Transport for London has been urged to publish the cost of freezing fares beyond 2020 to ensure Londoners and candidates at the next Mayoral election understand the impact of any freeze on the agency’s ability to deliver services and develop new projects.
The call is one of several recommendations made in a new London Assembly report into TfL‘s finances.
The agency is currently running a £1 billion deficit and has had to cut back spending in a number of key areas following the axing of its central government grants.
Its finances have also been squeezed by Mayor Sadiq Khan’s manifesto pledge to freeze fares throughout the current mayoral term, a policy which TfL estimates will cost around £640 million in lost revenue by the time voters go to the polls in 2020.
In addition to the impact of the fares freeze, fares income on several TfL transport modes is currently falling below budget assumptions, prompting fears from some Assembly Members that the agency is being too optimistic in its modelling.
TfL has also suffered a further blow from the delayed opening of Crossrail which will cost it around £20m in fares revenue in the current year and £10m in commercial revenue, although Mr Khan last week told the Assembly that both reductions could be “accommodated” within current budget plans.
Against this backdrop, Assembly Members have called for TfL to explore new forms of advertising on its network and urged the Government to work with City Hall and TfL to devolve Vehicle Excise Duty revenue to London.
In recent years TfL has worked to slash overheads, including by reducing the number of managers, but AMs say “it is still too difficult” to see exactly what progress has been made or where claimed savings have actually been delivered.
To help ensure greater clarity, today’s report challenges TfL to routinely publish updates setting out “what savings and efficiencies it has made in each business area, what further reductions are planned, and the impact on services.”
Gareth Bacon AM, Chairman of the Budget and Performance Committee, said: “TfL clearly has some way to go to become a financially sustainable public body.
“The first-term partial fares freeze will end up costing TfL at least £640 million; a second-term freeze could be substantially more, and it is simply not sustainable if TfL is to claw its way out of a perilous financial situation.
“Freezing fares is a political decision that the Mayor can take but Londoners deserves to know exactly how much it will cost.
“The public rightly demand value for money and good transport services but the organisation running most of the services in London cannot be left out in the cold through unsustainable policies.”
In response to the Committee’s report, TfL said it had already delivered “more than £500m per annum in savings” and was working hard to maximise commercial revenue to allow it to maintain investment “while dealing with the difficult challenges of the withdrawal of £700m per annum in Government operating grant and a subdued economy that has resulted in lower revenues.”
A spokesperson added: “Passenger income this financial year is in line with budget, with income and ridership on London Underground currently ahead of budget, partly offset by lower demand for buses.
“Customers have also benefited from a four-year fares freeze on TfL services, which has helped sustain demand.
“Our five-year Business Plan to be published by the end of the year will describe how we will manage the financial impact of the delay to the Elizabeth line while continuing to improve transport for everyone in London.”