The missing £500 million: Taxes from London drivers not spent in London

With much talk about TfL’s budget problems there’s a major change made over recent years that hits TfL and London hard, and it’s one that’s little talked about.

Under previous chancellor Phillip Hammond a decision was made that all annual income raised from drivers across the country would be reallocated from general taxation to a dedicated road fund for Highways England. Highways England maintain hardly any roads in London and TfL’s network of 360 miles of roads do not see a penny from the fund.

Coupled to a £700 million grant cut in 2015 from Government to TfL and this results in London’s public transport users subsidising roads in the capital, and it’s not enough to do more than the very bare minimum to maintain roads. Infrastructure is now suffering across London.

This even horrified some Tories in London, who wrote to their Conservative government colleagues in 2018 asking for more of the £500 million raised from drivers in London to be spent in London. Here’s a letter from then-Tory GLA member and Bexley Cllr Gareth Bacon (now MP for Orpington) asking for it to be changed:

Funnily enough most of those who were opposed to this policy in 2018 now seek to portray financial issues as not down to covid, or cuts, or government retaining taxes derived from drivers in London such as VED, but “TfL waste.”

I remember watching a GLA meeting when Tory Assembly Member Keith Prince found out. He could barely believe it. Here’s Keith Prince now:

Prince reverted to party lines

Bacon has also gone from questioning why £500 million is not being spent on London infrastructure, to blaming the current Mayor:

In a return letter, Robert Jenrick (yes, that one) said as Londoners drove outside London it was ok to now give all income from London drivers to an organisation that barely manages any roads in London. He also stated it was fine for public transport users to subsidise drivers; a stance no other country in the world takes.

TfL warned they would have to cut back maintenance severely, and also utilise as much public transport fare income as possible to keep the road network usable.

The loss of income from grant cuts and no VED allocation to TfL is severe, and we have seen numerous problems with maintaining core infrastructure such as Hammersmith Bridge and the Rotherhithe Tunnel.

Woolwich ferry is one of the few services TfL must run by law

Despite that, TfL have reduced the operational budget deficit in recent years – though it took cuts to various bus routes and staffing at tube stations.

Many other Tories have also reverted to the party line since concerns in 2018, and like mayoral candidate Shaun Bailey aren’t keen to talk about the VED issue. It’s the same story with £700 million in annual cuts made to TfL’s budget in 2015. Added together with Vehicle Excise Duty, that’s a possible £1.2 billion deprived from the capital each year.

It dwarfs by some magnitude any of Shaun Bailey’s quoted cost savings and examples of “TfL waste”.

His latest example is £44 million he claims it costs for one free travel pass given to each member of TfL staff. This is a perk they have enjoyed for decades under all governments and parties.

Bailey is spinning it as passes for “flatmates”. Note the plural. In reality it’s one pass per staff member, and it mostly goes to spouses

Before that his argument was wages. Specifically £55.7 million in TfL salaries. Even if all saw salaries cut in half at a stroke, is £28 million saved going to eat into a covid related fall in income of £2+ billion, let alone the issue of TfL’s loss of government grant AND £500 million from VED? No. Bailey’s “savings” are chicken feed in context.

Bailey’s incessant lies on what caused financial problems

No transport organisation in the rest of the UK, or the world, could withstand what is happening. Indeed, private rail franchises and bus companies outside London didn’t withstand it – and they got a relatively string-free bailout.

The line that TfL was bankrupt before this spring is a complete lie. A lie that is transparently untrue to anyone who spends two minutes looking into it. Hence why opposition to measures proposed by Government have come from all angles in recent days, both left and right. The latest are business organisations in the capital. Business knows that public transport benefits the economy. It takes cars off the road for deliveries. It gets staff to work.

TfL certainly isn’t perfect and has issues to address, yet the main cause for problems before covid was cuts from the very same ruling government now demanding severe cuts, vast fare increases, council tax rises and a congestion charge increase across much of London.

From the Prime Minister down this week we’ve seen lies and efforts to treat the public quite frankly as idiots. The same prime minster who was Mayor of London from 2008 to 2016 and oversaw many policies that Bailey is now stating “bankrupted” TfL.

Shapps, Johnson, Bailey and certain lackeys in London may be digging in with their lies, though its merely reinforcing how they’re take voters for mugs. Things like that 2018 letter reveal what was happening. Certain Tories may now change their tune and blame others, but successive attempts to cripple TfL are in the public domain.

It should be noted that some Tory Cllrs in Greenwich borough are not supporting what others in the party are doing.

One major own goal for TfL however is Silvertown Tunnel, and it’s a terrible look to argue for more cash while presiding over a PFI project with escalating costs – even if most of the cost will hit London for years to come rather than in the immediate future. It’s a project that relies on an increase in vehicles, and proponents attempt to deflect criticism by offering a handful of bus routes. Yet in future are those assumptions of traffic accurate, and will they even be able to afford sufficient new and extended bus services?

Silvertown Tunnel
Projected changes in traffic congestion according to Silvertown traffic study.

TfL project an increase from 3,500 vehicles an hour at 5pm to 5,000 an hour when Silvertown Tunnel opens:

Current level of traffic versus Silvertown & Blackwall levels according to TfL

This will result in additional congestion through Greenwich, Blackheath, Kidbrooke, Eltham and Falconwood according to TfL.

Silvertown tunnel south of the Thames converges with existing lanes

When asked about congestion Mayor Sadiq Khan notably only talks about alleviating northbound morning congestion and repeatedly fails to talk about afternoon southbound congestion.

This selective method of addressing concerns hardly presents a straight up Mayor in negotiations, even if letters from Grant Shapps do show who is calling the shots.

Without the Silvertown Tunnel Khan would be in stronger position. With it, it’s a £2 billion albatross. One thing on his side is hapless Bailey is a supporter too.



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I've lived in south east London most of my life growing up in Greenwich borough and working in the area for many years. The site has contributors on occasion and we cover many different topics. Living and working in the area offers an insight into what is happening locally.

9 thoughts on “The missing £500 million: Taxes from London drivers not spent in London

  • Jenrick…he will be coming a cropper sooner or later…and well deserved…enjoyed your article and conclusions….
    Unfortunately there’s a disconnect between voters and MPs…its a matter of human nature so unlikely to be resolved.
    Greenwich Councillors…do they keep us up to date…keep us informed…give us an opportunity to comment…everything is hidden…behind closed doors…its like MI5…
    You would think there would be some connect between Councillors and voters but I’m dreaming

  • As I’ve said in a previous post, I am baffled that the Conservatives are persisting in this ‘it’s Khan’s fault’ mantra. The figures are so easy to check!

    Thank you for neatly wrapping everything — including the fact that the Silvertown tunnel is a waste of time and money — into one single piece.

    I am still very interested in what Conservative concillors have to say. Do they back the government on this?

  • How much did the Boris bus cost us all? The wasted money on the Garden Bridge was not peanuts either. Mike Clinch

    • I’ve seen various figures for the Garden Bridge. Between 48 to 53 million is a widish range.

      As for the Boris bus…..hard to say. After they abandoned conductors (did they ever all have them?) fare evasion soared. They also suffered from battery problems and an ‘air-con’ system that made them swelteringly hot in the summer on the top deck.

      Glad not many of them made it out here!

      • If I recall correctly, route 38 was the first to go over to the ‘Boris’ bus and had ‘captains’ to ensure safe exit from the open platform. They did not deal with checking that cards had been tapped. Route 24 was another that had these captains. The decision was made to do away with the two persons crew and the back door was closed between stops.

        The early new routemaster did not have windows that could be opened and the summer heat was dangerous. Windows were retro-fitted which allowed for airflow.

        Route 21 switched over a few years ago’ and when I lived up the road from Lewisham town centre, that was the bus I took all the way to my Moorfields’ outpatients’ appointments.

  • I was charged over £55 by mistake for congestion zone even I have not been there for months. Last two months I am trying to get refund apparently they have sent a check. So far check hasn’t arrived but I am still thinking why they refund by checks but charge straight from my account as I am on auto-pay. So wrong, no help from them every time I call them all I hear is that they are looking to sort this out. From that point they charged me again £4.5 and when I called they I heard that by ( another) mistake they refund me by check too much ( I still haven’t received the check). I can’t even look how much I got refund but they easily have charged me again. This tfl is nothing but big joke.

  • Government agencies often refund via cheque. I had a refund from HM Customs & Revenue and this came by snail mail with a cheque enclosed. A slow refund means a bit more interest earned. You have obtained a refund and just have to wait for the cheque to eventually turn up.

  • Great article Murky. Very informative. Thank you.

    • Anything associated with refunds from TFL are an absolute joke. My Wife mistakenly paid a ULEZ while entering Croydon from the M25 because of poor signage stating a payment was due. her attempts to get a refund have met with
      confusing email information returns.



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