Monday 7 June 2021 9:30 am

London's future prosperity depends on a sustainable future for TfL

Nick Bowes is the Chief Executive of think-tank Centre for London

News of the latest financial support package for Transport for London (TfL) will have been met by sighs of relief across London. At the very least, buses, trains and tubes will continue running for the next few months. But fundamental questions about TfL’s future and how public transport is funded remain unanswered. 

Should a transport authority like TfL receive a subsidy from the taxpayer and, if so, should that come from the national pot, or should London pay? The government is reluctant to subsidise TfL, preferring them to be self-sufficient through fares and other income. Some of this is political, tied up with growing anti-London sentiment.

City Hall and TfL argue that the pandemic has exposed the flaws with being solely dependent on fare income, and that no other city of the same stature runs its transport authority without some form of public subsidy, either from the national government, local taxation, or a mixture of the two.

And yet ultimately, in times of crisis as we have seen this past 15 months, only the government has the financial clout to be the funder of last resort.

For London’s sake, there needs to be a way forward.

Read more: Sadiq Khan: TfL settlement is not the deal we wanted

First, an understanding about the scale of the financial support required to sustain TfL at the level that London needs. Second, an agreement on how this is to be funded, while closely monitoring the longer-term impact of behaviour changes on public transport usage. That is going to take considerable close working on all sides, something that the mood music of this week indicates will be challenging. The Mayor will need to be bold and honest with Londoners about difficult choices and not be deflected by the electoral cycle if new sources of income generation need to be found.

Business groups argue it would be a mistake to slash TfL funding because of the consequences for the London economy, particularly at this delicate time. 

Deferring or cancelling investments risks even higher costs in the future, increased delays and overcrowding and threatens jobs in the supply chain up and down the country. Cuts to buses and tubes could push more people into cars and create more congestion. Access to job opportunities could become harder. Running businesses could be more costly. Building new homes become more difficult. A shrunken TfL could drive foreign investment elsewhere, not to Manchester or Leeds, but to New York, Berlin or Shanghai, leaving the whole country worse off.

And TfL has always been more than just a transport authority. It’s an agent for improving public health, a place shaper and a tool of regeneration.

Many Mayors and council leaders outside the M25 want their own TfL equivalent and Ministers want to replicate its innovation elsewhere. There’s talk of rolling out ‘London-style’ Oyster and contactless ticketing. The ULEZ is the blueprint for many clean air zones in other cities. Andy Burnham cites London’s bus network – and the relative low cost of journeys – as his aspiration for Greater Manchester. And Ministers hail the concession model used by TfL as the future for the rail industry.

Read more: TfL adds 300 electric vehicle charging points ahead of ULEZ expansion

But leaders across the country need to keep a close eye on London. A diminished TfL, with a much-reduced budget, fewer powers and more central government involvement in operational decision making isn’t what London needs, and it’s not a model the rest of the country should demand either. Devolution of transport and accountability for it via the Mayor is an underestimated element of TfL’s success. Those with long enough memories will remember how poorly London transport was run from Whitehall.

It’s also the case that falling fuel duty as vehicles move to electric will leave HM Treasury desperate for new sources of income. With a political nervousness over any national road user charging system, Ministers might just need TfL to do them a favour and be a trailblazer on simple, smart and fair road user charging as Centre for London has long advocated. An under-resourced TfL might struggle to continue to be a driver of innovation and deliver the benefits of integrated public transport, which London and the rest of the UK needs. 

It would be a mistake to assume London will continue swelling the Treasury’s coffers given how hard hit the capital has been by the pandemic. National taxpayer support to TfL should be seen in the context of the huge returns it helps deliver for the rest of the country. And Ministers need to be much more confident in explaining to voters beyond the M25 why it is in the whole country’s interests to invest in London’s buses, tubes and trains.

Read more: TfL funding uncertainty puts vital HS2 link ‘at risk’

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