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23 October 2020

Who’s to blame for TfL’s funding crisis? It’s not Sadiq Khan

Boris Johnson’s claim that the mayor of London had “bankrupted” the transport system was a flat-out lie.   

By Jonn Elledge

The Prime Minister told a lie on Wednesday. This is no surprise; rain is wet, Boris Johnson lies. But this one really was a whopper.

At Prime Minister’s Questions – always a pleasure, never a chore – Janet Daby, the Labour MP for Lewisham East, asked Johnson to confirm that his government was trying to force Sadiq Khan to scrap free travel for the very old and very young, in exchange for government cash to keep Transport for London’s trains and buses moving about in the manner to which Londoners had become accustomed. “It was the Labour mayor of London who bankrupted TfL’s finances,” came the Prime Minister’s reply, “and any changes that he brings in are entirely his responsibility. I suggest she holds him to account.”

This was, in its way, the ideal rebuttal: simple, firm, neatly transferring all responsibility from the government to its political opponents. The only problem is it’s not even close to being true. The reason TfL is in financial trouble has very little to do with Khan, rather more to do with the Prime Minister, and a heck of a lot more to do with the small matter of a pandemic.

The ins and outs of public transport finance are both boring and complicated, but this explanation is necessary, so please bear with me and I’ll try to keep it brief. One metric of the economics of a public transport network is the “farebox recovery ratio”: this is the proportion of operating expenses that can be recovered through fares. If it costs you £100m to run your network for a year, and you bring in £50m in fares over that same period, your farebox recovery ratio is 50 per cent. 

In 2018-19, the farebox recovery ratio on London Underground was 134 per cent: this is extremely high. On the Overground and Docklands Light Railway, it was 94 per cent, which sounds less impressive, but to put those numbers in context, on New York City’s transport network in 2016 the ratio was 47 per cent, in Paris in 2014 just 30 per cent. 

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[See also: Boris Johnson’s lie about Sadiq Khan is revealing in more ways than one

These numbers are incomplete: the London measures don’t include buses, they ignore the need for capital expenditure, other revenue streams such as advertising, and so on. But they nonetheless make the point: an unusually large chunk of TfL’s funding – the money that pays for staff, the electricity bill, the lot – comes directly from passengers. And following a 2015 agreement between then chancellor George Osborne and the then mayor Johnson, TfL receives no central government grant (though in its place it won the ability to hang on to certain tax revenues). 

In normal times a high farebox recovery ratio is a good thing: it means tax revenues from places with poor public transport aren’t being diverted to subsidise the Tube journeys taken by bankers, etc. But as you may have noticed, what with the whole pandemic/lockdown/working-from-home thing, a lot of people haven’t been commuting much this year, knocking around £4bn off TfL’s 2020 revenues. 

In March, with TfL mere hours from running out of money, the government agreed a £1.6bn bailout package. But it was always clear that would run out at some point in the autumn, and right on time here we are: TfL is currently burning through an extra two weeks’ worth of cash while its bosses negotiate with the Treasury. That first bailout came with a few strings attached; the offer on the table now would come with rather more: this time the government wants an end to free travel for the under-18s and over-60s, and a huge extension of the congestion charge zone, which currently covers central London, all the way to the North and South Circular roads. 

Khan, whatever his flaws as a politician or as a man, is not responsible for any of this. Quite the opposite, he says: since 2016, when he took over from Johnson as mayor, TfL has reduced its operating deficit by 71 per cent.

And even though it’s quite hard to work out what he’s actually achieved as mayor, Khan remains one of the most popular politicians in Britain, which is clearly enraging his opponents. This week a poll showed him 22 percentage points ahead of the Tories’ Shaun Bailey.

But this, one suspects, may say less about how great Khan is than it does about how weak a candidate Bailey is. Added to this, the Tory released an absolutely cringe-inducing campaign video this week under the title “The Great London Bake Off”, in which a couple of actors pretending to be Paul and Prue prod at a cake and say nonsensical things like, “Oooh, you can really taste the reduction in crime.” There’s something slightly pathetic about a politician hiring people to tell him how great he is: it’s like writing your own book reviews on Amazon, or including commendations from your mum in your dating profile.

At any rate: the Tories are on course to lose next year’s mayoral election by something that resembles a landslide. So I can understand why Johnson would use this attack line. I can even understand why he would convince himself of its accuracy.

But that doesn’t make it true.

[See also: Stephen Bush: London will survive coronavirus, but life and work in my city will be very different in the years ahead]

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