Death of the Travelcard? Transport for London funding plans announced

Transport for London have revealed plans to raise the age of eligibility for the 60+ Freedom Card, remove Travelcards and add £20 to annual council tax bills to meet central Government demands for raising revenue.

In return for supporting TfL as passenger number fell and fare income reduced, central Government and Transport Secretary Grant Shapps demanded measures to increase revenue.

One measure is increasing the threshold for free travel for those aged 60 and older, with eligibility increasing by six months each year for 12 years.

Another is no longer being part of the Travelcard scheme, with Pay as You Go caps likely to remain for contactless.

Measures are expected to raise between £60m-£80m which is still far below what the pandemic has cost in lost income.

Fare income was rising until 2020

One reason London has been hit so hard on an international level is that it was overwhelmingly reliant on fare income due to central Government policy.

London was at 72 per cent for share of income from fares, which was far above cities like Paris at 38 per cent and Madrid at 47 per cent.

London is far more reliant on fares compared to other cities worldwide. Click to view comparison

Central Government had pushed for TfL to be the only self-funding transport authority in the developed world. That left it badly exposed and we again see the impact this week. Passengers are down sharply as “Plan B” and working from home introduced – and so TfL suffer through no fault of their own.

TfL have attempted to move to a model popular in places like Hong Kong which is to develop housing around stations to provide ongoing income to support the transport network. They drew up plans for 50,000 homes but the Treasury have refused to support, and so only a maximum of 20,000 can be built without government support.

Fares are also likely to rise above five per cent – which risks lessening the appeal of public transport yet further and increasing congestion.

Council tax increase

Pushing council tax rises again increases cost for some the poorest given the tax’s regressive nature. There’s often little difference between those in 1 or 2 bed homes and those in multi-million pound properties – unlike the situation in many other nations where ultra-prime homes have far higher property taxation. In the UK property taxation is skewed towards the bottom end with the poorest paying a high percentage of their income.

It’s part of a pattern of central government moves that further push funding for services onto council tax payers rather than general taxation and fairer forms of tax revenue. Police funding is the same. Government would only restore policing cuts if council tax precepts were increased sharply to pay for much of the funding.

This isn’t to say TfL have been perfect with spending. The Silvertown Tunnel is mostly funded by a private company who will gain income via tolls, yet TfL have spent tens of millions developing the project.

Woolwich Ferry is a shambles on an ongoing basis.

However those costs are vastly dwarfed by the hit from lower passenger numbers, and Whitehall now seem intent on harming a political opponent rather than supporting a city which provides a major tax raising centre.

If they insist on a funding model dependent on fares for income at a level far above international norms, then punish the city when fare income reduces due to an international pandemic, it comes across as vindictive, petty and self-defeating given a declining business tax base harms all.

As for Khan some will say he’s not ambitious enough.

Will he expand ULEZ (though the current expansion is forecast to raise very little due to high compliance and the scrappage scheme) to the M25? Or adopt road charging or a workplace parking levy?

We’ve not heard the last of this, and this weeks work from home order again ensures no stability any time soon.

 

 

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John Smith

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.

14 thoughts on “Death of the Travelcard? Transport for London funding plans announced

  • December 15, 2021 at 10:58 pm
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    I can sort of see the logic behind dropping the Travelcard product if most journeys are now made by contactless or Oyster card pay-as-you-go, but losing the all-you-can-eat season ticket aspect of it is a blow to passengers using it as part of a point-to-point ticket from outside of London. They’ll most likely end up paying more for the London end of their travel.

    It all smacks of the Tories’ latest wheeze of “leveling up” the rest of the country by “leveling down” London, because lowering the capital’s standards is easier than actually improving all of the other cities.

    Reply
  • December 16, 2021 at 5:41 am
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    The Government should continue to fund transport authorities in every major city in the UK including TFL.

    This is vital to the UK growth and economy and the public transport infrastructure plays a major part of this. Without decent public transport businesses will move a broad to european cities where there is more investment in their cities and transport networks.

    Reply
  • December 16, 2021 at 10:33 am
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    Those were projects funded by the Department for Transport and explicitly demanded by the DfT as part of the prior agreement between TfL and the DfT.

    Second, use of words “bankrupt” is miles off. TfL have a legal obligation to maintain a set reserve. They are not bankrupt.

    Even if they fell below into those reserves, it’s through little of their doing. Are you blaming hospitality companies right now losing money as Government alters guidance and rules?

    Should a govt let transport networks that are essential to the long term growth of an economy suffer severe cuts and push funding costs on the poor due to exceptional circumstances?

    Should they let viable businesses on the High Street die and not support in the short term?

    Reply
  • December 16, 2021 at 12:25 pm
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    I have deep regard for you John and your work. Often highlighting the London bubble it loves to lunch on. But this time you are standing on your head. It’s fake propaganda from city hall and over a long time from TfL that it is the only city not govt funded. What you chose not to mention is that the others are funded by their city mayors! And the notion that the government has withdrawn funding when it has actually increased it through the mayor keeping business rates is all spin spin spin. This mayor has chosen to make London the cheapest city in the world compared to its wealth to use public transport. If you use a bus or train outside London expect to pay double and often far more, and poor is on a whole different level outside the London bubble. He has chosen, to keep his son of a bus driver done good millionaire lifestyle, not to increase business rates and keep council tax low. In your article based on loads of twisted facts you didn’t mention that cities like New York have 10% tax on the value of millionaire homes to pay for its metro. Khan has to take a position and not try to be liked by everyone. He could start with a wealth tax and banning homes owned overseas paying no tax, to level up London, that he and his party so often criticises, as a classic distraction technique, in the way the govt is trying to do outside. But while he can line his pockets and those of his champagne socialist mates at the real expense of the poor he won’t want to tax his and them more will he? And on a different level, this is the man who defended terrorists that killed Londoners. How long before you dig up that story again from the murky depths…

    Reply
    • December 16, 2021 at 1:50 pm
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      Firstly any argument that states because an area outside London has it bad must mean accepting attempts to damage London is ok is simply accepting the race to the bottom narrative. Something’s always worse somewhere – it doesn’t excuse dragging a service down when it has grave consequences. It’s paucity of ambition and accepting the worst.

      You’re also talking to someone who’s lived in a number of English cities so well aware of how things are elsewhere – and I’ve also spent much time abroad. The site started partially as a result of that. I’m all too aware of how bad transport is in other places. My view isn’t to then ruin London but improve those other areas.

      “London bubble”. Maybe less time in Zone 1 and more in Thamesmead or Slade Green? I grew up and visit estates in that neck of the woods. It’s a world away from wealthy inner London and closer to deprived parts in the rest of the country.

      You miss that London has far, far less devolved fund raising powers than just about every other major world city. England is the most centralised state in the developed world. What you’re asking for the Mayor has no power over.

      I would say the mayor should be *far* more vocal about gaining those powers. One I’ve long been baffled by is no local hotel tax. These are common worldwide. In just about every other country, authorities down to sometimes a very local level in some rural areas have powers to levy taxation on overnight hotels. Whitehall blocks it in England. Khan should be shouting about that. If it existed, they could be no council tax increase.

      “Cheapest city in the world relative to wealth”. Firstly, the wealth of the City is not seen by many at the bottom – and of fare levels single trips are more expensive than the majority of other wealthy developed nations. Paris is cheaper. Barcelona is cheaper. Madrid is cheaper. Berlin too. It goes on.

      “He could start with a wealth tax and banning homes owned overseas paying no tax, to level up London,”.

      Well he can’t as he doesn’t have the power. Whitehall does.

      Can you link to where he defended terrorists?

      I’ve highlighted his flaws many times, and am writing a new post about some abysmal and hypocritical decisions by him, but so much of what is called for he has no power to do. He can do more, but lets stick to what is feasible and not ignore who really holds power.

      Reply
  • December 16, 2021 at 2:18 pm
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    Khan as a so-called socialist, wallows in London being the richest city in the world and the divide that brings. I can tell you are a loyal Khanite but he only had a 7% approval rating with 51% of the vote. Yet the 51% is amplified in the London media. Which is ironic because if it was the remain or leave vote it was the other way round in the London bubble. I look forward to your criticism of him to balance the books even if he can’t. As a loyal labour supporter and the 93% who want rid of him along with my union the RMT I look forward to his bubble being burst. Link here: https://www.thetimes.co.uk/article/khan-struggles-to-shake-off-link-to-convicted-terrorist-st5s2lr78

    Reply
    • December 16, 2021 at 2:19 pm
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      You’re talking absolute rubbish so barely worth continuing. I don’t care about approval ratings. I’m writing a post up about some abysmal policies of his. You’re stating some right old nonsense and making weak assumptions in place of real arguments and still havn’t addressed most points.

      Reply
  • December 16, 2021 at 3:30 pm
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    List your points John and I’ll address each one with facts

    Reply
  • December 16, 2021 at 6:53 pm
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    Over 550 tfl employees on over £50000 a year no wonder it’s bankrupt

    Reply
    • December 17, 2021 at 1:21 pm
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      Yep that really makes up the billions lost when it’s a tiny, minuscule fraction of the overall cost. Basic maths shows that argument is a nonsense.

      Reply
  • December 16, 2021 at 8:41 pm
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    I don’t really care about Khan either way tbh, I khan take him or leave him. But it seems to me John is making valid, reasoned, calmly argued points already (as he seems to always do on these pages), you don’t seem willing to listen and seem intent on pushing your anti Khan agenda. I’m sure John has better things to do than trying to convince you.

    Reply
  • December 16, 2021 at 11:01 pm
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    I’m Thamesmead, prior to that Erith. I was 4 years unemployed. Your postcode and closeness to a Tube affects your life HUGELY.

    Reply
  • December 17, 2021 at 6:44 pm
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    @Angel Hart: what has Khan’s supposed link to a convicted terrorist to do with his being Mayor of London? Address his policies rather than your own bias. Further you talk about New York City having a 10% levy on the homes of millionaires to pay for the metro. I have ridden the metro and it ain’t great. Ours is so much better.

    Reply

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