Tube fares are to rise under a new £1 billion bailout for Transport for London announced on Tuesday — but the potential imposition of a £3.50 daily “boundary charge” on motorists entering Greater London was effectively blocked.
He also made it difficult for the Mayor to trim the £15 congestion charge — or return it to a weekday-only levy — by saying the extra revenue would be needed if he wanted to continue with free travel for school children and the over-60s.
The Transport Secretary paved the way for the first “driverless” trains on the Tube — with draft proposals to be drawn up for the Waterloo & City line and Piccadilly line before Christmas. Mr Shapps attached a series of conditions to TfL’s third Covid bailout, including:
Fare rises of RPI plus one per cent from next January.
A pay freeze for all TfL staff earning above £24,000 a year and no executive bonuses.
A cost-sharing deal to get Hammersmith bridge reopened to pedestrians and cyclists this summer.
A requirement for TfL to spend £100 million by mid-December on walking and cycling schemes.
A refusal to hand the Mayor the £500 million a year paid by the capital’s motorists in vehicle excise duty
The requirement for TfL to generate an extra £500 million to £1 billion of income a year.
A review of TfL’s generous staff pension scheme to cut costs and make it “financially sustainable”.
The bailout is another short-term deal, running to December 11 and worth about £1.08 billion. The money is intended to replace the shortfall in TfL income caused by the drop in passenger numbers caused by the pandemic.
Bus and Tube fares rose by 2.6 per cent in March under the terms of a previous TfL bailout. Today’s deal confirms the Government’s wish for fare payers to contribute towards the cost of TfL’s recovery, with a similar rise now expected next January.
In a letter to the Mayor, Mr Shapps said government support for TfL during the pandemic now exceeded £4 billion. He said that it “cannot be right to impose a ‘boundary tax’ on non-Londoners to pay for services mainly enjoyed by Londoners.
“People living outside London should not be made to pay for the pursuit of policy choices over which they have no say.”
Mr Khan said it was “not the deal we wanted” and described it as “yet another sticking plaster” that left TfL’s long-term funding unresolved.
But he said he had seen off the threat of “huge cuts” that could have forced the axing of one in five bus routes or the closure of a Tube line.
He also said TfL would object to any imposition of driverless trains on the Underground. “It would cost billions of pounds and would be a gross misuse of taxpayers’ money at this critical time for our country,” he said.
Mr Khan last year floated the idea of imposing a Greater London boundary charge — costing £3.50 a day, or £5.50 for drivers of more polluting vehicles — from October 2023 as a “fall-back option” if he failed to secure the return of VED (road tax) to the capital’s coffers.
But his Tory critics dubbed it “Checkpoint Chigwell”, warned it would damage suburban town centres and divide families with relatives in the Home Counties.
TfL is required under Tuesday’s deal to find an extra £500 million to £1 billion of annual income by April 2023. This leaves open the possibility of having to revert to a boundary charge despite Mr Shapps’ opposition — or consider other difficult options such as a tourist tax or additional levies on new developments.
TfL is also required to find between £300 million and £900 million of savings this financial year, to establish a dedicated property company to build more homes and to break even within two years — although the Government will continue to fund major capital projects.
The driverless Tube proposals are being sought to bring TfL in line with some European city systems and to make the Tube more punctual by eliminating “human error”.
Draft proposals are required by December, with a full business case for the two-station Waterloo & City shuttle required within a year, and a more general plan for the Piccadilly line within 18 months.
It has been chosen because new trains that can operate without a driver are due to be introduced from 2025. However a “train captain” or “on-board attendant” akin to the DLR would be retained, although that person would not necessarily sit in the driver’s seat.
TfL says the cost of erecting platform-edge barriers, like those on parts of the Jubilee line, could be prohibitive.
During the mayoral election campaign, Mr Khan also made clear his wish to scale the congestion charge back to a £11.50 weekday levy — despite the fact it raised an extra £113 million a year for TfL. It was originally increased to £15 and had its hours of operation extended until 10pm, and at the weekend for the first time, last June as part of TfL’s first bailout.
The Government postponed a decision on changing the way TfL is funded over the longer term as it waits to see how demand for rush-hour services changes as lockdown eases. The TfL pay freeze, mirroring wider public sector restrictions, is not expected to apply to Tube drivers entering the last year of a four-year incremental pay deal.
TfL commissioner Andy Byford said passenger numbers were at almost 60 per cent of pre-pandemic levels but said the impact of Covid had shown that TfL’s fare model was “not fit for purpose”.
He said the funding deal would also help TfL to complete the opening of Crossrail and the Northern line extension to Battersea power station.
Full details of TfL’s plans to make savings and increase revenue in line with the bailout deal are due to be considered by the TfL board in July.