How will Reeves’ Budget impact London transport and TfL?
Funding lies at the heart of the debate over how to improve London’s transport and infrastructure.
Significant capital investment is needed to both maintain a network that was hammered by Covid-19 and to deliver vital upgrades.
Debate over Rachel Reeves’ first Budget has dominated the media over the last week. How will it impact Londoners looking to get around the capital?
Transport for London
Transport for London (TfL), the body operating much of the capital’s transport network, was brought to its knees by the pandemic and has for years requested a long-term funding deal to secure investment for the future.
No such deal arose from the Budget. However, things have taken a more positive turn over the last year.
It is expected that that long-term deal will come in the Spring Spending Review. In the meantime, TfL will have to make do with some £485m for its capital renewals programme.
The issue is no longer whether TfL has enough money to keep London’s network running up to scratch, rather whether it has enough cash to invest in the critical billion dollar infrastructure upgrades needed on the likes of the Bakerloo and Central Lines, as well as major projects such as Crossrail 2.
Half a million won’t be enough for that, yet it is more than Mayor Sadiq Khan had wanted, having revised down expectations prior to the announcement to “anything more than £250m”.
Pessimists would highlight unanswered calls for money for the Bakerloo extension and the DLR extension to Thamesmead.
But the current funding will be used for work including supplying new rolling stock to the Picadilly Line and Elizabeth Line, which is in need of extra capacity to serve the Old Oak Common HS2 station.
We will have to wait and see in the spring. The response from transport and business groups following the Budget was pretty quiet, signalling an understanding that good things could come in future.
Expect a stronger response should nothing materialise next year. Relations between Khan and the government have improved since the General Election, but tensions over funding could easily rise if Labour don’t come up with a longer term deal.
In the meantime, TfL’s financial situation looks to be improving. The operator hit an operating surplus of £138m in the latest financial year, driven primarily by the success of the Elizabeth Line.
Planned strikes by the RMT union were called off last week in a big boost for TfL, but Aslef members are still set to cause disruption. Whether or not the disputes continue will be key to whether TfL’s good run continues.
TfL fares
Any fare rise on TfL will be set by Khan, who has chosen to freeze fares for five out of the last eight years.
Reeves revealed in her statement that regulated train fares across the UK will rise by 4.6 per cent from 2 March next year, one per cent above July’s Retail Prices Index (RPI) measure of inflation.
A post-Budget letter to Khan from transport secretary Louise Haigh has since hinted that the amount of investment transport in London received over the next few years could hinge on whether the mayor agrees not to freeze fares again.
Fare increase will be assumed as the “baseline” for negotiations, it said. TfL has at points been criticised for taking too much of its revenue through ticket fares, as opposed to other sources of income.