High Street bank Santander has been confirmed as the new sponsor of London’s cycle hire scheme.
The £225m scheme launched in 2010 and has around 165,000 registered users – down from 185,602 in July 2013.
In December hire fees were simplified and a new flat fee of £2 per 30 minutes introduced in a bid to drive up usage. Transport for London said the previous regime of differing charges the longer a bike was hired had “led to complaints.”
Spanish-owned Santander, which built up its UK presence through the purchase of Abbey National and Alliance and Leicester, will replace rivals Barclays who announced in 2013 that it would end its association with the scheme this summer.
Barclays originally signed a five-year deal giving it exclusive naming rights until 2015 in return for a contribution of £25m toward’s the scheme’s construction and operational costs.
It later emerged that Barclays was able to deduct money whenever ridership numbers and other performance measures fell below specified targets, letting the bank clawback more than £2m of the sponsorship sum.
TfL later announced the deal had been extended until 2018 and repeatedly told Londoners that it was now worth £50m but, in December 2013, it emerged no contract had been signed and Barclays withdrew from negotiations.
That move left TfL “out of pocket” on the deal as it meant no sponsorship money was received towards the hire scheme’s expansion into South West London.
Regulatory investigations into the Barclays’ commercial activities provoked calls for it to be dropped as sponsor, forcing City Hall and TfL to repeatedly defend their association with the bank.
TfL’s three-year refusal to publish the Barclays contract and payment profile eventually lead to a London Assembly report highlighting transparency failings across the Mayor’s agencies.
As a result, TfL eventually agreed to proactively publish future contracts, including today’s deal with Santander which it will hope will prove less controversial.
The bank, which will pay £43.75m over seven years, beat competition from a number of brands in a bidding process which required potential sponsors to match cash offers with promises to support the scheme’s growth and engage with users.
TfL will receive £6.25m a year in each of the seven years plus a £1m per annum ‘activation fund’ to promote Santander Cycles and reach new customers through rewards, offers and incentives. Unlike the Barclays deal, Santander is unable to break the contract early or reduce the sums payable.
Bikes carrying the Santander name will begin rolling out from today and it’s expected the entire 11,500 fleet will have been rebranded by the end of April.
Announcing the deal, Mayor Boris Johnson, said: “As everyone knows, London buses, phone kiosks and post boxes are red. In Santander Cycles, we have a new red icon symbolising the Capital to Londoners, and the world. Santander’s marketing expertise will help us take the Cycle Hire scheme to a new level, and I am thrilled to welcome them.
“With my Cycling Vision about to bear fruit in new Superhighways, Quietway cycle routes and better junctions, there will be more opportunities than ever for Santander Cycles. It couldn’t be a better time to get involved in cycling.”
The deal was brokered by Transport for London’s Commercial directorate which is driving the agency’s ambitious plans to raise greater amounts of revenue from non-fare sources.
Graeme Craig, Director of Commercial Development, said: “We are really excited that our new partnership with Santander will help us build on the success of London’s iconic Cycle Hire scheme.
“It represents great value for customers, who will see improvements over the coming years including more bikes, more docking stations and new ways to access the cycles. Londoners and visitors to the Capital will see our iconic bikes change from blue to red over the next few months as they cycle around the city.”
Nathan Bostock, CEO of Santander UK, said: “The Santander Cycles scheme is a great example of our commitment to supporting the communities in which we operate across the UK. We are committed to making the experience of using Santander Cycles as simple, personal and fair as possible.
“It is why we will launch a world-first app to enable users to engage with the scheme from the palm of their hand; offer a more rewarding experience with cash back on every journey for customers of our 1|2|3 Credit Card; and why we will be looking to have Cycle Champions in all of Santander’s London branches to help users make the most of the scheme and their city.”
Opposition London Assembly members welcomed news of the deal, which is worth 45 per cent more than the Barclays contact.
Caroline Pidgeon AM, Liberal Democrat transport spokesperson, said: “The bike hire scheme is a brilliant development but from day one it has been hindered by a poor sponsorship contract.
“Today’s new sponsorship deal does look like a real improvement on the rotten deal struck with Barclays.
“I especially welcome the commitment to grow and develop the scheme.”
Labour’s Val Shawcross commented: “Whilst money is important this deal shouldn’t just be about the bottom line, it should be about finding a partner who will take an active role in promoting and championing cycling in London. I very much hope that is the case with Santander.
“When combined with the improvements to cycling infrastructure we have been long promised, this partnership has the potential to mark a new start for cycling in the capital making it that much easier for Londoners to get on their bike.”
City Hall’s Green group were more cautious, welcoming the extra money but said there “are genuine concerns over some of Santander’s international activities and its suitability as a sponsor.”
Darren Johnson AM added: “The Mayor should be using the extra money to review the whole way that cycle hire works. There are still complaints about over charging and the lack of compatibility with Oyster or waive and pay.
“The biggest complaint is over cycle hire missing out large chunks of inner London. The Mayor needs to look at expanding the scheme further northwards and to address the big gap in coverage south of the river.”
John Biggs AM, Chair of the Assembly’s Budget and Performance Committee, said: “This is a very welcome announcement, and I’m sure that the red cycle hire bikes will become as iconic as London’s red buses and postboxes.
“We all want to see this deal succeed, but for this to happen we have to learn the lessons from the previous scheme. A recent Budget and Performance Committee report highlighted where improvements needed to be made.
“The scheme needs a committed sponsor that really wants to help TfL to grow the scheme and get more people on their bikes – but the devil is in the detail. We’ll now look closely at the contract to ensure this deal is in the best interests of taxpayers.
“The bikes may be red but the detail mustn’t be taken as read – this is the biggest public sector sponsorship scheme in the world and Londoners deserve transparency.”