Grant Shapps: Sadiq Khan cannot ‘raid national budget’ to fix TfL finances
Grant Shapps has this morning said that Sadiq Khan cannot “just raid the national budget” to fix Transport for London’s ailing finances.
Speaking to the Transport Select Committee, the transport secretary said that it would not be fair on taxpayers to fund services and concessions that were not available outside of London.
The comments raise the prospect of another bitter round of talks between TfL and the government over a third financial package to prop up the operator, which has seen its revenues dry up due to the pandemic.
Shapps said that proposals such as TfL keeping London’s share of vehicle excise duty (VED), or levying a new boundary charge on drivers entering the capital, would be unfair on the rest of the country.
“We’ve got to make sure that we’re not funding things for London that our own constituents don’t enjoy”, Shapps said.
“I don’t think he can simply raid the national budget and say ‘Well if I had a bit of that I’d be okay’. I’m sure he would, but it’s not the way forward.
“It’s very easy to charge people who are not your electorate. Boundary charges would be a challenge the principle of no taxation without representation.”
At the moment, Londoners contribute £500m of the £6bn raised each year through VED.
Shapps added that the Mayor should instead focus on making more savings in order to help make TfL’s finances more sustainable.
Khan has already saved around £160m through cutting concessionary travel schemes, while also raising council tax precepts and raising fares.
A spokesperson for the Mayor said: “Ministers have failed to play fair by Londoners when it comes to financing our world-renowned transport system, and as the Transport Secretary is well aware, the Mayor has repeatedly urged Ministers to allow London to retain the £500m of Vehicle Excise Duty paid by Londoners every year but which is currently spent almost exclusively on maintaining roads outside the capital.
“If the Government do not agree, other ways of raising money to overcome the unprecedented financial challenges TfL faces as a result of Covid may be needed – such as asking people who live outside the capital and make journeys into Greater London by car to pay a modest charge, which would be reinvested in London’s transport network.
“It is not fair on London that our drivers should subsidise the rest of the country’s roads and get nothing in return.”
An estimated 1.3m vehicle journeys are made into London every weekday, TfL says. It is suggesting a £3.50 charge should be levied on non-Londoners.
Shapps sets stage for new negotiations
Shapps’ comments come as TfL and the Department for Transport attempt to thrash out a long-term funding package for the network operator.
The current £1.8bn bailout, which was granted in October after testy negotiations, expires at the end of March.
That comes on top of an initial £1.5bn granted last May as the travel all but ceased as a result of the pandemic.
TfL are pushing for a multi-year financial agreement to allow it to get its finances back on a sustainable footing after the devastation of the pandemic.
As part of this, it has proposed measures such as introducing a new boundary charge, which could raise as much as £500m.
The body argues that it needs to move away from its current dependence on passenger fares, which account for 72 per cent of its revenues.