The Mayor of London Boris Johnson says the recently announced fare rises in the capital are required "having cut costs to the bone" at Transport for London after being "ruthless in finding savings." It is true that the target for efficiency savings for the nine years from this year to 2017-18 has been raised from the £2.4 billion that Boris initially demanded to an extra £2.6 billion – this makes a total of £5 billion or £555 million a year.
But the spending total remains vast. The Transport for London budget this year is £7.7 billion with nearly £3 billion a year in subsidy from central government. The point is not that saving half a billion a year is an unimportant achievement. It is whether more, an awful lot more, could be done.
TfL doesn't even cover its operating costs from its own revenue. Last year its operating revenue (mostly fares) was £3.45 billion. Even this figure is artificially high as it includes the Freedom Pass costs paid by the Borough Councils ("revenue in respect of free travel for elderly and disabled people", £227 million) and this year the income figure is expected to be very slightly lower – £3.44 billion.
TfL's operating spending last year was £5.69 billion. This year's operating spending is budgeted to be £5.74 billion. So even before we start to talk about the capital projects, its losing £2.3 billion a year. On the tube it budgets to get £1.6 billion this year from fares, but its operating costs will be £2.4 billion. The DLR reckons on £74 million a year in fares but has operating costs of £120 million. For the buses the subsidy is £574 million this year. We have the absurd situation of every 60-year-old being given free travel (including free taxis under the Taxi Card scheme which TfL subsidise by £12.7 million a year) as if once that age is reached we all become impoverished or invalids. There are bus routes that scarcely anyone uses but are retained for political rather than business reasons. (It will always be in the interests of the local MP to complain about a bus route covering his constituency being scrapped even if virtually all his constituents use different routes.)
Last year the Croydon Tramtrack cost £21.1 million to run but got only £13.2 million in revenue. The Congestion Charge is a money spinner but astonishingly most of the revenue goes on operating costs. (£177.2 million out of £325.7 million.) Is there any other tax where the collection costs amount to more than half the revenue?
One way of getting more revenue in fares would be a greater sense or urgency in completing works which cause stations or lines to be closed. For London Underground the "infrastructure lost customer hours" will amount to 24.7 million this year. The gap left from fares is filled by £2.88 billion grants from central Government – which covers more than the total capital spending which is £1.96 billion. Even that isn't enough so there is also another £1.1 billion of state guaranteed borrowing. TfL spent £270 million last year on interest payments for its existing debt.
Transport for London say they have shed 1,000 posts – but that still leaves it directly employing over 28,000 and indirectly another 60,000. Overall directly employed staff numbers rose from 28,937 last year to 29,435 this year. That makes the shedding under way sound rather modest. Over 4,000 TfL staff are paid over £50,000 a year. 231 are paid over £100,000 a year. Many of the jobs that have been shed were simply by removing duplication with Metronet – that disastrous Public Private Partnership set up by the Government as a separate entity in the London Underground group and which fell into administration with 7,000 staff and was absorbed into TfL.
After supposedly having "costs cut to the bone" TfL still employs 27 press officers. It still employs ten climate change officers. It still employs eight Diversity Officers. The measures announced so far do not scratch the surface of overmanning that exists. They don't even touch the ludicrously overpaid 3,535 tube drivers or the other station staff.
TfL spends £73 million a year on traffic lights. Yet there is growing evidence that traffic lights frequently do not improve safety or traffic flow. It was encouraging that the Mayor of London produced a report last week which showed much of the £150 million a year on "traffic calming" measures is also of dubious value. It is now generally accepted that humps have done more harm than good. But some of the same problems of delay and pollution with traffic stopping and starting are still being inflicted with other "traffic calming" measures.
There is certainly a need for investment to provide increased capacity, shorten journey times and make journeys more pleasant (for instance through air conditioning.) But what about financing some of the transport improvement through selling off TfL's surplus assets? Their accounts talk about £2.3 billion in "non operational assets", – what's that all about? How much of the £22.5 billion "infrastructure and other property" is surplus land? How much is retail – eg shopping arcades next to station entrances, street markets such as Shepherd's Bush Market?
Ken Livingstone spent £34 million looking into the idea of an Uxbridge Road tram before giving up on the idea. Work has stopped on a number of other projects that are not going to take place. But I still suspect there are some "nowhere men" in TfL "making all their nowhere plans for nobody."
I am pleased that TfL is keen to promote walking. Their aim to get rid of obstacles is positive – not least the plan to remove 20 miles of guard rail between now and Febuary. I would support money being spent to get rid of much more. But not teams of Walking Officers spending their time, rather ironically, sitting around coming up "with integrated planning to increase walking modal share." I would prefer they went out and got on with ripping out guard rails. Similarly wouldn't the money spent on Cycling Officers be better spent on more police to stop bikes getting nicked?
What is the point of employing an army of health and safety officers if when a tube driver breaches safety guidelines he gets let off anyway for fear of a strike?
There will be promised savings, over the nine years, of £220 million on consultants and temporary staff. So that is a useful £24.5 million a year saving. But will that leave being spent? TfL won't tell me. This leads me to suspect it is rather a lot. Bringing in consultants can mean good value for money – but less often when it comes to the public sector. It is also hard to justify given all this supposed expertise on the payroll with six figure salaries. What does TfL spend on advertising? Again they won't say. Probably more to the point why don't they do a better a job of getting revenue from advertising rather than filling up so much space on buses and trains with its own ads?
Let's be clear that Boris is making great strides with TfL. He is taking it in a different direction to Ken Livingstone. But there are several more stations to reach before the journey is complete, and it is being run as a proper business offering a decent, efficient service. Cutting off the subsidies would force it to live in the real world.