Beneath the headlines, who really funds London’s Cycle Hire scheme?

London Cycle Hire bikes . Photo: MayorWatch
Boris Bikes, Barclays Bikes and, perhaps pejoratively, Banker Bikes.

London’s cycle hire scheme has a variety of names based on the perception of where the funding comes from and who most benefits from the bikes.

The Mayor hugs the scheme tight, squeezing every last drop of personal credit he can from it while Transport for London’s publicity machine endlessly talks up Barclays and a sponsorship deal we mere Londoners aren’t allowed to know the details of.

But below the headlines, a lot of funding for the scheme is coming from London’s boroughs who are having to pay large sums to secure its expansion into their areas.

Next month the scheme expands eastwards, covering the entire borough of Tower Hamlets.

With sign-up numbers dropping throughout last year, the expansion is vital if more Londoners are to take part and the promises of a self-funding scheme are to be realised.

The costs of the eastwards expansion are being partly met through a £2m contribution by Tower Hamlets council.

But while TfL’s latest press release mentions Barclays 19 times, Tower Hamlets council and their £2m aren’t mentioned at all.

Those frustrated at the lack of transparency surrounding TfL’s sponsorship agreement with Barclays should note that even councillors in Tower Hamlets apparently had to make do with an approximate cost – £40m – for the entire expansion.

If accurate, the cost of the eastwards expansion accounts for four-fifths of the maximum £50m payable under the sponsorship agreement, yet Barclays continues to benefit from a generous level of promotion by TfL.

Where in these austere times does a local council find such large sums to contribute to a Mayoral scheme?

Papers submitted to the Tower Hamlets cabinet in January 2011 show that the £2m contribution was to be assembled by taking funds from several external sources.

Under Section 106 of the Town and Country Planning Act 1990, planning authorities, including boroughs, can require developers to make a contribution towards local services and amenities.

According to the January 2011 document, Tower Hamlets opted to use Section 106 contributions collected for local cycling and public realm improvements to fund the cycle hire expansion.

In addition to the money from developers, Tower Hamlets also proposed handing TfL money from two pots of public cash.

Some of that money originated within TfL which gives boroughs money under the Local Implementation Plan scheme.

The LIPs money is normally spent on defined local schemes, and as of the most recent publicly available guidance, TfL must sign off on any changes to its use.

In the current financial year Tower Hamlets allocated £500,000 of their LIPs funding for the Cycle Hire scheme. The briefing note states that “No other cycling schemes to be funded from this source in 2011/12.”

So money originally allocated by TfL for local projects was to be handed back to help prop up a scheme outside the borough’s control.

The papers also suggest TfL have been the recipients of £250,000 provided to the borough by the Department for Communities and Local Government for High Street improvements.

Last year the Mayor asked TfL ”to prepare plans for a westward expansion of the scheme through the boroughs of Wandsworth, Hammersmith & Fulham, Lambeth and Kensington & Chelsea.”

The press release shouted about the extended Barclays sponsorship and money from Westfield London Shopping Centre, but where else is the money for this westwards expansion coming from?

As with the eastwards extension, the boroughs are being told to dig deep if they want the bikes the Mayor has already promised Londoners.

In September Councillors in Wandsworth were told the extension was “conditional on the Council making a financial contribution of £2 million.”

On Friday Wandsworth confirmed that £200,000 collected from developers Ballymore via a S106 agreement would go towards bringing the hire scheme to the borough, just one of many envisaged contributions to be raised from local developments.

The fact that boroughs contribute to the cycle hire scheme isn’t some hitherto undiscovered secret, but it’s also not a widely known fact thanks in part to TfL’s publicity machine.

Press releases and publicity are focussed on achieving the maximum publicity for the Mayor and TfL’s preferred financial backer to the near exclusion of all others.

But while Londoners are encouraged to be thankful to a headline corporate sponsor, it’s their local councillors, employers and developers who are funding much of the scheme’s growth.


Update: A spokesperson for Tower Hamlets council has confirmed to me that the January 2011 papers is “the most up to date breakdown of the agreement the council has entered in to” with TfL but stresses “payment is over a three year period.”

Comments

  1. Stop City Airport (@StopCityAirport) says

    Transport for London awarded the £50 million contract to Serco in October pushing the cost up to £190 million. http://www.serco.com/media/pressreleases/2011/cyclehireexpanded.asp
    TFL on the other hand choose not to press release or mention this. In fact they have stopped publishing financial expenditure on the 15th of October just a few days before this contract was awarded.
    http://www.tfl.gov.uk/corporate/about-tfl/investorrelations/17950.aspx