenue, combined with efficiencies already been identified and being implemented means that TfL’s business plan will be boosted by additional £800M over the period. This accounts for well over a third of the reduction in its DfT funding.

But Johnson said there were still some “tough choices” in order to further cut costs or raise revenue.

TfL has already outlined a programme of savings and efficiencies of over £5bn over the course of its current business plan period. But further measures will be taken to deliver savings and efficiencies, which will enable TfL to maintain investment in infrastructure and frontline services. They include a full review of TfL’s structure, the switch to a phased approach to Crossrail, and the descoping of cosmetic improvements to Tube stations.

This descoping, along with the deferral of non-essential civil works and the maximising of synergies between the planned Piccadilly and sub-surface lines upgrades will save £300M.

More will be saved by cutting road maintenance spend and investment on the TfL road network. Funding for Johnson’s electric vehicles programme will also be cut, as will the funding provided to boroughs for small scale projects. Walking and road safety campaigns will be scaled back. These measures will save £300M.

Cash will be raised by introducing charges for parking on the Transport for London Road Network, currently generally free. The congestion charge will also increase to £10, or £9 if paid through the new CC Auto Pay.

TfL commissioner Peter Hendy said it had been a tough process, “but one from which we have emerged with our key projects to improve reliability and capacity secured and frontline services protected”.

“However, there are further challenges and tough choices ahead, and in many respects the hard work for TfL starts now. We now need to continue to deliver the transport improvements Londoners need, while driving the best possible value for money for farepayers and tax payers. We have an enormous and exciting programme ahead of us and we will work tirelessly to ensure we deliver, on time and on budget, and that every penny is well spent,” he said.

London mayor Boris Johnson said it was the culmination of months of hard negotiations with the Government. “I am pleased that they have recognised the immense importance of protecting investment in the capital. London is the engine of the UK’s economy and it would be fiscal suicide to have starved it of fuel,” he said.

“This remains a difficult settlement but I am glad the Government has recognised my administration in London has been two years ahead of the rest of the country in identifying and making savings, with well over £5bn identified at Transport for London alone. Tough decisions have already been taken in the capital and more must be made; but we will continue to share the pain of the nation as we work with the Government to help put Britain’s finances back in order.

“However I am particularly pleased that we have secured the future of Crossrail, upgrade work on the Tube and the protection of our bus services. Without them we would have risked the long term economic prosperity of not just the capital, but the whole of the UK.”

As a result of the settlement all of TfL’s London 2012 Games transport commitments will be delivered.

TfL will publish a revised business plan in spring next year.

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