Transport for London: Funding

Sarah Olney Excerpts

Monday 30th November 2020 Westminster Hall

[Sarah Olney (Richmond Park) (LD)]

It is a pleasure to serve under your chairmanship, Sir David. It has been quite amusing to listen to my fellow MPs talking about whether the current or the previous Mayor is more to blame for the current state of TfL’s finances, but there is no doubt at all that whatever decisions have been made by either Mayor in the past, they were made in a pre-pandemic phase. The situation we are in now could not have been anticipated by anybody.

TfL’s income is almost unique in the world for a capital city, in that 80% of it comes from fare income. That is quite unprecedented among capital cities, most of which enjoy a far greater level of Government subsidy. There is no doubt, therefore, that when something such as the pandemic comes along and the instruction is given to Londoners to stay home and not to use public transport, there will be a big impact on finances. Londoners did exactly what they were supposed to do. They stopped using the tube and the buses: the subsequent impact on income has nothing to do with the mayoral policies of either the current Mayor or any previous one. The situation could not have been predicted.

The situation that we are in now is that TfL, not surprisingly, has required a bail-out in order to maintain its services. We need to look forward, not back at which Mayor was responsible for previous finances. What is the plan now for keeping our public transport going in London? In the comprehensive spending review last week, I was disturbed to see that the Government have not budgeted anything in the next financial year for any further bail-outs for TfL.

As I said last week, I am encouraged by the implication that the vaccine roll-out means that we will be back to full capacity on our tubes and buses in May next year, but I am little sceptical about it. I think it is a mistake for the Government not to plan further investment into London’s transport network, because we know that the drivers of the London economy are our cultural industries, our financial services and our retail sector. They have all seen a big hit from coronavirus and, potentially, a big hit from Brexit. They need investment from central Government to get them back up and running, and to get London running again at full speed, as it was before. That investment needs to go into our public transport network.

The point was made by an earlier speaker that the issue is not just about Londoners, but about travellers from abroad. If London is to get back up and running again, it needs to welcome travellers from abroad and it needs the public transport network. I am disappointed to hear from the Government that they plan to finance TfL through tax rises and charges on Londoners. That is what we were told: council tax increases and an increase in the congestion charge.

There was talk of scrapping travel for under-18s to pay for the bail-out. Much has been said about that and there were some excellent contributions from fellow Members. I want to pick up on the point that the hon. Member for Carshalton and Wallington (Elliot Colburn) made in his opening remarks about a potential doubling in car usage. In my constituency of Richmond Park, we do not want to see a doubling in car usage. Car usage is already a major scourge on our roads. The congestion and the impact on air pollution is terrible, as is the way it cuts people off from their local town centres.

My particular concern for young people is the impact on their safety. If there is an increase in the number of cars because they are being driven to school instead of catching the bus, then there is a knock-on impact on road safety. I worry for the safety of those who cannot afford to be driven to school and have to walk long distances, potentially in the dark, as well as the knock-on impact that might have on our policing budget. There are many budget implications for local authorities if we take away free travel for under-18s, which need to be considered alongside any potential savings for TfL.

It would be remiss of me not to use this opportunity to talk about Hammersmith bridge. I am talking to the Department for Transport about its long-term plans for travel in London, but please can we get some movement on this? It is imperative, and it has been obvious from the start, that there needs to be a substantial contribution from the Department for Transport. The sooner it can commit to that, the earlier stabilisation works can be undertaken. The sooner we can get pedestrians and cyclists back over the bridge, to connect my Barnes residents to all the services, shops and transport links on the other side of the Thames, the better.

--- Later in debate ---

[Rachel Maclean]

Of course I will address those concerns. I am about to do that, but I am highlighting the facts at the outset.

[Sarah Olney]

Will the Minister give way?

[Rachel Maclean]

With respect, I do not think I can give way. I want to address the substantive points, but I will be happy to talk to hon. Members on another occasion.

My hon. Friend the Member for Carshalton and Wallington highlighted in his opening speech the shocking extent of the Mayor of London’s financial mismanagement of Transport for London. We all know that coronavirus has cost £1.6 billion in lost fare revenue, but Mayor Sadiq Khan’s mismanagement of Transport for London’s finances has cost £9.56 billion in the round, and we heard many examples from hon. Members during the debate.

We can all agree that the transport network is key in supporting a safe and sustainable recovery for London. That was why, on 31 October, the Government agreed a second extraordinary funding and financing package with TfL for up to £1.7 billion, on top of the £1.6 billion funding package agreed with TfL in May. That is proof of the Government’s commitment to supporting transport services in London while remaining fair to national taxpayers.

The May funding agreement with TfL contained a series of measures to manage demand and to facilitate safe travel, including a temporary suspension of free travel for under-18s. I stress that that was agreed by the Government, the Mayor of London and the deputy mayor for transport. However, the suspension was not operationalised at the time. No one doubts the importance of free travel. It was always the case that children eligible for free home-to-school travel would continue to receive it, with families on low incomes—those most disadvantaged children—continuing to receive that free travel. It is right to say that the rationale was demand management, as before the covid-19 crisis, around a third of journeys were made by young people travelling to school.

[Sarah Olney]

Will the Minister give way?

[Rachel Maclean]

Very briefly, because I have several points to make.

[Sarah Olney]

I pointed out in my speech that in normal, pre-pandemic times, TfL raised about 80% of its own revenue. It was not primarily subsidised by taxpayers, so it is not by and large taxpayers who pay for free travel for young Londoners—or, indeed, for elderly Londoners.

[Rachel Maclean]

I remind the hon. Lady that central Government have agreed billions of pounds of support for Transport for London.

The initial reason for bringing in the suspension, or discussing it, was because it was seen as necessary to ensure that capacity was available on buses for those who needed to use it, including some schoolchildren, given social distancing requirements. At this point, I would like to refer to the Government’s commitment to support cycling and walking, or active travel. People should walk and cycle wherever possible, and that is why the Government have made £2 billion available to support it. According to TfL’s own statistics, the average journey to school in London is less than 1 km, so it is not unreasonable to suggest that some of those journeys could be made by active travel.

As part of the latest £1.7 billion of extraordinary funding agreed by the Government and TfL on 31 October, national taxpayers will continue to fund free travel concessions to standard English levels, and free travel to school for children who qualify under legislation. If the Mayor wishes to maintain concessions for Londoners above the English level, he will raise the money to pay for that. That represents a fair position for the whole country and brings London in line with the rest of England.

In agreeing the recent extraordinary funding and financing package, the Mayor proposed that he could pay for those concessions by retaining the central London congestion charge at its current level and increasing the existing TfL element of the Greater London Authority’s council tax precept. He must make his final choice by January 2021. It is the Mayor who has decided what the increase to the congestion charge should be and what the coverage is.

Several hon. Members raised the question of Hammersmith bridge. They will know that my noble Friend Baroness Vere of Norbiton is working on that and leading a taskforce. TfL has been given £4 million and a further £2.3 million for immediate mitigation, and a lot of detailed work is ongoing to sort the problem out.

Turning to TfL’s financial situation, the Government did agree a second package that will provide financial support until March 2021. The Government will make up the fare revenue that TfL has lost due to covid-19. The deal runs until 31 March, and the Government will continue to monitor TfL’s financial health and work closely with it to ensure that it continues to operate essential services and supports our recovery from the pandemic.

I would also like to put on record the fact that the Government are not forcing the Mayor of London to raise council tax. If he does so, it will be his decision and his alone. The Department works closely with him and constructive discussions are ongoing. Of course, I remind the Opposition that the Mayor of London is a politician, but nevertheless there are constructive discussions going on, as we have seen from the deals that have been agreed, which benefit Londoners and the transport network on which they rely.

As hon. Members have pointed out, the financial package agreed itself recognises that the Mayor of London has not done enough to find savings. His financial management has not been good enough, and further efficiencies must be found. Opposition Members have highlighted the impact on young people, so I must be clear: it is for the Mayor of London to explain to those young people why he has made the choices that will have those devastating consequences that Members are setting out. The Government have stood behind Transport for London to the tune of £2.3 billion. I suggest it is now time for the Mayor of London to take responsibility and show genuine leadership, instead of seeking to lay all his problems at the door of central Government.