Sadiq Khan's speech on "the great Tory train robbery": full text

The shadow London minister attacks Boris Johnson's "abysmal record of hiking fares year on year".

Delivered at the launch of the Better London Transport campaign in conjunction with the TSSA

Introduction

I would like to start by thanking you all for coming today.

And by thanking the TSSA for inviting me to speak at the launch of their Better London Transport Campaign during what has been a worrying few days for the future of London transport.

I have had a very personal relationship with London transport throughout my life.

Growing up in a Council flat down the road in Wandsworth, my father worked as a London Bus Driver.

Some of my earliest memories are of him driving the 44 route from Mitcham to London Bridge and like many young boys, wanting nothing more than to grow up to be a London bus driver too.

That dream never came true, which is probably a good thing.

The closest I came was trying the virtual TFL bus simulator when I first became Transport Minister. I can’t tell you how excited I was. That was until I crashed my virtual bus into a bridge and lost the top in the process – it ain’t as easy as it looks.

But my relationship with London transport continued none the less.

As a London MP, as Transport Minister responsible for London during the last Government and now as Shadow London Minister, it has always played a big role in my life.

For commuters in London, catching a bus, tube or tram is about more than just getting from A to B.

In a city the size of London affordable, accessible and high-quality transport keeps people connected with one another and provides the essential foundations for economic development.

50% of Londoners use public transport to get to work every day.

If our public transport doesn’t work then London doesn’t work either.

Good transport networks are of unparalleled economic benefit to cities, enticing new investment, jobs and opportunities.

Take Crossrail for example.

Links to the city and central London will attract businesses and jobs to areas in East and West London that desperately need both and will make it easier for local people to find and take work in central London.

It will transform large swathes of London and the lives of thousands of Londoners as a result.

We know this from experience.

You only have to look at the difference the jubilee line has made to Southwark and Bermondsey which are unrecognisable from the areas I knew when I was growing up.

Our tube, bus, tram and road network is essential to London maintaining its position as an economic powerhouse and to allowing Londoners to enjoy the cultural benefits that this brings.

But I want to focus this evening on just 2 specific but vital aspects of London Transport. Affordability and value for money.

Affordability

We are in the middle of a cost-of-living crisis in London that risks making public transport unaffordable for hard working Londoners.

Did you know that David Cameron has the worst record of any British Prime Minister on the cost of living?

Under his Government, real wages have fallen for 36 consecutive months.

For 36 months in a row, life has got harder and living standards have fallen.

This crisis is costing every Londoner over £42 a week.

By the time of the next election the average family will be £6,660 worse off as a result.

That is enough to pay for the weekly shop for almost 18 months.

Prices are rising sharply on every bill.

Average rents rose by 7.9% in London last year.

House prices rose by 8.1%.

Gas and electricity bills are on average £300 a year higher than when David Cameron entered Downing Street.

And only this week we learnt that Thames Water have increased Bills at twice the rate of inflation already this year and plan to put an additional £29 charge on every Londoners bill.

At the same time wages are falling in real terms.

In the first part of this year, average wages increased by just 0.8% – the lowest level since records began.

Londoners are being squeezed between rising bills and frozen wages and it means that every month wages go less far and increasingly difficult decisions have to be taken about household budgets.

Of course the other big cost in every Londoners life is transport.

Transport is one of our most unavoidable outgoings.

For most commuters there is simply no alternative to using public transport to get to work.

The daily commute in London is the most expensive in the world.

A single journey in London is more than twice the equivalent cost in New York, Paris or Milian and a third more expensive again than Copenhagen.

A zone 1-4 travel card is almost double the price of Berlin and three times more expensive than in Los Angeles or Rome.

And it’s getting worse.

Boris Johnson has an abysmal record of hiking fares year on year that has contributed massively to the cost-of-living crisis in London.

Since he became Mayor the cost of a single bus journey has increased by 56 percent.

In 2008 a single pay-as-you-go journey on a bus or tram cost just 90 pence.

The same journey today will cost you £1.40.

The price of a travel card from zones 1-6 has increased by £440 a year.

That’s a bigger hike than even gas and electricity bills.

In a few weeks’ time, the Mayor will be announcing the rate of fares for next year.

Londoners simply cannot afford another inflation busting increase to the cost of travel.

The Mayor must recognise that Londoners are struggling more than ever before and that their budgets can’t keep stretching forever.

He must take action to ease the pressure for ordinary Londoners by freezing fares at least at the rate of inflation for 2014.

He can afford to do so.

All that is missing is the political will.

The cost of freezing fares at inflation pales into insignificance compared to the amount wasted on the Mayor’s vanity projects and by his failure to get value for money from TFL.

Freezing fares at inflation would cost a fraction of the £60 million Boris Johnson has wasted on the Cable Car and the millions wasted on creating the world’s most expensive operational bus.

Including the cost of the additional crew number these buses need, they will cost £37.2 million more than an ordinary bus.

And that’s without paying for a new air conditioning system!

An inflation freeze is certainly more affordable than the 365 members of TFL staff who earn over £100,000 pounds a year, the £22,000 of expense claimed by just 7 members of staff and the £50,000 a year paid to provide TFL bosses with private healthcare.

VALUE FOR MONEY

But getting value for money from TFL means two different things.

As well as ensuring the Mayor makes the most out of every penny he spends on our transport system, it also means ensuring that the service that commuters get for their fares reflects the amount they are paying for their journey.

And the value that Londoners get from the highest fares in the world is set to drop dramatically over the next few years.

On Monday the Mayor’s secret plans to close every TFL ticket station in London over the next 2 years were revealed.

These plans will have a devastating effect on the daily commute.

Everyone has had to depend on a ticket office when the ticket machines are out of order or their Oyster card has stopped working.

Under the Mayor's plans you will now have nowhere to turn in these everyday situations.

On top of this, commuters will understandably feel less safe using deserted stations late at night, particularly older commuters and children.

The plans will lead to the loss of 2,000 jobs over the next two years alone.

And what worries me most is that there will be fewer staff at London stations to cope in an emergency situation.

Boris Johnson pledged to keep a ticket office open at every tube station in his manifesto.

This is one of the worst examples of breaking a manifesto promise I have ever seen in London politics.

No wonder the public are so cynical of politicians

Every journey should matter to the Mayor and he must not go ahead with these closures that ignore the needs and safety of hard working Londoners and significantly reduce the value they get for their sky high fares.

"There is little financial, strategic or common sense in these closures"- not my words but of the Mayor in his manifesto.

This should be as valid when you are trying to get Londoners to vote for you as they are once they have.

The effect will be felt across London; in Harrow, Redbridge, Wimbledon and Croydon, getting to work will get harder and stations will be less safe.

Londoners deserve better than to be paying more every year for a worse service.

And that’s why we’ve launched our campaign today against Boris Johnson’s plans to hike up fares and cut staff and ticket offices.

In just a couple of hours thousands have signed our petition. Over the next few days and weeks we will be rolling this out around London.

Please go to www.GreatToryTrainRobbery.co.uk and sign it today.

CONCLUSION

London transport faces many challenges in the years ahead and I’m sure you will hear more about them from our other speakers a little later today.

We should be proud of the transport system we have and endlessly ambitious for its future.

We need to continue improving and upgrading our existing networks, no easy task on a network with as much history as ours.

The tube network is celebrating its 150th anniversary this year.

The ten year improvement plan has resulted in a more reliable and regular service.

But we need to go further.

If we want London to stay as the greatest city in the world, we must aim to have the best transport system too.

We need more lines and services to cope with our growing population.

Speaking as a former Crossrail minister, crossrail must be seen as just the start of this process and we need to be aiming to open new lines far more frequently.

By the time Crossrail opens, Paris will have completed 6 new lines in the same period.

We need to improve and expand the networks that keep outer London connected like the trams and buses.

We need to do more to get Londoners cycling and walking to work and to further reduce reliance on cars.

It is embarrassing that in the country that that has produced the last 2 Tour De France winners and dominates Olympic Cycling, we still only do 2% of our journeys by bike.

But fundamental to all these future challenges is providing a transport network which is both affordable to ordinary Londoners and provides great value for money.

Unless we get that right, the rest of our ambitions will never become reality.

Thank You.

Shadow justice secretary and shadow London minister Sadiq Khan speaks at last year's Labour conference in Manchester. Photograph: Getty Images.
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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?