Transport for London fears wider travel changes dragging on passenger numbers as it faces near £1bn deficit

Rebecca Smith
Passenger numbers have been slipping
Passenger numbers have been slipping (Source: Getty)

Transport for London (TfL) has raised concerns falling passenger numbers could be part of a wider change in travel, according to internal documents seen by City A.M..

The capital's transport body, known as TfL, finds itself at the centre of a political storm after forecasting a near-£1bn deficit, as it deals with lower-than-expected fare revenues.

TfL bosses are grappling with a fall in passenger numbers as well as the loss of government funding, though the organisation says it plans to turn around the deficit to an operating surplus by 2021.

TfL hopes passenger numbers will bounce back, but fears changing habits could prove to be a permanent drag on so-called ‘ridership’, and not just a temporary phenomenon.

The slip in passenger numbers has become a puzzle for TfL, amid a rising population, solid tourism and high employment levels. It has forced TfL to revise its fares expectation for 2017-18 down by £240m on the budget from the year before.

Read more: TfL facing £1bn operational deficit as revenue raising efforts suffer blow

TfL has been investigating the issue internally, and in research from last autumn as part of a wider piece covering all modes of transport, it says:

The most plausible explanation for the decline in trip rates appears to be a growing effect of technology reducing the need to travel.

Time use surveys indicate that Londoners have been spending their time doing the same activities, but with "less travel involved in doing those activities". This trend was most noticeable for shopping and leisure.

Analysts have suggested that Uber's success may have come at the expense of public transport journeys, while online shopping could also have cut the number of trips made by Londoners.

TfL hopes fares income will rise as train frequencies increase and employment growth continues. However, the research admits: "We should not assume that trip rates will remain constant over time."

It remains a pressing issue as the Tube is the only part of the network to make a profit, and the hit from the unexpected dip has already led TfL to cancel Tube upgrades on the Northern and Jubilee Lines to save £600m.

TfL research has noted the average number of trips made per person per day is reducing alongside recent trends in mode shares.

A spokesperson for TfL said: "It is too early – in terms of the available data and relatively short timescale – to pronounce on whether either trend is likely to be sustained in the long term."

They added that Tube ridership is "only marginally down compared to last year despite the lower economic growth", while ridership on the buses is on the up following improvements in journey time reliability.

Blame over the current state of TfL's finances has been shunted in different directions, with City Hall citing the loss of government funding, along with the capital missing out on money raised through vehicle excise duty (VED).

Londoners pay around £500m a year to central government through VED, but City Hall says none of this comes back to London to spend on the roads – meaning public transport passenger fares cross subsidise road maintenance in the capital.

However, Conservative London Assembly member Keith Prince said: "The fact is, fewer people are taking the Tube because of cheaper taxi services like Uber, better cycling provision and because of the often-unpleasant rush hour conditions."

He added: "[Mayor Sadiq Khan's] partial fares freeze has not helped stem that trend but it has blown a huge hole in TfL’s finances. If anything will stem the decline it is investment, but that is being cut."

A spokesperson for the Mayor of London said:

Thanks to his [the maor's] fares freeze and the new Hopper bus fare, the number of passengers using TfL services is outperforming others across the country.

This is despite £700m cuts every year to TfL’s budget by the government – making London one of the only major cities in the world not to receive central funding to support the operating costs of its public transport and road network.

Read more: TfL doesn't "fully understand" why passenger numbers are falling

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