As of May 2012 the scheme cost Londoners £145m in construction and operational overheads, with a further £80m in additional expenditure expected between 2013/14 and 2015/16.
The total figure of £225m is more than 4 times the maximum £50m due under the Mayor’s sponsorship deal with Barclays Bank which runs until 2018.
The difference represents a massive public subsidy both for the hire scheme and Barclays, which enjoys huge PR benefits from its association with the scheme including sole naming rights and brand placement on TfL’s website.
TfL refuses to publish the contract with Barclays but it is understood the sponsorship sum is payable in instalments over a period of years.
In response to an FOI request made on June 8th but not answered until today, TfL says the next payment is due this month but declined to say how much money has been received so far.
In June members of the London Assembly called on TfL to reform its approach to sponsorship deals after Barclays was fined by UK and US regulators for manipulating key interest rates.
The current levels of subsidy are being met from TfL’s wider budget which is partly derived from fares revenue.
TfL has also told local boroughs that expending the scheme into their areas is “conditional” on them providing funding for the loss-making scheme.
Despite passengers on other TfL transport modes having seen a series of fare increases to meet investment plans and TfL seeking to cut bus subsidies, TfL says is it “not currently possible” to say when the Cycle Hire scheme will be self-funding.
The FOI response says: “…the impacts of the recent eastern extension of the scheme on both income and costs will be significant, and it is far too early to have a full understanding of what these will be.”
TfL also says no customer satisfaction surveys have been commissioned since January, despite a September 2011 survey warning of falling satisfaction among scheme users and a December 2011 report finding that poor availability of bikes was leading some users not to renew their memberships.
Despite reports of poor performance, TfL have refused to provide details of any financial penalties imposed on scheme operators, Serco.
TfL claimed “Disclosing the details of figures for any penalties would be detrimental to future tenders for the cycle hire scheme and would make it more difficult for TfL to maximise the value of other opportunities.”
However last year the BBC reported the firm was issued with a “critical improvement plan” and had £5m withheld by TfL because of problems.
As first reported in March, the owners of Westfield shopping centre are yet to pay for the scheme’s expansion to its site.
TfL’s latest response says payment isn’t due until this month despite a July 2011 City Hall statement that it was “to provide funding that will allow an early taster of the western expansion by extending Barclays Cycle Hire to the shopping centre by spring 2012.”
