Sadiq Khan launches review of TfL in response to official inquiry

  • london
  • July 21, 2020
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The London mayor, Sadiq Khan, has launched an independent review of Transport for London’s future funding and finances, in swift retaliation to the government-imposed inquiry whose terms and panel were announced on Monday.

The review is the latest move in a bitter row between City Hall and Downing Street over the £1.6bn bailout begrudgingly granted to the capital after TfL fare income collapsed with the onset of the Covid-19 pandemic, as the public were warned to stay away from the tube and other public transport.

Khan said that the independent expert panel would conduct a review looking at the longer-term running of London transport, in parallel with the government inquiry.

However, while the government review was accepted as part of the deal in May, it is understood that the mayor and TfL board decided in response to set up the separate inquiry.

Under the terms of reference of the government review, announced by the transport secretary, Grant Shapps, accountants KPMG will rake over the books and consider “alternative operating models” – a phrase understood by unions to mean potential privatisation of the tube – and cost-cutting measures including driverless trains. The review will also be shaped by special representatives appointed to the TfL board this week, including Khan’s arch-critic and key Boris Johnson ally Andrew Gilligan.

In contrast, TfL said the expert panel, drawn from transport, engineering and banking, would receive no fee and would be “completely independent” from TfL or City Hall. The members include former Office of Rail and Road chairman Stephen Glaister, National Infrastructure Commission member Bridget Rosewell, and Sir Jonathan Taylor, former vice-president of the European Investment Bank.

Its findings may yet equally anger the RMT union, which on Tuesday wrote to Shapps to reiterate warnings of industrial action should the government review attempt to privatise the tube. City Hall’s independent review will be unlimited in scope and also examine whether TfL should “utilise, where appropriate, new sources of finance and funding” and “will develop options for TfL’s long-term future funding and financing models”.

Khan said: “London’s public transport network is central to life in our city and will be essential to our recovery. Despite TfL’s strong financial position going into this pandemic, coronavirus has had a devastating effect on TfL’s finances, which rely on fare income.

“Despite the huge strides made in reducing TfL’s operating deficit over the past few years it is clearer than ever that the current funding structure is not fit for purpose. It is vital that we find a new solution to support not only London but the wider economy.”

TfL has argued that it was tackling its deficit, had cut costs and was expecting to run a surplus by 2023, before the pandemic hit. Its annual operating grant from central government was cut from £700m when Johnson was mayor to zero today. While Shapps quickly moved in March to grant national rail operators fresh contracts, at a cost of £3.5bn to the Treasury, and bail out private bus operators, TfL’s funding was not confirmed until two months after most passenger revenue had disappeared.

Andy Byford, London’s transport commissioner, said the review would provide “more robust arrangements” than fare income. “Prudent financial management had placed TfL on the cusp of breaking even for the first time in its history and with strong financial reserves. However, the pandemic has revealed that the current funding model simply doesn’t work when faced with such a shock,” he said.