The Mayor of London has announced an independent review of Transport for London (TfL) finances, hot on the heels of Government plans for its own investigation.
Tensions between City Hall and Westminster have been growing for weeks after Sadiq Khan and Transport Secretary Grant Shapps struck an eleventh hour deal in May to stop TfL running out of cash.
The network has been hit hard by coronavirus, losing 90% of fare revenue, which makes up 80% of its income.
But the Mayor’s team have accused the Government of bailout brinksmanship, and attacked the conditions of the deal – which include a fare hike next year, reducing free travel for pensioners, and scrapping it for children during the Covid-19 crisis.
Ministers in turn point to TfL’s weak finances – though improving, the network has a high deficit and delays to Crossrail combined with spiralling project costs have heaped on the pressure.
The £1.6 billion deal agreed two months ago is a stop gap measure to keep trains running till October, and further negotiations will be needed for the rest of the year.
As a condition of the bailout, ministers announced a full review of TfL’s finances – and on Monday released details of the review, led by the Government with accountants KPMG.
The three-stage investigation will assess TfL’s current finances, ways to strengthen cash flow in the short term, and the long term future of the network – including the option of driverless trains.
Scrapping Tube drivers, as seen on the DLR line, is a pet project of Prime Minister Boris Johnson, who pushed for the change when he was Mayor of London.
Another condition of the bailout was allowing a Government representative to sit in on TfL meetings – and ministers confirmed Andrew Gilligan, Boris Johnson’s former London cycling czar from his time as Mayor, and civil servant Clare Moriarty would take on the role.
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It has fuelled fears at City Hall that ministers are stripping powers from the capital – a claim denied by Government.
Mr Khan says the networks financial woes could be solved if the TfL grant – worth £700 million a year – was restored in line with transport funding for major cities across the world.
The central government funding was cut as part of a deal agreed by Boris Johnson while he was Mayor.
Now Mr Khan has launched his own expert-led independent review of TfL finances to run alongside the Government investigation.
The panel members will be:
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- Tai Chong Chew, global rail business lead for engineering firm Arup and a chartered engineer;
- Stephen Glaister, emeritus professor of transport and infrastructure at Imperial College London, a former TfL board member and member of last year’s HS2 review;
- Bridget Rosewell, chair of Atom Bank and the M6 Toll company and a National Infrastructure Commissioner;
- Sir Jonathan Taylor, a former European Investment Bank vice president.
Mr Khan said the review is essential because TfL is “central to life in our city” and “essential to our recovery”.
“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,” the Mayor warned.
“It is vital that we find a new solution to support not only London but the wider economy.”
TfL’s new commissioner Andy Byford – who joined the organisation last month after leading New York transport– defended the attacks on TfL’s finances.
“Prudent financial management had placed TfL on the cusp of breaking even for the first time in its history and with strong financial reserves,” he said
“But 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.”
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