Exclusive: TfL reveals how much Barclays has paid for Cycle Hire scheme

TfL had previously refused to say how much Barclays had paid. Image: MayorWatch
TfL had previously refused to say how much Barclays had paid. Image: MayorWatch
Barclays Bank has so far paid £13.43m out of its promised £50m sponsorship of the London Cycle Hire scheme.

The figure was released to MayorWatch by Transport for London following a series of Freedom of Information requests.

Earlier this year TfL refused to provide the same information, insisting that to do so “would adversely affect TfL’s bargaining power when negotiating other sponsorship opportunities.”

Despite this, TfL later provided the same information relating to Emirates’ sponsorship of the Cable Car.

Figures previously released show the Cycle Hire scheme is set to cost taxpayers £225m by 2015/16, almost 5 times the maximum due from Barclays.

Under its sponsorship deal with TfL, the bank will pay “up to” £50m by 2018.

As of March 2012 the scheme had cost more than £119m, £106m more than Barclays had paid “up to the end of Financial Year 2012.”

The scheme’s set-up and operating costs have caused a black hole in TfL’s finances, with the body recently admitting it has no idea when it will break even.

In a bid to stem losses and make the scheme “financially sustainable”, the Mayor has doubled membership fees, a move he says will generate an additional £6m of revenue annually.

TfL has also been looking to London’s boroughs to finance some of the shortfall between the headline sponsorship sum and the scheme’s actual costs.

Councils have been told expansion into their boroughs is “conditional” on them providing £2m each while also facing Government calls to slash funding.

Despite their status as co-funders, TfL has proven reluctant to publicly credit Boroughs for their contributions.

It has refused to answer FOI enquiries on the matter, claiming to do so: “would adversely affect TfL’s ability to secure the contributions towards the cost of the expansion of the Scheme which we are seeking from the Boroughs, or other landowners, and therefore would be likely to prejudice TfL’s commercial interests, by increasing the proportion of costs which would have to be met from TfL’s own resources.

“Disclosure would weaken TfL’s position in current and future negotiations with the Boroughs, and other landowners, by revealing the contribution we are prepared to consider accepting in each negotiation.”

Although TfL has not provided the amounts due from Barclays on future dates, it previously told this site: “Invoices are sent to Barclays every 6 months in February/March and August/September time, and payment is due within 20 days of the invoice date. To date, all payments have been made on time.”

In its latest response TfL says the bank paid £13.43 million “up to the end of Financial Year 2012″.

TfL’s CHANGING POSITION

15th August 2012:
Thank you for your email received by Transport for London (TfL) on 8 June 2012 asking for information about the Barclays Cycle Hire scheme.

Your request has been considered under the requirements of the Freedom of Information Act 2000 and TfL’s information access policy. I apologise for the delay in replying. I can confirm that TfL does hold the information you require. You asked for:

1. The total sum received so far from Barclays for sponsorship of the cycle hire scheme.

TfL is not obliged to supply this information as it is subject to a statutory exemption to the right of access to information under section 43(2), which relates to Commercial Interests.

In this instance the exemption has been applied as disclosure of the information you have requested would be likely to prejudice the commercial interests of Barclays and TfL. Disclosing the precise terms of payment would be detrimental to future tenders for the Cycle Hire scheme sponsorship, and would make it more difficult for TfL to maximise the value of other sponsorship opportunities. Both TfL and Barclays have multiple sponsorship agreements, and TfL will in future be tendering for further sponsorship contracts for Cycle Hire and other business units. Disclosure of the exact payment profiles in any agreement would hinder the ability of TfL to secure best value for any future tenders, and would lead to a clustering of bids around the published parameters’

The use of this exemption is subject to an assessment of the public interest in relation to the disclosure of the information concerned. TfL recognises the need for openness and transparency by public authorities, and the particular public interest there is in TfL’s sponsorship arrangements and the agreement with Barclays, but in this instance as disclosure of this information would be likely to affect TfL’s bargaining power with present or future sponsors and therefore hinder its ability to obtain best value it is considered that the public interest favours the use of the exemption.

19th December 2012:
Thank you for your email received by Transport for London (TfL) on 15 November 2012 asking for information about payments made regarding the Barclays Cycle Hire scheme.

Your request has been considered in accordance with the requirements of the Freedom of Information Act and TfL’s information access policy. I apologise for the delay in replying. I can confirm TfL does hold the information you require. You asked for:

The sums paid by Barclays for their sponsorship of the Cycle Hire scheme.

The amount paid by Barclays to TfL up to the end of Financial Year 2012 has been £13.43 million.

The overall value of the sponsorship agreement is worth up to £50 million pounds over the term of the eight year agreement.

Barclays Cycle Hire has proved tremendously popular with Londoners, who have made more than 18m journeys on the iconic blue bikes since it was launched just over two years ago. Londoners have taken to heart a scheme that is not only fun and easy to use, but also excellent value for money.

If this is not the information you are looking for, or if you are unable to access it for some reason, please do not hesitate to contact me.

Comments

  1. Cait Hurley says

    Can we find any of Mayor Johnson’s quotes where he ao helpfully explained that the system would cosg the tax payer next to / nothing?

  2. Jay Adams says

    Hi Martin .

    What an excellent result…thanks for following up and sharing the information.

    I have a question, Freedom of Information Act, can any Gov. department be asked similar questions?

    Also, did you have to pay any fees to recieve the info?

    thanks

  3. EdH says

    Your article mentions expenditure and income from Barclay’s sponsorship, but doesn’t detail how much revenue has been raised from the bike users; from hire fees, membership fees, fines. etc. Do you have this information? It would be good to see a proper balance sheet before making a judgement.

  4. Martin Hoscik says

    Hi EdH

    “how much revenue has been raised from the bike users; from hire fees, membership fees, fines. etc.”

    The scheme is loss-making, next month’s fee hike will see users pay an estimated additional £6m per year.

  5. EdH says

    Hi Martin – thanks for the reply!

    I’m sure it is loss making, I just wondered by how much. A lot of people would expect and accept it to be loss making, it’s just a question of how much.

  6. Paul says

    hi, We understand a similar process is going on with the expansion of CSH programme. It would be interesting to find out whether any of the surprising decisions for the csh not to extend into certain boroughs are due to the borough not coughing a contribution. In many cases the contribution for BCH and CSH is coming out of the LIP budgett and impacting on other services funded through that stream.

  7. Martin Hoscik says

    Hi Paul

    Indeed, we’ve previously reported that some boroughs are using LIPs money and Section 106 contributions to fund their £2m. Now that the Barclays contribution is known we’ll be returning to the issue of the Borough funding and have already made a number of enquiries. Watch this space…

  8. Richard Risemberg says

    Um…roads don’t make a profit, and are a burden on taxpayers. Likewise police and fire protection, armed forces, et al. All supported by general taxes, including private driving in almost every country. _(Perhaps not so much in Holland). There has been no “road tax”‘ in UK since 1937. Why all this focus on requiring bikeshare to be profitable? It is a public service that reduces public health and roadbuilding/repair costs and boosts retail sales; a value-capture analysis would likely show that it is more “profitable” than building endless multibillion-pound projects for private driving.

  9. Martin Hoscik says

    Hi Richard

    No requirement that it make a profit, TfL however are seeking a happy day when it breaks even.

    Remember, the scheme was initially promised to be provided at no cost to the taxpayer. Instead it’s costing the taxpayer £225m while Barclays receive huge PR off the back of a pretty small contribution.

    That’s what the article and the pursuit of these figures has been about.

  10. Mrs P says

    Hi. Interesting article.

    I guess Barclays or any other sponsor would only pay the going rate for advertising of this nature. “Huge PR off the back of a pretty small contribution” is quite a sweeping statement without giving any comparables. What does £50 million over 8 years buy in terms of advertising normally? How do we judge whether the Barclays deal is good or bad?

    Apparently they pay £27m per year (£82m over 3 years) for sponsorship of the Premier League which has a global reach. Suddenly £6.25m a year for sponsorship of a few thousand pushbikes (approx 8,300) in the centre of a single city in the UK looks pretty expensive in comparison…

    As for the point about taxpayer subsidy, I agree with Richard above. Ignoring whether the scheme could have been installed (or, thereafter, operated) more cheaply, the obvious alternatives are that users cover the whole cost (which opens another question about the effect on demand of increased prices), for additional sponsors to come on board (would the main sponsor still pay £50m for non-exclusive sponsorship?) or for the scheme to be scrapped.

    One final point (just to be pedantic!) – it is not costing the taxpayer £225m. It is costing £225m, less sponsorship income, less revenue costs. In any event, as with all new infrastructure projects, the returns should be measured over a longer period than the first few years. Every additional year brings down the average annual cost substantially. That’s why PFI projects tend to be for 25 years.

    .