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Transport for London: Financial Settlement

Volume 810: debated on Tuesday 2 March 2021


Asked by

To ask Her Majesty’s Government what progress they have made in discussions with Transport for London on a financial settlement (1) for 2021/22, and (2) beyond.

My Lords, the Government are committed to providing Transport for London with a financial deal that is sustainable, supports London’s recovery and keeps the capital moving. Any deal must be fair to the UK tax- payer. On 11 January, TfL provided us with a financial sustainability plan, which sets out its plans to achieve financial sustainability by April 2023. The Government hope to announce further Covid-related financial support for TfL shortly.

My Lords, TfL has suffered a double blow to its income from the pandemic and from years of irresponsible fare setting by the Mayor of London. While my noble friend grapples with that temporary challenge, will she also bear in mind that a railway needs steady capital investment too, and that there are parts of London Underground operating with signalling and rolling stock that is over 50 years old and is creaking at the seams. Will she, in support of the Government’s infrastructure objectives, seek to ensure that TfL is allowed a medium-term investment programme—however modest—to address these problems?

My noble friend is quite right: there have been some quite interesting fare increases—or not—from the mayor over recent years. We estimate that over the past four years his fares freeze has cost £640 million, which could otherwise have been spent on capital expenditure. But, as my noble friend knows, transport in London is devolved and it is up to the mayor and TfL to assess the merits of capital projects that they might want to invest in. However, it is absolutely clear that the Mayor of London must set a robust budget, demonstrate that TfL is on a clear path to achieving financial sustainability, and prioritise his capital expenditure. He will have to make difficult choices.

My Lords, many of us are old enough to remember renewing our road funds not with the DVLA but with the county council. It was £12 and 10 shillings when I started driving. I see that the Mayor of London has revived this policy as part of the problems of Transport for London, which would also broaden the base for local government taxation. Does my noble friend have a view on the merits of this policy?

My noble friend raises a very interesting period of time that unfortunately I do not remember, but it is the case that the Mayor of London has some very interesting ideas as to how he wants vehicle excise duty to be spent. It is one of the proposals in the financial sustainability plan he has prepared, which I have to say does seem to have been drafted with a money-no-object mindset. Noble Lords will know that vehicle excise duty is used for the strategic roads network, which is the motorways and the major A roads, so unless we are going to stop Londoners from using our motorways and buying products that have been brought into London by HGVs travelling on them, I see absolutely no rationale for devolving VED.

My Lords, I read in the Financial Times today that the ONS says that as an average Londoner I receive about £4,000 less in public spending than I pay in tax. As a proponent of progressive taxation, I am happy to pay, but the fable of the goose that lays the golden egg comes to mind. Will the Minister agree that the economic prosperity of the whole country depends on a prosperous London, and that that requires, among other things, a well-connected London with excellent public transport? Is it not remarkable that London is the only major city in the world where there is no contribution from general taxation, from which the whole country would benefit?

The noble Lord is right that London will play a very important part in the economic future of our nation; in 2018 it made 23% of UK GDP. But while much of the funding for Transport for London comes from passenger revenues, there are other routes by which it gets money; for example, business rates retention, which is a retention which would otherwise have gone to Her Majesty’s Government. So one might assume that there is a broad breadth of sources of funding for TfL, but I agree—the Government want to support London’s recovery and we want to keep the capital moving.

My Lords, train operating companies have received billions of pounds from the start of the pandemic to keep trains running, with minimal requirements in return. Why has Transport for London not been treated with the same generosity, and why are the Government determined to dictate the minute details of the way services are run, which they have not done on railways elsewhere? Surely this could not be political.

My Lords, TfL has also received billions of pounds over the Covid pandemic. I am not sure where the noble Baroness is getting her information from about the differential between the conditions that are put on the train operating companies and on TfL. The Government make demands on the train operating companies. We work incredibly closely with them on, for example, what the level of services should be and whether engineering works should take place. We put significant conditions on our support for them. We put some conditions on TfL support, such as looking at the future of driverless trains and increasing efficiency targets. All these things are perfectly reasonable.

Instead of levelling up the north, where the Government have cut £4 million from Transport for the North, clearly the Government intend to level down London’s transport network. Virtually every answer that we have heard from the Minister today has confirmed that this is the Government’s approach. Can the Minister confirm or otherwise that the Government are not seeking to force TfL into making cuts to its service level, which would be completely counterproductive and place at risk the economic recovery of central London, which, like it or not, is still the engine of the UK economy?

The Government will provide funding to TfL. We have already said that we will and that we want to keep the capital moving. That is essential. We can also agree that the forecast scenarios that are available for passenger demand will, quite frankly, resolve only over a period of time. The Mayor of London is going to have to think about his capital expenditure and service levels in the future. He may have to make difficult decisions, but there are a number of reforms that the Mayor of London should have done but has not done, and probably should do in the future, in addition to potentially looking at service levels.

My Lords, pursuant to the Question posed by my noble friend Lord Moylan, and in recognition of the long service that he has given to this subject, significant focus has been placed on new underground lines. However, does my noble friend the Minister recognise and accept that the settlement should focus as much on revenue as on the vital need for a fully funded capital programme to upgrade existing underground lines, in addition to the “new tube for London” programme?

There are many strands to the capital programme. Some of them are short- to medium-term. The Government will expect the mayor to make decisions that encourage the economic growth of London. One of the other important considerations when thinking about how we develop the London Underground will be housing. My noble friend may have seen that the Government agreed to safeguard the land for the Bakerloo line extension. It cannot be built now but it may be built in the future.

My Lords, what assessment have the Government made of the potential for further growth in goods and passenger transport on the River Thames, which, at 215 miles long, is the longest river in England?

As transport in London is devolved, the Government have not assessed the usefulness or otherwise of the River Thames. I suggest that the noble Lord takes that up with the Mayor of London.

My Lords, Crossrail’s budget has been under pressure recently, and one of the stations that has not yet been started is Old Oak Common. Can the Minister tell the House what the budget is for Old Oak Common station, and how it is broken down between Crossrail, HS2 and Great Western Railway? If she cannot tell me, can she please write me?

Had the noble Lord given me fair warning of that question, I would have been delighted to answer it for the Chamber. However, I will discuss very briefly the amount of funding that the Government have been able to support for Crossrail. Back in August 2020 the board of Crossrail said that it would need another £1.1 billion, which was probably about the P70 budget. The Government have announced £825 million so that the GLA can borrow further funds to get Crossrail over the line and open to passengers.

My Lords, the Government commissioned a report into TfL’s finances from KPMG in June 2020. They said at the time that this was to understand TfL’s needs. The Government are now refusing to publish this report despite businesses and politicians urging them to. The suspicion is that they are playing political games. When will they end this secrecy so that Londoners get the transparency that they deserve?

The noble Baroness is right that the Government did commission that report. It extends to many hundreds of pages, and contains a huge amount of commercial information which we would not want to see in the public domain, as it would not be beneficial to the future of TfL. But the report did give us a firm understanding of where TfL is at the current time. It should be remembered that, even before the pandemic, TfL had a deficit in 2018-19 of £494 million. Combined with that KPMG report and the financial sustainability plan that we have received from TfL, we are in a much better place to help the Mayor of London get TfL back on its feet, and the Government are ready to support that.