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TfL bailout agreed – £160m cuts coming but no Congestion Charge expansion for now

An agreement was signed just 15 minutes before last night’s midnight deadline to keep London’s transport running, though it appears to leave a number of questions.

There is no extension to the congestion charge, though this agreement only a six month extension taking us to just one week before the next Mayoral election, where it could re-emerge to impact voter intentions. TfL had sought an 18 month agreement.

More bus cuts incoming?

TfL will need to find cuts of £160 million. Service cuts look likely, which follows a pattern of cuts in recent years. Buses will possibly bore the brunt, though ridership on buses did not fall as sharply as tube numbers since the start of the pandemic.

Concessionary fares for under 18s and over 60s stay though more money will be needed to fund them. That is likely to mean council tax increases in London via TfL/GLA precept. Fares for others will rise above inflation at RPI +1%, which was already in TfL’s business plan. That’s above the highest level that inflation is measured.

Greater congestion as public transport fares increase and cuts kick in?

A 55 year old on the breadline will pay more, while a wealthy 60 year old pays nothing. The divide grows wider.

Another key factor is t passenger numbers underpinning the agreement. This agreement would have mainly been drawn up before the second lockdown decided. On Friday Ministers were still insisting their would be no lockdown. On Saturday a lockdown was announced hours before this agreement. That could impact passenger numbers and income underpinning passenger assumptions.

Bailout 1 underestimated passenger numbers and TfL finance documents reveal income was higher than expected. That seems unlikely with bailout 2 given the new month long (at least) lockdown starting on Wednesday.

Council tax looks likely to rise via the GLA precept. Council tax is one of the most regressive taxes with relatively little difference between different bands and wealth. A £20 million central London property can pay around the same council tax including GLA precept (£1,560.56 for the top Band H in Westminster) as a £200k home in some other parts of the capital. Top level council tax in London is far below levels in other major world cities such as New York where a multi-million pound homes pays tens if not hundreds of thousands annually in property tax.

If the Conservative government insist on local funding, they should permit local devolution to raise income. Where better than multi-million pound homes to bring London into line with other major world cities? Placing ever more costs onto low earners in London is hardly fair.

Lots of questions remain in the near to mid term, let alone long term. When the pandemic passes we will see fare rises above inflation in a struggling economy. More road congestion is likely to result. It certainly  won’t help tempt people back to public transport.

2 Comments

  1. Roy

    Wealthy 60 year olds….most of the one’s I know are on Housing Benefit…I’m over 70 and still at the poor end…so less of the rich poor attitude.
    We need a Govt with some intelligence and base decisions on Facts not Fear…
    The worst people to be in control of any organisation is the Govt but they never learn…you only have to look at the abysmal NHS to see the outcome

  2. Graham

    Most of 60 year olds I know are still in full time work as not old enough to retire and have paid taxes all their life With the retirement age currently at 66 soon to rise to 67 and then rise further to 68 in a few years,

    I guess most of the 60 year old you know are on benefits. Housing benefit is mean tested. with income and savings taken in to account. So if the 60 year olds you are talking about are rich then they are very unlikely to receive housing benefit. unless on benefit or pension with no savings or other income.

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