Mayor Sadiq Khan has ordered his own “independent” review of Transport for London’s finances which will run parallel to the one being conducted as a condition of the £1.6bn emergency funding package provided by the government.
City Hall says the review “will develop options for TfL’s long-term future funding” to ensure it can “deliver the right services for London, invest in new and existing infrastructure and continue to contribute to London’s development and sustainability.”
The review will be conducted by a panel comprising of: TC Chew, Global Rail Business leader at Arup; Stephen Glaister CBE, Emeritus Professor of Transport and Infrastructure at Imperial College London, a member of the Board of TfL 2000 to 2008 and member of the 2019 Oakervee Review of HS2; Bridget Rosewell CBE, Chair of Atom Bank and of the M6 Toll company and a Commissioner for the National Infrastructure Commission and Sir Jonathan Taylor, Vice President of the European Investment Bank from 2013 until 2019.
The panel’s work will be unpaid.
Fares are the largest source of TfL’s financing, accounting for almost half of the agency’s entire income, and travel restrictions and changes of behaviour arising from the coronavirus pandemic has led to a significant shortfall.
In May ministers and the Mayor agreed a £1.6bn bailout to help TfL keep services running in the short term, although further help is likely to be needed.
As a condition of the money, Mr Khan agreed that fares would rise across all TfL services, the congestion charge would be re-introduced, free travel for students would be suspended and concessionary travel passes for older people would no longer be accepted during morning peak hours.
Both City Hall and TfL insist the agency had “achieved significant progress” in reducing its operating deficit prior to the pandemic and that the agency was on a strong financial footing despite a 2015 decision to end a government operating grant with effect from 2018.
However the London Assembly has long questioned the agency’s financial position, and in 2017 published a report suggesting the Mayor’s decision to freeze fares meant the agency was unable to invest in a series of vital upgrades across the network.
TfL’s finances have also been hit by lost fares and commercial income arising from the delayed opening of Crossrail.
Announcing the review, Mr Khan said: “London’s public transport network is central to life in our city and will be essential to our recovery.
“Despite TfL’s strong financial position going into this pandemic, Coronavirus has had a devastating effect on TfL’s finances, which rely on fare income.
“Despite the huge strides made in reducing TfL’s operating deficit over the past few years it is clearer than ever that the current funding structure is not fit for purpose.
“It is vital that we find a new solution to support not only London but the wider economy, so I am really pleased that an independent panel of experts will review TfL’s long term funding and financing options.”
Andy Byford, London’s new Transport Commissioner, added: “The pandemic has revealed that the current funding model, with its heavy reliance on fare revenue, simply doesn’t work when faced with such a shock.
“This important review will examine the options for new and more robust arrangements to provide firmer foundations into the future.
“Securing TfL’s short and long-term financial future as part of our post-covid recovery is one of my top priorities and I look forward to assisting the panel in their work.”