11 January 2024

Transport for London is running on fumes under Sadiq Khan


I’m reading the diaries of Barbara Castle, the former Labour cabinet minister. She and her colleagues would often exhaust themselves in pay negotiations with trade unions threatening strike action. This was the era of ‘beer and sandwiches at No 10’ (in actuality, Harold Wilson offered whiskies to the visiting union delegations while drinking brandy himself). That term makes it sound rather jolly. But Castle’s account is of constant, grim, debilitating struggle. With economic planning, prices and incomes policies, large-scale nationalisation and very powerful trade unions it is not surprising that wage increases became so politicised. 

The point has been made that the unions had extra clout due to being Labour’s ‘paymasters’ as the principal donors to party funds. But even left-wing politicians like Castle accepted the constraints – foremost was that if you cave into one demand then it sets a precedent that other trade unions will notice. Also that if you make a ‘final offer’ and then bump it up credibility is lost. 

The Mayor of London Sadiq Khan does not appear to have grasped these fundamental negotiating rules. A tube strike has been averted after an extra £30m was ‘found’ to increase what had been the ‘final offer’ to the RMT Tube workers. The tube drivers’ union Aslef then demanded a bigger pay rise having previously settled at 5%. The message is if you threaten to strike, the Mayor will cave in. 

If you live away from London you may think this doesn’t concern you. Yet you will end up paying. Transport for London is groaning under the weight of its debt and depends on constant bailout from central government. The latest figures show total debt of £15bn. Yet a big slice of its ‘revenue’ is subsidy from central government. 

Last month Mark Harper, the Transport Secretary, wrote to Khan:

Since March 2020, HM Government (HMG) has supported Transport for London (TfL) by providing almost £6.4bn of funding to enable it to operate, maintain and invest in London’s transport network. The last funding settlement ensured the delivery of key capital renewals and investment in London worth almost £3.6bn, including the completion of a number of major projects, new road schemes and increased bus priority’. 

Harper added: 

‘The Department will make the following payments to TfL: £100m on 18 January 2024; £95m on 15 February 2024; £50m on 14 March 2024; and £5m on 11 April 2024.’ 

He concluded:

‘This is another significant funding boost to your budget from central government. As Mayor, it is up to you to ensure TfL delivers transport services in the Capital without placing an unfair burden on either Londoners or taxpayers more generally.’

Dream on. The TfL budget for the next financial year includes £558m for interest on its debt mountain. ‘We plan to increase our borrowings in subsequent years by a prudent amount,’ it says. Meanwhile, its land banking continues. TfL owns 5,700 acres of land, which is equivalent to the size of Camden. That includes the roads and the track and 70 car parks owned by TfL next to train stations. But also a lot of that is surplus to requirements and could be sold to develop housing. A thousand acres of development land in London should raise around £10bn and provide another 20,000 homes. 

The Mayor of London will impose an 8.6% increase in his Council Tax precept next year, double inflation. It will increase from £434.14 a year to £471.40, for Band D households, an extra £37.26. Why this special indulgence when for most local authorities the limit, without approval in a referendum, is 5%? 

Some of that will go on subsidising TfL, businesses will also pay more. Its accounts say: ‘TfL’s council tax requirement for 2024/25 would increase to £244.3m from £178.3m and business rates retention would increase from £1,991.2m in TfL’s 2023/24 forecast to £2,013.7m.’ 

Then there is ULEZ and other congestion charging – supposedly to combat the ‘Climate Emergency’ but also contributing over a billion pounds to the coffers. Every little helps. 

Money is ‘found’ for all the woke indulgences (At the end of June 2023, TfL launched its first pan-TfL Diversity and Inclusion strategy, Action on Inclusion). While Hammersmith Bridge remains closed. 

Planned savings involve cutting back on the number of buses (reviewing its operating model… which will mean fewer buses are required) yet the monopoly is maintained to prevent entrepreneurs from coming forward to see if they could do a better job. 

Tube drivers are paid £63,901 a year – plus free travel for them and a partner. They can retire at 60 on a full pension. Yet Khan refuses to contemplate greater use of driverless trains. The Docklands Light Railway has operated with driverless trains since its opening in 1987 and has an excellent safety record. The Jubilee Line is partly automated. 

There is talk of practical difficulties. That some lines would be easier to adapt than others. No doubt. Yet other countries have managed to overcome them. The Paris Metro is now automated, a process recently completed. 

Of course, we have an election for Mayor of London on 2nd May and given his failings not just on transport but on other issues it is quite possible that Khan will be ousted – despite Labour’s popularity more generally. 

Some will argue that if Khan is kept in City Hall then that’s democracy, and his municipal empire should be left intact. Yet the principle that public services should be decentralised has been subjected to constraints. Local authorities have to keep within budget and maintain other legal requirements or the commissioners are sent in to run the show – as has happened in Liverpool and Birmingham. Failing schools can face a hostile takeover of being made a ‘sponsored academy’ and put under new management. A police force or an NHS Trust face some limit to what they can get away with. 

Given its national importance, why is Transport for London still under the control of the Mayor? It is time for it to be run on a proper commercial basis by independent management with a clear remit to modernise and cease wasteful spending. 

The Mayor is able to get away with giving the unions what they want because in turn, the government has given in to him. Londoners and the rest of the country need this expensive farce to end.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Harry Phibbs is a freelance journalist.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.