Transport for London (TfL) sets wheels in motion for new consulting arm set to bring in tens of millions

 
Rebecca Smith
The capital's contactless system will be used by other cities across the world
The capital's contactless system will be used by other cities across the world (Source: Getty)

Transport for London (TfL) has set the wheels in motion to establish a consultancy providing its expertise to operators around the world.

London mayor Sadiq Khan has confirmed TfL is in the process of setting up a trading arm, Transport for London Consulting, after establishing there was “significant scope” for the transport body to pursue opportunities to generate revenues to reinvest in the transport network. A conservative estimate from TfL said the development should bring in tens of millions.

In a response to a question last month from Labour London Assembly member Tom Copley, Khan said TfL was in the process of “establishing a consulting function” and in the midst of “appointing someone to lead it”.

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Khan floated the idea in his manifesto before he was elected as London mayor in May 2016, saying the trading arm would be used to keep fares down in the capital, “just as foreign state-owned transport firms currently take profits made here to subsidise their services”.

Once elected, he instructed TfL to establish a consultancy business, and TfL is now holding discussions with engineering, transport and management consultancy businesses to build relationships and identify suitable opportunities.

While TfL is currently deciding what sort of projects its new trading arm will take on, it will look to build on contracts it has already secured with Cubic Transportation Systems and the Sydney Metro. In April last year, it was announced that Sydney would trial London-style open payment, with the intellectual property rights to the system developed for London owned by TfL.

And last July, TfL announced it had agreed a licence with Cubic for use of London’s contactless ticketing system worldwide in a deal worth up to £15m.

The transport body is under pressure to cut costs, announcing in its December business plan that it intended to achieve £800m in yearly efficiency savings by 2021.

And in discussions with the London Assembly earlier this year, TfL said at a “very conservative” estimate, the trading arm could generate “tens of millions” in income.

Concerns had previously been raised by the London Assembly Budget and Performance Committee that the consultancy “could be a distraction for TfL at a time when it is already under pressure to cut costs and reorganise itself”.

But TfL’s commissioner Mike Brown told the London Assembly earlier this year that the transport body had “developed the positive business case to provide expertise of such a trading arm to operators around the globe”, with TfL increasingly being sought out “for transport management consultancy advice”.

London Assembly member Tom Copley said the development could have “great potential” and it made sense for TfL to sell its expertise, as long as the transport body’s “priority remains delivering great transport services to London”.

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